Ackerman v. 305 East 40th Owners Corp.
Decision Date | 19 January 1993 |
Citation | 592 N.Y.S.2d 365,189 A.D.2d 665 |
Parties | Murray ACKERMAN, et al., Plaintiffs-Appellants, v. 305 EAST 40TH OWNERS CORP., Defendant-Respondent. |
Court | New York Supreme Court — Appellate Division |
Before MURPHY, P.J., and CARRO, ROSENBERGER, ASCH and KASSAL, JJ.
Order and judgment (one paper), Supreme Court, New York County (Karla Moskowitz, J.), entered on or about April 20, 1992, which, inter alia, granted the defendant's cross motion to dismiss the complaint, unanimously reversed, on the law and the facts, the cross motion is denied and the complaint is reinstated, without costs.
Apartment 3-0 at 305 East 40th Street became available when the record owner filed for bankruptcy and the bank, which held liens on the apartment, decided not to cure the owner's maintenance default and take over the apartment. The plaintiff, Murray Ackerman, a resident shareholder and director of the cooperative, decided to submit a bid for the apartment, which was to be sold at auction. According to Ackerman, at a meeting conducted prior to the auction, he informed the board of directors of the cooperative that he intended to bid on the apartment. Although he contends that none of the board members objected, the defendant, by way of affidavits from some of the directors of the cooperative, maintains that they were never informed of Ackerman's intentions.
After this meeting, Ackerman received permission from the president of the cooperative to post notices of the auction in the building. A notice also appeared in The New York Times. The plaintiffs, counsel for the cooperative, and nine other individuals attended the auction. The plaintiffs' bid of $18,000 was higher than the $17,000 bid submitted by the defendant and was accepted and sealed. The plaintiffs signed a "Memorandum of Sale", the terms of which provided that the successful bid was subject to approval by the board of directors of the cooperative. Ackerman gave counsel to the cooperative a bank teller's check for $1,800 as a downpayment on the apartment. The plaintiffs' attorney requested a closing date but received no response from the defendant. Some four months later, the plaintiffs were informed that the board had voted to reject their bid. The plaintiffs then commenced the instant proceeding seeking specific performance and damages. They also moved for a preliminary injunction.
The defendant cross moved to dismiss the complaint on the ground, inter alia, that it failed to state a cause of action. The Supreme Court denied the plaintiffs' motion for a preliminary injunction and granted the defendant's cross motion to dismiss the complaint based on its conclusions that Ackerman's bidding was inconsistent with his duties as a director, and that the vote of the board was a proper exercise of its business judgment. As limited by their brief, the plaintiffs contend that it was error to dismiss their complaint for failure to state a cause of action. We agree.
(McGill v. Parker, 179 A.D.2d 98, 105, 582 N.Y.S.2d 91). While a court may consider affidavit facts as a supplement to the complaint to show the cause of action to be valid, such affidavits "are not to be examined for the purpose of determining whether there is evidentiary support for the pleading" (Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635, 389 N.Y.S.2d 314, 357 N.E.2d 970).
The defendant contends that Mr. Ackerman violated his obligations as a director by usurping a corporate opportunity. Pursuant to the corporate opportunity...
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