Tolliver v Esplanade Gardens, Inc.
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Tolliver v Esplanade Gardens, Inc. 2021 NY Slip Op 32310(U) November 16, 2021 Supreme Court, New York County Docket Number: Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [* 1] INDEX NO. 157230/2021 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 11/16/2021 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LYLE E. FRANK PART 52M Justice ----------------------------------------------------------------- ----------------X ROBYN TOLLIVER, WILLIAM ROSS, Petitioner, INDEX NO. 157230/2021 MOTION DATE N/A MOTION SEQ. NO. 001 - V - ESPLANADE GARDENS, INC.,THE BOARD OF DIRECTORS FOR ESPLANADE GARDENS, INC.,JOHN AND JANE DOE DECISION + ORDER ON MOTION Respondent. ------------------------------------------------------------------- --------------X The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 18, 20, 21, 22, 23, 24,25,26,27,28,29,30,31,32,33 were read on this motion to/for ARTICLE 78 (BODY OR OFFICER) This petition arises out of allegations that petitioners were wrongfully removed from their positions as Board members on the Board of the cooperative apartments, Esplanade Gardens, Inc. ("Esplanade"). For the reasons below, the petition is denied. Petitioner Tolliver had been on the Board of Directors at Esplanade since February 2020 and an owner/shareholder of her premises since approximately 2002. Petitioner Ross was on the Board of Directors since October of 2020 and has been an owner/shareholder of his premises since 2002. Petitioner Ross was also a member of the Board of Directors from approximately 2003 to 2009. On March 4, 2021 petitioners sent a letter to Housing Preservation and Development (HPD) on Esplanade letterhead inquiring into the status of succession rights of a shareholder and well as an inquiry as to the addition of a non-Board members addition to a stock certificate. Further, the e-mail address from which they sent the March 4 letter, "Esplanade Gardens 157230/2021 Motion No. 001 Page 1 of4 1 of 4 [* 2] INDEX NO. 157230/2021 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 11/16/2021 esplanadegardensboard@gmail.com" was an e-mail address that was never used or authorized by Esplanade or the Board. Counsel for the Board was subsequently informed of this correspondence and as a result the Board held a meeting on March 16, 2021, at which both petitioners were present. At the meeting a resolution was adopted to give the petitioners a 14day notice regarding their possible removal. On March 19, 2021 the petitioners were provided a 14-day notice of discussion of their possible removal from the Board. The notice specifically advised that a Board meeting will be held on April 6, 2021 to discuss the possible removal of both petitioners based upon their discussion and dissemination of personal and confidential information. Petitioners Tolliver and Ross were terminated by the Board on April 7, 2021. In addition, there have been allegations raised by the respondents that the petitioners disseminated confidential information to Madison Security Group ("Madison") prior to their termination as the security contractor for Esplanade in April 2021. Discussion There is no dispute that the business judgment rule applies to the instant petition. This rule applies to decisions ofresidential-cooperative boards (see 40 W 67th St. v Pullman, 100 NY2d 147, 153 [2003]), and requires a court to defer to board determinations "[s]o long as the board acts for the purpose of the cooperative, within the scope of its authority, and in good faith" (Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530, 538 [1990]). As such, this Court's role is limited to determining whether the respondents' actions, specifically removing the 157230/2021 Motion No. 001 Page 2 of 4 2 of 4 [* 3] INDEX NO. 157230/2021 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 11/16/2021 petitioners as directors, were made in good faith, for a corporate purpose, and within the scope of its authority 1. This Court finds that the respondents have demonstrated the good faith and corporate purpose required. What is undisputed is that on July 29, 2020, the President of the Board of Directors informed the Board members that they could not use the corporate letterhead without permission of the Board. Nevertheless, the petitioners used the letterhead, without the permission of the Board, and wrote a letter to HPD inquiring about the status of the succession rights of another member of the Board. In this letter, which listed the officers of the Board with neither knowledge nor authorization from the Board, the petitioners identified themselves as Board members. The letter also included information that identified individuals other than the Board member. Thus, while there is some question of whether the petitioners further disseminated confidential information through communications with Madison which to this Court has not been proven, the Board's actions of removing the petitioners for the conduct described above regarding surreptitious and unauthorized use of letterhead of the Board, as well as confidential information regarding the succession rights of a Board member shareholder, satisfy the good faith and corporate purpose as required under the business judgment rule. The Court has reviewed petitioners' remaining contentions and find them unavailing. Accordingly, it is hereby ADJUDGED that the Article 78 petition is denied. 1 There does not appear to be any dispute that the procedures followed by the Board of Directors was consistent with the by-laws of Esplanade. As such, there appears to not be in dispute that removing Board of Directors members is within the scope of the Board of Directors' authority. 157230/2021 Motion No. 001 Page 3 of 4 3 of 4 [* 4] INDEX NO. 157230/2021 NYSCEF DOC. NO. 34 RECEIVED NYSCEF: 11/16/2021 11/16/2021 DATE CHECK ONE: APPLICATION: CHECK IF APPROPRIATE: LYLE E. FRANK, J.S.C. ~ CASE DISPOSED GRANTED 0 DENIED SETTLE ORDER INCLUDES TRANSFER/REASSIGN 157230/2021 Motion No. 001 ~ NON-FINAL DISPOSITION GRANTED IN PART SUBMIT ORDER FIDUCIARY APPOINTMENT • • OTHER REFERENCE Page4 of 4 4 of 4
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