It is about to become a lot harder to convince Unit Owners to serve on the boards of their building.
Subsequent to a ruling handed down on July 3, 2012 in Fletcher v. The Dakota, boards can be held liable and sued personally for the building’s tortuous misdeeds. The discrimination lawsuit was initiated last year, by an African-American Unit Owner. Fletcher is a hedge fund manager who once led the board of his building as President. Fletcher sued the building and its Board members individually over alleged discriminatory and retaliatory practices when the board turned down his application to buy the apartment adjacent to the one he currently owns. He also alleged that this was retaliation for his defense of others who have been discriminated against, including the singer Roberta Flack. Under a previous Court of Appeals decision, generally an individual Board member cannot be held liable for the actions of the cooperation if the decisions were based upon the business judgment rule. The Fletcher ruling took exception to the Court of Appeals decision by stating that individual Board members could be held personally liable for the “tortuous” actions of the corporation. The Fletcher decision takes effect immediately, reversing a 2006 decision related to a discrimination case on Park Avenue.