LAW LESSONS, PART 2: THE CASE OF THE DISRUPTIVE DIRECTOR

The tool consists of three innocent-sounding words: "Charges and Specifications." In this case, it's a 12-page litany of objectionable behavior that became the rationale for the board's decision to remove the offending party from the board. The board had already initiated an eviction proceeding against the shareholder; it's now working its way through the courts.

This building opened in the late 19th century as four separate tenements, which were combined in the 1950s into a single five-story property with a brick façade. It was converted to co-op in the 1980s. Of the 69 units, shareholders own 62. The place is home to a pleasingly eclectic mix of librarians, firefighters, business executives, actors and retired cops. There's a free lending library in the basement laundry room, featuring books by the likes of Jane Austen and Joyce Carol Oates, and four times a year, the co-op throws a come-one, come-all party.

Emboldened by Appeasement

Enter our disruptive shareholder, whom we'll call Wesley Herz. From the day he moved into the building in the late 1990s, there was friction. Herz kept bringing frivolous complaints to the board's attention, and the board frequently agreed to some modest settlement to make the complaint go away without getting its attorney involved. The reasoning, according to one board member, was that it was easier to appease Herz than to fight him.

Then, in 2005, Herz got elected to the board. During the following year, he proposed several projects that other board members found "self-serving" and "frivolous," including the installation of a rooftop penthouse above his top-floor apartment, and roof decks that would be available only to residents of the fifth floor (including Herz). In such an old building the projects were either physically impractical or in violation of zoning laws. The board voted them down after minimal debate.

Herz was voted off the board after one year, but he was reelected in 2007. One reason he was able to win is that this co-op has "cumulative" voting, which means that any shareholder can designate his entire vote bloc (calculated from the number of shares held) to a single candidate. The system is designed to prevent boards from becoming entrenched, but it has the disadvantage of making it relatively easy for a shareholder to win election to the board even if he has the support of only a few other shareholders.

He came to that

meeting and

started cursing

the board president.

In the course of Herz's second term, the board discovered, during a routine building-wide plumbing inspection, that he had an illegal washing machine in his apartment. Because of the building's wood-joist construction and aged plumbing, such major new appliances require board approval. The board ordered Herz to remove the machine within 30 days. He refused.

"That," says Jack Allen, "is when all hell broke loose. That's when he started getting really disruptive, acting in an insulting and abusive manner to other board members."

The discovery of that illegal washing machine was tipping point when this co-op stopped being a friendly building and started to become a battlefield. At a board meeting in early 2008 in the co-op's conference room, the managing agent had a hard time believing what he was seeing and hearing. "Herz came to that meeting and started cursing the board president," says Art Lever, who has managed the building for the past six years. (Because of ongoing litigation, the property manager, like others mentioned here, asked that his real name not be used.)

"We had to adjourn the meeting and move it to a board member's apartment" — minus the abusive Herz.