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Danka Funding, L.L.C. v. Page, Scrantom, Sprouse, Tucker & Ford, P.C.

21 F. Supp.2d 465 (D. N.J. 1998)

CONTRACTS; DRAFTING; FORUM SELECTION—A complaint filed by a foreign limited liability company that qualifies to do business after the date of filing is valid and the qualification relates back to the date the complaint is filed.

A Georgia law firm leased two copiers. The lease was signed in Georgia and required the law firm to keep and use the equipment in Georgia. The leasing company was an affiliate of the copier supplier and both those companies maintained their principal places of business in Florida. The law firm, however, did business through the leasing company’s Georgia office. The lease contained a choice of law/forum-selection clause. That clause established the state in which the leasing company or its assignee’s principal corporate offices are located as the jurisdiction for both venue and substantive law issues. Subsequent to the execution of the lease, it was assigned to a finance company located in New Jersey. Following a default in payment, the leasing company brought suit in New Jersey and insisted that New Jersey law be applied.

One issue raised was that the finance company was not authorized to do business in the State of New Jersey at the time it filed its action. When the finance company became aware of this lapse, it re-registered. The law firm argued that the plain reading of the Limited Liability Company Act meant that the financing company had no standing to file the suit and, therefore, its claim should have been dismissed. According to the District Court, however, although the law firm’s conclusion was reasonable from a casual reading of the statute, it is not the law in New Jersey. Time after time, 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. Furthermore, authorization obtained subsequent to the filing of the suit relates back to the date of filing.


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