Schmidt v Board of Directors of Duane Owners, Inc.

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Schmidt v Board of Directors of Duane Owners, Inc. 2023 NY Slip Op 33294(U) September 20, 2023 Supreme Court, New York County Docket Number: 651435/2023 Judge: Suzanne J. Adams 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. INDEX NO. 651435/2023 FILED: NEW YORK COUNTY CLERK 09/21/2023 01:03 PM NYSCEF DOC. NO. 67 RECEIVED NYSCEF: 09/21/2023 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: PART HON.SUZANNEJ.ADAMS Justice X . INDEXNO. FRED SCHMIDT, MOTION DATE Plaintiff, MOTION SEQ. NO. -v- 39TR 651435/2023 09/18/2023, 09/18/2023 002 003 THE BOARD OF DIRECTORS OF DUANE OWNERS, INC.,DUANE OWNERS, INC., DECISION + ORDER ON MOTION Defendant MARGARET L. BOODY Nominal Defendant -------------------X The following e-filed documents, listed by NYSCEF document number (Motion 002) 30, 31, 32, 33, 34, 35,36,37,38,39,40,41,42,43,48,50,52,53,54,55,56,57,58, 59,60,62,63,64,65 were read on this motion to/for DISMISS The following e-filed documents, listed by NYSCEF document number (Motion 003) 45, 46, 47, 49, 51, 61 were read on this motion to/for DISMISS Upon the foregoing documents, and oral argument having been heard by the court on September 18, 2023, Plaintiff in this matter is the proprietary lessee and owner of 500 shares out of a total of 2,000 shares in defendant DUANE OWNERS, INC. 's (hereinafter referred to as the "Co-op") which owns, in part, the cond-op building located at 150-152 Duane Street in Manhattan (the "Building"). The Building is five stories and consists of a residential unit split into eight cooperative apartments on the second through fifth floors, a single commercial unit, and certain common areas which includes approximately 4,000 square feet of roof space. Nominal defendant MARGARET L. BOODY a/k/a MEAGAN BOODY (hereinafter referred to as "Boody") is a 651435/2023 SCHMIDT, FRED vs. THE BOARD OF DIRECTORS OF DUANE OWNERS, INC. ET AL Motion No. 002 003 1 of 4 Page 1 of4 INDEX NO. 651435/2023 FILED: NEW YORK COUNTY CLERK 09/21/2023 01:03 PM NYSCEF DOC. NO. 67 RECEIVED NYSCEF: 09/21/2023 proprietary lessee and shareholder of the Corporation who occupies a penthouse apartment in the Building. In March 2001, Boody entered into a 25-year lease to occupy 977 square feet, or approximately 24%, of the roof. This lease will expire on February 28, 2026. On March 3, 2023, defendant THE BOARD OF DIRECTORS OF DUANE OWNERS, INC. (hereinafter referred to as the "Board") the Corporation's board of directors, unanimously voted to amend the Corporation's original by-laws. Pertinent to this matter is Article II, Section 8, of the original by-laws, which required 100% of outstanding shares to approve, inter alia, a change in rights pertaining to the Building's roof. The amended by-laws now provide, in Article III, Section 8(b)(ii), that only 51 % of outstanding shares are necessary to approve a sale and/or transfer of the roof space. On March 8, 2023, the Board sent notice of a special shareholders' meeting to the Corporation's shareholders to vote on entering into a 25-year extension to Boody's rooflease. At the special meeting, which was held on March 22, 2023, 53.5% of the outstanding shares voted in favor of entering the lease extension. Immediately prior to the special meeting, plaintiff moved by order to show cause for a temporary restraining order and preliminary injunction to enjoin the Board from holding the special meeting, implementing any shareholder approval to lease the roof space at issue, and encumbering the Corporation's interest in the roof and/or changing rights to the roof space. By order dated March 22, 2023, Hon. Jennifer Schecter, as the Ex Parte Judge, denied the temporary restraining order and scheduled oral argument on the remainder of the motion for March 30, 2023. This court's order dated March 31, 2023, denied plaintiff's motion in the entirety. It is well established that "[o]n a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction (see, CPLR 3026). We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine 651435/2023 SCHMIDT, FRED AL vs. THE BOARD OF DIRECTORS OF DUANE OWNERS, INC. ET Motion No. 002 003 2 of 4 Page2of4 INDEX NO. 651435/2023 FILED: NEW YORK COUNTY CLERK 09/21/2023 01:03 PM NYSCEF DOC. NO. 67 RECEIVED NYSCEF: 09/21/2023 only whether the facts as alleged fit within any cognizable legal theory. Under CPLR 321 l(a)(l), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter oflaw [cite omitted]." Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994). Under CPLR 321 l(a)(7), the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one. Leon, 84 N. Y .2d at 88 (citing Guggenheimer v. Ginzburg, 43 N.Y.2d 268,275 (1977)). The defendants the Board, the Co-op and Boody' s, moving papers all set forth evidence sufficient to meet the burden of entitlement to dismissal of plaintiffs Complaint by way of documentary evidence that resolved all factual issues and claims as a matter of law. In opposition, the plaintiff recites arguments that were previously decided by the court. The clear and unambiguous wording of the Co-op's original by-laws allowed for the Board to amend the original by-laws by majority decision. This was properly done. ORDERED that the defendants, THE BOARD OF DIRECTORS OF DUANE OWNERS, INC. (hereinafter referred to as the "Board") and DUANE OWNERS, INC.'s (hereinafter referred to as the "Co-op") motion seeking an Order: (a) pursuant to CPLR Rule 321 l(a)(l), and (7), dismissing the complaint, with prejudice; and (b) declaring that the Board's actions in amending the Co-op's By-Laws, holding a shareholder meeting and entering into the rooflease extension with defendant Boody are valid and enforceable, is granted in the entirety; and it is further ORDERED that the defendant MARGARET L. BOODY a/k/a MEAGAN BOODY's (hereinafter referred to as "Boody") motion seeking an Order pursuant to CPLR Rule 321 l(a)(l), and (7), dismissing the complaint, is granted in the entirety; and it is further ORDERED that plaintiffs complaint is dismissed with prejudice; and it is further 651435/2023 SCHMIDT, FRED vs. THE BOARD OF DIRECTORS OF DUANE OWNERS, INC. ET AL Motion No. 002 003 3 of 4 Page 3 of4 INDEX NO. 651435/2023 FILED: NEW YORK COUNTY CLERK 09/21/2023 01:03 PM NYSCEF DOC. NO. 67 RECEIVED NYSCEF: 09/21/2023 ORDERED that plaintiff's application for attorneys' fees is denied. ~ 9/20/2023 DATE CHECK ONE: SUZANNE J. ADAMS, J.S.C. CASE DISPOSED GRANTED DENIED APPLICATION: SETTLE ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN ~ NON-FINAL DISPOSITION GRANTED IN PART FIDUCIARY APPOINTMENT 651435/2023 SCHMIDT, FRED vs. THE BOARD OF DIRECTORS OF DUANE OWNERS, INC. ET AL Motion No. 002 003 4 of 4 OTHER REFERENCE SUBMIT ORDER Page4of4

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