Adam Leitman Bailey's Blog, page 7

Adam Leitman Bailey, P.C., On Behalf of Board, Defeats Temporary Restraining Order By Self-Dealing Owner in Complicated Litigation

SHAREHOLDERS’ DEMAND FOR PRELIMINARY INJUNCTION

New York City’s extreme density, especially in Manhattan, can yield high-stakes battles for even small spaces.  When disputes about such spaces can’t easily be consensually resolved, legal “street fights” often rapidly blossom, generating expedited proceedings. Successfully navigating those circumstances invokes an aphorism by British politician Charles Buxton:  “In life, as in chess, forethought wins.”  A recent matter handled by Adam Leitman Bailey, P.C. exemplifies that principle. 

TWO UNHAPPY SHAREHOLDERS 

The building at issue is a co-op exclusively for commercial tenants.  The tenants include, among others, artists, and craftspersons, and is located in a busy location not far from a major Hudson River crossing.  One of the tenant-shareholders, who acquired their shares and unit in the mid -1990s, and was a former Board director and officer, owned a unit abutting a loading dock and a modest portion of the building’s parking area.  That shareholder was an artist who created very large sculptures that often had to be shipped out in pieces.  Another shareholder operated a studio on a higher floor.  Both had been members of the Board, with the artist having served as an officer as well.  They were no longer on the Board in 2023 and resented certain new directors.  The artist had also used the portion of their unit that comprised a section of the parking area as their own private lot, and from time to time rented the space to third parties, keeping the monies for themselves.  Both shareholders had also become accustomed to unfettered year-round 24-hour 7-day-a-week access to loading docks and elevators. 

The new Board believed the situation was too chaotic, presented safety issues, and would be a financial burden on the Corporation.  The Board, therefore, passed several new “House Rules” which, among other things, prohibited using the loading docks for loading and unloading, making clear there was no parking or standing at the building, regulated use of elevators (including requiring coordination with the building’s management), and detailing fines that would be imposed for violating the House Rules or proprietary lease.  

A LAWSUIT IS FILED   

The two shareholders were incensed at these new requirements.  Adam Leitman Bailey, P.C. representing the Corporation and its Board, attempted to consensually resolve the dispute but the negotiations were unsuccessful.  The two shareholders commenced a special lawsuit, known as an “Article 78 proceeding”, which is a legal process used to challenge actions or inaction by, among others, co-op boards.  The shareholders claimed the Board had acted beyond its authority in enacting the new rules (known in legal parlance as an “ultra vires” act).  Specifically, the shareholders claimed that the Board was not permitted to enact these new House Rules without first amending the proprietary lease, which, if correct, required obtaining over 66% of shareholders to approve the amendments.  The artist also claimed entitlement to use the parking area as they saw fit based on the governing documents that they had received when they purchased their unit, and both claimed the Board had no right to regulate their elevator or loading dock access.  They further claimed the Board had acted in bad faith, noting that prior to the lawsuit, a Board member had instructed building staff to lock a gate which later resulted in a citation from the City for preventing ingress and egress.   

The Petition also claimed that even if the governing documents did not grant the artist unfettered use of the section of the parking area that was included in their unit, the shareholder was nonetheless entitled to use it as they desired under a doctrine called “adverse possession” (which, if certain conditions are met, permits a trespasser to claim title and ownership rights of a piece of real estate that they otherwise do not own).  The shareholders also accused the Board of breaching its obligations to the Corporation when it refunded a deposit to a counterparty to an air-rights development deal, with the counterparty being a company managed by the Board’s new President. 

The shareholders launched their attack by accompanying their Article 78 petition with a request for a temporary restraining order (TRO) and preliminary injunction which, if granted, would prohibit the Board from enforcing the newly enacted House Rules.  The Court, without even requesting an appearance or opposition papers, denied the TRO.  However, it scheduled an expedited hearing to address the petitioners’ preliminary injunction application.  The hearing would not address the shareholders’ adverse possession theory or their complaint about the deposit refund, but as a practical matter, those issues had already been presented to the Court and had to be kept in mind.  With less than a week to prepare a response, Adam Leitman Bailey, P.C. snapped into action. 

THE BOARD RESPONDS  

 It was clear at the outset that the petitioners faced a daunting hurdle. The shareholders were challenging the Board’s business judgment as to how to manage the corporation.  Under New York law the “business judgment rule” provides that so long as corporate directors have not breached their fiduciary obligations to the corporation they serve, a court may not question their judgment, even if the results demonstrated that the directors’ decision was unwise.  Another obstacle was the fact that the petitioners had not demonstrated that, even if they were correct, their grievances warranted injunctive relief, rather than monetary damages.  Nor did it appear that the shareholders could demonstrate they would be irreparably harmed if they complied with the House Rules.   

However, one challenge the Adam Leitman Bailey, P.C. team faced was locating important documents, which had to be collected from a series of different entities, given that the dispute required rapidly understanding the history of the building and amendments to the governing documents, and nearly three decades had passed since the Corporation had first issued an offering plan.  Nonetheless, Adam Leitman Bailey, P.C. quickly tracked down the materials and analyzed them.  

 The investigation revealed that the Corporation’s offering plan had expressly disclosed that units did not come with parking or driveway access.  One might think that ended the story, but the situation was more complicated.  An amendment to the proprietary lease stated that the artist’s unit included a portion of the parking area and permitted the owner to install appropriate fencing.  However, the litigation team also uncovered earlier House Rules that expressly reserved the Board’s right to control access to the building, and restricted parking and loading/unloading.  In addition, research revealed that the way the shareholder was using the parking spaces exposed the Corporation to civil and even criminal liability, because the number of vehicles the area was capable of holding was at least five, thus requiring approval and licensing from city agencies.  In the space of a few days, the Adam Leitman Bailey, P.C. team drafted and finalized opposition papers, and prepared for oral argument. 

