Jackson v. Wang

Jackson v Wang

2024 NY Slip Op 31481(U)

April 26, 2024

Supreme Court, New York County

Docket Number: Index No. 100585/2022

Judge: Arthur F. Engoron

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.

INDEX NO. 100585/2022

NYSCEF DOC. NO. 184 RECEIVED NYSCEF: 04/26/2024

SUPREME COURT OF THE STATE OF NEW YORK

NEW YORK COUNTY

PRESENT: HON. ARTHUR F. ENGORON PART 37

Justice

-------------------X INDEX NO. 100585/2022

TAMARA JACKSON, EVA ZBONAKOVA, TAMARA

MOTION DATE 01/19/2024

JACKSON, EVA ZBONAKOVA, LATOYA JACKSON,

VERONICA JOSEPH, NEIL POWELL, SHIRLEY WRIGHT,

MOTION SEQ. NO. 010

Plaintiff,

- V-

EVELYN WANG, KAITLIN STRICKLAND, MADISON

AVENUE HOUSING DEVELOPMENT FUND

CORPORATION, GREG COHEN, STUART HALPER, DECISION + ORDER ON

ELIZABETH RIVERA, IMPACT REAL ESTATE MOTION

MANAGEMENT, INC., VIOLET BUTLER, APOLLONIA

HOLZER, ZAIRA ZAFRA, KRYSTOF BOBER, REMI

COUSIN, TRICIA DAWSON, FRIEDERIKE WILLIAMS,

Defendants.

-------------------.X

The following e-filed documents, listed by NYSCEF document number (Motion 010) 165, 166, 167, 168,

169,170,179,180,181,182,183

were read on this motion to DISMISS

Upon the foregoing documents, and for the reasons stated hereinbelow, defendants' motion,

pursuant to CPLR 321 l(a)(l) and (7), to dismiss is granted.

Background

In December 2022, pro se plaintiffs commenced this action against defendants, including

Madison Avenue Housing Development Fund Corporation ("MAHDFC"), alleging, inter alia,

denial of access to voting records, election fraud, and breach of fiduciary duty.

Much motion practice, the reader's familiarity with which the Court will presume, ensued,

eventually leading to the instant Fourth Amended Complaint, asserting four remaining causes of

action: (2) derivative breach of fiduciary duty to MAHDFC; (3) individual breach of fiduciary

duty; (4) breach of contract/breach of Article X, Section 5 of the MAHDFC by-laws; and (5)

violation ofNon-for-Profit Corporation Law§ 621. NYSCEF Doc. No. 167. Plaintiffs seek,

inter alia, a Court-appointed monitor to oversee MAHDFC elections, and compensatory and

punitive damages. Id.

Defendants now move, pursuant to CPLR 3211 (a)(l) and (7), to dismiss the complaint, with

prejudice, asserting that what began as an election dispute has morphed into a complex challenge

to board decisions spanning years and multiple board elections. NYSCEF Doc. No. 165.

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Defendants argue that plaintiffs' third through fifth causes of action should be dismissed, as they

essentially seek to invalidate a 2022 election already mooted by a 2023 election. Defendants

also argue plaintiffs' second cause of action, for derivative breach of fiduciary duty to

MAHDFC, is time-barred, as it falls outside Article 78's four-month statute oflimitations.

Defendants note that alleged failures by the Board, such as not implementing certain measures

and addressing violations, occurred in 2021 and 2022. Furthermore, defendants also assert that

the second cause of action is barred by the business judgment rule and stress that shareholders

cannot challenge decisions simply because they disagree with them.

Finally, defendants argue that the entire complaint should be dismissed, as it improperly mixes

derivative and individual claims, for example, blending allegations of general mismanagement,

which are derivative, with personal grievances about access to records.

In opposition, plaintiffs argue that the instant motion is barred by CPLR 321 l(e)'s single motion

rule, which, essentially, prohibits the filing of multiple motions to dismiss. They argue that this

rule conserves judicial resources, prevents unnecessary delay and protects them from being

harassed by repeated CPLR 321 l(a) motions.

Plaintiffs also challenge defendants' assertion that their third through fifth causes of action are

moot, highlighting broader grievances, such as alleged improper removal of votes and the failure

to provide prior meeting minutes. Plaintiffs also deny defendants' claim that plaintiffs have

inspected all 2022 and 2023 board minutes and dispute defendants' assertion that plaintiffs must

provide an affidavit to inspect the board's minutes, pursuant to NPC § 62l(c).

Without conceding that Article 78 applies to their second cause of action, for derivative breach

of fiduciary duty, plaintiffs argue it is not time-barred because the Board's alleged failures were

not final determinations against plaintiffs, and there has been no outright refusal by defendants to

fulfil their duties. Plaintiffs acknowledge that paragraphs 218 and 224 of their Fourth Amended

Complaint are non-derivative claims and seek leave to further amend the complaint to fix them.

