In re Dissolution of Gould Erectors & Rigging, Inc.

• Decision Date: 03 July 2014
• Citation: 119 A.D.3d 1039,990 N.Y.S.2d 281,2014 N.Y. Slip Op. 05004
• Court: New York Supreme Court — Appellate Division
• Parties: In the Matter of the DISSOLUTION OF GOULD ERECTORS & RIGGING, INC., et al. Hank Digeser, Respondent; John C. Flach et al., Appellants.

119 A.D.3d 1039

990 N.Y.S.2d 281

2014 N.Y. Slip Op. 05004

In the Matter of the DISSOLUTION OF GOULD ERECTORS & RIGGING, INC., et al.Hank Digeser, Respondent; John C. Flach et al., Appellants.

Supreme Court, Appellate Division, Third Department, New York.

July 3, 2014.

The Baynes Law Firm, PLLC, Ravena (John T. Biscone of Biscone Law Firm, Albany, of counsel), for appellants.

The Harding Law Firm, Niskayuna (Charles R. Harding of counsel), for respondent.

Before: PETERS, P.J., STEIN, ROSE, EGAN JR. and CLARK, JJ.

ROSE, J.

Appeal from an order of the Supreme Court(Platkin, J.), entered August 20, 2013 in Albany County, which, among other things, in a proceeding pursuant to Business Corporation Law article 11, denied respondents' motion to dismiss the petition.

In April 2013, petitioner, a director and minority shareholder of respondentsGould Erectors & Rigging, Inc. and Flach Crane & Rigging Company, Inc., commenced this special proceeding seeking judicial dissolution of the corporations ( seeBusiness Corporation Law § 1104–a).Included in the petition is a request for an accounting of respondentJohn C. Flach, the majority shareholder and president of the corporations, based upon allegations that he was engaged in looting, wasting or diverting the corporations' assets for noncorporate purposes.In accordance with Business Corporation Law § 1106, petitioner filed the petition with the County Clerk of Albany County and served respondents with an order to show cause.Respondents then moved to dismiss the proceeding, arguing that personal jurisdiction had not been obtained due to petitioner's service of only the order to show cause—and not the petition—on respondents.Supreme Court denied the motion, finding that petitioner's compliance with Business Corporation Law § 1106 was sufficient to confer jurisdiction.Respondents now appeal, contending that Supreme Court erred because petitioner failed to comply with CPLR 403(b), which requires that “the petition ... be served on any adverse party.”

It is well settled that the CPLR “govern[s] the procedure in civil judicial proceedings ... except where the procedure is regulated by inconsistent statute”(CPLR 101;seeMatter of Harris Bay Yacht Club, Inc. v. Town of Queensbury,46 A.D.3d 1304, 1305, 848 N.Y.S.2d 773[2007];see alsoMatter of Hicks v. New York State Div. of Hous. & Community Renewal,75 A.D.3d 127, 133, 901 N.Y.S.2d 186[2010] ).As is relevant here, the procedure for the judicial dissolution of corporations is governed by Business Corporation Law article 11.Business Corporation Law § 1106 in particular provides that an order to show cause is to be served upon, among others, “the corporation[s] and upon each person named in the petition”(Business Corporation Law § 1106[c] ), while the petition need only be filed with the county clerk ( seeBusiness Corporation Law § 1106[d] ).As this is inconsistent with the requirements of CPLR 403(b), the specific requirements of Business Corporation Law § 1106 control in this circumstance ( seeMatter of Brusco v. Braun,84 N.Y.2d 674, 681, 621 N.Y.S.2d 291, 645 N.E.2d 724[1994];see alsoMatter of Dandomar Co., LLC v. Town of Pleasant Val. Town Bd.,86 A.D.3d 83, 92, 924 N.Y.S.2d 499[2011] ).Inasmuch as petitioner's compliance with Business Corporation Law § 1106 gave Supreme Court jurisdiction over the corporations ( seeMatter of Finando [Sunsource Health Prods.],226 A.D.2d 634, 635, 641 N.Y.S.2d 384[1996] ), we find that the court properly denied respondents' motion to dismiss the first and third causes of action seeking judicial dissolution of the corporations.

We agree with respondents, however, that Supreme Court erred in denying their motion to dismiss for lack of personal jurisdiction with respect to the second and fourth causes of action for an accounting of Flach individually.¹These causes of action are not governed by Business Corporation Law article 11.Thus, with respect to them, petitioner was required to comply with the service provisions set forth in the CPLR.As it is undisputed that the only pleading personally served on Flach was the order to show cause—which contains no mention of the accounting causes of action—personal jurisdiction was not obtained and, therefore, the second and fourth causes of action should have been dismissed ( see generallyParker v. Mack,61 N.Y.2d 114, 117, 472 N.Y.S.2d 882, 460 N.E.2d 1316[1984];Pierce v. Village of Horseheads Police Dept.,107 A.D.3d 1354, 1355–1356, 970 N.Y.S.2d 95[2013];Matter of Wyeth Ayerst...