THE COURT HEARS ARGUMENT, AND RULES FROM THE BENCH FOR THE BOARD 

The oral argument was held only a few days after the opposition was filed, with Mr. Glatter arguing for the Corporation and the Board.  The shareholders’ attorney, a highly experienced and competent real estate litigator, presented her case to the Court, arguing that the Board had acted beyond its remit in enacting the new house rules, claiming that the Board was allegedly persecuting the shareholders for ulterior motives, and argued that the nature of the shareholders’ work purportedly necessitated 24/7/36 access on demand to the building’s elevators and loading areas.  The shareholders further complained that they had been “ousted” from the Board.  And the shareholders insisted that the area in question was not capable of holding five vehicles. 

Mr. Glatter next addressed the Court and walked in the provision of the governing documents, explaining that adopting the petitioners’ arguments would effectively eliminate contractual provisions that had been disclosed to the owners and that they had agreed to years earlier which restricted their parking rights.  Pointing out the demanding standards that governed the petitioners’ request – one of “clear and convincing evidence”, the highest possible standard in a civil lawsuit –  once stripped of its caustic rhetoric, the shareholders’ argument reduced to complaints about convenience, noting that very few businesses, including large, august institutions, did not require scheduling and coordination with building management in respect of sending and receiving deliveries.  And not only was the evidentiary standard high, but the shareholders’ complaint attacked the board’s business judgment, and whatever subjective criticisms the shareholders had, they did not come close to overcoming the hurdle the business judgment rule imposed.   

Mr. Glatter also explained to the Court how the litigation team had calculated the number of cars the area could hold and noted that for all their accusations of having been unfairly “ousted” from the Board, the shareholders had not, and could not, demonstrate that the current Board had been elected illegitimately.  Furthermore, even if one incorrectly assumed the shareholders’ claims had merit, the claimed harm was not a candidate for injunctive relief. Mr. Glatter summarized why all the evidence the petitioners identified – including temporary certificates of occupancy, the governing documents, and past citations, failed to support the shareholders’ demands.  Finally, he observed that if anyone had the right to exploit the parking area section for profit, it was the Corporation, not the shareholder, and in fact, the shareholder was not only violating the law in operating an unlicensed parking facility, but had usurped an opportunity belonging to the Corporation, and had done so even as a Board director and officer.  

It is unusual for a Court to rule from the bench, but in this case, once the argument was completed, the Court announced it was prepared to rule.  It was evident the Court had carefully reviewed the papers, recognized the issues, and had closely followed the arguments.  The Court concluded that the shareholders had failed to satisfy their demanding burden, observing that at the day’s end, their grievances summed up to complaining about some inconveniences.  The Court agreed that injunctive relief was inappropriate, and also held that the petitioners failed to demonstrate that the governing documents unambiguously supported their proffered interpretation.  The ruling was a resounding victory for the Corporation, the Board, and Adam Leitman Bailey, P.C. 

The dispute is not over, and the shareholders have since filed an amended petition that notably no longer includes any claims regarding the deposit refund, and now asserts claims for “prescriptive easement”, a doctrine similar to adverse possession but focusing on use, rather than ownership.  Adam Leitman Bailey, P.C.’s work is not done. But in defeating the shareholders’ efforts to be awarded injunctive relief at the lawsuit’s genesis, Adam Leitman Bailey, P.C. protected its clients from very negative outcomes for the case’s pendency.  As legendary grandmaster David Bronstein once stated, “the most powerful weapon in chess is to have the next move.” 

The clients are represented by Adam Leitman Bailey, John M. Desiderio, and Joshua D. Glatter, with assistance from Stuart A. Klein, all attorneys at Adam Leitman Bailey, P.C. Mr. Glatter argued before the Court on behalf of the clients.

Heroes Among Men: How Adam Leitman Bailey, P.C. Saved Lives of the Lifesaving

New York City is known for its towering buildings, visible from all corners of the city. The maze of sky-high buildings is home to offices, schools, residences and thousands of important companies. Not all that glitters, as they say, is gold, though.

Among the older buildings—structural legacies that rise above the bustling streets—new construction is quite literally around the corner. A city that bears the weight of thousands of structures still has a seemingly endless capacity for new buildings. But sometimes, new construction can get messy and even dangerous.

When Adam Leitman Bailey, P.C. got a call from a company that their building was in dangerdue to construction from a large developer directly next door, the firm and Adam Leitman Bailey himself did what they do best—put on their capes and leaped to action.

A LIFE-SAVING COMPANY IN DANGER

The business, a 911 Center and Fortune 500 company, held its office in one of New York’s many buildings—and had for years—when the disruption began. The company, which must remain nameless for privacy, performs daily life-saving work. They also relied on the assurance that they themselves were safe in the building from which they functioned.

Right beside their building, a developer began construction on a tower that would house residences and a shopping center. Due to the sheer size and scope of the new construction, the existing building and thus, the 911 Center were put in jeopardy.

Cracks in the foundation erupted, traversing the walls and reaching far into the Center’s building. Bailey’s firm quickly jumped into action, and it wasn’t long before the workers had to leave for their safety while the building was properly inspected.

Bailey’s firm called in professional experts to evaluate the building and moved to put an immediate stop to the developer’s actions. The firm had the building assessed and the damage estimated so that the proper care could be enacted to reinforce the building, mitigating any risks of damage and destruction.

