Sharie Graham v. 420 East 72nd Street Tenants Corp., et al.

Sharie Graham v. 420 East 72nd Street Tenants Corp., et al.

Supreme Court of the State of New York, County of New York, June 1, 2016

Plaintiff is the shareholder in the defendant Apartment Corporation, and the proprietary lessee of apartment 1D in the cooperative apartment building owned by the Apartment Corporation. When plaintiff applied to purchase another apartment in the building, the defendant made a very low offer to buy apartment 1D for $400,000, which offer plaintiff rejected. Plaintiff thereafter received an all cash offer of $495,000, which the Apartment Corporation’s Board of Directors (the “Board”) rejected as under market value. The potential purchasers increased their offer to $535,000, based on a list of comparable sales provided by the managing agent. When the Board rejected the application again claiming that the price was still too low, plaintiff commenced this action for breach of fiduciary duty, tortious interference with a prospective contract, declaratory relief ordering the sale be approved and breach of contract for acting in bad faith/self-dealing in not approving the sale.

Defendant moved for summary judgment on the grounds that their decision was protected by the business judgment rule and that since Plaintiff could not show discrimination, self-dealing or misconduct, the Board has the presumption of acting in good faith. Defendant also alleged that the reason for the rejection was that the offers were below market value. Plaintiff claimed there was self-dealing based on the Board’s previous offer to purchase the apartment from her for $400,000.

The court denied defendant’s motion for summary judgment on the ground that there was an issue of fact “as to whether or not the Board engaged in self-dealing because they had an interest in purchasing” the apartment.