In reply, defendants argue that plaintiffs are misinterpreting the single motion rule to try to evade

dismissal and as the rule does not prevent successive motions to dismiss complaints repeatedly

amended in response to prior motions. Defendants also contend that dismissing the claims of the

original plaintiffs while keeping the claims of newly added plaintiffs would be wasteful.

Defendants also argue that Article 78's four-month statute of limitations applies to plaintiffs'

breach of fiduciary duty claim, as plaintiffs' own allegations contradict their argument that the

limitations period had not started running. For instance, the complaint asserts that the Board

breached its fiduciary duty by refusing to address the issue of a flip tax in September 2021;

institute a sublet fee in January 2022; institute a maintenance increase in March 2022; correct

fire code violations in January 2022; and fix a sidewalk crack that had existed since at least

January 2022. Defendants assert that the commencement of the instant action, in December

2022, is therefore outside Article 78's statute of limitations.

Defendants argue that, despite the Court having afforded plaintiffs multiple amended complaints,

plaintiffs' claims still lack merit. Finally, defendants reject plaintiffs' attempt to shift the burden

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onto them to prove diligence in decision-making, emphasizing that it is plaintiffs' responsibility

to overcome the presumption that the Board acted in MAHDFC's best interests.

Discussion

Dismissal pursuant to CPLR 321 l(a)(l) is warranted where "documentary evidence submitted

conclusively establishes a defense to the asserted claims as a matter of law." Leon v Martinez,

84 NY2d 83, 87-88 (1994). Dismissal pursuant to CPLR 321 l(a)(7) is warranted when,

"afford[ing] the pleadings a liberal construction, tak[ing] the allegations of the complaint as true

and provid[ing] plaintiff the benefit of every possible inference," the complaint fails to assert

facts that would make out a cause of action. EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11,

19 (2005).

Here, despite plaintiffs' arguments to the contrary, the third, fourth, and fifth causes of action all

should be dismissed due to mootness, as they arise out of an election made academic by changed

circumstances. It is well-established that an election challenge is moot with the occurrence of a

subsequent election. See Sahid v 1065 Park Ave. Corp., 140 AD3d 521 (1st Dept 2016); Matter

of Paraskevopoulos v Stavropoulos 65 AD3d 1153 (2d Dept 2009). Allegations that would

overcome that mootness doctrine, do not apply here. Hearst Corp. v Clyne, 50 NY2d 707, 714-

15 (1980) ("(1) a likelihood ofrepetition, either between the parties or among other members of

the public; (2) a phenomenon typically evading review; and (3) a showing of significant or

important questions not previously passed on, i.e., substantial and novel issues.").

Plaintiffs' contention that the instant motion is barred by the single motion rule does not hold.

Plaintiffs have continually modified their claims in response to defendants' successive motions,

demonstrating an adaptive approach aimed at fortifying their allegations and making themselves

impervious to dismissal. CPLR 321 l(e) provides, in pertinent part, that "At any time before

service of the responsive pleading is required, a party may move on one or more of the grounds

set forth in subdivision (a), and no more than one such motion shall be permitted." Exceptions

exist, however, such as when a prior motion was not decided on its merits. Successive motions

are allowed when new claims are alleged later, as here. Barbarito v Zahavi, 107 AD3d 416, 420

(1st Dept 2013) ("Because [defendants] did not have the opportunity to address the merits of the

original cause of action, the single motion rule does not apply.").

Further, plaintiffs' second cause of action, for derivative breach of fiduciary duty, should be

dismissed pursuant to the business judgment rule, as plaintiffs have failed sufficiently to allege

bad faith, self-dealing or fraud. Auerbach v Bennett, 4 7 NY2d 619, 629 (1979) (The business

judgment "doctrine bars judicial inquiry into actions of corporate directors taken in good faith

and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate

purposes."); 40 W. 67th St. Corp. v Pullman, 100 NY2d 147, 153 (2003) ("In the context of

cooperative dwellings, the business judgment rule provides that a court should defer to a

cooperative board's determination '[s]o long as the board acts for the purposes of the

cooperative, within the scope of its authority and in good faith."').

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In the final analysis, while the Court respects pro se plaintiffs' tenacity in fighting for their

homes, the election which began this action has been made moot, and the MAHDFC board is

entitled to the protections of the business judgment rule.

This Court has considered plaintiffs' other arguments and finds them to be unavailing and/or

non-dispositive.

Conclusion

Thus, defendants' motion to dismiss is granted, and accordingly the Clerk is hereby directed to

dismiss this action with prejudice.

GORO"(J,~.C.

APR 28 2024

4/26/2024

DATE ARTHUR F. ENGORON, J.S.C.

~

CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED □ DENIED GRANTED IN PART □ OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

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