Adam Leitman Bailey, P.C. Successfully Defeats Former Co-Op Board President’s Attempt to Enjoin Certification of Board Election Results and to Require New Election
Adam Leitman Bailey, P.C., secured a major victory for an incoming Cooperative Board defending against the former board president’s demands for a preliminary injunction to halt certification of election results in which she was ousted. After oral argument before the Queens County Supreme Court on the hotly contested dispute, the Court agreed with Adam Leitman Bailey, P.C. and denied the plaintiff’s requests for preliminary injunctive relief in their entirety.
After years of mismanagement and failure to hold annual elections for the Dayton Beach Park (“DPB”) Co-Op Board, the New York Department of Housing Preservation and Development (“HPD”), which oversees such Mitchell-Lama buildings, was forced to step in and take legal action against then-president Jennifer Grady (“Grady”) and her board (the “Grady Board”). The litigation was settled in an agreement between HPD and the DPB board – signed by Grady herself – requiring, among other things, that an election for a new board take place by a certain date, with safeguards to ensure genuine voter eligibility, and shall be conducted under the supervision of an independent election monitor proposed by the Grady Board and approved by HPD. Under the agreement, HPD was the final arbiter of all voter-eligibility determinations, and the vote computation was to be certified by the HPD-approved election monitor.
The election took place on May 15, 2024, in accordance with the HPD settlement, and the Co-Op shareholders overwhelmingly rejected the Grady Board, with Grady receiving a mere 13% of the votes.
In the face of this resounding defeat at the hands of her fellow shareholders, Grady filed suit against DPB to nullify the unfavorable election results and to force a new election pursuant to Business Corporation Law § 619, so that she could retain her years-long, improper control of the DPB board. Despite the vote already having been certified by the independent election company that she herself proposed, Grady claimed that ineligible shareholders were allowed to vote, that the election monitor had not actually certified the results, and, tellingly, did not name HPD in her lawsuit, despite its integral role in the 2024 election pursuant to the DPB-HPD settlement agreement. Grady also erroneously claimed that DPB had defaulted by failing to oppose her claims in a timely manner.
Adam Leitman Bailey, P.C. argued that Grady’s claims were the product of a disgruntled former board president with unclean hands who now sought to improperly cling to power. Numerous fatal flaws required rejection of Grady’s demands for preliminary injunctive relief, and the ultimate dismissal of her specious claims, including: (1) Grady had failed to join the HPD, which was a necessary party to the action given its central role in the election and the controlling settlement, (2) the action was improperly brought as a declaratory judgment action when the appropriate vehicle was an Article 78 proceeding, and (3) the relief sought was moot after the election results had already been certified by the monitor and approved by HPD. As to Grady’s assertion of default, Adam Leitman Bailey, P.C. argued that DPB’s motion was in no way untimely and that Grady’s argument flew in the face of well-established law concerning Grady’s methods of process service.
At oral argument, Adam Leitman Bailey, P.C. hammered home the fact that Grady’s claims were the bad-faith efforts of an ousted board member who was displeased with her rejection, and that her failure to name HPD – plainly a central and necessary party to the matter – was intentional attempt to avoid the ramifications of the controlling DPB-HPD settlement agreement and the hurdles presented by a properly-brought Article 78 proceeding. Further, Adam Leitman Bailey, P.C. exposed and underscored Grady’s attempts to obfuscate the record and mislead the Court as to the actual election status, which had been certified and confirmed, contrary to Grady’s assertions.
Grady was forced to concede at argument that she had not named the HPD because of insurmountable hurdles she would face in Article 78 proceedings, and, in light of Adam Leitman Bailey, P.C.’s compelling arguments, Grady asked the Court for leave to amend and name HPD if her claims were dismissed. Adam Leitman Bailey, P.C. rejoined that any leave to amend should be denied as futile because of the numerous other fatal deficiencies even beyond Grady’s failure to name HPD, including that the issues were now moot. The Court focused on the parties’ conflicting positions as to the election’s status vis-à-vis certification and confirmation. Grady claimed that the election had not, in fact, been certified by the monitor, and counsel was forced to admit that the sole basis for that position was the informal claim made by Grady to counsel in an email. Adam Leitman Bailey, P.C. was well prepared to address Grady’s falsehoods and immediately pointed the Court to indisputable documentary evidence showing that the election monitor had absolutely verified eligible voters, certified the votes including Grady’s results, and that HPD had received and confirmed such.
The Justice presiding over the case agreed with Adam Leitman Bailey, P.C., denying Grady’s requests for injunctive relief in their entirety. The Court found that Grady had failed to demonstrate either a likelihood of success on the merits or irreparable injury. The Court held that “HPD [w]as the final arbiter in overseeing and deciding the very issues [Grady] seeks to litigate in this forum. Moreover, . . . the balancing of equities favor [DPB] given the necessity of a functional board of directors to fulfill ongoing fiduciary duties to all of the shareholders weighed against [Grady’s] perceived loss of authority over the affairs of the board of directors.”
Ben Rose of Adam Leitman Bailey, P.C. conducted the oral argument and Brandon M. Zlotnick briefed the matter. Jeffrey R. Metz did the initial motion.