Plaintiff, Mulberry Condominium Associates, Inc., is an incorporated condominium on Mulberry Street in Manhattan. This action arises from a dispute about the composition of the condominium board between plaintiff and five unit owners, defendants David Leong, David & Dayton Realty, Inc., Hong Wai Realty Inc., Leong Family Investments, LLC, and Mulberry Street Commercial Properties LLC.

The board has seven seats. (NYSCEF No. 5 at 85 [pdf pagination].) When this dispute arose in January 2024, four seats were occupied, and three were vacant. Defendants possess a majority (66.046%) of the common interests in the condominium. In January 2024, defendants executed a certificate of written consent to change the composition of the board without convening a board meeting. The consent was signed by (1) Leong, on behalf of David & Dayton Realty Inc, Hong Wai Realty Inc., and Leong Family Investments LLC, and (2) Josh Halegua, on behalf of Mulberry Street Commercial Properties.

Defendants have claimed that pursuant to this certificate, they have removed the four sitting board members and selected four new board members to replace them; and that they also selected three new board members to fill the existing vacancies. Defendants assert that all seven of these members were put on the board for three-year terms, expiring in January 2027. (NYSCEF No. 19 at 2.) Plaintiff argues that defendants' actions were invalid. Plaintiff therefore brought this action.

Plaintiff asserts claims for a declaratory judgment that the consent was not effective and therefore that defendants did not remove the four board members and elect seven new ones; breach of by-laws; and violation of the Condominium Act due to noncompliance with the by-laws. (See NYSCEF No 2 [complaint].) Defendants assert counterclaims for declaratory judgment and permanent injunctive relief geared toward establishing that the new board is valid and has the authority to act on behalf of the condominium.

On motion sequence 001, plaintiff moves for a preliminary injunction. On motion sequence 003, plaintiff moves to dismiss defendants' counterclaims. On motion sequence 004, plaintiff moves to lift the automatic discovery stay. Motion sequence 001 is granted in part and denied in part. Motion sequences 003 and 004 are denied.

Plaintiff seeks a preliminary injunction to enjoin defendants from further attempts to assert control over the condominium or its operations and to enjoin defendants from interfering with the condominium's officers and board's authority/discharge of its responsibilities. Plaintiff also seeks to enjoin defendants from making further representations that the board has been replaced, that defendants' electees constitute the current board, or that Leong is serving as interim president. Plaintiff further seeks to enjoin defendants from using condominium funds and to compel them to reimburse any expended funds, including attorney fees. Finally, plaintiff seeks to enjoin defendants to retract representations that board was removed and replaced or that they are in control of condominium. (NYSCEF No. 15 at 2 [notice of motion].)

A party seeking a preliminary injunction must show "a likelihood of ultimate success on the merits, irreparable injury if the preliminary injunction is withheld, and a balance of equities tipping in favor of the moving party." (1234 Broadway LLC v West Side SRO Law Project, Goddard Riverside Community Ctr., 86 AD3d 18, 23 [1st Dept 2011].)

A. Likelihood of Success on the Merits

With respect to the likelihood of success on the merits, plaintiff argues that defendants violated the condominium by-laws in five ways. Plaintiff first argues that Halegua was not authorized to execute the consent for Mulberry Street Commercial Properties LLC and therefore [*2]that the consent agreement is not backed by a majority of unit owners.^[FN1] Plaintiff next argues that the former board was not provided written notice and a chance to be heard before the new board purportedly removed it, as required by bylaw § 2.9 (A). Plaintiff then argues that the written consent was improper and contravenes the bylaw provision that replacement board members serve out the remainder of their predecessors' terms and that it violates a staggered-term provision. Finally, plaintiff contends that Leong improperly holds himself out as the condominium's president.

