The DNAinfo archives brought to you by WNYC.
Read the press release here.

Judge Offers Deal to End National Arts Club's Legal Battle

By Amy Zimmer | October 26, 2011 4:56pm
O. Aldon James stepped down from his position as president of the National Arts Club in June. He allegedly stole funds from the NAC and used club apartments to hoard personal items.
O. Aldon James stepped down from his position as president of the National Arts Club in June. He allegedly stole funds from the NAC and used club apartments to hoard personal items.
View Full Caption
Astrid Stawlarz/Getty Images

MANHATTAN SUPREME COURT — The expensive legal battle between the National Arts Club and its former president O. Aldon James could end next week if both parties agree to terms set forth by a Manhattan Supreme Court Judge on Wednesday.

Under the terms of Justice Carol Edmead's proposal, James and his two co-plaintiffs would each be allowed to keep one apartment out of the six they currently control, on the condition that James steps down as a governor of the board. They would be allowed to remain NAC members, and the arrangement would not preclude James from being reelected to the board at a future date, she said.

Both parties would also have to agree to who gets to keep the estimated 2,000 objects found in the club that each side claim ownership over, with the court being the final arbiter if they disagree.

National Arts Club President Dianne Bernhard has led the club's clean-up after O. Aldon James' ouster.
National Arts Club President Dianne Bernhard has led the club's clean-up after O. Aldon James' ouster.
View Full Caption
National Arts Club

"This resolution cuts down on your expenses of lawyers, and you're at the end point," Edmead said Wednesday.

But the judge warned that deal would only stand if all parties agreed to give up any future litigation based on past actions.

"This is called clean up," she said. "You either give it all up or you don't."

Edmead left the door open for a future eviction of James and his two co-plaintiffs — but she would make the call on whether to evict them, not the club.

"The court makes the determination whether there has been conduct that warrants ouster," she said Wednesday.

Edmead gave the lawyers until Monday for their decisions.

James filed a lawsuit in August seeking to stop the club's board from holding an eviction hearing to oust him, his twin brother James and their friend Steven Leitner from 15 Gramercy Park South. 

James filed another lawsuit Monday, on behalf of the club against NAC's new president Dianne Bernhard along with 14 other board members for "breaches of their fiduciary duties," a "wasteful expenditure of club resources" and an "improper bid to hijack control and governance of the club through intimidation and dishonesty," according to the complaint.

James, his brother, and Leitner have been accused of using club apartments to hoard antiques and other flea market finds, which may have been bought with club money, according to an ongoing internal investigation conducted by the club.  As part of a court order, a team recently went into these apartments to document their contents and found roughly a dozen items of "significant value that were bequeathed to the club," according to NAC lawyer Roland Riopelle.

Bernhard told members previously that there "does not appear to be an end in sight" to the legal challenges from her predecessor. The club has shelled out $500,000 for legal costs since the New York Attorney General and the Manhattan District Attorney began investigating the NAC for alleged financial misdeeds.

James and the others could still face possible legal challenges from the Attorney General and the Manhattan District Attorney's office.

In James' latest, lawsuit he claims that board members instigated the AG and DA investigations, by approaching officials with "their accusations and carefully edited club records, seeking action" against James.

"Ms. Bernhard could have used lawful means to pursue the presidency of the club and seek appointment of new officers," the complaint said. "Instead, Ms. Bernhard and her supporters on the board embarked on a campaign to wrest control of the club through unlawful means, eventually subjecting the club to government investigations, extensive litigation and adverse publicity — all at costs that now total over $500,000."

James' lawsuit seeks the removal of several board members and repayment of James' attorney fees along with other relief.

Riopelle said he didn't believe the allegations in the suit were "merited."

Adam Gilbert, who is representing James on the eviction case, called Edmead's deal a "reasonable proposition," saying he applauded the court "honing in on the relevant issues and putting what is essentially a family dispute to bed."

Barry Felder, who filed the latest lawsuit for James, said, "We're certainly interested in pursuing a discussion."

The club's lawyer said the board's 20 members (excluding James) would meet to make a decision as soon as possible.

Bernhard released a statement Wednesday, saying: "The club is pleased to have received direction from the court as to how best to conduct its hearing, and looks forward to proceeding with the hearing promptly.

"We sincerely hope that the James Group will come to the same conclusion and that they will participate in this process and will work with the National Arts Club in accordance with Justice Edmead’s order and stop forcing the NAC to direct its precious resources toward any more lawsuits," the statement added.

If the parties do not accept Edmead's deal, the next step will be to move forward with the NAC internal hearing over the proposed eviction of James and his colleagues.

Edmead had granted a temporary injunction against the club last month, saying the way the hearing had been set up previously was unreasonable. On Wednesday, she issued new guidelines for any future hearing.