A team of experts, including lawyers from the firm, representatives from the Center, engineers, firm-selected structural and geotechnical engineers, as well as architects, went to work inspecting the building and documenting all damage, cracks and further destruction. What they found was extensive, and the developer was asked to halt all further construction. That request, though, was wholly ignored.

BROKEN BUILDINGS, BROKEN LAWS

The 911 Center had previously entered into a license agreement with the new building developer, which, required under the New York City Buildings Code, put temporary protections in place that would halt construction until deemed safe.

Despite the agreement, including a physical plain paper copy listing the requirements, the developer proceeded with construction. As the team of experts investigated the building, Bailey and his firm went into legal battle. They reviewed the agreement, finding several contract breaches, not the least of which included the continued construction during the investigation, which caused further damage to the Center’s building.

Bailey’s firm immediately called for a cease and desist until the building was made safe again, even contacting the New York City Department of Buildings Commissioner to explain the developer’s blatant building code violations and negligence. Bailey explained that the developer’s actions, not only illegal, posed incredible risk and forced workers into hazardous, life-threatening conditions. Bailey supplied the NYC Department of Buildings with thorough documentation from his team of experts that highlighted the extensive damage and the developer’s non-complicity with even the most minor of building codes that would have protected the Center’s building.

Because of Bailey’s efforts, the NYC Department of Buildings performed its own inspection, resulting in an immediate stop issuance to the developer, forcing all construction and excavation near or around the Center’s building to cease. Following this, the Department flagged the entire project for an audit, further forcing scrutiny onto the developer and his plans and methods for the project.

It was big win for Bailey and his team, but more work was still to be done.

A MEASURE OF SUCCESS

Now that construction—and the developer—were properly stopped, Bailey’s team of experts worked with the representatives from the Center to go a step further with the installation of monitoring devices. These devices were put in place to continue gauging the safety of the building and ensure that the developer’s work would not cause the building any further foundational distress.

These devices assisted the engineers while they and Bailey’s team worked together to steady the building and restore its structural safety, including soil stabilization. They were also able to meet directly with the developer of the new building to further evaluate the new construction and advise against particular actions that may impact the Center’s building.

In the end, not only was the 911 Center’s building restored of its structural security and safeguarded against future damage, allowing the employees to get back to the important work they did daily, but the developer was eventually able to resume construction following the NYC Department of Building rules.

OUT OF HARM’S WAY

Adam Leitman Bailey, attorney and owner of the firm Adam Leitman Bailey, P.C., worked with his team of experts, including lawyers Joanna C. Peck and Rachel Sigmund McGinley, to represent the Center and essentially save the building.

Their tireless commitment to their clients not only provided life-saving workers with life-saving solutions but also kept a developer in line with the laws and forged a safe path forward for all involved.

The lawyers at Adam Leitman Bailey, P.C. fight for their clients as any heroes would—with determination, tenacity and the hope that their work can make a difference.

Read the original article on Best Lawyers here.

No Time to Waste: Adam Leitman Bailey, P.C. Expeditiously Stops Condominium Board From Forcing Impermissible Conditions Upon Right of First Refusal Waiver’s Issuance

French philosopher Simone de Beauvoir famously remarked “[t]here is something in the New York air that makes sleep useless.”  That maxim is particularly resonant in the intense world of real estate disputes, especially when a condominium or coop’s board of managers engages in obstructionist behavior that, if not swiftly addressed, can quickly decimate a high-value sale.  A recent engagement handled by Adam Leitman Bailey, P.C.’s senior litigation team demonstrates how the firm’s ability to deploy quickly and aggressively saved a transaction that would have otherwise forced our clients to go back to an expensive and burdensome “square one” in connection with their apartment’s sale. 

THE ENGAGEMENT 

Adam Leitman Bailey, P.C. was engaged by a married couple in Manhattan who had contracted to sell their condominium apartment for several million dollars.  The buyer was an existing rental tenant in the building, who had already obtained a loan commitment to purchase the property.  The buyer had locked in their mortgage’s interest rate, but the clock was ticking on the rate’s expiration.  Everything was lined up to close the sale. The only pending item was an action by the condo board to waive their “Right of First Refusal”, which grants the board an option to acquire a unit upon which an offer has been made for the condo association itself.  Here, though, the board had been baselessly dragging its heels with respect to exercising or waiving its right of first refusal, and then demanded a condition on the waiver it was not permitted to make in the form of a separately funded escrow.  The buyer’s patience was nearly exhausted, and he had no obligation to agree to that term. The sale was in peril.  Adam Leitman Bailey, P.C. had to move fast. 

THE RACE IS ON  

Adam Leitman Bailey, P.C. was retained late on a Thursday afternoon by the sellers, who believed the board was unreasonably and inexplicably dragging its collective feet in issuing the Right of First Refusal Waiver. The buyer was becoming understandably impatient, and the sellers reasonably feared the board would continue to “slow play” matters until the buyer, in sheer, perfectly justifiable frustration, canceled the deal.  The Adam Leitman Bailey, P.C. litigation team, consisting of managing partner Adam Leitman Bailey, Real Estate Litigation Department head John M. Desiderio, and Real Estate Litigation partner Joshua D. Glatter snapped into action. They reviewed the sale contract and confirmed that the buyer had no obligation to remain bound to the deal if the Right of First Refusal Waiver did not issue, and reviewed prior correspondence between their clients’ transactional counsel and the board’s managing agent to evaluate the current state of play. Alarmingly, the board was taking the position that the buyer had supposedly failed to submit a complete application, and therefore – according to the managing agent – the time for the board to exercise its Right of First Refusal had not accrued.  But Adam Leitman Bailey, P.C. needed some more information to determine the correct strategy and was awaiting copies of the governing documents. 

