business judgment rule in New York

2025Corp. , 75 NY2d 530, 538 [1990]; Board of Mgrs. of Fairways at N. Hills Condominium v Fairway at N. Hills , 193 AD2d 322, 324-325 [1993]). "[I]n the context of cooperative dwellings, the business judgment rule provides that a court should defer to a cooperative board's determination 'so long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith' " ( 40 W. 67th St. v Pullman , 100 NY2d 147, 153 [2003] [brackets omitted], quoting Matter of Levandusky v One Fifth Ave.

2025Corp. , 75 NY2d 530, 538 [1990]; Board of Mgrs. of Fairways at N. Hills Condominium v Fairway at N. Hills , 193 AD2d 322, 324-325 [1993]). "[I]n the context of cooperative dwellings, the business judgment rule provides that a court should defer to a cooperative board's determination 'so long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith' " ( 40 W. 67th St. v Pullman , 100 NY2d 147, 153 [2003] [brackets omitted], quoting Matter of Levandusky v One Fifth Ave.

2026The court properly granted defendants' motion to dismiss based on the business judgment rule, which "bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes" ( Auerbach v Bennett , 47 NY2d 619, 629 [1979]; see Consumers Union of U.S., Inc. v State of New York , 5 NY3d 327, 360 [2005]).

2026Order, same court and Justice, entered May 5, 2025, which granted defendants' motion to dismiss the complaint, unanimously affirmed, without costs.</p> <p>The court properly granted defendants' motion to dismiss based on the business judgment rule, which "bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes" (<i>Auerbach v Bennett</i>, 47 NY2d 619, 629 [1979]; <i>see Consumers Union of U.S., Inc. v State of New York</i>, 5 NY3d 327, 360 [2005]).

2025Corp. , 75 NY2d 530, 538 [1990]; Board of Mgrs. of Fairways at N. Hills Condominium v Fairway at N. Hills , 193 AD2d 322, 324-325 [1993]). "[I]n the context of cooperative dwellings, the business judgment rule provides that a court should defer to a cooperative board's determination 'so long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith' " ( 40 W. 67th St. v Pullman , 100 NY2d 147, 153 [2003] [brackets omitted], quoting Matter of Levandusky v One Fifth Ave.

2025Corp. , 75 NY2d 530, 538 [1990]; Board of Mgrs. of Fairways at N. Hills Condominium v Fairway at N. Hills , 193 AD2d 322, 324-325 [1993]). "[I]n the context of cooperative dwellings, the business judgment rule provides that a court should defer to a cooperative board's determination 'so long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith' " ( 40 W. 67th St. v Pullman , 100 NY2d 147, 153 [2003] [brackets omitted], quoting Matter of Levandusky v One Fifth Ave.

2022Under the business judgment rule, a necessary threshold inquiry is whether the board acted within the scope of its authority under the bylaws and whether the action was taken in good faith to further a legitimate interest of the condominium ( see Schoninger v Yardarm Beach Homeowners' Assn. , 134 AD2d 1, 9 ; see also [*2]Matter of Levandusky v One Fifth Ave.

2022Conclusion Finally, to require a board that is seeking to assert the business judgment rule to demonstrate that it acted and did so in accordance with the terms of the applicable bylaws, is not an unreasonable burden but rather a threshold inquiry to be made before insulating a board's business decisions from liability under the guise of the business judgment rule ( see Schoninger v Yardarm Beach Homeowners' Assn. , 134 AD2d at 9 ).

2025Unequal treatment of shareholders is sufficient to overcome the directors' insulation from liability under the business judgment rule ( see Meadow Lane Equities Corp. v Hill , 63 AD3d 699, 700 [2009]), and a director who participates in the commission of a tort committed by the board may be held individually liable ( see Fletcher v Dakota, Inc. , 99 AD3d 43 , 47 [2012]; cf. Cohen v Kings Point Tenant Corp. , 126 AD3d 843, 845 [2015]; Hill v Murphy , 63 AD3d 680, 681 [2009])." ( Stinner v Epstein , 162 AD3d 819 , 820-821 [2d Dept 2018].) "However, the individual directors cannot be held liable

