Matter of Schapira v Grunberg

[*1] Matter of Schapira v Grunberg 2005 NY Slip Op 52277(U) Decided on November 10, 2005 Supreme Court, Bronx County Billings, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 10, 2005
Supreme Court, Bronx County

In the Matter of the Application of Ruth Schapira, Individually and as Co- Trustee of the Trust Under Paragraph Fifth(B) of the Last Will and Testament of Hans E. Schapira, SUSAN W. MORRIS, as Co-Trustee of the Trust Under Paragraph Fifth(B) of the Last Will and Testament of Hans E. Schapira, JEFFREY MOERDLER, and WHITEHALL TENANTS CORP., Petitioners,

against

Fred Grunberg, HORACE BULLARD, LUDWIG BRAVMANN, JOSEPH STERNBERG, and ETHEL SCHER, Respondents.



18621/2005



For Petitioners

Eric B. Levine Esq.

Wolf Haldenstein Adler Freeman & Herz LLP

270 Madison Avenue, New York, NY 10016

Jeffrey A. Moerdler Esq.

Mintz, Levin, Cohn, Ferris, Govsky & Popeo, P.C.

666 3rd Avenue, New York, NY 10017

For Respondents

Barry S. Gedan Esq.

555 West 235th Street, Bronx, NY 10463

Lucy Billings, J.

I.BACKGROUND

Petitioner Whitehall Tenants Corp. owns and operates a large residential cooperative apartment building at 3333 Henry Hudson Parkway in Riverdale, Bronx County, known as the Whitehall Building. Petitioners seek a determination that Whitehall Tenants Corp.'s Board comprises five specified persons elected by all shareholders other than the sponsor, Whitehall Realty Co. Those five are petitioners Schapira and Moerdler and respondents Grunberg, Bullard, and Bravmann. Petitioners seek a further determination that Whitehall Tenants Corp.'s officers [*2]are Schapira as President, Moerdler as Vice President, and nonparties Ted Phillips, Gene Staudt, and Sharon Steinfeld as Secretary, Assistant Secretary, and Treasurer respectively. Petitioners claim respondents have assumed control of the Board unlawfully, inconsistent with the above composition of the Board and identified officers. Consequently, petitioners seek to set aside and enjoin all past and future actions by respondents as Whitehall Tenants Corp.'s Board through a Board or officers inconsistent with the corporation's by-laws and lawful procedures for election to those capacities.

More specifically, petitioners allege that the cooperative shareholders elected Schapira and Moerdler as Board members June 28, 2005. Shortly afterward, the elected Board members elected her President and Moerdler Vice President. V. Pet., Ex. K. Respondents refuse to acknowledge Schapira as a Board member, claiming that under Whitehall Tenants Corp.'s by-laws, a Board member must be a shareholder, and Schapira is not a shareholder because the shares allocated to apartment 17S where she resides are held in trust.

On June 29, 2005, respondent Scher, the inspector of elections, certified the vote count June 28, 2005, by which Schapira was elected to the Board. The five candidates for the Board of Directors elected by the nonsponsor shareholders and receiving the most votes, in order, were Jeffrey Moerdler, Ruth Schapira, Ludwig Bravmann, Horace Bullard, and Fred Grunberg. Joseph Sternberg received the sixth most votes. Id., Ex. J. The parties do not dispute this vote count.

While the undisputed document certifying the vote count is entitled "Report," it recites: "The undersigned, duly appointed to act as inspector at the annual meeting of the Shareholders' [sic] of WHITEHALL TENANTS CORP. held on the 28th day of June, 2005 . . . certify [sic]" both that she has taken and signed the oath of office prescribed by NY Bus. Corp. Law (BCL) § 610 and the following results of the vote. V. Pet., Ex. J (emphasis added). The inspector certified the number of "shares entitled to vote" present, in person or by proxy, at the meeting, id. ¶ 3; that this number constituted a "quorum of the shares entitled to vote," id. ¶ 2; and the results from counting the votes, as set forth above. Id. ¶ 4. These items are the precise contents of BCL § 611(a)'s prescriptions as to what an inspector "shall determine" and, only upon request, actually "report" and "execute a certificate."

