Following the Elm City Cooperative Market’s foreclosure in September, one board member of the former co-op, Bruce Becker, is filing suit against the market’s former leadership.

After the Elm City Market was foreclosed, it was auctioned off in October to the Elm City Community Market, which made the purchase using an infusion of capital provided by philanthropist L. Linfield Simon. Under its new leadership, which replaces the authority of the co-op board, the market no longer runs as a cooperative.

Becker is investigating the Article 9 sale, which involved the transfer of assets from the original management to the new Elm City Community Market. In particular, he is filing a lawsuit against the market’s leadership in order to gain access to corporate emails and financial documents that he believes may indicate improper actions on the part of the market’s previous management.

Elm City Market CEO Doug Berson declined to comment on the suit due to the ongoing nature of the legal action. The attorney representing the Elm City Market, Jeffrey Sklarz, did not respond to request for comment Tuesday.

According to Becker, the market’s financial problems last year primarily resulted from an amendment to the market’s lease. The amendment included a revision that removed a clause that protected the market from default if they made late payments to the landlord, Multi-Employer Pension Trust. The market was already behind on payments, so the new amendment further strained their finances.

Berson, the Elm City Market’s general manager before the sale, signed the measure into place without approval from the board, Becker said.

“I don’t think anyone would dispute the fact that [the] lease amendment triggered the default,” Becker said.

In addition to Becker, other shareholders have raised questions about the sale of Elm City Market.

On Sept. 19, co-op shareholder and Yale professor of architecture Kent Bloomer wrote to Elm City Market management, the Webster Bank vice president and others involved in making decisions regarding the Article 9 to raise issues about the market’s sale. In the letter, Bloomer expressed concern with Berson and financial consultant James Fleet agreeing to the Article 9 sale without the Board of Directors’ approval.

“Given this, it appears that you, either knowingly or unwittingly, have been aiding or abetting self-dealing and tortious conduct by certain of the Cooperative’s employees,” Bloomer wrote. “Your actions may also amount to a civil conspiracy.”

Becker said that if he found evidence of malfeasance in the market’s financial documents and emails, board members and officers would potentially recoup some of their financial losses through an insurance policy. Becker stressed that the potential mismanagement was harmful to investors who lost money when the market went into foreclosure.

According to board member Diane Polen, all board members had to invest in the co-op in order to be a part of the board. Since the board can only consist of members, each person on the board had to invest at least $200. However, Polen said that Becker had invested significantly more money in the market than the minimum required for membership.

Still, she did not specify how much Becker had invested.

Polen added that Becker had encouraged other members of the New Haven community — including his former Yale architecture professor, Bloomer — to invest in the co-op.

Although the market has had around $10 million a year in sales, the board of directors has had a tumultuous relationship with management, hiring and firing three general managers over a two-year period.

In July, a proposal for an infusion of capital from Simon included a provision that stipulated that Berson was to remain in a management position, according to Becker.

A former board member who spoke under the condition of anonymity said they believe that the public and the co-op’s former owners have a right to know what is in the unreleased documents. Though he does not believe Berson single-handedly brought about the market’s financial problems, he thinks that the situation was manipulated to serve the former management’s ends.

Board member Pedro Soto said that although the lawsuit was filed against the former management of the market, the new Elm City Community Market has stepped in to intervene in the case. He added that if the lawsuit proceeds, the market may be forced to release the documents.

The market first opened in November 2011.

Correction: Nov. 19

A previous version of this article misspelled the name of Elm City Market board member Diane Polan.

SARAH BRULEY
NOAH KIM