Opinion
January 29, 1996
Appeal from the Supreme Court, Dutchess County (Jiudice, J.).
Ordered that the cross-appeal is dismissed as academic; and it is further,
Ordered that the judgment is affirmed insofar as appealed from; and it is further,
Ordered that the respondents and the respondent-appellant are awarded one bill of costs.
The Supreme Court properly determined that it was not obligated by the doctrine of the law of the case to follow a determination of a Federal court which found that issues of fact existed as to the Federal causes of action and the State common law causes of action sounding in waste and breach of fiduciary duty that were interposed by the plaintiff against the defendant E. Hale Mayer. A subsequent decision by the same Federal court, upon the motion of all defendants except Mayer, dismissed all of the Federal causes of action based on new facts, and then dismissed the pendent State common law causes of action against all defendants except Mayer, for lack of any Federal question jurisdiction.
Since the issues relating to the causes of action based on Federal law were the same as to all defendants, the initial decision pertaining to the Federal law causes of action interposed against Mayer was inferentially reversed or vacated when the Federal court dismissed all Federal causes of action against the remaining defendants for lack of Federal question jurisdiction. Similarly, the decision not to exercise pendent jurisdiction over the State common law causes of action against the remaining defendants inferentially reversed or vacated the prior finding that issues of fact existed with respect to the State common law causes of action interposed against Mayer ( see, e.g., Lund v Chemical Bank, 1990 WL 17711 [US Dist Ct, SD NY, Feb. 20, 1990, Sweet, J.] [citing, e.g., Zichy v City of Philadelphia, 590 F.2d 503, 508], reaffd on reconsideration 760 F. Supp. 51; see also, Zangiacomi v Hood, 193 A.D.2d 188, 190, 194).
Moreover, the Supreme Court properly determined that absent evidence that the individual defendants (other than Mayer), who were directors of the corporate defendant, had an interest in the retirement agreement or lacked good faith or committed fraud when considering whether to enter into the retirement agreement, the business judgment rule was applicable to the decision of these defendants ( see, Crouse-Hinds Co. v InterNorth, Inc., 634 F.2d 690, 702; Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 N.Y.2d 530, 537-538; Auerbach v Bennett, 47 N.Y.2d 619, 631; Matter of Breezy Point Coop., 123 A.D.2d 354; Aronoff v Albanese, 85 A.D.2d 3, 5). Moreover, the defendant directors, other than Mayer, demonstrated that they made a complete inquiry into whether the corporation should enter into the retirement agreement ( see, Auerbach v Bennett, supra, at 634-635; Schwartz v Marien, 37 N.Y.2d 487, 493).
While the defendant Mayer did have an interest in the retirement agreement and was also a director, Mayer demonstrated that he did not vote on the retirement agreement, that he disclosed his interest in the retirement agreement to the boards of directors, their committees, and the shareholders, and that the retirement agreement was fair and reasonable ( see, Business Corporation Law § 713; see also, Lewis v S.L. E., Inc., 629 F.2d 764, 768-769). Since the plaintiff failed to come forward with any evidence to rebut this showing, the Supreme Court properly granted Mayer's motion for summary judgment. Balletta, J.P., Miller, O'Brien and Sullivan, JJ., concur.