The underlying action is one for a declaratory judgment. The controversy centers on Defendant CHEVRE LIADY's claim that it is the sole member of NORTHERN SERVICES GROUP, INC. ( NSG), a not-for-profit corporation, which operates seven (7) nursing and assisted living facilities. Plaintiffs, on the other hand, claim that NSG has no member, as that term is defined in the Not-For-Profit Corporation Law. In the past, NSG had federal tax problems which resulted in each of its facilities losing their not-for-profit status, thereby creating a substantial tax liability. The issue was finally resolved with the federal authorities and a consent agreement (entitled, "Closing Agreement and Final Determination Covering Specific Matters") was entered into, which document embodied the terms of the settlement. As it has been presented to the Court from each party, if NSG was to violate any of the terms of the Closing Agreement", it could, again, have federal tax problems.

Along with other items, the size and composition of NSG's Board of Directors was addressed in the Closing Agreement. According to that document, the Board was to consist of thirteen members, no more than five of whom were to be what was termed as "Inside Directors" and no fewer than eight were to be what was termed as "Independent Directors". Inside Directors were defined to be "...a director who does not qualify as an Independent Director'.". The term Independent Directors was defined as "...a director who (a) is not a Family Member of Grand Rabbi Menasha Klein of Ungvar; (b) is not, and has not been prior to the execution of this closing agreement an officer or director of Chevre Liady Nusach Hoary (hereinafter Chevre Liady'), a Jewish congregation located in Brooklyn, NY (or a Family Member of such person); (c) has not been prior to the execution of this closing agreement an officer, director or employee of any NSG Entity (or a Family Member of such person); and (d) does not receive, and has not in the prior two years received, compensation directly or indirectly from any NSG Entity other than as a director. Indirect compensation includes compensation to Family Members and enterprises in which a director has a Significant business Interest.". The terms "NSG Entities", "Family Member", "Significant Business Interest" were also defined in the [*2]closing Agreement.

On November 20, 2006, Defendant CHEVRE LIADY, acting in its alleged capacity as the sole member of NSG, made a resolution, whereby it purportedly disbanded NSG's Board of Directors. Subsequently, Defendant CHEVRE LIADY, again acting in its stated capacity as the sole member of NSG, brought a Petition and moved for an Order To Show Cause seeking a temporary restraining order against the ousted Board members to enjoin them from taking any actions, or making any representations, in the name of NSG. The ousted Board members responded by bringing a cross-motion seeking a declaration that they were the rightful members of the Board and that the action taken to remove them was invalid and void. A temporary restraining order was also requested by the cross-movants. On December 21, 2006, the Court heard oral argument on the respective requests for a temporary restraining order. Those arguments, essentially, centered on the legality of Defendant CHEVRE LIADY's actions and the the failure to give notice of the meeting at which the Board members were dismissed. While Petitioner's counsel conceded that there was a failure to give notice, he also informed the Court that a new meeting had been scheduled to address the potential discharge of Board members and that proper notice had been given to the targeted Board members. Consequently, the Court dismissed the Petition because the meeting upon which it was predicated was not valid. The cross-motion was also dismissed as being moot. Defendant CHEVRE LIADY held the second meeting on December 24, 2006 and, once again, resolved to remove the Board members. Subsequently, the ousted Board members commenced the instant action seeking the following relief: (1) a declaration that the acts of Defendant CHEVRE LIADY, whereby it purported to remove Plaintiffs as Directors of NSG were void and of no force and effect; (2) a declaration that Plaintiffs are the duly authorized Directors of NSG; (3) a declaration that Defendant CHEVRE LIADY is not a member of NSG; (4) preliminarily and permanently enjoining Defendants from taking any action on behalf of NSG; (5) preliminarily and permanently enjoining Defendants from meeting for the purpose of removing or suspending any of NSG's Directors and/or appointing any Director's to NSG; (6) directing Defendants to reimburse Plaintiffs for the cost, including legal fees, of maintaining this action; and (7) for other and further relief as deemed necessary and proper by the Court. At the commencement of the action, Plaintiffs moved for a preliminary injunction to prevent Defendants from any actions which were not in consonance with their actions as the duly authorized Board of Directors of NSG. Pending that application, Plaintiffs also requested the issuance of a temporary restraining order. Defendants opposed the motion and cross-moved to preliminarily enjoin Plaintiffs from taking any actions in the name of NSG. Pending that application, Defendants also requested the issuance of a temporary restraining order.

