Stinner v. Epstein
Supreme Court of the State of New York, Appellate Division, Second Department, June 13, 2018
Plaintiff commenced action after suffering a bed bug infestation in their coop apartment against co-op and board of directors, including defendant Jay Sharfstein, individually and as a member of the board. Plaintiffs alleged that the infestation originated in the apartment across the hall from theirs and continued for approx. 10 months until plaintiffs hired an exterminator. Plaintiffs alleged that the Board deliberately conspired to conceal the unsafe condition posed by the building-wide infestation and that Sharfstein received an improper $25,000 payment from the board to repair water damage to his apartment by declined to take responsibility for plaintiff’s expenses caused by bed bug infestation. Defendant filed motion pursuant to CPLR 3211(a)(7) to dismiss breach of fiduciary duty cause of action as asserted against Sharfstein and Supreme Court denied. This Court affirms, finding that a board of directors owe its shareholders a fiduciary duty and unequal treatment of shareholders is sufficient to overcome directors’ insulation from liability under the business judgment rule. Sharfstein’s active participation in unequal treatment is sufficient to sustain cause of action.