The board, management, staff, and residents of a large Manhattan co-op suffered the harassing conduct of a shareholder but delayed legal action for many years. As the misconduct continued and spread to yet another category, the board decided that it could not delay any longer using the Pullman doctrine to terminate the shareholder’s proprietary lease. The board faced the daunting task, however, of securing the approval to move forward from two-thirds of its shareholders, even though the board struggled, as many do, to secure the presence of a majority of its shareholders at its annual meetings.
Worse yet, the board decided that it must act as the November and December holidays rapidly approached, and many shareholders would be focused on them, if not away altogether – and possibly having the holidays cast the harassing shareholder in a sympathetic light. The board decided to proceed nonetheless, and mostly within the confines of those holiday months, gathered and set forth in writing precise details of scores of harassing events, and other events of misconduct, as reported by more than 20 individuals, and formally presented them for votes first by the board itself, and next by the shareholders.
The board vote for termination was, not surprisingly, unanimous, with one abstention. But it was the shareholder vote that was particularly noteworthy. After reviewing the events and misconduct that the board presented, the termination was approved by the holders of more than 90 percent of the co-op’s shares. And soon afterward, the harassing shareholder communicated her willingness to vacate her apartment without requiring the co-op to prosecute.
The boards of large co-ops can secure super-majority votes of shareholders for Pullman-type proprietary lease terminations, but they should attempt to do so only if they are fully committed to the substantial and varied work that this will entail, including gathering information, soliciting proxies, and conducting the necessary meetings. If the shareholders sense a lack of commitment, they also might begin to doubt the validity of the grounds underlying the board’s request that they vote for termination.
Co-op shareholders might not always be so content with their board representatives, but they also will not tolerate a harassing shareholder. These shareholders realize that co-ops face far too many hurdles already, so at the very least it’s expected that they all will treat one another with a decent level of civility and cooperation. Even a harassing shareholder might get the message if a very high percentage of her fellow shareholders decides that she is no longer wanted as a resident of the co-op’s building. This shareholder’s offer to move out following such a vote was perhaps because she felt as Groucho Marx did when he resigned from the Friar’s club: “I don’t want to belong to any club that will accept people like me as a member.”