Preview
FILED: NEW YORK COUNTY CLERK 01/16/2024 02:41 PM INDEX NO. 159110/2023
NYSCEF DOC. NO. 141 RECEIVED NYSCEF: 01/16/2024
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
In the Matter of
JORDAN BARDACH, Index No. 159110/2023
Petitioner, NOTICE OF APPEAL
-against-
ANNA MARTYNOVA,
JENNIFER MILOSAVLJEVIC,
YOEL HERSHKOWITCH,
ARON WOLOCOWITZ, and
Respondents,
RENTABILITY, INC.,
Nominal Respondent.
PLEASE TAKE NOTICE that respondents Anna Martynova, Jennifer Milosavljevic,
Yoel Hershkowitch, and Aron Wolocowitz hereby appeal to the Supreme Court of the State of
New York, Appellate Division, First Department, from each and every part of the Decision &
Order (NYSCEF No. 137) of the Supreme Court of the State of New York, New York County (J.
Schecter, J.), dated December 18, 2023, and entered with the New York County Clerk on
December 18, 2023, which granted petitioner petition to invalidate the
September 1, 2023, Board Meeting of Rentability Inc., and for related declaratory and injunctive
relief and denied respondents cross-petition to invalidate the September 5, 2023 Board, Meeting
of Rentability Inc., and for related declaratory and injunctive relief.
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Dated: New York, New York
January 16, 2024
By: ______________________________________
Paul H. Aloe
Jacob S. Reichman
KUDMAN TRACHTEN ALOE POSNER LLP
488 Madison Avenue, 23 rd Floor
New York, New York 10022
Tel: (212) 868-1010
paloe@kudmanlaw.com
jreichman@kudmanlaw.com
Attorneys for Respondents
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FILED:
FILED NEW YORK COUNTY
NEW YORK COUNTY CLERK
CLERK 01/16/2024
12 /18 02:41 PM INDEX
INDEX NO. 159110/2023
NO. 159110/2023
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NYSCEF
NYSCEF DOC.
DOC. NO.
NO. 141
138 RECEIVED
RECEIVED NYSCEF: 01/16/2024
NYSCEF: 12/18/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
___...___-...______..____._..____.._..__________x
In the Matter of
JORDAN BARDACH, Index No.: 159110/2023
Petitioner, NOTICE OF ENTRY
- against -
ANNA MARTYNOVA,
JENNIFER MILOSAVLJEVIC,
YOEL HERSHKOWITCH,
ARON WOLOCOWITZ, and,
Respondents,
RENTABILITY, INC.,
Nominal Respondent.
..-----_..----_..-_..--..-_.._...--..-_..---------X
PLEASE TAKE NOTICE that the attached is a true of a Decision and Order
copy
issued by the Hon. Jennifer G. Schecter, dated December 2023 and entered in
18, the Office of
the Clerk of the County of New York on December 2023.
18,
Dated: New York, New York
December 18, 2023
LIBERMAN & CANNA LLP
By:
Brett G. Canna
59th
110 East Street, FL 22
New York, New York 10022
beanna@libermancanna.com
Tel. 212.390.8844
Fax. 212.953.3690
Attorneys for Petitioner
To: All Counsel via NYSCEF
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SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY: COMMERCIAL DIVISION
PRESENT: HON. JENNIFER G. SCHECTER PART 54
Justice
---------------------------------------------------------------------------------X INDEX NO. 159110/2023
JORDAN BARDACH,
MOTION SEQ. NO. 001
Petitioner,
-v-
ANNA MARTYNOVA, JENNIFER MILOSAVLJEVIC, YOEL
DECISION + ORDER
HERSHKOWITCH, ARON WOLOCOWITZ, RENTABILITY,
INC.,
Respondents.
---------------------------------------------------------------------------------X
The following e-filed documents, listed by NYSCEF document number (Motion 001) 6, 7, 8, 9, 10, 11, 12,
13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 26, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46,
47, 48, 49, 50, 51, 52, 53, 55, 57, 58, 59, 60, 61, 62, 63, 65, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90,
91, 92, 93, 94, 95, 96, 97, 98, 99, 115, 125, 126, 131
were read on this motion to/for MISC. SPECIAL PROCEEDINGS .
