This action arises from a dispute about the composition of a cooperative's board of directors. Plaintiffs are Henry Rincon, Lorraine Stevens, Burnus McKnight, Darrell Teasley, Bernard Heyward, Mary E. Collins, Andre Richardson, and 540 West 146th Street Housing Development Fund Corporation (HDFC). The individual plaintiffs are alleged shareholders in the HDFC. Defendants include individual shareholders Faith Allen, Bianca Baptiste, Thomas Byrum, Carmen Fernandez, Michael Howell, Martin Rosamila, and Leslie Baptiste; and the coop's property management company, Urban Management and Development.

As of April 2024, defendants were members of the board of directors. In April 2024, certain shareholders in the corporation called for a special meeting to elect a new board of directors to replace defendants. (See NYSCEF No. 2.) The meeting was held on May 6, 2024. Plaintiffs allege that 14 out of 26 shareholders (individually or by proxy) were present at the special meeting, thereby constituting a quorum. (NYSCEF No. 1 at ¶21.)

Plaintiffs allege that they were elected as the HDFC's new board; and that they then demanded that defendants turn over all building documents. (NYSCEF No. 3.) Defendants refused to do so. According to defendants, the May 2024 election was invalid for lack of a quorum.

Plaintiffs then brought this action against defendants. Plaintiffs assert two claims. The first is for a mandatory injunction requiring defendants to turn over the building's documents and records. The second is for a mandatory injunction requiring defendants to produce documents and records for plaintiffs' inspection.

On motion sequence 001, plaintiffs seek a preliminary injunction requiring defendants to produce the documents they seek; provide access to the HDFC's banks accounts; remove and replace the prior board of directors; and give plaintiffs all the documents and information they need to carry out the HDFC's business. (NYSCEF No. 38 at 1 [order to show cause].) Defendants cross-move to dismiss plaintiffs' action. Plaintiffs' motion is denied. Defendants' cross-motion is granted in part and denied in part.

The parties stipulated to withdraw motion sequence 002 and to consolidate two related actions into this action. (NYSCEF Nos. 94, 96.)

On motion sequence 003, plaintiffs seek to an injunction to stay nonpayment proceedings that defendants brought against certain shareholders. This motion is denied as academic.

On motion sequence 004, plaintiffs seek (i) a temporary receiver for the HDFC; (ii) to enjoin the sale and lease of apartments in the coop building, along with approval of those sales and leases; (iii) to enjoin illegal construction work in one of the coop apartments; (iv) and to amend their complaint. The motion is granted in part and denied in part.

On motion sequence 005, plaintiffs move for (i) a preliminary injunction staying a notice to cure that defendants issued to one of the coop's shareholders; and (ii) a declaratory judgment that the notice to cure is invalid and that defendants lacked authority to issue it. Plaintiffs also move for sanctions against defendants under 22 NYCRR 130-1.1 (c). The motion is granted in part and denied in part.

On motion sequence 001, plaintiffs seek a preliminary injunction requiring defendants to produce the documents and information they seek (see NYSCEF No. 1 at ¶ 28); to provide plaintiffs access to all HDFC accounts; to remove and replace the prior board of directors with the alleged new board of directors; and to turn over all documents and information necessary to the HDFC's function to plaintiffs. To provide the requested relief, however, would effectively grant plaintiffs the ultimate relief requested on their complaint. (See St. Paul Fire and Mar. Ins. Co. v York Claims Serv., Inc., 308 AD2d 347, 349 [1st Dept 2003] ["A mandatory injunction should not be granted, absent extraordinary circumstances, where the status quo would be disturbed and the plaintiff would receive the ultimate relief sought, pendente lite."].) Plaintiff's motion for a preliminary injunction is therefore denied.

Defendants cross-move to dismiss the complaint under CPLR 3211 (a) (1), (3), and (7). The branch of the motion to dismiss plaintiffs' claim to turn over the HDFC's documents and property to plaintiffs is granted under CPLR 3211 (a) (7). The branch of the motion to dismiss plaintiffs' document-inspection claim is denied.

On its first cause of action, plaintiffs seek a mandatory injunction requiring defendants to turn over all the HDFC's documents and property to plaintiffs, the (alleged) new board.

