Golden Gate Capital Partners Inc. v Blast Applications Inc.

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Golden Gate Capital Partners Inc. v Blast Applications Inc. 2012 NY Slip Op 31400(U) May 3, 2012 Supreme Court, Nassau County Docket Number: 16222-11 Judge: Timothy S. Driscoll Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. ----- ------------------------------------------------- [* 1] SUPREME COURT STATE OF NEW YORK SHORT FORM ORDER Present: RON. TIMOTHY S. DRISCOLL Justice Supreme Court --------------------------------------------------- x GOLDEN GATE CAPITAL PARTNERS INC., TRIAL/IAS PART: 16 NASSAU COUNTY Plaintiff, Index No: 16222- Motion Seq. No. - against - Submission Date: 3/16/12 BLAST APPLICA TIONS"INC. As Successor In Interest to MEDIVISOR, INC., Defendant. --------------------- x The following papers have been read on this motion: Notice of Motion, Affirmation in Support and Exhibits.................... Affirmation in Opposition and Affdavit in Opposition..................... This matter is before the Court for decision on the motion fled by Defendant Blast Applications Inc. as Successor in Interest to Medivisor Inc. ("Blast" or " Defendant" ) on Januar 24 2012 and submitted on March 16, 2012. For the reasons set forth below, the Court denies the motion. BACKGROUND A. Relief Sought Defendant moves for an Order, pursuant to CPLR Law ("BCL") 3211(a)(3) and Business Corporation 1312 , dismissing the Complaint. Plaintiff Golden Gate Capital Parners Inc. (" Plaintiff' ) opposes the motion. [* 2] B. The Paries ' History The Verified Complaint (" Complaint") (Ex. A to Bolton Aff. in Supp. ) alleges as follows: Plaintiff, Defendant Blast Applications Inc. (" Blast") and Defendant Medivisor Inc. Medivisor ) were and are corporations organized and existing by virtue of the laws of the State of Delaware , with principal places of business in Nassau County, New York. On or about Februar 15 2008 , Golden Gate I and Medivisor entered into a Consulting Service Agreement (Ex. A to Compl.). On or about Februar 15 , 2008 , Medivisor executed a Demand Promissory Note in favor of Golden Gate in the sum of $240 000. 00 (id at Ex. B). On or about July 10 2009 , Blast became the successor in interest to Medivisor. On or about July 30 , 2011 , Plaintiff sent a written notice to Defendant demanding the payment of $240 000. 00, together with accrued interest from February 15, 2011. On or about July 30 , 2011 , Plaintiff sent a written notice to Defendant demanding the sum of $240, 000. 00, plus an additional $22 500. 00 as additional principal , together with accrued interest from February 15, $15 500. 2011. The $22 , not $22 500. 00. 500. 00 demanded as additional principal should be the sum of Defendant has failed to pay the sums demanded , except for the sum of$27, 500, which was paid in two installments in 2009 and 2010. The Complaint contains two causes of action. In the fIrst , Plaintiff alleges that Defendant breached the terms of the Promissory Note by failing to make required payments , and seeks damages of not less than $212 500. , together with accrued interest from Februar 15 , 2008. In the second , Plaintiff alleges that Defendant breached the terms of the Consulting Services Agreement by failng to make required payments and failng to deliver designated shares of stock. Plaintiff seeks damages of not less tha together with accrued interest from Februar $255 950. 00, and not more than $267 750. 15 2008. In support of Defendant' s motion , counsel for Defendant (" Defendant's Counsel" submits that the Cour should dismiss the Complaint on the grounds that Plaintiff is a foreign corporation doing business in New York , but which is not authorized to do business in New York. Defendant' s Counsel notes that the Complaint does not allege that Plaintiff is authorized I Paragaphs 4 and 5 of the Complaint refer to Golden " to refer to Golden Gate. Globe " but the Court gleans that Plaintiff intended [* 3] to do business in New York. He affrms that he conducted a review of the records available from the website of the New York State , Deparent of State , Division of Corporations (Ex. B to Bolton Aff. in Supp. ), which revealed that there is no record of Plaintiff being authorized to do business in New York. Defendant's Counsel notes, furter , that the Complaint alleges tht Plaintiff maintains a principal place of business in Nassau County, New York, and that the Summons with Notice (Ex. C to Bolton Aff. in Supp. ) reflects that Plaintiff placed venue in Nassau County based on the fact that Plaintiff resides at Nassau County. Defendant' s Counsel submits that , pursuant to CPLR ~ 503(c), a corporation is deemed to be a resident ofthe county in which its principal offce is located and argues that if Plaintiffs principal office is located in Nassau County, then it must be deemed to be doing business in the State of New York. In opposition , Dean Petkanas (" Petkanas ) affirms that he is the sole managing member sole stock holder and sole employee of Golden Gate. Petkanas avers that he organized Golden Gate to render consulting and advisory services to corporations and entities throughout the United States and overseas. Prom 2008 to date , Golden Gate has performed advisory and consulting to five (5) entities , including Defendant Blast. Almost all of Golden Gate s clients were incorporated and/or located outside of New York , and most of the work was performed outside of New York. Petkanas provides details regarding those five (5) entities, including 1) their states of incorporation, which include Texas, Nevada and New Jersey, and 2) the locations where Golden Gate performed services , which included Arizona , Florida, Pennsylvania and Sri Lanka. Petkanas affrms that , with respect to its business transactions with Blast, Golden Gate handled all of Me divisor and Blast' s public filings from 2009 through 2010 on the " Pink (Petkanas Aff. in Opp. at Sheets 4), which is an electronic board that publishes filings and quotes for publicly traded companies that do not fie with the Securities and Exchange Commission SEC" ). Petkanas affirms that Blast' s public stockholders are located throughout the United States. Petkanas avers that Golden Gate has had " minimal contacts " within New York (id. 5) and , in light of the fact that its business is not regularly conducted in New York, Golden Gate determined that it was not necessary to obtain a Certificate of Authority to do business in the State of New York. Petkanas submits that the mere fact that Golden Gate has a place of [* 4] business in Nassau County, New York is an insufficient basis on which to conclude that it was doing systematic and regular business within New York. C. The Parties ' Positions Defendant submits that the Court should dismiss the Complaint on the grounds that Plaintiff is a foreign corporation doing business in New York , which is not authorized to do business in New York. Plaintiff opposes Defendant' s application , submitting that the Petkanas Affdavit establishes that Golden Gate does not systematically, continuously and regularly conduct 1312 is inapplicable. business in New York and, therefore, the statutory bar of BCL RULING OF THE COURT 1312(a) constitutes a bar to the maintenance of an action by Business Corporation Law a foreign corporation in New York if that corporation is found to be " doing business " v. Highfill, Inc. York without having obtained the requisite authorization to do so. Iris, Inc. 50 AD.3d 742 , 743 (2d Dept. 2008), quoting v. Airline Exch. in New Bruce and 266 A.D. 2d Bag, 415 (2d Dept. 1999). The question of whether a foreign corporation is " doing business " 414, in New York must be approached on a case- by-case basis with inquiry made into the type of business Id., quoting Alicanto, S.A. v. Woolverton 129 A.D. 2d 601, 602 (2d Dept. being conducted. 1987). To fmd that a foreign corporation is " doing business " in New York within the meaning ofBCL 1312(a), the corporation must be engaged in a regular and continuous course of conduct in the State. ld., quoting v. Commodity Ocean Transp. Corp. ofN.Y. Royce 221 A. 406 407 (2d Dept. 1995). A defendant relying on BCL ~ 1312(a) as a statutory barrier to a plaintiff s lawsuit bears the burden of proving that the plaintiff-corporation ' s business activities in New York were not just casual or occasional, but so systematic and regular as to manifest ld, continuity of activity in the jurisdiction. 2d 373 (2d Dept. 1998), quoting citing S & T Bank Peter Matthews, Ltd v. v. Spectrum Cabinet Sales , 247 117 AD. Robert Mabey, Inc., 943 , 944 (3d Dept. 1986). Absent sufficient evidence to establish that a plaintiff is doing business in New York, the presumption is that the plaintiff is doing business in its state of incorporation, and not in New York. Id. at 743- 744 , quoting Cadle Co. v. Hoffman, 237 AD. 555 (2d Dept. 1997). The Court denies Defendant' s motion based on the Court' s conclusion that , in light of the [* 5] Petkanas Mfidavit which details the nature and extent of Plaintiffs York and elsewhere , Defendant has not established that Plaintiffs business business activities in New activities in New York were so systematic and regular as to manifest continuity of activity in the jursdiction. Thus , the presumption is that Plaintiff is doing business in its state of incorporation , Delaware and BCL 9 1312 is inapplicable to the matter at bar. All matters not decided herein are hereby denied. This constitutes the decision and order of the Cour. The Court directs counsel for the paries to appear before the Court for a Preliminary Conference on June 7 , 2012 at 9:30 a. ENTER DATED: Mineola, NY May 3, 2012 HON. TIMOTHY S. DRISCOLL ENTERED MAY 11 2012 NASSAU COUNTY COUNTY CLEM"

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