2018 NY Slip Op 51958

Citation: 2018 NY Slip Op 51958
Jurisdiction: New York (state)
Source verification: cross_accepted_sealed
Original Source: https://www.nycourts.gov/reporter/3dseries/2018/2018_51958.htm ↗

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alleges with particularity that majority of board is interested in the transaction).

Despite this claim of demand futility, plaintiffs' counsel, in opposing the motion, points to a
consulting agreement and various invoices, dated April 20, 2017 (allegedly four days before
DOB's inspector first visited the building to try to inspect the cellar units [see id., ¶
113]) and June 28, 2017, which shows that the Board, as then comprised, had in fact taken steps
to address the issue of the illegal cellar occupancy about six months before the amended 2017
complaint, [*28]and several months before the proposed amended
complaint in the 2015 action, were filed. See Rosenberg affirmation in opposition to
motion to dismiss amended 2017 complaint, ¶¶ 10, 14; id., exhibit D
(4/20/2017, 6/28/2017 invoices from Callahan Consulting, for "Consultation & DOB
Research", "DOB Research," "Zoning Code and Feasibility," and "Zoning Analysis"); see also
id. (Sheldon Lobel letter of 9/25/2017 relating to another consultant hired by Matanic on
Stable's behalf to perform a zoning investigation to address the residential occupancy in the cellar
that was contrary to the certificate of occupancy).

Nevertheless, plaintiffs' counsel now takes the position that any attempt by the Board,
including any sum spent by it to explore the legalization of the cellar units and to try to clear the
DOB violation, is a breach of fiduciary duty because it constitutes the payment of Stable's funds
allegedly for the sole purpose of personally benefitting those Board members who are proprietary
lessees of the cellar units (Rosenberg affirmation in opposition to motion to dismiss, ¶ 14),
notwithstanding that the complaint charges the Board with refusing to investigate and remedy the