Upon a request by Grunberg and Bravmann three weeks after the election, Scher disqualified Schapira based on an interpretation of the by-laws requiring a Board member to be a shareholder and a determination that Schapira is not a shareholder. This written "restating" of the election results was in response to respondents' request, albeit tardy, yet was neither certified nor executed under oath. V. Pet., Ex. L; V. Answer ¶ 3. See BCL § 611(a). The parties do not dispute that Scher found no new or different facts bearing on the shares entitled to vote at the election, in person or by proxy; whether a quorum was present; or the vote count. V. Pet., Ex. L; V. Answer ¶ 3. Since then, Grunberg has been elected as Board President, Bravmann as Vice President, Bullard as Secretary, and Sternberg as Treasurer.

II.A BOARD MEMBER IS NOT REQUIRED TO BE A SHAREHOLDER.

In early 2004, a mid-term vacancy opened up on the Whitehall Tenants Corp. Board, between election cycles. Bullard, then Board president, asked Schapira to fill this vacancy, to which she agreed. On April 21, 2004, the Board elected her as a member. She served until the next regular election of Board members June 28, 2005, when the shareholders elected her to the Board. A.The By-Laws

Whitehall Tenants Corp.'s by-laws, on which all parties rely, set forth the qualifications for its Board of Directors: "At least one director shall be a resident of the State of New York. All directors shall be at least 18 years of age." V. Pet., Ex. A art. II, § 1. Schapira indisputably met both these requirements both in April 2004 and in June 2005. Neither the by-laws nor any other provision of law requires that a director be a shareholder.

The corporation's by-laws do provide that once elected, "a director who ceases to be a shareholder or whose spouse ceases to be a shareholder, as the case may be, shall be deemed to [*3]have resigned as a director." Id. art. II, § 4. Nothing prohibits directors who have resigned, due to their assumption of nonshareholder status, from being elected again in their new status. The automatic resignation simply gives the voting shareholders an opportunity to consider whether they want to elect a director who is not a shareholder as permitted by the by-laws.

To the extent Schapira, by being a trustee of the trust to which she had sold her shares, was not a shareholder, she already had assumed that status years before she was elected a director, first by the Board in 2004, and then by the shareholders in 2005. The record discloses no misrepresentation of her status to directors or shareholders that may have misled them to vote for her based on a misrepresented status, Goldfield Corp. v. General Host Corp., 29 NY2d 264, 267, 270-71 (1971), let alone any indication the election results might have been different if more accurate or complete information had been circulated. Id. at 269, 271-73; Chiulli v. Cross Westchester Dev. Corp., 130 AD2d 616, 617 (2d Dep't 1987). The directors in 2004 and the shareholders in 2005 had the opportunity to consider her status before electing her. Respondents had the opportunity to communicate with other directors and shareholders, persuade the voters that they did not want to elect such a director, solicit proxies, and offer an alternative candidate to Schapira or a slate other than the five elected by the nonsponsor shareholders June 28, 2005. Goldfield Corp. v. General Host Corp., 29 NY2d at 268-69, 271, 273.

Neither the by-laws nor any other provision of law requires that the notice to shareholders of an annual meeting communicate any information regarding candidates for the Board of Directors or any other office. "Such notice shall state the time when and the place at which such meeting is to be held . . . ." V. Pet., Ex. A art. I, § 1. Even the notice to shareholders of a special meeting need only add the purpose of the meeting and the person calling it. Id. art. I, § 2. Each of these requirements is fully consistent with BCL § 605(a). The requirements for notice of Board of Directors' meetings are similar. V. Pet., Ex. A art. II, § 5. B.The Offering Plan