In response, defendants argue that plaintiff lacks standing to challenge Halegua's authority to sign the consent on behalf of Mulberry and that, in any event, Halegua represents that he has such authority. They also argue that the bylaws (specifically §§ 4.10 and 2.9, when read together) show that the removed board members would have been entitled to a hearing only if their removal occurred at a meeting of unit owners. They further contend that they were permitted to simultaneously elect three new board members and remove the four other board members and that the staggered-term requirement applied only to the first ever condominium board. Finally, they assert that the current board ratified Leong's authority as acting president of the board. (See NYSCEF No. 32 at 24-31.)

The court first concludes that plaintiff has not shown that Halegua lacked authority to sign the consent for Mulberry Street. Plaintiff argues that "no member of the Condominium's Board has heard of or interacted with Mr. Halegua and he has failed, or otherwise refused, to confirm that he holds such authority." (NYSCEF No. 4 at ¶ 13 [Lee affidavit].) However, Halegua himself represents that he is the managing member of Mulberry Street and that he did have the authority to sign the consent. (NYSCEF No. 31 at ¶ 3 [affidavit].) The court therefore concludes that plaintiff is unlikely succeed in showing that Halegua lacked authority to sign the consent.

The court next agrees with defendant that that defendants' removal of the four incumbent board members without a hearing was proper. Section 2.9 requires that "[a]ny member of the Condominium Board whose proposed removal is to be acted upon at a meeting of the Unit Owners shall be given prior written notice thereof and an opportunity to be present and heard thereat." The language of that provision thus requires notice and opportunity to be heard only if the unit owners plan to remove those board members at a meeting. This section does not preclude unit owners from removing board members without a meeting altogether, as authorized by § 4.10.

Section 4.10 provides that actions unit owners are required or permitted to take at a "meeting may be taken without such a meeting if the number of Unit Owners sufficient (both in absolute number and in aggregate Common Interest to approve such an action at a duly constituted meeting . . . consent in writing to the adoption of a resolution approving such action." Plaintiff does not dispute that the defendant unit owners had sufficient aggregate common interests to remove board members. (See NYSCEF No. 5 at ¶ 4.5 [requiring minimum of 50% of aggregate common interests to constitute a quorum of unit owners for purposes of a unit-owner [*3]meeting].) Plaintiff has therefore not shown a likelihood of success on this aspect of its claim.

The court also concludes that defendants properly elected three new members to fill the existing vacancies, but that defendant did not properly elect four members to replace the members they removed.

With respect to the group of three, it is undisputed that three seats were already vacant at the time this dispute arose. The bylaws contemplate that unit owners get to elect board members. Indeed, § 4.9 delineates how votes are apportioned among the unit owners when they vote for members of the condominium board. (See NYSCEF No. 5 at ¶ 4.9 [A].) Defendants, as unit owners, therefore effectively elected three board members to the board for three-year terms,^[FN2] through the written consent, as permitted under § 4.10.^[FN3]

The court reaches a different conclusion with respect to the four people defendants assertedly placed on the board to replace the four members that defendants removed. Filling vacancies arising from removal of a board member is governed not by § 4.9 but by § 2.10. That section authorizes a majority of remaining board members to fill vacancies resulting from "removal, resignation, or death" of a board member—not expiration of term or other reason. (See NYSCEF No. 5 at ¶ 2.10.) And § 2.10 provides that these vacancies are to be filled by a majority of sitting board members—not by the unit owners.

Defendants argue that no board members were capable of filling the vacancies and therefore that the unit owners were able to select an entirely new board. (NYSCEF No. 32 at 29 [memorandum in opposition].) But as this court concluded above, the responsibility to fill vacancies does not belong to the unit owners; it belongs to the board members. Defendants validly elected three board members to fill the previously vacant seats. Those board members have the ability to fill the other four seats on the board. Indeed, § 2.10 provides that "the majority of the members of the Condominium Board then in office" must hold a special meeting to promptly elect new board members and that that election "shall be effective to fill such vacancy even if the number of members present at such meeting shall not constitute a quorum." (NYSCEF No. 5 at 42 [pdf pagination].)

