Cooperatives & Condominiums

AppDiv, First Dept. (memorandum opinion)

In co-op shareholder's action for a judgment that the co-operative corporation and its board breached obligations under the proprietary lease by unreasonably withholding consent to alterations, the co-op appealed from Supreme Court's denial of its motion to dismiss. The Appellate Division affirmed, holding that shareholder had raised issues of fact about whether the co-op's decision was unreasonable.

Shareholder sought to make alterations to a loading dock adjacent to their ground floor apartment. The proprietary lease provides that consent for alterations to the apartment or building shall not be unreasonably withheld or delayed. The co-op board refused to approve, contending that the reasonableness requirement applied only to areas of the proprietary lessee's exclusive ownership, and not to common areas. When shareholder brought this action, the co-op moved to dismiss, and Supreme Court denied the motion.

In affirming, the Appellate Division concluded that the lease provision, by referring to the “apartment or building” unambiguously applied to areas of common ownership. The court then concluded that shareholder had raised questions of fact about whether the refusal to consent was unreasonable, especially because shareholder's unit was the only one without a second means of egress. The court also held that shareholder's complaint stated a claim for breach of fiduciary duty because of questions about whether the board and its president acted in good faith rather than out of personal animus. Finally, the court concluded that shareholder had raised questions of fact about whether the board's decision was made because of shareholder's national origin in violation of the state and city human rights law.

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