2025Unequal treatment of shareholders is sufficient to overcome the directors' insulation from liability under the business judgment rule ( see Meadow Lane Equities Corp. v Hill , 63 AD3d 699, 700 [2009]), and a director who participates in the commission of a tort committed by the board may be held individually liable ( see Fletcher v Dakota, Inc. , 99 AD3d 43 , 47 [2012]; cf. Cohen v Kings Point Tenant Corp. , 126 AD3d 843, 845 [2015]; Hill v Murphy , 63 AD3d 680, 681 [2009])." ( Stinner v Epstein , 162 AD3d 819 , 820-821 [2d Dept 2018].) "However, the individual directors cannot be held liable

2014The business judgment rule, however, protects only directors who are disinterested, meaning they do not, for example, stand to gain any personal financial benefit in the sense of self-dealing “as opposed to a benefit which devolves upon the corporation or all stockholders generally” (Aronson v Lewis, 473 A2d 805, 812 [Del 1984], overruled on other grounds Brehm v Eisner, 746 A2d 244 [Del 2000]).

2014Ungar Moser (collectively the defendant wives), directors of NEC Holdings Corp. (NEC), due to plaintiffs’ failure to rebut the presumptions of loyalty, prudence and good faith under the business judgment rule (see Aronson v Lewis, 473 A2d 805, 812 [Del 1984], overruled on other grounds Brehm v Eisner, 746 A2d 244 [Del 2000]).

2013The business judgment rule does not apply when a cooperative board acts outside the scope of its authority or violates its own governing documents (see R & L Realty Assoc. v 205 W. 103 Owners Corp., 98 AD3d 421 , 422 [2012]; Wirth v Chambers-Greenwich Tenants Corp., 87 AD3d 470, 472 [2011]).

2013The business judgment rule does not apply when a cooperative board acts outside the scope of its authority or violates its own governing documents (see R & L Realty Assoc. v 205 W. 103 Owners Corp., 98 AD3d 421 , 422 [2012]; Wirth v Chambers-Greenwich Tenants Corp., 87 AD3d 470, 472 [2011]).

2017The Business Judgment Rule Absent claims of fraud, self-dealing, unconscionability or other misconduct, the business judgment rule limits judicial inquiry into the actions of corporate managers to [*7] whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the corporation ( see Shapiro v Rockville Country Club, Inc ., 22 AD3d 657 [2d Dept. 2005]; Gillman v Pebble Cove Home Owners Assn ., 154 AD2d 508 [2d Dept. 1989]).

2017The Business Judgment Rule Absent claims of fraud, self-dealing, unconscionability or other misconduct, the business judgment rule limits judicial inquiry into the actions of corporate managers to [*7] whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the corporation ( see Shapiro v Rockville Country Club, Inc ., 22 AD3d 657 [2d Dept. 2005]; Gillman v Pebble Cove Home Owners Assn ., 154 AD2d 508 [2d Dept. 1989]).

2011Co., 66 NY2d 556, 565 [1985] [The business judgment doctrine does not empower a coop board to make a decision that the proprietary lease does not authorize it to make]).

2006Co., 66 NY2d 556, 565 [1985].) Thus, the business judgment rule is not applicable to actions taken by a board in excess of its contractual authority. (40 W. 67th St. v Pullman, 100 NY2d 147 , 157 n 8 [2003]; Ludwig v 25 Plaza Tenants Corp., 184 AD2d 623, 624-625 [2d Dept 1992].) Nor does it apply when the directors have an interest in the challenged transaction.

2009Although an allegation of unequal treatment of shareholders may be sufficient to overcome the protections of the business judgment rule, plaintiffs are still subject to the requirement of pleading independent tortious acts (see DeCastro v Bhokari, 201 AD2d 382, 383 [1994]).

2008Corp., 246 AD2d 324, 326 [1st Dept 1998]; DeCastro v Bhokari, 201 AD2d 382 [1st Dept 1994].) The literature is divided on the issue, although most commentators side with protecting officers with application of the business judgment rule.