Respondents also rely on the sponsor's offering plan when the Whitehall Building was converted to a cooperative. An offering plan may be both an interpretive tool in construing the cooperative's by-laws, Fe Bland v. Two Trees Mgt. Co., 66 NY2d 556, 563 (1985); ALH Props. Ten v. 306-100th St. Owners Corp., 191 AD2d 1, 14 (1st Dep't 1993); Mogulescu v. 255 W. 98th St. Owners Corp., 135 AD2d 32, 36-37 (1st Dep't 1998); Riggin v. Balfour Owners Corp., 137 AD2d 799, 800 (2d Dep't 1988), and an independent enforceable contract between the sponsor and the shareholders and proprietary lessees. 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144, 152-53 (2002).

Here, however, the by-laws' qualifications for directors are not ambiguous. These provisions are clear, complete, and capable of application according to their terms, without considering evidence outside that document. South Rd. Assoc., LLC v. International Bus. Machs. Corp., 4 NY3d 272, 278 (2005); Greenfield v. Philles Records, 98 NY2d 562, 569 (2002); Reiss v. Financial Performance Corp., 97 NY2d 195, 199 (2001); Doldan v. Fenner, 309 AD2d 1274, 1275 (4th Dep't 2003). The rules for construing contracts apply equally to a corporation's by-laws. Kralik v. 239 E. 79th St. Owners Corp., 5 NY3d 54, 59 (2005). Therefore the court may not resort to evidence extrinsic to the by-laws themselves, such as the offering plan, to construe their unambiguous provisions regarding qualifications for directors. Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d 470, 475 (2004); Greenfield v. Philles Records, 98 NY2d at 569; R/S Assoc. v. New York Job Dev. Auth., 98 NY2d 29, 32 (2002); AG Capital Funding Partners, L.P. v. State St. Bank & Trust Co., 10 AD3d 293, 295 (1st Dep't 2004).

In any event, were the court to find grounds to look to the offering plan to interpret the by-laws' qualifications for directors, it does not support respondents' interpretation. The reference to directors that respondents rely on merely postpones application of an indemnity provision until "a majority of the members of the Board of Directors consists of tenant-shareholders." Aff. of Horace Bullard, Ex. G at 108 ¶ O. This provision nowhere limits all Board members or all nonsponsor Board members to tenants or shareholders.

III.ACTIONS BY THE INSPECTOR OF THE ELECTION [*4]

The duties of inspectors of elections at corporate shareholders' meetings are limited. Inspectors are to determine the shares' voting power, the shares represented at a meeting, whether a quorum is present, the validity of proxies, and questions concerning voting rights. The inspector is then to receive and count the votes and determine the result. BCL § 611(a) and (b). Thus the inspector is authorized to determine the qualifications of voters, but not of candidates for election. See Visutton Assocs. v. Anita Terrace Owners, 254 AD2d 295 (2d Dep't 1998). Whitehall Tenants Corp.'s by-laws confer no greater or different authority on an inspector of this corporation's shareholder meetings and elections. V. Pet., Ex. A art. I, § 6.

Hence, respondent Scher's determination that Schapira was unqualified to be elected as a director and consequent disallowance of all votes for her was not only inconsistent with the by-laws' qualifications for directors, but also outside the inspector's powers. Moreover, whatever the grounds for overturning the result of the votes June 28, 2005, the inspector lacked any authority to do so. BCL § 619 confers that authority on the court. See Visutton Assocs. v. Anita Terrace Owners, 254 AD2d 295.

