SUPREME COURT OF THE STATE OF NEW YORK" COUNTY OF NEW YORK * -
ALPHONSE FLETCHER, Jr., and IndexNo. H'lOll^ FLETCHER ASSET MANAGEMENT, Date purchased: F^ j 'J_QI\ INC. Plaintiffs designate New York Plaintiffs, County as the place of trial. The basis of venue is plaintiff Fletcher's residence (CPLR 503(a)). v. THE DAKOTA INC., SUMMONS BRUCE BARNES, PAMELA LO V I N G E R , PETER NITZE, Plaintiff Fletcher resides at: One West JOHN RYDZEWSKI, and ANTHONY R. 72'n d Street, Apt. 51, New York, NY SMITH AND GAEL SMITH ARNOLD as County of New York co-executors of THE ESTATE OF RUTH PROSKAUER SMITH,
Defendants.
To the above named Defendants:
YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of appearance, on the Plaintiffs' Attorneys within 20 days after the service of this summons, exclusive of the day of service (or within 30 days after the service is complete if this summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint.
Dated: February 1,2011 New York, N.Y. Attorneys for Plaintiffs:
KCBNSTEIN VEISZ WEXLER & PqifLARD, LM 5 OiAiui ' Daniel J. Komsteiii/Esq.A Defendants' addresses: Ina R. BortBort, ESQ/ 1 757 Third Avenue NEWYOUK The Dakota, Inc. New York, N.Y. 10017 COfJNTY OUffiMB OFFICE 675 Third Avenue (212)418-8600 New York, N.Y. 10017 FEB - 1 2011
MIWOOPYPfLE Bruce Barnes One West 72ndt Street New York, N.Y. 10023
Pamela Lovinger One West 72"^ Street New York, N.Y. 10023
Peter Nitze One West 72 7 nd Street New York, N.Y. 10023
John Rydzewski One West 72nd Street New York, N.Y. 10023
Anthony R. Smith and Gael Smith Arnold, as co-executors of the Estate of Ruth Proskauer Smith c/o Brill & Meisel 845 Third Avenue, 16* Floor New York, N.Y. 1.0022 *sit- SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
ALPHONSE FLETCHER, Jr., and IndexNo. |j \0\1$fl FLETCHER ASSET MANAGEMENT, INC. VERIFIED COMPLAINT Plaintiffs,
THE DAKOTA INC., BRUCE BARNES, PAMELA LOVINGER, PETER NITZE, NEWYOflK JOHN RYDZEWSKI, and ANTHONY R. COUMTY oimm OTOCE SMITH AND GAEL SMITH ARNOLD, as co-executors of THE ESTATE OF FEB-12011 RUTH PROSKAUER SMITH, NOTOGMfWliD Defendants. VWTH COPY RLE
^^ssi Plaintiffs Alphonse ("Buddy") Fletcher, Jr. ("Fletcher") and Fletcher Asset Management,
Inc. ("FAM"), by their counsel Komstein Veisz Wexler & Pollard, LLP, for their verified
complaint against defendants, The Dakota Inc. (the "Dakota," the "Building," or the
"Corporation"), Bruce Barnes, Peter Nitze, John Rydzewski and Pamela Lovinger (the
"Individual Defendants;" together with the Dakota, the "defendants"), as well as the Estate of
Ruth Proskauer Smith (the "Estate") allege as follows:
Nature of the Action
1. This is an action for defamation, tortious interference with contract, breach of
fiduciary duty, aiding and abetting breach of fiduciary duty and unlawful discrimination arising
out of defendants' tortious and unlawful mistreatment of their fellow shareholder and neighbor
Alphonse ("Buddy") Fletcher Jr. ("Fletcher"). As founder and CEO of plaintiff FAM, a
successful investment management firm, Fletcher is a prominent African-American investor and philanthropist. This lawsuit seeks relief as a result of the defendants' acts and statements in
opposing Fletcher's effort to accommodate his growing family by purchasing the apartment next
to his own at the Dakota, a renowned cooperative apartment building located on the Upper West
Side of Manhattan, and restoring the two apartments to their original size and configuration as
one unit. The facts also arise from Fletcher's past efforts to defend the rights of other minority
and female shareholders and applicants at the Dakota.
2. Motivated by unlawful animus and engaging in impermissible self-dealing, the
Dakota, the Individual Defendants and the Dakota's Board of Directors (the "Board") unlawfully
blocked Fletcher's effort to purchase the adjoining apartment after he had already entered into a
contract for the purchase with the apartment's current owner, the Estate of Ruth Proskauer
Smith. In so doing, the defendants not only breached their fiduciary duty to Fletcher by self-
dealing and by failing to treat him in the same manner as other Dakota shareholders, but they
also committed further unlawful acts by spreading demonstrably false, insulting, and inherently
defamatory reports about Fletcher's financial condition, his integrity, and the financial condition
of FAM. The reports included, for example, the false, malicious, and harmful rumors that
Fletcher was either unable or unwilling to satisfy commitments that he had made to various charities, that Fletcher lacked sufficient assets to purchase the apartment and that FAM's financial condition was precarious.
3. More specifically, last spring Fletcher entered into a contract for the all-cash purchase of Apartment 50, with the apartment's owner, free of any financing contingency. Ruth
Proskauer Smith, whose Estate now owns the apartment, was Fletcher's next-door neighbor and friend and had long made clear to her family and other Dakota shareholders that she wanted
Fletcher to purchase the apartment after her death. She wanted this to happen so that Fletcher could restore the two apartments to their original layout as one unit, and so that he could have a
larger residence in the Dakota for his family. Shortly after entering the purchase contract,
Fletcher, following long-established Board procedures, submitted his application for the Board to
approve the proposed transaction.
4. Yet despite Fletcher's great wealth, longstanding responsible behavior as a
Dakota shareholder and his ownership of a highly profitable investment management firm, the
defendants rejected Fletcher's application. In so doing, and in the course of their related
dealings, defendants maliciously and wrongfully impugned Fletcher's reputation, financial
condition and that of his company, FAM, to Board members, Dakota shareholders not on the
Board, and others, including current and potential FAM investors. Although such conduct by a
coop board on the Upper West Side of Manhattan in the beginning of the twenty-first century may seem surprising, this behavior was consistent with the defendants' extensive pattern of hostility toward non-white residents of the Building. Indeed, Fletcher had himself tried to stop such unequal treatment when he served as Board President several years before and he himself had been subjected to it as far back as 1992, when he first sought to purchase an apartment in the
Dakota. This unequal treatment — which several of the individual defendants have long referred to as "the Buddy Rule" —continues to this day, including through ongoing and highly unusual restrictions on Fletcher and his mother's use of their own apartments.
5. After the Board initially indicated its intention to reject his application to purchase
Apartment 50 in April 2010, Fletcher offered numerous times to address any questions or concerns the Board might have regarding his finances and those of FAM. In an attempt to reach an amicable resolution, Fletcher repeatedly attempted to engage in discussions with defendants over the course of many months, to no avail. In addition, Fletcher agreed to submit hundreds of pages of disclosures concerning his own finances and the financial situation of FAM, although the Dakota's established policies — specifically designed to protect existing shareholders from burdensome procedures — clearly did not require this. The Board, however, refused even to ask
Fletcher any questions regarding his extensive submission and instead presented a series of purported concerns about Fletcher and FAM's financial condition. Yet after Fletcher indisputably addressed each issue, the Board came up with purported new concerns and threatened new, unique conditions in connection with its consideration of Fletcher's application to purchase Apartment 50.
6. Despite Fletcher's numerous efforts, it eventually became clear that the defendants would not willingly relent in their determination to block Fletcher's purchase of
Apartment 50, notwithstanding his financial qualifications and past service to the Building. The
Board President went so far as to threaten that the Board would only approve Fletcher's application if Fletcher "won the lottery." Presumably based on the theory that the best defense is a good offense, the Board also falsely and injuriously accused Fletcher of playing the "race card." Indeed, long before Fletcher began to raise concerns about Board misconduct in connection with the handling of his application, the individual defendants sought to undermine
Fletcher by suggesting to Board members and others that Fletcher might, in the future, use his status as an African-American to persuade the Board to approve his application. This baseless allegation caused further harm to Fletcher by raising hostility toward him and diminishing his relationship with other shareholders in the Building.
7. Other Board members' actions confirm the Board's breach of fiduciary duty and other impermissible conduct. On or about November 3, 2010, then-Board member Pamela
Lovinger suddenly resigned from the Dakota Board and announced that she would be listing her
4 own apartment (Apartment 51) jointly for sale with Apartment 50 as an 11-room apartment at a combined price of $19.5 million. On information and belief, Mr. Rydzewski instigated this plan for the joint sale. On information and belief, the other Board members who are individual defendants in this action encouraged Ms. Lovinger to enter this arrangement for a combined purchase based on their belief that such a sale would bring financial benefit to them.
Specifically, the market value of their own apartments at the Dakota - where prices have been significantly depressed, in their view — would increase substantially if such a large sale were to occur within the Building. Indeed, should such a sale occur, Ms. Lovinger will have stolen the economic opportunity wrongfully denied to Fletcher, made even worse by her having served on the Board while it was considering Fletcher's application and thus owing him a fiduciary duty of the highest degree of trust and loyalty. And the other Board members who are individual defendants in this action will have not only aided and abetted her breach of fiduciary duty, but will also have breached their own fiduciary duties to Fletcher. Further, the apartment's current owner also aided and abetted Lovinger's breach of fiduciary duty by co-listing Apartment 50 for sale with Lovinger's own apartment.
8. As concerns Fletcher, the Board has abused its discretion, and can no Ipnger be relied upon to exercise that discretion in a fair and appropriate way.
9. Accordingly, by this action, Fletcher and FAM seek compensatory and punitive damages, including damages for the defamatory statements made and repeated by defendants about Fletcher and his business. Fletcher also seeks interim and final equitable relief. On an interim basis, to preserve the status quo, Fletcher seeks an order that defendant Dakota notify him of any offer to purchase Apartment 50 (either alone or in conjunction with Apartment 51), so that, if necessary, he can enjoin the sale of Apartment 50 to another purchaser. Fletcher further seeks permanent equitable relief requiring defendants to approve his application to
purchase Apartment 50. Finally, Fletcher also seeks to put an end to the discrimination he and
other minority residents have endured over the years within one the City's most expensive and
prestigious cooperative apartment buildings.
10. Plaintiffs had no choice but to sue now, because Apartment 50's current owner,
the Estate of Ruth Proskauer Smith, purported to cancel its contract with Hetcher last week, and
has announced its intention to pursue arrangements with alternative purchasers.
