When Are Individual Board Members Liable for the Coop’s Misdeeds in New York?

In the case of Weinreb v. 37 Apartments Corp., New York’s First Department was faced with the question of under what circumstances a coop’s board members can be personally named as defendants in a lawsuit.  The central facts of the lawsuit are as follows:  Weinreb bought a penthouse apartment (overlooking the Hudson River) on the Upper West Side that needed repairs.  Weinreb submitted the repair/renovation plans to the Board, but the Board refused to ratify them.  Weinreb claimed that the Board’s refusal was improper and otherwise unlawful while the Board claimed it had sound reasons for slowing down the repair plans.  Weinreb filed a lawsuit (against both the Cooperative and the individual board members) seeking to compel the Board to ratify the plans.  The Appellate Division was asked to decide whether the individual board members were proper parties to the suit.  The answer was no.  The court reasoned that: “individual board members [cannot be named] as defendants, where they are not accused of [independent] tortious conduct.”  Good news for cooperative insurers who are often faced with the question of just who they have to defend in a disgruntled owner lawsuit.

For more information about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.