Nominal respondent Rentability, Inc. (Rentability) is a New York not-for-profit
corporation that was formed in 2018 to act as an Administering Agent for the New York
City Department of Housing Preservation & Development (HPD). Rentability's bylaws
provide that it is to be governed by a board of at least three directors (see Dkt. 81 at 2). The
bylaws further provide that a director may resign at any time by giving written notice to
the Board of Directors or to an officer of the Corporation, that unless otherwise specified
in the notice, the resignation shall take effect upon receipt thereof by the Board of
Directors or such officer and that acceptance of such resignation shall not be necessary
to make it effective (id. [emphasis added]).
The original three directors were petitioner Jordan Bardach, who also is the President of
Rentability, and non-parties Martin Feinberg and Mary Knauf. In February 2019, Feinberg
and Knauf resigned from the board. Bardach remained the only director until September
2019, when he appointed respondents Anna Martynova and Jennifer Milosavljevic to the
board.
In the summer of 2022, Bardach and non-party Isaac Katz began having disputes
concerning a related company, City5 Consulting, LLC (City5). Martynova, who is
employed by City5, has aligned herself with Katz (see Dkt. 79 at 3 [explaining why Katz
is not a board member]).
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Motion No. 001
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In July and August 2022, Martynova sent multiple emails to Milosavljevic, urging her to
sign Rentability's compliance package, which was required by HPD semiannually and was
Milosavljevic contribution while on the board (Dkt. 82 at 2-5; see Dkt. 131 at
110). On August 21, 2022, Milosavljevic finally responded with the following email on
which Bardach was copied:
Sorry for the delay. I rarely check this email and have been busy with work.
Unfortunately, I am unable to sign this time around. In my new position with my
firm, I'm not allowed to enter into any contracts (especially RE-related or
concerning HPD with whom we deal) that could have any liability or exposure for
liability. I signed an employment agreement and an exclusivity agreement with my
new firm to this effect not to mention the restrictions contained in the firm's
malpractice insurance policy. I understand it wouldn't be in my capacity as an
attorney, but I never really understood what my role was concerning Rentability.
With The Price Law Firm, I was an equity partner and therefore possessed a much
wider range of latitude concerning what I was able to do outside of the firm. I
apologize for any inconvenience this may cause and wish you guys the best of luck
(Dkt. 82 at 1).
After further communications, on September 14, 2022, Martynova sent the following email
to Bardach, copying Katz:
I am afraid that Jennifer no longer can be a part of Rentability due to her new job.
Isaac spoke with Tina [non-party Aleftina Budaeva] and she said she would be ok
with taking over for Jennifer. I can let Jennifer know and we can finalize the
substitution to ensure compliance with HPD on our projects. I spoke to Isaac and he
is available to speak at 12pm today as well to discuss (Dkt. 83 at 2).
Martynova her 2022 conduct unmistakably establish--contrary to her totally
incredible testimony--that she no longer considered Milosavljevic to be on the board. This
is reflected in an affidavit Martynova filed with HPD in October 2022, listing the board
members as herself, Bardach, and Budaeva (see Dkt. 88 at 6).1 Martynova's understanding
that Milosavljevic was not on the board is further confirmed by another affidavit that she
submitted to HPD in April 2023, which only lists herself and Bardach as board members
(Dkt. 90 at 3).
By email to Martynova on August 25, 2023, Bardach called a special meeting to be held at
a Starbucks in the Hamptons on September 5, 2023 (Dkt. 94 at 2). On August 28, 2023,
1
Budaeva was only being considered as a board member and ultimately was never
appointed; nonetheless, Martynova submitted this false affidavit under penalty of perjury
(see Dkt. 79 at 5, 7-8).
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Motion No. 001
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Martynova sent an email to Bardach (without copying Milosavljevic), stating that the
notice was insufficient for failure to include Milosavljevic
her successor is chosen (Dkt. 111).
