National Arts Club Legal Battles Cost $500K So Far This Year

By Amy Zimmer | October 17, 2011 2:52pm 

MANHATTAN — The legal war at the National Arts Club has already cost the venerable arts institution a half million dollars so far this year and there appears to be no end in sight, according to lawyers for the club and an attorney for deposed club president O. Aldon James.

Bernhard told members last week that the club had already shelled out $500,000 for legal costs over the past seven months, but there "does not appear to be an end in sight" to the legal challenges from her predecessor.

A lawyer for "the James Group" — James, his brother John, and friend Steven Leitner — said the board's fears are correct.

"Until the National Arts Club begins to act reasonably, responsibly and rationally towards our clients instead of in a mean-spirited, mendacious and manipulative way, she's absolutely right," lawyer Adam Gilbert said. "The war will continue."

Roland Riopelle, who represents the NAC, fired back at the trio, saying they are "practiced at stringing things out through litigation" and that "they are not likely to let up. All we can do is hit the tennis ball to the other side."

Both sides have clashed in minor skirmishes as they file motions challenging each other almost daily.

Now the dueling factions are calling on their respective supporters to attend the next big battle: an Oct. 26 hearing at Manhattan Supreme Court where a judge could decide new guidelines for the club's eviction process regarding James, who occupies several apartments there.

The club had filed a motion in Manhattan Supreme Court on Wednesday to show that the club's governors were within their rights to dismiss James from its board during a Sept. 22 meeting where James was reportedly "wildly disruptive."

One day later, the club withdrew the motion.

Riopelle said the club rescinded the order to keep the focus on the upcoming court hearing.

"While we feel that the motion had merit," Riopelle said, "We didn't want to clog up the judge's calendar with one more issue. … We're just going to keep everything on hold until the hearing."

James's attorney believes the club backed down because it feared financial penalties.

He had argued that removing James from the board violated Judge Carol Edmead's Sept. 28 order, which stated "Aldon is entitled to be restored as Governor of the Board." Edmead said any violations of the court's orders "shall result in costs and attorneys' fees."

According to an ongoing internal investigation conducted by the club, James, his twin brother, John, and their friend Steven Leitner have been using club apartments — paying well below market rates on some and having no leases on others — to hoard antiques and other junk, which may have been bought with club money. The trio controls six apartments in the club, down from half of the nearly 40 apartments in the club, Bernhard has said. When the board attempted to hold an internal hearing to evict them from the club's Gramercy Park mansion, the three filed a lawsuit in August.

Judge Edmead temporarily halted any efforts to oust Aldon James from the club while she works with both sides on developing more reasonable guidelines for the club's internal eviction hearing.

The board tried to boot James from the club during a heated Sept. 22 meeting where "at one point, when President Dianne Bernhard, a cancer survivor, attempted to take control of the meeting, Mr. James stated in substance, 'I hope you get sick again with your cancer'," Riopelle wrote in an affidavit.

The club's legal team has also been trying to comply with the state Attorney General and Manhattan District Attorney on separate investigations into alleged financial misdeeds during James' 25-year reign.