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Four-Month “Article 78” Statute Of Limitations Bars Shareholder’s Challenge To Proprietary Lease Amendments

In the latest chapter in the protracted litigation between the entertainer Madonna and her cooperative, Madonna challenged the cooperative’s adoption of amendments to the proprietary lease and asserted that the cooperative adopted the amendments in bad faith.  The Appellate Division affirmed a decision dismissing the challenge on the grounds that it was governed by the four-month statute of limitations applicable to “Article 78 proceedings” against a body or officer, such as a cooperative board.  Because the case was filed after the four-month period had expired, it was dismissed as untimely, without reaching the merits of the dispute.  Ciccone v. One W. 64th St., Inc., 2019 N.Y. App. Div. LEXIS 2648, 2019 N.Y. Slip Op. 2636 (1st Dep’t Apr. 4, 2019).

It often is not clear whether a given claim will be treated as in the nature of an Article 78 proceeding, subject to the short four-month statute of limitations, or as a declaratory judgment proceeding, which is subject to a much more generous six-year limitations period.  To avoid any dispute and the possibility of dismissal, tenant-shareholders with claims arising from lease amendments, house rules, or similar actions by the board or shareholders should consult counsel and bring their claims as promptly as possible.