William Geller Successfully Defends Mitchell-Lama in Five Board Eligibility/Removal Cases

Since September 2021, a large Mitchell-Lama cooperative in upper Manhattan has been involved in five separate cases brought by present or former directors about whether they were properly removed from the Board and whether other Board members are eligible to serve. Braverman Greenspun of counsel William Geller successfully defended the co-op in each of the five cases, defeating the Board members’ claims that the co-op acted improperly.

In two of the cases, the Board had removed directors after finding that they had improperly disclosed confidential shareholder information. In another case, the Board had removed a director after finding that she had received a gratuity or kickback from a contractor. In these three cases, Bill secured the dismissal of the removed directors’ petitions for reinstatement. The court found that the Board had followed proper procedures for removal under the co-op’s by-laws and that the court would not interfere with the Board’s exercise of its business judgment in removing the directors.

The other two cases were derivative actions, which challenged the eligibility of a Board member to serve as a director and sought injunctions preventing the Board from counting the vote of the allegedly ineligible director. In both cases, Bill obtained the denial of preliminary injunctions. The court held that the allegations of ineligibility were insufficient to bar the challenged director from acting without the Board removing the director or having the Department of Housing Preservation and Development, which supervises Mitchell-Lama co-ops, adjudicate the director to be ineligible. After the injunctions were denied, the plaintiffs discontinued both cases.