IV.RELIEF A.The Special Proceeding's Form

Respondents move to dismiss this proceeding, brought pursuant to C.P.L.R. art. 78, on the grounds that it seeks to review a corporate election, reviewable exclusively under BCL § 619. C.P.L.R. art. 78 authorizes the court to review whether a determination by a corporate "body or officer," C.P.L.R. § 7802(a), was "made in violation of lawful procedure" or "affected by an error of law." C.P.L.R. § 7803(3). Petitioners ask the court to review whether respondents have unlawfully disqualified Schapira as a director and determined their election as the Board and officers of Whitehall Tenants Corp., based on an erroneous interpretation of the governing by-laws and in violation of the lawful procedure for election to those capacities. This request fits squarely within C.P.L.R. § 7803(3)'s scope, particularly since petitioners claim respondents did not follow the corporation's own internal rules contained in its by-laws. E.g., Drucker v. Hofstra Univ., 279 AD2d 472, 473 (2d Dep't 2001); Schiffer v. Tarrytown Boat Club, 219 AD2d 704 (2d Dep't 1995); Sines v. Opportunities for Broome, 156 AD2d 878, 879 (3d Dep't 1989).

C.P.L.R. § 7803(2) further authorizes the court to determine whether a corporate body or officer proceeded or is proceeding "without or in excess of jurisdiction." Petitioners' request for relief also asks the court to determine whether respondents have acted as the Board and officers of Whitehall Tenants Corp. without being lawfully elected to those capacities and outside the parameters of the Board and officers lawfully elected to those capacities. Sections 7801 and 7803(2) encompass not only the court's determination of these questions, but also petitioner's request to invalidate and enjoin all past and future actions by respondents as Whitehall Tenants Corp.'s Board through a Board or officers inconsistent with the governing by-laws and lawful procedure for election to those capacities.

BCL § 619 authorizes the court to hear the petition of shareholders aggrieved by a corporate election at a shareholders' meeting and "confirm the election, order a new election, or take such other action as justice may require." See Heisler v. Gringas, 90 NY2d 682, 686 (1997); Ronnen v. Ajax Elec. Motor Corp., 88 NY2d 582, 591 (1996); Buckley v. Wild Oaks Park, 44 NY2d 560, 566 (1978); Visutton Assocs. v. Anita Terrace Owners, 254 AD2d at 296. Here, if the original election June 28, 2005, where Scher certified the vote count June 29, 2005, is the focus, the relief the shareholder petitioners seek may be tantamount to confirming that election. If Scher's later disqualification of Schapira as a director, leaving five other candidates with the highest vote to be the elected directors is the focus, the relief respondents seek in their first counterclaim is to confirm that election.

Petitioners pursue an alternative course, however, as they are entitled to do. They claim to be aggrieved not by the election June 28, 2005, but by Schapira's disqualification by respondents that left Sternberg instead of Schapira among the five candidates with the highest vote count, and request review of that determination because it was based on an error under the [*5]governing law and violated the governing lawful procedure. C.P.L.R. § 7803(3). Petitioners hardly seek to "confirm the election" of those five remaining candidates as the five directors. BCL § 619. Instead, they claim to be aggrieved by and seek to enjoin the actions by four of those five candidates as unlawfully elected corporate Board members and officers. C.P.L.R. §§ 7801 and 7803(2). Petitioners seek not to test the validity of Schapira's election as a director or invalidate it. For that purpose, BCL § 619 may be the exclusive means. Chiulli v. Reiter, 130 AD2d 617, 618 (2d Dep't 1987). They seek to test the validity of her subsequent disqualification as a director and invalidate this later action. BCL § 619 does not specifically authorize this relief. Buckley v. Wild Oaks Park, 44 NY2d at 566.

A proceeding under BCL § 619 may challenge only the validity of elections at corporate shareholder meetings, not the validity of other actions, such as candidates' disqualification, either at a shareholder meeting or afterward. Goldfield Corp. v. General Host Corp., 29 NY2d at 267. While a determination of voters' shareholder status or voting power and a qualification or disqualification of their votes may be a predicate to confirming an election or ordering a new one, this proceeding concerns a candidate's qualification or disqualification as a corporate director. See Heisler v. Gringas, 90 NY2d at 686; Ronnen v. Ajax Elec. Motor Corp., 88 NY2d at 591; Buckley v. Wild Oaks Park, 44 NY2d at 565, 567; Visutton Assocs. v. Anita Terrace Owners, 254 AD2d at 296.

