Manhattan Eye, Ear and Throat Hospital v. Spitzer
Supreme Court, New York County, New York
715 N.Y.S.2d 575 (1999)
Manhattan Eye, Ear and Throat Hospital (MEETH) (plaintiff), a respected nonprofit specialty hospital focused on acute care, plastic surgery, and eye/ear/nose/throat disease treatment, faced financial troubles that led its Board of Directors to agree to sell its East 64th Street facility to Memorial Sloan Kettering Cancer Center and Downtown Group/Colony Capital for $41 million, despite an appraised value of $46-55 million, while also terminating its residency program, closing hospital functions, and converting other locations into standalone diagnostic and treatment centers. Because selling substantially all assets of a nonprofit corporation requires court approval under New York Not-for-Profit Law § 511 given the absence of shareholders, MEETH sought that approval after submitting a closure plan to state health regulators, with the state Attorney General, Spitzer (defendant), a required party to the petition.
Whether, to approve the sale of a nonprofit corporation's assets, the Board of Directors must show that the sale's terms are fair and reasonable and will further the corporation's purposes.