One Stone Lending LLC v Alta Operations, LLC

Annotate this Case

Download PDF

One Stone Lending LLC v Alta Operations, LLC 2020 NY Slip Op 30722(U) March 6, 2020 Supreme Court, New York County Docket Number: 850039/2019 Judge: Arlene P. Bluth Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 03/06/2020 10:39 AM NYSCEF DOC. NO. 61 INDEX NO. 850039/2019 RECEIVED NYSCEF: 03/06/2020 SUPREME COURT OF THE STATE OF NEW YORK· NEW YORK COUNTY PART ..!tONI. ARLENE P. BLUTH PRESENlr: IAS MOTION 32 Justice ---------------·--------------------------------------------------------------X ONE STOl\IE LENDING LLC, Plaintiff, INDEX NO. 850039/2019 MOTION DATE N/A. MOTION SEQ. NO. 001 .. v AL TA OPERATIONS, LLC,GARY FLOM, SVITLANA FLOM, AMERICAN EXPRESS NATIONAL BANK, ATLANTIC SPECIALTY INSURANCE COMPANY, VENIAMIN NILVA, 625 W 55 LLC,NEWYORK CITY PARKING VIOLATIONS BUREAU, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY TRANSIT ADJUDICATION BUREAU, JOHN DOE, JANE DOE DECISION + ORDER OIN MOTION Defendant. ............................................................................................................................~------------------X The following e-filed documents, listed by NYSCEF document number (Motion 001) 20, 21, 22, 23, 24, 25,26,27,28,29, 30,31,32,33,34,35,37,38,39,40,41,42,43,44,45,46,47,48,49,50,51,52,53, 54, 55,56, 57, 58, 59 were read on this motion to/for SUMMARY JUDGMENT/ C-M to DIMISS The motion by plaintiff for summary judgment is denied and the cross-motion by defendants Alta Operations, LLC, Gary Flom and Svitlana Flom (collectively "Defendants") to dismiss is granted. Background In this foreclo:mre action, plaintiff seeks summary judgment and the appointment of a _ ·referee. Plaintiff contends it loaned $499,000 to Alta in 2017. In opposition and in support of its cross-motion, Defendants argue inter alia that plaintiff failed to cornply with Limited Liability Company Law§ 206 and, therefore, lacks the capacity to 850039/2(]~9 IVlotion No.. ONE STONE: LENDING LLC vs. ALTA OPERATIONS, LLC cun 1 of 5 Page 1of5 [*FILED: 2] NEW YORK COUNTY CLERK 03/06/2020 10:39 AM NYSCEF DOC. NO. 61 INDEX NO. 850039/2019 RECEIVED NYSCEF: 03/06/2020 maintain thi~: case. They claim that plaintiffs disregard of this provision-which directs an LLC to publish its articlc::~s of organization--compels the Court to dismiss this case. ) In reply, pla ilntiff admits it did not publish in accordance with the Limited Li~bility Company Law but contends that this is not a jurisdictional defect that warrants dismissaL Plaintiff argues that it began the publication process (after receiving Defendants' cross-motion) and, at oral argument on March 3, 2020, contended that it had completed the publication requirement~:. Discussfon "Section 206 of the Limited Liability Company Law requires each limited liability company to publish its articles of organization or comparable specified information for six , successiv~;: weeks in two local newspapers designated by the clerk of the county where the limited liability company has its principal office, followed by filing an affidavit with the Departm~nt of State, stating that such publication has been made. If the publication requirement I of section 206 is not completed within 120 days of the company's formation, the limited liability company wiU be preclud<?dfrom maintaining any action or special pro'ceeding in any New York court unless and until it complies with that requirement. Section 206 further specifies that the company's failure to file t:tI·e required proof of publication shall not impair the validity of any of its contra:cts or impair the right of any other party to maintain any action or proceeding against the company or prevent the company from defending any such action or proceeding" (Barklee Realty Co., LLC v Pataki, 309 AD2d 310, 311, 765 NYS2d 599 [1st Dept 2003]). The question for this Court is whether it can overlook the fact that when plaintiff started this case, it had not complied with section 206. Defendants rely on Small Step Day Care. LLC v ONE S'l"CINE LENDING LLC vs. ALTA OPERATIONS, LLC IV!otion No" 001 ' · 850039/20~9 2 of 5 Page 2 of 5 [*FILED: 3] NEW YORK COUNTY CLERK 03/06/2020 10:39 AM NYSCEF DOC. NO. 61 INDEX NO. 850039/2019 RECEIVED NYSCEF: 03/06/2020 Broadway Bushwick Builders, L.P. (137 AD3d 1102, 26 NYS3d 872 (Mem) [2d Dept 2016]), where a pla.intiff's case was dismissed because plaintiff failed to comply with the publication requirements. Plaintiff points to two Supreme Court cases for the proposition that its failure to , comply with the publication