40 West

67TH STREET CORP. V. PULLMAN 790 N.E.2d 1174 (2003)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

D bought into the cooperative and acquired 80 shares of stock appurtenant to his proprietary lease for Apartment 7B. D engaged in a course of behavior that, in the view of the cooperative, began as demanding, grew increasingly disruptive and ultimately became intolerable. D started complaining about his elderly upstairs neighbors, a retired college professor and his wife who had occupied apartment 8B for over two decades. In a stream of vituperative letters to the cooperative - 16 letters in the month of October 1999 alone - he accused the couple of playing their television set and stereo at high volumes late into the night and alleged that they were running a loud and illegal bookbinding business in their apartment. D also charged that the couple stored toxic chemicals in their apartment for use in their 'dangerous and illegal' business. After investigation, P determined that the couple did not possess a television set or stereo and that there was no evidence of a bookbinding business or any other commercial enterprise in their apartment. Hostilities escalated, resulting in a physical altercation between D and the retired professor. D distributed flyers to the cooperative residents referring to the professor, by name, as a potential 'psychopath in our midst' and accused him of cutting D's telephone lines. D described the professor's wife and the wife of the Board president as having 'close intimate personal relations.' D made alterations to his apartment without Board approval, had construction work performed on the weekend in violation of house rules. D commenced four lawsuits against the upstairs couple, the president of the cooperative and the cooperative management, and tried to commence three more. P called a special meeting pursuant to Article III, section (1) (f) of the lease agreement, which provides for termination of the tenancy if the cooperative by a two-thirds vote determines that 'because of objectionable conduct on the part of the Lessee * * * the tenancy of the Lessee is undesirable * * * .'3 The cooperative informed the shareholders that the purpose of the meeting was to determine whether D 'engaged in repeated actions inimical to cooperative living and objectionable to the Corporation and its stockholders that make his continued tenancy undesirable * * *.' More than 75% of the outstanding shares in the cooperative were present. By a vote of 2,048 shares to 0, they passed a resolution directing the Board to terminate his proprietary lease and cancel his shares. D refused to cooperate, and the Supreme Court denied the cooperative's motion for summary judgment and dismissed its cause of action that premised ejectment solely on the shareholders' vote and the Notice of Termination. The court declined to apply the business judgment rule to sustain the shareholders' vote and the Board's issuance of the Notice of Termination. It held that to terminate a tenancy, a cooperative must prove its claim of objectionable conduct by competent evidence to the satisfaction of the court. A divided Appellate Division granted the cooperative summary judgment on its causes of action for ejectment and the cancellation of D's stock. D appealed.