After hearing oral argument, the Court denied (1/17/07) each party's request for a temporary restraining order. However, in response to the respective applications for a preliminary injunction, this Court held a hearing on the following dates: February 27th and 28th, March 5th, 7th, and 12th, all of 2007. During that proceeding, the Court provided each party with a full and fair opportunity to: present witnesses; prosecute claims; present defenses; cross-examine witnesses; admit and/or object to the admission of documentary evidence; proffer comments on contested rulings; and make arguments which they believed were persuasive.

In arriving at this decision, the Court has reviewed, evaluated, and considered the entirety of the admissible evidence, including testimony from multiple witnesses and dozens of exhibits. Additionally, the Court has also relied on its personal observation of each witness in determining issues of credibility. It should be noted that the failure of the Court to specifically mention any particular piece of evidence in this Decision and Order does not mean that item has not been considered by the Court. As the trier of fact, it is the Court's obligation to review all admitted evidence, but that duty does not mean that all admitted evidence is necessarily accepted at face value. In reaching its conclusions, the Court has carefully observed and listened to the parties and other witnesses during multiple days of testimony and has evaluated [*3]all evidence in light of its relevance, materiality, credibility, importance, weight, and, where applicable, permissible inferences have been considered. Moreover, the evidence has been viewed in light of the appropriate legal authority, such as the statutory criteria for a preliminary injunction and its interpretive case decisions. The Court recognizes the importance of the instant Decision and Order to each of the parties. No Decision rendered here is made lightly or unadvisedly, as all decisions by this Court result, instead, from a reasoned view of the credible evidence and the applicable law.

Essentially, Plaintiffs position is: Defendant CHEVRE LIADY is not a member of NSG, as that term is defined in Article 6 of the Not-For-Profit Corporation Law. Therefore, Defendant CHEVRE LIADY did not have the authority to remove any Directors at the meeting which was held on December 24, 2006. Additionally, Plaintiffs also argued that, although NSG's by-laws, adopted by unanimous consent on June 7, 2006, did indicate that Defendant CHEVRE LIADY was a member of that entity, those by-laws unequivocally stated that it was a non-voting member (Plaintiffs' Exhibit 35' and Exhibit 36'). In any event, Plaintiffs also posited that, on November 30, 2006, the then duly constituted Board of Directors held a meeting, at which they amended the by-laws to reflect that NSG had no members (Plaintiffs' Exhibit 13' and Exhibit 14'). Finally, Plaintiffs also contend that, even if Defendant CHEVRE LIADY was a member of NSG, the notice of the December 24, 2006 meeting was invalid since it did not inform the targeted Directors of the grounds for their removal. Alternatively, and, if the notice was valid, Plaintiffs posited that there was no cause to remove those Directors.

In opposition to the motion and in support of the cross-motion, Defendants averred that CHEVRE LIADY was, indeed, the sole member of NSG and, as such, it enjoyed all the rights and duties that New York law affords to that status. To support that claim, Defendants point to the July 27, 2004 amendment to NSG's by-laws, which installed CHEVRE LIADY as the sole member of that entity. As for the amendments to the by-laws which purported to restrict the sole member's voting rights (June 7, 2006 amendment - Plaintiffs' Exhibit 35' and Exhibit 36') and the later amendment which sought to remove the sole member (November 30, 2006 amendment - Plaintiffs' Exhibit 13' and Exhibit 14'), Defendants argued that New York law did not permit such actions to be taken by the Board.

