ORDER TO SHOW
Index No. 2004-7739
Appellate Case: 2005-3754
Bea Marinello, Tim Hanke, Stephen Shutt, Elizabeth
Shaughnessy, Randy Bauer, Bill Goichberg, Kenneth
M. Chadwell and United States Chess Federation,
Michael J. Matsler, an attorney duly admitted to practice in the courts of the State of New York, affirms under penalty of perjury:
1. I am a member of Rider, Weiner & Frankel, P.C., attorneys for the respondents. I am personally familiar with the facts to which I attest in this affirmation. The Court is also respectfully referred to the annexed affidavits of Grant Perks, CPA; Beatriz Marinello; Timothy Hanke; Randall Bauer; and Elizabeth Shaughnessy.
2. The respondents oppose appellant Sloan's order to show cause dated April 21, 2004 as set forth below.
3. Appellant Sloan has file an appeal from the decision and order of the Hon. Lawrence I. Horowitz dated January 10, 2005 denying his request for a temporary restraining order, and granting respondents' motion to dismiss his petition. Mr. Sloan filed his appeal on or about April 18, 2005. The record on appeal has not been filed and the appeal has not been perfected. (A copy of Judge Horowitz's Decision and Order with Notice of Entry is annexed hereto as Ex. "A"). The only papers before the Appellate Court, therefore, are those attached to Mr. Sloan's affidavit of April 20, 2005, and the annexed exhibits, upon information and belief; as well as the exhibits appended hereto.
4_ Appellant Sloan has not included with his affidavit the respondents?f notice of motion to dismiss and accompanying affidavits filed in the court below. For the convenience of the Court, as copy is annexed hereto under Ex. "B". Also annexed as exhibits are inter alia the August 2003 president's report and minutes of the USCF 2003 Annual Delegate's Meeting at which the sound business reasons for the move to Crossville, Tennessee were explained, discussed, and approved; and a copy of the USCF's By-Laws.
5. As set forth in respondents' opposing affidavits, and not disputed by appellant Sloan, the United States of America Chess Federation ("USCF") is a not-for-profit corporation organized under the laws of the State of Illinois, and is authorized to conduct business as a foreign not-for profit corporation in the State of New York. (A copy of USCF's certificate of incorporation in Illinois is annexed as exhibit "b" to respondents' affidavits from the court below). USCF's only office in New York State is in New Windsor, Orange County, New York. In February 2005 USCF completed the relocation of its principal offices to Crossville, Tennessee, leaving only its ChessLife Magazine offices in New Windsor. (A copy of USCF's certificate as a foreign corporation in Tennessee is annexed as Ex. "C" hereto).
6. Appellant Sloan's allegations of wrongdoing are baseless. He has failed to sustain his heavy burden of proving entitlement to injunctive relief. He also never served properly any of the respondents in the court below.
7. The only individual respondent who resided in New York at the time Mr. Sloan filed his papers in the court below was former Executive Director Bill Goichberg. The remaining respondents, other than Beatriz Marinello, do not and have not lived or worked in New York and are all residents of other states. Only respondent Beatriz Marinello, currently president of the USCF Executive Board, has spent any significant time in New York since January 2, 2005, when she became the volunteer Chief Operating Officer. Ms. Marinello supervised the move to Tennessee. Respondent Tim Hanke is an Executive Board member and works in Massachusetts. Respondent Stephen Shutt is an Executive Board member who lives and works in Pennsylvania. Elizabeth Shaughnessy was elected to a one-year term on the Executive Board in August 2004, as Mr. Sloan alleges, and she resides and works in California. Respondent Randy Bauer, like Ms. Shaughnessy, was elected in August 2004 to the Executive Board to fill a vacancy, and lives and works in Iowa. Respondent Kenneth M. Chadwell is an attorney for the City of Crossville, Tennessee and resides and works in Tennessee.
8. Respondents' motion to dismissed was based inter alia on petitioner's failure to effectuate service of process of the order to show cause and the papers on which it was based by personal service on or before November 22, 2004 as ordered by Judge Horowitz; by reason of the lack of personal jurisdiction over the respondents other than USCF and Bill Goichberg; and due to the inapplicability of ????510 and 511 of the Not-for-Profit Corporation Law upon which Mr. Sloan based the bulk of his claims.
9. Mr. Sloan, in his reply affidavit dated December 9, 2004, admitted that the only respondent he had personally served was the USCF. (Ex. "G" hereto). He stated that "it would have been impossible" to serve the individuals personally. He admits in his current affidavit before the Appellate Court that he did not serve, whether personally or otherwise, a copy of his affidavit and petition together with the order to show cause signed by Judge Horowitz on November 16, 2004. He admitted in open court, and in his reply affidavit, that Beatriz Marinello and Elizabeth Shaughnessy were in Spain between mid-October and mid-November 2004, and he also stated that Bill Goichberg was at a tournament in Ohio. It is undisputed that personal service was not made in compliance with Judge Horowitz?fs order. Mr. Sloan?fs claim that he posted all the papers on his website , www.samsloan.com is insufficient to confer personal jurisdiction over the respondents.
