The other half of the decision limits who can sue

The plaintiff also lost something, and the reasoning is a clean statement of a rule that comes up constantly in New York condominium litigation:

“However, the court properly dismissed the derivative claims that were asserted against the individual defendants on behalf of the condominium's unit owners. It is undisputed that plaintiff has standing to pursue the direct claims in this matter based on a proper assignment of all litigation claims against defendants by his wife, the unit owner. However, neither the assignment, nor any other instrument, transferred to him the membership interest in the condominium that is required for the assertion of derivative claims on behalf of the unit owners (see Kober v Nestampower, 243 AD3d 902, 904 [2d Dept 2025]; MFB Realty LLC v Eichner, 161 AD3d 661, 661 [1st Dept 2018]).”

Assigning “all litigation claims” does not confer derivative standing. Derivative standing requires the membership interest itself — the unit. A spouse, a trust, an LLC that holds the claims but not the unit can bring a direct claim and cannot bring a derivative one.

The court's headnotes record both points: “Condominiums and Cooperatives — Board of Directors — Individual Liability of Board Members — Direct Claims” and “… — Derivative Claims.”

Where the derivative/direct line actually falls

A separate First Department decision this year, Etkin v Sherwood Residential Management LLC, 2026 NY Slip Op 01301, maps the other side of the same line and is worth reading with Bent:²

“The parties agree that the balconies at issue are defined in the governing documents as 'Residential Limited Common Element[s]' and are part of the broader common elements of the building. Plaintiff acknowledged in his opposing memorandum that the condominium, not plaintiff, owned his unit's balcony. Thus, plaintiff appropriately brought a derivative claim on behalf of the condominium and its unit owners for alleged defects in the balconies.”

And on a common-element claim brought individually: “plaintiff lacks standing to bring a claim alleging injury due to a common element.”

So damage to a limited common element — a balcony, a terrace, anything the declaration assigns for exclusive use but the condominium owns — is the condominium's injury. The owner's route is derivative. Our New York governing statute page covers how New York declarations divide units from common elements, which is where these fights start.

Etkin also dismissed a nuisance claim as duplicative, on the ground that “the facts which form the basis of the nuisance claim stem entirely from the Board's contractual obligations to make repairs” — a useful point for a board facing a complaint that dresses a repair dispute as a tort.

What this means for D&O coverage and for how boards behave

Three practical consequences, stated at the category level.

Directors and officers coverage matters more than boards think. The premise that an exculpatory bylaw keeps individual directors out of a case is wrong as a matter of pleading practice. A board member facing a Fletcher v Dakota-style claim is a named defendant with a defence, not a person the clause removes. Our insurance requirements page covers the coverage in play for a New York association.

The record of board conduct toward an individual owner is the evidence. What converts a governance dispute into a personal claim is a documented pattern aimed at one owner. Minutes that show a board applying a rule generally are protective; minutes, emails and enforcement letters that show escalation against one person after that person complained or sued are the raw material of an animus allegation.

Read this together with the indemnification decision. In Board of Managers of the 432 Park Condominium v 56th and Park (NY) Owner, LLC, 2026 NY Slip Op 03381, 250 AD3d 401, the First Department held that the standard indemnification language in a condominium's offering plan and bylaws does not cover the association's own suit against a former board member:³

“The indemnification provisions in the condominium's governing documents do not unequivocally include intraparty disputes between the condominium's board of managers and a board member for those provisions to insulate defendant from liability here as a matter of law.”

Applying Hooper Assoc. v AGS Computers and Sage Sys., Inc. v Liss, the court held that generic “no liability except bad faith, gross negligence or willful misconduct” language does not “evince an intent by the parties to waive the American rule in an action between the parties on the contract,” and concluded: “Had that been the parties' intention, they should have said so.”

Put the two together and the position for a New York board member is uncomfortable in both directions: an owner can name you individually notwithstanding the exculpatory clause, and the association can sue you without the indemnity clause protecting you. That combination is the strongest argument available for reviewing an association's indemnification language and its D&O limits, and it is a reason our director qualifications page is worth reading before agreeing to serve.

None of this predicts how any particular claim would come out. These are pleading-stage decisions; Bent expressly says so. What they establish at a category level is which defences are available when, and that two of the ones boards rely on most are weaker than assumed.