The Court of Appeals [Aetna Ins. Co. v. Capasso, 75 NY2d 860] has established a three-part test for preliminary injunctions. Consequently, to succeed on a preliminary injunction motion, a party must show:

the probability of success on the merits of the underlying action;

the danger of irreparable injury if an injunction is not issued; and

that the equities are balanced in favor of the party seeking the restraint.

The three factors must be demonstrated by clear and convincing evidence [Network Financial Planning, Inc. v. Prudential-Bache Sec., Inc., 194 AD2d 651 (Second Department, 1993)]. However, the three-pronged test is not rigid; instead, the approach should be one of flexibility and the remedy should be tailored to the facts of specific cases. It should also be noted that courts have the discretion to weigh the "irreparable harm" and "balance of the equities" prongs of the preliminary injunction analysis more heavily than the "likelihood of success" factor.

The evidence adduced at the hearing demonstrated that, from the point of its incorporation (May 2000) as a type B', not-for-profit corporation, NSG had no members. However, on July 27, 2004, that status was allegedly changed when that entity's by-laws were purportedly amended by the Board of Directors to install Defendant CHEVRE LIADY as its sole member. Thereafter, in June 2006, the by-laws were, again, amended and, while Defendant CHEVRE LIADY was acknowledged by the Board to be the sole member of NSG, the member [*4]was purportedly stripped of its right to vote (Plaintiffs' Exhibit 35' and Exhibit 36'). Subsequently, on November 30, 2006, the by-laws were, again, amended by the Board of Directors, whereby Defendant CHEVRE LIADY was purportedly removed as the sole member of NSG (Plaintiffs' Exhibit 13' and Exhibit 14'). From that point on, Plaintiffs contend that NSG had no members.

During the hearing, each side introduced a document which was entitled "UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF NORTHERN SERVICES GROUP" (Plaintiffs' Exhibit 15' and Defendants' Exhibit C'). The stated purpose of that document, which was executed on July 27, 2004, was to amend NSG's Certificate of Incorporation and its by-laws to "...clarify and formally recognize its relationship with Chevra Liady...". At that point in time, the Board of Directors consisted of three members - Benjamin Klein, Elisha Roseman, and George Margareten - all of whom signed the aforementioned written consent. The document recited that nine other documents, including the by-laws, were attached to it. The amended by-laws referred to were the version which, allegedly, installed Defendant CHEVRE LIADY as the sole member of NSG.

Despite the plain language of the Written Consent that the amended by-laws and the Certificate of Incorporation were each attached to that document, both Elisha Roseman and George Margareten testified that they were not so attached to it when they executed the consent. Cross-examination of those witnesses did nothing to dissuade them from their position that the written consent was unaccompanied by any other documents. What did come to light during the cross-examination, however, was that neither Mr. Margareten, nor Mr. Roseman appeared to be very vigilant in discharging their duties as Board members.

Mr. Margareten was a member of the Board of Directors of NSG's predecessor, Northern Metropolitan, from 1981 until he became, shortly after its incorporation, a Director of NSG. Although he was a Director during that lengthy period, Mr. Margareten testified that he did not attend any Board meetings from the year 1981 to the year 2004. Mr. Margareten further testified that, during his tenure on the Board, corporate documents were delivered to him and he never changed or challenged any of those documents, but simply signed them.

Mr. Roseman, who became a Director in the late 1980's, was equally candid in his testimony, during which he admitted to being unsure if he had read certain by-laws before approving them. As for the Unanimous Written Consent, which, allegedly, installed Defendant CHEVRE LIADY as the sole member of NSG, Mr. Roseman did not remember how he got the document, or where he was when he signed it. Moreover, Mr. Roseman was not sure if he had read the Unanimous Written Consent before signing it. Additionally, although the amended Certificate of Incorporation referred to the term "Members", Mr. Roseman admitted that he did not know to whom that term referred.

