Practice point: In moving to amend the complaint, plaintiff's proposed claims were barred to the extent that they are palpably insufficient or patently devoid of merit. The claim that board members violated the bylaws is insufficient, as such a violation is effectively a breach of contract and participation in a contract does not give rise to individual director liability. The cause of action alleging that the board violated the bylaws by failing to muster a quorum of unit owners for the annual election of board members is insufficient, as plaintiff cites to no authority imposing such a duty on the board.
In addition, the business judgment rule, which applies to a condominium's board of
directors, bars the cause of action alleging that the board acted outside the scope of its authority under the bylaws by failing to get the unit owners' approval for an improvement costing more than $10,000. The bylaw provision on which
plaintiff relies is not applicable to the elevator project at issue, as the project did not constitute an improvement, but was merely the replacement of existing building components that had
fallen into a state of disrepair.
The business judgment rule also bars the cause of action alleging that the board acted in bad faith and for an improper
purpose by wasting the condominium's funds on unnecessary litigation
with the Sponsor. The bylaws give the board the power to negotiate and
settle "all claims and actions relating to the Condominium." The issues
of how aggressive the board should be toward the Sponsor, and whether it
should discontinue a lawsuit against the Sponsor, are matters of
business judgment.
Student note: A movant's mere lateness is not a barrier to the amendment of the complaint.
Case: Pomerance v McGrath, NY Slip Op 00466 (1st Dept. 2015)
Here is the decision.
Monday's issue: A successful motion for leave to file a late notice of claim.
