The past 12 months has been the year unit owner’s and shareholders have found cooperative and condominium board of director’s kryptonite at the appellate courts. For years, the courts of New York have been rubber stamping board decisions under the shield of the business judgment rule. Whether it be the persuasive facts in this year’s crop of cooperative and condominium cases or a change in policy, the appellate courts have been enforcing the corporate documents and determining whether boards have been acting in good faith and with the proper authority and piercing the shield of the business judgment rule.

History of Deference

Twenty-four years ago, in Levandusky v. One Fifth Avenue Apartment Corp.,1 the New York Court of Appeals announced that, henceforth, New York courts would apply the business judgment rule, first developed in the context of business corporate law, in cases challenging the decisions and actions of the governing boards of cooperative apartment corporations and condominium associations.

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