Thanks to everyone for their help with this post. It was certainly a group effort given all the moving parts.
We were very disappointed with the recent announcement of a 5.75% increase in maintenance fees for 2024. We understand that the Board of Directors has conducted a thorough review of the projected operating budget for the upcoming year and determined that the increase is necessary to support the operation of the corporation. However, we believe that the increase is too high and will place an undue burden on shareholders.
We are mainly concerned about the legal fees incurred by the corporation.
At the Annual Meeting in June, we learned that legal fees were $100,000 (at that point) for a legal battle that has been going on for around 3 years. This raises questions about the Board’s fiduciary relationship with its shareholders. We wonder why a case about a barking puppy has been allowed to be drawn out for so long.
To date, the only information provided has been through Shareholder posts on BuildingLink and as a result of concerns raised at the Annual Meeting. Below are the related posts we were able to find.
BUILDINGLINK POSTS
In May, posts from Shareholder Kenneth Schneider inquired about the ongoing litigation – see the bottom portion of the image below. Shareholder Blanche Zelmanovich responded, providing links to court documents about the case.
Links from above:
New York County Supreme Court – https://iapps.courts.state.ny.us/nyscef/DocumentList?docketId=DPScegZfS0d4DPZYoVm_PLUS_NA==&display=all&courtType=New%20York%20County%20Supreme%20Court&resultsPageNum=1
Appellate Division – 1st Dept – https://iapps.courts.state.ny.us/nyscef/DocumentList?docketId=DdibNXT4HKPOp92HBJuOWg==&display=all&courtType=Appellate%20Division%20-%201st%20Dept&resultsPageNum=1
New York County Civil Court – Landlord And Tenant Division – https://iapps.courts.state.ny.us/nyscef/DocumentList?docketId=GAiuFAX6MiXgqgRUldq/mQ==&display=all&courtType=New%20York%20County%20Civi
Links from above: …three additional lawsuits involving Eastmore Owners Corp. (which can be identified through a search here: https://iapps.courts.state.ny.us/nyscef/CaseSearch?task=new
5-30-2023 The Eastmore – Litigation involving the Eastmore Owners Corp. (image below)
The Eastmore’s 2022 Financial Statement and Supplementary Information for the Year Ended December 31, 2022 and 2021 (Note 11)
Links above can be found earlier in this post.
ANNUAL MEETING
Those attending the Annual Meeting on June 12 were privy to an “interesting” show by the Board’s lawyer when he responded to questions about the litigation. He was belligerent toward those asking questions and said that “every last penny owed by Ms. Zelemanovich would be collected”. Clearly, he showed no intention to resolve the case in a timely manner which is interesting given that the longer the case draws out, the more fees he can charge. It is even more interesting that the Board seems to be on board with that approach.
BUILDINGLINK POST
After the Annual Meeting, Shareholder Mark Haut posted a couple of times on BuildingLink asking detailed questions in follow-up to the Annual meeting about the ongoing litigation and other matters. His General section posts were blocked (not approved) by the Board and when he posted in another area of BuildingLink, his posts were promptly removed. Here is the second of his posts which was related to the ongoing litigation.
That is all the information we have found at this point. We’ve heard nothing over the last 5 months. If you have additional documents or information, please email us. (see Contact page)
We have heard that our Board is retaliatory and question whether the specific call-out of the legal fees in the Maintenance Letter is a form of retaliation and intimidation. “In addition, unfortunately, this year we incurred unanticipated litigation expenses more than our projection.”
The Board of Directors has a fiduciary duty (as they state in the 5-30-2023 The Eastmore – Litigation involving the Eastmore Owners Corp. post above) to act in the best interests of the corporation and its shareholders. Since the Board called out the legal fees specifically, we would urge the Board to be transparent about those fees and to provide a detailed breakdown of how the money was spent. If you agree, please contact the Board via BuildingLink (must be logged in) to let them know your concern.
We hope that the Board will take these concerns seriously and work to address them. We believe that it is important for shareholders to have a voice in the operation of the corporation and to hold the Board accountable for its actions.