Two days later, on August 30, 2023, Martynova, who swears that she had no idea that the
purpose of the board meeting was to remove her (see Dkt. 100 at 10 ¶ 41), informed
Milosavljevic of the special meeting, explaining to her that the meeting was for Bardach
at 4-5 ¶ 19). Milosavljevic
believes that Martynova told her that Bardach was trying to get Martynova off the board
(Dkt. 131 at 129). Milosavljevic, who had no involvement with Rentability whatsoever
since at the latest October 2022 (see id. at 110), then conveniently resurfaced and emailed
Bardach that the meeting notice was invalid because it was not sent to her directly (see Dkt.
77). She insisted the need for [her] position
to be considered for replacement due to changing employment circumstances that
cannot, under any circumstances, be construed as a resignation notice Dkt. 78
[emphasis in original]). She insisted that under the bylaws she was obligated to retain her
board position until the Annual Meeting or a successor was ready to assume the role (id.).
Martynova testified that, reschedule the meeting and failure
to notify Milosavljevic, member present
allowing him to summarily remove [her] (Dkt. 100 at 9 ¶ 40). Later that
same day, Martynova sent an email to Bardach and Milosavljevic, purporting to call an
annual meeting--the first one in Rentability's history--on Zoom on September 1, 2023
(see Dkt. 97 at 4). At the September 1 meeting, among other things, a new board was
supposedly elected, composed of Martynova and respondents Yoel Hershkowitch and
Aron Wolocowitz, and Rentability appointed Angelyn Johnson, Esq. as counsel (see Dkt.
113 at 2, 4).
At the September 5 special meeting, which Martynova did not attend, Bardach removed
Martynova from the board due to her misconduct, including her creation and submission
of false business records to HPD 2 and deletion of corporate records (Dkt. 95; see Dkt. 132
at 13).
Bardach commenced this special proceeding on September 18, 2023, seeking a judgment
declaring that Milosavljevic resigned on August 21, 2022, and that the September 1
meeting was invalid as well as related injunctive relief. Respondents answered and cross-
moved for relief to the contrary, including a declaration that the September 5 meeting was
invalid and for related injunctive relief. On November 6, 2023, the court held a hearing
(see Dkt. 131), after which the parties filed post-hearing briefs (Dkts. 132-134).
2
Martynova also submitted documents for notarization purportedly on behalf of Bardach,
which he did not sign (Dkt. 79 at 11-12; see Dkt. 86).
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Martynova and Milosavljevic were not credible witnesses. Their testimony was
inconsistent with what actually happened, their stories made no sense and their demeanor
reflected a lack of truthfulness. It is clear that Milosavljevic intended to and did resign in
August 2022 (despite her after-the-fact insistence otherwise) and that all of the parties
operated as such for over a year. Martynova omission of Milosavljevic as a board
member on both HPD affidavits that she submitted after the resignation email is clear and
convincing proof that the parties all considered her to have resigned. The authority
respondents cite suggesting that a resignation requires more formality or that a director
remains on the board until a replacement is elected does not actually so hold and would be
inconsistent with the bylaws here, which expressly provide that a resignation notice takes
immediate effect.
Thus, nothing about the September 1 meeting was valid.
Initially, the September 1 meeting was unauthorized. Since there had been no such
meeting ever before, there was nothing regular about the September 1 meeting and it
cannot be considered an annual meeting under the terms of the bylaws. This conclusion is
compelled by the bylaws' description of an annual meeting as one whose time and place
has been "fixed" by the board (see id.). There is no evidence that the board ever fixed a
time for an annual meeting (see N-PCL § 710[b]), and there is nothing in the bylaws
providing Martynova with the unilateral right to do so.
September 1 meeting can only be characterized as a special meeting
(called after and intended to preempt the September 5 meeting), and only Bardach, as
President, could call such a meeting absent a direction from "a majority of the directors
then in office" (see Dkt. 81 at 3). N-PCL § 710(c) is clear that a corporate officer can only
call a meeting "as provided in the by-laws" and Rentability's bylaws did not permit
Martynova to do so.
Next, there was no quorum at the September 1 meeting (since only one of two directors
was present), and so the votes taken at that meeting are void (Sealey v American Soc. of
Hypertension, Inc., 26 AD3d 254, 255 [1st Dept 2006]; see Dkt. 81 at 3 ["Except to the
extent herein or in the Certificate of Incorporation of the Corporation provided, a majority
of the entire members of the Board of Directors shall constitute a quorum"]). Moreover,
"vacancies in the Board of Directors may be filled by a vote of majority of the Board of
Directors then in office" and since on September 1 there were only two board members
(Martynova and Bardach) there were insufficient votes at that meeting to fill board
vacancies (see id. at 2).
