O. ALDON JAMES, JR., ETC., plf-res, v. DIANNE BERNHARD def-ap

10002. O. ALDON JAMES, JR., ETC., plf-res, v. DIANNE BERNHARD def-ap — Sercarz & Riopelle, LLP, New York (Roland G. Riopelle of counsel), for ap — Foley & Lardner LLP, New York (Barry G. Felder of counsel), for res — Order, Supreme Court, New York County (Carol R. Edmead, J.), entered January 16, 2013, which denied defendants' motion pursuant to CPLR 1021 to remove plaintiff in this derivative action and substitute the special litigation committee of the board of governors of the National Arts Club ("Club") as plaintiff, unanimously reversed, on the law, with costs, and the motion granted.

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10002. O. ALDON JAMES, JR., ETC., plf-res, v. DIANNE BERNHARD def-ap — Sercarz & Riopelle, LLP, New York (Roland G. Riopelle of counsel), for ap — Foley & Lardner LLP, New York (Barry G. Felder of counsel), for res — Order, Supreme Court, New York County (Carol R. Edmead, J.), entered January 16, 2013, which denied defendants’ motion pursuant to CPLR 1021 to remove plaintiff in this derivative action and substitute the special litigation committee of the board of governors of the National Arts Club (“Club”) as plaintiff, unanimously reversed, on the law, with costs, and the motion granted.

Defendants have established a “persuasive case” that “the proper protection of the corporation’s interest or the proper conduct of the litigation would be better served by the elimination or a change in the identity” of the plaintiff (Tenney v. Rosenthal, 6 NY2d 204, 209-210 [1959]), due to a conflict of interest. Plaintiff was expelled from the Club on whose behalf he is suing and the entire complaint in this derivative action alleges waste of corporate assets and breach of fiduciary duties by defendants, current and former directors of the Club, based entirely on their decision to investigate and expel him. We note that, although a complaint filed against plaintiff by the Attorney General alleging waste and misuse of corporate assets is not proof of any misconduct, it reinforces the existence of a conflict.

O. ALDON JAMES, JR., ETC., plf-res, v. DIANNE BERNHARD def-ap

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