The Parties
Plaintiffs
11. Fletcher has been a resident of the Dakota and a shareholder of the Corporation
since 1992. He currently lives in Apartment 52. Fletcher previously served on the Dakota Board for a number of years, including two terms as Board President during the period 2007-2009. As
a past Board president, Fletcher also serves, consistent with established Building practice, as a permanent member of the Dakota's Finance Committee.
12. Fletcher was married in 2007 to Ellen K. Pao and they have a two-year old daughter. Fletcher owns and operates FAM, an investment management firm based in New York
City. Named to the most recent Forbes' List of the Wealthiest Black Americans, his success as an investment manager is well known.
13. Fletcher is also a philanthropist and has, over the past two decades, donated tens of millions of dollars of his own wealth, primarily for initiatives aimed at eradicating racial inequality through education. In 1994, for example, he endowed a University Professorship at his alma mater, Harvard College. Similarly, in 2004, on the 50th anniversary of the Supreme
Court's decision in Brown v. Board of Education, Fletcher and entities affiliated with him launched a $50 million multi-year initiative to support those working to create educational opportunities for all. Fletcher has been generous in New York City, supporting churches, museums, schools, and community organizations, including co-sponsoring exhibitions related to
African Americans at the New York Historical Society, the Metropolitan Museum of Art, and
The Studio Museum in Harlem. Fletcher has also provided African-American history resources to thousands of public schools both in and outside New York City.
14. FAM is a successful investment management firm. Founded by Fletcher in 1991,
FAM serves in an advisory capacity with respect to a series of funds that include outside investors. Since 1991, FAM has completed more than 50 transactions that have provided additional capital to companies through the purchase of newly issued securities. The investments have helped these companies create and preserve tens of thousands of quality jobs from upstate
New York to Southern California in industries including affordable and energy-efficient housing, alternative energy, education services, and environmental services. FAM is currently focused on providing additional capital and other support to community banks aimed at helping to reinvigorate the economy and generate attractive returns.
15. FAM's constructive investment approach has led to superior, risk-adjusted, long- term returns for pension funds, philanthropists, foundations, endowments and other investors.
FAM has thrived throughout this most recent and the previous recessions, generating profits for its institutional investors in each year since the firm's inception in 1991. Of significance to the instant lawsuit, several of the Dakota's shareholders are individuals who have invested in FAM's funds or associates of individuals who have invested in FAM's funds and they, in turn, socialize and do business with other individuals who are past, present and prospective investors in FAM's funds. Defendants
16. Defendant The Dakota, Inc. is a domestic corporation with its principal executive
office at 675 Third Avenue, New York, NY. The Corporation owns and operates the Dakota, a
cooperative apartment building located at One West 72nd Street, New York, NY. The Dakota
cooperative is one of New York City's most legendary apartment buildings. Built in 1884, it is
known for its unique architecture and for the many high-profile individuals who have resided in
the Building over the years.
17. Defendant Bruce Barnes is a resident at the Dakota and a shareholder of the
Corporation, currently serves on the Board as President, and is a member of the Finance
Committee. Prior to May 2010 when he became Board President, Barnes served on the Board as
Treasurer and as a member of Finance Committee.
18. Defendant Peter Nitze is a resident at the Dakota, a shareholder of the
Corporation, a member of the Board and a member of the Finance Committee. Nitze is also a past President of the Board, a permanent member of the Finance Committee and previously
served as Vice President of the Board.
19. Defendant John Rydzewski is a resident at the Dakota, a shareholder of the
Corporation, a past and current member of the Board and a previous President of the Board. By virtue of being a past Board President, Rydzewski is a permanent membfer of the Finance
Committee. Although Rydzewzki was not a member of the Board during the 2009/2010 term, he was actively involved in discussions and deliberations concerning Fletcher's application to purchase Apartment 50.
20. Defendant Pamela Lovinger is a resident at the Dakota, a shareholder of the
Corporation and a frequent past member of the Board. Lovinger currently resides in Apartment Apartment 11, Fletcher was subsequently told by a Board member that the Board had felt that
there was "no way" that he would be approved. Nevertheless, Fletcher's purchase was ultimately approved by the Board after Fletcher was interviewed by several Board members.
Indeed, prior to purchasing Apartment 11, Fletcher submitted bids for three larger apartments on higher floors, but those shareholders refused to enter into contracts with him, presumably based on the assumption that the Board would reject his application.
25. In 1993, Fletcher entered a contract to purchase Apartment 52, a larger unit within the Dakota and the unit in which he currently lives. The Board raised numerous obstacles to the purchase, ultimately explicitly conditioning its approval on two harsh conditions. First, the
Board required Fletcher to immediately sell Apartment 11 and, second, the Board required
Fletcher, in the interim, to cease using Apartment 11 for any purpose whatsoever, including using the apartment himself or allowing any guest or family member to stay there, even for one night. Fletcher subsequently learned that several other, white residents of the Dakota, by contrast, owned multiple units within the Building and openly used them as guest rooms, offices, gyms and storage units, without any such restriction. Indeed, the prohibitions that the Board arbitrarily imposed on Fletcher at that time with respect to Apartment 11 were so unique that they became known within the Building, and Board members mockingly referred to them, as
"the Buddy Rule."1
26. In or around May of 2002, Fletcher sought to purchase a second apartment at the
Dakota for his mother, Dr. Bettye R. Fletcher, a noted educator and a Trustee of the Bank Street
Thus, in connection with his purchase of Apartment 52, the Board imposed the following condition: "You confirm your intent to purchase Apartment 52 for yourself and to promptly sell Apartment 11... You understand that while you own more than one Dwelling Unit or Apartment, the Board will not entertain any request that any of the spaces owned by you be . .. occupied by anyone other than you ..."
10 College of Education. Fletcher entered into an all-cash contract for the purchase of Apartment
92. After much deliberation, the Board permitted Fletcher to purchase Apartment 92, but
required him to form a special trust to purchase the apartment. In addition, and once again, the
Board conditioned its approval on an explicit limiting condition — that only Dr. Fletcher and no
one else would be permitted to reside in Apartment 92, even overnight and even including close
relatives. On information and belief, no Dakota Board ever imposed any similar condition on
any previous owners of Apartment 92, all of whom had been white. Once again, the Board provided no rationale for the stringent condition it imposed on Fletcher and his mother. In the years that followed, relatives visiting Fletcher or his mother did not feel comfortable staying overnight in the Dakota specifically due to concerns regarding the so-called "Buddy Rule."
The Board's Hostility Toward Other Minority Dakota Shareholders and Prospective Purchasers
27. In addition to enduring, and watching his mother endure, this unequal treatment,
Fletcher also witnessed the Board's discriminatory acts against other non-white shareholders and persons seeking to purchase units in the building.
28. For example, in 2005, while serving on the Board, Fletcher witnessed Board members' discriminatory statements regarding the purchase application of a prominent, financially well-qualified white woman and her husband, a Hispanic man. The Board refused to grant the couple an interview. At the Board meeting itself, at defendant Nitze's insistence, no discussion of the matter was permitted. Instead, the Board rejected the application outright. At
2 Specifically, the Board required the Fletchers to agree that "[t]he Apartment shall be used as a residence only, and only by Bettye R. Fletcher ... the Apartment shall not be occupied at any time by any other person without the prior written consent of [The Dakota Inc.] in each instance."
11 subsequent Board meetings however. Board members made jokes regarding the Hispanic husband's desire to have a first floor apartment so that he could purchase drugs from people on the street. Board members repeated this offensive joke for many years.
29. Similarly, beginning in or around 2006, Fletcher witnessed the Board discriminate against the only other African-American shareholder of the Corporation, a prominent individual in the arts. In that case, the Board rejected the shareholder's requests to perform much-needed renovations and repairs to her apartment, without explanation. And indeed, when the Board did respond to her inquiries concerning the repeated rejections, the shareholder was given an explanation that either did not make sense or was told that the Board did not know the reason.
As a result of the Board's conduct, the shareholder endured the humiliation of applying multiple times for permission to fix or replace her bathtub.
30. In addition, Fletcher witnessed the discriminatory enforcement of Building rules against this same African-American shareholder. While the Dakota's rules require shareholders to use a service elevator, rather than the main elevators, to transport their pet dogs, the Board strictly enforced this rule only against this African-American shareholder and not against white shareholders. Moreover, because her apartment was not accessible via the service elevator, this shareholder was required to wait, often for long periods of time, at an operator-dependent freight elevator until a staff member was available to transport her and her dog to the appropriate floor.
Indeed, defendant Rydzewski — openly at Board meetings — insisted that the Building's managing agent make sure that the Building keep careful track of every time this same shareholder "violated" the Building rule by not using the service elevator with her dog. Further, defendant Rydzewski went so far as to send a series of offensive and threatening letters to this shareholder about this issue and others and directed counsel to the Board to do the same.
12 31. In early 2007, Fletcher again witnessed discrimination by certain Board members during discussions regarding a Jewish couple's application to purchase a unit in the Dakota.
Although the couple was financially well-qualified to make the purchase, the Board quickly rejected the couple, without even an interview, after one Board member had described them as members of the "Jewish mafia." Fletcher and one other Board member had voted to grant the family an interview, but they were outvoted.
32. In May of 2007, Fletcher was elected Board President after an internal power struggle on the Board. Just prior to his election, several Board members (including defendant
Rydzewski) were accused of having conflicts of interest that were previously unknown to the rest of the Board, and most other Board members took sides in the dispute. Although Fletcher had been critical of the substantive conflicts, he had remained neutral with respect to personality conflicts. As a result, Fletcher became one of the few candidates who was still acceptable to a majority of Board members, and they elected him Board President.
33. When Fletcher became Board President, he tried (unsuccessfully, as it turned out) to put an end to the discriminatory behavior of certain Board members. For example, in advance of the September 12, 2007 Board meeting, Fletcher conveyed his view to defendant Nitze that the "Jewish mafia" comments and the process and general tenor of the discussion surrounding the Jewish applicants' ethnicity and religion were not appropriate. Although defendant Nitze tried to persuade Fletcher not to raise the issue again, Fletcher urged the Board to reconsider the couple's application "on the record" and the Board voted to grant the couple an interview.
Following that interview, the Board changed its earlier position and approved the couple's application.
