FIFTY NINE REALTY LLC v. GOTTESMAN (2026)

Recitation, as required by CPLR 2219 (a) of the papers considered in review of this motion by NYSCEF Doc Nos: 9-26.

PROCEDURAL POSTURE AND BACKGROUND

This is a nonpayment proceeding commenced against respondent, Shia Gottesman ("respondent"), by Fifty Nine Realty, LLC ("petitioner") on November 10, 2025. Respondent retained counsel through the Universal Access to Counsel initiative. On April 30, 2026, respondent filed a verified amended answer with counterclaims, asserting six objections in point of law (lack of standing, no lease in effect between the parties at the commencement of the proceeding, no agreement to pay the sought-after rents, building not registered as a multiple dwelling, failure to comply with GCEL, defective rent demand), two affirmative defenses (laches, breach of warranty of habitability), and four counterclaims (order to correct violations of Housing Maintenance Code, rent abatement, order to correct conditions in apartment, and attorney's fees). (NYSCEF Doc No. 7.)

On May 4, 2026, the court issued an adjournment and briefing schedule order on respondent's anticipated motion for summary judgment or dismissal. (NYSCEF Doc No. 8.) The court heard oral arguments on July 13, 2026 and reserved decision.

ARGUMENTS

Respondent seeks dismissal pursuant to CPLR 3211 on their first objection in point of law that petitioner lacks capacity to sue due to its failure to comply with publishing requirements under Limited Liability Company Law ("LLC") § 206, or alternatively for either full or partial summary judgment on their first affirmative defense of laches. (NYSCEF Doc No. 10, notice of motion [sequence 1].) Respondent attaches a screenshot of petitioner's entity's filing history with the New York Department of State ("DOS"), Division of Corporations, which indicates an initial DOS filing date of September 22, 2003, but does not reflect the filing of a certificate of publication or affidavits of publication with DOS. (NYSCEF Doc No. 10, respondent's attorney's affirmation ¶ 6; NYSCEF Doc No. 12, respondent's exhibit A, NYS DOS LLC filing.) Respondent contends the proceeding should be dismissed pursuant to CPLR 3211 (a) (3) for lack of capacity, because -- pursuant to the Appellate Division, Second Department's holding in Small Step Day Care, LLC v Broadway Bushwick Bldrs., L.P., 137 AD3d 1102 (2d Dept 2016) -- petitioner's failure to timely file affidavits of publication and a certificate of publication with DOS precludes it from conducting business in New York State, and from maintaining an action or summary proceeding until such time it comes into compliance with the publishing and filing requirements under LLC 206. (NYSCEF Doc No. 10, respondent's attorney's affirmation ¶¶ 15, 17, 20, 24-31.)

In opposition, petitioner's counsel argues that failure to comply with LLC 206 is not a "jurisdictional" defect that should lead to dismissal of the proceeding, citing to a number of lower court decisions in support of the argument that the court can permit the case to proceed if there has been compliance with LLC 206 following commencement of the proceeding. (NYSCEF Doc No. 22, petitioner's attorney's affirmation in opposition ¶¶ 5-6.) Petitioner's agent affirms they "have commenced curing the alleged defect of failure to advertise," and references a "letter from the company that my attorney engaged to cure the defect in the registration[.]" (NYSCEF Doc No. 23, Marcus affirmation ¶ 9.) Petitioner attaches an apparent screenshot of an undated e-mail or text message (of unknown provenance to an individual named Leonard Ledereich) regarding an "LLC [p]ublishing order" that "has been received and is currently being reviewed by our team of professionals." (NYSCEF Doc No. 25, petitioner's exhibit B.)

In reply, respondent argues that petitioner's counsel's affirmation should not be considered because it was not sworn in the manner required by CPLR 2106.¹ (NYSCEF Doc No. 26, respondent's attorney's reply affirmation ¶¶ 35-39.) As to the substance of petitioner's opposition, respondent contends petitioner has not cured its violation of LLC 206 and has not submitted proof of any efforts to do, which regardless would not suffice to deny dismissal of the proceeding. Respondent notes petitioner produced an undated and unauthenticated email, and not proof of having published the requisite notice. (Id. ¶¶ 6, 8.) Respondent distinguishes case law cited by petitioner, noting that two of the trial-court decisions cited by petitioner were issued prior to Small Step Day Care, LLC, and that in a recent trial-court decision issued in May 2026, the decision and order indicates the petitioner therein had already begun the requisite publishing, whereas here no proof has been submitted of anything published by petitioner. (Id. ¶ 12.)

For the reasons set forth below, the court concludes that a limited liability company must be in compliance with LLC 206 at the time a summary proceeding is commenced in Housing Court. A petitioner may not remedy noncompliance by satisfying the publication requirements after the proceeding has begun.

