511 West 232nd Owners Corp. v. Jennifer Realty Co.

10 A.D.3d 573, 782 N.Y.S.2d 423, 2004 N.Y. App. Div. LEXIS 11024

Opinion

Order, Supreme Court, Bronx County (Norma Ruiz, J.), entered April 22, 2004, which on defendants’ motion for interim indemnification of attorneys’ fees and expenses in defending the instant action limited recovery to those related to plaintiffs’ second cause of action for breach of fiduciary duty against the individual defendants in their capacity as members of the board of directors of the cooperative apartment building, and specified an apportionment of all other litigation expenses, unanimously affirmed, with costs.

The cooperative’s bylaws, consistent with Business Corporation Law § 722 (c), limit the indemnification to which each individual defendant herein is entitled to actions brought by the corporation “by reason of the fact that he . . . is or was a Director or officer of the corporation.” Only the second cause of action, for breach of fiduciary duty, relates to the individual defendants’ status as officers or directors of the cooperative. The remaining claims relate to all defendants as the sponsor or principals of the sponsor (see Happy Kids, Inc. v Glasgow, 2002 WL 72937, 2002 US Dist LEXIS 785 [SD NY, Jan. 17, 2002]).

Defendants’ reliance on our holding in 136 E. 56th St. Owners v Darnet Realty Assoc. (248 AD2d 327 [1998]) is misplaced because the issue of such a limitation on indemnification under these circumstances was not before this Court. Concur—Tom, J.P., Sullivan, Williams, Friedman and Marlow, JJ.