Defendants argue that there is no new board. According to defendants, at least one of the 14 individuals present at the special meeting was not a coop shareholder. Therefore, defendants contend, there was no quorum at the meeting and no valid vote. (NYSCEF No. 67 at 8-9.) Defendants also argue that many individuals at the meeting were delinquent on payments to the co-op and therefore could not constitute a quorum or vote for a new board. (Id. at 6). Plaintiffs contend that delinquency is irrelevant to determining a quorum and that, in any event, defendants inaccurately calculated outstanding payments. This court agrees with defendants.

The parties do not dispute that a quorum is required to hold a meeting to vote for a new board of directors. (See id. at ¶ 6 [bylaws] [noting that to transact business, a quorum must be present].) The bylaws define quorum as "the presence, in person or by proxy, of a majority of all shareholders." (Id.)

Decisions are made by majority vote. (Id. at ¶ 7.) To vote, a shareholder must be in "good standing in the Corporation ten days before the date of any meeting." (Id. at ¶ 8.) Shareholders "delinquent in payments due the Corporation" may not vote or be elected to the board. (Id.) But the bylaws do not foreclose delinquent shareholders from being part of the quorum required to hold the meeting.

The court concludes that the shareholders at the May 2024 meeting did not elect a new board because plaintiff has not established for pleading purposes that a quorum was present. With respect to at least one special-meeting attendee out of the 14, plaintiff has not shown that the attendee counted toward the quorum; and 13 attendees out of 26 total shareholders is not a majority.

The attendance sheet from the special meeting reflects that Mary Collins was present by [*2]proxy. (See NYSCEF No. 16 [ attendance sheet].) Collins purports to be the estate representative of the late Irene Chisolm, who was a coop shareholder.^[FN1] (NYSCEF No. 83 at 1.) The parties appear to assume that estates holding coop shares still count toward the total number of shareholders for purposes of the majority-of-total-shareholders quorum requirement.^[FN2] (See Singleton v Morton, 199 AD3d 437, 437-438 [1st Dept 2021] [holding that deceased shareholders still count toward the total number of shareholders in the co-op for purposes of determining whether a quorum of shareholders is present].)

Even granting the assumption that estate representatives may count toward the majority of shareholders needed to form a quorum, plaintiffs have not shown that a majority was present at the special meeting. It is undisputed that the total number of shareholders for quorum purposes was 26—and that at most 14 shareholders, a bare majority, were present. With respect to Collins, the only basis for treating her as the estate representative for Chisolm (and thus capable of being present at the meeting directly or by proxy) is the conclusory statement in Collins's affirmation that she is "the fiduciary of the Estate of Irene Chisolm." (NYSCEF No. 83 at ¶ 2.) That statement is unsupported by documentation of Collins's fiduciary status; and the affirmation itself does not contain the attestation language required by CPLR 2106 in any event. (See generally NYSCEF No. 83.) Plaintiff thus has not adequately shown, even for pleading purposes, that Collins could count toward the 14 shareholders needed to constitute a quorum.

Given that fewer than 14 shareholders were at the special meeting, no quorum was formed. In turn, the election of new board members was invalid. The branch of the motion to dismiss the first cause of action is granted. The court does not reach the parties' remaining arguments relating to this cause of action.

On their second cause of action, plaintiffs seek to inspect a numerous coop documents and records.^[FN3] Plaintiffs demanded to see these documents in April 2024. (See NYSCEF No. 6.) Defendants denied that request.

Defendants now argue that this cause of action should be dismissed. Defendants assert that plaintiffs' request is too broad, both in scope and temporally, under Business Corporation Law (BCL) § 624. They also contend that the request was made in bad faith—that plaintiffs want [*3]to remove defendants to prevent them from commencing nonpayment proceedings against many of the plaintiffs. This branch of defendants' motion is denied.

New York law provides shareholders with "both statutory and common-law rights to inspect a corporation's books and records, so long as the shareholders seek the inspection in good faith and for a valid purpose." (Pomerance v McGrath, 143 AD3d 443, 444 [1st Dept 2016].) BCL § 624 "grants shareholders, upon showing good faith and a valid purpose, the right to examine and make paper copies of a list of shareholders and records of shareholder meeting minutes, and requires a corporation to deliver an annual balance sheet to a shareholder, upon written request." (Id. at 444-445, citing BCL § 624 [b], [c], [e].) But "because the common-law right of inspection is broader than the statutory right, petitioners are entitled to inspect books and records beyond the specific materials delineated in BCL § 624(b) and (e)." (Retirement Plan for Gen. Empls. of the City of N. Miami Beach v McGraw-Hill Cos., Inc., 120 AD3d 1052, 1056 [1st Dept 2014].) Nonetheless, "[w]hether a shareholder asserts statutory or common-law inspection rights, the shareholder may be required to demonstrate good faith and a valid purpose, and inspection may be limited to the scope of records relevant and necessary for such purpose." (Pomerance, 143 AD3d at 444.)

