Cooperatives & Condominiums

Business Judgment Rule Bars Conversion Claim By Co-Op Shareholder

Jacobs v. Gant

NYLJ 4/17/15, p. 23, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In co-op shareholder's action against the co-op corporation and its board of directors, shareholder appealed from Supreme Court's grant of summary judgment to the co-op corporation and board. The Appellate Division affirmed, relying on the business judgment rule.

Shareholder stored belongings in a storage room located in the basement of the building in which he resided. The co-op corporation notified shareholder and other shareholders that, due to a building-wide asbestos abatement project, shareholder tenants were required to remove all belongings from the storage room. Shareholder refused, and after several notices to shareholder, the co-op corporation hired a moving company to move and store shareholder's belongings until completion of the project. Shareholder then brought this conversion action.

In affirming Supreme Court's grant of summary judgment to the corporation and its board, the Appellate Division held that the decision to remove and store the property was protected by the business judgment rule. The court then held that shareholders had failed to raise a triable issue of fact that the corporation and its board had acted outside the scope of their authority, in a way that did not further the corporate purpose, or was in bad faith.

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Business Judgment Rule Bars Conversion Claim By Co-Op Shareholder

Jacobs v. Gant

NYLJ 4/17/15, p. 23, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In co-op shareholder's action against the co-op corporation and its board of directors, shareholder appealed from Supreme Court's grant of summary judgment to the co-op corporation and board. The Appellate Division affirmed, relying on the business judgment rule.

Shareholder stored belongings in a storage room located in the basement of the building in which he resided. The co-op corporation notified shareholder and other shareholders that, due to a building-wide asbestos abatement project, shareholder tenants were required to remove all belongings from the storage room. Shareholder refused, and after several notices to shareholder, the co-op corporation hired a moving company to move and store shareholder's belongings until completion of the project. Shareholder then brought this conversion action.

In affirming Supreme Court's grant of summary judgment to the corporation and its board, the Appellate Division held that the decision to remove and store the property was protected by the business judgment rule. The court then held that shareholders had failed to raise a triable issue of fact that the corporation and its board had acted outside the scope of their authority, in a way that did not further the corporate purpose, or was in bad faith.

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