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NYF Properties Corp. v. SB Investors, Ltd.

96 A.D.2d 481 Court N.Y. App. Div. Decision date 1983-07-14 English

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p. 481
NYF Properties Corp., Appellant, v SB Investors, Ltd., et al., Respondents. (Action No. 1.) Coronet Properties Corporation, on Behalf of Itself as a Shareholder of NYF Properties Corp., and in the Right of NYF Properties Corp., et al., Respondents, v NYF Properties Corp. et al., Appellants. (Action No. 2.)

— Order of the Supreme Court, New York County (Edward Greenfield, J.), entered October 1, 1982, which granted plaintiffs’, Coronet Properties Corp. and Gloria Dansker, motion, in action No. 2, for a preliminary injunction, to the extent of staying action No. 1, reversed, on the law and facts, with costs and disbursements, and the motion for a preliminary injunction denied and the matter remanded for further proceedings. The stay, by Special Term, of action No. 1 was improvidently granted under the circumstances herein. Plaintiffs in action No. 2 failed to demonstrate a clear likelihood of success on the merits. They showed that only minority shareholders of NYF and perhaps a single officer objected to the litigation. The institution of a lawsuit does not require a formal vote of authorization by the directors of a corporation (Rothman & Schneider v Beckerman, 1 AD2d 154 , affd 2 NY2d 493 ). Even if such approval were required, plaintiff in action No. 1 established that all three directors of the corporation had ratified the institution of the action. Further,

p. 482
there was no showing that Dansker, even if she were president of NYF, had any veto power over the commencement and prosecution of action No. 1. In addition, there was no demonstration of what irreparable injury, if any, Coronet and Dansker would suffer if action No. 1 were prosecuted. Finally, plaintiff Coronet in action No. 2 failed to establish, in its derivative status as a shareholder of NYF, that action No. 1 was not in the best interests of NYF. Plaintiff Dansker’s attempt to stay action No. 1 as an officer of NYF was also defective since she failed to join any officer or director of NYF as a defendant in action No. 2 (see Business Corporation Law, § 720). Concur — Sullivan, J. P., Ross, Carro, Asch and Fein, JJ.

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