Plaintiffs demand to inspect the records to evaluate (i) why the building has incurred municipal debt for real-estate taxes, water sewer, HPD violations, and DOB fines; (ii) whether the cooperative has sold units it does not own; (iii) whether some units were mis-charged for lead paint abatement; (iv) outcomes of various elections; and (v) alleged general mismanagement of the building. (NYSCEF No. 6 at 2-3 [pdf pagination].) These stated purposes for the document inspection are proper. (See Matter of Tatko v Tatko Bros. Slate Co., 173 AD2d 917, 918 [3d Dept 1991] [holding that "proper purposes are those reasonably related to the shareholder's interest in the corporation" and may include "efforts to ascertain the financial condition of the corporation, to learn the propriety of dividend distribution, to calculate the value of stock, to investigate management's conduct, and to obtain information in aid of legitimate litigation"].) And to the extent plaintiffs seek the documents to effect a change in board composition, that is not bad faith. (See Ochs v Washington Hgts. Fed. Sav. and Loan Assn., 17 NY2d 82, 88 [1966] ["We need not even conjecture here whether a design to remove a director motivated by personal malice would preclude the exercise of a right to inspection."].)

Moreover, the bylaws provide that "[t]he books, records, documents and accounts of the Corporation, shall be open to inspection by shareholders, at reasonable times, at the office of the Corporation." (NYSSCEF No. 17 at 21 pdf pagination] Given the breadth of inspection rights provided by the bylaws, the court disagrees with defendants that plaintiffs' inspection rights are limited in time and scope. (See Matter of Goldstein v Acropolis Gardens Realty Corp., 116 AD3d 776, 777 [2d Dept 2014] [holding that breadth of proprietary lease's terms allowed for plaintiff to see records spanning from 2001 to 2014].)

The branch of defendants' motion to dismiss the second cause of action is denied.

On motion sequence 003, plaintiffs seek to stay several nonpayment proceedings that defendants have brought against certain coop shareholders in Civil Court, New York County, and to prevent the HDFC from bringing nonpayment proceedings during the course of this action. (NYSCEF No. 122 [order to show cause].) Plaintiffs' motion rests on their contention that [*4]defendants lacked authority to bring these proceedings on the HDFC's behalf. Plaintiffs represent that they have been escrowing their funds until defendants turn over the HDFC documents and records to plaintiffs. (NYSCEF No. 101 at 4.)

Given the court's conclusion on motion sequence 001 that the purported election of the new board was ineffective, this motion is denied as academic.

On motion sequence 004, plaintiffs ask this court to (i) appoint a temporary receiver for the HDFC until the conclusion of this action; (ii) enjoin the sale or lease of units in the building by both plaintiffs and defendants; (iii) enjoin plaintiffs' and defendants' approval of sales and leases; (iv) to amend the complaint to add Jennifer B. Meltzer and Melanie Moore as defendants in this action; and (v) to enjoin Jennifer B. Seltzer from conducting illegal renovations on apartment 43.^[FN4] Plaintiffs' motion is granted in part and denied in part.

Plaintiffs contend that defendants are mismanaging the HDFC's funds. Under CPLR 6401, a court may appoint a temporary receiver "where there is danger that the property will be removed from the state, or lost, materially injured or destroyed." The moving party must make a "clear evidentiary showing of the necessity for the conservation of the property at issue and the need to protect a party's interests in that property." (Quick v Quick, 69 AD3d 828, 829 [2d Dept 2010].)

The court concludes that plaintiffs have not made that showing. Plaintiffs provide an affidavit from plaintiff Andre Richarson in which he alleges that the HDFC is in debt to New York City and that the HDFC has not been paying property taxes or for water or sewage. (NYSCEF No. 147 at ¶13.) Richardson also alleges that defendants have been filing false ledgers as part of mismanaging the HDFC. (Id. at ¶15.) But these allegations are based on "information and belief." (Id. at ¶¶ 13, 15.)

