Q&A: Problem Board Members

Q I’m currently the vice president for our co-op, a 334-unit community on Long Island. We’re having difficulties with two of our board members. One has been on the board for five years, and has been very destructive. For example, this board member accuses other board members of being corrupt, and our sponsor of manipulating the board, etc. Whenever the board member is confronted for proof, it can never be supplied. The board member also threatens everyone with lawsuits. This individual is also harassing our maintenance crew. The second board member follows in this person’s footsteps, and both their behavior is escalating. We are at a loss as to what to do. Our bylaws state that a two-thirds vote must come from the community in order to remove someone from the board, but this will be nearly impossible, as a large number of our shareholders do not take part in the voting process. Are there any other venues we could take?

—Long Island Board Member

A According to John Van Der Tuin, an attorney and partner at Balber Pickard Battistoni Maldonado & Van Der Tuin, who specializes in complex litigation, “Developing a productive culture of board conduct is a recurring issue for cooperative and condominium boards, particularly given the lack of corporate or organizational experience of many board members. The board must operate as a group that balances assertion of individual opinions and expertise with respect for the views and responsibilities of all board members. You may find it useful to consult available guidelines for board conduct such as the detailed Corporate Director’s Guidebook (4th Ed.), published by the Committee on Corporate Laws of the American Bar Association, or the much shorter, Board Best Practices memorandum, prepared by our firm for our cooperative and condominium’s general counsel and ask him or her to counsel the difficult board member on their role, responsibilities and potential personal liability.

“Your question describes several types of conduct that may cause expense or legal liability for both your cooperative and the difficult board members personally. Accusations of corruption should be reported by the cooperative to its insurance carriers and accountants—to make sure that coverage of potential claims is not lost and that financial reports contain proper disclosure—resulting in potential expense of investigation or increased premiums. Such accusations may also give rise to suits for defamation, resulting in litigation expense and potential corporate or individual liability. Harassment of cooperative employees may give rise to union grievances, expense of investigation or increased premiums. Such accusations may also give rise to suits for defamation, resulting in litigation expense and potential corporate or individual liability. Harassment of cooperative employees may give rise to union grievances, expense from increased employee turnover or suits for discrimination against the corporation and/or the individual directors. None of this is acceptable conduct by a director. If the director believes there is corruption that is being ignored, the proper course of conduct is to resign and report the corruption to other apartment owners or law enforcement authorities. If the director believes employees are not performing properly, the proper course is to report it to the board and to managing agent for corrective action.

“Your cooperative’s bylaws will describe the bases and process for removal of a director, with or without cause. Section §706 of the New York Business Corporations Law (BCL) is also relevant, but depends on the specific provisions of the certificate of incorporation and by-laws. You indicate that you have reviewed the bylaws and that the vote required may be difficult to obtain. You should consult with counsel knowledgeable about cooperative governance to be sure you fully understand the requirements. The directors must also periodically stand for re-election, most typically either annually or every three years. Other board members, or the nominating committee, should act with respect to director candidates who have been disruptive. Do not endorse their re-election. Explain why to the other apartment owners. Nominate and support other candidates.”

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