Citation Numbers: 293 A.D.2d 650, 741 N.Y.S.2d 261
Filed Date: 4/22/2002
Status: Precedential
Modified Date: 1/13/2022
—In an action, inter alia, to recover damages for injury to property rights, the plaintiff Aaron Hochman appeals from an order of the Supreme Court, Kings County (G. Aronin, J.), dated February 23, 2001, which granted the defendant’s motion for summary judgment dismissing the complaint.
Ordered that the order is affirmed, with costs.
In 1991 the plaintiff Aaron Hochman (hereinafter the plaintiff) pledged the shares of his cooperative apartment to Citibank as collateral for a business loan. After the plaintiff’s company defaulted on its obligations to Citibank, the bank took possession of the collateral pledged to secure the loan, and new stock certificates and a new proprietary lease were issued to Citibank’s nominee. In 1996 the plaintiff entered into a stipulation of settlement with Citibank in which he agreed to pay the entire outstanding balance of the business loan. Pursuant to the stipulation, Citibank agreed, inter alia, to reconvey the plaintiffs cooperative shares and proprietary léase back to him. However, the transfer to the plaintiff was conditioned upon the consent of the defendant cooperative corporation. In the event that such consent could not be obtained, Citibank agreed to pay the plaintiff $460,000 for the apartment, less the
Contrary to the plaintiffs contention, the Supreme Court correctly found that the business judgment rule was the proper standard to apply in reviewing the defendant’s decision. Although the plaintiff correctly asserts that he had a statutory right to redeem his cooperative shares from Citibank until the bank disposed of the shares (see UCC 9-506), it is undisputed that when Citibank took possession of the plaintiffs collateral, new stock certificates and a new proprietary lease were issued to its nominee. Accordingly, the plaintiffs request to have the shares and lease conveyed back to him came within the scope of the provision of the proprietary lease which prohibits assignment of the lease without the written consent of the cooperative board. Thus, the decision whether to permit the requested assignment was within the board’s authority.
Furthermore, the defendant’s motion for summary judgment was properly granted pursuant to the business judgment rule, which prohibits judicial inquiry into decisions made by cooperative or condominium governing boards which are “ ‘taken in good faith in the exercise of honest judgment’ ” (Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530, 538, quoting Auerbach v Bennett, 47 NY2d 619, 629). Pursuant to the rule, the party seeking review of a governing board’s actions has the burden of demonstrating a breach of fiduciary duty, through evidence of unlawful discrimination, self-dealing, or other misconduct by board members (see Matter of Levandusky v One Fifth Ave. Apt. Corp., supra at 539, Kleinman v Point Seal Restoration Corp., 267 AD2d 430; Jones v Surrey Coop. Apts., 263 AD2d 33, 36). In support of its motion for summary judgment, the defendant made a prima facie showing that the board members acted in good faith and within the
The plaintiffs remaining contentions are without merit. S. Miller, J.P., Krausman, Goldstein and Cozier, JJ., concur.