Naranjo v Jefferson

[*1] Naranjo v Jefferson 2006 NY Slip Op 52102(U) [13 Misc 3d 1233(A)] Decided on November 3, 2006 Supreme Court, New York County Ling-Cohan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 3, 2006
Supreme Court, New York County

Pablo Naranjo, MARIA GALLARDO, DIANE LOPINTO, & GINA LUGO, as attorney in fact for MARIA GUZMAN, individually and as shareholders of 188-90 EIGHTH AVENUE HDFC, a/k/a 188 EIGTH AVENUE HDF CORP., Plaintiffs,

against

Kamala Jefferson, JAMES ROLDOS a/k/a JIMMY ROLDOS & JESSY MOYA, in their individual capacity and in the representative capacity as the BOARD OF DIRECTORS OF 188-90 EIGHTH AVENUE, HDFC a/k/a 188 EIGHTH AVENUE HDF CORP., & 188-90 EIGHTH AVENUE, HDFC a/k/a 188 EIGHTH AVENUE HDF CORP., Defendants.



115721/06

Doris Ling-Cohan, J.

"Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough."

Abraham Lincoln, Notes for a Law Lecture, July 1850 [FN1]

ORDER TO SHOW CAUSE

Plaintiffs are cooperative tenants and shareholders of 188-90 Eight Avenue HDFC a/k/a 188 Eighth Avenue HDF Corp. ("HDFC). On or about October 20, 2006, plaintiffs filed the within order to show cause seeking a temporary restraining order and a preliminary injunction, enjoining, restraining and prohibiting defendants Kamala Jefferson, James Roldos a/k/a Jimmy Roldos and Jessy Moya, from acting as directors or exercising any of the duties, functions or decision-making authority of said office, including the termination of any tenancy and the eviction of any shareholder or tenants, with the exception of emergency matters, and except to continue day to day operations of the HDFC, pending the final results of an election of the Board of Directors that conforms with the HDFC's governing documents, scheduled to be held on November 9, 2006. [*2]

THIS ACTION

The underlying action was commenced by plaintiffs at or about the time of the submission of the above described order to show cause, seeking declaratory relief, as well as a preliminary and permanent injunction. In essence, plaintiffs seek to nullify the actions of the current board of directors, which plaintiffs claim were illegally and improperly elected. According to plaintiffs, the election of the current board of directors, occurred at two (2) annual shareholders meetings on or about January 14, 2005 and April 26, 2006, in which less than a quorum of the shareholders were present, in violation of the HDFC's governing rules.

Plaintiffs claim that, inter alia, the current and allegedly illegal board has been recklessly operating and unlawfully controlling the governance of the HDFC. According to plaintiffs, the allegedly illegal board has been improperly disbursing large sums of the HDFC's funds for individual apartment renovations, as well as pursuing the eviction of the long term and allegedly valuable commercial tenant of the building, against the wishes of the plaintiff shareholders.

It is noted that, the within action, is the latest in the saga of court proceedings resulting from a long-standing fight between seven (7) out of the eight (8) in total co-operative shareholders of the HDFC, who appear to have a difference of opinion as to how the building should be run. After conference, and a review of the submitted papers, it appears that the crux of the dispute at this juncture, is primarily focused on whether the commercial tenant Havana Chelsea Luncheonette Inc. d/b/a Havana Chelsea Restaurant Corp., ("commercial tenant" or "Havana Chlesea") - located on the ground floor of the co-operative building - should be evicted.

THE COMMERCIAL TENANT

The eviction of the commercial tenant had allegedly been scheduled for, on or about, October 26, 2006; however, the eviction failed to go forward due to the signing of the interim stay by this Court on October 20, 2006. The warrant of eviction was issued in the context of a landlord-tenant holdover proceeding which was commenced in March 2004 by 188-90 Eighth Avenue HDFC a/k/a 188 Eighth Avenue HDF Corporation, based upon the expiration of the commercial lease in February 2004. A trial was held in such holdover proceeding in January of 2005, and resulted in a judgment of possession being entered against the commercial tenant on January 24, 2005.

The Court notes that the landlord-tenant matter was fully litigated in the Civil Court over the course of two and a half years; the January 24, 2005 judgment of possession was appealed to the Appellate Term and affirmed in a decision dated May 5, 2006, and a stay of the warrant of eviction was denied by the Appellate Division, First Department in a decision dated July 26, 2006. Additionally, the within plaintiffs, attempted to assist the commercial tenant in stopping its eviction by signing a purported renewal lease with commercial tenant. Similar claims to those asserted in this lawsuit, were posed to the Honorable Saliann Scarpulla in a post-appeal attempt [*3]to stop the commercial tenant's eviction in the context of the landlord-tenant proceeding [FN2]; however, in a decision dated October 6, 2006, Judge Scarpulla ruled that, inter alia, the commercial tenant "has not shown that the purported lease is a binding agreement on behalf of Eighth Avenue Corp.", and denied the motion to permanently stay execution of the warrant of eviction. These specific facts were not presented to this Court in plaintiffs' ex parte application for a temporary injunction.

