It is not uncommon for corporate players to form multiple legal entities. Multiple legal formations can be useful in limitation of business liability or can be used as tool for improvement of business efficiencies. When business problems arise to a level that requires attention of the court, understanding of legal entity structure is important. In a breach of contract or tort action, filing commencement papers with wrong entity as a plaintiff can result in the dismissal pursuant to CPLR 3211(a)(3). Rule 3211. Motion to dismiss. (a) Motion to dismiss cause of action. A party may move for judgment dismissing one or more causes of action asserted against him on the ground that: * * * 3. the party asserting the cause of action has not legal capacity to sue; or * * * The basis for CPLR 3211(a)(3) are rooted in CPLR 1004. To have standing in the breach of contract claim, the party must be a part of contractual agreement. Generally, if the party is listed on the contractual document, that party has a right to maintain an action in its own name. CPLR 1004 also permits “real parties in interest” to have standing to sue or be sued.…
Published January 14, 2016 by Yuri Starikov
