Board of Mgrs. of Academy Twins Condominium v Hernandez

[*1] Board of Mgrs. of Academy Twins Condominium v Hernandez 2010 NY Slip Op 52258(U) [30 Misc 3d 1203(A)] Decided on December 16, 2010 Supreme Court, New York County Jaffe, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 16, 2010
Supreme Court, New York County

Board of Managers of Academy Twins Condominium by David Shargani, President, Petitioners,

against

Ines Hernandez and Veritas Property Management, LLC, Respondents.



112410/10



For petitioners:

Robert F. Zerilli, Esq.

Andrew M. Romano, Esq.

20 South Broadway, Suite 902

Yonkers, NY 10701

914-965-4221

For Hernandez:

Phillip H. Kuszel, Esq.

472 Union Valley Road

Mahopac, NY 10541

212-488-0505

For Veritas:

Barry Jacobs, Esq.

Abrams, Gorelick, Friedman et al

One Battery Park Plaza - 4th Floor

New York, NY 10004

212-422-1200

For Hernandez as Pres.:

Mark L. Hankin, Esq.

Hankin & Mazel, PLLC

7 Penn Plaza Suite 904

New York, NY 10001

212-349-1668

Barbara Jaffe, J.

By order to show cause and petition dated September 18, 2010, petitioners seek an order terminating respondent Veritas Property Management, LLC (Veritas) as managing agent of Academy Twins Condominium (Academy Twins) and naming non-party A.N. Shell as the new managing agent; compelling Veritas to turn over its Academy Twins files to A.N. Shell and present an accounting; declaring that petitioner David Shargani is the president of the Board of Managers of Academy Twins; declaring that Shargani is the President of Academy Twins; and according the Board of Managers allegedly elected at a meeting held on August 11, 2010 the right to a one-year term. Respondent Ines Hernandez, who claims the presidency of the Board of Managers, opposes and cross-moves in her individual capacity and as purported president pursuant to CPLR 3211(a)(3) and (7) for an order dismissing the petition.

I. FACTS AND PERTINENT PROCEDURAL BACKGROUND

Academy Twins, located at 571-579 and 581-589 Academy Street in Kings County, is a condominium association established in accordance with its by-laws (Affirmation in Support of Notice of Cross-Motion, Mark Hankin, Esq., dated Oct. 4, 2010 [Hankin Aff.], Exh. E; Academy Twins Condominium by the Board of Managers, et al. v Elcordy, et al., 2010 NY Slip Op 32072[U] [Sup Ct, New York County 2010]), and consonant with the Real Property Law (RPL), Article 9-B, § 339-d et. seq (Condominium Act). Pursuant to Article II, sections one and four of the by-laws, Academy Twins is governed by a nine-member Board of Managers (Board) who serve staggered terms. (Hankin Aff., Exh. E; RPL § 339-v[1][a]).

As set forth in Article II, sections two, three, and 15 of the by-laws, the Board's authority encompasses: the selection of a managing agent, the appointment of a president, vice-president, secretary, and treasurer, who may exercise the Board's powers in managing the condominium between meetings, and conducting regular and special meetings.(Hankin Aff., Exh. E.; RPL

§§ 339-v[1][a], 339-[1][c],[d],[e]). Article II, sections eight and nine, Article X, section one, and Article III, section three provide that at least three days' notice must be given for regular meetings, and that special meetings are called by the president upon resolution of the Board or a petition signed by 25 percent of the unit owners, signed and presented to the secretary, stating the time, place and purpose, and informing that only the business reflected on the notice may be conducted at the meeting, and upon three days' notice to each Board member, "by registered or certified mail" or "by mail or telegraph" stating the time, place and purpose of the meeting or by the president or secretary with written notice on the written request of at least two board members. (Hankin Aff., Exh. E). Pursuant to Article II, section 11, a majority of members constitutes a quorum for conducting business at board meetings. (Id.).

