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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at 429 (damages directly due to the other side's misconduct is a required element of a breach of
fiduciary duty cause of action). Even if Stable incurred any such costs, the complaint does not
distinguish between any damages that accrued due to a particular Board member's inaction, once
notified of the issue, and any damages accruing solely because the non-conforming cellar units
were created and leased to the shareholders in the first place. In light of these additional pleading
deficiencies, the eleventh cause of action is dismissed on these grounds as well.

This Court further observes that plaintiffs' counsel's newly-raised unpleaded theory, i.e., that
the Board's spending of any sum to address the cellar units' illegality amounts to a breach of
fiduciary duty, is inadequate to constitute such a claim, because the DOB violation itself,
according to the amended 2017 complaint, requires that Stable correct and remove the violating
conditions, which does not preclude a reasonable attempt by Stable to ascertain whether the
violating conditions can and should be corrected and, if so, to correct them. Id., ¶
117. Moreover, the amended 2017 complaint alleges that the Board breaches its fiduciary duty if
it does nothing to "investigate," "correct, remedy [and/]or rectify" the illegal uses and
occupancies of parts of the cellar levels, and bases the complaint's assertion of demand futility on
the Board's alleged refusal to "investigate and remedy" the illegal occupancies." See id.,
¶¶ 89, 139, 172.

Further, plaintiffs' counsel's new position, that Stable's payment of any sum to address the
illegal occupancy constitutes a breach of fiduciary duty because it solely benefits the cellar unit
occupants, lacks merit under the circumstance presented. Given that shares, which were