Also on the issue of the amended by-laws, whereby Defendant CHEVRE LIADY was, allegedly, installed as the sole member of NSG, the defense presented Michael Cooney, an attorney, as a witness. Mr. Cooney testified that he is a member of the law firm, Nixon Peabody, L.L.P., and works strictly with not-for-profit entities. According to his testimony, Nixon Peabody, specifically Mr. Cooney, handled NSG's corporate affairs, including the drafting of by-laws and incorporation documents. In fact, the Court notes that Mr. Cooney is listed on NSG's Certificate of Incorporation (Plaintiffs' Exhibit 1' ) as the Incorporator. According to the witness, the three documents in question from July 27, 2004: (1) the Unanimous Consent; (2) the Certificate of Amendment to the Certificate of Incorporation; and (3) the amended by-laws; were all prepared by his firm and approved by him. Continuing on, Mr. Cooney testified that the documents were duly filed with the Secretary of State and that the original documents are kept on file in his Rochester office.

In response to questioning, Mr. Cooney explained that a member does not have to be installed by an amendment to the Certificate of Incorporation. Instead, that action can be accomplished by an amendment to the by-laws, which was the method used to install Chevre [*5]Liady. Once installed, however, the Board of Directors could not remove the member without its consent. It should also be noted that an affidavit from Mr. Cooney was included with Defendants' cross-motion. In that affidavit, Mr. Cooney rejected the notion that the amendment which installed Defendant Chevre Liady as the sole member of NSG was not duly adopted. As Mr. Cooney concluded, the action was accomplished with the unanimous consent of the then sitting Board of Directors and, as such, the documents in question speak for themselves.

In determining the issues before it, this Court must weigh the credibility of the witnesses in performing its evaluation of their respective testimony. In that vein, the Court notes that Mr. Margareten testified that he is a Certified Public Accountant and is the President and Chief Financial Officer of a company named Clover Wire. As for his background, Mr Roseman testified that he is both a guidance counselor and a college admissions advisor in a high school. Obviously, then, each of those witnesses is an educated person and is an experienced member of the Board of Directors, having each served in that capacity for a period in excess of twenty years. Yet, each of those witnesses testified to signing documents without reading them. Furthermore, both Mr. Margareten and Mr. Roseman acknowledged signing the July 27, 2004 Unanimous Consent, which clearly stated what documents were attached to it, but claimed that there were no such documents attached to what they signed. It is this Court's belief, then, that the two witnesses put forth by Plaintiffs were less than vigilant in carrying out their fiduciary responsibilities to NSG. On the other hand, the defense proffered Mr. Cooney, an attorney who performed corporate work for NSG and whose testimony regarding the amending of the by-laws was uncontradicted.

Therefore, it is the opinion of this Court that NSG's by-laws were, in fact, amended on July 27, 2004. It is also this Court's belief that the subject amendment installed Defendant CHEVRE LIADY as the sole member of NSG, as that term is defined in Article 6 of the Not-For-Profit Corporation Law. The Court also notes that Plaintiffs did not rebut the testimony of Mr. Cooney that the Board of Directors could not remove the member (Defendant CHEVRE LIADY) without its consent. Hence, it would appear that the vote by the Board to limit the member's voting rights and the later vote to remove that member, were invalid. Consequently, it would appear that Defendant Chevre Liady remains as the sole member of NSG, with the concomitant authority afforded to it by the New York Not-For-Profit Corporation Law.

Additionally, Defendants put forth three witnesses, Mark Appel, Stephen Katz, and Marian Rokeach, to address the issue of the danger of irreparable injury to Plaintiffs if an injunction is not issued. Mr. Appel is a new member of the Board of Directors of NSG; Mr. Katz is a vice-president of NSG and is the administrator of Northern Manor; and Ms. Rokeach is the vice president of corporate services for NSG. The testimony of those three individuals, both individually and collectively, led the Court to believe that NSG and its subsidiaries are operating in a seamless and professional manner. In this Court's opinion, Plaintiffs did nothing to effectively rebut the testimony of the aforementioned witnesses.