DISCUSSION

"A limited liability company is formed at the time of the filing of the initial articles of organization with the department of state or at any later time specified in the articles of organization, not to exceed sixty days from the date of such filing." (LLC 203 [d].)

LLC 206 (a) provides in relevant part:

"Within one hundred twenty days after the effectiveness of the initial articles of organization as determined pursuant to subdivision (d) of [LLC 203], a copy of the same or a notice containing the substance thereof shall be published once in each week for six successive weeks, in two newspapers of the county in which the office of the limited liability company is located, one newspaper to be printed weekly and one newspaper to be printed daily, to be designated by the county clerk. When such county is located within a city with a population of one million or more, such designation shall be as though the copy or notice were a notice or advertisement of judicial proceedings. Proof of the publication required by this subdivision, consisting of the certificate of publication of the limited liability company with the affidavits of publication of such newspapers annexed thereto, must be filed with the department of state."

As a penalty for failing to comply with the publication filing requirement, LLC 206 (a) further provides in relevant part:

"If within one hundred twenty days after its formation, proof of such publication, consisting of the certificate of publication of the limited liability company with the affidavits of publication of the newspapers annexed thereto has not been filed with the department of state, the authority of such limited liability company to carry on, conduct or transact any business in this state shall be suspended, effective as of the expiration of such one hundred twenty day period (emphasis added)."

Relevant here, in 2005 the legislature amended LLC 206 effective June 1, 2006. (L 2025, ch 767 as amended by L 2026, ch 44.)² Under the amended statute, any LLC that had already been formed prior to the amended statute's June 1, 2006 effective date, as was petitioner herein, but had not complied with the publishing and filing requirements under the prior version of the statute, was provided a 12 month window after June 1, 2006 within which to "publish a copy of its articles of organization or a notice containing the substance thereof in the manner required (other than the one hundred twenty day period) by this section[.]" (LLC 206 [b] [3].)The amendments provide that if an LLC fails to file the requisite proof of publication within the grace period, "its authority to carry on, conduct or transact any business in this state shall be suspended, effective as of the expiration of such [grace period]." (Id. 203 [b] [3].) Notably, the former text of LLC 206 expressly barred "maintaining any action or special proceeding . . . unless and until" the required publication was completed and proof filed. This proscription was removed by the 2006 amendments; however, courts in the Second Judicial Department continue to maintain that noncompliant LLCs are barred from accessing the courts.

In Barklee Realty Co., LLC. v Pataki, 309 AD2d 310 (1st Dept 2003) — decided when the prior version of the statute was in effect -- the Appellate Division, First Department upheld the constitutionality of the statute finding that it is rationally related to the legitimate State interest of disseminating information regarding a newly formed company's "organizational structure and other pertinent factors." The Barklee court also observed that the Court of Appeals has recognized the validity of limiting access to the courts as a way to incentivize compliance with the required public disclosures. (Barklee, 309 AD2d at 316, citing White v Eiseman, 134 NY 101, 103 [1892].)

In Small Step Day Care, LLC v Broadway Bushwick Bldrs., L.P., 137 AD3d 1102 (2d Dept 2016), citing Barklee, the court underscored the stringent nature of the publication requirements, finding that failure to timely adhere to the publication mandates of LLC 206 (a) "precludes a limited liability company from maintaining any action or special proceeding in New York." (Small Step, 137 AD3d at 1103 [internal citations omitted].) Accordingly, the Appellate Division affirmed the Supreme Court's dismissal of the proceeding. Although Small Step relies on the Barklee court's interpretation of the earlier version of LLC 206 -- that expressly barred "maintaining any action or special proceeding ․ unless and until" the required publication was completed -- this court is bound by the holding in Small Step and that court's interpretation of the amended statute to continue to impose the same operative penalties.³

The court recognizes a split of opinion among civil court judges across the city, and in Kings County, regarding the curability of an LLC's failure to comply with the publication requirement.⁴ However, this court adopts the principled reasoning articulated in One Stone Lending LLC v Alta Operations, LLC, 2020 NY Slip Op 30722(U) (Sup Ct, NY County 2020), which relied on both Barklee and Small Step, namely that:

"The goal [of the recent amendments to LLC 206] was to make information about LLCs available to the public in a manner which reinforces the public's right to know the entities with which they are dealing and to the benefit of consumers and other persons who do business in this state․

