David Blumenfeld and Dogwood Residential, LLC, in its own right and derivatively on behalf and in the right of Stable 49, Limited, Plaintiffsv.Stable 49, Limited, Kim Youngberg, Marianne Matanic, and Tewfic El-Sawy, each individually and in their official Capacity as members of the Board of Directors of Stable 49, Limited, the Board of Directors of Stable 49, Limited, and Damian Cavaleri, individually, Defendants-and-Stable 49, Limited,Nominal Defendant on the derivative claim
DECISION AND ORDER The following efiled documents filed with NYSCEF were reviewed in connection with this decision and order: documents 26-46 (motion sequence 002) and documents 74-109 and 111-115 (motion sequence 003). Motion sequence nos. 002 and 003 in this action (the 2017 action) are hereby consolidated for disposition.Defendant cooperative corporation, Stable 49, Limited (Stable), moves (motion sequence no. 002) for an order, pursuant to CPLR 3013, and CPLR 3211 (a) (1), (4), (5), and (7), dismissing the original 2017 complaint, with prejudice, and requesting sanctions in the form of a monetary fine and/or the imposition of a filing injunction against plaintiffs, proprietary lessee/shareholder Dogwood Residential, LLC (Dogwood LLC) and David Blumenfeld (Blumenfeld), a trustee of one of the two trusts, Dogwood Realty Group and Boxwood Realty Group, that comprise Dogwood LLC’s sole members. Peterson affidavit in support of motion to dismiss amended 2017 complaint, exhibit 4, Occupancy agreement. Following service of that motion, plaintiffs served an amended 2017 complaint as of right, asserting individual causes of action and derivative causes of action on Stable’s behalf, and naming as defendants Stable, both individually and nominally, proprietary lessees Marianne Matanic (Matanic), Kim Youngberg (Youngberg), and Tewfic El-Sawy (El-Sawy), all individually and in their capacities as members of Stable’s three-member board of directors (the Board) from an unspecified date in 2016 until January 10, 2018,1 the Board, and proprietary lessee and Stable officer Damian Cavaleri (Cavaleri) individually. The service of the amended 2017 complaint renders the original complaint of no consequence, and, thus, the branch of defendants’ motion to dismiss the original 2017 complaint is denied as moot. Plaintiffs’ service of the amended 2017 complaint triggered Stable’s instant motion (sequence no. 003), which seeks dismissal of the amended 2017 complaint on the same grounds as urged with respect to the original 2017 complaint, and again requests sanctions.Factual and Procedural BackgroundMuch of the factual and procedural history of this action, which involves a 125-year old landmark building that was converted in the late 1980s from a stable to a 10-unit residential cooperative apartment building (the building), are set forth in this Court’s decisions on motion seq. nos. 001 and 002 in plaintiffs’ related 2015 action (index no. 157621/2015) and in the Appellate Division, First Department’s determination of Stable’s appeal of the latter decision (see Dogwood Residential, LLC v. Stable 49, Ltd., 159 AD3d 490 [1st Dept 2018]), and are deemed incorporated herein. Additional relevant factual and procedural history is set forth below.In or about 1995, Yoko Ono (Ono), for her son’s benefit, purchased 30 percent of Stable’s outstanding shares, which entitled her to a proprietary lease2 for the approximately 5,700 square-foot cooperative penthouse apartment (the Apartment) in the building, which also contains nine substantially smaller units. As is relevant, the proprietary lease describes three of those nine units, G-1, G-2, and G-3 (cellar units) as duplex garden apartments, each having an upper level with a powder room (a bathroom without a tub or shower), kitchen, and living room, a lower level with a full bathroom, a bedroom, a recreation room, and sliding doors leading to a garden/terrace, and each level having an entry into the building’s hallway. Peterson affidavit in support of motion to dismiss the 2017 amended complaint, exhibit 2, Proprietary lease,7 (c) (h). Id. The proprietary lease does not specify which of the building’s floors comprise those two levels, but it is claimed in this action that the lower level is in the cellar.The Apartment mainly comprises the building’s entire fourth floor, includes the exclusive use of the entire roof, a roof deck, a large two-section residential portion of that Apartment which protrudes through the roof, and a private elevator terminating at the fourth floor. Ono’s son lived in the Apartment for several years but, by the fall of 2013, it had been vacant for more than a decade. In October 2013, Ono, who wished to sell the Apartment, sued Stable and its then Board members/shareholders, i.e., Matanic, a third-floor resident, Youngberg, a cellar unit resident, and Phillip Frank (Frank), who resided in a second floor unit. Peterson affidavit in support of motion to dismiss amended 2017 complaint, exhibit 1, Amended 2017 complaint,118. Ono asserted claims based on Stable’s alleged failures to repair the elevator and a leaky roof, which issues she alleged were structural and, therefore (unless certain exceptions existed), Stable’s responsibility under the proprietary lease. Complaint, Ono v. Stable, index no. 653582/2013, NYSCEF Doc. 1.Ono also asserted that the Apartment was uninhabitable and in need of major renovations. She alleged that the alterations which any purchaser would wish to make to the Apartment would, given its size, take a long time and inconvenience the other shareholders, including the Board members who lived in the building, especially Matanic, one of three third-floor residents who lived directly under the Apartment. Ono thus alleged that the Board members discriminated against her by enacting new rules requiring all lessees’ construction/alterations projects to be completed within 120 days, so as to intentionally discourage anyone from buying her shares, since it was impossible to renovate the Apartment within that abbreviated period. As a result, Ono claimed that she lost a $6.6 million purchaser.In November 2013, about a month after Ono commenced her action, Blumenfeld3 entered into a contract with her, contingent on Stable’s consent, to purchase the Apartment for $8.3 million, indicating that he and his three sons, Lucas, Max; and Jack, were the “proposed occupants.” Peterson affidavit in support of motion to dismiss amended 2017 complaint, exhibit 5, Youngberg affidavit, exhibit 2. Ono represented in that contract’s rider that, other than her aforementioned lawsuit, she was unaware of any pending litigation against the Apartment, its shares, the lease, or the property. Id., rider,47. The rider further indicates that the sale was “as is,” that Ono was only aware of a leak in the kitchen, and that she was unaware of any other water infiltration for the two years prior to the contract date, of any mold issue, and, other than the roof and the elevator, of anything else that would give rise to the seller’s obligation to make repairs. Id.,
