Matter of Singh v 74th St. Merchants Assn. Inc.
Annotate this CaseDecided on November 12, 2009
Supreme Court, Queens County
APPLICATION OF Mahipal Singh, NARESH SONDHI, SUBASH SHARMA, JASWINDER SINGH, DEEPAK BHARDWAJ, MOHINDER VERMA, and DEEPAK VERMA, Petitioners,
against
74th Street Merchants Association, Inc., d/b/a JACKSON HEIGHTS MERCHANTS ASSOCIATION, KANUBHAI CHAUHAN, JAGIR SINGH, SHIV DASS, NITIN VORA, and ASHOK KUMAR and JOHN DOES 1-20, Respondents.
21270/2009
For Petitioners Mahipal Singh, Naresh Sondhi, Subash Sharma, Jaswinder Singh, Deepak Bhardwaj, Mohinder Verma, and Deepak Verma: Hodgson & Russ, by Joseph P. Goldberg and Gary M. Heller, Esqs., 1540 Broadway, 24th floor, New York, NY 10036
For Respondents 74th Street Merchants Association, Inc., d/b/a Jackson Heights Merchants Association, Kanubhai Chauhan, Jagir Singh, Shiv Dass, Nitin Vora, and Ashok Kumar and John Does 1-20: Law Office of Steve Cohn, by Mitchell R. Goldklang, Esq., One Old Country Road, suite 420, Carle Place, New York 11514
Charles J. Markey, J.
For purposes of this Decision and Order only, the Court is consolidating the article 78 proceeding, commenced by Notice of Petition, filed under index number 21270/2009 with the commercial action, filed under index number 24015/2009.
This action arises out of a struggle between members of the 74th Street Merchants Association, Inc., d/b/a Jackson Heights Merchants Association (the "Association"), a not-for-profit corporation organized under New York law, concerning the election of members of its Board of Directors and officers that occurred on August 1, 2009. The membership of the Association is comprised entirely of local retail merchants within a certain defined geographic area located in Jackson Heights, in the County of Queens, New York.
As an initial comment, this dispute, starting this year, has already occupied the time and energies of five different Justices of this Court, contrary to the principles of the Individual Assignment System. In the future, all matters concerning the above-captioned cases and any related actions or proceedings shall be referred directly to the undersigned or, only in my absence concerning any contemplated order to show cause, to the Emergency Justice.
In the Notice of Petition filed under index number 21270/09, the petitioners seek to invalidate the election of August 1, 2009, a declaration that the offices of Shiv Dass, [*2]Nitin Vora, and Ashok Kumar, who were elected to the Board of Directors of the Association at that election are invalid, and the appointment of a neutral referee.
In the commercial action commenced under index number 24015/09, the plaintiffs obtained an order to show cause with a temporary restraining order from Justice Marguerite Grays, dated September 3, 2009, seeking to prevent defendants in that action from taking any action on behalf of the Association, including the holding of new elections. Also, in that commercial action, the undersigned issued an order to show cause why the defendants should not be held in contempt for allegedly violating Justice Grays's order of September 3, 2009.
By order dated September 25, 2009, the action under index number 24015/09 was transferred to the undersigned, who heard oral argument on October 1, 2009, concerning the background facts and circumstances. The three orders to show cause were then marked returnable on October 22, 2009, for the submission of additional papers, and this Court, on that date, requested counsel for all parties not to make additional motions or seek additional orders. Recognizing the urgency of the situation and that the Association's business was effectively paralyzed with consequent divisiveness to the Association's constituency, this Court promised an accelerated decision.
The Court, next, addresses the mistakes of spelling of the parties' names and orders corrections. Astonishingly, the Court, in the papers of the parties, has found six to seven name variations for respondent Jackson Heights Merchants Association. The Court hereby orders that the spelling of that entity in the caption on all papers be corrected by the Clerk to Jackson Heights Merchants Association.
The Court further directs the Clerk to correct in the caption of all papers the name of the defendant Kanu Bhar Chauhan in the second action to Kanubhai Chauhan.
The Court further notes that counsel for plaintiffs in the second action seeking a contempt citation against the defendants in the second action have withdrawn their request only as against defendant Kanubhai Chauhan.
