Co-op Board Denies Permission for Apartment Alterations

Proprietary lessee of penthouse apartment sued landlord cooperative corporation and some of its board members after they refused permission to demolish a one-story rooftop structure and replace it with a two-story unit. Lessee claimed breach of fiduciary duty and discrimination. He also claimed that landlord breached a 1994 agreement not to unreasonably withhold consent to alterations. The court granted landlord's request to dismiss the claims without a trial. Lessee appealed and won in part. Lessee claimed that landlord permitted extensive work on many other units in the building, but the vague claim of unequal treatment didn't overcome the business judgment rule governing co-op buildings. Lessee also didn't show that any of the board members acted in self-interest, so there was no proof of breach of fiduciary duty. But whether landlord acted arbitrarily or unreasonably in violation of the 1994 agreement presented a question of fact that required a trial.

Peacock v. Herald Square Loft Corp.: NYLJ, 11/9/09, p. 28, col. 2 (App. Div. 1 Dept.; Sweeny, JP, Buckley, Catterson, Acosta, Freedman, JJ)