On April 12, 2023, Justice Chan of the New York County Commercial Division issued a decision in Hafeez v. American Express Co., 2023 NY Slip Op. 31273(U), upholding a common law claim to inspect a corporation’s books and records despite the plaintiff’s failure properly to bring a statutory action to inspect books and records, explaining:
As to plaintiff’s statutory claim for inspection of books and records, defendant argues that, by filing a summons and complaint, plaintiff fails to comply with BCL § 624, which requires that the shareholder apply to the court seeking an order to show cause in a summary proceeding. Defendant contends that by way of an order to show cause, plaintiff would offer a memorandum of law in support of the petition along with affidavits that defendant can properly respond to, as opposed to a complaint under which defendant has to accept the allegations as true.
As defendant points out, moving by a proposed order to show cause is the appropriate procedure to demand inspection under BCL § 624. Here, plaintiff does not dispute that his statutory claim is brought in an improper form, thereby waiving his opposition and abandoning this claim for inspection under BCL § 624.
Under New York law, shareholders have both statutory and common-law rights to inspect a corporation’s books and records so long as the shareholders seek the inspection in good faith and for a valid purpose. Since the common-law right of inspection is broader than the statutory right, plaintiff is entitled to inspect records beyond the specific materials delineated in Business Corporation Law § 624(b) and (e). Accordingly, dismissing the BCL § 624 claim does not automatically lead to a dismissal of plaintiff’s common law claim.
To the extent defendant argues that the common law claim is not styled in the proper form, it does not warrant dismissal. Under CPLR 103, a civil proceeding shall not be dismissed solely because it was not brought in proper form, but the court shall make whatever order is required for its proper prosecution. In this connection, defendant’s argument that the court does not have, or should not exercise, jurisdiction over this matter is also unavailing. Despite relying on CPLR 401·411 in the complaint, plaintiff also raises in his opposition that the court has jurisdiction under CPLR 301 to independently determine the common law claim. Notably, jurisdiction is an affirmative defense for the defendant to raise by motion or answer, and plaintiff is allowed-when the defense is raised-to establish the court’s jurisdiction.
(Internal quotations and citations omitted).