THE DOCKET / BAD FAITH AND UNEQUAL TREATMENT
What the board is said to have done
Adopted house rules said to single out individual shareholders rather than apply to the building generally, including a rule governing parking spaces.
No tribunal ever decided this.
Matter of Atta v. 450 West 31st Owners Corp. · 2025 NY Slip Op 04042 (1st Dept 2025) · Sup Ct NY County · Index 651890/2023
No court has decided whether this conduct occurred. This decision resolved a procedural question. Nothing here is a finding that anyone did anything.
Outcome
Split decision
Filed
2023-04-17
Last decision
2025-07-03
Elapsed
2.2 yrs
Brought by
unit owner
Posture
motion to dismiss
What the court held
A cooperative board and its members are generally shielded by the business judgment rule, but a house rule that "deliberately singles out individuals for harmful treatment" escapes that shield at the pleading stage. Where a shareholder alleged that its unit was the only one whose demised premises included a parking area, that the board president had challenged its possessory interest in that area, and that the rule banning all parking necessarily affected only one shareholder tenant, bad faith was sufficiently pleaded and dismissal was improper. The remaining house rules -- governing freight elevator use and generally applicable fines -- were upheld under the rule because they applied to all shareholders.
“Plaintiffs failed to demonstrate that "the board's action has no legitimate relationship to the welfare of the cooperative, 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"”
Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530, 540 (1990), as quoted in Valyrakis, 161 AD3d 404, 407 and applied in Atta, 2025 NY Slip Op 04042
Outcome in full
Split, and still live. The First Department MODIFIED the dismissal to reinstate the first, third and ninth claims, and the fourth, fifth and sixth claims to the extent one petitioner challenged the parking-space house rule; otherwise affirmed. Also reinstated: a claim for easement by necessity, the petitioner's portion of the lot being landlocked. Dismissed and not revived: the remaining house-rule challenges (business judgment rule), breach of the covenant of quiet enjoyment (no actual eviction and no abandonment of possession), adverse possession (RPAPL 531 -- the landlord-tenant relation has existed and the tenancy has not expired), and prescriptive easement (use was permissive). No merits determination on whether the board acted in bad faith -- only that it was adequately pleaded.
What it cost
Not disclosed. No decision in this case states a figure, and we publish no estimate. Why costs are mostly blank.
What would have prevented this
The measurable fact in this opinion is the RATIO. Of every house rule challenged, only the one affecting a single shareholder survived dismissal; the rest were insulated without any inquiry into whether they were reasonable. That is the business judgment rule working exactly as designed -- and it is why "owners can always sue" is not an answer. A standard of review that reaches only rules targeting one identifiable person leaves everything short of open targeting unreviewable, which is the space most board conduct occupies.
Sources
Read in full and verified 2026-08-04.