At this point, the Court will note that Plaintiffs continuously raised the issue that the actions of Defendant Chevre Liady, in discharging the Board members, was a violation of the Closing Agreement between NSG and the federal tax authorities. Since, in their opinion, the agreement has been violated, Plaintiffs posited that NSG has been placed in the untenable position that it will, once again, lose its tax exempt status, thereby costing it millions of dollars in back taxes and threatening the very existence of the various facilities operated by NSG. However, that issue does not affect the questions before this Court, which are questions involving the substantive law of this State. Moreover, the Court notes that there has been no evidentiary showing that the Consent Agreement is in jeopardy.

Based upon the foregoing analysis, this Court does not believe that Plaintiffs have sustained their burden to demonstrate the merits of their application for a preliminary injunction. Therefore, their application shall be denied.

The Court will now address Defendants' application for a preliminary injunction. In [*6]support of their application, Defendants presented Burton I. Dorfman, an attorney, as their witness (his statements were presented in both live testimony and in an affidavit which accompanied the cross-motion). Mr. Dorfman stated that he has been representing NSG for, approximately, twenty years, during which time he has engaged in zoning, real estate, and tax certiorari work for that entity. The witness averred that he is, presently, representing NSG in, approximately, thirty tax certiorari matters with various local municipalities. Mr. Dorfman testified that he has been attempting to resolve matters with a global settlement, but Plaintiffs are holding themselves out as the Board of Directors of NSG, thereby creating doubt as to who the rightful board is. Essentially, Mr. Dorfman stated that the global settlement has fallen apart because of Plaintiffs' actions and representations. In this Court's opinion, Plaintiffs did nothing to effectively rebut the testimony of the aforementioned witness.

Therefore, it is this Court's opinion that Defendants have met their burden in demonstrating the merit in their application to enjoin Plaintiffs from taking any actions in the name of NSG.

Accordingly, it is hereby

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

ORDERED that Defendants' cross-motion for a preliminary injunction is granted and EDGAR GLUCK, ELISHA ROSEMAN, GEORGE MARGARETEN, THOMAS PANETH, ABRAHAM KLEINBART, MOSHE GOTTESMAN, BERNARD ROSENBLUM, LEAH WERNER, YAAKOV SINGER,

PAUL ZICHERMAN are hereby enjoined, during the pendency of this action, from holding themselves out as members of the Board of Directors of NORTHERN SERVICES GROUP, INC., and they are further enjoined from taking any action in the name of that entity; and it is further

ORDERED that Defendants shall post, pursuant to CPLR Rule 6312 (b), a bond in a sum to be determined by the Court upon written submissions of the parties, who shall, no

later than May 25, 2007, provide the Court with said written submissions, service of same is not to be by facsimile transmission; and it is further

ORDERED that counsel shall appear before the undersigned on June 5, 2007 at 9:30 a.m. for a preliminary conference.

The foregoing constitutes the Decision and Order of this Court.

Dated: New City, New York

April 30, 2007

______________________________

HON. MARGARET GARVEY

Justice of the Supreme Court

TO:

Michael P. O'Connor, Esq.

Attorney for Plaintiffs

10 Esquire Road, Suite 14

New City, New York 10956

fax no.: (845) 638-3916

Howard Kleinhendler, Esq.

Walter P. Stasiuk, Esq. [*7]

Wachtel & Masyr, L.L.P.

Attorneys for Plaintiffs

110 East 59th Street

New York, New York 10022

fax no.: (212) 909-9417

Joseph J. Haspel, Esq.

Attorney for Defendant Chevre Liady Nusach Hoary

40 Matthews Street

Goshen, New York 10924

fax no.: (845) 294-3843

David G. Samuels, Esq.

Duval & Stachenfeld, L.L.P.

Attorneys for Defendant Chevre Liady Nusach Hoary

300 East 42nd Street, 3rd floor

New York, New York 10017

fax no.: (212) 883-8883

Eric Dranoff, Esq.

Alan G. Katz, Esq.

Saretsky Katz Dranoff & Glass, L.L.P.

Attorneys for Defendant Morris Klein

475 Park Avenue South

New York, New York 10016

fax no.: (212) 973-0939