ADAM LEITMAN BAILEY, P.C. FIRES THE FIRST SHOT ACROSS THE BOARD’S BOW 

The next morning, Friday, Adam Leitman Bailey, P.C. learned that the board intended to condition its Right of First Refusal Waiver on the buyer escrowing thousands of dollars of funds in what, for all practical purposes, would be a security deposit for the board. Adam Leitman Bailey, P.C. promptly reviewed the condo’s by-laws and determined that they did not provide the board any such right. But the situation called for a careful approach; the clients’ goal was to consummate their apartment’s sale, not get embroiled in litigation of indeterminate length against, literally, their neighbors in the building. 

Accordingly, that same day, Adam Leitman Bailey, P.C first expeditiously emailed a letter to the Board’s managing agent (who the board had designated to communicate on this issue) setting forth Adam Leitman Bailey, P.C.’s position and warning the board to not demand an escrow or any other condition on the Right of First Refusal Waiver not permitted under the governing documents. Knowing that the board would claim that conditioning the Right of First Refusal Waiver on an escrow was a valid exercise of its business judgment, Adam Leitman Bailey, P.C. pre-empted that argument.  Adam Leitman Bailey, P.C. directed the board’s attention to long-standing jurisprudence demonstrating that the board’s demand would not be regarded by a court as merely a request for information to enable the board to vet the question of whether to exercise its Right of First Refusal, but was instead an improper condition precedent the board had no right to demand under the current governing documents. Adam Leitman Bailey, P.C. also warned the board that its foot-dragging would not be tolerated any further, that its information demands appeared superfluous and pretextual, and that its conduct threatened to tank the deal and cause the buyer to walk away.   

 Adam Leitman Bailey, P.C. made clear that, although the goal was to simply close the transaction and avoid a fight, Adam Leitman Bailey, P.C. would have no qualms about initiating formal action.  Adam Leitman Bailey, P.C. continued to gather documents and prepare for its next move while awaiting the board’s response. 

THE COMPLAINT IS RAPIDLY PREPARED  

The weekend came and went without any word from the board.  On Monday morning, Adam Leitman Bailey, P.C. learned that, notwithstanding its letter, the board had sent the buyer’s attorney a draft escrow agreement, which made clear that it was conditioning the Right of First Refusal Waiver on the escrow.  The draft imposed the escrow on the buyer for the life of his ownership, and while the draft permitted the buyer to apply in two years for the right to remove the condition and have the funds returned to him, it granted the board almost unfettered discretion to refuse that application, and allowed it to further probe his finances and circumstances in the future. 

The board and its agents had either ignored Adam Leitman Bailey, P.C.’s litigation, or doubted Adam Leitman Bailey, P.C.’s ability to expeditiously assemble a hard-hitting complaint.  There was no time to waste.  In the space of a single day, the Adam Leitman Bailey, P.C. team drafted and finalized a detailed, nearly 30-page complaint that summarized the governing documents’ metes and bounds, detailed the board’s obstructionist conduct, and explained why imposing an escrow condition upon the Right of First Refusal was impermissible. Adam Leitman Bailey, P.C. was prepared to bring 5 claims against the board and its individual directors: a declaratory judgment (asking the Court to declare the board’s conduct was improper and requiring it to issue a  Right of First Refusal), breach of the board’s various fiduciary duties, negligence, breach of contract (i.e. – the board was violating the terms of the governing documents), and tortious interference with contract (i.e. – the board was illegally interfering with the contract running between the sellers and buyer). 

THE BOARD THROWS IN THE TOWEL 

The complaint was filed the next morning, Tuesday. Virtually contemporaneous with that filing, Adam Leitman Bailey, P.C. was contacted by the board’s attorney, a lawyer who well knew that Adam Leitman Bailey, P.C. does not bluff, and was fully capable of litigating the matter aggressively and efficiently. In the space of only a few communications, the board agreed to withdraw its escrow demand, and asked that the closing be scheduled as soon as possible. Adam Leitman Bailey, P.C. in turn agreed to voluntarily dismiss the lawsuit once the closing occurred.  As a result of the firm’s speedy action, Adam Leitman Bailey, P.C.’s clients have avoided significant legal fees and costs, along with the inexorable headaches and burdens litigation carries even under the best circumstances. 

The clients were represented by Adam Leitman Bailey, John M. Desiderio, and Joshua D. Glatter of Adam Leitman Bailey, P.C.

Interview with Author – Adam Leitman Bailey

Author Bio:
Adam Leitman Bailey, has, throughout his career, established himself as a connoisseur of real estate. For the New York Times, Wall Street Journal, and several other national media outlets, Bailey frequently contributes his real estate expertise and advice.

As an owner of several properties and father of two children, Adam Leitman Bailey was inspired – and uniquely placed – to write about homes in a way that is relatable to real estate professionals, first-time home buyers, and young minds.

To-date, Home has won a number of awards, including the Literary Classics International Book Award, the Mom’s Choice Award, and the eLit Book Award. Bailey’s first book, a guide for first-time homebuyers entitled Finding the Uncommon Deal, was also a New York Times Bestseller and winner of the National Association of Real Estate Editors “Best First Time Author Award.”

A lifetime believer in giving back to the community and a fundamental leader in supporting and educating children within the community, Adam Leitman Bailey has helped provide college scholarships, facilitate youth mentoring, combat bullying, provide paid internships, giving history tours and inspirational speeches at schools as well as supporting hospital research into tackling life threatening children’s illnesses and providing funds to cure children’s’ neurological diseases. In 2017, he was also named Humanitarian of the Year by a local high school for his charitable efforts. 100% of the proceeds from his latest children’s book, Home, will go to the Building Foundations and Dreams, the charity he founded that strives to assist underserved students of all ages in pursuing their dreams.