10. As set forth in respondents accompanying brief, injunctive relief is an extraordinary\ remedy and cannot be granted unless the applicant demonstrates compelling facts establishing irreparable harm if the relief is not granted and a clear entitlement to the relief. Although the appellate court in extraordinary cases can assume original jurisdiction to entertain a request for a TRO directly, the appellant has the burden of proving the relief is warranted by a "reasonable probability". See, e.g., Michael Schwartz v. Nelson A. Rockefeller, 38 A.D.2d 995 (3d Dept. 1972), appeal dismissed 30 N.Y.2d 484; 664 (1972).
11. Mr. Sloan has not presented in admissible evidentiary form the factual basis necessary to support his conclusiory allegations of conspiracy or wrongdoing. Even if any of his factual assertions were, arguendo, correct, his grievance is primarily an internal matter which should be addressed in the first instance by the corporate body and only then by the courts in either Illinois or Tennessee, where USCF's principal offices are located.
12. Mr. Sloan has presented no legitimate ground for the Court to order a freeze on the USCF's bank accounts, whether in Newburgh, New York or elsewhere. USCF's prior financial situation, its current solvent condition thanks to its recent successful efforts to trim costs and refocus on its core mission, and the sale of the building in September 2004, are described in detail in USCF's opposing affirmation by counsel, and the affidavits of Bill Goichberg and Dr. Leroy Dubeck filed in the lower court. (Ex. "B" hereto); as well as in the annexed affidavits and exhibits. The sale of the building and the move to Tennessee were the necessary culmination of a process long in the making and the result of careful planning. The move was approved by the USCF delegates and the Executive Board, contrary to Mr. Sloan's belief.
13. The proceeds of the sale, approximately $500,000, were deposited into the USCF KeyBank account in Newburgh. Of that amount $100,000 as of this date has been invested in a certificate of deposit and the balance is to be placed in a combination of money market funds and certificates of deposit, all in the name of the USCF.
14. As set forth in respondents' memorandum of law, approval by the New York State Attorney General's office was not required for the sale of the building. This issue is without substance and is in any event moot. Mr. Sloan, moreover, has not presented any grounds to justify the extraordinary remedy of an attachment or freeze on any funds.
15. Mr. Sloan has not established any right to have the individual respondents removed from the Executive Board and disqualified from running for a position on the Board in the future.
16. Mr. Sloan has not established any right to an order prohibiting respondents from performing their duties on behalf of the USCF. If granted, such an order would shut down USCF and prevent it from operating, for no valid reason. Nor does any valid ground support petitioner's demand that Beatriz Marinello and Tim Hanke be prevented from exercising their duly authorized check-writing authority. No improper checks have been written by them or anyone else at USCF and no improper expenditures have been incurred. (See Dubeck Affidavit, Ex. "B" hereto; Affidavit of Grant Perks sworn to April 27, 2005).
17. Mr. Sloan's allegations in par. 19 through 58 deal primarily with allegations of "recent developments" not contained in the record before Judge Horowitz and are not the proper subject of this appeal. They also amount to only conclusiory delusions on the part of appellant without any substance.
18. Mr. Sloan?fs candidates statement was submitted too late for the April 2005 edition of ChessLife Magazine. It appears however in the May issue. (See affidavit of Beatriz Marinello and Glen Peterscn. Ex. "G" hereto).
19. Mr. Sloan's request that the USCF be prevented from moving to Crossville, Tennessee is moot. Respondents suggest that whether the presence of mosquitos or nudists in Crossville rises to the level of an actionable wrong should be left to the courts of the State of Tennessee. The fact remains that the move was approved by the USCF delegates in August 2202 and in August 2003 and reconfirmed by the Executive Board in October 2004. The actions of the USCF Executive Board in considering, and ultimately approving, the move to Tennessee were amply documented and publicized. (See, e.g., exhibit F to respondents' opposing papers, Ex. "B" hereto, memorializing the Board's vote on October 17, 2004 and prior votes in 2003; and the August 2003 minutes, Ex. "F" hereto).
20. Mr. Sloan is, in effect, demanding a full-scale accounting of all USCF's funds and expenses based on spurious, conclusiory allegations. This relief, even assuming arguendo_ it were warranted, should be the subject of a regular plenary proceeding in the appropriate court for the State of Illinois or the State of Tennessee.
21. Finally, Mr. Sloan has presented no legitimate ground for an order disqualifying counsel.
22. Accordingly, the respondents respectfully request that Mr. Sloan's application be denied.
Dated: April 28, 2005
Michael J. Matsler
RIDER, WEINER & FRANKEL, PC.
P.O. BOX 2280 NEWBURGH, N. Y 12550 (845) 562-9100
My Home Page