BRITTANIA 54 HOTEL CORP v. FREID (1998)

Order, Supreme Court, New York County (Leland DeGrasse, J.), entered January 13, 1998, which denied defendant's motion for an order pursuant to Business Corporation Law § 724 awarding him, during the pendency of the litigation, such reasonable expenses as are necessary in connection with his defense of the action, including attorneys' fees, unanimously affirmed, with costs.

Section 722 of the Business Corporation Law permits a corporation to indemnify a past or present officer for his reasonable litigation expenses when he is sued by reason of the fact that he was an officer, i.e., for his actions taken as an officer.   When a corporation declines to afford indemnification pursuant to Business Corporation Law § 722, the officer may apply to the court, which may direct that such payments be made “if the court shall find that the defendant has by his pleadings or during the course of the litigation raised genuine issues of law or fact” (Business Corporation Law § 724[c] ).

Defendant's submissions were insufficient to raise a genuine issue of fact regarding his assertion that he held the office of president or chief executive officer in plaintiff corporation, in light of compelling documentary evidence submitted by plaintiff establishing that defendant never was a corporate officer.   In any event, the declaratory judgment action commenced against defendant was not brought “by reason of” the fact that he was an officer, or for any action allegedly taken by him as an officer.   Accordingly, he did not qualify for a discretionary allowance by the court for his reasonable expenses in defending the action.

MEMORANDUM DECISION.