A Capehart Scatchard Blog

Foreign Corporation Which Loses Its Certificate of Authority To Transact Business in NJ May Not File Suit to Enforce Claims

By on November 26, 2014 in Blog with 0 Comments

In Seven Caesars, Inc. v. Dooley House, 2014 N.J. Super. Unpub. LEXIS 2222 (Sept. 11, 2014 App. Div.), Seven Caesars was a subcontractor  to Dooley House which entered into a contract with the City of Camden to rehabilitated the Hogan House. After the contract was underway, the City maintained that Dooley House was not complying with the terms of the agreement and declined to release any further installment payments. Seven Caesars sued the City of Camden due to its failure to release those funds. The City argued that this suit should be dismissed because Seven Caesars, a Delaware corporation, had its corporate charter revoked in Delaware, making it ineligible to transact business in New Jersey and unable to file suit in New Jersey.

Seven Caesar’s corporate status had lapsed in Delaware because of its failure to file an annual report and pay the annual franchise tax. As a result, New Jersey revoked its registration certificate to do business in the state. Under N.J.S.A. 14A:13-11(1), a foreign corporation transacting business in the state may not maintain any action in any court of the state until it obtains a certificate of authority. After filing this lawsuit, Seven Caesars  did restore its corporate status in Delaware and was able to produce a certificate of authority showing New Jersey restored its corporate registration.

Thus, the Appellate Division had to decide whether a foreign corporation whose certificate of authority to conduct business in New Jersey had expired, can cure that lapse and, upon issuance of a newly issued certificate of authority, retroactively validate a complaint filed when it had lost authority to do business.

The court noted that N.J.S.A. 14A:13-11(1) is jurisdictional as it defines the right of a foreign corporation to use the state courts. This statute specifically restricts access to those foreign corporations transacting business in New Jersey if they fail to comply with the provisions of the Act and register to do business in the state.

Thus, the Appellate Division found that the lapse in valid corporate status deprived Seven Caesars of its ability to file suit. Curing the defect and obtaining a retroactive certificate to conduct business will not retroactively validate the prior action. Therefore, the Appellate Division held that its suit should have been dismissed.

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About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

For the years 2020 and 2021, Ms. Ramos was selected for inclusion in The Best Lawyers in America© in the practice area of Litigation - Insurance. The attorneys on this list are selected based upon the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. A complete description of The Best Lawyers in America© methodology can be viewed via their website at: https://www.bestlawyers.com/methodology.

In 2021, Capehart Scatchard and Ms. Ramos received the “Best Law Firm” ranking in the area of Litigation – Insurance (Metro, Tier 3) published by U.S. News & World Report and Best Lawyers®. Law firms included on the list are recognized for professional excellence with consistently impressive ratings from clients and peers. To be eligible for a ranking, a firm must have at least one attorney who has been included in the current edition of Best Lawyers in America, which recognizes the top five percent of practicing lawyers in the United States. Betsy Ramos (Litigation – Insurance) was recognized for this prestigious award in the 2021 edition. For a description of the “Best Law Firm” selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

“Best Law Firms” is published by Best Lawyers in partnership with U.S. News & World Report. For a description of the selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

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