Opinion ID: 2241642
Heading Depth: 1
Heading Rank: 5

Heading: Good Faith, in the Exercise of Honest Judgment

Text: Finally, defendant has not shown the slightest indication of any bad faith, arbitrariness, favoritism, discrimination or malice on the cooperative's part, and the record reveals none. Though defendant contends that he raised sufficient facts in this regard, we agree with the Appellate Division majority that defendant has provided no factual support for his conclusory assertions that he was evicted based upon illegal or impermissible considerations. Moreover, as the Appellate Division noted, the cooperative emphasized that upon the sale of the apartment it will `turn over [to the defendant] all proceeds after deduction of unpaid use and occupancy, costs of sale and litigation expenses incurred in this dispute' (296 AD2d at 127). Defendant does not contend otherwise. Levandusky cautions that the broad powers of cooperative governance carry the potential for abuse when a board singles out a person for harmful treatment or engages in unlawful discrimination, vendetta, arbitrary decisionmaking or favoritism. We reaffirm that admonition and stress that those types of abuses are incompatible with good faith and the exercise of honest judgment. While deferential, the Levandusky standard should not serve as a rubber stamp for cooperative board actions, particularly those involving tenancy terminations. We note that since Levandusky was decided, the lower courts have in most instances deferred to the business judgment of cooperative boards [7] but in a number of cases have withheld deference in the face of evidence that the board acted illegitimately. [8] The very concept of cooperative living entails a voluntary, shared control over rules, maintenance and the composition of the community. Indeed, as we observed in Levandusky, a shareholder-tenant voluntarily agrees to submit to the authority of a cooperative board, and consequently the board may significantly restrict the bundle of rights a property owner normally enjoys (75 NY2d at 536). When dealing, however, with termination, courts must exercise a heightened vigilance in examining whether the board's action meets the Levandusky test. We have considered defendant's remaining contentions, and find them without merit. Accordingly, the order of the Appellate Division should be affirmed, with costs. Order affirmed, with costs.