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Appellate Division Determines that Chapter of Not-for-Profit Corporation, Seeking to be Declared a Separate Entity, has Standing and Capacity to Sue the Not-for-Profit Corporation

23 Apr 2013
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By Lewis Tesser and Timothy Nolen

A recent decision from the Appellate Division, Third Department, demonstrates a fundamental issue in any litigation: the plaintiff’s capacity to sue. The case involved issues of business law, corporate law, property and civil practice.

The case, Craine v. NYSARC, Inc., 2011 N.Y. App. Div. LEXIS 7228 (3d Dept October 20, 2011), concerned a chapter of a New York not-for-profit corporation which objected to the corporation’s restructuring plan and chose to incorporate separately. The chapter filed suit seeking that the Court declare the chapter a separate entity and allow it to incorporate on its own. Although the Court ultimately determined that the defendant-corporation’s bylaws controlled whether the chapter could incorporate separately, the Court initially found that the chapter had standing and capacity to sue given the chapter’s various “markers of autonomy” such as election of the chapter’s own officers and maintenance of the chapter’s own bank accounts.

At Tesser, Ryan & Rochman, LLP, our attorneys have decades of experience handling various business and corporate litigation matters, including capacity and standing. We can work with clients to advise them whether they are the proper party to commence a lawsuit.

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About Post Author

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Lewis Tesser is a senior partner in the New York law firm of Tesser, Ryan & Rochman, LLP, concentrating his practice in litigation and mediation, representing licensed professionals and professional practices, administrative law and commercial law. Lew Tesser is Vice-President of the New York County Lawyers’ Association and Director of its Ethics Institute. Prior to private practice, Mr. Tesser was an Assistant United States Attorney in the Eastern District of New York. In that capacity, he represented various agencies of the United States government in litigation in the United States District Court and United States Court of Appeals. Mr. Tesser also served as a Judge Advocate in the United States Army where he prosecuted and defended criminal cases and was the chief legal advisor to the Commanding General of the U.S. Army War College, Carlisle, Pennsylvania. He also has served as an Arbitrator for the American Arbitration Association, New York City Civil Court, a Judge for the Environmental Control Board of the City of New York and a lecturer for various Bar Associations and New York area law schools. Mr. Tesser, who was admitted to practice in 1971, is a 1970 Honors graduate from the National Law Center, George Washington University, a Masters graduate from the Wharton Business School, University of Pennsylvania (l974) and a graduate of the Harvard Law School Program of Instruction for Lawyers. He is a past President of Congregation Sons of Israel, Nyack, NY. Publications and Speaking Engagements Editor-In-Chief, “The New York Rules of Professional Conduct Annotated”, Oxford University Press, New York, 2010. A complete list of Mr. Tesser’s speaking engagements and publications is available if you would like to learn more about Mr. Tesser’s work. Representative Cases In Re Zhang, 376 Fed. Appx. 104 (2d Cir. 2010) Continental Casualty Co. v. JBS Construct. Mgmt., 2010 U.S. Dist. LEXIS 85467 (S.D.N.Y. 2010)

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Tesser, Ryan, & Rochman Blog

At Tesser, Ryan, & Rochman we are committed to keeping current, former, and future clients up to date. Here on our blog we will have news regarding our firm, as well as business analysis, various cases, case studies, and legal findings for the benefit of our clients.