13 34. The issue of the African-American tenant's repeated efforts to gain approval for her bathtub renovation resurfaced as well during Fletcher's tenure as Board President. During a
Board meeting on or about March 13, 2008, Fletcher observed defendant Rydzewski and the
Corporation's counsel, Eric Balber, whispering and snickering with each other. When Fletcher asked them what they were discussing, Rydzewski explained, with obvious amusement in his voice, that they had been speculating about how many times that shareholder would have to
"apply to fix her bathroom." Fletcher made it clear to them and to the rest of the Board that such jokes at that shareholder's expense were not appropriate and that the shareholder understandably needed to have the issue resolved. Shortly after Fletcher challenged those Board members' conduct, and years of rejecting the shareholder's requests, the Board finally voted to allow the proposed renovation.
35. Despite Fletcher's efforts to stop discriminatory practices during his tenure as
President, the hostility of certain Board members toward non-white shareholders and Fletcher in particular persisted both during and after his term as Board President ended in May 2009.
36. For example, on information and belief, during a Board meeting held on
October 7, 2009, the Board discussed three shareholders' requests to have guests reside in their respective apartments for limited periods of time. The Board quickly approved the two requests from white shareholders after little discussion and with no restrictions. The Board refused, however, to approve the request of the third shareholder, a South-Asian woman, unless she agreed to subject her proposed guests, members of her own family, to background checks.
3 At one point during his communications with the defendants concerning his application to purchase Apartment 50, the Board even insisted that Fletcher, who by that time had lived in the Building for nearly two decades, consent to a background check. Fletcher initially agreed. The Board, however, appeared to have rejected his application to purchase
14 37. On information and belief, reinforced by the Board's past practices described
above, the defendants were determined to prevent the Board from approving Fletcher's purchase
of Apartment 50 at any cost. This agenda arose from longstanding hostility toward Fletcher due to his race, from the defendants' similarly longstanding desire to retaliate against Fletcher for exposing and challenging the defendants' past acts of racially-motivated hostility, and from the defendants' desire to increase the value of their own balance sheets by blocking Fletcher's purchase and by facilitating the sale of a $19.5 million joint unit in the Building.
Ruth Proskauer Smith's Intention for Fletcher to Purchase Apartment 50, and Fletcher's Purchase Contract with the Estate
38. Until her death in January 2010, Fletcher's next-door neighbor at the Dakota was
Ruth Proskauer Smith, the noted women's rights activist and the daughter of Judge Joseph M.
Proskauer, who was a justice of the New York State Supreme Court before becoming a partner in the law firm that bears his name, Proskauer Rose. Mrs. Smith, who lived in Apartment 50 for many years prior to her death, had become good friends with Hetcher over many years of living next door to him.
39. As a result, on many occasions, Mrs. Smith expressed to Fletcher and others her intention that Fletcher purchase Apartment 50 after her death, so that he could re-combine and restore the two apartments into the single residence they had once been. Mrs. Smith also expressed that she wanted Fletcher to purchase the apartment so that he could have a home at the
Dakota for his growing family.
Apartment 50 so quickly that Fletcher had not yet undergone the check. At that point, he withdrew his consent.
15 40. Tony Smith, Mrs. Smith's son and the executor of her Estate, was well aware of
his mother's wishes in this regard. On January 20, 2010, while his mother was quite ill and near
death, Mr. Smith emailed Fletcher asking to speak with him by phone. When they spoke
Mr. Smith informed Fletcher that the Smith family wished to fulfill Mrs. Smith's longstanding
desire and intention to sell Apartment 50 to Fletcher.
41. Accordingly, shortly after Mrs. Smith's death on January 21, 2010, Mr. Smith
began negotiations with Fletcher concerning Fletcher's purchase of Apartment 50.
42. Those negotiations were resolved quickly since there was little haggling over
price and both parties were clear about the objective. On March 19, 2010, Fletcher entered into a
contract with Mr. Smith, as the executor of Mrs. Smith's Estate, to purchase Apartment 50. It
was well known that the Dakota policy at the time permitted quick approval and closing for long-
time Dakota residents in good standing such as Fletcher.
43. The contract between Fletcher and the Estate provided for an all-cash transaction
of the apartment for $5.7 million, without any financing. In other words, Fletcher was to pay for the apartment out of his own funds, without a mortgage or any other type of loan in connection with the purchase.
44. On information and belief, the defendants had long known that Mrs. Smith intended for her Estate to sell Apartment 50 to Fletcher and were aware that Fletcher was negotiating a contract of sale with the Estate. Accordingly, on or around March 10, 2010, the individual defendants began discussing ways to prevent Fletcher's purchase of Apartment 50 from the Estate no matter what.
16 Defendant's Efforts to Change the Dakota's Transfer Disclosure Policy to Impede Fletcher's Purchase
45. Several years earlier, the Board had streamlined the Dakota's policy for Board approval regarding purchase applications by existing shareholders (the "Transfer Disclosure
Policy" or "Policy"). The Policy, which was adopted on March 22, 2007 and was in force in
2010 when Fletcher sought approval to purchase Apartment 50, provides in pertinent part:
When a current Dakota shareholder applies to purchase another apartment in the Dakota, and the purchase would materially increase the shareholder's share ownership, the shareholder will only be required to provide a one page balance sheet, indicating the shareholder's principal assets and liabilities and signed by the shareholder, if the shareholder making such application has (i) resided in the Building for more than four years and (ii) a personal history of timely payment of all financial obligations to the Dakota.
(emphasis added). This Policy remains in effect today.
46. When he applied to the Board to purchase Apartment 50, Fletcher qualified for this limited disclosure provision and he remains qualified to this day. Fletcher has been a shareholder of the Corporation and a resident of the Dakota since 1992 (considerably more than the four years required by the policy) and he has timely fulfilled all of his financial obligations
(including monthly maintenance charges) to the Dakota. Indeed, the defendants have never asserted that Fletcher did not meet the requirements for the Transfer Disclosure Policy's limited disclosure provision.
47. On information and belief, some or all of the individual defendants recommended changing the Transfer Disclosure Policy to preemptively impede Fletcher's forthcoming application to purchase Apartment 50. This effort began during a March 10, 2010 Board
17 meeting, at a time when these defendants knew that Fletcher was in negotiations to buy
Apartment 50.
48. Fletcher learned of the Board's effort to change the Policy just days after he had
signed a contract with the Estate. Robert McFarland of Douglas Elliman, the Dakota's managing
agent, informed Fletcher by phone that the Board was considering making the application
process for existing shareholders seeking to purchase additional units within the Building more
onerous. Although Mr. McFarland also informed Fletcher that the Board had formed a Special
Committee to consider this issue and make recommendations, the Board, at its March 10
meeting, had actually delegated the issue to the Finance Committee to consider.
49. To date, on information and belief, the Finance Committee has made no
recommendations to the Board regarding the Transfer Disclosure Policy and the Board has not
formally acted to amend the Policy. Indeed, Fletcher, as a permanent member of the Finance
Committee, has not been given notice of any report or action from the Finance Committee
regarding the Transfer Disclosure Policy and has never been asked to consider any amendment to
the Transfer Disclosure Policy.
Fletcher Also Satisfies the Dakota Policy in Favor of Recombining Apartments
50. In addition to the Transfer Disclosure Policy described above, at the same time it
adopted the Transfer Disclosure Policy, the Corporation also adopted a policy in 2007 entitled
"Apartment Ownership Guidelines: Combining Apartments" (the "Recombination Policy").
This policy expressed the Dakota's approval of apartment recombinations under the following
conditions: (i) the apartments were originally configured as one apartment; (ii) the combination furthers a building objective; (iii) the combination can be accomplished without risk of damage
18 to the building's structures; and (iv) the resulting number of shares held by the purchasing
shareholder will be less than the number of shares held by the Dakota shareholder holding the
largest number of shares at the time of the request.
51. Once again, Fletcher's application to recombine Apartment 50 with his own
Apartment 52 satisfied all of these criteria: Apartments 50 and 52 were originally one unit; they
can be restored to their original configuration without any risk of damaging the Dakota's
structures. Important Building objectives would be achieved because the recombination would provide Apartment 50 with emergency egress, a service entrance, and independent wiring, all of which it currently lacks. And, upon purchase, Fletcher's total share ownership will remain below that of the Dakota's largest shareholder.
52. Moreover, as with the Transfer Disclosure Policy, there has been no notice given to the shareholders or members of the Finance Committee to amend or alter this policy in any way.
Fletcher's April 5 Submission to the Board
53. On April 5, 2010, Fletcher submitted to the Board his application to purchase
Apartment 50 (the "April 5 Submission"). The contents were precisely those required by the
Transfer Disclosure Policy described above. That is, Fletcher's application included a copy of his contract with the Estate, which showed the $5.7 million purchase price to be paid in cash without financing, and, as directed by the Building's policy, a one-page balance sheet presenting his "principal assets and liabilities," the cost of those assets, and the amount of those liabilities.
That document showed Fletcher's principal assets and their cost basis of $29,475,998 (their market value, a multiple of cost basis, was not required and was not included) and his principal liabilities (non-callable business loans each maturing after 2031) at $20,814,251. Thus, the April
19 5 presentation demonstrated that Fletcher had more than sufficient means to purchase Apartment
50 and to pay any associated future maintenance or other charges, still leaving a multi-million dollar asset cushion.
54. In his cover letter, Fletcher explained the transaction as follows:
The estate of Mrs. Smith has offered to sell me Apartment 50 and we have signed a purchase contract. There would be no financing associated with this cash purchase. Apartment 50 has less than half the quantity of shares that I currently hold and our two apartments were originally one. As with my past transactions, I have enclosed a current balance sheet (prepared by Duhallow Financial Services, LLC valuing assets at the lower of cost or market value) and a letter from my attorney ...
55. The April 5 Submission fully satisfied the terms of the Transfer Disclosure
Policy. It clearly confirmed Fletcher's ability to incur all costs associated with his proposed purchase of Apartment 50. It also demonstrated that Fletcher's proposed purchase satisfied the
Dakota's Recombination Policy described above. In blatant disregard of the Transfer Disclosure
Policy, then-President Goldsmith and then-treasurer defendant Barnes jointly wrote to Fletcher on April 10, 2010 and demanded that he satisfy a new Board policy regarding prospective purchasers. Their letter, in pertinent part, states as follows:
In the wake of the recent financial crisis, the Board of Directors has adopted a policy of requiring the following information from all prospective purchasers, regardless of whether the prospective purchaser is currently a shareholder-resident of the Dakota:
1. Copy of the executed contract of sale;
2. Current financial statement (see attached), with current bank and broker statements;
3. Three most recent years of income tax returns (2007, 2008, 2009). In addition, the Dakota now requires a background check on all prospective purchasers, including current residents.
20 56. On April 14, 2010, in response to this letter, Fletcher emailed defendant Barnes to
ask when this "new policy" had been adopted. Barnes replied vaguely that it had been adopted
"a few months ago."