Nor do petitioners seek "a new election." BCL § 619. If the court grants their request, reverses Schapira's disqualification, and enjoins the candidate with the sixth highest vote count, Sternberg, from supplanting the candidate with the second highest vote count, Schapira, the original election will remain in place. To the extent the shareholder petitioners seek to confirm that original election, they seek relief authorized by BCL § 619, but it is superfluous.

Moreover, to the extent the petition could be construed as claiming the shareholder petitioners to be aggrieved by respondents' unlawful election as corporate Board members and officers, the remedy would be simply to convert the claim to another form of a special proceeding, under BCL § 619. C.P.L.R. § 103(c); Nationwide Mut. Ins. Co. v. Hausen, 143 AD2d 577, 580 (1st Dep't 1988); Rodriguez v. New York City Tr. Auth., 269 AD2d 600, 601 (2d Dep't 2000); Consolidated Rail Corp. v. Tax Appeals Tribunal of State of NY, 231 AD2d 140, 142 (3d Dep't 1997); Laird v. Town of Montezuma, 191 AD2d 986, 987 (4th Dep't 1993). See Boryszewski v. Bridges, 37 NY2d 361, 365 (1975); Manshul Constr. Corp. v. Board of Educ. of City of NY, 154 AD2d 38, 41-42 (1st Dep't 1990); Haddad v. Haddad, 272 AD2d 371 (2d Dep't 2000); Town of Fishkill v. Royal Dutchess Props., 231 AD2d 511, 512 (2d Dep't 1996). While BCL § 619 dictates that only the shareholder petitioners could seek relief under that section, the corporate petitioner named here seeks no distinct relief, and § 619 nowhere dictates that petitioners name respondents other than are named. Therefore the court denies respondents' motion to dismiss this proceeding because it was brought pursuant to C.P.L.R. art. 78 rather than BCL § 619.

Respondents Grunberg, Bullard, Bravmann, and Sternberg, on the other hand, do seek, by their first counterclaim, (a) to "confirm the election" of those five candidates remaining with the highest vote count after Schapira's disqualification or (b) "a new election," BCL § 619, after written disclosure of Schapira's co-trustee status to the shareholders. Therefore the court determines those respondents' first counterclaim and the shareholder petitioners' claim, insofar as petitioners may be aggrieved by the five remaining candidates' election, pursuant to BCL § 619. B.Respondents' Second Counterclaim

The second counterclaim by the same four respondents seeks an inspection of the election records, including the ballots voted in person and by proxy and the proxies. BCL § 624(b) entitles corporate shareholders, five days after their written demand, to examine the corporation's "minutes of the proceedings of its shareholders and record of shareholders." Upon the corporation refusing such a demand, the demanding shareholders may commence a proceeding pursuant to BCL § 624(d) to compel the inspection.

Respondents do not seek, however, to inspect the minutes of a shareholder meeting or of [*6]another shareholder proceeding or the record of shareholders. Therefore the court determines respondents' second counterclaim pursuant to BCL § 624(d) and, insofar as respondents seek to compel Whitehall Tenants Corp. "to perform a duty enjoined upon it by law," but outside BCL § 624's scope, pursuant to C.P.L.R. art. 78. C.P.L.R. § 7803(1). See Crane Co. v. Anaconda Co., 39 NY2d 14, 18 (1976); Dyer v. Indium Corp. of Am., 2 AD3d 1195, 1196 (3d Dep't 2003); Trocolli v. L & B Contract Indus., 259 AD2d 754 (2d Dep't 1999); Niggli v. Richlin Mach., 257 AD2d 623 (2d Dep't 1999).

On July 27, 2005, respondents other than Scher sent Whitehall Tenants Corp. a written demand to inspect the June 2005 election records, to which respondents have received no response aside from petitioners' position on the issue in this proceeding. As the reason for the request, respondents claim "improprieties" regarding the proxy ballots. V. Answer ¶ 68. Respondents "were given proxy ballots by certain shareholders, and the SCHAPIRA group appeared with what they claim were later proxies from the same shareholders, purportedly superseding the proxies given to . . . respondents." Id. Signatures on the latter proxies "appeared questionable." Id.

