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RPO decision April 2013

RPO decision April 2013

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Published by chrisatcity
Justice Kenneth Fisher's decision in a lawsuit to invalidate RPO's annual meeting.
Justice Kenneth Fisher's decision in a lawsuit to invalidate RPO's annual meeting.

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Published by: chrisatcity on Apr 15, 2013
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05/28/2014

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STATE OF NEW YORKSUPREME COURTCOUNTY OF MONROE______________________________________In re Eileen E. Buholtz on behalf ofROCHESTER PHILHARMONIC ORCHESTRA, INC.,Petitioner, DECISION AND ORDERv.Index #2013/01909ROCHESTER PHILHARMONIC ORCHESTRA, INC.,William E. Cherry, Patrick Fullford,Marie Kenton, Dawn F. Lipson,Katherine T. Schumacher, Mark Siwiec,Ingrid A. Stanlis, and Dr. Eugene Toy,Respondents._____________________________________Petitioner, a member of the RPO as of December 19, 2012,brings this proceeding pursuant to Not for Profit Law (“N-PCL”)§618 seeking to overturn the January 23, 2013 election ofdirectors at the annual meeting of members of the RochesterPhilharmonic Orchestra, Inc. (“RPO”). Petitioner also asserts asa second cause of action that the RPO failed to provide her witha list of members entitled to vote at the annual meeting andrefused to provide members’ contact information which petitionerasserts she is entitled to pursuant to N-PCL §621.Not for Profit Corporation Law §618 provides:Upon the petition of any member aggrieved byan election and upon notice to the personsdeclared elected thereat, the corporation andsuch other persons as the court may direct,the supreme court at a special term heldwithin the judicial district where the officeof the corporation is located shall forthwithhear the proofs and allegations of the1
 
parties, and confirm the election, order anew election, or take such other action asjustice may require.As well stated in an earlier Supreme Court decision applyingthis statute, “[t]he court has broad equitable powers and maydirect a new election where the election under review is ‘soclouded with doubt or tainted with questionable circumstancesthat the standards of fair dealing require the court to order anew, clear and adequate expression.’" In re F. I. G. H. T.,Inc., 79 Misc.2d 655, 659 (Sup. Ct. Monroe Co., 1974). However,the court “should not interfere in the internal affairs of acorporation of this character unless a clear showing is made towarrant such action.” Id., citing Matter of Wyatt v. Armstrong,186 Misc. 216, 220 (Sup. Ct., N.Y. Co., 1945), quoted in Scipioniv. YMCA of Rochester and Monroe Co., 105 A.D.2d 1113 (4 Dept.
th
1984). “[I]n the absence of any appearance of fraud orintentional wrongdoing, courts usually direct new elections onlywhen correction of an alleged grievance would affect the resultof the election.” Blanksteen v. New York Mercantile Exch., 879F. Supp. 363, 367 (S.D.N.Y. 1995)(citing In re Election Officersand Directors of F.I.G.H.T., Inc., 79 Misc.2d 655, supra; Burkev. Wiswall, 193 Misc. 14 (Sup. Ct. Ulster County 1948).“Furthermore, election procedures for not-for-profit corporationsare not to be disturbed without a showing that an election wastainted by fraud or wrongdoing.” Parisi v. N.Y. Co. Med.
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Society, 177 A.D.2d 369, 370 (1 Dept. 1991)(emphasis supplied).
st
Initially, although respondents assert in their answer thatpetitioner lacks standing to raise the issues asserted in herpetition, respondents admit that §618 allows an aggrieved memberto seek relief [Resp. Mem. Law., n. 1] and present no argumentsthat petitioner is not aggrieved within the meaning of thestatute. “[E]very member has a presumptive interest in thelegality of members’ meetings.” 6 White, New York BusinessEntities, ¶618.01 (citing In re Lake Placid Co., 274 App. Div.205, 208 (3d Dept. 1948)(“any stockholder has a presumptiveinterest in the legality of votes cast at a stockholder’smeeting,” construing N-PCL §618's predecessor statute, section 25of the General Corporation Law). “A defeated candidate forelection is, of course, an aggrieved person.” 6 White, New YorkBusiness Entities ¶618.01 (citing Cuva v. United States TennisAss'n, 13 Misc.3d 1221(A), 2006 WL 2918215 (West. Co.2006)(Lippman, J.)(candidates defeated by the election incontroversy had standing to bring Section 618 proceeding). Atthis point, the court considers petitioner a “candidate” only forthe purpose of standing in the sense that she complains that shewas not elected to a directorship position. The legality of hercandidacy under the by-laws is considered separately below.At the January 23, 2013 annual meeting of members of theRPO, eight candidates nominated by the RPO Governance Committee
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