Brooklyn Board Brouhaha

For shareholders who are disgruntled with the current board and want a new election, there are mechanisms for doing so. But if it’s not according to your co-op’s bylaws or New York’s Business Corporation Law, be warned. A court of law will not recognize the election, you will have spent an enormous amount of time (and potentially legal fees), and the old board will remain in place.

WHAT HAPPENED In January 2018 an outgoing board president appointed several individuals to the board of directors of this Brooklyn HDFC co-op, notably with no notice of election, or an actual election. Eight months later, with assistance from HPD and the Neighborhood Housing Service, a special shareholders meeting to elect a new board was held.

After the board election, Deitra Wyche and Marie Davis, members of the new board, filed a petition alleging that the “appointed to the board” individuals had engaged in certain malfeasance in their capacity as board members; refused to turn over the corporate books, records, and documents; and had not been duly elected. They also sought a “writ of prohibition” to keep the appointed individuals from accessing the co-op’s bank accounts, collecting maintenance fees and rent, or exercising any control over the co-op. 

 

GOOD NEWS FOR THE BOARD In January 2019, the Supreme Court granted the Wyche and Davis petition.

 

AND THEN The individuals who had been appointed to the board appealed the decision.


A REVERSAL The Appellate Division reversed the Supreme Court’s judgment and denied the petition from the new board members, finding that the Supreme Court erred when it granted the prohibition remedy for this particular instance. It also found that the co-op failed to produce evidence that the August special shareholders meeting to hold board elections was conducted in accordance with the HDFC’s bylaws.

COUNSEL For Petitioners Wyche and Davis Angelyn D. Johnson ANGELYN D. JOHNSON & ASSOC / For Respondent HDFC and de facto officers COHEN, TAUBER, SPIEVACK & WAGNER; IRA DANIEL TOKAYER, SANTAMARINA & ASSOC.