Opinion ID: 1981302
Heading Depth: 1
Heading Rank: 12

Heading: Fiduciary Duty/N-PCL

Text: Plaintiffs broadly allege that notwithstanding Chapter 1, the conversion was required to follow the procedures in N-PCL 510 and 511. They also contend that Empire's Board breached its fiduciary duty by deciding to convert. Indeed, plaintiffs allege that even before Chapter 1 was enacted, the Board breached its fiduciary duty by invit[ing] the politician-legislators to decide how its assets should be used after the conversion rather than making its own determination. The short response to this claim is that Chapter 1 supersedes all inconsistent common-law and statutory duties (Insurance Law § 7317 [f] [ii]). Even were the Court to somehow overcome this obstacle, the business judgment rule, which we discussed most recently in 40 W. 67th St. v Pullman (100 NY2d 147 [2003]), bars plaintiffs' claims. To the extent that plaintiffs complain about action occurring before Chapter 1 was enacted (i.e., inviting the Legislature to decide how to allocate Empire's not-for-profit assets), this claim is without merit because the plan of conversion  whether the one presented to the Superintendent in 1999 or the one presented to him after Chapter 1's enactment  was, in the Board's judgment, necessary to safeguard Empire's continued viability ( see Auerbach v Bennett, 47 NY2d 619, 629 [1979] [the business judgment rule bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes]).