2018 NY Slip Op 51958

Citation: 2018 NY Slip Op 51958
Jurisdiction: New York (state)
Source verification: cross_accepted_sealed
Original Source: https://www.nycourts.gov/reporter/3dseries/2018/2018_51958.htm ↗

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2017 complaint fails to allege facts demonstrating that any good faith negotiations were
conducted before plaintiffs resorted to litigation on this issue.

Although plaintiffs allege in the amended 2017 complaint that the Board's refusal to sign
various applications constituted a violation of paragraph 21 (a) of the proprietary lease, that
provision does not specifically refer to the lessor's obligation to sign any such applications.
Although the Holdover Case Agreement (¶ 3 [d]) provides that the Board would sign DOB
and Landmark Preservation Commission's applications, such obligation was contingent on the
Board's approval of Dogwood LLC's plans. Because the Board, according to the allegations in the
amended 2017 complaint, never reached the ultimate issue of whether to accept or reject
Dogwood LLC's plans, the demand for injunctive relief compelling the Board to execute various
documentation and applications is premature, devoid of merit, and is dismissed, along with the
balance of the fourth cause of action.

Breach of Fiduciary Duty

"The very concept of cooperative living entails a voluntary, shared control over rules,
maintenance and the composition of the community. . . . [A] shareholder-tenant voluntarily
agrees to submit to the authority of a cooperative board, and consequently the board 'may
significantly restrict the bundle of rights a property owner normally enjoys.' " 40 W. 67th St. v
Pullman, 100 NY2d 147, 158 (2003) (internal citation omitted). That said, a cooperative
corporation's board of directors owes a fiduciary duty to its shareholders. Stinner v
Epstein, 162 AD3d at 820-821. The board must act "within the scope of its authority and in
good faith," in furtherance of the cooperatives's legitimate purposes, and with loyalty for the