What inspires you to write?
I have a compelling need to teach and help others — maybe because my parents, step-parents, sisters and brother-in laws are teachers. So when my first book, Finding The Uncommon Deal became a hit, won awards, and made the best seller lists — and most importantly, when I received the hundreds of emails and contacts from people who benefited from the book — I became even more hooked on writing. I am also a columnist for several law publications and as a real estate law and litigator, we do a lot of persuasive writing to help our clients seek justice.

Tell us about your writing process.
Writing is so fulfilling and gratifying and each book I consider another child. But it is a slow, difficult, and even lonely path to success, so do not do it for money. Do it because you want to help others by telling your story or because you have a compelling story that you need to get out there and will love telling. It should be something that you do not care becomes a best seller or wins awards and recognition. For HOME, I know I have it 100 percent; I am proud of it and I know that each kid I read it to or hear feedback from has loved it. When or if the awards come in, I will be the happiest person on earth, but that is not why I wrote the book.

Who are your favorite authors?
By the age of 47 or 48 (depending on which birth certificate you rely on), Alexander Hamilton became the most important American and New Yorker in our history. Since I was young I have striven to be like Alexander. I am now 48. He created the New York Post, Bank of New York, national dollar… He was a leader in fighting in the Revolutionary War, the main author of articles supporting the Constitution… and so much more. AND he also came from humble beginnings and was rejected from the school of his choice, but never gave up and kept producing and producing. I hope to one day have a legacy that can resemble in even the smallest way, Mr. Hamilton’s.

How did you decide how to publish your books?
I’ve had my book, Finding the Uncommon Deal published by a legitimate publishing company, Wiley & Sons, but with HOME i decided to self-publish so i could put all of the proceeds towards my charity, Building Foundations and Dreams.

What do you think about the future of book publishing?
I believe it is an open field for many to make a great living off of. It may move more toward a digital trend though rather than print.

What genres do you write?
Home Buying Advice, Children’s Picture Books

What formats are your books in?
eBook, Print

Website(s)
Adam Leitman Bailey Home Page Link
Follow Adam Leitman Bailey On Amazon

 

Original Article 

Adam Leitman Bailey Saves Upper East Cooperative From Forced NYU Combination With Neighboring University Building

To fall in love with where you live is one of life’s grandest gestures, finding peace and passion in the places you call home. For residents of New York, the city that glimmers day and night, it’s hard not to cherish the homes made among the glittering buildings. New York is a place so uniquely other, a city with historical roots that run deep for those already living there and those who seek it out.

Bordering 5th Avenue on the 70s between the towering residences are some of the most prestigious and profitable businesses, organizations and institutions of higher education. These establishments usually usher in significant change—and throngs of people. And while positive enhancement and growth to the cityscape are cherished, unnecessary destruction can be harrowing, especially for those who live there. When big organizations and schools spanning several city blocks threaten the harmony and structural integrity of New York’s most beloved buildings, legal action becomes the primary—sometimes the only—plan of recourse.

Perhaps no one is more acutely aware of just how special New York real estate is than long-time resident and powerhouse real estate lawyer Adam Leitman Bailey. With an office that skims the clouds in a Battery Park high-rise, Bailey has spent the last several decades working for New Yorkers to ensure that they remain defended against those who try to take their peace—and property.

Between the Brownstones

Real estate developer and decades-long resident of New York City Marius Fortelni bought his city apartment in the late 1980s when it was converted from a rental to a condominium. The apartment, situated in one of New York’s most notable Brownstone buildings bordering 5th Avenue on the 70s, was constructed by famed architect C.P.H. Gilbert and bore the signet gargoyles upon its entrance. Its opulence and history were part of its charm, and for that, Fortelni loved living in the building. He even became the cooperative building president upon moving in.

Fortelni’s building resided on one of New York’s most iconic spots—78th Street. Known for its history of luxury, both among the homes themselves and the residents who inhabited them, the Upper East Side’s 78th Street in Manhattan remains among the biggest jewels in America’s crown city. For it’s on this street that some of the country’s most affluent families have called home, and it was here that Fortelni sought to protect his building, both for himself and his fellow residents.

Although Fortelni’s building was not landmarked, it resided in a landmark district with its very famous neighbor, the James Duke building, owned and operated by New York University (NYU) for its Institute of Fine Arts. Chartered in 1831, NYU has buildings peppered in and around various blocks of the city. When Fortelni’s building was originally converted to condominiums, the fine print of that transaction conceded to several entry points of the building, even granting the institution access to the lower level and basement. Famed Real Estate developer Sheldon Solow has also donated a unit on the ground floor of the cooperative to NYU.

NYU eventually sought to put in a breezeway between Fortelni’s building and the NYU building to create an entrance so that students might pass between them as they traveled around campus. The breezeway would run directly into the building, opening into the building’s basement and creating additional points of entry. This would, essentially, gut a hole into Fortelni’s beautiful, preserved building. It would also allow for several hundred people to walk through the lower level between buildings, herding heavy noise and foot traffic right to the residents’ doorsteps. As Fortelni described it, it would also force the residents to surrender control over who could enter their building, their home. To say the least, it was an unwelcome and unfair intrusion that none had anticipated, threatening the harmony—and property value—of their beloved building.

Fortelni, protective of the building and its residents, sought to rectify this, discussing with several law firms his options. He was told by all that he was “wasting his time” and that “the language is written in such a way that it gives them [NYU] all the rights.” The lawyers with whom he spoke believed he had little chance—less than 1%, in fact—of winning such a litigious case against a powerful institution.

