First published: Oct 2025
No Unit — No Seat — No Case
TAKEAWAY Allegations of bad faith or breach of fiduciary duty require real evidence, not just dissatisfaction with a board’s actions. Courts are generally reluctant to interfere with decisions made within a board’s authority and in good faith, and the business judgment rule protects boards from having their decisions second-guessed so long as those decisions are rational, honest and serve a legitimate purpose for the building. This case underscores that a board’s careful adherence to its governing documents - coupled with professional advice from attorneys or other experts - provides a strong defense against legal challenges. For unit owners considering litigation, it’s important to remember that courts will defer to a board’s discretion unless there is proof of fraud, self-dealing, or other misconduct. And in this case Zihenni and his LLC had had no proof that the board acted in bad faith or beyond its authority.
VANDERBILT MONROE LLC V. BOARD OF MANAGERS OF MARBURY CLUB CONDOMINIUM
WHAT HAPPENED An election dispute at the Marbury Club, a 55-unit condominium in Pelham, New York, morphed into a lawsuit when Albert Zihenni, the sole member of Vanderbilt Monroe LLC, wanted to run for a board seat. When his name was nominated at the 2024 annual meeting, the condo’s attorney stopped the nomination. He explained that Zihenni couldn’t run because he didn’t personally own the unit - it was owned by his LLC, Vanderbilt Monroe. The condo’s bylaws said that all officers must be unit owners (except for that period when the board was controlled by the sponsor), and the board had previously adopted a rule that said only ‘record owners’ could serve on the board. The board’s reasoning, its attorney explained, was that you could have multiple members of an LLC, making it unclear who would represent the entity. Because Zihenni’s nomination was rejected, the incumbent board member ran unopposed and was re-elected. The LLC (Vanderbilt Monroe) then sued the condominium and the individual board members, claiming they acted in bad faith and violated their fiduciary duties. The lawsuit alleged the rule was just an excuse to keep Zihenni off the board because he had previously clashed with the board — including a lawsuit two years earlier over alleged unauthorized alterations to his unit.
IN COURT The judge dismissed the case, siding with the condominium and the board members. The court said its role was limited to deciding whether the board acted within its legal authority and in good faith to protect the condominium’s interests. The by-laws gave the board power “to regulate the qualifications of individuals eligible to serve on the Board,” so the court found the board acted within its rights. On the question of good faith, the judge noted that the rule had been adopted in 2021 — under a different board and different legal counsel — well before this dispute arose. The 2021 rule, together with advice of counsel in 2024, were considered a rational, legitimate basis for the decision. Because the board acted within its authority and in good faith, the business judgment rule applied. That rule protects a board’s decisions from being second-guessed by a court unless there’s evidence of fraud, self-dealing, or bad faith.
COUNSEL for Vanderbilt MARK A. GUTERMAN Lehrman, Lehrman & Guterman; for Marbury LAURA K. BRECHER Milber Makris Plousadis & Seiden; Justice Anne B. Bianchi