Richardson also alleges that the HDFC's agent—Joshua Clennon—facilitated an apartment sale with defendants' approval and likely profited from the sale. (Id. at ¶¶ 17, 19.) But defendants argue that they did not sell the unit and that the coop received only outstanding arrears from the seller's profit. (NYSCEF No. 159 at 2.) And to support this argument, defendants submit checks from the purchaser to the seller and from the seller to the coop. (NYSCEF Nos. 160, 161.) Richardson's allegations do not clearly show that the HDFC's property will be dissipated or destroyed. The branch of plaintiffs' motion for a temporary receiver is denied.

Plaintiffs claim that the sale and lease of apartments in the coop must be facilitated and approved by the board of directors. Plaintiffs argue that because the board's composition is disputed, neither plaintiffs nor defendants should be allowed to sell or lease any apartments in the building (unless approved by all parties or this court). (NYSCEF No. 142 at 12-13.)

Given the court's conclusions on motion sequence 001, which determined that the May 2024 election was invalid, this branch of plaintiffs' motion is denied as academic.^[FN5]

On this branch of their motion, plaintiffs move under CPLR 3025 (b) to amend their complaint to add (i) new claims and (ii) new defendants, Jennifer B. Seltzer and Melanie Moore. Plaintiffs claim that Moore sold apartment 43 in the building to Seltzer, and that Seltzer began illegal construction on the apartment that resulted in building violations and fines. (NYSCEF No. 146 at 11 [proposed amended complaint].)

Plaintiffs propose causes of action against Moore and Seltzer for (i) preliminary and mandatory injunctions to stop the illegal construction work on apartment 43 and to restore the apartment to its original condition (NYSCEF No. 146 at 11-12); and (ii) a declaratory judgment that Moore's sale of the apartment to Seltzer is invalid, because it was not facilitated or approved by the board of directors. Plaintiffs also propose breach-of-contract claims against Moore for allegedly defaulting on her proprietary lease when she sold her apartment without board approval and allowed Seltzer to conduct illegal renovations. (Id. at 13-14.)

Under CPLR 3025 (b), the party moving to amend their pleading "need not establish the merit of its proposed new allegations," but must simply "show that the proffered amendment is not palpably insufficient or clearly devoid of merit." (MBIA Ins. Corp. v Greystone & Co., Inc., 74 AD3d 499, 500 [1st Dept 2010] [internal citation omitted].)

Defendants argue that Moore, as owner of the shares, was permitted to sell her shares in the coop to Seltzer. (NYSCEF No. 159 at 2.) But defendants do not dispute that board approval is required. (See id.) Nor do they provide documentation—such as a stockholder agreement or offering plan—showing that approval is not required. Moreover, the bylaws provide that "[t]he Board shall supervise the transfer of shares in such a manner as to implement the rules and restrictions established for transfers in the Certificate of Incorporation." (NYSCEF No. 17 at 17 [pdf pagination] [emphasis added].)

The court concludes that defendants proposed amendments are not clearly devoid of merit. The branch of plaintiffs' motion to amend their complaint is granted.

The parties do not dispute that shareholder Melanie Moore sold her shares for apartment 43 to Jennifer B. Seltzer. Since the sale, Seltzer has made renovations to the apartment resulting in building violations and fines. The parties do not dispute the need for a preliminary injunction preventing Seltzer from continuing with the renovations. (See NYSCEF No. 159 at 2 [not opposing plaintiffs' TRO for injunctive relief against Seltzer].)

This branch of plaintiffs' motion is granted.

On motion sequence 005, plaintiffs seek an injunction staying (and tolling the cure period for) a July 2025 notice to cure sent by defendants to Lorraine Stevens as representative of the Estate of Katherine Stevens, the proprietary lessee of apartment 33. (See NYSCEF No. 200.) Plaintiffs also seek a declaratory judgment that the notice to cure is invalid and that defendants have no authority, as the board, to issue notices to cure on the HDFC's behalf. Finally, plaintiffs move for sanctions, costs, and attorney fees against defendants. (NYSCEF No. 191 at 2.)

