13315 Owners Corp. v. Kennedy, 4 Misc. 3d 931 (2004)

Citation: 13315 Owners Corp. v. Kennedy, 4 Misc. 3d 931 (2004)
Parent Document: 13315 Owners Corp. v. Kennedy, 4 Misc. 3d 931 (2004)
Jurisdiction: New York (state)
Effective Date: 2004-06-29
Original Source: https://www.courtlistener.com/opinion/6305035/13315-owners-corp-v-kennedy/ ↗

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The Appellate Division disagreed with Supreme Court and, with two Justices dissenting, granted the cooperative summary judgment based on the Court of Appeals decision in Matter of Levandusky v One Fifth Ave. Apt. Corp. (75 NY2d 530 [1990]). (See 40 W. 67th St. v Pullman, 296 AD2d 120, 124 [1st Dept 2002].) The First Department in Pullman held that the business judgment rule is the proper standard of judicial review to evaluate decisions made by residential cooperative corporations. (See id.) The business judgment rule is a common-law doctrine by which the courts exercise restraint and defer to good-faith decisions made by boards of directors in business settings. The business judgment rule has applied to cooperative board determinations for some time: “[E]ven before Levandusky, Courts had recognized that Cooperative Boards were decision-making bodies and their decisions were reviewable under the business judgment rule.” (Smollens, supra at 25 [citing cases].) But although business judgment issues would occasionally arise in holdover proceedings involving cooperatives (see e.g. Sirianni v Rafaloff, 284 AD2d 447, 448 [2d Dept 2001]), no court before Pullman had applied the business judgment rule in the context of a proprietary lease termination to evict a shareholder.

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