A respondent owns a well-known Manhattan cooperative housing complex (co-op). The petitioners are “middle class” “cooperators” who, previously had “long-term, relatively inexpensive licenses to park their cars in [co-op’s] garage.” The co-op’s board of directors (board) voted to change “from a ‘park-and-lock’ system to a ‘valet parking’ system” and to have a parking company operate the garage. After the board voted to approve the change and a proposed contract with the parking lot operator (contract), the petitioners filed the subject Article 78 proceeding, seeking “to annul the board’s decisions.” The petitioners alleged that “the board failed to provide proper advance notice of the votes,” had “exceeded its authority; and…the contract is illegal.”

The respondents had moved to dismiss, “primarily on the grounds that the petition was untimely and that the business judgment rule insulated the board’s actions.” The petitioners had cross-moved for sanctions, alleging frivolous litigation and that the respondents had committed “various alleged bad acts.” The court had dismissed the petition on “the ground of untimeliness, while also addressing the business judgment rule and other issues” and referred the respondents’ request for attorney fees, “for which petitioners’ proprietary leases provided, to a referee to hear and report.”