57. On information and belief, no such policy was ever adopted by the Board. This
purported policy does not appear in the minutes of the Board; nor was it mentioned, much less
approved, at any shareholders' meeting. Instead, the representation that such a "policy" existed
or exists was false and was known to be false by Barnes and Goldsmith. To the contrary,
defendants couched their never-ending list of demands as "policy requirements" in an effort to
create a pretext for denying Fletcher's application.
The Defendants Reject Fletcher's Application and Defame Fletcher and FAM
58. On information and belief, at a Board meeting held on April 14, 2010, one or
more of the Individual Defendants repeatedly made false and misleading statements to other
Board members regarding Fletcher's financial condition. This occurred on the same day that
Fletcher questioned the "new" policy and before he could provide the new information demanded by Barnes and Goldsmith's April 10 letter.
59. In particular, one or more of the Individual Defendants told the other members of the Board that Fletcher had not fulfilled binding charitable commitments and pledges, that
Fletcher's assets were all illiquid and difficult to value, and that FAM's business loans left it over-extended and at risk of collapse. The defendants made these false statements maliciously and with the intent both to taint the Board's consideration of Fletcher's application to purchase
Apartment 50 and to damage Fletcher and FAM's reputation within the Dakota and the broader investment community.
21 60. The very next day, April 15, 2010, Mrs. Smith's son, Anthony Smith, emailed
Fletcher, stating that Mr. Nitze had informed him that the Board had not approved Fletcher's
purchase application because it had "questions." Smith has never been a shareholder or resident
of the Dakota.
61. Remarkably, the Board had not communicated any concerns or updates on the
purchase application's status to Fletcher, even after it conveyed both concerns and the status
update to Smith, a non-resident of the building. Later that day, Fletcher emailed Goldsmith to
inquire about the status of his application.
The April 21 Telephone Call
62. Fletcher spoke with Barnes and Goldsmith by phone on or about April 21, 2010.
During that call, these Board members raised several completely unfounded concerns regarding his ability to afford Apartment 50. These alleged concerns presumably arose from the false
statements made during the April 14 Board meeting, at the prior Finance Committee meetings, as well as discussions among individual Board members, including the Individual Defendants.
63. More specifically, defendant Barnes and Goldsmith said on the April 21 call that there were "three issues." First, they said that Fletcher had not honored "binding charitable commitments" that "amounted to undisclosed liabilities" that should have been on his balance sheet and that "require an investigation by a private investigator."
64. As for the second issue, defendant Barnes and Goldsmith told Fletcher that they believed that his assets were "illiquid and difficult to value." They elaborated that Fletcher needed to "prove" that he had "liquid assets." They negatively contrasted Fletcher's interest in
FAM with AT&T stock, which can be sold. They acknowledged, however, that a fair valuation of FAM could be done, and that "there are plenty of people who can value the business."
22 65. Finally, they said that Fletcher's "business loans" had left him "over-extended and
at risk." They incorrectly asserted that the FAM loans had call provisions and thus were not
long-term capital.
66. In response, Fletcher made it clear that he had substantial liquidity and that the
FAM business loans were, in contrast to their accusations, very attractive financing because they
do not mature for 20 years, had low interest rates, were tax deductible, and were not callable.
Fletcher further pointed out that most of Barnes' and Goldsmith's allegations were not actually
relevant to the Board's evaluation of his application given that his proposed purchase of
Apartment 50 was an "all cash" transaction, without any financing. He further noted that the
balance sheet submitted listed his "principal assets and liabilities," as required by Dakota policy,
and that the market value of the assets far exceeded the assets, as listed on a cost basis.
67. The Board could not have derived these concerns about Fletcher's finances from
any of the material provided by Fletcher since his application at this point consisted only of the
one-page balance sheet that was part of the April 5 submission which contained limited financial
detail. Rather, on information and belief, these concerns stemmed from the Individual
Defendants' deliberate concoction of false and defamatory statements regarding Fletcher and
FAM's finances.
68. Fletcher was troubled by all of defendant Barnes's and Goldsmith's unfounded concerns expressed during the April 21 call. But he was particularly insulted and appalled by their false allegation that he had failed to satisfy binding commitments he had made to charities.
Fletcher questioned Barnes and Goldsmith as to the basis for this claim. In response, they referred to a 2004 article in The New York Times that described Fletcher's plan that he would
give $50 million over the course of his lifetime for individuals and institutions working to
23 improve race relations. Fletcher had formulated this plan to honor the fiftieth anniversary of the
United States Supreme Court's decision in Brown v. Board of Education. Barnes and Goldsmith
claimed that "someone said that you haven't paid those charities and we need a private
investigator to call each one to determine how much you owe and what claims they have on
you."
69. This six-year old article concerning Fletcher's 2004 plan could hardly have led to reasonable concerns among Board members regarding Fletcher's financial condition. If anything, the very fact that Fletcher was able to commit so much of his personal wealth to charity commends his financial success and stability. Neither the referenced New York Times article nor any other article regarding Fletcher published since that time has questioned in any way Fletcher's sincerity. Indeed, Fletcher explained to Barnes and Goldsmith on the April 21 call that he did not owe any amounts to any charity.
70. Neither Barnes nor Goldsmith provided a legitimate explanation in response to
Fletcher's questions regarding the basis of the Board's supposed concerns and the Board's demands for additional financial disclosures during the April 21 call. Instead, they simply stated that the Board "can do whatever it wants and does not have to give a reason" — a statement that the Board has made to Fletcher or his representatives many times before and since concerning his application to purchase Apartment 50.
Fletcher Submits Additional Financial Information in an Effort to Move Ahead with the Purchase (the April 24 Submission)
71. Given his practical nature and his desire to move forward amicably with purchasing Apartment 50, Fletcher opted not to argue over the Board's unjustified requests for additional financial disclosures. He instead agreed to provide the additional information that the
24 Board said was necessary and, on April 24, 2010, submitted a supplemental application package to the Board totaling over 300 pages (the "April 24 Submission").
72. The April 24 submission included a completed financial disclosure form;
Fletcher's checking account statements for the period ending March 31, 2010; Fletcher's tax returns for 2007 and 2008; financial condition statements and income statements for Fletcher's private businesses from 2007 - March 2010; an independent valuation of FAM by Quantal
International, a global service provider to financial institutions and advisors, and a business loan security agreement pertaining to Fletcher's existing Dakota shares.
73. In a letter accompanying this submission, counsel for Fletcher, Denis Kiely, summarized the strength of Fletcher's financial condition in pertinent part as follows:
Liquidity, Income and Net Worth: Mr. Hetcher's current and projected liquidity, income, and net worth greatly exceed the $5.7 million needed to consummate his cash purchase (i.e. without financing) of Apartment 50, any associated purchasing expenses, the $5,236.40 monthly maintenance, and his aggregate financial commitments. Beyond his history of fulfillment of his obligations, Mr. Hetcher's ability to satisfy all of these commitments is evidenced by the fact that his net worth exceeds $80 million, his average income has exceeded $3 million for two decades, and he could comfortable pre-pay several years of the additional maintenance should that be a concern.
Valuation: Mr. Fletcher is the sole owner of an investment management business and a natural resources investment company. All of his securities and investments are made through his firm which holds stakes in its funds managed by his firms. In addition to the previous balance sheet presented, which valued assets at a Cost Basis/Book Value, we have completed the Dakota's required financial disclosure form which requests "actual value." To this end, we quickly commissioned an independent valuation firm, Quantal International Inc., to provide a valuation report, which is attached hereto.
Charitable Giving: Mr. Fletcher has already given to charity a substantial portion of his earnings. Though Mr. Fletcher intends to continue both his substantial annual charitable giving and, from time to time, award capital gifts, I can confirm that as of this writing, he has no binding commitments to fund any charitable gifts.
Mr. Kiely concluded: "I trust that this package of information, coupled with Mr. Fletcher's long history, record and service as a shareholder, provides ample support for this transaction."
25 74. In this second presentation, Fletcher's assets and liabilities were valued based on
their conservative market value, as opposed to the "cost basis" on April 5, and the submission
showed Hetcher's net worth to be $80 million. Fletcher knew and understood that his April 21 presentation contained complicated financial information. Accordingly, after submitting the package and on multiple occasions thereafter, Hetcher repeatedly asked that the Individual
Defendants meet with him in order to allow him to answer their questions and said that he would be happy to make his accountants or other experts available to answer their questions as well.
Each time, however, the defendants either ignored his requests to meet, or quickly rejected his offer with the statement either that "nothing" would change the defendants' mind or that the
Board did not need to meet with Fletcher because it had its "own experts." Revealingly, the
Board offered that speaking to Fletcher, even to ask a single question about Hetcher's extensive financial submissions, was dangerous because he would surely accuse the Dakota of racial discrimination.
The Board's Approval of Two Purchase Applications, One from a White Shareholder and Another from an Outside Purchaser, at the Same Time as it Refused to Approve Fletcher's Application
75. While Fletcher's application was pending, the Dakota Board also received two purchase applications from white applicants. Consistent with its general practice, the Dakota
Board referred these applications to the Finance Committee, as it had referred Fletcher's, to make recommendations for approval or denial based upon the financials supplied by the prospective purchaser.
76. On information and belief, the Finance Committee and the Board subjected those applications to different review practices and less burdensome standards than it imposed on
26 Fletcher's application. In addition, during this time, the defendants impermissibly excluded
Fletcher, a permanent member of the Finance Committee, from the Committee's deliberations
regarding the white shareholders' applications.
77. More specifically, on information and belief, the Finance Committee never
seriously considered Fletcher's April 24 Submission, despite having requested and received
hundreds of pages of detailed financial disclosures addressing the concerns raised by Barnes and
Goldsmith. By contrast, days later, the Finance Committee considered and recommended for
approval two pending purchase applications submitted by white applicants. One application,
most comparable to Fletcher's, because submitted by existing shareholders, had financial
qualifications clearly not as strong as Fletcher's, despite the applicants' proposal to purchase an
apartment twice as expensive as Apartment 50.
78. Fletcher had received copies of these two other applications in his capacity as a
Finance Committee member and, in that capacity, was obligated to evaluate them in accordance
with the Corporation's best interests. In April 2010, Fletcher evaluated these applications, with the expectation that the Finance Committee would follow its customary practice and discuss the
applications prior to conveying a Committee recommendation to the Board. The Finance
Committee improperly excluded Hetcher from discussions regarding these applications, however, revealing the defendants' intent to conceal their unequal treatment of Fletcher in comparison to the white applicants.
