Case Notes in
Fiduciary Duty
Category
- Access
- Alterations
- Appeals
- Arbitration
- Assessment
- Attorney Fees
- Attorney-Client
- Authority to Sue
- Balcony/Terrace Rights
- Bike Lane
- Board of Directors
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- Indemnification/Subrogation
- Injunction
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- Licenses
- Liens
- Maintenance
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- Management
- Mechanic's Lien
- Misrepresentations
- Motion Practice
- Motion Practive
- Negligence
- Notice of Pendency
- Nuisance
- Occupancy Agreement
- Ownership
- Parking
- Partnership
- Personal Injury
- Pets
- Property Damage
- Proprietary Lease
- Reasonableness
- Receivership
- Release
- Repairs
- Representations
- Sales
- Service of Process
- Sponsor
- Statute of Limitations
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- Stocks/Shares
- Sublets
- Succession Rights
- Tax
- Third-Party Liability
- Transfers
- Trespassing
- Trial Practice
- Violations
- Warranty of Habitability
- Yellowstone Injunction
- Zoning
First published: Oct 2024
Good FaithTAKEWAY Once again, boards should take comfort in the fact that as long as they act in good faith within the scope of authority, lawsuits against them will fail. The business judgment rule provides broad protection and it is a high hurdle for plaintiffs to get past in order to try to impose liability. Managing agents and attorneys should also take comfort in the fact that the court recognized that their fiduciary responsibility is to the whole entity and not any individual unit owner (or shareholder). Attempts to expand liability in lawsuits beyond the basic breach of contract claim against the co-op or condo entity are often expensive and unsuccessful.
Read full articleFirst published: May 2024
The Four-Year LeakThe plaintiff, a corporation, sued the board of managers of 580 Carroll Street for breach of fiduciary duty, negligence, and breach of bylaws, and the court found that the board was liable for breach of contract for failing to "promptly" repair the façade.
Read full articleFirst published: Dec 2023
A Win for the ClimateTAKEAWAY Nearly 18 months passed between the filing of the Glen Oaks complaint and the court’s dismissal of it. One of the more interesting things about the Glen Oaks lawsuit is how much the ground had shifted under the plaintiffs’ feet during that period. For example, New York State released its final Scoping Plan under the CLCPA in December 2022, which, among other things, included an entire chapter highlighting the importance of coordinated action with local jurisdictions. “Partnership with local governments,” explained the Scoping Plan, “is a keystone of the State’s clean energy, adaptation and resilience, and greenhouse gas (GHG) emissions mitigation strategies” – a direct (if implicit) rebuke to plaintiffs’ assertion that the CLCPA pre-empted the CMA. As noted above, the Glen Oaks court was convinced that the two laws were not only consistent but should be read together. In addition, the Department of Buildings issued two sets of rules during the interim period that filled in many of the “vague” provisions of the law. For example, under the first set of rules issued in 2022, the DOB incorporated 61 different use-and-occupancy subgroups with different emissions factors for each, hopefully leading to more equitable and realistic emissions targets for covered buildings. With the newly issued “good faith efforts” rules, the DOB spelled out a detailed process by which building owners could seek to reduce or eliminate the annual fines issued for noncompliance during the 2024–2029 period. These rules underscore New York City’s position, contra the Glen Oaks plaintiffs, that building owners should have multiple viable compliance pathways short of just accepting massive annual fines. This decision is by no means the last word on legal challenges to Local Law 97. Not only is it expected that the Glen Oaks plaintiffs will appeal, but there will likely be new legal challenges once the DOB starts issuing fines to non-complying buildings in 2025. Nevertheless, this decision is a landmark in legitimating robust climate policy at the local level.
Read full articleFirst published: Aug 2022
Slow Death of a Sweetheart LeaseThis 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.
Read full articleFirst published: Jun 2022
A Dog Fight: Commercial Board vs Residential BoardOuch, 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.
Read full articleFirst published: Feb 2022
Water LeakUnlike 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.
Read full articleFirst published: Nov 2008
Ash v. Board of Managers, The 155 CondominiumThis 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.
Read full articleFirst published: Oct 2003
Michaelson v. AlboraThe 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.
Read full article