Legal Cases Your Board Should Know From the Court to the Board

 While not everyone who serves on his or her co-op or condo board needs to be an  attorney or have an encyclopedic knowledge of the law, it never hurts to be  aware of the important, often precedent-setting legal decisions being handed  down by the courts. Some of these cases offer useful insights to boards, while  others may ultimately have an impact on how buildings are run from day to day.  Over the past few months there have been several such decisions—here are a few that may provide building administrators with some helpful ideas  and information.  

 Allannic v. Levin

 Lesson: The Business Judgment Rule Only Shields Board Members with Disinterested  Independence

 The board of 682 Sixth Avenue Housing Development Fund Corporation in Manhattan  decided to extend the master lease for a space owned by the cooperative under  the “80/20” rule provisions for commercial space. The shareholders sued the board and  tenant claiming that all shareholders were not being treated equally under the  extension, and that the board had breached its fiduciary obligation to them by  extending the lease. The lower court dismissed the case, but the Appellate Division, First Department  reversed and reinstated the case on the grounds that the board members were not  disinterested members when they voted in favor of the lease extension and thus  not necessarily insulated from judicial scrutiny under the Business Judgment  Rule. The Business Judgment Rule is a powerful shield, but not for board  members with conflicts of interest.  

 Holding Corp. v. Prince Fashions, Inc.

 Lesson: Legal Fees and Costs May Be Recoverable If a Party Engages in Frivolous Conduct

 This was a long, drawn-out litigation between the 542 Holding Corp. cooperative  and its commercial tenant, Prince Fashions, Inc. The co-op was seeking to eject Prince from the premises for lease violations and  aggressively asked the court for injunctive relief concerning Prince’s hazardous spray painting on the premises and unauthorized non-structural  alterations. The co-op also argued that Prince had violated an order the court had issued a  year earlier.  

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Comments

  • In regard to the Hamlet Olde Oyster Bay, Did the App Div reverse portions of the decision on reargument ? I thought actualkly they upheld the lower court that dismissed claims of breach of fiduciary duty beyond three years old. ( S of L's). ?