Wynkoop v. 622A President St. Owners Corp.
| Decision Date | 07 November 2014 |
| Docket Number | No. 507156/13.,507156/13. |
| Citation | 7 N.Y.S.3d 245 (Table) |
| Parties | Brett E. WYNKOOP and Kathleen Keske, Plaintiffs, v. 622A PRESIDENT STREET OWNERS CORP., Kyle Taylor, Hilary Talor, and Rajeev Subramanyam, Defendants. |
| Court | New York Supreme Court |
The following papers numbered 1 to 28 read herein:
Upon the foregoing papers, plaintiffs Brett E. Wynkoop and Kathleen Keske move for an order: (A) pursuant to CPLR 3001, granting them a declaratory judgment declaring their rights as against defendant 622A President Street Owners Corp. (622A Owners) with respect to: (1) plaintiffs' use of the cellar in the building owned by 622A Owners, (2) plaintiffs' subletting apartment 2 of the building to James Borland, (3) plaintiffs' entitlement to indemnification for defending a prior action against them, and (4) plaintiffs' right to be assigned additional shares relating to their occupation of additional space under the proprietary lease; and (B) pursuant to CPLR 5519(c), staying all proceedings pending the outcome of defendants' appeal of the dismissal of the prior action, Taylor v. Wynkoop, Index No. 6548/12, or, alternatively, staying the counterclaims pending a determination of the a motion to amend/renew/reargue made in the prior action (Motion Sequence No. 2).
Defendants and plaintiffs on the counterclaim Kyle Taylor,1 Hilary Taylor and Rajeev Subramanyam (collectively referred to as the Shareholder Defendants) move for an order, pursuant to CPLR 6401, appointing a temporary receiver for 622A Owners (Motion Sequence No. 3).
Plaintiffs cross move for an order: (1) pursuant to Business Corporation Law §§ 624 and 720 and CPLR 3211(a)(1) and (a)(7), dismissing the Shareholder Defendants' counterclaims; and (2) quashing defendants' demand for discovery and issuing a protective order (Motion Sequence No. 4).
By way of an order to show cause dated May 20, 2014, the Shareholder Defendants move for an order: (1) enjoining plaintiffs, their attorneys, agents and parties acting in concert with them, from holding themselves out as representatives of 622A Owners or taking any action on the behalf of 622A Owners; (2) ordering plaintiffs to turn over the books and records of 622A Owners and statements, checkbooks, and passwords associated with all bank accounts belonging to 622A Owners to Subramanyam; and (3) ordering plaintiffs to provide all necessary authorizations, documents and signatures to permit Subramanyam to exercise control of all of 622A Owners bank accounts as president and treasurer (Motion Sequence No. 6).
By way of an order to show cause dated May 20, 2014, plaintiffs move for an order: (1) pursuant to CPLR 6301, enjoining the Shareholder Defendants from taking action purporting to be on the behalf of 622A Owners; (2) pursuant to CPLR 6301, enjoining the Shareholder Defendants from coming within 100 yards of plaintiffs; (3) pursuant to CPLR Art. 78, enforcing the May 16, 2014 shareholder vote electing Winkoop, Keske and Charmaine Chester as the board of directors, or alternatively holding a hearing to resolve any dispute regarding shares and votes (Motion Sequence No. 5).
The portion of plaintiffs' motion for a declaratory judgment (Motion Sequence No. 2) is denied without prejudice to renewal after joinder of issue or without prejudice to plaintiffs moving for a default judgment as against 622A Owners. The portion of plaintiffs' motion requesting a stay of the counterclaims pending the determination of the appeal of the dismissal of Taylor v. Wynkoop, Index No. 6548/12 or a stay pending reargument/renewal of the dismissal is denied.
The Shareholder Defendants' motion for the appointment of a receiver (Motion Sequence No. 3) is denied.
The portion of plaintiffs' cross motion (Motion Sequence 4) seeking dismissal of the counterclaims is denied. The portion of plaintiffs' cross motion seeking to quash discovery and for a protective order is granted only to the extent that the parties are directed to appear for a conference to be held on January 30, 2015, at 9:30am, to address the scope of the discovery. The cross motion is otherwise denied.
The Shareholder Defendants' motion for a preliminary injunction (Motion Sequence No. 6) is granted to the extent that it is ordered that plaintiffs, their attorneys, agents and parties acting in concert with them, are enjoined from holding themselves out as representatives of 622A Owners or taking any action on the behalf of 622A Owners. The motion is otherwise denied but with leave to renew following the new election ordered herein. It is further ordered this motion is converted to a special proceeding (CPLR 401 ; Business Corporation Law § 619 ) and the Shareholder Defendants are directed to purchase a separate index number within 20 days.
