Despite the fact that most people would agree that discrimination is a bad thing, discrimination persists, which suggests either that existing laws against it are sometimes ignored, or that the legal definition of ‘discrimination’ isn’t always clear. Fortunately, when it comes to condos, co-ops and HOAs there are laws at the federal, state and local levels to guide boards in making decisions that will steer them clear of the ethical breach that discriminatory practices represent, as well as the legal penalties that can follow.
And those penalties can be high indeed. In New York City, a pair of legal decisions around the turn of the last century—specifically, the federal Broome v. Biondi et al and the New York State Biondi vs. Beekman Hill House Apartment Corporation—revolving around a finding of race-based discrimination against prospective co-op tenants resulted in board members learning that they could be held individually liable for decisions that violate the law. The case was significant enough that the decisions around it had reverberations that affect how discrimination law is discussed today.
A Bit on Biondi
In short, the Broome v. Biondi decision were the result of lawsuits brought against both the cooperative corporation and certain individual board members of Beekman Hill House at 425 East 51st Street in Manhattan in the late 1990s. Gregory and Shannon Broome, two young attorneys, were seeking to sublet an apartment, and found their ideal unit in Beekman Hill House. The process appeared to be going smoothly until the board found out that Mr. Broome was black. According to testimony, the tone of the board’s communications with the Broomes immediately cooled, and after a contentious meeting at which Mr. Broome was accused of being ‘angry, aggressive, difficult, pushy,’ the Broomes’ application was denied. The couple fought back, bringing suit against Beekman Hill House and the board members who voted to deny their sublet. The case went to trial, and a federal jury ultimately found in the Broomes’ favor, agreeing that the board members named in the suit had indeed discriminated against them in denying their sublet application. The Broomes were awarded $640,000, nearly two-thirds of which was to come from the pockets of the board members as punitive damages. Nicholas Biondi, the president of the co-op, then sued the co-op to recoup his losses, but a state court denied him even that, determining that board members can be held individually liable for discriminatory transgressions.
According to the New York Times’ May 14, 1997 account of the decision, “In returning its verdict on May 6, the jury found against the co-op as well as against the five directors who had voted to deny the sublet application. In granting punitive damages to the Broomes, the jury awarded $150,000 against the co-op, $125,000 against Mr. Biondi, $60,000 against...another board member, and $25,000 each” against three other board members. “The jury also awarded Mrs. Demou, the apartment owner, $107,000 in compensatory damages and $57,000 in punitive damages on her claim that the board had retaliated against her when she tried to stand up to it when it sought to deny the Broomes’ application.”
These decisions were a wake-up call to boards that had previously been unaware of—or insufficiently concerned about— the scrutiny they might find themselves under in regard to discriminatory practices. They’ve since had to tighten up interview practices and walk a fine line when vetting potential shareholders. And, while Biondi pertained specifically to discrimination on the basis of race, discrimination extends far and wide to areas including disability, gender, sexual preference, religion, and other factors. It’s imperative that boards stay abreast of the latest developments in regard to discrimination, lest they find themselves on the wrong side of both ethics and the law.