Judge Scott Fairgrieve
Gorbrook Associates and Fishman, derivatively on Gorbrook’s behalf, commenced this holdover action against Ilene Silverstein regarding the subject premises. The petition alleged Gorbrook owned the premises and Ilene and her husband moved into it without a lease or contractual grant, allegedly arranged by her father, Allen, the only other director of Gorbrook, aside from Fishman. Respondents moved for dismissal arguing Fishman did not have the authority to bring this action, and claimed a shareholder could not maintain a summary proceeding derivatively. The court disagreed finding a derivative action may be maintained by Fishman on behalf of Gorbrook. It noted the economic benefit of the proceeding belonged to the corporation, not Fishman individually, thus, any recovery from a shareholder’s derivative suit inured to Gorbrook’s benefit, not the shareholder. Hence, as Gorbrook was the owner of the premises and would receive the benefit of the summary proceeding, an action may be brought under Real Property Actions and Proceedings Law §721. Fishman adequately pleaded grounds in the petition establishing that demand on the board of directors would be futile, thus Fishman’s derivative suit may proceed under Business Corporation Law §626.
