Serving Process Upon Foreign Non-New York Business Entities: The Devil is in the Details
Today, more than ever, commercial litigation gives rise to a host of procedural issues that need to be thoughtfully analyzed before a single paper is filed in Court. One such procedural issue involves effectuating good service upon an unauthorized foreign non-New York business so as to bring that entity within the jurisdiction of the subject New York court. While it sounds simple enough, there are several unique steps that must be taken otherwise service will fail.
If a non-New York business entity is authorized to do business in New York, then service is straightforward because that entity can be expediently served via the New York Secretary of State and in the same manner as a domestic New York business entity.[1] However, service is more complicated with respect to foreign non-New York business entities that are not authorized to do business in New York. In those instances, service upon the New York Secretary of State without more will not suffice.
The manner of service upon an unauthorized foreign non-New York business entity is outlined in (1) New York Business Corporation Law (“BCL”) with respect to a for-profit corporation and (2) New York Limited Liability Company Law (“LLCL”) with respect to a limited liability company.[2] These statutes apply where the foreign unauthorized business entity is subject to jurisdiction in New York. (see BCL § 307(a); see also LLCL § 304(a)). As is typically the case with interstate transactions involving sophisticated commercial parties, there is often a contractual provision through which the foreign unauthorized business entity voluntarily submits to the jurisdiction of the New York courts.
Although slightly different in form, these two comparable statutes are substantively the same in that both provide for a multi-step process to accomplish service mainly consisting of the following three (3) steps to be consecutively completed:
- First, serving process upon the New York Secretary of State (see BCL § 307(a); see also LLCL § 304(a)); and
- Second, serving a copy of the process, together with a form-type notice of service advising that the first step of service upon the New York Secretary of State was completed, by either (a) personally serving the foreign business entity outside of the State of New York by a person and in the manner authorized by the law of the service jurisdiction (see § 307(b)(1); see also § 304(c)(1)) or (b) serving the foreign business entity by registered mail, return receipt requested, at the appropriate address as set forth in the statute (see § 307(b)(2); see also § 304(c)(2)); and
- Third, filing in the New York action, as proof of service, an affidavit of compliance together with copies of the process, the notices of services, and other things depending on whether personal service or service by registered mail, return receipt requested, was used for the Second Step (see § 307(c)(1)-(2); see § 304(d)-(e)).
The First Step consisting of serving process upon the New York Secretary of State is the least complicated step. The statutes provide, in pertinent part, that “[i]n any such case, process against such [foreign unauthorized business entity] may be served upon the secretary of state as its agent.” § 307(a); § 304(a).
As to the Second Step regarding personal service outside of New York State, the statutes provide that the prior service upon the New York Secretary of State shall be sufficient if the notice of service thereof and a copy of process are “[d]elivered personally [outside of New York State] to such [foreign unauthorized business entity] by a person and in the manner authorized to serve process by law of the jurisdiction in which service is made ….”
§ 307(b)(2)(i); § 304(c)(1). Particular attention must be paid to ensure that personal service is effectuated in conformity with laws of the service jurisdiction. As a practical point, like New York, some jurisdictions permit service on business entities via serving the Secretary of State’s Office, however, there may be other local requirements that must be satisfied.
With regard to service via registered mail, return receipt requested, the statutes require that such service must be “[s]ent by or on behalf of the plaintiff to such [foreign unauthorized business entity] by registered mail[,] return receipt requested, at the post office address specified for the purpose of mailing process, on file in the department of state, or with any official or body performing the equivalent function, in the jurisdiction of its [formation], or if no such address is [there] specified, to its registered or other office [there] specified, or if no such office is [there] specified, to the last address of such [foreign unauthorized business entity] known to the plaintiff.” § 307(b)(2)(ii); § 304 (c)(2). As such, these statutory provisions set forth specific addresses in a particular order for purposes of making the mailings. (See id.) Accordingly, the determination as to which address is appropriate will depend upon the unique facts of the case and careful attention must be paid in that regard.
Finally, as to the Third Step and irrespective as to which method of service is utilized for the Second Step (to wit, personal service or mail service via registered mail, return receipt requested), the statutes require the filing of an affirmation of compliance in order for service to be deemed complete. See § 307(c)(1)-(2); see also § 304(d)-(e). The statutes set forth the particulars to be included in the affirmation of compliance and the timing requirements for filing same, which vary depending on whether personal service or mail service via registered mail, return receipt requested, was used. See id. Service is deemed complete under the statutes ten (10) days after filing a proper affirmation of compliance. See id.
Strict compliance with the wording of these statutes is required, including the requirement for filing an affirmation of compliance. See Flannery v. General Motors Corp., 214 A.D.2d 497, 497-98 (1st Dep’t 1995) (strict compliance with BCL § 307 is required); see also Global Liberty Ins. Co. v. Surgery Center of Oradell, LLC, 153 A.D.3d 606, 607 (2d Dep’t 2017) (strict compliance with LLCL § 304 is required). We successfully navigated similar service issues in the matter captioned Kapitus Servicing, Inc. v. Zumma Management Group, LLC, et al., Supreme Court of the State of New York, New York County, Index No.: 653859/2022.
The foregoing makes clear that there are enough twists and turns in these statutes to cause the unwary practitioner to err. Consequently, if an unauthorized foreign non-New York business entity is the target of a litigation the practitioner will be well-served by spending the time to study the nuances of these statutes.
Contact
If you would like to discuss this article, please contact Robert J. Malatak, Dennis A. Amore, or your Windels Marx relationship lawyer.
Disclaimer
In some jurisdictions, this material may be deemed as attorney advertising. Past results do not guarantee future outcomes. Possession of this material does not constitute an attorney/client relationship.This material should not be relied upon as a primary research source, and should issues arise pertaining to matters discussed herein, those issues should be independently researched.
[1] See, e.g., CPLR § 311(a)(1); see also BCL §§ 304(a), 306(b)(1); LLCL §§ 301(a)-(b); 302(a); 303(a); Konig v. Hermitage Ins. Co., 93 A.D.3d 643, 646 (2d Dep’t 2012) (“[s]ervice was properly effectuated upon the insured, a [non-New York] corporation [authorized to do business in New York], in the underlying action when the plaintiff delivered a copy of the summons and verified complaint to the Secretary of State …”) (citations omitted).
[2] Service with respect to other entities such as not-for-profits and partnerships are beyond the scope of this article and the statutes relevant to these other entities should be separately analyzed to discern their service requirements.
