Dale J. Degenshen in Legal/Financial on May 13, 2019
Today we offer a case study of what happens when factions fight over control of a condo board. It is not pretty.
Golf View is a condominium on Staten Island made up of 61 homes. In early 2017, two members of its seven-person board of managers resigned. The bylaws of the condo allowed the board to fill vacancies between annual elections. A special board meeting was called and held on November 1, 2017, at which the then-secretary of the board, Jason Trazoff, was elected president, and the two vacant positions were filled, one by Harlene Factor.
Some board members challenged the validity of the meeting. The November 1 meeting had been called by Trazoff, who was board secretary at the time. However, according to the condominium’s bylaws, a special meeting can be called only by the president of the board with three days’ notice, or by the secretary of the board with the written request of three board members. Neither of these conditions was met.
In addition, Trazoff sent notices of the meeting by email, when the bylaws required notice by mail or telegraph. Finally, he sent notices to the two board members who had previously resigned – the two people whose seats were supposed to be filled at the meeting. One of the two former board members actually came to the meeting and voted, which was doubly incorrect, as non-board members should not have been given notice of the meeting and certainly should not have voted. As a result of these infractions, the board demanded that Trazoff and Factor not hold themselves out as members of the board.
This issue could have been resolved by a unit-owner vote for board members at either a special meeting or the annual meeting if the factions could have agreed to hold a meeting.
The Trazoff/Factor faction had issued notices that a unit-owners’ meeting would be held on August 4, 2018. These notices were never authorized by the full board, and other board members issued a notice stating that the August special meeting was not authorized, would not be in conformity with the bylaws, and would thus not be valid. The notice, which was posted within the condominium, also stated that a meeting would be held on September 14, and that the Honest Ballot Association would run the election at that meeting.
The Trazoff/Factor group tore down notices of the September meeting and held its own meeting on August 4. Trazoff and Factor determined that they were elected as board members and attempted to fire the managing agent, who refused to accept the termination.
The September meeting never took place. Trazoff and Factor filed suit against the condominium, and motions were heard by the court in October. The court determined that the original November 1, 2017, board meeting was improperly noticed and thus improperly held – it was not called in accordance with bylaw requirements. The August 4, 2018, meeting similarly was not authorized because the board that called the meeting – the one which claimed to be in place as of the November 1 meeting – was never properly constituted and thus lacked the authority to call a unit-owners’ meeting. The court ordered that a special meeting of unit-owners be held in April 2019. The meeting was later postponed by the court until September 2019.
As this case demonstrates, a failed 2017 designation of board members has spawned a two-year fight for control. During these two years, it appears that there was havoc – most notably one faction attempted to terminate the managing agent. And while it appears that a working board is now in place, there has to be uncertainty until an election is held.
This case reminds us that, while boards should always act in accordance with their building’s governing documents, when there is a battle between factions, it is imperative that scrupulous attention be paid to those documents. To do otherwise subjects any “board” action to challenge.
Dale J. Degenshein is special counsel at Stroock & Stroock & Lavan.
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