Brenda Pomerance v. Brian Scott McGrath, Board of Managers of the 310 West 52nd Street Condominium Association, et al.
Supreme Court, Appellate Division, 1st Department, October 4, 2016
Plaintiff, a unit owner in a condominium, commenced an action against the residential Board of Managers of the condominium and each individual member of the Board of Managers alleging, among other things, that the Board violated Real Property Law §339-w by denying her access to inspect and copy monthly financial reports, condominium invoices and legal invoices, and for breach of fiduciary duty personally against each individual Board member for their failure to provide access to the books and records. Both parties moved for summary judgment. On the inspection cause of action, the Supreme Court held both motions in abeyance pending a hearing to determine if Plaintiff sought the records in good faith and for a proper purpose. On the breach of fiduciary duty cause of action, the Court denied defendant’s motion for dismissal against the individually named defendants.
The Appellate Division reversed holding that “plaintiff has a right, whether statutory or under the common law, to examine monthly financial reports, building invoices, minutes of board meetings, and appropriately redacted legal invoices, so long as it is done in good faith and for a valid purpose.” The Court further held that “plaintiff’s right to examine records at the managing agent’s office, during convenient weekday hours, includes the right to create paper copies or electronic copies at her own expense during the inspection.” To address confidentiality concerns, the Court held that requiring a unit owner to sign a confidentiality agreement would suffice.
On the fiduciary duty cause of action, the Appellate Division held that the Supreme Court erred in failing to dismiss this cause of action against the individual directors as “directors who are responsible for mere nonfeasance by the entity, without causing the commission of any affirmatively tortious acts, are not subject to personal liability for such nonfeasance.” The right to inspect the books and records and enforcing the By-Laws are obligations of the condominium association and the Board “as a body,” not Board members in their individual capacity.