$15 million lawsuit against the Dakota lives on

Part 2 of 2

The co-operative building is legend.

Former home of John Lennon, Lauren Bacall and Leonard Bernstein, location of Rosemary’s Baby, the hulking Dakota on a corner of Central Park West at 72nd St. continues under the cloud of a $15 million lawsuit lodged by an African-American resident who served two terms as president of the board.

Alphonse Fletcher Jr., who moved into the building in 1992 claims racial discrimination in the board’s rejection of his application to purchase an adjoining apartment.  His complaint adds that he wasn’t alone, naming Roberta Flack as another prospective purchaser who was not allowed into the co-operative.

Noting that he already owned three other units in the Dakota, the board countered that the allegation lacks credibility.  Its response to his application, the board said, was based on concerns about his financial resources.

(Coincidentally or not, both the Securities and Exchange Commission and three Louisiana public pension systems raised questions about Fletcher Asset Management, which the financier runs, following the boards’s rejection, according to the New York Times.)

In a dense, but informative, update on Habitat magazine’s Web site, Bill Morris reports that the Appellate Division of State Supreme Court “brushed aside” the board’s 237-page response by ruling that the case could go to trial.

The court thereby overturned a key 2006 decision that, as Morris says, “largely protected board members from personal liability in discrimination cases.”

He goes on to quote Marc Luxemburg, president of the Council of New York Cooperatives and Condominiums, as predicting financial ruin for many building in the event that Fletcher is successful against the Dakota’s board.

A finding in his favor also would subject board members to far more jeopardy than many have perceived since both the 2006 ruling and an earlier one that means, according to lawyer Richard Siegler in Habitat magazine, the courts will not substitute their judgment for the board’s “so long as the board acts for the purposes of the corporation, within the scope of its authority, and in good faith.”

The issues that Fletcher’s case raise anew could have profound effects on board membership should he prevail.

Co-ops and condominiums often have difficulty enough recruiting residents who are willing and able to serve on their boards.

Should Fletcher win — and I have no opinion on the validity of his lawsuit — things could get only worse.

Tomorrow: Weekly Roundup

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