SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION DOCKET NO. A-0775- 22 NG FLOORING, INC., d/b/a FLOORINGDOCTOR.COM, Plaintiff-Appellant,

v. DEROCHI DESIGN AND BUILD, LLC, Defendant-Respondent.

__________________________

Submitted April 8, 2024

– Decided April 30, 2024 Before Judges Sabatino and Vinci. On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L

- 1769

- 20. Jeffrey Harris Ward, attorney for appellant. Law Offices of Cohen & Riechelson, attorneys for respondent (Philip Cohen, on the brief).
PER CURIAM NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court. " Although it is posted on the internet, this opinion is binding only on the parti es in the case and its use in other cases is limite d. R. 1:36- 3.2 A- 0775

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This appeal arises from the trial court's applicati on of provisions within the New Jersey corporate statutes that affect a pla intiff's standing to bring suit
in our state courts. The appeal concerns the Law Divi sion's dismissal with prejudice of a complaint by plaintiff, NG Flooring, Inc. ("NG Flooring"), doing business as flooringdoctor.com, against defendant, DeRochi Design and Build, LLC (" De Rochi"), for breach of contract and other claims. The trial court dismissed the lawsuit because of NG Flooring's alle ged noncompliance with various annual corporate registration requirements set forth in Title 14A. Based on our de novo review of the legal questions presented, we re verse and reinstate NG Flooring's lawsuit. We briefly summarize the relevant facts and allegat ions. Pursuant to a written contract, NG Flooring, a Pennsylvania corpo ration, completed flooring work for DeRochi in New Jersey, starting in 2016 an d ending in 2017. At the time of th os e services, NG Flooring had a valid certificate of authority to do business in this State under N.J.S.A. 14:12 -11(1). A dispute over the work arose, and NG Flooring claimed that DeRochi owed it $87,677. DeRochi denied owing that amount and, in fact, claimed that NG Flo oring owed it money. Of pertinence here, NG Flooring's certificate of au thority was revoked by the State on July 16, 2019 , because it had not paid the $75 annual registration3 A- 0775

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fee for calendar years 2017 and 2018. By that poin t, NG Flooring was no longer engaged in business activities in New Jersey.
In October 2020, NG Flooring filed the present breach of contract action against DeRochi. DeRochi filed a counterclaim agai nst NG Flooring, but that pleading was dismissed with prejudice and the dismi ssal is not cross-appealed. On the brink of trial in 2022, DeRochi moved to dis miss NG Flooring's lawsuit, upon discovering that NG Flooring no longe r had a valid certificate of authority and had not been filing annual reports wi th the Secretary of State as a foreign corporation pursuant to N.J.S.A. 14A:13

- 15 . DeRochi asserted NG Flooring now lacks standing to be a plaintiff in th e New Jersey courts, relying upon preclusive language within N.J.S.A. 14A:13 -11(1) and N.J.S.A. 14A:13

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. NG Flooring responded that it does not need a certi ficate or to file reports
because it is not transacting business in New Jersey at present, alt hough it had been making the requisite filings when it was doing business here. The trial court agreed with defendant's interpretat ion of the statutes and dismissed the complaint due to lack of subject matt er jurisdiction. The court also denied NG Flooring an opportunity to cure the fi ling defect, specifying that the dismissal was with prejudice.4 A- 0775

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We analyze the legal issues of statutory interpreta tion and jurisdiction presented by NG Flooring de novo. "The determinati on of whether subject matter jurisdiction exists is a legal question, whi ch we review de novo." AmeriCare Emergency Med. Serv., Inc. v. City of Ora nge Twp., 463 N.J. Super. 562, 570 (App. Div. 2020) (citing Santiago v. N.Y. & N.J. Port Auth., 429 N.J. Super. 150, 156 (App. Div. 2012)). "A trial court's interpretation of the law and the legal consequences that flow from established f acts are not entitled to any special deference." Rowe v. Bell & Gosset Co., 239 N.J. 531, 552 (2019) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Ma nalapan, 140 N.J. 366, 378 (1995)). The issues before us involve an assortment of provi sions within Title 14A applicable to out- of -state corporations such as NG Flooring that conduc t business activities in New Jersey. We highlight the pertinent terms of those provisions, as follows. Chapter 13 of the General Corporation s Act ("the Corporations Act") contains directives on how that statute is applied to foreign corporations. 1 The main provision of the Corporations Act involved her e is N.J.S.A. 14A:13-11(1) ,