2024At the pleading stage, the allegations are sufficient to overcome the business judgment rule, as plaintiff has alleged that the sponsor's principals acted in bad faith and that their actions were tainted by conflict of interest and fraud ( see Ackerman v 305 E. 40th Owners Corp. , 189 AD2d 665, 667 [1st Dept 1993]; Amfesco Indus. v Greenblatt , 172 AD2d 261, 264 [1st Dept 1991]).

2024At the pleading stage, the allegations are sufficient to overcome the business judgment rule, as plaintiff has alleged that the sponsor's principals acted in bad faith and that their actions were tainted by conflict of interest and fraud ( see Ackerman v 305 E. 40th Owners Corp. , 189 AD2d 665, 667 [1st Dept 1993]; Amfesco Indus. v Greenblatt , 172 AD2d 261, 264 [1st Dept 1991]).

2026The court properly granted defendants' motion to dismiss based on the business judgment rule, which "bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes" ( Auerbach v Bennett , 47 NY2d 619, 629 [1979]; see Consumers Union of U.S., Inc. v State of New York , 5 NY3d 327, 360 [2005]).

2026Order, same court and Justice, entered May 5, 2025, which granted defendants' motion to dismiss the complaint, unanimously affirmed, without costs.</p> <p>The court properly granted defendants' motion to dismiss based on the business judgment rule, which "bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes" (<i>Auerbach v Bennett</i>, 47 NY2d 619, 629 [1979]; <i>see Consumers Union of U.S., Inc. v State of New York</i>, 5 NY3d 327, 360 [2005]).

2025Corp., 246 AD2d 324, 325-326 [1998]; DeCastro v Bhokari, 201 AD2d 382, 383 [1994]).

2008Corp., 246 AD2d 324, 326 [1st Dept 1998]; DeCastro v Bhokari, 201 AD2d 382 [1st Dept 1994].) The literature is divided on the issue, although most commentators side with protecting officers with application of the business judgment rule.

2025Issues of fact exist as to whether the IIPD Board validly ratified the decision not to apply for grant funding on behalf of IIPD, thereby rendering this decision subject to the business judgment rule and not a proper basis for a finding of a breach of fiduciary duty ( see Owen v Hamilton , 44 AD3d 452, 455-456 [1st Dept 2007], lv dismissed 10 NY3d 757 [2008]).

2024NO. 89 RECEIVED NYSCEF: 04/01/2024 in the lawful and legitimate furtherance of corporate purposes." (Gonzalez v Been, 145 AD3d 434 ,435 [1st Dept 2016] [internal quotation marks and citation omitted].) "The business judgment rule, however, does not foreclose judicial inquiry into the decision of a board of directors where the board acted in bad faith." (Owen v Hamilton, 44 AD3d 452,456 [1st Dept 2007] [citation omitted], appeal dismissed 10 NY3d 757 [2008].) Plaintiffs have not stated direct claims based on the alleged failure to pay distributions because the Director Defendants allegedly decl

2012“Where a unit owner challenges an action by a condominium Board of Managers, courts apply the business judgment rule” (Helmer v Comito, 61 AD3d 635, 636 [2009]; see Matter of Levandusky v One Fifth Ave.

2011Where, as here, a unit owner challenges an action of the condominium’s board, “courts apply the business judgment rule” (Yusin v Saddle Lakes Home Owners Assn., Inc., 73 AD3d 1168, 1170-1171 [2010]; Helmer v Comito, 61 AD3d 635, 636 [2009]; see Walden Woods Homeowners’ Assn. v Friedman, 36 AD3d 691, 692 [2007]).

2024At the pleading stage, the allegations are sufficient to overcome the business judgment rule, as plaintiff has alleged that the sponsor's principals acted in bad faith and that their actions were tainted by conflict of interest and fraud ( see Ackerman v 305 E. 40th Owners Corp. , 189 AD2d 665, 667 [1st Dept 1993]; Amfesco Indus. v Greenblatt , 172 AD2d 261, 264 [1st Dept 1991]).

