As I wrote here, in 2016 the Manhattan-based Appellate Division, First Department decided Raharney Capital LLC v Capital Stack LLC, overruling its own precedent and joining appellate rulings by the other Departments holding that New York courts lack subject matter jurisdiction over petitions to dissolve foreign business entities.
New York courts are not the only ones to come to that conclusion, albeit not necessarily expressed in terms of subject matter jurisdiction. For those interested in the topic, I highly recommend a 2015 article in The Business Lawyer by Peter B. Ladig and Kyle Evans Gay entitled Judicial Dissolution: Are the Courts of the State that Brought You In the Only Courts that Can Take You Out? The article examines doctrinal underpinnings and highlights court rulings from a number of states holding that the power to judicially dissolve a business entity belongs exclusively to courts in the state of its formation.
You’d think we’d seen the last of the issue, at least in New York, after Raharney closed the door five years ago. But there’s one wrinkle that Raharney and its kindred decisions didn’t address: Where should a business owner seeking judicial dissolution of a New York-based foreign business entity bring suit when the governing shareholder, partnership, or operating agreement includes a broad forum selection clause consenting to the exclusive jurisdiction and venue of New York courts in any litigation among the signatories?
Manhattan Commercial Division Justice Jennifer G. Schecter gave the answer in her decision last month in Durst Buildings Corp. v Edelman Family Co. Continue Reading Business Divorce Alert: Forum Selection Clauses Do Not Confer Subject Matter Jurisdiction in Foreign Entity Dissolution Cases