RAPAPORT... Judge Michael Stallman dismissed a petition brought before the court to void the New York Diamond Dealers Club's (DDC) vote to change its December 2008 bylaws. Instead, he determined that the votes cast by club members who had not paid their dues were still valid because those members had not been notified of possible suspension for nonpayment. 

The club's former vice president, David Abraham, brought the petition in February 2009 on the grounds that failure to pay club dues resulted in automatic membership suspension and thus disqualified a number of the votes tallied in the very tight December 2008 poll, the outcome of which repealed DDC's term limits and enabled then-president Jacob Banda to secure a fifth term. Banda passed away in 2009.

The main point argued on both sides centered on whether members were allowed to vote if their club dues were not up to date. Abraham  argued that members who had failed to paid dues were not entitled to vote because membership was automatically suspended. 

Affidavits submitted to the judge found that approximately 40 members had not paid thier 2008 dues. But while Judge Stallman found that the DDC's bylaws stated that "a member shall be automatically suspended from membership for failure to pay dues," he also found that the bylaws did not include a provision addressing membership expiration. He ruled that although the bylaws intended automatic suspension for the failure to pay dues, they did not specify the impact of this suspension on voting rights. The judge wrote though that a member may resign or be expelled, as set forth in the bylaws.

Based upon a New York State statute, not-for-profit provisions require that these groups offer reasonable notice to someone who has failed to pay membership dues before suspending that member for non-payment. The DDC had not issued suspension notices.

"A bylaws provision that is inconsistent with the not-for-profit corporation law is void and unenforceable," the judge noted in his ruling. "The court must conclude that automatic suspension provision set forth in Article VII of Diamond Dealers Club's 2006 bylaws cannot be enforced because it runs contrary to the statute." 

Judge Stallman concluded that Abraham had not shown a valid basis for invalidating the December 2008 votes. The judge also denied the DDC's request for a summary judgment.

LH