But then, a friend of Fortelni mentioned Adam Leitman Bailey, P.C.: “You know what? There’s this one law firm that probably can help you, even though your case seems to be hopeless.” Fortelni took a chance and reached out, and rather than watching a construction crew pave a new path through his building, Fortelni worked with Bailey to pave a different path—to victory.

Bailey’s Brilliant Battle Back

Fortelni describes Bailey as one of those rare people who is simply brilliant and takes different approaches to problem-solving. He says every field has a few of them, those unique minds who can look at a situation, dig into it, turn it on its head and produce an unexpected solution.

Bailey and Fortelni sat down to again pore over the text that originally granted NYU the rights to access the Brownstone. This same text, which several lawyers had declared to be without any loopholes, reminded Bailey of something pivotal to the entire ordeal: the buildings involved were classic, famous, landmark feats of architecture, and NYU was proposing—quite literally—a blight on the foundation.

Bailey knew, from years of living and working in New York real estate, that the historical value was tantamount to the monetary value of these buildings, and NYU’s renovation plans would drastically compromise both.

Bailey got to work doing one of the things he does best—research. He dug through arsenals of paperwork—about New York, the history of the buildings, the Brownstones on 78th Street—and uncovered important facts about each that had long lay dormant.

The Hearings

NYU maintained that the bylaws allowed the owner of the commercial ground floor condominium to make alterations without the board’s consent, according to the New York Times. NYU representatives appeared before the area’s Community Board 8 and presented the plans, which were met with a hostile reception by building residents and the community. NYU representatives continued that, “The addition of the breezeway was included in large part to reduce the traffic in the main entrance in order to minimize impact to the condo residents.” Bailey appeared before Community Board 8, demonstrating how NYU had falsely represented itself in the application to the Landmarks Preservation Commission and never received permission from the cooperative to sign its name to any application.

As a result, Landmarks formally withdrew NYU’s application until NYU followed the proper protocols in receiving permission to do the exterior construction and sign the appropriate name on the application. To this day this has never been achieved. “NYU knows this will ruin the value of the building and then they can capture the rest of it cheap, which is what they really want. How can you take the Mona Lisa and edit it, so it fits in with a Picasso?” Bailey expressed to the Community Board. He then discussed the effect of those changes on the small cooperative next door and introduced expert studies on the foot traffic and potential sound implications of such an instruction. The Community Board sided with Adam Leitman Bailey and the small cooperative. About this case, The New York Times noted:

“The community board voted 41-1 to disapprove the plans. ‘The presentation information did not fully illustrate the proposed changes,’ the board stated in a letter to the LPC dated May 22. The letter notes that ‘the materials are not appropriate to the existing buildings’ and that the construction would disturb ‘the original fabric’ of the two buildings.”

Bailey achieved the similar results in State Supreme Court. Before the Community Board, the Landmark Association, a well-known judge and a large, competitive law firm with some of the best landmark attorneys in the world, Bailey presented his findings. Language from corporate documents supported his case. Bailey gave them all powerful examples, outlining why we have these landmark buildings and how vital they are not only to the city held so dear but to its residents and organizations who represent New Yorkers. The Landmark Association and the Community Board realized what a detriment NYU’s plans were to the buildings, to the city, to the people who lived there and to the legacy of 78th Street. Bailey’s representation was, as Fortelni described it, “a simple and powerful approach” that won their case.

Tenacity and Triumph

Adam Leitman Bailey has built his career, his law firm and his reputation on his fearlessness. Where others back down, he steps up, forging creative solutions and keeping his focus on the success of his clients. Fortelni attests to this strength after working with him on this case. “Honestly, I don’t think he has any weaknesses. You know, I think that man is made to do what he’s supposed to do, and he’s just set apart. There’re always some people in some fields, in sports, whatever it is, that are extraordinary. I think he really gets into the case, thinks outside the box, finds a path no matter what, does not give up, has a tenacity that is amazing. I think he doesn’t sleep at night because I think he works seven days a week, 24/7 for you. If you really have a difficult case, any case really, you want to make sure that you’re on the winning side, and the way Adam approaches any kind of deals that I’ve seen, any kind of agreements, he finds a path. I think if he would have lived a long time ago, he would have been Caesar in an army because he doesn’t give up, he’s the only one I would recommend.”

Indeed, Bailey is cut from a different cloth, with a knack for pulling back the veil and defeating what others deem unbeatable. “He doesn’t give up. That tenacity to say no matter what, I’m going to find a path to victory. That is something that is rare.”

Read the original article here.

2022 Client Highlight Reel for Adam Leitman Bailey

How To Run a Board Meeting

Adam Leitman Bailey explains how using Robert’s Rules of Order can assist with effective and productive board meetings in real estate matters.

“The holding of assemblies of the elders, fighting men, or people of a tribe, community, or city to make decisions or render opinion on important matters is doubtless a custom older than history,” notes Robert’s Rules of Order, Newly Revised (“Robert’s Rules”). This resulted in the need for rules of procedures to organize and obtain results.

Using a simplified version of Robert’s Rules, cooperative and condominium boards of directors and managers have been able to run effective, efficient and productive board meetings that assist, run and decide important and unimportant matters for their buildings.

The most important objectives of Robert’s Rules are (a) to set goals or an agenda for the board meeting, (b) to keep the meeting streamlined and on topic, (c) to allow everyone to have input without allowing one or more board members to highjack the meeting, (d) to ensure that there is discussion of important matters and (e) that votes are cast to decide policies of the cooperative or condominium that the board deems necessary and appropriate to the interests of the cooperative or condominium building and its shareholders or unit owners.

