| Matter of St. Denis v Queensbury Baybridge Homeowners Assn.,Inc. |
| 2012 NY Slip Op 08212 [100 AD3d 1326] |
| November 29, 2012 |
| Appellate Division, Third Department |
| In the Matter of John St. Denis, Respondent, v QueensburyBaybridge Homeowners Association, Inc., Appellant. |
—[*1] John St. Denis, Queensbury, respondent pro se.
Spain, J. Appeal from an order of the Supreme Court (Muller, J.), entered July 27, 2011 inWarren County, which, among other things, converted an application, brought pursuant to CPLRarticle 78, into a plenary action and dismissed the second cause of action.
Petitioner is a property owner in the Town of Queensbury, Warren County and a member ofrespondent, a domestic, not-for-profit corporation that is governed by its Declaration ofCovenants, Restrictions, Easements, Charges and Liens (hereinafter declaration) and its bylaws.Petitioner commenced this proceeding alleging five claims against respondent, only one of whichremains pending;[FN1]namely, that respondent's July 2009 amendment to its 2009 budget and subsequent increase inmonthly dues violated its declaration. Supreme Court denied respondent's motion to dismiss theclaim, finding that petitioner had standing, and converted the proceeding into a plenary action.Respondent appeals, and we now affirm.[*2]
Respondent asserts that Supreme Court erred in findingthat petitioner had standing to challenge respondent's amendment to its annual budget andsubsequent increase in monthly dues. Specifically, respondent asserts that the claim is derivative,brought on behalf of the corporation and, as such, must comply with N-PCL 623 (a), whichrequires a member to be joined by enough other members or shareholders of the corporation suchthat the number of petitioners amounts to at least 5% of the total number of shareholders of thecorporation (see N-PCL 623 [a]; Clark v Trois, 21 AD3d 439, 440 [2005], lv dismissed anddenied 6 NY3d 829 [2006]). It is undisputed that petitioner does not represent 5% ofrespondent's members.
We agree with Supreme Court that petitioner has standing to assert this claim in hisindividual capacity. Respondent's declaration specifically provides that petitioner, or "any[o]wner[,] shall have the right to enforce, by any proceeding at law or in equity, all restrictions,conditions, covenants, reservations, liens and charges no [sic] or hereafter imposed by theprovisions of this [d]eclaration." The Not-For-Profit Corporation Law creates limited standingfor shareholders—that they would not otherwise have—to bring derivative actions;it does not operate to take away individual standing derived from other sources (see generally Caprer v Nussbaum, 36AD3d 176, 182-184 [2006]). Here, the declaration recognizes petitioner's standing to enforcehis rights under the declaration and, here, petitioner alleges that when, in July 2009, respondentamended its budget and raised fees mid-year, it violated the declaration. Unlike a situation wherean individual member seeks to redress some wrong to, and on behalf of, a corporation (compare Tae Hwa Yoon v New York HahnWolee Church, Inc., 56 AD3d 752, 753-754, 755 [2008] [claim for misappropriation ofcorporate funds]; Clark v Trois, 21 AD3d at 440 [same]; Bernbach v Bonnie BriarCountry Club, 144 AD2d 610, 610 [1988] [claim for misconduct by corporation's boardresulting in harm to corporation], lv dismissed 74 NY2d 715 [1989]), here, petitioneralleges—as an individual stakeholder—that respondent's board of directors hasviolated its declaration to the detriment of its individual members. Although judicial review ofrespondent's exercise of authority with respect to assessing fees is limited,[FN2]its individual members are authorized to challenge actions allegedly taken in contravention of itsdeclaration or bylaws (see Yusin vSaddle Lakes Home Owners Assn., Inc., 73 AD3d 1168, 1171-1172 [2010] [individualmember challenged leash law imposed by board of homeowners' association]; Levine vGreene, 57 AD3d at 628 [individual member challenged budget]; Forest Hills Gardens Corp. v West SideTennis Club, 23 AD3d 338, 340 [2005] [member challenged imposition of maintenancefees]).
Finally, as petitioner has standing to bring suit against respondent, we discern no abuse ofdiscretion in Supreme Court's decision to convert the proceeding to a plenary action (seeCPLR 103 [c]; Matter of Aydin vCommissioner of Taxation & Fin., 81 AD3d 1203, 1205 n [2011]; Hodges v Beattie, 68 AD3d 1597,1598 [2009]).[*3]
Rose, J.P., Malone Jr., Garry and Egan Jr., JJ., concur.Ordered that the order is affirmed, with costs.
Footnote 1: At a preliminary conference,petitioner withdrew his first and third claims against respondent and, after reviewing thesubmissions of the parties, Supreme Court dismissed his second claim for want of standing. Inhis brief, petitioner acknowledges that he has now also withdrawn his fourth claim.
Footnote 2: "[A]bsent claims of fraud,self-dealing, unconscionability, or other misconduct, the court should apply the businessjudgment rule and should limit its inquiry to whether the action was authorized and whether itwas taken in good faith and in furtherance of the legitimate interests of the corporation" (Levine v Greene, 57 AD3d 627,628 [2008] [internal quotation marks and citation omitted]; see Matter of Levandusky v OneFifth Ave. Apt. Corp., 75 NY2d 530, 542 [1990]).