In this breach of contract action, plaintiff Cornelia Sharpe Bregman (Bregman) moves, pursuant to CPLR 3025 (b) to amend the complaint. Defendant 111 Tenants Corp. (the Co-op), cross-moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint. For the reasons set forth below, the motion is denied and the cross motion is granted.

BACKGROUND

The complaint alleges that in 1972, Bregman was a tenant in an apartment house located at 111 East 75th Street in Manhattan (the Building or the Co-op) when the building owners, who wished to convert the building into a cooperative, approached her about buying apartments in the Building. According to Bregman, the owners assured her that if she bought two apartments she would have unconditional and perpetual subletting rights for both apartments. Bregman claims that, based on this assurance, she purchased the shares allocated to apartments 10A and 6C (collectively, the apartments) directly from the sponsor. Bregman also claims that the sponsor assured her that the Building's board of directors (Board) would adopt a resolution granting her perpetual and unconditional rights to sublet the apartments.

Bregman claims that for 30 years she was able to freely sublet her apartments but, starting in 2002, the Board began placing restrictions on her ability to sublet and, on September 16, 2003, the Board adopted a resolution restricting the rights of all shareholders to "sublet the whole or any part of an apartment or renew or extend any previously authorized sublease for more than two years during any four consecutive year period unless consent thereto has first been authorized by a resolution of the Directors" or by lessees owing at least two-thirds of the shares of the corporation (Kasdan Aff., Ex. B). Bregman claims that she acknowledged the resolution, but that her signature acknowledging the resolution was obtained by duress, because the Building's attorney threatened to evict one of her subtenants if she did not sign.

Thereafter, Bregman attempted to sublet apartment 10A, but her application was rejected by the Board on the ground that, under the resolution, the apartment was not eligible for sublet.

Bregman commenced this action in May 2006, seeking an injunction to prohibit the Building from refusing to approve her sublet application and an order directing the Board to approve her application. Bregman also sought damages based on her lost rental income.

THE INSTANT MOTIONS [*2]

Bregman takes the position that the Building, the managing agent and the Board members must honor her 1972 alleged agreement with the sponsor. She now moves to amend the complaint to add Goodman Management Co., Inc. (Goodman), the Co-op's managing agent, and the Board members, individually, as defendants. She also seeks to add causes of action for: 1) a declaratory judgment that she has a free and unfettered Cooperative her apartments; 2) a permanent injunction prohibiting the defendants from interfering with her sublet rights; 3) breach of fiduciary duty against the Board members, individually and 4) tortious interference with contract against Goodman.

The Co-op cross-moves for summary judgment dismissing the complaint on the ground the New York's Business Corporation Law (BCL) § 501(c ) prohibits the unequal treatment of similarly situated shareholders and that allowing Bregman to have more favorable sublet rights than any of the other shareholders is a violation of that statute; that the Co-op's by-laws and the proprietary lease give the Board broad control regarding sublets; and that the restrictions on subletting serve a legitimate business purpose.

DISCUSSION

Summary judgment will be granted if it is clear that no triable issue of fact exists (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). The burden is on the moving party to make a prima facie showing of entitlement to summary judgment as a matter of law (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067 [1979]). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of a triable issue of fact (Alvarez v Prospect Hosp., 68 NY2d at 324; Zuckerman v City of New York, 49 NY2d at 562). Mere conclusions, unsubstantiated allegations or expressions of hope are insufficient to defeat a summary judgment motion (Zuckerman v City of New York, 49 NY2d at 562).

In this case, the Co-op has made a prima facie showing that it is entitled to judgment as a matter of law. The defendant has produced evidence to demonstrate that Bregman's right to sublet was always subject to conditions the Board might impose and/or on Board or shareholder approval. The proprietary leases, signed by plaintiff, provide, in pertinent part that:

the Lessee shall not sublet the whole or part of any apartment

or renew or extend any previously authorized sublease, unless

consent thereto shall have been duly authorized by a resolution

of the Directors or given in writing by a majority of the directors

. . . Any consent to subletting may be subject to such conditions

as the Directors or lessees . . . may impose. There shall be no

limitation on the rights of Directors or lessees to grant or

withhold consent, for any reason or for no reason, to a subletting

(Kasdan Reply Aff., Ex. A, ¶ 15).

Moreover, Article V, section 5 of the Co-op's by-laws gives the Board authority to fix "conditions as it may determine" in connection with the sublet of a proprietary lease (Cranshaw Aff., Ex. A).

In addition, the Co-op has produced a letter dated April 14, 1972, signed by the sponsor and others, that demonstrates that, at the time Bregman purchased the apartments, she knew that she [*3]"would be permitted to sublet her apartments provided the consent of the Board of Directors of the Cooperative is obtained" and that the owners only agreed to "use their best efforts to have the Board of Directors not unreasonably withold their consent to subletting . . . " (Cranshaw Aff., Ex. D).