79. This exclusion of Fletcher began on April 20, 2010, when defendant Barnes scheduled a Finance Committee conference call via email for April 26 at 8:30 a.m. to discuss the two pending applications. As a Committee member, Fletcher was included on the scheduling email. However, on April 26, only a few minutes past the scheduled call start time, Barnes sent
27 an email to Committee members, including Fletcher, indicating that he could not activate the call
because he did not have the chairman's code. Barnes indicated in this email that he would
circulate a new time for the call.
80. The following day, in the course of an email exchange regarding his April 24
Submission, Fletcher asked Ms. Kaswaree Narine of Douglas Elliman whether a new time had been set for the Finance Committee call. Narine responded that the call had not yet been rescheduled. Later that day, Narine emailed Barnes conveying Fletcher's inquiry regarding the call. Barnes emailed Fletcher shortly thereafter, stating that the consensus among Finance
Committee members was that they were satisfied with the financial packages submitted by these applicants. When Fletcher responded, asking whether he had overlooked an email rescheduling the call, Barnes did not reply.
81. One day later, on April 28, 2010, the Finance Committee held its meeting.
During this meeting, they voted unanimously to recommend the other two pending applications from the white applicants to the Board for approval, including the existing shareholder couple who could not afford to purchase the new apartment without financing and who had a questionable financial history. At the same time, they voted unanimously not to recommend
Fletcher's application to purchase Apartment 50. Fletcher received no notice of this meeting.
Although Fletcher could not have participated in the Committee's discussions regarding his own application, the defendants impermissibly excluded him from discussions regarding the other two applications. Given his exclusion from the meeting, Fletcher was not permitted to ask any questions concerning the other applicants and was told nothing about the deliberations, other than the decision was unanimous.
28 82. The minutes from the April 28 meeting report the Finance Committee's reason for
its decision regarding Fletcher's application: "the risk of the applicant's inability to meet his
future financial obligations." Fletcher later learned that the defendants took the position that
while Fletcher might today have sufficient liquidity and net worth, he may, because he works in
the financial industry, encounter financial distress at some undetermined point in the future. Of
course, the Dakota has many shareholders who likewise work in the financial industry, including
the shareholders whose application the Finance Committee recommended for approval at its
April 28 meeting.
83. As discussed above, the Finance Committee had no basis for this determination.
Yet, if Committee members had questions regarding Fletcher's extensive submission, they never
asked him. At no time prior to the April 28, 2010 meeting did any Finance Committee member pose a single question or solicit any clarification regarding the hundreds of pages of financial information in the April 24 Submission. In other words, as discussed above, they refused to permit Fletcher to address any questions they might have, provide any clarifications, or otherwise attempt to bridge the unexplainable gap between what the third-party experts had concluded and what the Finance Committee seemed to be concluding. On information and belief, the Committee recorded its decision in this way to disguise the Individual Defendants' disregard of their fiduciary duty, as motivated by their unlawful animus and discriminatory intent.
84. At that same meeting, the minutes report that the Finance Committee decided, unanimously, to recommend that the Board approve the application from the white shareholders, a married couple, to purchase another apartment in the Building. The Finance Committee made this recommendation despite numerous facts related to the couple's finances, including their
29 limited liquidity post-purchase and the debt that the couple required in order to make the
purchase. In addition, a background check regarding the couple shows bad debt judgments,
evictions, and a number of UCC liens.
85. By contrast, Fletcher's application had none of these issues. His April 24 submission included a financial statement calculating Fletcher's net worth in excess of $80 million and an independent valuation of FAM, which valued the company conservatively at $45 million. In addition, it showed approximately $14 million of liquid assets, and $8 million after the proposed all-cash purchase of Apartment 50.
86. On May 2, 2010, the day before the shareholders' annual meeting which would include the election of a new Board, the Board held a hastily-called meeting and voted to approve the white shareholders' purchase application. The Board also referred the application by a white non-shareholder to the Interview Committee, indicating that the Board had been sufficiently satisfied about that applicant's financial status.
87. At the same time, on information and belief, Goldsmith informed the Board that the Finance Committee recommended that the Board deny Fletcher's application.
88. Shortly thereafter, the Board voted to withhold its consent to the transfer of
Apartment 50 to Fletcher. On information and belief, the Individual Defendants again, during this meeting, made false and misleading statements regarding Hetcher's fulfillment of his charitable commitments as well as his finances and those of FAM.
Defendants' Continued Unlawful Conduct Following the Board's Rejection of Fletcher's Application
89. On May 3, 2010, the Corporation held its annual shareholders' meeting and elected a new slate of directors for the 2010-2011 term. Defendants Barnes and Nitze, and
30 Dr. Fletcher, were all re-elected to the Board. Defendant Rydzewski was also elected to serve as a director for the new term. A week later, Barnes was elected Board president.
90. On May 14, 2010, Fletcher spoke with defendant Barnes by phone regarding the
Board's rejection of his application. During this call, Hetcher followed up with Barnes, again, about his exclusion from the Finance Committee discussions and the April 28 meeting regarding the other pending applications.
91. Barnes informed Fletcher that he was not invited to that meeting because the
Committee members had already agreed to approve the other two applications and because the exclusive purpose of the meeting was to discuss his application to purchase Apartment 50. Yet the April 28 meeting minutes specifically state that the other transfers were discussed and voted upon by the Committee.
92. Mr. Barnes also, and remarkably, in light of the submissions and history to that point, told Fletcher that, "No additional information regarding your application will result in a different decision by the board."
93. Word of Fletcher's rejection spread quickly throughout the Building and throughout the larger community of successful, philanthropic New Yorkers. On or about May 7,
2010, for example, Fletcher had conversations with a Dakota shareholder, Craig Hatkoff. On information and belief, Hatkoff, along with others, had been informed of the Board's decision to deny Fletcher's application from one or more of the Individual Defendants. These defendants had told Hatkoff the same kinds of lies regarding Hetcher's financial condition and that of his company, FAM, as had been discussed during Board meetings.
31 94. In a conversation with another Dakota shareholder, Mark Myers, Myers suggested
to Fletcher that Fletcher have his wife, Ellen, purchase the apartment, because, Myers speculated,
"her financials must be clean," implying that Fletcher's were not.
95. Hatkoff similarly reported to Fletcher a recent conversation he had with two
directors, including, on information and belief, defendant Nitze. During this conversation,
Hatkoff asked about the status of Fletcher's application. After being told that the Board was
concerned about Fletcher's finances, Hatkoff asked how the Board could have that concern,
given the amount of money he gives to charity. On information and belief, Nitze replied that
Fletcher had not actually given the money he had promised to give and "he owes it."
96. Mr. Hatkoff later reported to Fletcher that he had a conversation with another
shareholder and former Board president, Toni Sosnoff, in which she stated that she had heard
that Fletcher was not financially qualified to purchase Apartment 50. On information and belief,
Mrs. Sosnoff s erroneous impression originated from the false rumors maliciously spread by the
defendants.
97. In short, the defamatory lies of the Individual Defendants have tarnished and otherwise harmed Fletcher's reputation as an investment advisor and philanthropist, which he earned after working for years to build.
Coercion of the Estate/Self-Dealing
98. Causing even more harm, the defendants also acted tortiously to interfere with
Fletcher's contract to purchase Apartment 50 from the Estate. In so doing, they also breached their fiduciary duty to the Dakota by acting to give the economic opportunity posed by the sale to defendant Lovinger a fellow Board member.
32 99. On May 19, 2010, Smith emailed Hetcher to say that he had learned of the
"absurd, unfair and inexplicable" rejection of Fletcher's application through a call from the
Dakota's managing agent. On May 21, Fletcher replied that he was preparing a response to the
Board in an attempt to understand and resolve their concerns and offered to pay to the Estate the
maintenance charges and other out-of-pocket expenses associated with Apartment 50 while
discussions with the Board were on-going.
100. On May 24, 2010, counsel for the Estate negotiated with Fletcher's counsel to
hold Apartment 50 off of the market in exchange for monthly payments by Hetcher. On
information and belief, one or more of the Individual Defendants sought to coerce the Estate not
to enter into any such agreement with Hetcher.
101. On June 2, 2010, the Board held a meeting at which it discussed a request by the
Estate to apply for a bridge loan to pay the estate taxes on Apartment 50. Though Board
approval is not required for this type of financing, the Board granted conditional approval to the
Estate's request. The minutes indicate that approval was conditioned upon satisfaction of
Barnes' "inquiries" on the Board's behalf. The nature of these "inquiries" is nowhere specified.
102. On June 14, 2010, Kiely, Fletcher's counsel, spoke with counsel to the Estate,
Elliott Meisel. Meisel conveyed that the Estate did not believe that the Board's decision regarding Fletcher's application would change. He also indicated that the Estate did not want to be seen as supporting a litigation against the Board for fear that the directors would exact revenge upon the Smiths. Still, he said that the Estate would give Fletcher time to resolve the dispute because Mrs. Smith had so clearly wanted Fletcher to purchase the apartment.
103. As Fletcher sought to have the Board remove its block on his purchase, Board member defendant Pamela Lovinger suddenly resigned from the Board on or about November 3,
33 2010. Shortly thereafter, at the instigation of defendant Rydzewski, she listed her own apartment
for sale with a real estate broker who, on information and belief, is a friend of defendant
Rydzewski's. The listing indicated that the sale would be in conjunction with Apartment 50 as
part of a 5 bedroom, 4 bathroom, 11-room combined unit. The price for this joint listing was
posted at $19.5 million.
104. On information and belief, the Board encouraged defendant Lovinger to do so because the Individual Defendants had concluded that the values of the apartments at the Dakota
were too depressed, that the value of their own apartments would be significantly higher if
Apartments 50 and 51 were sold together for $19.5 million, and that the value of their own apartments would certainly be higher than if Fletcher were to buy Apartment 50 for $5.7 million.
Moreover, Lovinger's apartment alone is worth substantially less than $6 million so she stands to gain a huge windfall if the apartments are sold together.
105. Prior to the joint listing, the Estate broke its tentative deal with Fletcher not to list
Apartment 50 and listed it with the same broker who listed the joint sale of Apartments 50 and
51. That broker again, is a friend of defendant Rydzewski's.
Fletcher's Continued Efforts to Purchase Apartment 50
106. On June 24, 2010, counsel for Fletcher wrote to the Board. He outlined the
Board's unfair and unlawful treatment of Hetcher and urged the Board to work with Fletcher amicably to reach a solution.
107. On July 21, 2010, Fletcher, along with his counsel, attended a meeting proposed by counsel for the Board, who along withdefendant Barnes, attended on the Board's behalf.
