[*1]
Matter of Digeser v Flach
2013 NY Slip Op 51348(U) [40 Misc 3d 1229(A)]
Decided on August 19, 2013
Supreme Court, Albany County
Platkin, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on August 19, 2013
Supreme Court, Albany County


IN THE MATTER OF THE APPLICATION OF Hank Digeser, AS A SHAREHOLDER OF GOULD ERECTORS & RIGGING, INC., FOR THE JUDICIAL DISSOLUTION OF GOULD ERECTORS & RIGGING, INC., AND THE PETITION OF HANK DIGESER, AS A SHAREHOLDER OF FLACH CRANE & RIGGING CO., INC., FOR THE JUDICIAL DISSOLUTION OF FLACH CRANE & RIGGING CO., INC., Petitioner,

against

John C. Flach and GOULD ERECTORS & RIGGING, INC., and FLACH CRANE & RIGGING CO., INC., Respondents.




2382-13



Law Offices of Richard J. Herrmann, Jr.

Attorneys for Petitioner

(Richard J. Herrmann, Jr., of counsel)

440 Route 146

Clifton Park, New York 12065

The Baynes Law Firm, PLLC

(Brendan F. Baynes, of counsel)

Attorneys for Respondents

130 Main Street

Ravena, New York 12143

Richard M. Platkin, J.



By this special proceeding, petitioner Hank Digeser seeks the judicial dissolution of two business corporations in which he is the minority shareholder: respondents Gould Erectors & Rigging, Inc. ("Gould") and Flach Crane & Rigging Co., Inc. ("Flach Co."). The majority shareholder, John C. Flach, also is named as a respondent.

The petition seeks dissolution of the corporations pursuant to Business Corporation Law ("BCL") § 1104-a, based largely upon allegations of oppressive conduct directed at Digeser. The proceeding was commenced on April 30, 2013 by an Order to Show Cause ("OTSC") (Lynch, J.), directing that all persons interested in Gould and Flach Co. show cause why the corporations should not be dissolved. The OTSC also directed publication of the OTSC and service of the OTSC upon the named respondents and the state tax commission.

Respondents do not dispute that they were served with the signed OTSC in the manner and within the time directed therein. However, respondents argue that petitioner's failure to serve them with the petition leaves the Court without jurisdiction over this matter.

The procedures to be followed when seeking judicial dissolution of a corporation are set forth in statute. Upon presentment of a verified petition for dissolution, the court is to issue an order requiring the corporation and all interested persons to show cause why the corporation should not be dissolved (BCL § 1106 [a]). A copy of this order must be published in accordance with a prescribed schedule (id. [b]). Further, "[a] copy of the order to show cause shall be served upon the state tax commission and the corporation and upon each person named in the petition" at least ten days prior to the return date (id. [c]). Additionally, the statute requires that "[a] copy of the order to show cause and the petition . . . be filed within ten days after the order is entered, with the clerk of the county where the office of the corporation is located at the date of the order" (id. [d]).

The foregoing statutory procedures do not require service of the petition upon the corporation or other named respondents. This represents a departure from the usual mode of commencing a special proceeding (cf. CPLR 403 [b]). However, by requiring the petition to be filed with the County Clerk in advance of the return date, the State Legislature has afforded interested parties the opportunity to review the petition.

With regard to respondents' claim that petitioner's failure to serve them with the petition is a fatal jurisdictional defect, the Appellate Division, Second Department has held that jurisdiction for the purpose of dissolution is acquired "over the corporation and all persons interested in the corporation' upon compliance with the statutory notice provisions set forth in Business Corporation Law § 1106" (Matter of Finando (Sunsource Health Prods.), 226 AD2d 634, 635 [2d Dept 1996]; accord Matter of Adelstein v Finest Food Distrib. Co. NY Inc., 2010 NY Slip Op 31719 [U] [Sup Ct, Queens County 2010]; see also In re Christian Jensen Co., 128 NY 550 [1891]). As respondents have not identified any contrary authority from the Third Department, the precedent of the Second Department is binding upon this Court (see generally Matter of Patrick BB, 284 AD2d 636, 639 [3d Dept 2001]; Mountain View Coach Lines v Storms, 102 AD2d 663, 664 [2d Dept 1984]).

As there is no dispute that petitioner complied with the statutory requirements of BCL § [*2]1106 and the corresponding judicial directives included within the signed Order to Show Cause, the motion seeking dismissal of this matter for lack of jurisdiction must be denied.

Accordingly, it is

ORDERED that respondents' motion to dismiss is denied; and it is further

ORDERED that respondents shall file an answer to the petition within thirty (30) days from service of this Decision & Order upon them with notice of entry; and finally it is

ORDERED that respondents shall have ninety (90) days from service of this Decision & Order upon them with notice of entry in which to make a BCL § 1118 election.

This constitutes the Decision & Order of the Court. The original Decision & Order is being transmitted to the petitioner's counsel for filing and service; all other papers are being transmitted to the Albany County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR Rule 2220. Counsel is not relieved from the applicable provisions of that Rule respecting filing, entry and Notice of Entry.

Dated: Albany, New York

August 19, 2013

RICHARD M. PLATKIN

A.J.S.C.

Papers Considered:

Order To Show Cause, dated April 30, 2013;

Verified Petition, sworn to April 30, 2013;

Notice of Motion to Dismiss, sworn to June 10, 2013;

Affidavit of John C. Flach, sworn to June 10, 2013, with attached exhibit B;

Affidavit of Brendan F. Baynes, Esq., sworn to June 10, 2013, with attached exhibit A;

Affidavit of Richard J. Herrmann, Jr., Esq,. sworn to June 12, 2013;

Reply Affidavit of Brendan F. Baynes, Esq., sworn to June 14, 2013.