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THE CONDOMINIUM BOARD OF MANAGERS PROPERLY APPLIED THE BUSINESS JUDGMENT RULE WHEN IT AUTHORIZED CONSTRUCTION WHICH NARROWED PLAINTIFF’S BOAT SLIP; THE DISSENT ARGUED THE BOARD FAILED TO SHOW THAT IT ACTED IN ACCORDANCE WITH THE CONDOMINIUM BYLAWS, WHICH IS REQUIRED BY THE BUSINESS JUDGMENT RULE (SECOND DEPT).

The Second Department, over a dissent, determined the defendant condominium board of managers properly applied the business judgment rule when it authorized construction which narrowed the boat slip assigned to plaintiff when she purchased the condominium:

“Under the business judgment rule, the court’s inquiry is limited to whether the board acted within the scope of its authority under the bylaws (a necessary threshold inquiry) and whether the action was taken in good faith to further a legitimate interest of the condominium. Absent a showing of fraud, self-dealing or unconscionability, the court’s inquiry is so limited and it will not inquire as to the wisdom or soundness of the business decision” … .

From the dissent:

Under the business judgment rule, a necessary threshold inquiry is whether the board acted within the scope of its authority under the bylaws and whether the action was taken in good faith to further a legitimate interest of the condominium … . Here, as set forth below, the Board failed to show, prima facie, that it satisfied this first prong—that it acted pursuant to the bylaws. Katz v Board of Mgrs. of Stirling Cove Condominium Assn., 2022 NY Slip Op 00033, Second Dept 1-5-22

 

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