It is undisputed and quite significant that the subject commercial landlord-tenant proceeding was commenced by a board of directors, which was presumably "legal", as it was filed prior to the alleged illegal elections of the current board members held on or about January 14, 2005 and April 26, 2006 . Further, although plaintiffs characterize the restaurant tenant as a "valuable commercial tenant", defendants, in opposition to the within motion assert, inter alia, the following with respect to the allegedly dangerous and violent nature of the commercial tenant's principals, Federico Cainas and Daniel Cainas:

"[they] were both convicted of criminal offenses in 2004 and 2005 arising out of their physical assault on [defendant Jimmy Roldos] while on the Coop's premises, which required hospitalization and an Order Of Protection against them for [defendant Jimmy Roldos'] physical safety...that they were both arrested again about two weeks ago for their violation of that Order Of Protection in again threatening [defendant Jimmy Roldos] with physical harm...further...Daniel Cainas was arrested in February 2006 for the promotion of gambling at the restaurant premises".

[See ¶3 ( c), Jimmy Roldos Affidavit in Opposition]. Specifically, these claims, which are supported by documentary proof, are not refuted by plaintiffs. [See Exh. 11, Roldos Affidavit in Opposition]. Thus, this commercial tenancy, which appears to affect the safety of tenants in the building, is far from a "valuable commercial tenant", as plaintiffs claim.

Further, in opposition to plaintiffs' request for a preliminary injunction, defendants maintain that a lease with a new commercial tenant has been signed commencing November 1, 2006, which provides the Coop with the benefit of a much higher rental amount than the prior tenant. [See Copy of Lease, Exh. 1, Maria Roldos Supplemental Affidavit in Opposition]. According to defendants, the difference in the first year's rent between the amount Havana Chelsea was paying and what the new tenant agreed to pay, is $52,200.00. [See ¶6, Maria Roldos Supplemental Affidavit in Opposition].

PRELIMINARY INJUNCTIVE RELIEF

A preliminary injunction is a drastic remedy which should only be granted where the movant has [*4]demonstrated in the moving papers a clear legal right to the relief demanded based upon the undisputed facts. See Cohen v. Department of Social Servs., 37 AD2d 626, affd 30 NY2d 571(1972); William M. Blake Agency, Inc. v. Leon, 283 AD2d 423, 424 (2nd Dept 2001). Given that it is a provisional remedy, its function is not to determine the ultimate rights of the parties, but to maintain the status quo until there can be a full hearing on the merits. Residential Board of Managers of the Columbia Condominium v. Alden, 178 AD2d 121 (1st Dept 1991). To be entitled to a preliminary injunction, plaintiff must clearly demonstrate: (1) a likelihood of success on the merits; (2) irreparable injury absent granting the preliminary injunction; and (3) a balancing of the equities in their favor. See W.T. Grant Co. v. Srogi, 52 NY2d 496, 517 (1981); Aetna Ins. Co. v. Capasso, 75 NY2d 860 (1990); Borenstein v. Rochel Props., Inc., 176 AD2d 171, 172 (1st Dept 1991). Irreparable injury has been held to mean an injury for which monetary damages are insufficient. See James v. Gottlieb, 85 AD2d 572 (1st Dept 1981); Klein, Wagner & Morris v. Klein, 186 AD2d 631, 633 (2nd Dept 1992).

Here, as detailed further below, plaintiffs have failed in the moving papers to meet their burden of establishing a "clear right" to the demanded relief. Cohen v. Department of Social Servs., 37 AD2d at 626. Thus, plaintiff's motion is denied.

Glaringly absent from the moving papers is an explanation as to why plaintiffs waited until almost two years after the first allegedly illegal election of directors was held, to commence this action.Ironically, this is at least the second action commenced by plaintiffs alleging that the board of directors had not been properly elected; in opposition to the within motion, defendants have attached a decision dated August 30, 1996, by the Hon. Eileen Bransten, JSC, in a case titled Diane Lopinto, Pablo & Hugo Naranjo, Maria Gallardo, Maria Guzman and Dolores Lugo v. Sandy Roldos, Diego Balarezo, Alega Naranjo, Kamala Jefferson and 188-90 Eighth Avenue, HDFC, Index Number 110379/95.

