Can a corporate entity that is not registered in NYS commence an action in the State?

When a corporate entity has commenced an action in NYS and a search on  the NYS Department of State Website reveals that the corporate entity is not registered in the State of New York, the argument can be asserted that the entity lacks the capacity and ability to avail itself of the NYS Courts and should not be permitted to sue in NYS.

The key question is whether the corporate entity has systematic and regular business activities in the State. In the instance of an entity that has commenced a foreclosure action, this office generally searches ACRIS to see how many mortgages the entity is handling in NYS. In addition, an online search would reveal the attempts that the entity has made to solicit business in the State. 

Business Corporation Law Section 1312(a) provides that:

(a) A foreign corporation doing business in this state without authority shall not maintain any action or special proceeding in this state unless and until such corporation has been authorized to do business in this state and it has paid to the state all fees and taxes imposed under the tax law or any related statute, as defined in section eighteen hundred of such law, as well as penalties and interest charges related thereto, accrued against the corporation. This prohibition shall apply to any successor in interest of such foreign corporation.”

In JP Morgan Chase Bank NA v. Didato, 185 AD3d 801 (2^nd Dept. 2020) the Appellate court held that:

Business Corporation Law § 1312(a) constitutes a bar to the maintenance of an action by a foreign corporation found to be doing business in New York without … the required authorization to do business there” (Airline Exch. v. Bag, 266 A.D.2d 414, 415, 698 N.Y.S.2d 694). “The purpose of that section is to regulate foreign corporations which are ‘doing business’ within the State, not … to enable the avoidance of contractual obligations” (Von Arx, AG. v. Breitenstein, 41 N.Y.2d 958, 960, 394 N.Y.S.2d 876, 363 N.E.2d 582). “[T]he party relying upon this statutory barrier bears the burden of proving that the corporation’s business activities in New York were not just casual or occasional, but so systematic and regular as to manifest continuity of activity in the jurisdiction” (S & T Bank v. Spectrum Cabinet Sales, 247 A.D.2d 373, 373, 668 N.Y.S.2d 641 [citation and internal quotation marks omitted] ). “[A]bsent proof establishing that the [subject corporation] is doing business in New York, it is presumed that [it] is doing business in [the] State of incorporation, and not in New York” (Airline Exch. v. Bag, 266 A.D.2d at 415, 698 N.Y.S.2d 694; see S & T Bank v. Spectrum Cabinet Sales, 247 A.D.2d at 374, 668 N.Y.S.2d 641).

LIMITED LIABILITY COMPANY LAW Section 802 provides that:

“(a) Before doing business in this state, a foreign limited liability company shall apply for authority to do business in this state by submitting to the department of state (i) a certificate of existence or, if no such certificate is issued by the jurisdiction of formation, a certified copy of the articles of organization of the limited liability company and all subsequent amendments thereto or, if no articles of organization have been filed, a certified copy of the certificate filed as its organizational basis and all amendments thereto (if such certificate or certified copy is in a foreign language, a translation in English thereof under oath of the translator shall be attached thereto) and (ii) an application for authority as a foreign limited liability company entitled “Application for authority of… (name of foreign limited liability company) under section eight hundred two of the Limited Liability Company Law,” (emphasis added).

1. We have argued to the Court that despite the fact that the Plaintiff is not currently licensed or authorized to conduct any business in NYS, and has not paid any corporate fees or taxes in NYS, it seeks to sue in NYS and avail itself of the NYS Courts. This is absurd and should not be permitted.