Co-Op Board Reversed a Prior Resolution Which Permitted the Co-Op’s Then President to Enclose a Roof Terrace and Create a Master Bedroom Suite and Bath Without Allocation of Additional Shares or Increase in Maintenance—President Had Allegedly Pressured Co-Op’s Attorney and Managing Agent to Approve Such Agreement—Co-Op Argued That the Statute of Limitations Had Tolled Pursuant to the “Open Repudiation Rule” Which Tolls the Statute Until a Fiduciary Has Openly Repudiated His or Her Obligation or the Relationship Has Otherwise Been Terminated—Co-Op Failed to Communicate With Its Own Attorney and Managing Agent—President’s Self-Interest Was Obvious—He Was Not Acting in the Fiduciary Capacity When He Was Openly Arguing for His Own Benefit—Doctrine of “Unclean Hands”
This matter involved a dispute between the respondent cooperative corporation (co-op) and petitioner “A,” the co-op’s former board president and his wife. The dispute arose from the co-op’s June 8, 2012 reversal of its June 16, 2006 “decision not to allocate additional shares to petitioners’ apartment in connection with an alteration” (initial determination). The petitioners sought “a judgment annulling, as unlawful and arbitrary and capricious, the [co-op's] June 8, 2012 decision to allocate 400 additional shares to petitioners’ apartment” (second determination). The petitioners also sought a declaration that a 2007 alteration agreement was valid and enforceable. Additionally, they sought “compensatory and punitive damages for respondents’ alleged breach of fiduciary duty,” citing Business Corporation Law (BCL) §717 (a).
