Foreign Limited Liability Companies. Page, Scrantom, Sprouse, Tucker & Ford, a Georgia law firm, entered into a lease of office equipment in Georgia. The lessor assigned the lease to Danka Funding Co (DFC), a New York limited liability company (LLC)

Question

with its principal place of business in New Jersey. DFC was registered as a foreign LLC in New Jersey for almost two years before the registration lapsed or was withdrawn. Under the applicable statute, a foreign LLC "may not maintain any action . . . in this State until it has registered." When Page defaulted on the lease, DFC filed a complaint in a New Jersey state court against Page for more than $100,000. In its response, Page pointed out that DFC was not registered as a foreign LLC. DFC reregistered. Asserting that DFC had not been registered when it filed its suit, Page asked a federal district court to dismiss the suit. Should the court grant this request? Why or why not?

Answer 1

Foreign limited liability companies
The court denied Page's motion to dismiss the case. The court acknowledged that "defen-dant's conclusion is reasonable from a casual reading of the statute," but "it is not the law in New Jersey. Time and time again, New Jersey courts have reiterated their understanding that a company's failure to register before filing does not require dismissal so long as the company corrects the deficiency and files during the proceedings. These cases appear equally applicable to the limited liability company statute." The court emphasized that DFC had reregistered during the course of the proceedings and that "the specific language of the statute only forbids ‘maintain[ing]' an action, not the commencement of one." Most states interpreting similar statutes have held that the word "maintain" does not block the commencement of a suit, but only the "maintaining" of one when a business entity fails to comply with the requirements of the statute.