Conflicts between boards and the building’s shareholders or unit-owners are nothing new in New York City. But once in a long while, these disputes wind up going to trial. You’re familiar with a recent case. What was the nature of the beef?
The essence of the complaint was that the sponsor controlled the board. In 1986 the building submitted an offering plan to become a condominium, and the sponsor had control of the building for five years or so. She wound up putting family members on the board and giving out contracts to family members to be the management company. It was self-dealing.
What did the unit-owners do?
They filed a lawsuit, a derivative action, on behalf of the condominium. They wanted to hold the sponsor and the board to task for what was going on. The case has an interesting procedural history. Initially, the New York Supreme Court wound up dismissing the complaint. The amended complaint then went up to the Appellate Division, which said: “The lower court erred. We’re going to send this back. We’re not going to allow the business judgment rule to bar the court from examining whether or not these self-dealings were breaches of fiduciary duty, or if they were breaches of contract.”
About the Author
James F. Woods is Founder and Managing Partner of Woods Lonergan. He has tried more than 60 jury cases to verdict as first-chair trial counsel, beginning his career as a prosecutor, and resolves complex commercial and real estate disputes valued at $1M to $100M+ for business owners, principals, and middle-market enterprises across the New York metro area. He appears regularly in the New York Commercial Division and in the federal district courts for the Southern and Eastern Districts of New York, and has argued appeals in the Appellate Division and the Second Circuit.
His practice covers complex commercial litigation, real estate and asset litigation, partnership and shareholder disputes, fiduciary breach and corporate fraud, and cooperative and condominium governance. He counsels corporate and cooperative boards throughout New York.
The Legal 500 United States ranks James in its New York Elite rankings for Commercial Disputes, and his peers have recognized him with Martindale-Hubbell's AV Preeminent rating. Woods Lonergan is ranked in Chambers USA: Spotlight New York for Litigation: General Commercial and Real Estate. James serves on the Commercial & Business Litigation Committee and the Business Torts & Unfair Competition Committee of the American Bar Association Section of Litigation, and on the Cooperative & Condominium Law Committee of the New York City Bar Association. His commentary on New York commercial and real estate disputes has been quoted in The New York Times, The Washington Post, Bloomberg Law, Law360, and Forbes.
Disclaimer: The information in this article and blog post (“post”) is provided for informational purposes only, and may not reflect the current law(s) in every jurisdiction. No information contained in this post should be construed as legal advice from Woods Lonergan PLLC or the individual author(s), nor is it intended to be a substitute for legal counsel on any subject matter. Nothing herein shall be construed to create an attorney-client relationship with Woods Lonergan PLLC. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient’s jurisdiction. This post is attorney advertising.
