Board of Managers of the Kingsley Condominium v. Villinvestment A.V.V. and Feldman

On August 18, 2003, in Board of Managers of the Kingsley Condominium v. Villinvestment A.V.V. and Feldman, Index No. 603944/02 (Sup. Ct., New York Co., August 18, 2003) (Tolub, J.), based on a motion filed by Kucker Marino Winiarsky & Bittens, LLP the court rendered a significant decision which limits a condominium board’s protection under the “business judgment” rule. The motion filed by KMWB sought summary judgment on defendants’ behalf, enabling them to proceed with a proposed condominium unit sale. Among other things, the court held that the plaintiff’s treatment of a proposed offer as bona fide precluded plaintiff from subsequently asserting otherwise. An offer may not be bona fide for some purposes but not for other purposes. Court also held plaintiff was required in its motion papers to include any alleged evidence that proposed purchase price was not bona fide. Evidence presented by the plaintiff for the first time in reply papers on a cross-motion could not be considered for either defendants’ motion or plaintiffs’ cross-motion because defendants had no opportunity to respond to the evidence. The court also held that the Board received notice when its managing agent received notice. While the business judgment rule may protect a Condominium Board in the event of a challenge to its determination of whether or not to exercise a right of first refusal, a failure to act within the time limits set forth in the by-laws has nothing to do with business judgment. Equity will intervene in the event that the party who failed to act will suffer a forfeiture if not permitted to exercise its right of first refusal. However, cases in which such forfeiture is found generally involve parties that have invested considerable sums of money in renovating the subject premises, which they will lose if they cannot exercise the option that they had, whether it was to renew the lease or to purchase the property.]