Was this co-op blocking a sale or setting a secret price floor?

Early readers of More For LES may recall this article, which dealt with Livvy Dunne, a Sports Illustrated Swimsuit cover model , influencer , former gymnast at LSU , and girlfriend to Pittsburgh Pirates pitching phenom (and soon to be New York Yankee…maybe) Paul Skenes, who was rejected in her bid for an Upper West Side apartment .

The takeaway here is that co-ops have a big say in who and why they accept or decline shareholder candidates , and they don’t have to tell anyone the underlying reasons .

In this post, we’ll look at an actual local dispute between two shareholders and their cooperative . The situation is not the same, i.e., it doesn’t involve the purchaser — or a celebrity, for that matter — but it does deal with the respective rights of both parties , who has the final say , and who has to pay for what .

The legal matter centers on two LES cooperative residents who attempted to sell their apartment at an agreed-upon price that aligned with an independent appraisal and with comparable sales in the neighborhood .

They submitted their sale application to the cooperative’s governing body, which quickly declined to approve it . Hoping to keep the deal alive, the sellers appealed the decision, raised the price , and resubmitted the application. Even with the improved offer, the board continued to reject the sale , communicating through management that anything below a significantly higher internal threshold would not be acceptable .

Because of the ongoing uncertainty and delays , the buyer ultimately canceled the contract , leaving the sellers without a path forward .

The shareholders contend that the board’s actions were arbitrary and outside the scope of its authority .

Their position: The original sale price and the later increased price were both grounded in market data , including a professional appraisal and a set of comparable sales . In their view, the board’s refusal had little to do with actual market value and everything to do with an “unwritten price minimum” that bore no relation to the unit itself.

They also claim that when they later submitted a new application, as the litigation was underway, the board made additional — and retaliatory — demands that were intended to create further obstacles. On top of that, they challenged the cooperative’s attempt to recover attorney fees , arguing that such a requirement would unfairly deter shareholders from asserting their rights .

The cooperative responded that boards are permitted to consider price as part of their discretion in reviewing sales , and that their decision in this instance was a rational effort to maintain overall building equity .

The board’s position: The appraisal was not properly provided and was conducted for another purpose , i.e., one that did not truly reflect the true market conditions . They also cast doubt on the broker materials submitted by the sellers , suggesting they were biased or incomplete .

Throughout their defense, the board maintained that its actions were fully insulated by the business-judgment rule , which generally prevents courts from second-guessing cooperative decision-making made in good faith .

What was the verdict? (Any guesses? )

When the court reviewed the various motions , it concluded that several important factual disputes remain unresolved—particularly around whether the board’s rejection of the sale was grounded in good-faith evaluation or in an arbitrary price floor disconnected from market reality . Because of this, the court declined to dismiss the core breach-of-contract claim and allowed it to move forward .

The cooperative’s attempt to obtain a declaratory judgment on its right to consider sale price was rejected because the sellers never disputed that general principle; the dispute was about how the board applied it .

The court also dismissed the cooperative’s claim for attorney fees , finding the fee-shifting clause unenforceable because it would discourage shareholders from bringing legitimate claims .

Taken together, the case underscores a few broader themes relevant to cooperative living .

1. Boards certainly have wide discretion, especially regarding the approval of sales , but that discretion must still be exercised reasonably and with reference to real market conditions . The business-judgment rule protects principled decision-making but does not give a board unlimited power to impose arbitrary thresholds unrelated to value .
   

2. The decision also reinforces that shareholders should not fear automatic financial penalties simply for challenging a board’s actions .
   

3. Finally, opaque and inflexible approval practices — such as those conducted by co-ops — can lead not only to litigation but to a weakening of trust among residents who rely on the cooperative’s governing structure to act in the community’s best interest .

One last thought: voting matters — especially when you’re choosing the people who will represent you and your interests. It can be easy to feel like your vote or your voice doesn’t make a difference , but that only becomes true if you choose not to participate .