Additionally, plaintiffs' claim that "the consequence of the eviction [of the commercial tenant], will be substantial and irreparable" [¶8, Pablo Naranjo Supplemental Affidavit] is unpersuasive in that a new tenant can be obtained, and according to defendants, has already been obtained, at a substantially higher rent, which has been undisputed. In fact, plaintiffs seem to care more about the commercial tenant than the safety of their own residential neighbors when they argue, albeit inappropriately, that "[t]his well-established business will certainly be destroyed" as a factor on the issue of irreparable harm,. [¶52, Naranjo Affidavit].

Moreover, a balancing of the equities does not tip in plaintiffs' favor. Should an injunction be granted by this Court, the eviction of the commercial tenant will be stayed, a result which is clearly not warranted. The litigation which proceeded in the Commercial Landlord-tenant Part of the Civil Court, was extensive, costly and exhaustive; as detailed above, a trial was held, appeals were taken, and post-appeal attempts were made, all proving to be futile to the commercial tenant.

At this juncture, it would be highly unjust to allow the commercial tenant to achieve in this Court [*5]- where it is not even a party- that what it was unable to achieve after unsuccessfully litigating the matter in the Civil Court, Appellate Term and the Appellate Division. No basis whatsoever has been supplied in the moving papers to warrant this Court to issue an injunction which would stay the eviction of the commercial tenant, after over two and half years of litigation in Civil Court, and permit the circumvention of numerous prior orders of the Civil Court, as well as the Appellate Term and the Appellate Division, First Department.

Significantly, it is not disputed that the landlord-tenant proceeding was commenced by a board of directors which was properly elected. Moreover, that the principals of the commercial tenant have been indisputably criminally convicted for the assault against defendant Jimmy Roldos, and have allegedly demonstrated violent and threatening conduct to shareholders and tenants of the subject building, and that Orders Of Protection have been issued, provides further justification for this Court to deny plaintiffs' request for an injunction. The Court notes that the individual defendants have submitted affidavits in which they express fear for their safety and the safety of their families, due to the presence of the present commercial tenant.

With respect to any claim by plaintiffs that defendants are improperly using shareholder funds, it is undisputed that all of the tenants of the building, at one time or another, reaped the benefit of individual apartment improvements funded by the HDFC, and/or at least had the opportunity to get apartment improvements, but refused access.

Preliminary injunctions are drastic remedies which should be used sparingly. See 67A NY Jur 2d, Injunctions §47. Upon the submitted papers, plaintiffs have failed to demonstrate an entitlement to such drastic relief.

As the parties to this lawsuit consist of seven tenant shareholders, in an eight unit building, the Court strongly encourages the parties to contact the mediation program of Safe Horizon, 356 Broadway, Suite 400W, New York, NY, (212) 577-1740, to arrange for a mediation session at which the parties can discuss the future of the building and create solutions to any present conflicts. Long after the conclusion of this lawsuit, regardless of its outcome, the parties, until they sell their apartments, will remain neighbors and co-shareholders in a corporation owning valuable New York City real estate. Thus, a more harmonious existence is in the best interest of all of the parties.

The Court notes that a shareholder meeting is currently scheduled for November 9, 2006, at which a new board of directors is to be elected, presumably rendering this declaratory judgment action moot.

Accordingly, it is

ORDERED that plaintiffs' motion for a preliminary injunction is denied; it is further

ORDERED that any and all stays issued by the signing of plaintiffs' order to show cause dated October 20, 2006, are hereby vacated forthwith; and it is further

ORDERED that, within twenty days of entry of this decision/order, defendants shall serve [*6]a copy upon plaintiffs with notice of entry.

Further, both sides are

ORDERED to complete discovery expeditiously, so that this matter may be placed on the trial calendar; it is further

ORDERED that the parties shall appear for a preliminary discovery conference before this Court on Thursday, December14, 2006, at 10:30 a.m., Room 279, 80 Centre Street, New York, New York, unless this case is discontinued due to the new election of the board of directors, scheduled for November 9, 2006.

This constitutes the decision and order of the Court.

Copies shall be supplied to counsel for the parties by the Clerk of the Part.

Dated: November 3, 2006

Doris Ling-Cohan, JSC

Check One: [ ] FINAL DISPOSITION[ X ] NON-FINAL DISPOSITION

Check if Appropriate: [ ] DO NOT POST C:\htformat\f5210260.txt Footnotes

Footnote 1: http://showcase.netins.net/web/creative/lincoln/speeches/quotes.htm

Footnote 2: The Court notes that defendants, in their papers in opposition, assert that plaintiff Naranjo submitted an affidavit dated August 3, 2006 in support of the commercial tenant's order to show cause submitted in the Civil Court to stay its eviction, however, such affidavit has not been submitted to this Court, despite defendant's reference to it being attached as Exhibit 3. [See ¶26, Roldos Affidavit].