Went to court to have a candidate elected at its own annual meeting declared ineligible to serve, on the theory that a mortgage he took from a holder of unsold shares was "remuneration" from the sponsor.

A tribunal rejected this claim.

300 Ocean Owners Corp. v. Bouskila · 67 AD3d 919 (2d Dept 2009) · App Div 2d Dept · Index 67 AD3d 919

No court has decided whether this conduct occurred. This decision resolved a procedural question. Nothing here is a finding that anyone did anything.

Outcome

Split decision

Filed

Last decision

2009-11-17

Elapsed

yrs

Brought by

board

Posture

special proceeding

What the court held

A cooperative corporation cannot bar the sponsor or a holder of unsold shares from voting for a director unless the director is shown to be on a slate prepared by that holder or to receive a salary or other remuneration from it. Accepting sponsor financing — a mortgage loan from a holder of unsold shares to buy the apartment — does not as a matter of law constitute such remuneration, and there is no basis for treating sponsor-financed purchasers as categorically ineligible to stand for election. Whether a mortgage is "something of value" in the hands of a DEBTOR (as distinct from a creditor) is fact-specific, and on an undeveloped record no declaration of eligibility may issue in either direction.

“while the sponsor of a cooperative conversion may offer sponsor financing as an incentive to purchase the unsold shares ..., there is no basis for categorizing such purchasers as ineligible to run for election to the Board of Directors on the ground that they received remuneration from the sponsor or holders of the unsold shares”
67 AD3d at 920

Outcome in full

Split, and unresolved on the substance. The Second Department MODIFIED the order below by deleting the declaration that the appellant was not qualified to be elected — the corporation failed to establish remuneration as a matter of law. But it affirmed the denial of his cross motion for a declaration that he WAS qualified, because the record was insufficiently developed. No declaration as to his status could issue at all. finding_against_role NULL: neither side obtained a determination.

What it cost

Not disclosed. No decision in this case states a figure, and we publish no estimate. Why costs are mostly blank.

What would have prevented this

A cooperative corporation spent shareholder money on a special proceeding and an appeal to keep a man elected at its own annual meeting off its own board, and twenty-one months later the courts had determined only that it had not proved its case — not that he was eligible. An election arbitration that resolves candidate eligibility BEFORE the ballot, which is what Florida's DBPR process does, makes this litigation unnecessary rather than merely unsuccessful.

Sources

Read in full and verified 2026-08-04.

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