Plaintiffs motion for a preliminary injunction/article 78 proceeding (Motion Sequence No. 5) is granted to the extent that the election held on May 16, 2014 is declared invalid; and it is ordered: (1) that the shareholders of 622A Owners shall hold a new special meeting of shareholders to elect a new board within 40 days of today's date on a date, time and location set by the referee (appointed below) after consulting with the parties attorneys that is at least 10 days after the date the notice of meeting is to be sent; (2) that the referee (appointed below) shall send a notice of the meeting to the shareholders by regular mail; (3) that Roger E. Siegel, Esq, 16 Court Street, Ste. 2506, Brooklyn, N.Y. 11241, (718) 852–3113, is appointed as a referee to act as an inspector of the election; (3) that the parties are directed to pay the referee, upon the completion of the report of the inspector, a minimum fee of $250 and additional fee of $250 per hour if the meeting lasts more than an hour as compensation for his/her services, which sum shall be shared equally by the parties; (4) that the referee appointed herein is subject to the requirements of Rule 36.2(c) of the Chief Judge, and if the referee is disqualified from receiving an appointment pursuant to the provisions of that Rule, the referee shall notify the Appointing Judge forthwith; and (5) that by accepting this appointment the referee certifies that he/she is in compliance with Part 36 of the Rules of the Chief Judge (22 NYCRR Part 36), including but not limited to, section 36.2(e) (“Disqualification from appointment”), and section 36.2(d) (); and it is further ordered that the Shareholder Defendants, their attorneys, agents and parties acting in concert with them, are enjoined from holding themselves out as representatives of 622A Owners or taking any action on the behalf of 622A Owners. The motion is otherwise denied. This motion/article 78 proceeding is converted to a special proceeding (CPLR 401 ; Business Corporation Law § 619 ) and plaintiffs are directed to purchase a separate index number within 20 days.
This action involves an acrimonious dispute amongst the shareholders and proprietary leaseholders of a small four unit cooperative (coop) apartment building owned by 622A Owners that was converted into a coop in the mid–1980s. Plaintiffs jointly own 50 percent of the shares of 622A Owners, and are the proprietary leaseholders of apartments 1 and 2 of the building.2 It is undisputed that plaintiffs purchased their shares in February 1995, that they live in apartment 1, which is located on the first floor of the building, that they exclusively occupy the building's cellar which is connected to their first floor living space by way of a circular stairway, and that they have sublet apartment 2 from the time of their purchase of their shares for apartment 2. Defendant Kyle Taylor purchased his 25 percent shareholder interest in 622A Owners and entered into his proprietary lease for apartment 3 in September 2010. Kyle Taylor lives (or lived)3 in apartment 3 with his wife, defendant Hilary Taylor. Defendant Rajeev Subramanyam, who holds a 25 percent shareholder interest in 622A Owners, purchased his shares and entered into his proprietary lease for apartment 4 in January 2006.
It is essentially undisputed that, from the time that plaintiffs purchased their interest in 622A Owners, the shareholders of 622A Owners managed 622A owners without following the corporate formalities required by 622A Owners' by-laws and by the Business Corporation Law. 622A Owners operated without a board of directors, officers or a management company. Upon becoming a shareholder, Wynkoop assumed the roles of treasurer and building manager and Keske assumed the roles of vice-president and secretary (Amended Complaint 23–25; 1/13/14 Wynkoop Aff. ¶ 9). Without the holding of any annual meetings or the election of board members or officers, plaintiffs continued in these roles even after the Shareholder Defendants purchased their shares. Disputes thereafter arose between plaintiffs and the shareholder defendants relating, among other things, to access to the basement areas and the maintenance of the building, including a repair of a water leak in a skylight on the building's roof and water damage associated with the leak. In October 2011, while the parties were embroiled in these maintenance disputes, the Shareholder Defendants first requested the holding of a shareholder meeting. The Shareholder Defendants, however, assert they received no response despite continued requests (8/24/12 Kyle Taylor Aff. ¶¶ 10–11, 26–37, 46–51; 8/26/12 Subramanyam Aff. ¶ 26).
Unable to resolve their differences with plaintiffs, in March 2012, Taylor and Subramanyam commenced an action (Taylor v. Wynkoop, Index No. 6548) (Prior Action), styled as a shareholder derivative action, against the plaintiffs in this...
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