According to plaintiffs, defendants illegally rented out apartment 33 to Rebecca and Ramel Peebles. (NYSCEF No. 192 at 2.) The apartment contains a leak that defendants want repaired. Plaintiffs claim that defendants "seek to weaponize their own wrongdoing" and served a notice to cure on the out-of-possession owner. (Id. at 2.) Plaintiffs argue that the notice to cure is a nullity, because (i) the board lacks legal authority to act on the HDFC's behalf and (ii) and the notice was issued in bad faith, "demands an impossible act, is barred by the doctrines of waiver, estoppel, and unclean hands, and fundamentally misapplies the law of privity." (Id. at 3.)

Defendants argue that the notice to cure does not threaten to terminate the Estate's lease and therefore that the Estate needs no injunctive relief. (NYSCEF No. 203 at 1.) Defendants represent that they asked the tenant for access to the apartment but that the Peebles denied access. Defendants argue that the coop lacks contractual and estate privity with the Peebles and therefore may not sue the Peebles without the Estate's involvement.

The court agrees with plaintiffs. Defendants do not dispute that the Peebles signed a lease agreement with the HDFC. It is further undisputed that (i) the Estate is the proprietary lessee of the apartment and (ii) the Estate did not rent the apartment to the Peebles. Defendants provide no basis for issuing the notice to cure against the out-of-possession proprietary lessee to fix leaks stemming from the conduct of tenants to whom the Estate did not rent the apartment. Nor do defendants provide support for their contention that "the coop lacks contractual and estate privity with the Peebles." (NYSCEF No. 203 at 2.) The court therefore concludes that defendants' notice to the Estate to cure the leak in apartment 33 is invalid.^[FN6]

Accordingly, branch of the motion for a declaratory judgment that defendants' July 2025 notice to cure is invalid is granted. Additionally, the branch of the motion for an injunction staying enforcement of the July 2025 notice to cure is denied as academic. Further, to the extent plaintiffs seek a declaratory judgment that the disputed board lacks authority to issue notices to [*6]cure on behalf of the HDFC generally, the court disagrees, for the reasons discussed on motion sequence 001.

Plaintiffs also seek sanctions against defendants. Plaintiffs argue that defendants sent the notice to cure to harass plaintiffs after plaintiffs notified defendants that the Estate is not in privity with the Peebles. The branch of the motion for sanctions against defendants is denied. The court is unpersuaded that issuing the notice to cure was frivolous or vexatious within the meaning of 22 NYCRR 130-1.1.

Accordingly, it is

ORDERED that plaintiffs' motion for a preliminary injunction (mot seq 001) is denied; and it is further

ORDERED that the branch of defendants' cross-motion to dismiss plaintiffs' first cause of action to turn over the HDFC's documents and records (mot seq 001) is granted; and the first cause of action is dismissed; and it is further

ORDERED that the branch of defendants' cross-motion to dismiss plaintiffs' second cause of action (mot seq 001) to inspect the HDFC's documents is denied; and it is further

ORDERED that plaintiffs' motion to stay the Civil Court, New York County, nonpayment proceedings (mot seq 003) is denied as academic; and it is further

ORDERED that the branch of plaintiffs' motion for a temporary receiver (mot seq 004) is denied; and it is further

ORDERED that the branch of plaintiffs' motion to enjoin the approval of, and sale or lease of, HDFC apartments (mot seq 004) is denied; and it is further

ORDERED that the branch of plaintiffs' motion to amend their complaint (mot seq 004) is granted; and the proposed amended complaint (located at NYSCEF No. 146) is deemed the operative complaint; and it is further

ORDERED that branch of plaintiffs' motion to enjoin Jennifer B. Seltzer from conducting illegal renovations on apartment 43 is granted; and it is further

ORDERED that the branch of plaintiffs' motion for a declaratory judgment that the July 2025 notice to cure (mot seq 005) is invalid is granted; and it is further

ORDERED AND ADJUDGED that the July 2025 notice to cure is invalid (mot seq 005); and it is further

ORDERED that the branch of plaintiffs' motion for an injunction staying and tolling the July 2025 notice to cure is denied as academic; and it is further

ORDERED that the branch of plaintiffs' motion for a declaratory judgment that the disputed board has no authority to issue notices to cure is denied; and it is further

ORDERED that the branch of plaintiffs' motion for sanctions, costs, and attorney fees under 22 NYCRR 130-1.1. (c) is denied; and it is further

ORDERED that the parties appear for a telephonic preliminary conference on December 5, 2025.