The Board of Managers of the 72 Poplar Street Condominium and individual board members were sued by a unit owner who was overcharged common charges. The Board allegedly knew about the overcharge and eventually refunded the overpayments to the owner, and then called a unit owner vote to amend the Condominium’s bylaws to change the method by which common charges were calculated and assessed to each unit owner so as to conform with the method set forth in the plan bylaws. The Court upheld the unit owner’s claim for breach of fiduciary duty and fraud against the Board and its individual members. Other claims were dismissed and now the parties have to engage in discovery. Read the Second Department’s Decision here.

It is important that Board’s act in the best interest of all unit owners. If Board members know that something improper is being done, they ought to let the Board know and confer with professional management and general counsel to advise how to address the matter. In the end, the Board of Managers of the 72 Poplar Street Condominium and its individual Board members who were named personally in the lawsuit, will likely prevail based on the public facts so far but they are now stuck in a lawsuit paying defense costs to attorneys or implicating directors and officer’s insurance coverage which may impact the premiums or deductible amounts for the association in the future.