Recent Ruling Impacts Service on LLCs in Civil Court

Rosenberg & Estis, P.C. (“R&E”) routinely monitors decisions and trends in judicial rulings to ensure that our clients are aware of the most up to date information with respect to how current laws affect their business.

A recent ruling in a summary proceeding brought in New York County Civil Court dismissed a proceeding and addressed the propriety of service on limited liability companies (LLCs) pursuant to RPAPL 735. The Court held that a landlord may not rely on the RPAPL to serve an LLC in a summary proceeding. Therefore, landlords will have to utilize different, more stringent, methods of service on LLCs, potentially causing delays and additional jurisdictional objections. While the decision is not binding at this juncture, landlords should consider taking additional steps to avoid its application to new proceedings.

One alternative may be to pursue an ejectment action in Supreme Court thereby avoiding the RPAPL service issue entirely. R&E is well-versed in commencing plenary actions and ejectment actions in Supreme Court, in which landlords have rights and remedies otherwise unavailable in a summary proceeding. In our experience over the past few years, Supreme Court actions have moved more quickly and, in some instances, have afforded landlords more expedient access to interim remedies. However, the forum choice must be evaluated on a case-by-case basis and your R&E attorney is, as always, available to assist you in making this threshold decision.

Additionally, this should serve as a reminder that acceptable methods for service of process can be addressed and agreed upon in leases with your LLC tenants. R&E will continue to ensure that the negotiation of leases for LLC tenants includes protections to specify service requirements and minimize the risk of service defenses.

We recommend that you reach out to your trusted R&E Attorney if you have a dispute with a commercial tenant that requires potential legal action and to review new leases and letters of intent to include language in your leasing documents that protects against service of process disputes.

If you have any questions about this industry update or to learn more about the issues discussed in this industry update, please reach out to your trusted R&E Attorney.