—A Concerned Unit Owner
“Developed in the context of commercial enterprises, the business judgment rule prohibits judicial inquiry into actions of corporate directors “taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes.”... So long as the corporation's directors have not breached their fiduciary obligation to the corporation, “the exercise of (their powers) for the common and general interests of the corporation may not be questioned, although the results show that what they did was unwise or inexpedient. [citations omitted]”
This case has been applied to many different types of board decisions. In fact, the Appellate Division (second highest Court in New York State) applied the same standard in the case of Greene v. Levine, 57 A.D.3d 627, 871 N.Y.S.2d 187 (2nd Dept., 2008) which related to a board decision concerning a budget. That Court held:
“In reviewing the reasonableness of the Association's exercise of its authority, “absent claims of fraud, self-dealing, unconscionability, or other misconduct, the court should apply the business judgment rule and should limit its inquiry to whether it was taken in good faith and in furtherance of the legitimate interests of the corporation.” [citations omitted]
Likewise, the business judgment rule has been applied with respect to a board's determination to repair common areas. Schoninger v. Yardarm Beach HOA, 134 A.D.2d 1, 523 N.Y.S.2d 523 (2nd Dept. 1987) .