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Townhouse Residents, Members of a Community Homeowners’ Association, Entered an Implied Contract to Pay a Proportionate Share of the Fees for Authorized and Necessary Services in Connection with the Maintenance of the Townhouse Facilities

The Third Department affirmed Supreme Court’s ruling that defendants (townhouse residents) had entered an implied contract to pay a proportionate share of the full cost of maintaining the facilities. The defendants had refused to pay membership fees after a dispute with other residents arose.  The Third Department, applying the “business judgment rule,” determined the fees assessed by the plaintiffs were for authorized and necessary services provided by the plaintiff:

… [T]he Court of Appeals has made clear that an implied contract for a community homeowners’ association “includes the obligation to pay a proportionate share of the full cost of maintaining . . . facilities and services, not merely the reasonable value of those actually used by any particular resident” … . We review plaintiff’s action in undertaking such expenditures under the business judgment rule, which, in the absence of “claims of fraud, self-dealing, unconscionability, or other misconduct,” is limited to an inquiry of “whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the corporation” … . Bluff Point Townhouse Owners Assn., Inc. v Kapsokefalos, 2015 NY Slip Op 04905, 3rd Dept 6-11-15

 

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