1 For purposes of analysis, a "foreign" corporation is one organized under the laws of another state or country.5 A- 0775

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which specifies the need for certain foreign corpor ations to obtain a certificate of authority to do business in this State, and the consequences of failing to obtain and maintain such a certificate when it is required

. Specifically, N.J.S.A. 14A:13 -11(1) states: (1) No foreign corporation transacting business in this State without a certificate of authority shall maintain any action or proceeding in any court of this State , until such corporation shall have obtained a certificate of authority. [Ibid. (emphasis added).] Meanwhile , N.J.S.A. 14A:13 -2, specifies the rights and privileges that foreign corporations can enjoy after obtaining a ce rtificate of authority, as well as penalties for not obtaining a certificate:

(2) A foreign corporation which receives a certific ate of authority under this act shall, until a certific ate of revocation or of withdrawal is issued as provided i n this act, enjoy the same, but no greater , rights and privileges as a domestic corporation 2 organized for the purposes set forth in the application pursuant to which such certificate of authority is issued; and, except as in this act otherwise provided, shall be subject to the sam e duties, restrictions, penalties and liabilities now or

2 Among the sixteen enumerated general powers provide d to corporations under the General Corporations Act is the power: "to sue and be sued, complain and defend and participate as a party or otherwise in a ny judicial, administrative, arbitrative or other proceeding, in its corporate name[.] " N.J.S.A. 14A:3-1, -(b) (emphasis added).6 A- 0775

- 22 hereafter imposed upon a domestic corporation of li ke character. (3) A foreign corporation which transacts business in this State without a certificate of authority under this act shall be subject to the same duties, restrictio ns, penalties and liabilities now or hereafter imposed upon a foreign corporation procuring such certificate of authority. [N.J.S.A. 14A:13-2(2), (3) (emphasis added).] The Commissioner's Comment to this provision issued upon its enactment in 1968 observes that "Subsection 14A:13-2(3) leaves to the cour ts the question of the rights and privileges of foreign corporations w hich transact business in this State without a certificate of authority." Ibid. , Commr's cmt. (1968) (emphasis added). Of central importance here, the Corporations Act d elineates when a foreign corporation is "transacting business" in Ne w Jersey and thereby required

to obtain and maintain a certificate of authority:

(1) No foreign corporation shall have the right to transact business in this State until it shall have procured a certificate of authority to do so from t he Secretary of State. . . . (2) Without excluding other activities which may no t constitute transacting business in this State, a fo reign corporation shall not be considered to be transacti ng business in this State, for the purposes of this ac t, by7 A- 0775

- 22 reason of carrying on in this State any one or more of the following activities 3 (a) maintaining, defending or otherwise participating in any action or proceeding , whether judicial, administrative, arbitrative or otherwise, or effecting the settlement thereof or the settlement of claims or disputes; 4 [N.J.S.A. 14A: 13 -3(1), (2), (2)(a) (emphasis added).] The Corporations Act next expresses the purpose of the certificate of authority and how long the "authority to transact . . . business" continues:

Upon the issuance of a certificate of authority by the Secretary of State, the foreign corporation shall b e authorized to transact in this State any business o f the character set forth in its application. Such autho rity shall continue so long as it retains its authority to transact such business in the jurisdiction of its incorporation and its authority to transact busines s in this State has not been surrendered, suspended or revoked.

3 The Commissioner's Comment in 1968 explains that "S ubsection 14A:13-3(2) is new . . . . It differs from Title 14 by setting forth a non-exclusive list of certain activities . . . any one or more of which a foreign corporation may carry on in this State without having first secured a certifica te of authority." N.J.S.A. 14A:13 -2, Commr's cmt. (1968) (emphasis added).

4 A treatise on New Jersey corporations law and forms similarly points out that "N.J.S.A. 14A:13-3(2) sheds some light on th[e] que stion [of when a corporation must apply for a certificate of authority] by providing tha t a foreign corporation need not obtain a certificate of authority if its o nly contacts with New Jersey " include the listed activities. 15A N.J. Practice, Legal Forms § 28:1, ¶3 (James H. Walzer) (4th ed. 2009) (emphasis added).8 A- 0775

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[N.J.S.A. 14A:13-5 (emphasis added) .] The effect of a certificate of authority's revocat ion is addressed in N.J.S.A.
14A:13

- 10 , which provides:

(1) In addition to any other ground for revocation provided by law, the certificate of authority of a foreign corporation to transact business in this State may be revoked by the Secretary of State upon the conditio ns prescribed in this section when

. . . (e) the corporation has failed to file its annual report within the time required by this act.

