In Rare Win by Shareholder Against Manhattan Co-Op Board, Court Rules “The Business Judgment Rule is not a Get-Out-of-Jail-Free Card”
On September 14, 2018, the New York Supreme Court granted a petition filed by Sher Tremonte on behalf of its client, a shareholder and tenant of a co-op apartment on Manhattan’s Upper West Side, against a co-op board. After initially approving the shareholder’s application to purchase and combine an adjacent apartment, the board attempted to rescind its approval and impose new conditions. Accepting Sher Tremonte’s argument that the board’s original approval constituted a binding commitment, the court held that the board was “estopped from setting conditions that were not already contained” in its prior resolution. The Court ruled that the board’s decision to rescind its prior approval was not entitled to the protection of the business judgment rule, explaining “the Business Judgment Rule is not a get-out-of-jail-free card protecting any and all board activity.” Read the court’s full opinion here.