Justice Peter Moulton
A proceeding involved a dispute between respondent, cooperative 7 East 35th Street Owners Inc., and petitioners, Goldman, the coop’s former board president, and his wife. This dispute arose out of the co-op’s 2012 reversal of its 2006 decision not to allocate additional shares to the petitioners’ apartment in connection with an alteration. Petitioners sought a judgment annulling, as unlawful and capricious, the co-op’s 2012 decision to allocate 400 additional shares to petitioners’ apartment. The court granted the petitioners’ cause of action for a judgment annulling the co-op’s 2012 decision and issuing a proprietary lease to cover the alteration, finding that the co-op’s decision was an improper attempt to rescind its 2006 decision and is not protected by the business judgment rule. The court noted that the respondents failed to demonstrate that Goldman was acting as a fiduciary in connection with the alteration or that the damages were caused by his misconduct, as opposed to the board’s own failures in communication with their attorney and managing agent. The court added that respondents cannot demonstrate fraud because they cannot show that Goldman had a duty to disclose to the board the opinions of his own agents.
