Opinion
No. 2021-04048 Index No. 603550/19
05-22-2024
Sikh Forum, Inc., Plaintiff, v. Maan S. Saluja, et al., Defendants Third-Party Plaintiffs-Appellants, et al., Defendants; Maninder Sethi, et al., Third-Party Defendants-Respondents.
Harris Law Firm, Rockville Centre, NY (Sondra I. Harris of counsel), for defendants third-party plaintiffs-appellants. Ran Mukherjee, P.C., Brooklyn, NY, for third-party defendants-respondents.
Harris Law Firm, Rockville Centre, NY (Sondra I. Harris of counsel), for defendants third-party plaintiffs-appellants.
Ran Mukherjee, P.C., Brooklyn, NY, for third-party defendants-respondents.
COLLEEN D. DUFFY, J.P., WILLIAM G. FORD, DEBORAH A. DOWLING, LOURDES M. VENTURA, JJ.
DECISION & ORDER
In an action for declaratory and injunctive relief, the defendants third-party plaintiffs appeal from an order of the Supreme Court, Nassau County (David J. Gugerty, J.), entered May 14, 2021. The order granted the third-party defendants' motion pursuant to CPLR 3211(a) to dismiss the third-party complaint.
ORDERED that the order is modified, on the law, by deleting the provision thereof granting those branches of the third-party defendants' motion which were pursuant to CPLR 3211(a) to dismiss the second and third causes of action of the third-party complaint, and substituting therefore a provision denying those branches of the motion; as so modified, the order is affirmed, with costs to the defendants third-party plaintiffs, and the third-party action is severed and converted into a special proceeding pursuant to Not-for-Profit Corporation Law §§ 618 and 621.
In March 2019, Sikh Forum, Inc. (hereinafter Sikh Forum), a not-for-profit corporation that owns and operates a gurdwara, or Sikh temple, commenced this action, inter alia, alleging that the defendants held a sham meeting in which they claimed to have elected themselves as the board of trustees of Sikh Forum. Thereafter, in June 2020, certain members of Sikh Forum who had been named as defendants in the action commenced a third-party action against certain alleged officers and/or members of the board of directors of Sikh Forum. The third-party complaint sought damages for breach of fiduciary duty, a judicial declaration with regard to the election that was the subject of the main action commenced by Sikh Forum, and injunctive relief compelling the third-party defendants to provide access to certain books and records which previously had been demanded. The third-party defendants moved pursuant to CPLR 3211(a) to dismiss the third-party complaint for lack of standing. In an order entered May 14, 2021, the Supreme Court granted the third-party defendants' motion. The defendants third-party plaintiffs appeal.
"On a defendant's motion to dismiss the complaint based upon the plaintiff's alleged lack of standing, the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing as a matter of law" (U.S. Bank N.A. v Marrero, 221 A.D.3d 631, 633 [internal quotation marks omitted]; see Wilmington Sav. Fund Socy., FSB v Matamoro, 200 A.D.3d 79, 90). "To defeat a defendant's motion to dismiss, the plaintiff has no burden of establishing its standing as a matter of law, but must merely raise a question of fact as to the issue" (Sizova v Union Mut. Fire Ins. Co., 217 A.D.3d 1007, 1008 [internal quotation marks omitted]; see Wilmington Sav. Fund Socy., FSB v Matamoro, 200 A.D.3d at 90).
Under Not-for-Profit Corporation Law § 623(a), a derivative action "may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor by five percent or more of any class of members" (see Feliciano v Seabrook, 214 A.D.3d 711, 712). Here, the third-party defendants established, prima facie, that the defendants third-party plaintiffs lacked standing to assert a derivative claim of breach of fiduciary duty on behalf of Sikh Forum by demonstrating that the defendants third-party plaintiffs did not represent five percent or more of any class of members of Sikh Forum. In opposition, the defendants third-party plaintiffs failed to raise a question of fact (see N-PCL 623[a]; Sizova v Union Mut. Fire Ins. Co., 217 A.D.3d at 1008; Feliciano v Seabrook, 214 A.D.3d at 713). Accordingly, the Supreme Court properly determined that the defendants third-party plaintiffs lacked standing to bring a a claim of breach of fiduciary duty derivatively on behalf of Sikh Forum (see Tae Hwa Yoon v New York Hahn Wolee Church, Inc., 56 A.D.3d 752, 755; see also Schaefer v Chautauqua Escapes Assn., Inc., 158 A.D.3d 1186, 1187).
However, the Supreme Court should not have directed dismissal of the second cause of action of the third-party complaint, which asserted individual claims for declaratory relief with regard to the election of new officers and directors (see N-PCL 618). Likewise, the third cause of action of the third-party complaint asserted individual claims seeking injunctive relief to compel the production of certain books and records of Sikh Forum (see id. § 621[b], [d]) and the court should not have directed dismissal of that cause of action for lack of standing (see CPLR 3211[a][3]; Matter of Smith v Calvary Baptist Church, 35 A.D.3d 749, 750; see also Tae Hwa Yoon v New York Hahn Wolee Church, Inc., 56 A.D.3d at 754).
Although the defendants third-party plaintiffs did not bring the third-party action as a special proceeding pursuant to the Not-for-Profit Corporation Law, "[g]enerally, where an action or proceeding is brought in the wrong form or under an inappropriate statute, the court, in its discretion may deem it brought in a proper fashion, thus avoiding a dismissal" (Tae Hwa Yoon v New York Hahn Wolee Church, Inc., 56 A.D.3d at 755 [internal quotation marks omitted]; see Jackson v Bank of Am., N.A., 149 A.D.3d 815, 818). Accordingly, we convert the third-party action into a special proceeding pursuant to Not-for-Profit Corporation Law §§ 618 and 621 (see Tae Hwa Yoon v New York Hahn Wolee Church, Inc., 56 A.D.3d at 755; Esformes v Brinn, 52 A.D.3d 459, 460).
DUFFY, J.P., FORD, DOWLING and VENTURA, JJ., concur.