Co-Ops—Motion to Dismiss Attorney General’s Special Proceeding to Dissolve a Corporate Sponsor Denied—Sponsor Stopped Selling and Began Leasing at Market Prices—Statute of Limitations Had Not Expired—Continuous Wrong Doctrine

A special proceeding had been commenced by the New York Attorney General (AG), seeking to dissolve respondent (“A” Corp.). “A” Corp. had been incorporated in December 1986 and owned a 44-unit building (Building). “A” Corp. had been formed by a prior landlord (sponsor) for the purpose of converting the Building from a for-profit rental building into a building that was owned by a cooperative corporation. “A” Corp.’s purpose, as set forth in its certificate of incorporation (certificate), is “to provide homes for its stockholders by leasing to them units in the Building.” Prior to converting the Building into a co-op, the units had been subject to rent stabilization and rent-control protections. The AG sought to dissolve “A” Corp., pursuant to BCL §§109(a)(1) and (5) “for acting in contravention of its corporate purpose to sell apartments to tenant-shareholders.” The AG also sought a declaration that upon dissolution of “A” Corp., “the new owner of the units owned by ['A' Corp.] must register the apartments with the [NYS Division of Housing and Community Renewal] (DHCR)” to achieve “rent stabilization protections.”

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