. . . (4) The issuance of the certificate of revocation s hall have the same force and effect as the issuance of a certificate of withdrawal under subsection 14A:13- 8(2). [N.J.S.A. 14A:13- 10 (emphasis added).] The above cross-reference to N.J.S.A. 14A:13-8(2), equating the consequences of a certificate of authority's revoca tion to that of a foreign corporation's withdrawal from New Jersey, portends the following
consequences:

(2) Upon the filing of the application for withdraw al, the Secretary of State shall issue to the corporati on a certificate of withdrawal, whereupon9 A- 0775

- 22 (a) the authority of the corporation to transact business in this State shall cease; (b) the authority of its registered agent in this State to accept service of any process against the corporation shall be deemed revoked; (c) the corporation shall be deemed to have irrevocably consented that service of process in any action or proceeding based upon any liability or obligation incurred by it within this State before the issuance of the certificate of withdrawal may thereafte r be made on such corporation by service thereof on the Secretary of State or the chief clerk in his office . . . . [N.J.S.A. 14A: 13 -8(2) (emphasis added) .] Applying these provisions from the Corporations Act to the circumstances of this case, the pivotal question of law is "Was N G Flooring 'transacting business' in New Jersey at the time it filed its co mplaint against defendant in October 2020?" The answer is no. There is no dispute that, at the time NG Flooring provided services to DeRochi in 2016 and 2017, it possessed a valid cert ificate of authority. It is further uncontested that when NG Flooring filed sui t against DeRochi in 2020,10 A- 0775

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it was no longer selling or providing products or s ervices to customers within this State. The plain language of N.J.S.A. 14A:13 -3(2)(a) makes clear that a foreign corporation's act of "maintaining . . . or otherwis e participating in any action or proceeding, whether judicial, administrative, arbitra tive or otherwise"

— i.e., the sole identified activity of NG Flooring in New Jers ey in 2020

— "shall not be considered to be transacting business in this State , for the purposes of [the Corporations Act]. " N.J.S.A. 14A:13 -3(2)(a). NG Flooring was "maintaining" a lawsuit against defendant for unpaid goods and se rvices it previously supplied in 2016 and 2017. It therefore was not "transacting busine ss" by virtue of filing that lawsuit in our courts. The revocation of its certificate of authority in 2019 has no bearing on the issue.
Th e trial court erred in reaching a contrary conclusi on. Its reliance on an unpublished opinion cited to it by defendant, which alle gedly interpreted the statute differently in a fact pattern in which a fo reign corporation had actually been transacting business without a valid certifica te, was misplaced. See R. 1:36

- 3. We turn to the second basis on which the trial cour t dismissed NG Flooring's complaint: its failure to file annual r eports of its business activities11 A- 0775

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with the Secretary of State under N.J.S.A. 14A:13 -20(a). Defendant's dismissal motion fails as a matter of law on this ground as w ell. N.J.S.A. 14A:13-20(a) is part of the Corporation Bu siness Activities Reporting Act, N.J.S.A. 14A:13-14 to -22 ("the Repo rting Act"). The statute denotes when foreign corporations are precluded fro m affirmatively accessing the New Jersey courts for failure to comply with it s terms. Section 13-20 of the Reporting Act provides as foll ows: a. No foreign corporation carrying on any activity or owning or maintaining any property in this State which has not obtained a certificate of authority to do b usiness in this State and disclaims liability for the corpo ration business tax and the corporation income tax shall maintain any action or proceeding in any State or Federal court in New Jersey , until such corporation shall have filed a timely notice of business activi ties report. b. The failure of a foreign corporation to file a t imely report shall prevent the use of the courts in this State for all contracts executed and all causes of action that arose at any time prior to the end of the last acco unting period for which the corporation failed to file a r equired timely report. c. The court in which the issues arise shall be gra nted the power to excuse the corporation for failure to file a report when due, and restore the right of access to the courts in this State. Such failure to file a repor t shall be excusable where the court finds the corporation has sustained the burden of establishing that12 A- 0775