2024At the pleading stage, the allegations are sufficient to overcome the business judgment rule, as plaintiff has alleged that the sponsor's principals acted in bad faith and that their actions were tainted by conflict of interest and fraud ( see Ackerman v 305 E. 40th Owners Corp. , 189 AD2d 665, 667 [1st Dept 1993]; Amfesco Indus. v Greenblatt , 172 AD2d 261, 264 [1st Dept 1991]).

2022Here, the plaintiff demonstrated, prima facie, that the board's adoption of the house rule was not authorized by the condominium bylaws, and thus, the adoption of that rule was not protected by the business judgment rule ( see Yusin v Saddle Lakes Home Owners Assn., Inc. , 73 AD3d 1168, 1171 ; Strathmore Ridge Homeowners Assn., Inc. v Mendicino , 63 AD3d 1038 ).

2019Plaintiffs respond that the business judgment rule does not bar their claims, as the Board's adoption of the amended rental policy was not legitimate and "exceed[ed] [its] authority under the relevant corporate bylaws" ( Matter of People v Lutheran Care Network, Inc. , 167 AD3d 1281 , 1286 [2018]; see 40 W. 67th St. v Pullman , 100 NY2d 147, 155 [2003]; Matter of Olszewski v Cannon Point Assn., Inc. , 148 AD3d 1306, 1311 [2017]; Yusin v Saddle Lakes Home Owners Assn., Inc. , 73 AD3d 1168, 1171 [2010]).

2020By making a demand on the officers of the Company, plaintiff conceded that they were disinterested and independent for purposes of responding to the demand; therefore, the court's role is limited by the business judgment rule to assessing the good faith and reasonableness of their investigation ( Spiegel v Buntrock , 571 A2d 767, 775-776 [Del 1990]; Andersen v Mattel, Inc. , 2017 WL 218913 , *3, 2017 Del Ch LEXIS 12, *8-9 [Del Ch 2017]).

2020By making a demand on the officers of the Company, plaintiff conceded that they were disinterested and independent for purposes of responding to the demand; therefore, the court's role is limited by the business judgment rule to assessing the good faith and reasonableness of their investigation ( Spiegel v Buntrock , 571 A2d 767, 775-776 [Del 1990]; Andersen v Mattel, Inc. , 2017 WL 218913 , *3, 2017 Del Ch LEXIS 12, *8-9 [Del Ch 2017]).

2026The business judgment rule "provides that[] where corporate officers or directors exercise unbiased judgment in determining that certain actions will promote the corporation's interests, courts will defer to those determinations if they were made in good faith" ( Matter of Kenneth Cole Prods., Inc., Shareholder Litig. , 27 NY3d 268, 274 [2016]).

2026The business judgment rule "provides that[] where corporate officers or directors exercise unbiased judgment in determining that certain actions will promote the corporation's interests, courts will defer to those determinations if they were made in good faith" ( Matter of Kenneth Cole Prods., Inc., Shareholder Litig. , 27 NY3d 268, 274 [2016]).

2025Unequal treatment of shareholders is sufficient to overcome the directors' insulation from liability under the business judgment rule ( see Meadow Lane Equities Corp. v Hill , 63 AD3d 699, 700 [2009]), and a director who participates in the commission of a tort committed by the board may be held individually liable ( see Fletcher v Dakota, Inc. , 99 AD3d 43 , 47 [2012]; cf. Cohen v Kings Point Tenant Corp. , 126 AD3d 843, 845 [2015]; Hill v Murphy , 63 AD3d 680, 681 [2009])." ( Stinner v Epstein , 162 AD3d 819 , 820-821 [2d Dept 2018].) "However, the individual directors cannot be held liable

2025Unequal treatment of shareholders is sufficient to overcome the directors' insulation from liability under the business judgment rule ( see Meadow Lane Equities Corp. v Hill , 63 AD3d 699, 700 [2009]), and a director who participates in the commission of a tort committed by the board may be held individually liable ( see Fletcher v Dakota, Inc. , 99 AD3d 43 , 47 [2012]; cf. Cohen v Kings Point Tenant Corp. , 126 AD3d 843, 845 [2015]; Hill v Murphy , 63 AD3d 680, 681 [2009])." ( Stinner v Epstein , 162 AD3d 819 , 820-821 [2d Dept 2018].) "However, the individual directors cannot be held liable

2022These claims are personal to Miller; it is alleged that the Board acted in bad faith, out of animus toward Miller, in revoking his gym membership and allowing petitions against but not for him to be posted, and thus engaged in conduct not protected by the business judgment rule ( see Perlbinder , 65 AD3d at 989 ; GPS Global Parking Solutions, LLC v 151 W. 17th St.

