James v. Nat'l Arts Club
| Decision Date | 28 September 2011 |
| Docket Number | 109945/2011 |
| Citation | 2011 NY Slip Op 51885 |
| Parties | O. Aldon James, Jr., JOHN JAMES and STEVEN U. LEITNER, Plaintiffs, v. The National Arts Club; THE BOARD OF GOVERNORS OF THE NATIONAL ARTS CLUB; DIANNE BERNHARD, as President of the National Arts Club; JOHN MORISANO, as First Vice President of the National Arts Club; and TARA CORTES, STEPHEN HEDBERG, MILBRY POLK, ALEX ROSENBERG and ROSS ZNAVOR, as Governors of the National Arts Club and as hearing officers, Defendants |
| Court | New York Supreme Court |
Attorneys for Plaintiffs Nixon Peabody by Adam Gilbert and Amanda Devereux.
Attorneys for Defendants Sercarz & Riopelle, LLP by Roland G. Riopelle and Diane Ferrone.
Plaintiffs O. Aldon James, Jr. ("Aldon"), John James and Steven U. Leitner ("plaintiffs")seek an order enjoining the National Arts Club (the "NAC") and its directors, Board of Governors, officers, and hearing officers, from holding a hearing to terminate their membership from the NAC and concomitant tenancies of NAC-owned apartments.1
The NAC, founded in 1898, is a not-for-profit foundation dedicated to promoting and fostering the arts and education about the arts. There are four classes of membership: (1) Honorary Members, (2) Artist Life Members, (3) Patrons, and (4) Life Members. Individuals can become members of the NAC if nominated and approved for membership. NAC is managed by a Board of Directors, which is known as the Board of Governors (Constitution Section II (1)). The NAC's physical headquarters houses the NAC's administrative offices and NAC's exhibitions and events. It also contains apartments and/or rooms that have traditionally been made available to NAC members.
Plaintiffs have been members of NAC and have occupied apartments at the NAC for at least 25 years.
NAC received a subpoena, dated March 15, 2011, from the New York State Attorney General for records from January 2005 (Affirmation in Opposition, pp.1-2). The New York County District Attorney's Office also informed NAC that it was investigating NAC's operations. According to NAC, Aldon was president of NAC, and plaintiff Steven Leitner, was the chairperson (and at times, the only member) of NAC's House Committee, during the period in question. NAC hired counsel, which investigated potential improprieties at NAC and prepared a memorandum of its findings, a copy of which was allegedly delivered to the Board of Governors members, including Aldon, on or about June 15 and 16, 2011.
On or about July 8 and/or July 9, 2011, the members of the Board (other than Aldon) were contacted by telephone, and asked if they agreed that charges should be instituted against the plaintiffs. According to NAC, a telephone "poll" was taken, and a majority agreed that charges should be instituted (the "Telephone Meeting").
A Statement of Charges 3 (not including the memorandum prepared by NAC's counsel) was served upon plaintiffs on July 11, 2011, noticing a hearing to begin on August 10, 2011 at 7:00 p.m. When plaintiffs informed defendants that the Statement of Charges was invalid because no formal Board meeting had occurred and no formal Board resolution had been passed,the NAC produced a handwritten record of the poll.4
Thereafter, on August 3 or 4, 2011, Board Secretary Hillary Weldon emailed and/or telephoned members of the Board regarding a special Board meeting to be held by teleconference on the evening of August 4, 2011 at 7:30 p.m. According the NAC, notice of the special Board meeting was hand delivered to those members, including Aldon, who did not have email.
At the August 4, 2011 meeting, Board member Alex Rosenberg ("Chair Rosenberg") was appointed to chair a committee charged with investigating the allegations of the Statement of Charges. Board members on that call voted to suspend Aldon from his position as a Governor of the Board. NAC asserts that the Statement of Charges was delivered to the plaintiffs, along with NAC's counsel's memorandum, the following day.5
On August 9, 2011, defendants issued a "Notice of Hearing" to be held on August 30, 2011 from 5:30-9:30 p.m. and on August 31, 2011 from 12:00-9:30 p.m. "by a sub-committee of the NAC Board of Governors to determined [sic] the validity of the Statement of Charges previously served on you, and to recommend an appropriate disposition of the Charges to the Board of Governors."NAC contends that this Notice of Hearing was delivered to the plaintiffs pursuant to CPLR 308(2), by delivering a copy to the Doorman at NAC and mailing a second copy to the plaintiffs in the appropriate manner.