By contrast, the September 5 meeting was permitted by the bylaws and Martynova, who
chose not to go to the meeting, was duly removed (see Dkt. 81 at 3 ["At any meeting held
to remove one or more directors a quorum shall consist of a majority of the directors present
at such meeting"]). The location was irrelevant (see N-PCL § 710[a] ["Meetings of the
board, annual, regular or special, may be held at any place within or without this state,
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unless otherwise provided by the certificate of incorporation or the by-laws"] [emphasis
added]; see also Dkt. 81 at 3 ["The notice of any meeting need not specify the purpose of
such meeting"]). Bardach, moreover, had ample cause to remove Martynova from the
board (see also Dkt. 79 at 9-10, 13-15). Indeed, Martynova admitted her misconduct
during the hearing by acknowledging that she herself knowingly submitted a false
certification about the board members of Rentability to HPD that was made under penalty
of perjury (see Dkt. 131 at 157-70).
Martynova's due process arguments are rejected. The evidence established, at the very
least, that she was well aware that going to be taken against her;
yet, she chose not to attend (perhaps, at that time, wrongly believing that Bardach was no
longer on the board). Furthermore, the cases that she relies on are inapposite. For instance,
Board of Managers of Townhomes of Eastbrooke Condominiums One, Two & Three v
Padgett (185 AD2d 650 [4th Dept 1992]) did not involve a not-for-profit corporation and
cited a Court of Appeals case, Matter of Koch (257 NY 318, 324 [1931]), whose holding
was based on unique notice language in the Religious Corporations Law. Reliance on
Capossela v Wykagyl Country Club (258 AD2d 522, 523 [2d Dept 1999]) and Ellis v
Broder (11 Misc 3d 534, 536 [Sup Ct, NY County 2006]) also is misplaced, as those
determinations turned on specific notice language in the bylaws that is not included in
Rentability's bylaws. Notably, the Second Department did not premise its holding on a
purported common law rule requiring notice, but rather was clear that the violation was the
failure to comply with the bylaws (see Capossela, 258 AD2d at 523). Here, the actions
taken at the September 5 meeting were consistent with the bylaws. In addition, Martynova
admitted under oath that she filed false statements with HPD. That is not even contested.
Based on that admitted serious misconduct Martynova has no business being on the board
of a regulated not-for profit company. Martynova is urged to consider retaining
independent counsel in light of the possible criminal and regulatory implications that may
flow from this action. Her admissions during the hearing were shocking. The court
assumes that her counsel ensured that she provided informed consent to their continued
representation since they filed a post-hearing brief on her behalf.
Furthermore, Ms. Johnson was never validly retained to represent Rentability. She clearly
was retained to represent the interests of Katz, who has been dictating respondents' actions
and using this case to gain collateral advantages in the City5 litigation. While the court
has grounds to entirely disregard her submissions, nothing she argued would have changed
the court's decision. The court, of course, assumes that she will comply with her ethical
duties as a result of this decision.
Martynova's removal from the board and notification of HPD of these proceedings satisfies
the court that measures are being taken to right the ship. Whether they are sufficient is
ultimately up to HPD. To be sure, the court has concerns about Bardach being in sole
control of Rentability going forward. But since respondents are no longer directors of
Rentability, they lack standing to assert further claims regarding its governance, such as
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the validity of actions taken with only one director. Of course, there is no reason to assume
that Bardach would not promptly comply with the requirement in the bylaws to appoint
replacement directors especially given all that has occurred. Presumably, this is something
HPD would require and will pay attention to.
Respondents' other arguments are unavailing.
Accordingly, it is ORDERED that the petition is granted, the cross-petition is denied, and
petitioner shall e-file and email the court a Word version of a proposed judgment within
one week.
12/18/2023
DATE JENNIFER G. SCHECTER, J.S.C.
CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION
X GRANTED DENIED GRANTED IN PART OTHER
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Motion No. 001
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