Case Notes in

Fiduciary Duty

First published: Aug 2022
Slow Death of a Sweetheart Lease

This case is a cautionary tale. Individuals who serve as members of a cooperative board owe a fiduciary duty to act in the best interests of the corporation. The record in this case shows that the defendant, Siwana Green, together with at least one relative who also served on the board until they were voted out in 2018, succeeded at enriching themselves while failing to ensure that the co-op paid the City of New York more than $1 million for real estate taxes and water charges, resulting in a foreclosure proceeding and leaving the building in dire financial straits.

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First published: Jun 2022
A Dog Fight: Commercial Board vs Residential Board

Ouch, two big lessons. One, do not ignore a lawsuit. Your first call upon learning of a lawsuit must be to an attorney, there will be time to try to settle it later. Two, don’t present the court with a story that can be refuted by your own emails. The court’s decision bristles with umbrage at the demonstrably misleading statements of the defendant, and the individual is lucky the court was satisfied with denying the motion. The court might have issued sanctions.

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First published: Feb 2022
Water Leak

Unlike a co-op shareholder, a condo owner is not a lessee under a proprietary lease, and is not protected by the statutory warranty of habitability. Under this protection, a co-op shareholder can withhold rent if his or her apartment becomes unlivable due to damage, but a condo owner does not have that right. The condo owner can't withhold common charges, even if there is a damage claim for alleged water leaks. But note that the Judge, by holding the money judgment in abeyance, essentially gave the unit-owner a reprieve on paying common charges while the lawsuit was pending, undercutting the principle that was supposedly being exalted. It is a curious decision, one that properly states and applies the law but then, in a twist of fate worthy of M. Night Shyamalan, undoes it all in the penultimate sentence.

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First published: Nov 2008
Ash v. Board of Managers, The 155 Condominium

This case reminds us that courts are bound to defer to board decisions taken in good faith, in the best interests of the co-op or condominium and within the scope of their authority. This is true even if it is ultimately determined that the board’s act are unwise or inexpedient. In addition, boards have the right to rely on their experts and, if the expert makes a mistake (such as, here, allowing a reporting system to be implemented which did not give the board all of the information it required), the board will not be liable for following the expert’s advice. The case also discusses what happens when a party to a litigation asks that a judge recuse himself from the case. As this court explains, orally attacking the court and inundating it with a letter-writing campaign will not force a judge to recuse himself, which would allow the litigant to “shop” for another judge. Assuming there is no statutory obligation, a judge will not remove himself from a case unless the judge believes, as a matter of his own personal discretion, that he cannot remain impartial.

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First published: Oct 2003
Michaelson v. Albora

The case illustrates the fiduciary duty of board members that is owed to both co-op shareholders and condo unit-owners when it comes to business dealings. A board cannot permit some unit-owners to get a "better" deal than others. If this happens, legal recourse is available, swift and unsympathetic.

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