Those respondents who are shareholders, namely Grunberg, Bullard, and Bravmann, have a right not only under BCL § 624, to inspect the records specified there, Estate of Purnell v. LH Radiologists, 90 NY2d 524, 531-32 (1997), but also by virtue of their status, to inspect other corporate records. Crane Co. v. Anaconda Co., 39 NY2d at 18; Dyer v. Indium Corp. of Am., 2 AD3d at 1196; Trocolli v. L & B Contract Indus., 259 AD2d 754; Berkowitz v. Astro Moving & Stor. Co., 240 AD2d 450, 451 (2d Dep't 1997). Both rights are conditioned on respondents' showing that their demand is in good faith for a proper purpose. Crane Co. v. Anaconda Co., 39 NY2d at 18, 23; Mayer v. National Arts Club, 223 AD2d 440, 441 (1st Dep't 1996); Dyer v. Indium Corp. of Am., 2 AD3d at 1196; Trocolli v. L & B Contract Indus., 259 AD2d 754.

Respondent Scher's duty as the inspector of the election was to determine the validity of proxies, voting qualifications and power, and any questions concerning voting rights. BCL § 611(a) and (b); Visutton Assocs. v. Anita Terrace Owners, 254 AD2d 295. Therefore questions whether later proxies held by petitioners or by nonparties superseded earlier proxies for the same shareholders held by respondents were to have been presented to Scher June 28, 2005, and determined by her. Vasinkevich v. Elm Drugs, 208 AD2d 522, 524 (2d Dep't 1994). Pointedly, respondents nowhere claim she failed in her statutory duties or otherwise failed to perform a duty required of her, acted in excess of her authority, or made an unlawful or arbitrary determination. C.P.L.R. § 7803. In addition, respondents have not articulated their basis for questioning signatures on the superseding proxies or a reason to inspect all ballots, when respondents do not dispute the vote count.

On the other hand, respondents' untimeliness and lack of evidentiary support aside, inspecting the propriety of proxies or ballots cast at a shareholders' meeting is a facially valid purpose in the shareholders' corporate interest. Trocolli v. L & B Contract Indus., 259 AD2d at 754-55; Berkowitz v. Astro Moving & Stor. Co., 240 AD2d at 451. Respondents' verified answer minimally places that propriety in controversy. Crane Co. v. Anaconda Co., 39 NY2d at 18. Respondents' motives appear questionable, Vasinkevich v. Elm Drugs, 208 AD2d at 524, if not from respondents' own allegations and the undisputed vote count, from petitioners' showing that respondents may use the ballot information to badger, scold, or intimidate shareholders who did not vote for respondents. Crane Co. v. Anaconda Co., 39 NY2d at 20, 22; Matter of Salatino, 180 AD2d 434 (1st Dep't 1992). Nevertheless, where any question is raised, the remedy is a hearing to resolve the counterclaim rather than its summary dismissal. Dyer v. Indium Corp. of Am., 2 AD3d at 1197; Trocolli v. L & B Contract Indus., 259 AD2d 754; Niggli v. Richlin Mach., 257 AD2d 623.

Respondents' purpose and any relief granted must be consistent with the assurances to shareholders and proxy holders by the attorney whom the prior Board, controlled by respondents, appointed to conduct the election and arrange for the ballot count. Those assurances included a repeated promise at the election, without objection then or contradiction now, that the ballots [*7]would be secret and sealed from all shareholders and Board members. Similarly, the court must be assured, before granting any inspection, and must assure further, upon granting one, that it will not be used contrary to the purposes of secret ballots or that respondents' purpose for the inspection is more compelling. See Mayer v. National Arts Club, 223 AD2d at 441. C.Board Composition