The Agenda

To keep everyone focused and tempers restrained, I have always suggested that the agenda be long enough to get results, but short enough to achieve the silent goal of the agenda—a productive meeting lasting no more than an hour. I have always noticed, in the thousands of meetings I have attended in my career, that those meetings where bread is broken are not only more productive but result in better behavior. I have also noticed that in a few cases food can be a distraction. I have seen boards provide pizza or desserts at every meeting, and many more buildings have no food at all.

The agenda should be prepared in advance, and board members should be prepared from recommendations submitted by all board members, the building’s manager/super and compiled by a designated agent or managing agent who makes it into a workable document. I suggest putting the most important topics earlier in the meeting, but if any topic is likely to require prolonged discussion, to place topics that will take very little time before the one requiring prolonged discussion.

Making a Motion: Step 1 in Attempting to Vote

The goal of a motion is to have an idea or item that a board member wants/decided/agreed to by a majority (51%) of the board. The board member makes a motion by stating I make a motion for [fill in the blank].

The Second

If the motion is not seconded or if another person does not vote to support or agree with the motion being proposed, the motion does not go forward. The second can be made by voice, “I second the motion” or by raising your hand after someone says “is there a second for the motion?”

Discussion

Once the motion is seconded, the floor or meeting is open for discussion. The person running the meeting will call on persons raising their hand in turn to speak one at a time. Once everyone has a turn to speak that wants to speak, a vote on the motion is taken.

Calling A Vote

Any board member can move to end discussion and/or call a vote on the motion at any time. If the deflation or motion to end the discussion is challenged, then a formal motion must be made to end discussion on the motion and to call a vote on the motion. The board member making this motion cannot start a new discussion or do anything else other than vote to end discussion and call a vote on the current motion. Once seconded to end the discussion, the voting to end discussion begins.

If a majority vote is not received or, more frequently, if the person running the meeting does not get a unanimous “all in favor of calling a vote on the motion,” then discussion shall continue until “we have a majority ready to vote up or down or yes or no on the motion, or until an amendment to the motion is made, or a motion to deal with this motion at a subsequent meeting once more information is gained, is made.”

Voting

The person running the meeting can call for an oral vote or a paper ballot where everyone votes at once. If a board member wants the votes in the minutes and recorded, an objection may be made, and an alternative voting means will be adopted. If there is a debate on which way to vote, a motion must be made on the voting protocol, and a majority vote will decide how voting will take place—usually raising a hand, roll call, voice voting or private ballots. In all cases, majority vote or one more than half wins, and the action voted on passes.

Amending a Motion

Many times, board members agree with the decision or action to be taken by the building and board but desire to change the wording of the motion or add something to the original motion that may have been forgotten or that strengthens the motion. The amended motion follows the same path as the path taken when making a motion, and the person in charge of the meeting (or “Chair”) declares “making a motion to amend the motion to add… Is there a second…” And then the discussion leads to a vote on the proposed amendment.

Point of Order

One of the most essential rules for a well-run meeting is that every person speaks uninterrupted. However, Robert’s Rules provide that when a particular Robert’s Rule is not being followed, a speaker can be interrupted. That person interrupting the speaker must declare “Point of Order,” and the room freezes, and the person declaring “Point of Order” obtains the right to speak and explain how the current discussion at the meeting is being conducted in a manner that is in violation of a particular Robert’s Rule. The Chair then either agrees with the Point of Order and halts the discussion or rejects the Point of Order by declaring the objector “out of order” and allows the discussion to continue.

Adjourning the Meeting

Most votes to adjourn the meeting are unanimous and called by the person running the meaning, by saying “all in favor of adjourning the meeting,” and everyone usually answers “I.” However, sometimes board members have one more topic that was not addressed and deemed important which they want to be discussed by the board. In every meeting I have ever attended, that board member gets an audience, but the meeting may nevertheless be adjourned and that topic handled at another time or not at all. Sometimes, however, that new last topic leads to significant debate and important decision making.

Point of Information

A person may rise to offer information that is considered necessary for the group. This provision is not used to offer debate.

Right to Speak and Present

The moderator of the meeting must give every member the same opportunities to present and speak without favoring any one board member. A person who has not spoken gets precedence in speaking before board members who have already spoken.

When a group agrees on a set of rules to follow, and they are followed every time, year after year, decade after decade, you trust that those rules and the resulting process engendered by those rules will work to help your meetings run smoothly. In my experience, in most cases, when a person running the meeting chose to not follow a Robert’s Rules format, what then occurred was what would happen if that person were thrown a ball in a game he/she was playing for the first time without knowing what was happening. But, when followed, Robert’s Rules works, and they have helped thousands of buildings to get results in helping their buildings in meeting their goals and tackling their problems, and in seeking answers and solutions to the tasks before them. The danger occurs when the rules are amended or shortened, like in the book “Animal Farm.” Once a meeting does not have a set of rules to follow, usually one or two board members are able to highjack the building, and that is when problems eventually start occurring. I have not seen any alternative to some form of Robert’s Rules for Cooperatives and Condominiums, and for almost three decades, board meetings are running well—mostly because of the dedicated men and woman serving to make their buildings better than how their buildings were run before they were on the board.

“Adam Leitman Bailey is brilliant…Adam doesn’t give up, he goes to war for you.”

The Wolf Near Wall Street

New York City real estate: its reputation proceeds itself, and beyond the prices, availability and competition that surround it, there also lies a lot of red tape.

Especially contentious are shared real estate ventures and the often-combative circumstances that arise when multiple parties are involved.

In this particular case, when one property owner prepared to sell their portion of shared real estate, the other tenants put forth their best efforts to circumvent signing the seller agreement. Bribery, extortion and monetary demands from the other property owners turned a cut-and-dry sell into a dispute with an encroaching expiration date.