In turn, defendants cannot represent that the three members elected at least one other member to form a quorum. Absent a quorum—defined as a majority of board members, i.e., four members—the board is unable to transact business on behalf of the condominium.^[FN4] (See NYSCEF No. 5 at ¶ 2.15.)

Finally, the court agrees with plaintiff that Leong has not been appointed interim-president or president of the board. Absent a president and vice president of the board—both of whom were removed with the written consent—it is up to the board itself to appoint an interim president by majority vote. (NYSCEF No. 5 at ¶ 3.8.) Although Leong represents that defendants' purported board authorized Leong to act as board president (see NYSCEF No. 30 at 21 [affidavit]), this cannot be so, given that the board lacks the quorum required to hold a meeting (see NYSCEF No. 5 at ¶ 2.15).

To the extent plaintiff seeks to enjoin defendants from attempting to control the condominium and its operations and to enjoin defendants from interfering with the former condominium board's use of their authority, plaintiff is unlikely to succeed on the merits. As shown above, unit owners have the right to issue a consent agreement to change the makeup of the board without convening a board meeting. Additionally, there is no board with which defendants could interfere, because defendants removed the last members of the former board.

To the extent plaintiff seeks to enjoin defendants from representing (and to retract representations) that the board has been replaced; that defendants constitute the new board; and that Leong is the board president, plaintiff is likely to be successful on the merits. The same applies to the extent plaintiff seeks to enjoin defendants from using condominium funds and to compel them to reimburse any condominium funds they spent.

B. Irreparable Harm

A showing of irreparable harm is required to be entitled to a preliminary injunction. Plaintiff argues that it will be harmed absent the preliminary injunction. Plaintiff contends that it will be unable to conduct its normal business and that having no injunction presents "an opportunity for defendants to shift the balance power and assume management and control of the company." (Vanderminden v Vanderminden, 226 AD2d 1037, 1041 [3d Dept 1996].) Defendants argue that the former board members control the accounts, funds, and records of the condominium—rendering the new board powerless—and therefore that plaintiff will not suffer harm if denied a preliminary injunction. (NYSCEF No. 32 at 32.)

To the extent plaintiff seeks to enjoin defendants from (1) representing (and to retract representations) that the board has been replaced; that they constitute the new board; and that Leong is the board president; and (2) that they must reimburse any condominium funds they expended, plaintiff has demonstrated irreparable harm. When "control and management" of an entity is "at stake, money damages [are] not sufficient." (Yemini v Goldberg, 60 AD3d 935, 937 [2d Dept 2009].)

Here, absent the preliminary injunction, defendants might try to act on behalf of the condominium as the new board, notwithstanding that it has only three members—fewer than the quorum required to transact business. (NYSCEF No. 18 at ¶ 2.15.) Although defendants currently lack access to condominium funds and records, there remains the possibility that defendants will try, within the condominium board's purview, to take other actions that will have an impact on control and management of the condominium (e.g., firing employees).

C. Balance of the Equities

Defendants have not shown that they will be harmed if the court grants the preliminary [*4]injunction. In contrast, a change of control in management of the board may have irreparable consequences. The balance of equities favors plaintiff.

The motion for preliminary injunction is granted to the extent that (1) plaintiff seek to enjoin defendants from representing (and to retract representations) that the board has been replaced; that defendants constitute the new board; and that Leong is the board president; and (2) that defendants must reimburse any condominium funds they expended.

A. Motion to Dismiss Counterclaims

On motion sequence 003, plaintiff moves under CPLR 3211 (a) (1) to dismiss defendants' counterclaims and for attorney fees and costs. Defendants raise five counterclaims for permanent-injunctive and declaratory relief geared toward establishing "that the Board has been removed and the Dissenting Owner Board holds all power and authority to manage the Condominium." (NYSCEF No. 39 at 5 [plaintiff's memorandum in support].)

i. Conversion of Motion to Dismiss to Motion for Summary Judgment

Defendants argue that the CPLR 3211 (a) motion is a disguised CPLR 3212 motion. According to defendants, the motion should be treated as one for summary judgment, because there are no disputes of fact and the issues in this case involve legal interpretation of the bylaws. (NYSCEF No. 51 at 9). Plaintiff disagrees and argues that it "did not raise all of the same grounds for invalidating the Consent as it raised in its Complaint and Motion for Preliminary Injunction because certain grounds require additional evidence not attached to the Counterclaims, require discovery, or are better suited for summary judgment." (NYSCEF No. 52 at 4 n 2.) In other words, plaintiff argues that considering this motion as one for summary judgment would be premature, because the parties have not conducted discovery.