Defendants have served plaintiffs with Notices to Quit the apartments in which they are tenants by September 2, 2011, even though the revocation of membership hearing is scheduled for August 30-31, 2011.
Plaintiffs allege that defendants have violated their procedural and substantive due process rights in various ways.
The initial Statement of Charges served on July 11, 2011 was invalid, because it had been issued without holding a Board meeting as required under NAC Bylaws and without notifying all members of the Board that the Statement of Charges was under consideration or had been served upon plaintiffs. The alleged telephone "poll" was not a valid Board meeting, as Board meetings must be held either in person or by telephone with all members on the line and able to hear at the same time, pursuant to NAC Bylaws and NY Not-for-Profit Law ("NPL"). The record of the telephone poll reflects that at least one-third of the Board members (including Aldon) were not in fact contacted, in violation of the requirement under NAC Bylaws and NPL. Also, while calls were made to certain Board members on July 8-9, 2011, the members' signatures on the allegations in the Statement of Charges are dated July 11, 2011, showing that the allegations were crafted after the fact, in violation of NAC Bylaws. Further, defendants were not provided with Exhibit "B" to the Statement of Charges - a collection of memoranda by defendants' counsel, when first provided with the Statement of Charges.
The following Notice of the special meeting to be held on August 4, 2011 was not provided by mail as required by NAC Bylaws, and Aldon, and upon information and belief, the absent Board members, did not waive notice thereby rendering the notice and the meeting invalid.
Further, as reflected in the minutes, a full 1/3 of Board members were not present during the August 4, 2011 meeting. Also, Board members who voted were interested and/or demonstrably biased and, therefore, disqualified from voting, were permitted to vote on the issuance of the Statement of Charges. The minutes show that Cherry Provost (one of the signatories of the Statement of Charges) and Daniel Schiffman, whom the Statement of Charges alleges to be victims of harassment, were among the 13 Board members who purportedly voted to issue the Statement of Charges. Other disqualified voters included Hillary Weldon, who demonstrated extreme bias by signing and circulating minutes reflecting issuance of the Statement of Charges before the meeting had taken place.6
Aldon was not provided with any notice that his suspension from the Board would be considered and voted on during the August 4, 2011 meeting. Neither the NAC Bylaws nor the NPL provides for the suspension of a Board member without notice and a hearing. The NAC Bylaws required that the Statement of Charges set forth "with reasonable specificity" any charges on which members are tried. In addition, any charges must constitute "material violations" of NAC rules or policies or conduct "seriously prejudicial to the NAC." The purported purpose of the suspension of Aldon from the Board, is vague, unsupported by any findings of fact, and does not meet the requirement of a "material violation" of NAC rules or "seriously prejudicial" conduct required by the NAC Bylaws for suspension. Nor was the Statement of Charges based on member affidavits, or served in the manner of a summons as required by NAC Bylaws.
Further Chair Rosenberg was not qualified to judge the allegations against plaintiffs due his bias and interest in the outcome of the proceeding, arising from the fact that Aldon previously denied him an apartment at the NAC.
Thus, the meeting and actions taken thereat were invalid.
The August 9, 2011 Notice of Hearing to be held on August 30 and 31 (and the decisions reflected therein) were not discussed or acted upon by the Board. The minutes of the August 4, 2011 meeting do not reflect the setting of a date for a hearing, or reflect the various time limitations that were presented to plaintiffs for the first time in the August 9, 2011 Notice of Hearing. Also, counsel for defendants were advised that plaintiffs' counsel would be unavailable on the hearing dates, and requested that the hearing be held after Labor Day so that witnesses would be available after the NAC reopened from summer recess. However, defendants arbitrarily scheduled the hearing for August 30 and 31. Holding the hearing on August 30-31, 2011 is eminently unreasonable because it only provides plaintiffs with 21 days to investigate the allegations against them and prepare a defense. Therefore, the Notice of Hearing is invalid.
The Board's proceedings have also been potentially infected by Board members who, upon information and belief, were not properly nominated and elected pursuant to the NAC'sConstitution and Bylaws. Thus, new elections pursuant to NPL § 618 as to those Board members should be ordered.
Plaintiffs face both the revocation of their memberships, and the loss of their ability to remain in their homes of the past 30 years. Holding the hearing while the NAC is closed during the summer months, and while many witnesses will not be available would substantially deprive plaintiffs of their ability to present an adequate defense and receive a fair hearing. The hours for which the hearing is currently noticed are unreasonable. The first day's hearing...
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