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<i>Levandusky</i> After 25 Years
For over 25 years, the Court of Appeals' decision in Levandusky v. One Fifth Avenue Apartment Corp., 75 N.Y.2d 530 (1990) (affirmed in 40 West 67th Street v. Pullman, 100 N.Y.2d 147 (2003)), has stood for the proposition that the actions of condominium and co-op boards are entitled to judicial deference when made in the proper exercise of their business judgment. Levandusky held that discretionary board actions are subject to such deference unless the apartment or commercial unit owner who is challenging the board's action can show that the board acted in bad faith, outside of its authority or not in furtherance of the condominium or co-op's legitimate interests. This deference has been a powerful tool for boards, one that benefits the entities they serve and the overwhelming majority of apartment owners, and avoids the expense and disruption of litigation by encouraging summary dismissal of unwarranted claims.
This article updates our prior ones that dealt with Levandusky and its progeny. See, e.g., Siegler and Talel, “Business Judgment Rule: Board Protection Continues,” N.Y.L.J. , May 6, 2009, at 3, col. 1; Siegler and Talel, “'Levandusky' and Unprecedented Board Influence,” N.Y.L.J., Sept. 5, 2007, at 3, col. 1 and “'Levandusky' at 21: Board Protection Continues,” N.Y.L.J., May 4, 2011, at 3, col. 1. Herein, we review 13 recent cases, dating from 2011 through 2015, that invoked the business judgment rule. The cases discussed below show that Levandusky is still widely applied to give deference to a broad range of board actions.
Of the nine cases in which Levandusky was held applicable, 100% of them summarily dismissed claims against the board and/or individual board members. However, as also discussed below, there remain circumstances where Levandusky is not applied, such as discrimination claims, breaches of contract and where the condominium or co-op's operating documents require the board not to act unreasonably.
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