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First published: Jan 2021
Platt v. Windsor Owners Corp.The war between Elaine Platt and the Windsor Towers co-op board is a long, complicated and expensive tale. Yet there are lessons here. Perhaps the first is that before commencing any legal action, especially one in which personalities are involved, a careful review is required. Can it blow up? Can it entangle the parties for years? Is it worth a decade of legal fees? The second lesson involves the use of committees by the board. The New York Business Corporation Law states that a board can establish a committee of board members, which can be given all of the powers of the board. Many co-op bylaws contain a similar provision. Committees can be useful in numerous ways. If there is a legal action involving one or more board members, for example, a committee might be formed to make all decisions in regard to the matter. If the cooperative is undertaking a large capital improvement, perhaps a committee of engineers and people with financial backgrounds might be given the power to negotiate, execute and oversee the project. The third lesson is really the important one. Platt disclosed communications from the attorneys hired by the board. She was privy to the information only in her capacity as a board member. Information received that has been sent as an attorney-client communication, which is considered privileged under the law, should be kept confidential, unless the board decides to disseminate the communications to the shareholders. Further, the fact that Platt used this information for her own purposes and for her own benefit – hoping to be re-elected to the board – was certainly not for the benefit of the cooperative. This was doubly improper. Many cooperative corporations and condominium associations have adopted not only a policy for keeping information confidential but also a confidentiality form to be signed by each board member, acknowledging that he or she is aware such policies exist. As a general rule, information that a board member has learned in the role as a board member should not be repeated or forwarded to non-board members. Clearly, there are exceptions – if, for example, a board member learns that the board is doing something illegal or potentially dangerous. Even then, it is probably best to contact the board’s manager or attorney first. The fact that a board member does not agree with the judgment of the rest of the board is not reason enough to breach the responsibility of a board member to abide by the policies established by the board. Failure to heed this lesson is sure to generate bad blood.
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