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Court Applies the Business Judgment Rule

The plaintiffs own 1 of 20 lots comprising a subdivision known as Estates at Brookview. As such, the plaintiffs are members of the Estates at Brookview Homeowner’s Association (hereinafter the Association) and subject to its bylaws and “Declaration of Restrictions, Covenants, and Easements” (hereinafter the Declaration). A New York Probate Lawyer said that in the fall of 2004 the plaintiffs constructed a shed on their property. Upon inspection of the completed structure by the Town of Chester’s Building Inspector, the shed was approved and the plaintiffs were issued a certificate of compliance.

After complaints about the shed were received by the Board of Directors of the Association, the plaintiffs received a document entitled “Determination and Notice of Violation” (hereinafter the DNV), issued by the Board, advising them that their shed violated certain provisions of the Declaration. The plaintiffs contend that the Board lacked the authority to issue the DNV.

As a result, a New York Estate Litigation Lawyer said that, plaintiffs filed an action for summary judgment, declaring that the document entitled “Determination and Notice of Violation” issued by the Board of Directors of the Estates at Brookview Homeowner’s Association is null and void. A New York Estate Litigation Lawyer said that defendants filed a cross motion for summary judgment and for an award of an attorney’s fee pursuant to the Association’s bylaws and “Declaration of Restrictions, Covenants, and Easements.

New York City Probate Lawyers said that, the Supreme Court granted the motion and declared that the document entitled “Determination and Notice of Violation” is null and void and denied defendants’ cross motion for summary judgment and for an award of an attorney’s fee pursuant to the Association’s bylaws and “Declaration of Restrictions, Covenants, and Easements.
The issue in this case is whether the document issued by the Board of Directors of the Association, entitled “Determination and Notice of Violation” is null and void.

The Court in deciding the case said that, in reviewing the actions of a homeowners’ association and its board of directors, “absent claims of fraud, self-dealing, unconscionability or other misconduct, a court should apply the business judgment rule and should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the corporation”.

Manhattan Probate Lawyers said that the Court held that, the business judgment rule protects the board’s business decisions and managerial authority from indiscriminate attack. At the same time, it permits review of improper decisions, as when the challenger demonstrates that the board’s action has no legitimate relationship to the welfare of the development, deliberately singles out individuals for harmful treatment, is taken without notice or consideration of the relevant facts, or is beyond the scope of the board’s authority”.

In the case at bar, the plaintiffs established their prima facie entitlement to summary judgment declaring that the DNV is null and void. The relevant provisions in the Declaration are unambiguous and require that each lot owner “prevent the development of any unclean, unsightly or unkempt conditions of buildings or grounds on such lot which would tend to substantially detract from the natural beauty and residential character of the subdivision.” They do not give the Board the authority to regulate the type or shape of a building, such as the shed, erected on a homeowner’s property and conforming to the applicable zoning laws and regulations, only the condition of such building. Since the defendants cannot point to any other basis for the Board’s authority for issuing the DNV, and since they failed to raise a triable issue of fact, the Supreme Court properly granted that branch of the plaintiff’s motion which was for summary judgment declaring that the DNV is null and void, and denied the defendants’ cross motion for summary judgment and for an award of an attorney’s fee.

Accordingly, the Court ordered that the order is affirmed insofar as appealed from, with costs, and the matter is remitted to the Supreme Court, Orange County, for the entry of a judgment declaring that the document entitled “Determination and Notice of Violation” is null and void.
The business judgment rule protects the board’s business decisions and managerial authority from indiscriminate attack. If you felt that there was a violation of this rule, seek the advice of a New York Estate Attorney and/or New York Estate Administration Attorney to help you with your case and declare certain documents in violation of such rule as null and void. At Stephen Bilkis and Associates, we have reliable New York Estate Litigation Attorneys that can handle your case.

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