Cooperatives & Condominiums

Supreme Ct., Suffolk Cty

(Klein, J.)

In an action by condominium unit owners for breach of fiduciary duty, both plaintiff unit owners and defendant board members moved for summary judgment. The court concluded that the board members owed a duty not to act in their own self-interest, but that questions of fact precluded grant of summary judgment.

Plaintiffs and defendants are unit owners in a commercial condominium. The Slayton group sought to purchase an uncompleted portion of the condominium to develop in conjunction with neighboring property Slayton already owned. In order to complete the purchase and development, Slayton needed the consent of all unit owners in the commercial condominium. By letter, Slayton offered each of the unit owners between $10,000 and $12,000 for transfer of their common interest in the property Slayton needed. Plaintiff unit owners contend that testimony at a condominium board meeting establishes an agreement to negotiate with Slayton in concert, through Steve Fuchs. In fact, however, most unit owners agreed to transfer, but two board members did not. They ultimately received payments of $52,500 and $50,000, respectively. Plaintiff unit owners then brought this action against the board members, alleging breach of fiduciary duty.

In denying board members' motion for summary judgment dismissing the complaint, the court noted that when a condominium board member's personal interest may conflict with that of the common interest, the board member must be especially careful not to gear his or her conduct to benefit his or her own self-interest. The court noted that both statutes and the condominium bylaws indicated an intent that upon loss of the common interest, unit owners should be compensated in proportion to the value of their units. Here, the court concluded that the complaint included allegations sufficient to make out a prima facie case of breach of fiduciary duty, but that fact questions remained about whether each of the board members acted or failed to act in a way that breached that duty. Accordingly, the court denied plaintiff-unit owners' summary judgment motion.

Questions of Fact Preclude Summary Judgment

Michaelson v. Albora

NYLJ 6/18/03, p. 24, col. 5

Supreme Ct., Suffolk Cty

(Klein, J.)

In an action by condominium unit owners for breach of fiduciary duty, both plaintiff unit owners and defendant board members moved for summary judgment. The court concluded that the board members owed a duty not to act in their own self-interest, but that questions of fact precluded grant of summary judgment.

Plaintiffs and defendants are unit owners in a commercial condominium. The Slayton group sought to purchase an uncompleted portion of the condominium to develop in conjunction with neighboring property Slayton already owned. In order to complete the purchase and development, Slayton needed the consent of all unit owners in the commercial condominium. By letter, Slayton offered each of the unit owners between $10,000 and $12,000 for transfer of their common interest in the property Slayton needed. Plaintiff unit owners contend that testimony at a condominium board meeting establishes an agreement to negotiate with Slayton in concert, through Steve Fuchs. In fact, however, most unit owners agreed to transfer, but two board members did not. They ultimately received payments of $52,500 and $50,000, respectively. Plaintiff unit owners then brought this action against the board members, alleging breach of fiduciary duty.

In denying board members' motion for summary judgment dismissing the complaint, the court noted that when a condominium board member's personal interest may conflict with that of the common interest, the board member must be especially careful not to gear his or her conduct to benefit his or her own self-interest. The court noted that both statutes and the condominium bylaws indicated an intent that upon loss of the common interest, unit owners should be compensated in proportion to the value of their units. Here, the court concluded that the complaint included allegations sufficient to make out a prima facie case of breach of fiduciary duty, but that fact questions remained about whether each of the board members acted or failed to act in a way that breached that duty. Accordingly, the court denied plaintiff-unit owners' summary judgment motion.