Accordingly, this evidence indicates that at the time plaintiff purchased apartments 10A and 6C, she was aware that the Board had the right to place conditions on all subletting and that all sublets were contingent upon Board approval, and directly contradicts plaintiff's claim that she was given unconditional and perpetual subletting rights.

However, even assuming, arguendo, that Bregman was given preferential subletting rights, the defendant correctly argues that BCL § 501( c )^[FN1] requires that the resolution restricting subletting, which the Board adopted in 2003, must be applied equally to similarly situated shareholders (Spiegel v 1065 Park Ave. Corp., 305 AD2d 204 [1st Dept 2003]; Wapnick v Seven Park Ave. Corp., 240 AD2d 245, 246 [1st Dept 1997]; De Soignes v Cornasesk House Tenants Corp., 2003 WL 25514873 [Sup Ct, NY County 2003]).

In Spiegel v 1065 Park Ave. Corp., (305 AD2d at 204), the plaintiff argued that she did not need the consent of the board of directors to sublet her apartment because the housing corporation's proprietary lease and by-laws gave original purchasers of the cooperative's shares more favorable subletting rights than non-original purchasers. In that case, the First Department held that the plaintiff was not entitled to special subletting privileges, because "[t]here is no question that the lease . . . and the related bylaw provision violate Business Corporation Law § 501 ( c) by giving original purchasers more favorable subletting rights that nonoriginal purchasers (see Wapnick v Seven Park Ave. Corp., 204 AD2d 245, 246-247 [1st Dept 1997])." In that case, the court found that the preferential treatment was illegal and void as against public policy. The court went on to state:

[I]t does not avail plaintiff that she relied on the sponsor's

offer of special subletting privileges in buying the apartment,

that the cooperative learned of her intent to sublet the apartment

when she purchased a second larger apartment in the building

with her husband, that the cooperative is continuing to permit

subletting by other original shareholders and that the

cooperative is itself subletting an apartment

(Spiegel v 1065 Park Ave. Corp., 305 AD2d at 204).

In opposition to summary judgment, Bregman has produced an affidavit of Paul Green, a former principal of the Building's sponsor, who states that he negotiated with plaintiff regarding her purchases of apartment 10A and 6C; that the sponsor agreed to use its best efforts to have the Board consent to all sublease applications; and that the intent was that the right to sublease would be denied only if the proposed subtenant was found to be objectionable (Bregman Aff., Ex. B, ¶ [*4]6). However, Green's affidavit does not raise a triable issue of fact because, even if Bregman did initially acquire special sublet rights, those special sublet rights violate BCL § 501( c) which prohibits the unequal treatment of shareholders holding the same class of shares, and public policy dictates that when the terms of a contract contradict a state statute, the statutory provision will prevail (see Matter of Green [Republic Steel Corp.-Levine], 37 NY2d 554, 558 [1975]; Spiegel v 1065 Park Ave. Corp., 305 AD2d at 204). Accordingly, in this case, Bregman's alleged contract granting her preferential subletting rights is illegal and void as against public

policy.

Moreover, Bregman's argument, that the defendant's past practice of honoring her special rights should bar the co-op from refusing to continue to recognize those rights, is without merit. The doctrines of waiver, estoppel and laches are not available to plaintiff because the preferential treatment she received is in violation of BCL 501( c) and the statutory provision prevails (Spiegel v 1065 Park Ave. Corp. 305 AD2d at 204["(n)or can waiver or estoppel based on the cooperative's conduct be relied upon to enforce corporate documents that are contrary to public policy"]; De Soignes v Cornasesk House Tenants Corp., 2003 WL 25514873 at *3).

As to Bregman's motion to amend the complaint, a review of the proposed amended complaint reveals that the causes of action in the proposed pleading are based on Bregman's claim that she is entitled to preferential subletting rights. However, for the reasons stated above, the Co-op cannot provide Bregman with special subletting rights because this would violate section 501( c) of the BCL which requires that "each share shall be equal to every other share of the same class" and so leave to amend must be denied as moot (see Buckley & Co. v City of New York, 121 AD2d 933, 935 [1st Dept 1986][it was error to allow plaintiff to replead because a judgment on the merits may not be undermined by allowing the party whose cause is dismissed a second chance to litigate the matter]).

Accordingly, because Bregman has failed to raise a triable issue of fact in opposition to defendant's prima facie showing that it is entitled to judgment as a matter of law, it is

ORDERED that defendant 111 Tenant Corp.'s cross motion for summary judgment dismissing the complaint is granted with costs and disbursements to defendant as taxed by the Clerk upon submission of an appropriate bill of costs; and it is further

ORDERED that plaintiff Cornelia Sharpe Bregman's motion to amend the complaint is denied as moot; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

Dated: January 24, 2011_____________________________

J.S.C.