Opinion
No. 04-CV-0425 (JBW).
July 13, 2004
MEMORANDUM, JUDGMENT ORDER
In November 2003, Great Seneca Financial Corporation ("Great Seneca"), through its attorneys, Mel S. Harris and Associates, L.L.C., brought suit against plaintiff in New York state court to recover a debt allegedly incurred by plaintiff originally to Aspire Card and subsequently assigned to Great Seneca. The suit demanded judgment for the sum of $2273.79 together with interest and attorneys fees.
Plaintiff subsequently brought suit in this court for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692. Plaintiff alleges that Great Seneca filed suit in the State of New York without obtaining a license to do business in this state and that such action violates FDCPA's prohibition on "the threat to take action that cannot legally be taken," 15 U.S.C. § 1692e(5), and "the use of any false representation or deceptive means in an attempt to collect any debt," 15 U.S.C. § 1692e(10). Defendants move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that, as a Maryland corporation not doing business in the State of New York, Great Seneca is not required to obtain a license in order to file a lawsuit in this state. For the reasons stated below, the motion to dismiss is granted.
Section 1312 of the Business Corporation Law precludes a foreign corporation from maintaining a New York action if it is doing business in New York without the required authorization. Bus. Corp. Law § 1312(a). In order for a foreign corporation to be found to be doing business in New York, it must have engaged in continuous, systematic and regular activity in the state.Int'l Fuel Iron Corp. v. Donner Steel Co., 151 N.E. 214, 215 (N.Y. 1926); Interline Furniture, Inc. v. Hodor Indus., Corp., 527 N.Y.S.2d 544, 545 (N.Y.App.Div. 1988). A single or isolated act or activities which are merely incidental to the corporation's business in interstate or international commerce do not constitute doing business for such purpose. Int'l Fuel Iron Corp., 151 N.E. at 215; Interline Furniture, Inc., 527 N.Y.S.2d at 545; Alicanto, S.A. v. Woolverton, 514 N.Y.S.2d 96, 98 (N.Y.App.Div. 1987). The same is true as to the mere retention of a law firm in the state. Azuma N.V. v. Sinks, 646 F. Supp. 122, 125 (S.D.N.Y. 1986). Absent proof establishing that a foreign corporation is doing business in New York, it is presumed that it is doing business in its state of incorporation and not in New York. Airline Exchange, Inc. v. Bag, 698 N.Y.S.2d 694, 695 (N.Y.App.Div. 1999).
Plaintiff has failed to overcome the presumption that Great Seneca is doing business in Maryland, its state of incorporation, and not in New York. Plaintiff's sole allegation is that Great Seneca has brought hundreds of collection actions in this state and is an important client of New York law firms. Plaintiff does not allege that Great Seneca owns any real or personal property in New York, has entered into any contracts in this state, has any offices or employees here, or that its New York collection activities represent a disproportionate share of its business. The retention of a law firm and the maintenance of legal action in New York do not constitute the type of regular, systematic and continuous activity required by Section 1312 of the Business Corporation Law.
Because plaintiff has failed to overcome the presumption that Great Seneca is not doing business in New York, the complaint is dismissed. Plaintiff has not alleged any facts to suggest that Great Seneca or Mel S. Harris and Associates have threatened to take legal action that cannot be legally taken, used any deceptive means to collect a debt or otherwise violated the Fair Debt Collection Practices Act.
Given the national character of much of American commerce, this type of parochial and hypertechnical basis for suit under the Fair Debt Collections Practices Act should not be encouraged. It does nothing to really protect consumers against overreaching creditors and burdens the federal courts unnecessarily.
Plaintiff's request to amend her complaint would not cure its deficiencies. Nevertheless plaintiff may move to reopen the case, providing a proposed amended complaint and an indication of how facts could support her contentions.
No costs or disbursements are granted. Renewal of this case with no substantial showing of merit could lead to reconsideration of fees, costs and other sanctions.
SO ORDERED.