The court agrees with plaintiff. This court did not warn the parties that it would consider this motion as one for summary judgment. (See Hendrickson v Philbor Motors, Inc., 102 AD3d 251, 258 [2d Dept 2012] ["CPLR 3211(c) requires that if a court intends to treat a CPLR 3211 motion as one for summary judgment under CPLR 3212, it must give the parties notice of its intention to do so."].) Additionally, aside from the documentary evidence plaintiff provides—namely the bylaws—plaintiff may, in discovery, find alternative evidence to use in moving for summary judgment dismissing the counterclaims on alternative grounds. For example, plaintiff says discovery will allow it to discover whether additional evidence exists about Halegua's capacity to sign the consent—a ground for dismissal not necessarily rooted in interpretation of the bylaws. (Mihlovan v Grozavu, 72 NY2d 506, 508 [1988] [holding conversion of motion to dismiss into motion for summary judgment was improper partly because the parties did not "indicate that the case involved a purely legal question rather than any issues of fact"].) Moreover, the court notes that the parties did not submit evidence outside documentary evidence (e.g., factual affidavits).

The court is not persuaded that the parties made it "unequivocally clear that they are laying bare their proof and deliberately charting a summary judgment course." (Four Seasons Hotels Ltd. v Vinnik, 127 AD2d 310, 320 [1st Dept 1987].) The court thus declines to treat [*5]plaintiff's motion to dismiss as one for summary judgment.

ii. Dismissal of Counterclaims (CPLR 3211 [a] [1])

The parties' arguments, in favor of and against, dismissing the counterclaims echo those it made in motion sequence 001. Accordingly, the motion is denied.

iii. Attorney Fees

On this branch of its motion, plaintiff seeks attorney fees for violation of bylaws. But the provisions to which plaintiff cites to support its request for attorney fees—§§ 9.2 and 9.4—are inapplicable. Section 9.2 is limited to situations in which unit owners fail to fulfill their obligations under the by-laws; it allows for the board to enjoin or remedy the violation. Similarly, § 9.4 provides that costs incurred by the board in correcting a unit owner's breach or default will be paid by the unit owner to the board. Article 9 contemplates violations such as unit owners' obligations to paint and maintain their units, not election/removal/filling vacancies of board members. (See NYSCEF No. 5 at ¶ 9.1.)

The branch of plaintiff's motion for attorney fees is denied. The court does not reach defendants' contention that awarding attorney fees to plaintiff would be punitive to defendants.

Plaintiff moves under CPLR 3214 to lift the automatic discovery stay resulting from its motion to dismiss defendants' counterclaims (mot seq 003). Given the court's resolution of that motion, plaintiff's motion to lift the stay is denied as academic.

Accordingly, it is

ORDERED that plaintiff's motion for a preliminary injunction (mot seq 001) is granted to the extent (1) that defendants are enjoined from representing and must retract representations that the board has been replaced; that defendants constitute the new board; and that Leong is the board president; and (2) that defendants must reimburse any condominium funds they expended; and is otherwise denied; and it is further

ORDERED that plaintiff's motion to dismiss defendants' counterclaims (mot seq 003) and for attorney fees is denied; and it is further

ORDERED that plaintiff's motion to lift the automatic discovery stay (mot seq 004) is denied as academic; and it is further

ORDERED that defendants serve a copy of this order with notice of its entry on plaintiff and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nyco urts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.