That’s when the seller turned to Adam Leitman Bailey, P.C., a powerhouse New York City law firm with a veteran real estate lawyer and area native at the helm.

ADAM LEITMAN BAILEY P.C.

For over two decades, Adam Leitman Bailey has owned and operated his Battery Park law firm bearing his name, Adam Leitman Bailey, P.C. In that time, he’s participated in some of New York’s most high-profile, groundbreaking real estate legal proceedings and built a law firm equipped with the most talented lawyers and professionals.

When sitting down with Bailey, he waves off discussing the accreditations and years of accomplishments—of which there are many—that follow his career. His passion for real estate and the wins he’s secured along the way guide his career and enable him to continue pursuing victory for his clients.

It was the last two years, when the world was brought to a screeching halt and the city that never sleeps was forced to lie down, that Bailey stood unwavering in his workload. The clients and cases didn’t stop just because everything else had. While everyone else was grappling with a new normal, Bailey was flipping normal on its head.

Through creativity, ingenuity and outside-of-the-box thinking, Bailey used new tactics, pushed the limits of tried-and-true lawyering and went to work for clients who entrusted him with their most important legal dealings.

After talking with him, the man who has not only a passion for real estate law but a talent that he’s cultivated and nurtured through years of practice, we thought it best to let his work speak for itself.

WHAT’S OLD IS NEW

That phrase and the cyclical nature of the world remind us often that sometimes, the best way to solve a new problem is with an old solution.

That’s exactly what Adam Leitman Bailey did for a client in 2020. Digging deep into the archives of legal tactics from days past, Bailey was able to help a client file a 36-year-old document that was never officially recorded by the NYC Department of Finance.

The document, an easement that was entered into by four parties in 1986, was established to allow the owners to split a multi-building section of real estate in New York City into five separate legal subdivisions. The easement outlined, in part, that the property would have a passage accessible from all floors and stairwells adjoining a corridor that would lead through the yards of the property and to the rear of the buildings. The four parties agreed and signed all necessary legal documentation, with the exception of filing together with the NYC Department of Finance.

This wouldn’t become an issue until 2019, however, when one of the four original property owners entered into a Purchase and Sale of one of the five subdivided lots. The new buyer would not get approval from the lender “due to a cloudy title caused by an easement that supposedly had not been filed correctly.” Because of this, all parties postponed the closing date to give the seller time to clear up the issue.

The seller came together with the other three property owners and worked to update the easement but was met with resistance after introducing the updated easement agreement. At least one of the other owners made demands for changes to the agreement, which the seller believed to be a bribe to extort financial reimbursement, as it was known that the seller was under time constraints to complete the closing before a certain date.

It was then that the seller contacted Adam Leitman Bailey, P.C. Facing the unexpected difficulties in filing the amended agreement and bribery from the other owners involved, the seller needed advice and clarity.

The seller turned to the firm and Bailey himself, hoping that with the proper guidance and knowledge, they could forge a path forward.

And that’s just what they did—by going back in time.

THE FIRM’S FIRST COURSE OF ACTION

Initially, the solution seemed clear. The firm sought to simply file the nearly four-decade old easement in the present. Although this seemed like the straightforward resolution, time and technology soon became an obstacle.

Because the seller did not have the original signed document from 1986, only an electronic PDF of the easement, the seller’s transactional lawyer noted that the County Clerk and the New York City Automated City Register Information (ACRIS) would not accept the document. Aside from missing signatures, which were needed to accept the document according to ACRIS, the original document was also deemed necessary.

To some, this setback would have been a crucial misstep. To Bailey and his firm, it spurred the ingenuity and imaginative thinking that would propel them to success.

A SOLUTION UNVEILED

After more research by Bailey and the firm, they discovered two critical facts: First, the buyer’s title report did not specify that the unrecorded 1986 easement was an exception to the title insurance coverage. Second, and perhaps most vital to the case: according to New York common law, the PDF copy of the original document could, in fact, be filed and recorded as an “ancient mortgage doctrine.”

The PDF document met several sets of outlined criteria in the ancient mortgage doctrine, and using this information, Bailey and the firm were able to produce an affidavit that would be filed with the 1986 easement.

When both involved title companies still declined to file the easement with this new affidavit, attorneys and paralegals from Adam Leitman Bailey, P.C. worked together to file it themselves. They were met with many anticipated questions from the County Clerk, all of which the lawyers and staff expertly answered.

Persistence, innovation and a look back in time allowed the firm and Bailey himself to ultimately have the PDF version of the 1986 easement successfully filed with the NYC Register.

The work of Adam Leitman Bailey, John Desiderio, Andrew Jorges and Sophia Bule allowed the seller to finalize the transaction by the agreed upon closing date.

WHY IT MATTERS

Real estate law is a tricky business in all corners of the country, but New York City and its property owners can often harbor their own challenges that leave many unprepared, swindled and foregone to failure. This uncertainty requires knowledge and a deep understanding, not only of the issues, but of the labyrinth it often takes to reach a resolution.

In times of tumult and uncertainty, Adam Leitman Bailey continues to show tenacity and to fight with creativity, forward thinking and a focus on solutions that matter, for clients who matter more.

Read the original article here.

Advanced Real Estate Topics 2022 New York State Bar Association

In December 2022, Adam Leitman Bailey lectured for the New York State Bar Association CLE Program Advanced Real Estate Topics 2022 and handled the commercial real estate litigation section of the lecture.

Adam Leitman Bailey presented “A Key Commercial Leasing Litigation Update”.

“I reviewed every appellate case since the first day of COVID and, in my humble opinion, have analyzed the most important.” – Adam Leitman Bailey

Click here to view “A Key Commercial Leasing Litigation Update”.