Article II, section five of the by-laws provide that Board members may be removed by a majority of the unit owners at any regular or special meeting, with or without cause, after which replacements may be elected; a Board member selected for removal is entitled to be heard at the meeting. (Id.). In Article IV, section three, it is also provided that an officer may be removed from his or her executive position by a majority vote of the board at a regular board meeting or a special board meeting called for that purpose, with or without cause, and a successor may be elected at the meeting. (Id.).

On December 10, 2009, Ana Torres, Sharif Elkordy, defendant Ines Hernandez, Alexander Pankov, secretary Alison Stamas, Akibedes Espinoza, Lilian Ramos, Danny Leonardo, and Kim Sharaishi were elected to the Board. (Academy Twins, 2010 NY Slip Op [*2]32072[U). By e-mail to the Board dated December 22, 2010, Pankov expressed his intention to resign from the Board and indicated that he would send a confirmatory letter. (Id.; Hankin Aff., Exhs. A, B). He never confirmed his resignation and instead attended and voted at subsequent board meetings. (Id.).

On January 18, 2010, the newly elected Board met and elected Hernandez president, Stamas secretary, and Elkordy treasurer. Torres resigned and Shargani was elected vice-president in absentia. (Academy Twins, 2010 NY Slip Op 32072[U]). The Board minutes reflect that Torres, Pankov, Stamas, and Leonardo voted in favor of e-mail voting; Elkordy and Hernandez voting against it. (Hankin Aff., Exh. A).

At a meeting held on January 26, 2010 at which there was a quorum of five, Pankov, Stamas, and Shargani voted to remove Veritas as Academy Twins's managing agent due to fiscal concerns. (Hankin Aff., Exh. B). Shargani announced that Fernandez, who was not present, was resigning. (Reply Affidavit of David Shargani in Further Support of Order to Show Cause, dated Oct. 22, 2010 [Shargani Reply Affid.]).

By e-mail vote conveyed on February 5, 2010 and February 15, 2010, the Board replaced Veritas with A.N. Shell and elected Shargani president, Ramos vice-president, Stamas treasurer, and Pankov secretary. (Academy Twins, 2010 NY Slip Op 32072[U]). However, on February 12, 2010, Elkordy advanced a resolution whereby a majority of the unit owners signed a petition removing Shargani and other Board members and replacing them with other unit owners. (Id.). The resolution passed and on February 19, 2010, the newly elected Board instructed Veritas to retain its records. (Id.).

Shargani, claiming the presidency, then brought an action against the Board headed by Hernandez. The complaint was dismissed by another justice of this court on the grounds that the e-mail election is unauthorized and that section 12 of the General Associations Law accords only the president or treasurer the capacity to sue on behalf of an unincorporated association such as a condominium. (Academy Twins, 2010 NY Slip Op 32072[U]).

Soon thereafter, by e-mails dated August 7, 2010, notices were sent to the Board and to Stamas of a regular meeting to be held on August 11, 2010. (Hankin Aff., ¶ 3). By letter dated August 10, 2010, Hernandez, on behalf of Academy Twins, directed A.N. Shell to cease and desist holding itself out as the property manager and to turn over any money it had received in that capacity. (Id., Exh. D).

On the day of the August 11 Board meeting, Hernandez circulated a petition to the unit owners calling for a meeting to remove Shargani, Fernandez, Pankov, Stamas, and Ramos from the Board. (Pet., Exhs. C, O). The minutes reflect all five were present at the Board meeting and that Hernandez, Elkordy, Leonardo, and Espinoza were not. (Id., Exh. C). Ramos was elected vice-president, Pankov secretary, and Fernandez treasurer. (Id.). Violence ensued upon the appearance of Hernandez and her supporters. (Pet.).

By e-mail dated August 12, 2010, Stamas expressed her intent to resign as secretary but retain her position on the Board. (Id., Exh. P).