Counsel for petitioners uses strong language concerning the actions of respondent Jagir Singh. They contend that Jagir Singh "orchestrated an illegal election that was conducted undemocratically" [Petitioners' Memorandum of Law], that the election of August 1 was "a sham" conducted by its "ring leader" Jagir Singh, who was "hijacking the Association and unilaterally installing his self-selected board member and officers."
This Court, having read all the papers and exhibits, and having heard oral [*3]argument, concludes that petitioners are correct that the election held on August 1, 2009, was illegal and must be set aside. Since some of the respondents may attempt to seek office in a second election that is being ordered herein, the Court will scrupulously avoid any reference to the individual litigants. Suffice it to say that the conduct of the August 1, 2009 election violated the requirements of the Not for Profit Corporation Law and basic principles of reasonable notice and fundamental fairness.
This Court makes the following ten findings of fact:
1. By order of this Court, dated March 26, 2009, the Association was directed to
conduct elections of the Board of Directors and officers on August 1, 2009.
2. On or about June 15, 2009, Mohinder Verma, as General Secretary of the
Association, Deepak Verma, as Treasurer of the Association, and Mahipal Singh, mailed a
circular to its members that enclosed a membership information card for members to complete
and return by June 20, 2009, in order to ensure that all members had an opportunity to cast a
ballot in the elections.
3. On June 16, 2009, Jagir Singh, without authorization from the Association, sent a
letter to certain of the Association's members stating that elections would be held on July 30,
2009, as opposed to the August 1, 2009 date set in a prior so-ordered stipulation.
4. The aforementioned, purported notice failed to identify the time or location of the
election, to discuss a nominating process, or to offer slates of competing candidates.
5. On June 23, 2009, Jagir Singh sent another unauthorized notice to the
Association's membership concerning the forthcoming elections. That letter failed also to
identify the date, time, and location of the elections. It also illegally imposed a fifty dollar ($50)
fee as a precondition for filing a vote.
6. Neither of the two letters sent out by Jagir Singh to the Association's membership
invited nominations, set forth competing slates, or described a nominating process.
7. No election was held on July 30, 2009, as previously indicated by Jagir Singh.
8. An election was held on August 1, 2009, with only a few hours notice. At no time
prior to August 1, 2009, did the Association deliver to the membership notice of this election or
provide slates of candidates to choose from, and there was no nominating process.
[*4]
9. On the same day of this election of August 1,
2009, with only a few hours notice to the Association's membership, Jagir Singh announced in a
notice that elections would be held that day from 4 PM to 5PM at a certain restaurant in Jackson
Heights. That notice also did not identify the candidates for election. Jagir Singh gave this notice
of the same day elections on August 1, 2009, not to the full membership, but only to members
who voted in the last election of 2006.
10. There is no proof as to how many members of the association received the last
minute notice. Only 52 out of the 179 Association members, who qualified to vote on August 1,
2009, actually voted, according to the unofficial count.
Failure to give adequate notice of a meeting for the election of directors as required by a corporation's bylaws or section 618 of the Not for Profit Corporation Law provides legal grounds for vacating the results of that election. Two cases, involving Republican Party and Democratic Party political clubs provide helpful, compelling precedents. First, in Azzi v. Ryan, 120 Misc 2d 121, 465 NYS2d 414 [Sup Ct Queens County 1983], members of the Woodside Republican Club, Inc., a Republican Party club from Woodside, in the County of Queens, New York, contested the legality of the vote of officers at a club meeting. In Azzi, the corporation bylaws did not strictly require notice of an election. 120 Misc 2d at 122, 465 NYS2d at 415. The court, nevertheless, held that, even absent a notice requirement, election results may be vacated where "the failure to notify members is repugnant to the interests of right and justice." Id. at 123, 465 NYS2d at 415.
Although the petitioners in Azzi had attended the election meeting, they were not prevented from seeking relief on behalf of other members who may have participated had they known that an election was taking place and that challengers to the initial slate of candidates were being nominated. The court in Azzi, therefore, directed a new election for officers to be held with advance written notice detailing the place, date, and hour of the election, and that such notice be given to all persons entitled to vote either personally or not less than ten days if the notice were being mailed. Id. at 123, 465 NYS2d at 415-416.
