The Court of Appeals Draws a Distinction Between Condominiums and Cooperatives in Terms of the New York Labor Law

December 14, 2012

On Tuesday, December 11, 2012, in a surprising 4-2 split decision, the New York Court of Appeals in Guryev v. Tomchinsky, et al., exempted “condominium related defendants,” collectively described as the condominium building (including non-contracting unit owners), the board of managers and the building manager, from liability under New York Labor Law Section 241(6). In finding that such defendants do not constitute “owners” or “agents of owners” under Section 241(6), a necessary condition to the application of this statute, the plaintiff/worker who was injured in an individual condominium unit was not entitled to recovery from the condominium related defendants, but could recover from the individual owners of the unit that contracted with the plaintiff’s employer. In the face of a scathing dissent that called for reversal of the majority decision, the court notably made a distinction between condominium defendants and cooperative corporations (“co-ops”), who are considered owners for the purposes of the statute.

In Guryev, the plaintiff was injured while engaged in the renovation of an individual condominium unit within a condominium building owned and operated by the condominium related defendants. Specifically, during the course of his employment for a contractor, retained by the individual unit owner, the plaintiff sustained injuries when he was struck in the eye by a ricocheting nail. The individual unit owner had entered into the agreement with the plaintiff’s employer for renovation work, which was approved by the board of managers, who retained the right to insist upon compliance with the Industrial Code worker safety provisions. In this case, there was no lease between the condominium related defendants and the individual unit owner.

The issue on appeal was the fine distinctions relating to ownership of the premises, as the condominium defendants did not control the injury producing work. In affirming the holding of the Appellate Division, Second Department, the Court of Appeals explained that ownership, while a “necessary condition” is “not a sufficient one” for purposes of imposing liability upon non-contracting parties, under Labor Law Section 241(6). For instance, condominiums own only the land beneath the condominium building as each unit within the condominium building is separately owned by each individual unit owner. On the other hand, cooperative corporations (“co-ops”) are considered owners of the entire building, including all individual units therein, as said units are leased by the corporation to the shareholders.

Of significance, we note the strong dissent, which requests a reversal of the majority and legislative reform finding this holding “rips a gaping hole in the Labor Law’s protective mantle.” The dissent opined that because condominiums and co-ops retain a similar proprietary interest in the alteration of each individual unit, the Labor Law must apply to condominiums in the same manner as co-ops. To treat these condominiums differently, exempting condominiums from the strict liability under Labor Law Section 241(6) would contradict the broad remedial purpose of the Labor Law.

Although not explicitly stated, it seems the Court of Appeals holding is not limited to Labor Law Section 241(6), but broadly exempts condominiums and condominium-related entities from liability as owners under Sections 200 and 240 of the Labor Law. We will follow for any legislative developments in the wake of the court’s controversial decision.