On August 18, 2010, Shargani's Board met at the offices of A.N. Shell. Hernandez, Elkordy, Leonardo, and Espinoza were not present. (Pet., Exh. L). All five Board members voted to fire Veritas, hire A.N. Shell, fire counsel, and find new legal representation. (Id.). The Board also voted to accept the resignations of Stamas and Pankov, and add Shiraishi and Greg West as [*3]Board members. (Id.).

By letter dated August 26, 2010, the Board's new counsel notified Veritas that it was fired and demanded an accounting (Pet., Exh. M), and by letter dated August 30, 2010, Veritas indicated that it would not comply under the circumstances. (Id., Exh. N).

On September 1, 2010, Hernandez, holding herself out as the Board's president, sent notice to the unit owners of a meeting to be held on September 21 to remove from the Board Shargani, Pankov, Fernandez, and Ramos, observing that 28 percent of the unit owners had signed a petition to that effect. (Pet., Exh. Q).

The instant order to show cause was filed on or about September 18, 2010, and Hernandez's cross-motion was filed on or about October 4, 2010. I declined to stay the September 21, 2010 shareholder meeting, at which Shargani, Pankov, Fernandez, and Ramos were removed from the Board by a vote of 54 percent of the unit owners. (Hankin Aff., Exh. G). By letter dated September 30, 2010, Elkordy notified A.N. Shell that Shargani and the others had been removed and asked that it remove them as signatories and cease taking directions from them. (Id.). By notice to the unit holders dated October 13, 2010, Hernandez announced a meeting to be held on November 10, 2010 for the election of new Board members. (Shargani Reply Affid., Exh. D).

II. CONTENTIONS

In support of his order to show cause, Shargani argues that Hernandez's August 11 petition for a special meeting to remove Board members was invalid because the signatures were neither notarized nor witnessed, the notices were served on Stamas who was no longer secretary as of February 15, 2010, that the notification was invalid because only Shargani as president may call a special meeting, and notification calling for the replacement of Stamas and Pankov was invalid given their prior resignations. (Pet.).

In opposition, and in support of her cross-motion, Hernandez argues that Shargani lacks the capacity to sue on behalf of the Board as he is neither president nor treasurer. Rather, she asserts, she became president as of January 18, 2010, that Shargani was not elected president on August 11, 2010 because Fernandez's resignation left less than a quorum, that the e-mail notice of the Board meeting was invalid, that the notice was not given on three business days' notice, that the vote was not preceded by a vote to remove her, and that Shargani fails to state a claim because the action is against her and not the Board. (Hankin Aff.).

Veritas, in opposition to Shargani's order to show cause, argues that A.N. Shell's appointment is invalid because it was by e-mail, that it must respond to Hernandez as president and to the Board elected with her, that it has been ordered not to turn over documents, that it cannot recognize Shargani's authority and therefore cannot recognize the August 18 meeting at which it was fired, and that it is reluctant to hand over anything pending a final determination of the proper Board and managing agent. (Affirmation of Barry Jacobs, Esq. in Opposition to Order to Show Cause, dated Oct. 4, 2010).

In reply, Shargani argues that Fernandez never effectively resigned from the Board and thus, there was a quorum on August 11 and the election was valid, that the Board had authority to remove Hernandez as president, that Hernandez has not offered the allegedly flawed e-mail notices and has not alleged that she and her colleagues were unaware of the meeting, that meetings had previously been noticed by e-mail without objection, that the September 21 [*4]meeting naming Hernandez as president was a nullity because it was improperly scheduled, that Hernandez had no authority to call a meeting on November 10, and that Hernandez and Elkordy are no longer Board members because they effectively withdrew by setting up their own Board. (Shargani Reply Affid.).

Allegations regarding Hernandez's renovation of her apartment, raised by petitioner for the first time in his reply and not relevant to the relief requested are not considered.

III. ANALYSIS

A. Governing law

"The supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed." (CPLR 3001). Additional relief as a consequence of the declaration sought may also be obtained. (CPLR 3017[b]).

