On February 19, 2026, the First Department issued a decision in Pokoik v. Steinberg, 2026 NY Slip Op. 00995, holding that the business judgment rule protected partners from a breach of fiduciary claim, explaining:
The business judgment rule provides that where corporate officers or directors exercise unbiased judgment in determining that certain actions will promote the corporation’s interests, courts will defer to those determinations if they were made in good faith. As relevant here, partners acting as fiduciaries are entitled to the same protections as corporate directors. The deference afforded by the business judgment rule is not applicable where the challenged transaction is affected by an inherent conflict of interest, in which case the burden shifts to the defendant to prove the fairness of the challenged transaction.
Here, Supreme Court properly applied the business judgment rule where the shareholders, including plaintiffs, held roughly equal interests in the tripartite ownership structure made up of three entities holding their interests in the property, and no individual held a controlling position in nominal defendant Norsel Realties. Plaintiffs fail to submit credible evidence that defendants received any profit or other financial benefit that was not received by other shareholders in connection with their proportional ownership interest, nor that defendants were controlled or dominated by an interested party.
The setting of the ground rent at issue here was properly ratified under Norsel’s articles of partnership, which provide that partnership decisions only require a simple majority. The eighth amendment to the ground lease specifically contained the option for three lease extensions, including the first renewal embodied in the ninth amendment. It is undisputed that plaintiff Leon Pokoik was involved in the management of the three entities when the eighth amendment was executed in 1995, without any objection from him. Further, he financially benefitted from his interest in the three entities before and after the contemplated April 30, 2016 expiration date of the partnership. Thus, Norsel is not precluded from abiding by the terms of the ninth amendment and continuing the business of the partnership, at least through the expiration of the ninth amendment. Based on the foregoing, plaintiffs’ reliance on Northmon Inv. Co. v Milford Plaza Assoc. (284 AD2d 250 [1st Dept 2001], lv dismissed 97 NY2d 677 [2001], lv denied 97 NY2d 743 [2002]) for the proposition that unanimous consent was required to extend the Norsel partnership past April 30, 2016, before executing the ninth amendment, is misplaced.
Because the business judgment rule applies here, it is unnecessary to reach the parties’ arguments as to entire fairness review.
(Internal citations omitted).