A recent court decision reminds us how the simple, easily avoidable mistakes made by counsel at the outset of a dissolution case can end in a misfire — and likely an angry client.

In Matter of Cohen (Last Choice Real Estate Corp.), Index No. 5940/07 (Sup Ct Nassau County July 18, 2007), Justice Stephen A. Bucaria of the Nassau County Supreme Court, Commercial Division, dismissed a deadlock dissolution petition brought by a 50% shareholder because the petition was verified by the shareholder’s attorney instead of by the shareholder. For readers who don’t know, under New York practice dissolution is sought by way of a petition in a special proceeding, as opposed to filing a complaint in a regular action. The petition must be verified, meaning the petitioner/shareholder must sign before a notary public an acknowledgment that he or she has read the petition and that its allegations are true to his or her own knowledge. A properly verified petition also functions as an affidavit and thus can be considered by the court as evidence. Under certain circumstances specified by statute (typically because the client does not reside in the same county as the attorney) the attorney is allowed to verify even though the attorney has no personal knowledge of the petition’s factual allegations.

What some attorneys may not appreciate, however, is that dissolution proceedings essentially start off as a paper trial, that is, the court can decide the case on the merits based on the dissolution petition and the answering papers. If the petition is verified by an attorney who lacks personal knowledge of the petition’s allegations, and there is no additional client affidavit supporting the merits, then the court cannot treat the petition as an affidavit, and the petitioner is left with no evidence in support of dissolution. Case over.

In this age of nearly instant communication and document transmission via email and overnight courier, there is little or no reason ever to forego client verification of a dissolution petition.

Update (June 3, 2008):  Following the dismissal of his case, the petitioner filed a new dissolution proceeding supported by the petitioner’s own affidavit alleging deadlock and dissension between the two 50% shareholders.  The respondent moved to dismiss the new proceeding based on the doctrine of collateral estoppel, arguing that the prior dismissal had been for lack of any evidence to support dissolution.  Justice Thomas Feinman ruled that the prior decision was not on the merits and denied the dismissal motion (read decision here).