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 ↗

Related Parts of This Source

Full Text

1,733 chars

benefit of cooperative and its shareholders as a whole. Matter of Levandusky v One Fifth
Ave. Apt. Corp., 75 NY2d 530, 538-539 (1990). If a board acts in accordance with its
fiduciary duties, the "courts [as a general matter] will not substitute their judgment for the
board's." Id.

Nonetheless, because of the expansive powers afforded cooperative board members, a
potential for abuse exists through decision making that may smack of favoritism or is
discriminatory, arbitrary, and/or malicious. Fletcher v Dakota, Inc., 99 AD3d 43, 48 (1st Dept [*17]2012). Decision making tainted by such considerations is not
covered by the business judgment rule, which ordinarily protects inquiry into the actions of
cooperative board members. Id.; cf. Board of Mgrs. of Honto 88 Condominium v Red Apple Child Dev. Ctr.,
a Chinese Sch., 160 AD3d 580, 582 (1st Dept 2018) (board members protected by the
business judgment rule absent allegations of tortious acts outside of legitimate condominium
purposes, and were granted summary judgment dismissing the breach of fiduciary duty cause of
action asserted against the individual board members where no tortious acts were alleged and the
allegations of discrimination were conclusory); 20 Pine St. Homeowners Assn. v Pine St., LLC 109 AD3d 733,
735-736 (1st Dept 2013) (breach of fiduciary duty cause of action asserted against individual
board members dismissed pursuant to CPLR 3211 [a] where no individual wrongdoing was
alleged against board members except for their collective actions taken on the condominium's
behalf). When board members treat a shareholder unequally, they may be found to have breached
their fiduciary duty to that shareholder. Stinner v Epstein, 162 AD3d at 821. Thus,