2022These claims are personal to Miller; it is alleged that the Board acted in bad faith, out of animus toward Miller, in revoking his gym membership and allowing petitions against but not for him to be posted, and thus engaged in conduct not protected by the business judgment rule ( see Perlbinder , 65 AD3d at 989 ; GPS Global Parking Solutions, LLC v 151 W. 17th St.

2022"In reviewing the actions of a homeowners' association, a court should apply the business judgment rule and should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the association" ( 19 Pond, Inc. v Goldens Bridge Community Assn., Inc. , 142 AD3d 969, 970 [2016]; see also Matter of Levandusky v One Fifth Ave.

2021While that motion was pending, on August 30, 2017, the Supreme Court, after a hearing, granted Fieldpoint's motion to hold the plaintiffs in civil contempt based on their failure to remove the fence in accordance with the June 26, 2017 order, and directed the plaintiffs to purge themselves of their contempt by removing the fence. "'In reviewing the actions of a homeowners' association, a court should apply the business judgment rule and should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the asso

2025While “unequal treatment of shareholders is sufficient to overcome the directors’ insulation from liability under the business judgment rule, individual directors and officers may not be subject to liability absent the allegation that they committed separate tortious acts.” Meadow Lane Equities Corp. v. Hill, 63 A.D.3d 699, 700 (2nd Dept. 2009).

2025Unequal treatment of shareholders is sufficient to overcome the directors' insulation from liability under the business judgment rule ( see Meadow Lane Equities Corp. v Hill , 63 AD3d 699, 700 [2009]), and a director who participates in the commission of a tort committed by the board may be held individually liable ( see Fletcher v Dakota, Inc. , 99 AD3d 43 , 47 [2012]; cf. Cohen v Kings Point Tenant Corp. , 126 AD3d 843, 845 [2015]; Hill v Murphy , 63 AD3d 680, 681 [2009])." ( Stinner v Epstein , 162 AD3d 819 , 820-821 [2d Dept 2018].) "However, the individual directors cannot be held liable

2013The issue of whether defendant co-op breached the proprietary lease and the alteration agreement by stopping work that was proceeding in accordance with plaintiffs approved renovation plans is correctly resolved without regard to the business judgment rule (Whalen v 50 Sutton Place S. Owners, 276 AD2d 356 [1st Dept 2000]).

2013The issue of whether defendant co-op breached the proprietary lease and the alteration agreement by stopping work that was proceeding in accordance with plaintiffs approved renovation plans is correctly resolved without regard to the business judgment rule (Whalen v 50 Sutton Place S. Owners, 276 AD2d 356 [1st Dept 2000]).

2022Waters Edge, Inc. , 108 AD3d 697 , 699; see Matter of Beckerman v Lattingtown Harbor Prop., Owners Assn., Inc. , 183 AD3d 821, 823 ).

2022Waters Edge, Inc. , 108 AD3d at 699).

2019Regardless of whether New York or Delaware law applies, the business judgment rule does not protect Woodrow ( see Amfesco Indus. v Greenblatt , 172 AD2d 261, 264 [1st Dept 1991]; Brehm v Eisner , 746 A2d 244 , 264 n 66 [Del 2000]).

2014The business judgment rule, however, protects only directors who are disinterested, meaning they do not, for example, stand to gain any personal financial benefit in the sense of self-dealing “as opposed to a benefit which devolves upon the corporation or all stockholders generally” (Aronson v Lewis, 473 A2d 805, 812 [Del 1984], overruled on other grounds Brehm v Eisner, 746 A2d 244 [Del 2000]).