Case Notes in
Elections
Category
- Access
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First published: Jun 2015
Mishaan v 1035 Fifth Ave. Corp.There is little question that most elections are uncontested. Even when contested, very few end in litigation. But for many people, an apartment is a very large asset and owners want to do what they believe is necessary to protect that asset. There can be huge disparity in how individuals believe their boards should act – how the building should be managed both financially and in terms of its physical plant. There can often be a situation where someone runs and he or she obtains one percent of the vote. But when it is clear there is going to be a closely contested election, boards and shareholders should try to come to some creative solution – if they can – to address one another’s issues. If that cannot be done – and sometimes the disagreements are too fundamental to come to agreement – the shareholders must be able to decide. When an election is close, from a practical standpoint, it is often good practice to have more than one inspector of elections. Another practice may be to close the polls at the end of the meeting so that no additional votes can be issued, and to allow the inspectors to place all the ballots in an envelope, seal it, and have someone sign his or her name across the flap – that way, they can open and count the ballots the next day at the office of the inspectors (often two members of the managing agent). If done this way, inspectors can check and double-check their work. There is one final point that, for some reason, was not addressed by the court. When an election is uncontested (and thus there is a successful candidate or slate by acclimation), proxies and ballots are not an issue. But when there is a contest, we want to remind people that a proxy is just that – a proxy. It is not a ballot and, indeed, New York does not use absentee ballots in these types of elections, even if the one giving the proxy identifies whom the proxy-holder must vote for. When a person or board is a proxy-holder, a ballot must be completed and submitted with the proxy. Without that procedure, no matter how duplicative it seems to be, the vote by proxy alone should not be counted.
Read full articleFirst published: May 2006
Matter of Schapira vs. GrunbergWith the spring annual meeting season for most co-op and condominium entities to elect board members now in full bloom, this case provides helpful guidelines where such elections are disputed and sometimes quite contentious. The Whitehall has a long history of political infighting. Among the lessons of the case are: qualifications of directors are determined by the language of the bylaws; the role of the inspectors of election is limited and does not extend to interpreting the bylaws on board qualifications, and courts are reluctant to upset shareholder votes for fear of destabilizing the entity’s proper functioning, especially where it suspects the motives of the party seeking a new election.
Read full articleFirst published: Dec 2003
Brodsky v. Board of Managers of Dag Hammarskjold Tower CondominiumWhile notarized proxies may be required in some instances, this is rarely done. This case makes clear that if it is to be done it should be done by amendment of the governing documents – usually the bylaws, which in the case of many co-ops and most condominiums requires a vote of the owners. What is less certain is the court’s decision to require a new election for the six incumbent board of managers. The court did not have to decide this issue, but was obviously troubled by the failure to elect any of these managers at meetings because there was never a quorum of unit-owners present.
Read full articleFirst published: May 2003
Feld v. 710 Park Avenue Corp.This foiled attempt to bar Feld from board service for being at odds with the current board must be viewed as outrageous. The case illustrates the difficulties a co-op or condo board faces when it seeks to bar a dissident from service, especially where cumulative voting is provided in the entity's bylaws.
Read full articleFirst published: Sep 2002
Matter of Fort Hamilton Development Corp. v. Bay Ridge Towers Inc.In the court's view, the petitioners' attempt to distinguish Visutton from their case was unavailing. The restrictive provision at issue in Visutton was virtually the same as the one in the present case. The court also dealt with the petitioners' argument that Flagg was distinguishable from the case at bar merely because the restrictive provision therein stated that the sponsor shall have the right to elect three of seven directors and did not specifically refer to the number of directors Fort Hamilton may elect. It said it was without merit. The offering plan in Flagg stated that the sponsor or holder of unsold shares "will not elect a majority of the Board of Directors" and, here, Article II, Section 2, of BRT's bylaws similarly stated that a shareholder of more than 50 percent of BRT's shares (i.e., the sponsor and holder of unsold shares) cannot "elect a majority of the Board of Directors." Thus, the court concluded that such provisions were indistinguishable. Petitioners also argued that the inspectors exceeded their authority and violated BCL Section 612(a). BCL Section 612(a) provides that "[e]very shareholder of record shall be entitled at every meeting of shareholders to one vote for every share standing in his name on the record of shareholders, unless otherwise provided in the certificate of incorporation." They contended that under this section, the subject restriction in Article II, Section 2, of BRT's bylaws was unenforceable since it was not contained in BRT's certificate of incorporation. The court rejected this argument. While a restriction depriving a shareholder of the right to vote all of his/her shares can only be accomplished through a provision in the certificate of incorporation, the appellate division, second department, in Visutton, held that a provision restricting a sponsor from voting its unsold shares for more than one less than the majority of directors to be elected is not required to be set forth in the certificate of incorporation. This is because such a provision "do[es] not prohibit the sponsor from voting all its shares; [it] merely bar[s] the sponsor from obtaining control of the board under certain circumstances." . Petitioners further contended that the inspectors' refusal to count the ballots cast by Fort Hamilton while counting the ballot cast by Marine Properties LLC, which was also a holder of unsold shares, was arbitrary, capricious, and unlawful. The court said that such contention was devoid of merit. While it is undisputed that Fort Hamilton owns greater than 50 percent of the shares of BRT, Marine Properties LLC owns only 4.39 percent of the shares of BRT, and has never held 50 percent or more of the shares of BRT. Therefore, since the subject bylaw only applied to any "shareholder who owns greater than 50 percent of the shares of [BRT]," it was plainly inapplicable to Marine Properties LLC.
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