34 108. Rather than discuss the Board's supposed concerns regarding Fletcher's finances, however, Barnes reiterated at that meeting that nothing would cause the Board to approve
Fletcher's application, except if Fletcher "won the lottery."
109. Barnes' statement revealed far more than Barnes intended, as it revealed that the
Board's decision did not rest on a rational or fair review of Fletcher or FAM's assets, liabilities or balance sheet but instead derived from underlying, impermissible animus and self-interest.
110. Later that day, Barnes informed Fletcher that it had appointed Board member
Matthew Mallow as the chair of a Special Sub-Committee to consider the issue of Fletcher's application to purchase Apartment 50. The Board comprised this Committee primarily of the very same people who had rejected Fletcher's original application, including defendant Nitze, whom Barnes described as a leader in the decision to deny Fletcher's application.
Notwithstanding the committee's composition, Fletcher had at least some confidence in this process since Mallow was a long-time investor in FAM's funds and was or had recently been a partner at the law firm of Skadden, Arps LLP, the primary law firm that Fletcher and FAM had used for more than nineteen years.
111. Beginning in July, Fletcher and his counsel had a series of conversations with
Mallow in an attempt to understand and bring to an end the Board's opposition to his application.
On August 5, 2010, Fletcher and Mallow had lunch at the Harvard Club in New York. At that lunch, Mallow said that he wanted to find something that Fletcher could "give" the Board in exchange for its approval, even if it was not "terribly real." Mallow suggested a letter-of-credit for two years' maintenance; or having Fletcher's wife purchase the apartment instead of Fletcher.
In response, Fletcher told Mallow that he did not know if he could accept either of these demeaning demands and that Barnes had indicated that the Board would not accept Fletcher's
35 application no matter what Hetcher did or said. Mallow then commented that defendant Barnes'
comments about Fletcher "winning the lottery" was the "dumbest f****** comment" he had
ever heard.
112. On August 27, 2010, Barnes sent a letter to Fletcher on the Board's behalf, finally
offering to meet with Fletcher if there was any information Fletcher wanted to provide.
Following a series of exchanges between Barnes and Fletcher, Barnes told Fletcher on
September 8, 2010 that the Board would like him to submit documents relating to the FAM business loans. The Board indicated that it wanted the Special Sub-Committee to review the business loans.
113. While these discussions were ongoing, on information and belief, one or more of the Individual Defendants communicated with several Dakota shareholders and maliciously made false and misleading statements regarding the state of Fletcher's finances and those of
FAM, as well as statements that Fletcher had not fulfilled his charitable commitments. By
September 2010, for example, before Fletcher had a chance to respond to the Board's most recent request regarding the business loans, one or more of the Individual Defendants falsely and maliciously stated to Hatkoff that Fletcher had "checked out of his business" and was living on
"borrowed money."
114. On September 14, 2010, in purported response to a letter from Fletcher's counsel to the Board which Fletcher had shared with a few concerned neighbors, the Board sent a letter to certain Dakota shareholders that contained several false and defamatory statements about
Fletcher. First, the Board claimed that "[i]n reviewing Fletcher's application, the Board and its
Finance Committee . . . followed the procedures and applied the standards applicable to all existing shareholders." This statement is false in at least three respects. First, the Board and
36 Finance Committee did not follow the Transfer Disclosure Policy for existing shareholders.
Even after Fletcher's compliance with the more demanding financial disclosures, the Board did not review his application under the same standards as it applied to the white shareholders whose application was approved.
115. Second, the September 14 letter falsely implies that Fletcher's application was kept "in confidence" and that the Board "prefer[red] not to discuss publicly the details of his application." These statements are patently untrue. As indicated above, Fletcher heard directly from several Dakota shareholders not on the Board — as well as others who do not even live in the Dakota — that the Board did not approve the sale because of the false allegations that his financial situation was in disarray and because he had reneged on financial commitments to charitable organizations.
116. Third and most importantly, while disclaiming any motive based on "improper motivation" and noting that it held Fletcher in "high regard," the Board repeated, publicly, the defamatory statement that "[bjased on the financial information submitted by Fletcher, the Board concluded that approving such a purchase would not be in the best interest of the Dakota."
117. The September 14 letter also contained the false and misleading statement that
Fletcher had declined the Board's request to provide additional financial information. As discussed above, he had provided extensive financial information in response to the Board's requests. In addition, Fletcher was in the process of gathering the additional documents requested by the Board for review. He wrote specifically to defendant Barnes by email on
September 17, 2010, confirming this and stating that "our document collection for your latest request continues with a current estimate of 500."
37 118. On October 18, 2010, Fletcher sent a follow-up email to the entire Board, in an
effort to correct the false and misleading statements that defendant Barnes and other Individual
Defendants had made regarding Hetcher's finances. In addition, Fletcher stated that he had
collected the documents requested and was, along with his advisors, completing an initial review.
119. Fletcher submitted these documents to the law firm of Skadden Arps, where
Mallow is a retired partner, for review, allow told Fletcher that he believed this review would
succeed in convincing the Board to approve Fletcher's application to purchase Apartment 50.
Both the attorneys at Skadden and Mallow confirmed that the FAM loan covenants were "plain
vanilla" and that there was nothing unusual or of concern regarding the FAM loans. Indeed, the
FAM loans had been made on extremely attractive terms that were economically advantageous
to FAM's business, particularly during a period of low liquidity in the rest of the market.
120. Remarkably, on November 4, 2010, Mallow informed Hetcher that the Board had yet another series of unprecedented and insulting demands before it would consider approving his application to purchase Apartment 50. These demands included, among others, that Fletcher give the Board a release, that he purchase from the Building interior hallway space between the two apartments at the same price per square foot as he had agreed to pay for Apartment 51, and that he agree to sell $6 million of real estate that he owns in California and further agree to sell
Apartment 51 in the event that the California real estate was not sold within 12 months.
121. By this point, Fletcher had had enough. He had already spent months of his time and more than one hundred thousand dollars as he tried to assuage the Board's purported concerns despite the defendant's unlawful self-dealing and hostility toward him. In addition, as a direct result of the defendants' conduct, Fletcher suffered extreme stress, as have his wife and
38 family. Among other harms, Fletcher has been diagnosed with stress-induced shingles and
prescribed treatment for that condition.
122. Although Fletcher would have much preferred to resolve this conflict amicably, as
shown by his extensive efforts to satisfy the Board's increasingly unreasonable requests and by
his years of turning the other cheek in the face of disparate treatment, it had become apparent
that defendant Barnes meant his threat that Fletcher would literally have to "win the lottery"
before he would be permitted by the defendants to purchase Apartment 50. The defendants'
actions have thus left him and FAM with no choice but to bring the instant lawsuit.
The Estate Purports to Cancel,
and Breaches, Its Contract with Fletcher
123. Indeed, plaintiffs had no choice but to sue now because the Estate has purported to cancel its contract with Fletcher and has announced its intention to pursue arrangements with
"alternative" purchasers.
124. By letter dated January 24, 2011, the Estate wrote to Fletcher informing him that it was canceling the contract.
125. The Estate based its purported cancellation of the contract with Fletcher solely on the Board's purported refusal to consent to the transaction: "in view of the Board's refusal to consent to the transaction, the Seller is hereby canceling the Contract...." (emphasis added).
126. The Estate concluded the letter by stating that "it does not appear that there is any likelihood" that Fletcher "will be able to" buy Apartment 50, and that the Estate accordingly
"must pursue other alternatives."
127. In its letter, the Smith Estate acknowledged its agreement with Fletcher to keep
Apartment 50 off the market pending Fletcher's efforts to persuade the Board to reconsider his
39 application.
128. Enclosed with the January 24, 2011 letter was a check for $250,261.00, representing the return of Fletcher's down payment on Apartment 50, plus accrued interest.
129. Fletcher has not deposited the Estate's check.
130. The Estate's action has created an urgent situation. Now that the Estate has purported to cancel its contract with Fletcher and has announced its intention to put Apartment
50 on the market, Fletcher faces imminent risk of irreparable harm. The great desirability of apartments at The Dakota and the rarity with which those apartments become available mean that there is now a significant risk that Apartment 50 will promptly be purchased by someone other than Fletcher, and Fletcher's opportunity to make that purchase, consistent with Ms. Smith's intentions as well as the Dakota's combination policy, will be destroyed.
131. But even before its purported cancellation with Fletcher, the Estate breached its contract with Fletcher.
132. It did so, on information and belief, by listing Apartment 50 for sale both independently and as a joint listing with defendant Lovinger's apartment, even while having already contracted to sell that apartment to Fletcher. The Estate thus marketed to the public an apartment that it had already promised to sell to Fletcher.
133. In so doing, the Estate also aided and abetted defendant Lovinger's breach of the fiduciary duty that she owed to Fletcher as a member of the Dakota Board.
134. To date, Apartment 50 remains unsold and is still owned by the Estate.
40 FIRST CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY - UNEQUAL TREATMENT (By Fletcher Against the Dakota and the Individual Defendants)4
135. Fletcher repeats the foregoing allegations.
136. Each member of the Board and each member of the Finance Committee owes a
fiduciary duty to each of the Corporation's shareholders, including Fletcher, to treat all
shareholders equally and to evaluate in good faith shareholder applications to purchase additional units.
137. Each member of the Board and each member of the Finance Committee also owes to Fletcher a duty of loyalty not to damage Fletcher's reputation by spreading false and misleading rumors in a reckless or malicious manner.
138. The Dakota and the Individual Defendants breached its, his or her fiduciary duty to Fletcher by (a) refusing to adhere to the Transfer Disclosure Policy; (b) imposing arbitrary and unreasonable conditions upon Fletcher's application to purchase Apartment 50; (c) subjecting
Fletcher to racial discrimination and/or otherwise impermissible treatment and retaliating against him for his efforts to assure unbiased treatment of minority residents of the Dakota; (d) failing to take reasonable steps to inform themselves of the meaning and significance of Fletcher's financial disclosures; (e) knowingly and maliciously spreading false rumors concerning
Fletcher's financial condition; (f) tendering and/or accepting the recommendation to reject
Fletcher's application while at the same time approving an application from white shareholders who were far less qualified financially; (g) tendering and/or accepting the recommendation to reject Fletcher's application with knowledge that the recommendation was based upon racial
4 To reiterate, the "Individual Defendants" for purposes of this Complaint do not include the Estate.
41 animus; (h) conspiring with other Individual Defendants to devise a pretext for rejecting
Fletcher's application.
