Summary
In Kleinerman v. 245 E. 87 Tenants Corporation, 105 A.D.3d 492, 493, 963 N.Y.S.2d 187 (N.Y. App. Div. 2013), the court decided there was an issue of fact as to whether the defendant knew the payments were "kickbacks."
Summary of this case from Gessele v. Jack in the Box, Inc.Opinion
2013-04-11
Vivian KLEINERMAN, et al., Plaintiffs–Respondents, v. 245 EAST 87 TENANTS CORP., et al., Defendants–Appellants.
Braverman & Associates, P.C., New York (Scott S. Greenspun of counsel), for appellants. Brian M. Levy, New York, for respondents.
Braverman & Associates, P.C., New York (Scott S. Greenspun of counsel), for appellants. Brian M. Levy, New York, for respondents.
GONZALEZ, P.J., FRIEDMAN, ABDUS–SALAAM, ROMÁN, CLARK, JJ.
Order, Supreme Court, New York County (Milton A. Tingling, J.), entered August 27, 2012, which, to the extent appealed from as limited by the briefs, denied defendants' motion for summary judgment dismissing the causes of action for breach of fiduciary duty, aiding and abetting such breach, injunction as against defendants other than the cooperative corporation insofar as it is related to relocating plaintiffs' gas line, and unjust enrichment, and the claims for punitive damages and attorneys' fees, unanimously modified, on the law, to grant the motion with respect to the cause of action for breach of fiduciary duty as against the cooperative corporation and the injunction as against all defendants other than the cooperative corporation, and otherwise affirmed, without costs.
Plaintiffs, cooperative shareholders seeking to renovate their unit, allege that the cooperative corporation and its individualboard members condoned the superintendent's solicitation of kickbacks by improperly stopping certain renovations in the face of plaintiffs' accusations against him. Issues of fact exist, including whether the board members had knowledge of the superintendent's alleged conduct, whether the coop corporation stopped plaintiffs' renovations in good faith based on the interests of the coop, and whether plaintiffs were accorded disparate treatment ( see Bryan v. West 81 St. Owners Corp., 186 A.D.2d 514, 515, 589 N.Y.S.2d 323 [1st Dept. 1992] ). As to the unjust enrichment cause of action, there is an issue of fact whether the superintendent solicited kickbacks or merely accepted gratuitous payments. The punitive damages claim is viable in light of the tort cause of action for breach of fiduciary duty; a public wrong is not required ( see Bishop v. 59 W. 12th St. Condominium, 66 A.D.3d 401, 886 N.Y.S.2d 153 [1st Dept. 2009] ). Dismissal of the claim for attorneys' fee would be premature under the circumstances.
However, a corporation does not owe a fiduciary duty to its shareholders ( see Fletcher v. Dakota, Inc., 99 A.D.3d 43, 54, 948 N.Y.S.2d 263 [1st Dept. 2012]; Stalker v. Stewart Tenants Corp., 93 A.D.3d 550, 552, 940 N.Y.S.2d 600 [1st Dept. 2012] ). As to the injunction cause of action, only the coop corporation, as the “Lessor,” is authorized under the proprietary lease to consent to plaintiffs' proposed renovations ( see Weinreb v. 37 Apts. Corp., 97 A.D.3d 54, 57–58, 943 N.Y.S.2d 519 [1st Dept. 2012] ).
We have considered defendants' other contentions and find them unavailing.