First published: Mar 2012
Weston Murphy v. 14 Sutton Tenants Corporation
As we can see from the NAR decision, issues concerning pets are often litigated. Here, the plaintiff believes she was being singled out for improper treatment by the board and its individual directors when the board demanded that she use the service elevator when traveling with her dog. However, her suit against the individual board members was dismissed since she did not plead that any of them did anything other than act in their capacity as board members. Without allegations of personal wrongdoing, courts readily grant motions to dismiss claims against the individuals and – as it did here – permit the case to proceed against the co-op corporation.
May a shareholder sue her cooperative corporation and its individual board members if she is required to use the service elevator when taking her dog in and out of the building? That was the question asked in Weston Murphy v. 14 Sutton Tenants Corporation.
Elizabeth Weston Murphy is a shareholder at 14 Sutton Place, a cooperative owned by 14 Sutton Tenants Corporation. The corporation mandated that Weston Murphy use the service elevator when she was accompanied by her dog, while all other dog owners (except one other) used the passenger elevator. The board based its action on belief that the dog, Theo, was ill-behaved. Weston Murphy brought an action breach of fiduciary duty and intentional infliction of emotional distress by the cooperative and its individual directors. The underlying complaint was founded in discrimination and disparate treatment. The corporation and the board members moved to dismiss the action.
The corporation and board mem-bers relied on the Business Judgment Rule as set forth in the seminal Court of Appeals case Levandusky v. One Fifth Avenue Owners Corp. In sum, the rule prohibits the courts from inquiring into the actions of corporate directors when the actions are taken in good faith and in the exercise of honest judgment and in the lawful and legitimate furtherance of corporate purposes.
In this case, the corporation and board members justified their business judgment by citing numerous incidents where Weston Murphy violated the rules and the existence of numerous ongoing complaints by neighbors.
The corporation and board members made a motion to dismiss the action based on a claim that the complaint failed to state a cause of action. The court discussed the standard on such motions – the pleading was to be afforded a liberal construction, the facts were to be accepted as true, and the plaintiffs were to be given the benefit of every possible favorable inference. The court was to determine whether the claims fit into any cognizable legal theory. The court explained that it was to determine merely whether the pleading contained a cause of action, not whether the plaintiff had stated a claim.
Given this standard, the court then reviewed the complaint as it related to the individual board members. The court explained that when dealing with liability of individual board members, courts dismiss complaints that fail to allege with specificity the questionable actions by the individuals. The court explained that, even though the board members may have taken action to deliberately single out a shareholder for harmful treatment, that did not, in and of itself, expose the individual board member to liability.
Here, the court granted the motion to dismiss as to the individual defendants, and denied the motion as to the co-op, finding that Weston Murphy had pleaded a cause of action against the co-op, which could not be decided in connection with this motion to dismiss.
Attorneys
For Plaintiff:
The Price Law Firm
For Defendants:
Belkin, Burden, Wenig & Goldman
