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Horgan Brothers, Inc. v. Monroe Property, L.L.C.

2010 WL 2674166 (U.S. Dist. Ct. D. N.J. 2010) (Unpublished)

CORPORATIONS; BUSINESS ACTIVITY REPORTS — In order for a corporation to resolve past failures and restore its access right to New Jersey’s courts, it must file business activity reports for those years it carried on New Jersey business prior to obtaining a Certificate of Authority and once it does so, it may refile or resume a previously filed law suit.

The owner of land and a restaurant entered into a contract with a general contractor for property improvement work. The parties agreed the general contractor would be entitled to a certain percentage markup on its subcontractors’ bills. In turn, the general contractor entered into a subcontract with a company to pour concrete, clear trees, install sewer lines, and fill and pave a parking lot. During the subcontractor’s performance of services, the owner orally instructed the subcontractor to perform extensive change order work in excess of the subcontractor’s agreement with the general contractor. The owner also instructed the general contractor to perform change order work in excess of the general contract. The owner indicated to both that he would pay for all the change order work he requested.

The owner failed to pay either company for the change order work. The owner then transferred both the land and the restaurant to related corporate entities. The subcontractor then filed a construction lien against the property, and subsequently sued the owner, as the controlling party of the entities that owned the land and restaurant, seeking damages personally from the owner. The owner and his two companies filed a motion for summary judgment against the subcontractor.

The Court granted the motion, finding the subcontractor was not entitled to bring suit because it had not complied with the New Jersey Corporation Business Activities Reporting Act. As the subcontractor had failed under the Act to file notice of business activities reports, it was not authorized to transact business in New Jersey. The evidence demonstrated the subcontractor had failed to pay taxes on income derived from work within New Jersey.

The Court held that the Act requires that a foreign corporation, in order to resolve past failures and restore its access right to New Jersey’s courts, must file business activity reports for those years it carried on New Jersey business prior to obtaining a certificate of authority. It held the subcontractor, who had obtained a certificate of authority two years after filing suit, had conducted business in New Jersey, but had not paid state taxes for at least two years before receiving the certificate. The Court dismissed the case, but permitted the subcontractor to refile its suit once it complied with the Act’s requirements.


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