Tenant-Shareholder Can Challenge Actions of Co-op Board

May 31, 2008

LVT Number: #20438

Tenant-shareholder sued the board of directors of a cooperative building, to challenge the board's actions. The board asked the court to dismiss the case without a trial. The directors claimed that they were protected by the business judgment rule and that their actions weren't subject to challenge. The court ruled against the board. The board appealed and lost. Tenant claimed that the board's actions were outside the scope of their authority and questioned whether they acted in good faith. This raised questions of fact that required a trial.

Tenant-shareholder sued the board of directors of a cooperative building, to challenge the board's actions. The board asked the court to dismiss the case without a trial. The directors claimed that they were protected by the business judgment rule and that their actions weren't subject to challenge. The court ruled against the board. The board appealed and lost. Tenant claimed that the board's actions were outside the scope of their authority and questioned whether they acted in good faith. This raised questions of fact that required a trial. If proved, the board's actions wouldn't fall within the scope of the business judgment rule.

Dubasso v. East 69th Owners Corp.: NYLJ, 5/5/08, p. 26, col. 5 (App. Div. 1 Dept.; Lippman, PJ, Gonzalez, Moskowitz, Acosta, JJ)

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