STATUTE OF LIMITATIONS IN ACTIONS AGAINST CO-OP BOARD

Herriott v. 206 W. 121st ST., 2017 NY Slip Op 30218 - NY: Supreme Court 2017:

""Generally, the applicable statute of limitations depends upon the substantive remedy sought" (Board of Managers of Bayside Plaza Condominium v. Mittman, 43 Misc.3d 1208(A), 990 N.Y.S.2d 436 [Supreme Court, New York County 2014]). "When the relief sought is equitable in nature, the six-year limitations period found in CPLR 213(1) applies" (Board of Managers of Bayside Plaza Condominium, supra citing Kaufman v. Cohen, 307 A.D.2d 113, 760 N.Y.S.2d 157 [1st Dept 2003]).

Nevertheless, any allegations that the Co-op was acting "in violation of its own governing documents," are subject to "the four-month statute of limitations associated with Article 78 proceeding" (Konigsberg v. 333 East 46th St. Apartment Corp., 2016 WL 3455940 (N.Y.Sup.), 2016 N.Y. Slip Op. 31180(U) (emphasis added) citing see e.g. Katz v Third Colony Corp., 101 AD3d 652, 653 [1st Dept 2012] [allegations that defendant cooperative acted beyond the powers granted to them in the cooperative's governing documents are governed by the four month statute of limitations for an Article 78 proceeding]; and Buttitta v Greenwich House Coop. Apts., Inc., 11 AD3d 250 [1st Dept 2004]). And, even actions that are allegedly violative of the BCL are governed by the four-month statute of limitations (see e.g., Lindkvist v. Honest Ballot Ass'n, 31 Misc.3d 1234(A), 932 N.Y.S.2d 761 (Table), 2011 (stating, The court's jurisdiction flows from BCL § 619 to which a four-month Statute of Limitations applies"))."

GENERAL RULES ON ACTIONS AGAINST CO-OP BOARD

Sims v. Firstservice Corp., 2017 NY Slip Op 30104 - NY: Supreme Court 2017:

"Before shareholders may commence a derivative action, they must make a demand upon the corporation to commence the action, unless such demand would be futile (Marx v. Akers, 88 N.Y.2d 189 [1996]). Under the rule that the plaintiff may commence a derivative action only after demanding that the board of directors initiate a suit, a demand will be considered futile if the complaint alleges with particularity: 1) that the majority of the directors are interested in the transaction; 2) that the directors failed to inform themselves to a degree reasonably necessary about the transaction; or 3) that the directors failed to exercise their business judgment in approving the transaction (id.).

"Under the business judgment rule, which applies to the directors of residential cooperative corporations, absent a showing of discrimination, self-dealing or misconduct by board members, corporate directors are presumed to be acting in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes" (Jones v. Surrey Coop. Apts., 263 A.D.2d 33, 36 [1st Dept., 1999] (internal citation and quotation marks omitted)). "Thus, without a showing of a breach of fiduciary duty to the corporation, judicial inquiry into the actions of corporate directors is prohibited, even though `the results show that what [the directors] did was unwise or inexpedient'" (id.).

A cooperative board owes a fiduciary duty to further the collective interests of the cooperative (40 W. 67th St. v. Pullman, 100 N.Y.2d 147, 150 [2003]). The business judgment rule prohibits judicial inquiry into the actions of the board of directors of a cooperative undertaken in good faith and in furtherance of the cooperative's business (id.)."