On the other issues, respondents raise no material factual issues requiring an evidentiary hearing. C.P.L.R. § 409(b); Chadbourne & Parke, LLP v. AB Recur Finans, 18 AD3d 222 (1st Dep't 2005); 10 W. 66th St. Corp. v. New York State Div. of Hous. & Community Renewal, 184 AD2d 143, 148 (1st Dep't 1992); Eck v. City of Kingston Zoning Bd. of Appeals, 302 AD2d 831, 832 (3d Dep't 2003); Friends World Coll. v. Nicklin, 249 AD2d 393, 394 (2d Dep't 1998). See Scotto v. Giuliani, 280 AD2d 315 (1st Dep't 2001); Young v. Costantino, 281 AD2d 988 (4th Dep't 2001); Davis v. Peterson, 254 AD2d 287 (2d Dep't 1998); Laird v. Town of Montezuma, 191 AD2d at 986-87. Based on the undisputed by-laws, petitioners have sustained their burden to establish that Scher's disqualification of Schapira as a Board member and hence as Board President was erroneous under the governing by-laws and violated the procedure under the by-laws and BCL § 611(a) and (b) for election to those capacities. Consequently, the court grants the petition as follows and dismisses respondents' first counterclaim.

The five members of the Whitehall Tenants Corp. Board of Directors who have been elected by all shareholders other than the sponsor are petitioners Schapira and Moerdler and respondents Grunberg, Bullard, and Bravmann, as established by the vote count June 28, 2005. Whitehall Tenants Corp.'s officers, elected June 30, 2005, by the seven Board members elected June 28, 2005, including the two elected by the sponsor, are Schapira, President; Moerdler, Vice President; Ted Phillips, Secretary; Gene Staudt, Secretary; and Sharon Steinfeld, Assistant Secretary. Since Schapira's election was valid, and respondents had the opportunity to communicate with the other shareholders, in writing or orally, before the election June 28, 2005, and persuade them not to elect a director who is a co-trustee of a trust that owns the shares allocated to the apartment she resides in, a new election with such notice is unwarranted. Goldfield Corp. v. General Host Corp., 29 NY2d at 268-69, 271, 273; Cinotti v. Davidsohn, 283 AD2d 280, 281 (1st Dep't 2001). Nothing requires that any or all shareholders be notified of any information regarding candidates for the Board of Directors or any other office. V. Pet., Ex. A art. I, §§ 1 and 2, and art. II, § 5; BCL § 605(a).

Any actions on the corporation's behalf since June 28, 2005, by a Board composed differently, or by an officer designated differently, are void, without effect, unless approved or ratified by the Board of Directors specified above. Respondent Scher's actions disqualifying Schapira as a director and actions after counting the votes June 28, 2005, and reporting the vote count June 29, 2005, were unauthorized by the by-laws and therefore are also void, without effect. C.P.L.R. § 7803(2) and (3). All respondents are enjoined from any further action as Whitehall Tenants Corp.'s Board through a membership or through officers inconsistent with the court's determination. D.Disposition of the Petition and Counterclaims

Given Scher's undisputed certification of the vote count and the absence of any challenge by the other respondents to the performance of her duties, it is in all shareholders' interest that the above determination and injunction be effective immediately, to enable the cooperative to conduct its business with certitude and confidence, pending any inspection of records. Berkowitz v. Astro Moving & Stor. Co., 240 AD2d at 451. If after a hearing the court orders the requested inspection of records, and the court further determines that the inspection reveals Schapira's election was invalid, the court will reconsider its determination of the petition and first counterclaim.

At the hearing, petitioner Whitehall Tenants Corp. shall produce for the court the records, including the ballots voted in person and by proxy and the proxies, from the election of directors at the shareholders' meeting June 28, 2005. After the hearing, the court will determine the relief to which respondents Grunberg, Bullard, and Bravmann are entitled on their second [*8]

counterclaim. Because respondent Sternberg is admittedly not a shareholder, the court dismisses his second counterclaim.

DATED: November 10, 2005

_____________________________

LUCY BILLINGS, J.S.C.