139. As a result of the foregoing, plaintiff Fletcher has been damaged.
SECOND CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY - SELF-DEALING (By Fletcher Against the Dakota and the Individual Defendants)
140. Fletcher repeats the foregoing allegations.
141. The Dakota and the Individual Defendants owed a fiduciary duty to Fletcher.
142. The Dakota and the Individual Defendants breached its, his or her fiduciary duty to Fletcher by (a) refusing to adhere to the Transfer Disclosure Policy; (b) imposing arbitrary and unreasonable conditions upon Fletcher's application to purchase Apartment 50; (c) failing to take reasonable steps to inform themselves of the meaning and significance of Fletcher's financial disclosures; (d) knowingly and maliciously spreading false rumors concerning Fletcher's financial condition; (e) conspiring with other Individual Defendants to devise a pretext for rejecting Fletcher's application; and (f) engaging in or allowing other Board members to engage in self-dealing by denying Fletcher's application to purchase Apartment 50 so that one of the
Board members could list it on the market with her own apartment at a combined purchase price of $19.5 million.
143. In so doing, the Dakota and the Individual Defendants believed that the value of the Individual Defendants' and all other Dakota apartments would be maximized if Apartments
50 and 51 were sold together as one unit for $19.5 million and that value would certainly be greater than if Fletcher were to purchase Apartment 50 for $5.7 million.
144. As a result of the foregoing, plaintiff Fletcher has been damaged.
42 THIRD CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY - INJUNCTION (By Fletcher Against the Dakota and the Individual Defendants)
145. Fletcher repeats the foregoing allegations.
146. Fletcher has been irreparably harmed as a result of the Dakota's and the
Individual Defendants' conduct outlined above, in that he has been deprived of the ability to purchase Apartment 50 and combine it with his existing apartment at the Dakota.
147. Only if he is allowed to go forward with the purchase of Apartment 50 and the combination of that apartment with his current apartment can the harms that Fletcher has suffered be remedied. Apartment 50 is uniquely situated, as it is next to Fletcher's apartment in the building in which he has lived for nearly two decades and in which he and his wife wish to deepen their roots and raise their growing family.
148. Fletcher's purchase of Apartment 50 is, moreover, in keeping with the dying wishes of its former owner, and with the Dakota's original, historic layout.
149. If the Dakota and the Individual Defendants are not enjoined from continuing to breach their fiduciary duty by refusing to allow Fletcher to purchase Apartment 50 and combine it with his existing apartment, Fletcher will continue to suffer irreparable harm for which he has no adequate remedy at law.
FOURTH CAUSE OF ACTION
AIDING AND ABETTING BREACH OF FIDUCIARY DUTY (By Fletcher Against the Dakota and the Individual Defendants)
150. Hetcher repeats the foregoing allegations.
151. As a member of the Dakota Board, defendant Lovinger owed Fletcher, a Dakota resident, a fiduciary duty.
43 152. Defendant Lovinger breached her fiduciary duty to Hetcher by engaging in financial self-dealing for her own benefit and to Fletcher's detriment.
153. The Dakota and the Individual Defendants aided and abetted that breach and knowingly participated in that breach. They were aware that Fletcher had contracted to purchase
Apartment 50, that he had made two submissions to the Board seeking the Board's approval of his purchase of Apartment 50, and that he was engaged in on-going discussions with the Board regarding approval of his purchase of Apartment 50.
154. Rather than evaluate Fletcher's submissions in a fair and appropriate way,the
Dakota and the Individual Defendants intentionally provided substantial assistance to one another to unlawfully block the Board from approving Hetcher's application to purchase
Apartment 50, and to enable and allow defendant Lovinger to list her apartment in conjunction with Apartment 50 for a substantial profit, and thus breach the fiduciary duty that she owed to
Fletcher.
155. As a result of the foregoing, plaintiff Fletcher has been damaged.
FIFTH CAUSE OF ACTION
TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS (By Hetcher Against the Dakota and the Individual Defendants)
156. Fletcher repeats the foregoing allegations.
157. Fletcher had a valid contract with the Estate, a third-party, for the purchase of
Apartment 50.
158. The Dakota and the Individual Defendants knew about the existence of the contract and imposed unjustified preconditions on the approval of the sale to Fletcher.
44 159. The Dakota and the Individual Defendants intentionally prevented the
performance of the contract, and their wrongful acts have resulted in the Estate's purported
cancellation of the contract with Fletcher..
160. The Dakota's and the Individual Defendants' actions in this regard have been
wanton, willful, malicious, and without justification at law.
161. Fletcher has been damaged as a result of defendant's interference with the
contract.
SIXTH CAUSE OF ACTION
DEFAMATION (By Fletcher and FAM Against the Dakota and the Individual Defendants)
162. Plaintiffs repeat the foregoing allegations.
163. Beginning in April 2010, the Individual Defendants knowingly made false
statements, or made such statements in reckless disregard of their truth or falsity, about Fletcher
and FAM to the Board, Dakota shareholders and to other third parties, as set forth above.
164. Defendants disseminated false statements regarding Fletcher and FAM for the purpose of preventing Fletcher's purchase of Apartment 50.
165. Defendants' false statements are defamatory per se. They expose Fletcher and
FAM to contempt, ridicule and disgrace because they charge Fletcher with being dishonest in pledging millions of dollars to charity without the ability to follow through, and because they allege that Fletcher and FAM are in poor and unstable financial condition, thereby harming
Fletcher's reputation as an investment professional and FAM's reputation as an investment firm.
166. None of the defendants' statements is privileged because the statements were made by defendants with malice and ill will toward Fletcher and FAM and with the desire to injure, disgrace and defame Fletcher and his company.
45 167. None of the defendants' false statements is privileged because defendants made
them with knowledge that they were false, or with reckless disregard for whether the statements
were true or false.
168. Fletcher has suffered injury in that defendants' false statements have prevented him from realizing the premium value associated with his proposed acquisition of Apartment 50
and recombination with his existing residence. Apartment 52. In addition, Fletcher has suffered damages to his reputation as a trusted and successful investment advisor, which has interfered with his business dealings.
169. FAM has suffered injury in that defendants' false statements have damaged its reputation as a successful investment firm, and this reputational injury has had a further damaging effect on relationship with current and prospective investors, and on resulting profits.
170. Defendants' false statements were made with malice and willful and wanton disregard of the rights of Fletcher and FAM, thus entitling plaintiffs to punitive damages.
Further, punitive damages are necessary to deter such misconduct by the individual defendants in the future.
SEVENTH CAUSE OF ACTION
DECLARATORY JUDGMENT (Fletcher'ss Compliance With, and Defendant's Breach of. Transfer Disclosure Policy and Dakota Policy in Favor of Recombining Apartments - Declaratory Relief) (By Fletcher Against the Dakota and the Individual Defendants)
171. Fletcher repeats the foregoing allegations.
172. There are genuine, existent controversies between the parties as to the adequacy of Fletcher's application for the purchase of Apartment 50, and the propriety of the Board's failure to approve that application.
46 173. The controversy concerning the adequacy of Fletcher's application for the purchase of Apartment 50, and concerning the propriety of the Board's failure to approve that application, is justiciable.
174. If this controversy is not resolved through declaratory judgment, adequate relief will not be obtainable through other existing causes of action.
175. Fletcher is therefore entitled to a declaration that (a) his April 5, 2010 application for the purchase of Apartment 50 satisfies the Dakota's Transfer Disclosure Policy and Policy in
Favor of Recombining Apartments; and (b) the Board is required to approve Plaintiff's application for the purchase of Apartment 50.
EIGHTH CAUSE OF ACTION
DECLARATORY JUDGMENT (By Fletcher Against the Dakota and the Individual Defendants)
176. Fletcher repeats the foregoing allegations.
177. There is a genuine, existent controversy between the parties as to the legality of the Board's purported refusal to approve Hetcher's application to purchase Apartment 50 given that such refusal was the outgrowth of discrimination by the Board on the basis of Fletcher's race and/or otherwise impermissible differential treatment, and of financial self-dealing on the part of at least one Board member.
178. The controversy concerning the legality of the Board's purported refusal to approve Fletcher's purchase application is justiciable.
179. If this controversy is not resolved through declaratory judgment, adequate relief will not be obtainable through other existing causes of action.
180. Fletcher is therefore entitled to a declaration that the Board's purported refusal to approve Hetcher's application to purchase Apartment 50 is null, void, and of no effect.
47 NINTH CAUSE OF ACTION
UNLAWFUL DISCRIMINATION IN VIOLATION OF NEW YORK HUMAN RIGHTS LAW § 290 ET SEP. (By Fletcher Against the Dakota and the Individual Defendants)
181. Fletcher repeats the foregoing allegations.
182. Fletcher is an African-American man who sought to purchase Apartment 50.
183. Fletcher is financially well-qualified to purchase Apartment 50 and pay the
monthly financial obligations associated with Apartment 50.
184. The Dakota and the Individual Defendants have not identified any objective
standard against which Mr. Fletcher could be deemed financial unqualified to purchase
Apartment 50.
185. Apartment 50 remains available for sale.
186. The Dakota and the Individual Defendants (i) denied Fletcher the benefit of having the Transfer Disclosure Policy govern his application to purchase Apartment 50;
(ii) denied Fletcher the impartial, fair, and unbiased review of his financial disclosures;
(iii) recommended rejection of Fletcher's application; and (iv) made that recommendation based upon Fletcher's race and in retaliation for his prior efforts to defend other victims of racial discrimination.
187. The Dakota's and the Individual Defendants' conduct with respect to Fletcher's application to purchase Apartment 50 resulted in Fletcher being treated differently by the
Corporation than other similarly-situated white applicants.
188. The differential treatment and rejection of Fletcher's application were unlawful discriminatory acts, as defined by the New York Human Rights Law, N.Y. Executive Law § 290, et seq.
48 189. The Dakota and each of the Individual Defendants actively participated in and
caused the unlawful discriminatory acts.
190. Fletcher is entitled to an award of compensatory and punitive damages, and attorneys' fees, from the Dakota and each of the Individual Defendants, jointly and severally, in amounts to be determined at trial.
TENTH CAUSE OF ACTION
RETALIATION IN VIOLATION OF NEW YORK HUMAN RIGHTS LAW § 290 ET SEQ. (By Fletcher Against the Dakota and the Individual Defendants)
191. The Dakota and the Individual Defendants have retaliated against Fletcher in violation of New York Human Rights Law, N.Y. Executive Law § 290, et seq. by (i) denying
Fletcher the benefit of having the Transfer Disclosure Policy govern his application to purchase
Apartment 50; (ii) denying Fletcher the impartial, fair, and unbiased review of his financial disclosures; (iii) recommending rejection of Fletcher's application; (iv) spreading false and defamatory rumors about the state of Fletcher's finances and those of FAM.
