Shell Consulting Group LLC v. Nims

DECISION AND ORDER On March 17, 2022, defendant Chad E. Nims — who is owner of defendant Hunt’s Tree Care & Pest Control (hereinafter Hunt’s Tree Care) and sole shareholder of defendant Nims Hospitality, Inc. — received a “cold call from a sales representative of [p]laintiff.” The representative advised that plaintiff could help Nims to obtain certain tax credits in exchange for plaintiff receiving a 20% commission on the credits obtained. Nims directed the representative to reach out to his employee, Bill Johnson, to further discuss the proposal. On March 18, 2022, Robert Plocharczyk reached out to Johnson on plaintiff’s behalf and the two then met on March 19. A second meeting subsequently took place on March 20, 2022, this one with Johnson, Robert Plocharczyk, and Nims. On March 22, 2022, Robert Plocharczyk sent Nims a proposed Client Services Agreement between plaintiff and Nims, Hunt’s Tree Care, and Nims Hospitality, respectively. This Agreement was then executed that same date and, on April 6, 2022, Robert Plocharczyk again met with Johnson and Nims to go over certain documents necessary for obtaining the tax credits. Each of these meetings took place in the Town of Queensbury, Warren County, with Plocharczyk apparently advising that he typically works out of plaintiff’s office in Naples, Florida but had traveled to New York for client meetings. According to plaintiff, it thereafter obtained tax credits in the amount of $497,309.96 for Nims, $434,207.94 for Hunt’s Tree Care, and $68,702.22 for Nims Hospitality. It sent invoices to defendants for the commissions due and owing, but no payments were received.¹ As a result, plaintiff commenced this action for breach of contract and unjust enrichment on December 13, 2022. Presently before the Court is defendant’s pre-answer motion to dismiss the complaint. Defendants contend that plaintiff — a limited liability company formed under the laws of Florida — is doing business in New York without a certificate of authority to do business in the State and is therefore without standing and capacity to sue (see CPLR 3211 [a] [3]). Defendants rely upon Limited Liability Company Law §808 (a), which provides as follows: “A foreign limited liability company doing business in this [S]tate without having received a certificate of authority to do business in this [S]tate may not maintain any action, suit or special proceeding in any court of this [S]tate unless and until such limited liability company shall have received a certificate of authority in this [S]tate.” Those few cases discussing Limited Liability Company Law §808 (a) rely upon the case law analyzing Business Corporation Law §1312, which has nearly identical language (see Matter of Mobilevision Med. Imaging Servs., LLC v. Sinai Diagnostic & Interventional Radiology, P.C., 66 AD3d 685, 686 [2d Dept 2009]).² That being said, “[i]n order for a court to find that a foreign corporation is ‘doing business’ in New York within the meaning of Business Corporation Law §1312 (a), ‘the corporation must be engaged in a regular and continuous course of conduct in the State’” (Highfill, Inc. v. Bruce & Iris, Inc., 50 AD3d 742, 743 [2d Dept 2008]; see Commodity Ocean Transp. Corp. of N.Y. v. Royce, 221 AD2d 406, 407 [2d Dept 1995]). “A defendant relying upon Business Corporation Law §1312 (a) as a statutory barrier to a plaintiff’s lawsuit bears the burden of proving that [plaintiff] 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” (Highfill, Inc. v. Bruce & Iris, Inc., 50 AD3d at 743 [internal quotation marks omitted]; see S & T Bank v. Spectrum Cabinet Sales, 247 AD2d 373, 373 [2d Dept 1998]; Peter Matthews, Ltd. v. Robert Mabey, Inc., 117 AD2d 943, 944 [3d Dept 1986]). “A foreign company will only be prevented from maintaining an action in New York [S]tate under Business Corporation Law §1312 (a) if…defendant can prove that…plaintiff not only operates in New York [S]tate, but that their business is wholly intrastate as well” (SLM Private Credit Student Loan Trust 2004-B v. Bonet, 49 Misc 3d 1204[A], 2015 NY Slip Op 51399[U] *5 [Civ Ct, Bronx County 2015]; see Highfill, Inc. v. Bruce & Iris, Inc., 50 AD3d at 744; see also Domino Media, Inc. v. Kranis, 9 F Supp 2d 378, 385 n 70 [SD NY 1998]). “A foreign company’s business is intrastate when it is permanent, continuous, systematic and regular within the [S]tate and the intrastate business essential to the corporation” (SLM Private Credit Student Loan Trust 2004-B v. Bonet, 2015 NY Slip Op 51399[U], at *5; see Highfill, Inc. v. Bruce & Iris, Inc., 50 AD3d at 744). In other words, “the foreign corporation must do more than make a single contract, engage in an isolated piece of business, or an occasional undertaking; it must maintain and carry on business with some continuity of act and purpose” (Intl. Fuel & Iron Corp. v. Donner Steel Co., 242 NY 224, 230 [1926]; accord SLM Private Credit Student Loan Trust 2004-B v. Bonet, 2015 NY Slip Op 51399[U], at *5). “Business Corporation Law §1312 (a) does not apply when a company’s activities in New York are merely incidental to its business in interstate…commerce” (SLM Private Credit Student Loan Trust 2004-B v. Bonet, 2015 NY Slip Op 51399[U], at *6; see Audemars Piguet Holding S.A. v. Swiss Watch Intl., Inc., 46 F Supp 3d 255 [SD NY 2014]). Indeed, Business Corporation Law §1312 (a) cannot preclude “a foreign corporation doing business in New York [S]tate from bringing suit when it is engaged in interstate commerce under the protection of USCA Const art I, §8″ (SLM Private