In Action For Fiduciary Breach, Amounts Paid By Condominium To Non-Party In Settlement Of Action Where Breach Occurred Not Recoverable As Damages

Posted: December 19, 2025 / Written by: Jeffrey M. Eilender, Joshua Wurtzel, Channing J. Turner, Samuel L. Butt, Thomas A. Kissane / Categories Damages, Fiduciary Duties, Summary Judgment, Discovery/Disclosure, Motion to Compel

In Action For Fiduciary Breach, Amounts Paid By Condominium To Non-Party In Settlement Of Action Where Breach Occurred Not Recoverable As Damages

On September 10, 2025, Justice Andrew Borrok denied a motion for summary judgment seeking to recover, as damages for breach of fiduciary duty, monies paid by a condominium and its insurer in settlement of a prior litigation that gave rise to plaintiffs’ fiduciary breach claim. The case is Gilbert v. Winston, Index No. 650374/2023.

Plaintiffs, shareholders of Parc Vendome Condominium (“PVC”), sued both individually and on PVC’s behalf alleging that the PVC Board and its members breached their fiduciary duties by engaging in conduct that led to a settlement payment of $4.5 million to Parc 56 LLC (“Parc 56”), a non-party in the case at hand, in an action, styled Parc 56 LLC v Board of Managers of the Parc Vendome Condominium, et al., Sup. Ct., NY County, Index No. 653550/2021 (the “Underlying Action”.) The settlement payment in the Underlying Action followed a finding that the PVC Board and its president had engaged in bad faith in denying Parc 56’s right to lease its premises to a childcare facility.

In the case at hand, Justice Borrok had earlier granted plaintiffs summary judgment as to liability on their claim that defendants had committed fiduciary breach through their conduct at issue in the Underlying Action. After the Underlying Action settled, plaintiffs brought the current motion, seeking to fix their damages for fiduciary breach as including the $4.5 million.

The court found the damages to be more limited:

Neither the plaintiff nor PVC was ever owed this money [the $4.5 million] and neither of them are out this money. Nothing in the record suggests that this is in any way damages caused by any injury to PVC or them. Thus, they simply do not meet their burden of entitlement to summary judgment (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]) and their motion is denied. Indeed, on the record before the Court, the injury to PVC (and to them [plaintiffs] reflectively) is limited to the cost of the Underlying Action (i.e., the legal fees) and any increase in insurance premiums (if any) occasioned solely by virtue of the payment of the settlement amount.

Slip op., p. 6 (footnotes omitted).

Damages remain to be determined, and the court granted motions by plaintiffs to compel compliance with discovery demands “to the extent that they seek information about the legal costs incurred and paid in connection with the Underlying Action and to the extent that the motions seek information as to any increase in premium occasioned solely by virtue of the settlement amount” because “these amounts are relevant to any injury incurred by PVC or the plaintiffs (directly or reflectively).” Id., p. 7.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning damages for breach of fiduciary duty, summary judgment or motions to compel discovery.