Wednesday, June 25, 2008

Status Restored

A lawyer disbarred in New York for a federal felony conviction filed an amended certificate for his professional corporation that named his daughter (also an attorney) as director, president, secretary and shareholder. He thereafter filed documents claiming that he was sole director and dissolved and liquidated the corporation. He then sued another firm for legal malpractice in connection with their handling of claims involving the City of New York. The defendants moved to dismiss, contending that he could not individually bring suit on behalf of the corporation. The trial court granted the motion and the dismissal was affirmed by the Appellate Division.

The New York Court of Appeals reversed, holding that the merits of the malpractice claim had not been addressed. As to capacity to sue on behalf of the corporation: "Although [the corporation] initially lacked capacity to initiate the subject litigation in that it had been dissolved by proclamation of the Secretary of State...for failure to pay franchise taxes, this deficiency was cured when [the corporation] paid the required fees. Thus, [the corporation] was restored to the status it had when it was dissolved..." (Mike Frisch)

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