The petitioner, an existing shareholder in a residential cooperative apartment building, commenced an Article 78 proceeding to overturn two decisions made by a residential cooperative’s board. By the first decision, the cooperative’s board denied the shareholder’s application to purchase a second apartment in the cooperative. The board’s second decision was to deny the shareholder’s application to add his son to the stock certificate and proprietary lease appurtenant to the apartment already owned by the shareholder in the apartment. The board declined to provide reasons for its decisions.
The petitioner sought a judgment (i) reversing and annulling the board’s decision to deny the purchase of the apartment, and upon reversal, compelling the corporation to permit the apartment’s sale; (ii) reversing and annulling the board’s decision to deny the shareholder’s request to add his son to the stock certificate and proprietary lease appurtenant to the shareholder’s apartment, and upon reversal compelling the corporation to grant his request; (iii) compelling the corporation to provide a detailed decision explaining the grounds for the corporation’s denial of the shareholder’s requests. The petitioner also sought to recover attorney’s fees. The Court dismissed the petition in its entirety.
The Court ruled that the petitioner failed to meet his burden of raising a triable issue of fact by submitting that the board acted in bad faith and further held that the board was entitled to rely on the business judgment rule’s presumption that its decision to deny the shareholder’s purchase application was made in good faith and denied the petitioner’s request to vacate the board’s decision to deny the purchase application. The Court further held that the provisions of the corporation’s lease and bylaws confirm the corporation’s discretion regarding transfers and do not require the corporation to entertain appeals or provide explanations for its decisions. The court similarly upheld the corporation’s decision to deny the shareholder’s application to add his son to the stock certificate and proprietary lease for this apartment under the business judgment rule. Finally, to the extent that the petitioner sought an order in the nature of a mandamus under Article 78, compelling the board to provide a detailed decision pertaining its denials, the Court also declined to entertain the request finding that “the remedy of mandamus to compel does not lie with respect to a co-op’s discretionary (as opposed to ministerial) actions.” The court held: “The acts of reviewing an apartment purchase contract or share transfer application clearly involve the exercise of the co-op board’s discretion since they necessarily involve the investigation of evidence prior to the issuance of a decision based thereon.” The court also denied the petitioner’s request for attorney’s fees because he failed to establish that the decisions constituted a “default.”
A copy of the decision is accessible here.