The same situation occurred in Matter of the Election of Directors of the FDR-Woodrow Wilson Democrats, Inc., 57 Misc 2d 743, 293 NYS2d 463 [Sup Ct New York County 1968]. Granting the petition, the court in that case declared that the election of directors was void for failing to give the requisite notice as required by the political club's bylaws. Similar to the simple, quietly resounding statement made by the court in Azzi, the court in the FDR-Woodrow Wilson Democrats case, stated: "Justice and equity require that the election be set aside." Id. at 747, 293 NYS2d at 467. [*5]
Other cases provide helpful confirmation. See, Trustees of Gallilee Pentecostal Church, Inc. v. Williams, 65 AD3d 1221, 885 NYS2d 525 [2d Dept. 2009] [Appellate Division rendered void, under the Religious Corporation Law, a church election of trustees and a minister for improper notice of the election meeting]; Shevlin v. National Conservation Corp., 199 AD2d 995, 605 NYS2d 593 [4th Dept. 1993] [requiring a new election for directors and officers, under Business Corporation Law section 619, for an improperly convened meeting]; Hong v. 384 Grand Street Hous. Dev. Fund Co., Inc., 2008 WL 2328934, 2008 NY Slip Op 31456[U] [Sup Ct. NY County 2008] [Madden, J.] [declaring void an election meeting under the Not for Profit Corporation Law].
No advance notice, in the present matter, was provided to Association members of the August 1, 2009 election, other than the same day notice given, by respondent Jagir Singh, selectively to some members of the Association that voting would occur in a few hours, for one hour only, between 4:00 P.M. to 5:00 P.M. Respondent Jagir Singh's choice of same day notice, whether a tactic calculated to guarantee a low turnout or the product of impulse or poor judgment, is untenable as a matter of law. Not for Profit Corporation Law section 605[a] states that notice of any meeting - - not only elections - - must be given to members not less than 10 days nor more than 50 days before the meeting date.
Additional facts, aside from the same-day-only-hours-away notice, require that the petition be granted and that the August 1, 2009 election be deemed, in all respects, a nullity and set aside, including any actions based on such elections. Significantly, respondent Jagir Singh unilaterally imposed a $50 fee in order to cast a ballot, and he, furthermore, limited access to a vote only to those who had voted in the 2006 election, even though the Association's membership had expanded since that time, and may even expand further for the purposes of the new election being ordered herein. Even worse than the facts in Azzi v. Ryan, 120 Misc 3d 121, supra , where there existed a formal procedure for the nomination of candidates and competing slates, in the present case there was none.
The election that occurred on August 1, 2009, offends fundamental fairness, democracy, and due notice, not to mention the requirements of New York's Not for Profit Corporation Law section 618. The results of the August 1, 2009 election cannot stand.
The conduct that occurred in this case gives life and expression to the statement of Leonid Brezhnev [1906-1982], the General Secretary of the Communist Party of the Soviet Union and thus its political leader [from 1964-1982], who stated: "The trouble with free elections is you never know who is going to win."
It is, therefore, hereby ORDERED that the Petition is granted in all respects, and it is further
ORDERED that the election August 1, 2009, of the 74th Street Merchants Association, Inc., is deemed void and of no effect, and that the election at that meeting of Shiv Dass, Nitin Vora, and Ashok Kumar as directors of the 74th Street Merchants Association, Inc., is declared to be void and of no effect, and it is further
ORDERED that the appointment of Kanubhai Chauhan as Chairman of the 74th Street Merchants Association, Inc., and of Jagir Singh as its President is set aside; and it is further
ORDERED that all members of the 74th Street Merchants Association, Inc., are to be entitled to vote in the new elections to be held pursuant to this order, and it is further
ORDERED that Stephen D. Hans, Esq., 45-18 Court Square, suite 403, Long Island City, NY 11101-4347, a lawyer with over 30 years of experience and who is trusted by this Court, shall serve as Referee for the forthcoming election. Mr. Hans, as the Court-appointed Referee, shall conduct the nominating procedures, nominations, and the election. All notices go under his name and by him so as to remove any hint or appearance of bias or prejudice that would have attached if the notice of the election were to be sent under the name or auspices of a candidate for election, and it is further
