Slarskey Scores Fiduciary Misconduct Victory for Gramercy Park Residents
In a classic New York City co-op battle, Slarskey LLC successfully represented co-op residents to invalidate the attempt by a Gramercy Park co-op board to liquidate a 35-residence building for the benefit of a luxury condominium real estate developer.
In a thorough opinion that adopted all of the Firm’s arguments and evidence (and then some), the Court unmasked a plan “hatched” by the co-op board to sell off the co-op’s air and development rights, and then force a liquidation of the corporation, so that a luxury condominium developer could proceed with its development of an adjoining lot.
The Court found that the board had disseminated “demonstrably false” information about the transaction, “pressured” shareholders into supporting the transaction, and “unquestionably breached its fiduciary duties.”
The firm successfully advanced three separate legal theories, each of which mandated “annulment” of the improperly adopted development rights agreement: the board violated Article 78 by acting arbitrarily and without substantial justification. The board violated BCL 909(a) by attempting to liquidate the corporation without prior shareholder approval. And the board’s breach of fiduciary duty subjected the disputed agreement to equitable rescission.