requirements can be overlooked. In a 2003 Nassau County case, the court found that the failure to publish was a "procedural defect" that did not preclude plaintiff from bringing a case nor did it "constitute a jurisdictional defect warranting dismissal" (Willoughby Rehabilitation & Health Care Ctr., LLC v Webster, 13 Misc3d 1230(A), 831 NYS2d 357 (Table) [Sup Ct, Nassau County 2006]). The Colpi in Willoughby also noted that plaintiffs belated publication of the notice satisfied the Limited Liability Company Law (id.). Plaintiff also relies on another case in which a court held that "subsequent compliance with Limited Liability CompanyLaw § 206 warrants nunc pro tune application averting di:;missal of the action" (2004 McDonald Ave. Realty, LLC v 2004 McDonald Ave Corp., 25 Misc3d 1204(A), 901NYS2d911 (Table) [Sup Ct, Kings County 2007]). Plaintiff is correct that some trial courts have permitted a plaintiff to maintain an action where it complied with the requirements of Limited Liability Company Law § 206 after starting a case. But there are few appellate cases on this issue. In fact, a case from the Civil Court of the City ofNew York noted that "there appears to be no New York authori,ty on whether a limited liability company can cure a publication defect after having commenced a proceeding" (Acquisitimi Am. Vl LLC v Lamadore, 5 Misc3d 461, 462, 784 NYS2d 329 [Civ Ct, New York - County 2004] [finding that petitioner was entitled to cure publication defect after starting a case]). Thi::. Court finds that it cannot ignore the purpose of Limited Liability Law § 206 and will not permit ;;i plaintiff to maintain a case where it failed to comply with the publication 850039/2019 ONE STONE LENDING LLC vs. ALTA OPERATIONS, LLC Motion No.. 1101 3 of 5 Page 3 of 5 [*FILED: 4] NEW YORK COUNTY CLERK 03/06/2020 10:39 AM NYSCEF DOC. NO. 61 INDEX NO. 850039/2019 RECEIVED NYSCEF: 03/06/2020 requirements when the case began. A review of the most recent amendment to this provision shows that the legislature increased the number of publication days from four to six and reduced the time frame :for an LLC to publish from eighteen months to twelve months (New York Bill Jacket, 2006 S.B.. 6831, Ch. 44). The goal was to make information about LLCs "available to the public in a rnam1er which reinforces the public's right to know the entities with which they are dealing·' and "to the benefit of consumers and other persons who do business in this state" (id.). Ckarly, the legislature requires LLCs to publish with the inte.nt to provide the citizens of this state.with potentially helpful information about the entities with which they might be dealing. The Court finds that these technical and cumbersome requirements cannot be overlooked simply because plaintiff decided to comply with the law only" after Defendants pointed out plaintiffs failure to meet its obligations. Under those circumstances, it would make a. mockery of the statute to allow plaintiff to maintain its case by complying with the law after starting a lawsuit and after Defendants pointed out this glaring omission. The fact :is that plaintiff started a case when it did not have the capacity to do so. It does not matter that plaintiff later may have rectified this error. Simply put, what would be the purpose of the legislature creating strict statutory requirements for LLCs to publish only for the courts to give a :plaintiff a chance to comply if and when a defendant raises it as a defense? This court canJ1C•t condone the LLC's practice of ignoring the statute, unless and until it is caught, and then preten:iing it shouldn't make a difference. Accordingly, it is hereby ORDERED that th(;: motion by plaintifffor summary judgment is denied and the crossmotion by defendants Alta Operations, LLC, Gary Flom, and Svitlana Flom to dismiss is 850039/20~9 ONE STONE: LENDING LLC vs. ALTA OPERATIONS, LLC II/lotion No. 001 · 4 of 5 Page ;r. of 5 [*FILED: 5] NEW YORK COUNTY CLERK 03/06/2020 10:39 AM INDEX NO. 850039/2019 NYSCEF DOC. NO. 61 RECEIVED NYSCEF: 03/06/2020 granted, the Clerk is directed to enter judgment accordingly and to cancel the notice of pc:ndency .\ (NYSCEF Doc. No. 7) filed in connection with this case. - - - -DATE ---·--CHECK ONE: CASE DISPOSED GRANTED D DENIED APPLICATION SETTLE ORDER CHECK IF JiPFl'WPRl.llTE: INCLUDES TRANSFER/REASSIGN ~ 850039/2019 ONE STONE LENDING LLC vs. ALTA OPERATIONS, LLC Motion NCI. 001 5 of 5 NON-FINAL DISPOSITION 0 GRANTED IN PART SUBMIT ORDER · FIDUCIARY APPOINTMENT . D OTHER REFERENCE Page 5 of 5

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.