Where a party seeks injunctive relief as its ultimate remedy, that party must demonstrate irreparable harm and inadequate remedy at law. (1 Law of Condominium Operations § 4:92 [2010]; cf Caruso v Board of Managers of Murray Hill Terrace Condominium, 146 Misc 2d 405 [Sup Ct, New York County 1990] [applying standard for preliminary injunction to Condominium Act]). Although the parties do not supply the procedural predicate for the requested relief, the arguments are appropriately applied under these provisions. (See Siegel, NY Prac § 563 at 930 [3d ed] [courts are encouraged to abandon a search for the proper procedural mechanism "and just get on with merits"]; cf Brasseur v Speranza, 21 AD3d 297 [1st Dept 2005] ["condominiums, generally regarded as unincorporated associations, are not amenable to article 78 proceedings in the nature of mandamus relief for claims of bylaw breach"]).

The Condominium Act (the Act) governs a condominium's operation, if so acknowledged in the condominium's by-laws. (Cf Broadway Realty Co. v Assimakopolous, 264 AD2d 626, 627 [condominium is governed by Act, not Business Corporation Law). The Act is to be "liberally construed to effect the purposes thereof." (RPL § 339-ii;Caruso v Board of Managers of Murray Hill Terrace Condominium, 146 Misc 2d 405, 408 [Sup Ct, New York County 1990]). It requires that the by-laws provide procedures for the nomination and election of the board of managers, and designate the number of persons constituting the board, with at least one-third of the members serving greater than one-year terms. (RPL §§ 339-v[1][a], 339-f; Liberty Court Condominium Residential Unit Owners Coalition v Board of Managers of Liberty Court Condominium, 3 AD3d 443 [1st Dept 2004]). They must also specify the board's power and duties, the methods of electing and removing its officers and members, how unit owner meetings are called, what constitutes a quorum, the number of votes required to adopt a decision, whether it may retain a managing agent and delegate its powers and duties, and the manner of designation and removal of persons employed for the operation of the property. (Id.). If a meeting to elect board members is invalid, any votes held therein are void. (Bd. of Mgrs. of Park Regent Condominium v Park Regent Unit Owners Assocs., 58 AD3d 589 [2d Dept 2009]; Bd. of Mgrs. of the Townhomes of Eastbrooke Condominiums One, Two and Three v Padgett, 185 AD2d 650 [4th Dept 1992]). Thus, the validity of an election, and the court's ability to award relief accordingly depends on the court's interpretation of the by-laws. (Mishkin v 155 Condominium, 2 Misc 3d 1001[A], 2004 NY Slip Op 50066[U] [Sup Ct, New York County 2004]).

B. Shargani's election and his capacity to sue[*5]

An action may be brought on behalf of a condominium, as an unincorporated association, by its president or treasurer. (GAL § 12; Academy Twins Condominium by the Bd. of Mgrs., et al. v Elcordy, et al., 2010 NY Slip Op 32072[U] [Sup Ct, New York County 2010]). Absent any dispute that the validity of Shargani's election as president is essential to the action, it must first be determined if his election was conducted in compliance with the by-laws.

Although the by-laws do not provide that notices of Board meetings may be conveyed by e-mail, each Board member was aware of the meeting date, the meetings were previously noticed via e-mail, and Hernandez appeared at the meeting, albeit after the vote. As the Act is to be liberally construed to achieve its objective, so should the by-laws in order to avoid undesirable results. (See eg Bd. of Mgrs. of Madison Med. Bldg. Condominium v Rama, 249 AD2d 140 [1st Dept 1998] [board's authority to enforce by-laws not compromised by technical defects in election]; Caruso, 146 Misc 2d at 409 ["not every technical failure of the Board of Managers to strictly follow the procedures for amending the By-laws necessarily requires the court to invalidate such action by the Board"]; Bd. of Mgrs. of Gen. Apt. Corp. Condominium v Gans, 72 Misc 2d 726, 728 [Civ Ct, Queens County 1972] [change in date of meeting irregular, but not invalid]). Although it was previously held that the e-mail election was invalid (Academy Twins, 2010 NY Slip Op 32072[U]), the issue here is the validity of the notice, not the election, and in my view, the e-mail notice conveyed here undermines neither the objectives of the by-laws nor the Act. Rather, it constitutes an efficient alternative to the other methods of notice, and moreover, notices had previously been conveyed by e-mail (compare Caruso, 146 Misc 2d at 409 [challenged policy had been effect since inception of condominium and consistently enforced]; Gans, 72 Misc 2d at 728] [challengers to irregular board procedure previously acquiesced to it], with Park Regent, 58 AD3d at 591 [election of board members invalid as notice did not comply with by-laws]; Eastbrooke Condominiums, 185 AD2d at 650 [Board members not properly removed according to by-laws]; Mishkin, 2 Misc 3d 1001[A] [matter entirely dependent on whether election of board complied with by-laws]).

