Co-ops and Condominiums

In an action by two condominiums action for declaratory relief against a homeowners association and its board members, homeowners association and the board members appealed from Supreme Court's denials of their motion to dismiss. The Appellate Division affirmed, holding that the condominiums' amendment of their bylaws released them from the obligation to pay the homeowners association for services.

The same sponsor developed two condominium communities and their governing documents appointed the homeowners association to provide repair and maintenance services for the common elements. Those documents also authorized the association to collect assessments from the unit owners, and provided that the condominium "shall be deemed to have irrevocably appointed" the homeowners association to provide those services. After the sponsor relinquished control, disputes arose between the condominiums and the homeowners association, and the condominium sought to take control of those services. The condominiums then brought this action seeking a declaration about the meaning of the irrevocable appointment, and seeking damages from the board members for breach of fiduciary duty. After settlement negotiations and a Supreme Court order directing the condominiums to hold meetings to amend their bylaws, the two condominiums conducted meetings at which the homeowners approved amendments to their bylaws deleting the irrevocable appointment language. Supreme Court then granted summary judgment to the condominiums dismissing the homeowners association's counterclaim for a judgment declaring the meaning of "irrevocable managing agent", and denied the association's motion to dismiss the claim for rental revenue wrongfully retained by the association and its board members.