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Posted: July 24, 2014

BCL § 1112 is Controlling for Determining Venue In an Action Seeking Judicial Dissolution

On July 21, 2014, Justice Demarest of the Kings County Commercial Division issued a decision in Sicignano v. Hymowitz, 2014 NY Slip Op. 51100(U), refusing to change venue in an action seeking judicial dissolution.

In Sicignano, the defendants in an action seeking “judicial dissolution . . . pursuant to Business Corporation Law § 1104-a” and asserting claims for negligence and breach of fiduciary moved for a change of venue. The court denied the motion, explaining:

Venue may be changed as of right on the ground that the county designated is not a proper county (CPLR § 510[1]) or on the discretionary ground that the convenience of material witnesses and ends of justice will be promoted by the change (CPLR § 510[3]). Here, the defendants are not entitled to a change of venue as of right because Kings County is a proper venue, pursuant to Business Corporation Law § 1112. Further, the defendants are not entitled to a discretionary change of venue because they have not met the burden of demonstrating that the convenience of material witnesses and the ends of justice would be promoted by the change.

Defendants argued that Plaintiffs’ choice of venue was improper because CPLR § 503(a) is controlling and no parties resided in Kings County when this action was commenced. However, this argument is unavailing because, in an action seeking judicial dissolution, Business Corporation Law § 1112 is controlling for determining venue. Business Corporation Law § 1112 prescribes that an action or a special proceeding under this article shall be brought in the supreme court in the judicial district in which the office of the corporation is located at the time of the service on the corporation of a summons in such action or of the presentation to the court of the petition in such special proceeding. Office of a corporation means the office the location of which is stated in the certificate of incorporation of a domestic corporation. Here, the plaintiffs clearly seek judicial dissolution of the Corporation, pursuant to Business Corporation Law § 1104-a, and the Certificate of Incorporation states Kings County as the location of the office of the Corporation. Since the office of the corporation was located in Kings County at the time Defendants commenced this dissolution proceeding, Kings County is a proper venue. Plaintiffs assert that the Corporation has offices [in Manhattan]. However, the sole residence of a domestic corporation for venue purposes is the county designated in its certificate of incorporation, despite its maintenance of an office or facility in another county. The principal office of the corporation as stated in its certificate is conclusive evidence of its residence. Hence, Kings County is a proper venue for this action and the defendants are not entitled to a change of venue as of right.

(Internal citations and quotations omitted) (emphasis added).

This decision illustrates some of the many procedural rules governing dissolution proceedings with which counsel should be familiar.

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