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Common Sense Trumps Greed: Adam Leitman Bailey, P.C. Secures Injunction to Prevent Vote to Terminate the Proprietary Lease of a Thirty-Year-Old Shareholder

Adam Leitman Bailey, P.C. was tasked with saving the cooperative apartment of a shareholder who has occupied it for more than three decades. Adam Leitman Bailey, P.C.’s client lives in a small four-unit cooperative. A few years ago, a limited liability company run by real estate speculators bought two units in the building on the representation that they would merely rent the units. Soon thereafter, they had succeeded in buying out the third-floor unit owner. Now, in effective control of the cooperative, the speculators started amending the cooperative documents to their advantage with the end goal being to terminate the proprietary leases and thereafter sell the building, flip it or develop it.

Adam Leitman Bailey, P.C. believed that the speculators’ actions violated Business Corporation Law 713 (a)(1) which prohibits self-interested directors from voting on issues where they have a direct pecuniary interest. While the speculators claimed that the law did not apply because they were acting in the best interest of the cooperative, Adam Leitman Bailey, P.C. successfully argued that as a matter of common sense, a vote that would destroy a housing cooperative could not be construed as acting in its best interest since the purpose of a housing cooperative is to provide common housing for its shareholders, rather than permitting the eviction of a long term shareholder so that the speculators (who never lived in the building) could line their pockets.

The court agreed and granted Adam Leitman Bailey, P.C.’s client a preliminary injunction stopping the vote to terminate the proprietary leases.

Jeffrey R. Metz represented the client before New York Supreme Court.

Adam Leitman Bailey developed the strategy presented before the court.

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