And, as Fernandez made it clear that his resignation from the Board would be effective pending confirmation by letter, absent the letter, he never effectively resigned. Consequently, there was a quorum at the August 11, 2010 meeting, the election was valid, and Shargani was duly elected president. However, no one was removed, and thus, Ramos remains vice-president, Pankov remains secretary, Fernandez remains treasurer, and members Stamas, Hernandez, Elkordy, Leonardo, and Espinoza remain on the Board.

C. Hernandez's election

Because at least 25 percent of the unit owners signed Hernandez's petition as required by the by-laws, Shargani, as president, would have been required to call the special meeting even if not in his interest to do so. In light of the liberal construction given the Condominium Act and the uncertainty at the time as to who presided, service on Stamas as secretary did not invalidate the September 21 meeting.

However, Shargani and his colleagues were given no opportunity to be heard before their removal, which constitutes a violation of a provision of the by-laws which is of greater substance than that governing the transmittal of meeting notices, and the notarized submissions of the two appointed inspectors, to the extent they accurately depict the meeting, do not indicate whether the ousted members were present, and under the circumstances, there is no reason to believe that [*6]they were given a proper opportunity to address the unit owners. (See Academy Twins,2010 NY Slip Op 32072[U][action to remove Board members probably not valid because they were not given notice to be heard]). Their removal without an opportunity to be heard is not only contrary to the by-laws, but is contrary to the objectives of the Condominium Act, and beyond what a liberal interpretation would permit. I thus find that the September 21 meeting was invalid under the by-laws and the Condominium Act, and that the Board remains the same as it was following the August 11 meeting.

d. Managing agent

As the court observed in Academy Twins, 2010 NY Slip Op 32072(U), Veritas has acted ethically and properly, and appears to be willing to turn over documents to the proper entity upon clarification of the Board's constitution. As the Board's status may again change should a meeting be properly held, it is premature to order Veritas to take any measures that will jeopardize the ability of the condominium to function. Accordingly, I decline to award injunctive relief against Veritas.

IV. CONCLUSION

Absent any effort by the parties and others to cooperate or serve in the best interest of the condominium and notwithstanding any resolution reached by this court, the parties and counsel are advised to resolve their differences through good faith negotiation and a great deal of compromise. It is hereby

ADJUDGED, that the petition of David Shargani as president of the Board of Managers of Academy Twins Condominium is granted only to the extent that Shargani is declared president of the Board of Managers of the Academy Twins Condominium; it is further

ADJUDGED, that the Board of Managers of the Academy Twins Condominium shall consist of Shargani as president, Lillian Ramos as vice president, Alexander Pankov as secretary, Nicholas Fernandez as treasurer, Alison Stamas, Ines Hernandez, Sharrif Elkordy, Danny Leonardo, and Akibedes Espinoza, effective as of August 11, 2010; it is further

ORDERED, that the motion is otherwise denied; and it is further

ORDERED, that the cross-motions of Ines Hernandez individually and as purported president are denied in their entirety.

All relief not discussed herein is hereby denied.

This constitutes the decision and judgment of the court.

_______________________________

Barbara Jaffe, JSC

DATED:December 16, 2010

New York, New York