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Axelrod v. 400 Owners Corp.

Other Lower Courts

October 29, 2001

Sharon Axelrod, Plaintiff,
v.
400 Owners Corp. et al., Defendants.

Page 462

COUNSEL

Cantor Epstein Simon & Degenshein, L. L. P., New York City (Stephanie Kaufman of counsel), for defendants.

Peter Axelrod & Associates, New York City (Osman Dennis of counsel), for plaintiff.

OPINION

Herman Cahn, J.

Defendants 400 Owners Corp. (Owners Corp.), Harold Spitzer, Sam Friedman, Lewis Clayton, Mary Gherty, Larry Timmons, Gloria Appeal and Gerald Cohen move, pursuant to CPLR 3211, for an order dismissing the complaint by reason of lack of standing and failure to state a cause of action.

Owners Corp. is a cooperative corporation in which plaintiff, Sharon Axelrod, is a shareholder. The individual defendants are members of its board of directors. Axelrod alleges that when she sought to sell her apartment, i.e., the underlying shares, etc., defendants improperly refused to approve two prospective purchasers, before finally consenting to a sale to a third person.

In July 1998, Axelrod entered into a contract to sell the apartment to Richard Kassel and Penny Venetis for $435,000. She alleges that the defendant directors rejected the prospective purchasers because they were a married couple in their thirties and were of child-bearing age (i.e., likely to have children in the foreseeable future). In December 1998, Axelrod's broker found another married couple interested in buying the apartment. In an informal interview with the board, the broker was advised that the prospective purchasers would not be approved, as a result of which the parties did not go to contract.

In February 1999, the broker secured several additional prospective purchasers. The Rigbys, a married couple, offered $435,000 and the other, John McCusker, offered $455,000. Axelrod then entered into a contract with McCusker, who was

Page 463

in his early thirties and was about to be married. The board of directors, however, rejected McCusker as a purchaser.

In October 1999, Axelrod entered into a contract of sale with Martine Shen, a 59-year-old divorced woman with no minor children. The price was $455,000. This time, the board approved the sale.

In evaluating a motion to dismiss, the court assumes the allegations of the complaint to be true and liberally construes the complaint in plaintiff's favor (Bansbach v Zinn, 258 A.D.2d 710 [3d Dept. 1999]).

The first cause of action alleges that defendant Harold Spitzer, the board president, breached a fiduciary duty owed to plaintiff, in that his position regarding the suitability of prospective purchasers was motivated by his own interest. Specifically, it is claimed that Spitzer, whose own apartment was on the same floor as that of plaintiff, thought it was in his interest to keep his floor " quiet" and free of children. In addition, plaintiff states that Spitzer had a business relationship with the real estate broker involved in the proposed sale to Ms. Shen (i.e., the ...


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