Clearly, the legislature requires LLCs to publish with the intent to provide the citizens of this state with potentially helpful information about the entities with which they might be dealing. The Court finds that these technical and cumbersome requirements cannot be overlooked simply because plaintiff decided to comply with the law only after [d]efendants pointed out plaintiff's failure to meet its obligations. Under those circumstances, it would make a mockery of the statute to allow plaintiff to maintain its case by complying with the law after starting a lawsuit and after [d]efendants pointed out this glaring omission." (One Stone Lending LLC, 2020 NY Slip Op 30722(U), *4 [emphasis in original, internal citation and quotation marks omitted].)5

Further guiding this court's determination is appellate authority reaffirming the fundamental principle in New York jurisprudence that a party must possess standing at the commencement of a proceeding. In Tzifil Realty Corp. v Mazrekaj, 85 Misc 3d 20 (App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2025), the Appellate Term, Second Department reversed the trial court for dismissing a summary holdover proceeding where the tenant had vacated the premises but was undisputedly in possession when the proceeding was initiated. In so doing, the court found that "[t]he primary rights at issue in a summary proceeding are the respective rights of the parties to possession, which rights are to be determined as they existed at the time the proceedings were commenced." (Tzifil Realty Corp., 85 Misc 3d at 23 [emphasis added, internal citations and quotation marks omitted]; see also 21st Mtge. Corp. v Rudman, 201 AD3d 618 [2d Dept 2022] [dismissing a foreclosure proceeding as the plaintiff did not hold the note "at the time the proceeding was commenced"]; Wilmington Sav. Fund Socy., FSB v McFarlane, 88 Misc 3d 1260[A], 2026 NY Slip Op 50602[U] [Civ Ct, Queens County 2026] [citing Tzifil and allowing substitution of a new owner in a RPAPL 713 [5] proceeding where the original petitioner had standing to commence the proceeding.)

Here, petitioner concedes that it was not in compliance with LLC 206 (a) at the commencement of this proceeding, but trivializes its noncompliance as curable, nunc pro tunc. As set forth above, the court disagrees that this defect can be remedied retroactively.

CONCLUSION

Accordingly, it is hereby

ORDERED that respondent's motion is GRANTED and the proceeding is dismissed for the reason that failure to be in compliance with the publishing requirements prescribed by LLC 206 (a) at the commencement of a proceeding cannot be cured during the course of the proceeding; and it is further

ORDERED that respondent's counterclaims are severed without prejudice pursuant to CPLR 407.⁶

Respondent's remaining arguments are academic and need not be addressed.

This constitutes the decision and order of this court.

FOOTNOTES

1.   While the better practice would be for attorneys to include the entire language of CPLR 2106 in their affirmations, the court notes that petitioner's agent's affirmation is properly sworn pursuant to CPLR 2106. Accordingly, the court will overlook this defect. CPLR 2001.

2.   Petitioner is a limited liability company which was formed in 2003.

3.    2004 McDonald Ave. Realty, LLC v. 2004 McDonald Ave. Corp., 25 Misc 3d 1204(A), 2007 NY Slip Op 52638(U) (Sup Ct, Kings County 2007), aff'd, 50 AD3d 1021 (2d Dept 2008), issued eight years prior to Small Step is not to the contrary. The Supreme Court rejected the defendant's argument that failure to comply with LLC 206 (a) was fatal to the proceeding, but dismissed the proceeding on the basis that a letter of intent was not enforceable. The Appellate Division, Second Department upheld the dismissal, and was silent regarding the lower court's opinion with regard to LLC 206. Accordingly, the Appellate Division's decision in 2004 McDonald Ave. Realty, LLC is not binding appellate authority on the issue currently before this court,

4.    Compare Ocean 801 LLC v Rich, 2026 NY Slip Op 30531(U) (Civ Ct, Kings County 2026) (noncompliance with LLC 206 (a) cannot be cured during the course of a proceeding), with 140 E. 35st St. LLC v Booker, 88 Misc 3d 1272(A), 2026 NY Slip Op 50768(U) (Civ Ct, Kings County 2026) (noncompliance with LLC 206 (a) can be cured during the course of a proceeding).

5.   See also Credit League, LLC v Cella Bella's Hospice Corp., 2026 NY Slip Op 31905(U), 2026 WL 1257018 (Sup Ct, Kings County 2026) (same).

6.   See Great Park Corp. v Goldberger, 41 Misc 2d 988, 989 (Civ Ct, NY County 1964) ("It is essential ․ to vest the court with broad powers to control such joinder or interposition of claims and to order severances when the summary nature of the special proceeding would be jeopardized" (internal quotation marks omitted); V & J Inc. v 2320 Rte. 112, LLC, 13 Misc 3d 30, 31 (App Term, 9th & 10th Jud Dists 2006) ("It is well settled that in a special proceeding, the trial court may at any time order a severance of counterclaims").

Karen May Bacdayan, J.