192. The Dakota's and the Individual Defendants' retaliatory conduct occurred as a result of Fletcher's engagement in the protected activity of opposing the Dakota's and the
Individual Defendants' discriminatory treatment of other shareholders and non-shareholders seeking to purchase units in the Dakota.
193. Fletcher has been injured as a result of the Dakota's and the Individual
Defendants' discriminatory conduct and is entitled to an award of compensatory and punitive damages, and attorneys' fees, from the Dakota and each of the Individual Defendants, jointly and severally, in amounts to be determined at trial.
49 ELEVENTH CAUSE OF ACTION
UNLAWFUL DISCRIMINATION IN VIOLATION OF NEW YORK CITY ADMINISTRATIVE LAW § 8-107 ET SEP. (By Fletcher Against the Dakota and the Individual Defendants)
194. Fletcher repeats the foregoing allegations.
195. The differential treatment and rejection of Fletcher's application were unlawful
discriminatory practices, as defined by New York City Administrative Law § 8-107 et seq.
196. The Dakota and each of the Individual Defendants actively participated in and caused the unlawful discriminatory practice.
197. Fletcher is entitled to an award of compensatory and punitive damages, and attorneys' fees, from the Dakota and each of the Individual Defendants, jointly and severally, in amounts to be determined at trial.
TWELFTH CAUSE OF ACTION
RETALIATION IN VIOLATION OF NEW YORK CITY ADMINISTRATIVE LAW § 8-107 ET SEP. (By Fletcher Against the Dakota and the Individual Defendants)
198. Fletcher repeats the foregoing allegations.
199. The Dakota and the Individual Defendants have retaliated against Fletcher in violation of New York Human Rights Law, N.Y. Executive Law § 8-107, et seq. by (i) denying
Fletcher the benefit of having the Transfer Disclosure Policy govern his application to purchase
Apartment 50; (ii) denying Fletcher the impartial, fair, and unbiased review of his financial disclosures; (iii) recommending rejection of Fletcher's application; (iv) spreading false and defamatory rumors about the state of Hetcher's finances and those of FAM.
200. The Dakota's and the Individual Defendants' retaliatory conduct occurred as a result of Fletcher's engagement in the protected activity of opposing the Dakota's and the
50 Individual Defendants' discriminatory treatment of other shareholders and non-shareholders
seeking to purchase units in the Dakota.
201. Fletcher has been injured as a result of the Dakota's and the Individual
Defendants' discriminatory conduct and is entitled to an award of compensatory and punitive
damages, and attorneys' fees, from the Dakota and each of the Individual Defendants, jointly and severally, in amounts to be determined at trial.
THIRTEENTH CAUSE PF ACTIPN
DECLARATPRY JUDGMENT (By Fletcher Against the Estate)
202. Hetcher repeats the foregoing allegations.
203. There is a genuine, existent controversy between the parties as to the validity of the Estate's purported cancellation, on or about January 24, 2011, of its contract with Fletcher for the sale and purchase of Apartment 50, given that: (a) such cancellation was premised solely on the Board's purported refusal to consent to Fletcher's purchase application for Apartment 50; and (b) the Board's purported refusal was the product of illegal race discrimination and/or otherwise impermissible differential treatment, and of financial self-dealing on the part of at least one Board member.
204. The controversy surrounding the validity of the Estate's purported cancellation of its contract with Fletcher is justiciable.
205. If this controversy is not resolved through declaratory judgment, adequate relief will not be obtainable through other causes of action.
206. Fletcher is therefore entitled to a declaration that the Estate's purported cancellation of its contract with Fletcher is null, void, and of no effect
51 FPURTEENTH C A U S E C F A C T I P N
BREACH C F C C N T R A C T (By Fletcher Against the Estate)
207. Fletcher repeats the foregoing allegations.
208. Cn or about March 19, 2010, Fletcher and the Estate entered into a valid, signed contract for Fletcher's purchase of Apartment 50.
209. Pursuant to the terms of that contract, the Estate promised to sell Apartment 50 to
Fletcher, and to no one else.
210. Fletcher fully performed all of his obligations under the contract with the Estate.
211. The Estate breached the contract by making efforts to sell Apartment 50 to individuals other than Fletcher; specifically, by listing Apartment 50 as available for sale, along with defendant Lovinger's Apartment 51, in a co-listing that was circulated to the public, even before it purported to cancel its contract with Fletcher.
212. If the Estate is not enjoined from continued efforts to sell Apartment 50 to purchasers other than Fletcher, Fletcher will continue to suffer harm for which he has no adequate remedy at law.
FIFTEENTH CAUSE PF ACTIPN
AIDING AND ABETTING BREACH CF FIDUCIARY DUTY (By Fletcher Against the Estate)
213. Fletcher repeats the foregoing allegations.
214. Defendant Lovinger, as a member of the Dakota Board, owed a fiduciary duty to
Fletcher, a resident of The Dakota.
52 215. Defendant Lovinger breached her fiduciary duty to Hetcher by engaging in financial self-dealing for her own benefit and to Fletcher's detriment.
216. The Estate had knowledge of Lovinger's breach and knowingly participated in that breach. Gn information and belief, it knew that Lovinger had been on the Dakota Board and had suddenly resigned from the Board, and it coordinated with Lovinger to enable her to co-list her apartment for sale along with Apartment 50 and, thereby, thwarted Fletcher's efforts to purchase Apartment 50.
217. If the Estate is not enjoined from continuing to aid and abet defendant Lovinger's breach of fiduciary duty to Hetcher, Hetcher will continue to suffer harm for which he has no adequate remedy at law.
WHEREFPRE Plaintiffs demand judgment as follows:
a. on the First Cause of Action, an award of compensatory and punitive damages to Plaintiff Fletcher jointly and severally against the Dakota and the Individual
Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
b. on the Second Cause of Action, an award of compensatory and punitive damages to Plaintiff Fletcher jointly and severally against the Dakota and the Individual
Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
c. on the Third Cause of Action, an order (i) directing the Dakota and the
Individual Defendants to provide immediate notice to plaintiffs' counsel of any application to purchase Apartment 50 (either alone or in conjunction with any other apartment), such notice to be provided no more than one business day after such application is submitted to the Board; (ii) enjoining, in the event of such notice of an application to purchase Apartment 50, the Dakota and the Individual Defendants, preliminarily and permanently, from taking any action to approve any
53 application for the purchase of Apartment 50; (iii) regardless of whether any other application to purchase Apartment 50 is submitted by any potential purchaser, requiring the Dakota and the
Individual Defendants to approve Fletcher's purchase application of Apartment 50; and (iv) preliminarily and permanently enjoining the Dakota and the Individual Defendants from interfering with or impeding in any way plaintiff's purchase of Apartment 50;
d. on the Fourth Cause of Action, an award of compensatory and punitive damages to Plaintiff Fletcher jointly and severally against the Dakota and the Individual
Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
e. on the Fifth Cause of Action, an award of compensatory and punitive damages to Plaintiff Fletcher, jointly and severally against the Dakota and the Individual
Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
f. on the Sixth Cause of Action, an award of compensatory and punitive damages to Plaintiffs jointly and severally against the Dakota and the Individual Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
g. on the Seventh Cause of Action, a declaration that (i) Plaintiff's application for the purchase of Apartment 50 satisfies the Dakota's Transfer Disclosure Policy and Policy in Favor of Recombining Apartments; and (ii) the Board is required to approve
Plaintiff's application for the purchase of Apartment 50;
h. on the Eighth Cause of Action,, a declaration that the Dakota's and the
Individual Defendants' purported refusal to consent to Fletcher's purchase of Apartment 50 is null, void, and of no effect;
54 i. on the Ninth Cause of Action, an award of compensatory and punitive damages and reasonable attorneys' fees to Plaintiff Fletcher jointly and severally against the
Dakota and the Individual Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
j . on the Tenth Cause of Action, an award of compensatory and punitive damages and reasonable attorneys' fees to Plaintiff Fletcher jointly and severally against the
Dakota and the Individual Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
k. on the Eleventh Cause of Action, an award of compensatory and punitive damages and reasonable attorneys' fees to Plaintiff Fletcher jointly and severally against the Dakota and the Individual Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
1. on the Twelfth Cause of Action, an award of compensatory and punitive damages and reasonable attorneys' fees to Plaintiff Fletcher jointly and severally against the
Dakota and the Individual Defendants, in an amount to be determined at trial, but in any event not less than $15 million;
m. on the Thirteenth Cause of Action, a declaration that the Estate's purported cancellation of the contract with Fletcher for the purchase of Apartment 50 is null, void, and of no effect;
n. on the Fourteenth Cause of Action, an order (i) directing the Estate to provide immediate notice to plaintiffs' counsel of any application to purchase Apartment 50
55 (either alone or in conjunction with any other apartment), such notice to be provided no more than one business day after such application is submitted to the Board; and (ii) enjoining the
Estate, preliminarily and permanently, from taking any further action of any kind to sell
Apartment 50 to any purchaser other than Fletcher; and
o. on the Fifteenth Cause of Action, an order (i) directing the Estate to provide immediate notice to plaintiffs' counsel of any application to purchase Apartment 50
(either alone or in conjunction with any other apartment), such notice to be provided no more than one business day after such application is submitted to the Board; and (ii) enjoining the
Estate, preliminarily and permanently, from taking any further action of any kind to sell
Apartment 50 to any purchaser other than Fletcher; and
p. Such other and further relief as to the Court may deem just and proper, including reasonable attorney's fees, together with the costs and disbursements of this action.
Dated: New York, New York January 31, 2011
KCRNSTEIN VEISZ WEXLER & PPLL&RD, LLP • I
By: /iy IVUJ _L pVwy \ Daniel J. Konjistein Ina. R. Bort v^ / 757 Third Avenue New York, New York 10017 (212)418-8600
Attorneys for Plaintiffs
Pf Counsel: Suzanne B. Goldberg, Esq.
56 VERIFICATION STATE PF CALIFPRNIA ) CCUNTY OV^[^C^j(j"
ALPHPNSE FLETCHER, JR., being duly sworn, deposes and states:
1. I am one of the Plaintiffs in the within action. I am also the founder. Chairman and Chief Executive CfBcer of Plaintiff Fletcher Asset Management, Inc.
2. I have read the foregoing Complaint and know the contents thereof, and the same is true to my own knowledge, except as to those matters alleged upon information and belief, and as to those matters, I believe them to be true.
ALPHCNS
Swom to before me this 37A/$yofJaAy,2011 GLENN TURNER COMM.# 1892244 NOTARY PUBLIC - CALIFORNIA SAN FRANCISCO COUNTY My Comrisscn Expires June 18, 2014