ORDERED that Mr. Hans, although expediting the holding of this election, shall set forth a nominating procedure for candidates and competing slates and shall notify the membership of all candidates and competing slates. Mr. Hans shall treat the membership of the Association in liberal terms so as not to exclude the right of legitimate members to vote. Mr. Hans shall give at least three weeks notice of the election from any mailing, and he shall also permit for proxy voting, consistent with the Association's bylaws and New York law (Not for Profit Corporation Law section 609[a]). Mr. Hans shall impose such requirements, consistent with applicable law and bylaws, to ensure the integrity of the voting and any proxy vote and strike down any proposal that limits the right to vote to those who participated in past voting or past elections. Mr. Hans shall strike any proposal that limits or conditions the right to vote upon payment of a fee. Mr. Hans shall conduct the voting on a weekday that is not a legal or religious holiday between the hours of 10 [*6]A.M. and 5 P.M. Mr. Hans shall be present during the voting to ensure that no chicanery occurs, and it is further
ORDERED that Mr. Hans, in this Court's discretion, pursuant to CPLR 4321, shall be a paid a fee of $325.00 per hours for his referee services. Mr. Hans shall also be paid all expenses, costs, and disbursements he incurs in supervising the fair conduct of the election, and it is further
ORDERED that the aforementioned fees and expenses of Mr. Hans shall be paid by respondent Jagir Singh personally, subject to redistribution of the source of payment by the referee, at his discretion, upon the conclusion of the election process, and it is further
ORDERED that no money shall be used from the Association for the payment of any election costs, legal costs, legal bills, or the payment of Mr. Hans's fees and expenses, and it is further
ORDERED that the undersigned and Mr. Hans shall take a continuing, active supervisory role to make sure that the new elections are held in a manner beyond any reproach. To the extent that any term of this order, literally or in spirit, shall be violated, the Court will impose severe sanctions and measures against the offender, and it is further
ORDERED that any dispute concerning the operation and management of the Association shall be brought first to the attention of the Referee, Mr. Hans, for such action that he may deem advisable, and it is further
ORDERED that the motion by the plaintiffs in the commercial action under index number
24015/2009, by Order to Show Cause, dated September 3, 2009, is DENIED, with the terms of
this Decision and Order, appointing Mr. Hans as Referee, to be given precedence and
conclusiveness in the event of any perceived inconsistency, and it is further
ORDERED that the temporary restraining order imposed by Justice Grays in the aforementioned is hereby vacated in all respects, and it is further [*7]
ORDERED that the motion by the plaintiffs in the commercial action under index number 24015/2009, by Order to Show Cause, dated October 1, 2009, by Order to Show Cause, to hold defendants in contempt is Denied in all respects, and it is further
ORDERED that counsel for the litigants herein, together with any member of the Association, may address any concerns regarding the forthcoming election directly with Mr. Hans as Referee, and it is further
ORDERED that any orders to show cause in this matter shall be directed to the undersigned, who, if unavailable, shall then be referred to the Emergency Justice for review and signature, and it is further
ORDERED that the Clerk of the Court shall file the original copy of this Decision and Order in the file of the Notice of Petition under index number 21270/2009, the earlier index number, and that the Clerk file a duplicate copy of this Decision and Order in the file of the commercial action under index number 24015/2009, and it is further
ORDERED that the petitioners shall serve a copy of this decision and order, bearing a stamp or sign of its recording by the County Clerk, together with notice of entry upon counsel for the respondents and the Referee, Mr. Hans.
The foregoing constitutes the decision, order, and opinion of the Court.
______________________________Hon. Charles J. Markey
Justice, Supreme Court, Queens County
Dated: Long Island City, New York
November 12, 2009
Appearances:
For Petitioners Mahipal Singh, Naresh Sondhi, Subash Sharma, Jaswinder Singh, Deepak Bhardwaj, Mohinder Verma, and Deepak Verma: Hodgson & Russ, by Joseph P. Goldberg and Gary M. Heller, Esqs., 1540 Broadway, 24th floor, New York, NY 10036 [*8]
For Respondents 74th Street Merchants
Association, Inc., d/b/a Jackson Heights Merchants Association, Kanubhai Chauhan, Jagir Singh,
Shiv Dass, Nitin Vora, and Ashok Kumar and John Does 1-20: Law Office of Steve Cohn,
by Mitchell R. Goldklang, Esq., One Old Country Road, suite 420, Carle Place, New York
11514
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