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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In deciding Pullman, the Court of Appeals noted that the Legislature designed RPAPL 711 (1) to protect shareholder-tenants from eviction upon their landlord’s whim. But the Court was satisfied that “relationships among shareholders in cooperatives are sufficiently distinct from traditional landlord-tenant relationships that the statute’s ‘competent evidence’ standard is satisfied by the application of the business judgment rule.” (Pullman, 100 NY2d at 155.) Relationships between cooperative board members and shareholders, on the other hand, are similar to relationships between landlords and tenants, with twists that reflect the shareholders’ collective will. Because of this, a board vote raises due process concerns that a shareholder vote avoids. Members of a board can exclude an “objectionable” shareholder-tenant from a board’s vote, away from the public eye. Members of a board can silence an “objectionable” shareholder-tenant at a board’s vote. Members of a board might act in bad faith but successfully hide their motives. Members of a board might develop their own definition of objectionable conduct that other cooperative shareholders do not share. Hav*942ing elected officials — board members — decide questions of obj ectionability prevents the possibility of mob rule that can result from a shareholder vote. Nevertheless, greater potential for abuse arises in a board vote than in a shareholder vote.

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