Lawsuits are an unfortunate, often expensive fact of life these days, and co-op and condo communities are not immune from seeing the inside of a courtroom, or at least a lawyer's office suite. An issue that arises between a resident and the board or between two or more residents can spiral out of control, wind up involving the managing agent, and end up in court. Then it becomes a battle of he-said/she-said until the lawsuit is over, a settlement is declared and it's back to building business as usual. Or is it?
Although it isn't currently listed alongside participating in active combat or shark-wrangling as the most stressful experience a person can have, being involved in a lawsuit is most certainly stressful. For the managing agent, it can temporarily supercede other building responsibilities as the manager tends to what is needed by the courts and attorneys. Lawsuits not only cause tension between the residents named in the litigation, but strain among those tenants who are not involved as each draws their own lines in the sand and chooses up sides. In some cases, lawsuits also cause financial damage, leading to additional worries and pressure for board, management, and residents alike. Even when it's over, it's sometimes not over; when the lawsuit is settled, management can be left dealing with lingering Hatfield and McCoy-type hostility among residents.
Like many stressful situations, however, managers (and boards, to a lesser degree) can take steps to resolve lawsuit stress in an efficient and less-stressful manner through notification, organization and communication.
The managing agent is usually first informed of a lawsuit through the super or resident and when they are, they should spring into action and notify their insurance carrier.
"Management should be apprised of all lawsuits," says David L. Berkey, a partner with the law firm of Gallet Dreyer & Berkey, LLP in Manhattan. "Often shareholder-versus-shareholder lawsuits are a result of issues that management should have been dealing with, such as noises, or leaks. If it's a shareholder-versus-building lawsuit, those also generally come about because the shareholder is not obtaining appropriate services, or because repairs have been requested and not made. Depending on the substance of the claim, management should be brought in immediately because you can [try to] diffuse the problem if management and the board resolve it together."