Credit Student Loan Trust 2004-B v. Bonet, 2015 NY Slip Op 51399[U], at *6; see Colonial Mtge. Co. v. First Fed. Sav. and Loan Assn. of Rochester, 57 AD2d 1046, 1046 [4th Dept 1977]). “If a foreign corporation’s business in New York is merely soliciting business, no matter how extensive those contacts may be, then the foreign corporation is engaged in interstate commerce and is constitutionally beyond [the] reach of Business Corporation Law §1312 (a)” (SLM Private Credit Student Loan Trust 2004-B v. Bonet, 2015 NY Slip Op 51399[U], at *6; see Paper Manufacturers Co. v. Ris Paper Co., 86 Misc 2d 95, 98 [Cic Ct, NY County 1976]). Here, defendants contend that plaintiff’s business activities in New York were regular and continuous because its sale representative placed a cold call to Nims in New York, and Robert Plocharczyk then followed this cold call up with three separate meetings in New York. In this regard, defendants submit an email Robert Plocharczyk sent to one of its employees which identifies him as “Robert from Shell Consulting Group, LLC in Warrensburg.” Defendants further note that plaintiff has brought two nearly identical actions in New York: (1) Shell Consulting Group LLC v. Baker in Saratoga County Supreme Court, commenced on August 24, 2022 under Index No. EF20221850; and (2) Shell Consulting Group LLC v. Michael Christine Catering, LLC in Montgomery County Supreme Court, commenced on December 13, 2022 under Index No. EF2022-684 — thus demonstrating that plaintiff has several clients in this State. Plaintiff, on the other hand, contends that its business activities in New York are not regular and continuous but, rather, are intermittent and incidental to its interstate business — which spans 27 States, including New York. Plaintiff has submitted the affidavit of its owner, John Plocharczyk, who states that “Robert Plocharczyk…is not an owner, office [sic], member or employee of [plaintiff, and h]is connection to [plaintiff] is that he occasionally refers clients to it for which he receives a commission,…as do others in other [S]tates.”³ John Plocharczyk further states that plaintiff does not rent any space in New York, have any employees in New York, have a telephone number in New York, or have a bank account in New York, and while it occasionally receives referrals for contracts in New York, these contracts are either “received by electronic means [or, like] the one in this case,…signed at the customer’s location and mailed to [plaintiff's] Florida office.” Additionally, all work on the contracts is performed in plaintiff’s Florida office. Under the circumstances, the Court finds that defendants have failed to demonstrate that plaintiff is doing business in New York, as defined under Limited Liability Company Law §808 (a). While plaintiff solicited defendants’ business in New York and Robert Plocharczyk then met with plaintiff three times in this State, these activities were incidental to and in furtherance of plaintiff’s business in interstate commerce. The fact that plaintiff has two other breach of contract actions pending in New York is not sufficient to demonstrate otherwise — especially given the nature of its business and its presence in 27 different States (see SLM Private Credit Student Loan Trust 2004-B v. Bonet, 2015 NY Slip Op 51399[U], at *6; Paper Manufacturers Co. v. Ris Paper Co., 86 Misc 2d at 98). At this juncture, there is simply nothing in the record to “prove that…plaintiff not only operates in New York [S]tate, but that [its] business is wholly intrastate as well” (SLM Private Credit Student Loan Trust 2004-B v. Bonet, 2015 NY Slip Op 51399[U] at *5; see Highfill, Inc. v. Bruce & Iris, Inc., 50 AD3d at 744). “Absent sufficient evidence to establish that a plaintiff is doing business in this [S]tate, ‘the presumption is that…plaintiff is doing business in its State of incorporation…and not in New York” (Highfill, Inc. v. Bruce & Iris, Inc., 50 AD3d at 743-744, quoting Cadle Co. v. Hoffman, 237 AD2d 555, 555 [2d Dept 1997]). Defendants’ motion to dismiss is therefore denied without prejudice. Defendants are hereby directed to serve an answer within thirty (30) days of the date of this Decision and Order.⁴ Briefly, even if defendants had successfully demonstrated that plaintiff is doing business in New York without a certificate of authority, this would not require dismissal of the action. Indeed, under Limited Liability Company Law §808 (a) plaintiff must be provided with a reasonable opportunity to cure its noncompliance prior to dismissal (see Matter of Mobilevision Med. Imaging Servs., LLC v. Sinai Diagnostic & Interventional Radiology, P.C., 66 AD3d at 686; see also Aybar v. Aybar, 37 NY3d 274, 311 [2021, Wilson, J., dissenting]; Showcase Limousine v. Carey, 269 AD2d 133, 134 [1st Dept 2000]; Uribe v. Merchants Bank of N.Y. , 266 AD2d 21, 22 [1st Dept 1999]; Tri — Terminal Corp. v. CITC Indus., 78 AD2d 609, 609 [1st Dept 1980]). Therefore, having considered NYSCEF document Nos. 14 through 20, 24, and 26 through 31, and oral argument having been heard on November 2, 2023 with Thomas W. Peterson, Esq. appearing on behalf of plaintiff and Laura M. Gulfo, Esq. appearing on behalf of defendants, it is hereby ORDERED that defendants’ motion to dismiss is denied without prejudice; and it is further ORDERED that defendants shall serve an answer within thirty (30) days of the date of this Decision and Order. This Decision and Order has been efiled by the Court. Counsel for plaintiff is hereby directed to serve with notice of entry. Dated: November 6, 2023