Grenader v. Lefkowitz

• Decision Date: 24 April 1975
• Citation: 367 N.Y.S.2d 17,47 A.D.2d 359
• Parties: Application of Max GRENADER et al., Petitioners-Appellants-Cross-Respondents, For a judgment under Article 78 of the Civil Practice Law and Rules Reviewing the Acceptance by the Department of Law of the State of New York for Filing of an Offering Statement, Prospectus or Plan to Convert to Cooperative Ownership the Premises at 345 East 57th Street, New York, N.Y. and Amendments Thereto, and the Adequacy Thereof, to the End that said Offering Statement, Prospectus or Plan and Amendments Thereto, and the Filing Thereof be Annulled and Vacated, and That the Subsequent Declaration That the Cooperative Plan is Effective Be Vacated, Annulled and Enjoined v. Louis J. LEFKOWITZ, Attorney General of the State of New York,Respondent-Respondent-Cross-Appellant, and Three Forty Five Management Co. etal., Respondents-Respondents-Cross-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 17

367 N.Y.S.2d 17

47 A.D.2d 359

Application of Max GRENADER et al.,

Petitioners-Appellants-Cross-Respondents, For a judgment

under Article 78 of the Civil Practice Law and Rules

Reviewing the Acceptance by the Department of Law of the

State of New York for Filing of an Offering Statement,

Prospectus or Plan to Convert to Cooperative Ownership the

Premises at 345 East 57th Street, New York, N.Y. and

Amendments Thereto, and the Adequacy Thereof, to the End

that said Offering Statement, Prospectus or Plan and

Amendments Thereto, and the Filing Thereof be Annulled and

Vacated, and That the Subsequent Declaration That the

Cooperative Plan is Effective Be Vacated, Annulled and Enjoined v. Louis J. LEFKOWITZ, Attorney General of the State of New

York,Respondent-Respondent-Cross-Appellant, and

Three Forty Five Management Co. etal.,

Respondents-Respondents-Cross-Respondents.

Supreme Court, Appellate Division, First Department.

April 24, 1975.

Charles Marks, New York City, for petitioners-appellants-cross-respondents.

Shirley Adelson Siegel, New York City, of counsel (Samuel A. Hirshowitz, New York City, with her on the brief; Louis J. Lefkowitz, Atty. Gen.), for respondent-respondent-cross-appellant.

Kevin P. Hughes, New York City, of counsel (Weil, Gotshal & Manges, New York City, attys.), for respondents-respondents-cross-respondents.

Before KUPFERMAN, J.P., and LUPIANO, CAPOZZOLI, LANE and NUNEZ, JJ.

PER CURIAM:

Petitioners are nonpurchasing tenants residing in an apartment house which was converted to cooperative ownership. They initiated this proceeding in order to invalidate the cooperative plan approved and accepted by the Attorney General. After issue was joined, petitioners moved for summary judgment and the respondent Attorney General made a cross-motion for summary judgment, both of which were denied by Special Term.

Preliminarily, we must note that, contrary to the assertion of the Attorney General, petitioners do have standing to institute this proceeding, since they have an interest as tenants which is 'personal, real, direct and substantial,' and allows them to challenge the actions of the public officials involved (Matter of Whalen v. Lefkowitz, 36 N.Y.2d 75, 78, 365 N.Y.S.2d 150, 324 N.E.2d 536).

In this proceeding, petitioners pose a manifold challenge to the acceptance of the cooperative plan by the Attorney General.

Firstly, it is urged that the Attorney General acted in excess of his authority in approving the plan since he is preempted by Federal jurisdiction under the Securities Act of 1933 (15 U.S.C. § 77a et seq.); The Federal statutory scheme, however, contemplates concurrent State jurisdiction over domestic securities (15 U.S.C. § 77r; Cf. Forman v. Community Services, Inc., 500 F.2d 1246 (2d Cir.)). Furthermore, Judge Stewart of the Federal District Court recently rendered a decision involving the very same parties to this proceeding, holding that there were no Federal registration requirements to be met in the filing of the plan presently under review (Grenader v. Spitz, 390 F.Supp. 1112, 1975).

Petitioners also claim that when the offering was declared effective, 51% Of the purchasers had not registered. The plan, as amended, required that the percentage requirement be met 'by 5/16/72.' However, the term 'by' includes the date mentioned and does not mean '5/15/72,' the day before the date mentioned (86 C.J.S. Time § 13(4), pp. 854--5). The declaration of effectiveness was therefore proper.

We also find that the Attorney General had statutory authority to conduct the investigation of the Bona fides of the named prospective purchasers in the manner effected, without allowing petitioners the right of active participation (Cf. General Business Law, §§ 352--i, 353; Matter of Greenthal v. Lefkowitz, 32 N.Y.2d 457, 463, 346 N.Y.S.2d 234, 236, 299 N.E.2d 657, 658).

The bulk of the petition in this proceeding deals with an alleged failure to comply with General Business Law, § 352--e. Subdivision (1)(b) of that section outlines the material which should be included in cooperative plans submitted to the Attorney General for approval. The petition alleges 20 major areas of noncompliance, some of which areas were even further subdivided. Suffice it to say that the 'noncompliance' alleged ranges from the relatively trivial (E.g., whether an elevator service contract is in effect; whether each cooperator would get individualized basement storage space) to the more significant (E.g., omission of projected basic carrying expenses; omission of computations establishing the basis of real estate projections).

While the allegations as to misrepresentation are technically not reviewable in the framework of this petition alleging violation of General Business Law, § 352--e (Matter of Whalen v. Lefkowitz, 36 N.Y.2d 75, 78, 365 N.Y.S.2d 150, 324 N.E.2d 536; Matter of Greenthal v....