- 22 (1) the failure to file a timely report was done in ignorance of the requirement to file, such ignorance was reasonable in all circumstances; and (2) all taxes, interest and civil penalties due the State for all periods have been paid, or provided for by adequate security or bond approved by the director, before the suit may proceed. [N.J.S.A. 14A: 13

- 20 (emphasis added).] The Reporting Act specifies which activities withi n New Jersey require foreign corporations to file a notice of business activities report with the State :

Every foreign corporation which during any calendar or fiscal accounting year . . . carried on any activit y or owned or maintained any property in this State, unl ess specifically exempted under section 3 of this act, 5 shall be required to file a notice of business activities report, as hereinafter provided. Activities or property maintenance in this State wh ich require corporations to file this report are:

. . . e. receiving payments from persons residing in this State, or businesses located in this State, aggregating in excess of $25,000.00 regardless of any other connections with this State; or

5 Section 3 is codified at N.J.S.A. 14A:13-16.13 A- 0775

- 22 f. the derivation of income from any source or sources within this State; or g. any other activity or property in, or interrelationships with, this State as designated by the director. [N.J.S.A. 14A:13-15, 15(e)-(g) (emphasis added) .] N.J.S.A. 14A:13- 16 provides that:

A foreign corporation shall not be required to file a notice of business activities report if a. by the end of an accounting period for which it was otherwise required to file a notice of business activities report under this act, it had received a certificate of authority to do business in this State; or b. a timely return has been filed under the Corporation Business Tax Act or the Corporation Income Tax Act for such accounting period. [( Emphasis added).] In interpreting these provisions, our Supreme Court has explained that "[e]very foreign corporation subject to the Reporting A ct must file an Activities Report with the Director of the Division of Taxation of the State of New Jersey, on or before the fifteenth day of the fourth month after the close of the corporation's calendar or fiscal accounting year." First Fam. Mortg. Corp. v.14 A- 0775

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Durham, 108 N.J. 277, 281 (1987) (citing N.J.S.A. 14A:13

– 18(a)) (emphasis added). However, as the Court further explained, " [p]ursuant to N.J.S.A.
14A:13 -16[(a), and] (b), a foreign corporation is not required to file, if it has received . . . a certificate of authority to do business in this [S]tate." Ibid. (emphasis added). The statute, as worded, signified that a "[f]ailure to file an Activities Report prevents a corporation from using New Jersey courts to pursue any cause of action arising 'at any time prior to the end of the last accounting period for which the corporation failed to file a required tim ely report.'" Id. at 288 (quoting
N.J.S.A. 14A:13

- 20 ( b) ) (emphasis added). That "harsh penalty" burdening interstate commerce led the Court to declare it "co nstitutionally infirm," and resulted in the Court construing the statute to tre at the preclusion as a temporary problem rather than a permanent one. Id. at 288

- 89 , 292. In that vein, several published opinions of our state courts have allowed foreign corporation s to cure the filing deficiency during the pendency of litiga tion. See e.g. , Materials Rsch. Corp., 64 N.J. 74 , 77 , 77 n.1 (1973); Davis & Dorand, Inc. v. Patient Care Med

. Serv s. Inc., 208 N.J. Super. 450, 454, 459

- 60 (Law Div. 1985) ; Grow Farms Corp. v. Nat'l State Bank, 167 N.J. Super. 102, 114 (Law Div.1979); Menley & James Labs., Ltd. v. Vornado, Inc., 90 N.J. Super. 404, 414 (Ch. Div. 1966)

.15 A- 0775

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Applying these provisions and related case law principles, we are constrained to reverse the trial court's dismissal based on NG Flooring's alleged violation of the Reporting Act. The relevant seque nce of events is instructive. The record indicates NG Flooring began its work for defendant in New Jersey in September 2016, and received its certific ate of authority in December 2016. Accounting periods are defined under the Rep orting Act to "mean the calendar or fiscal year, or part thereof, for which a report is due under this act." N.J.S.A. 14A:13-17(e). The business activity repor ts, if required by N.J.S.A.
14A:13 -15, are due annually. N.J.S.A. 14A:13-18. Thus, the record clearly shows NG Flooring had duly obtained its certificate by the end of the first accounting period for which it would otherwise have needed to produce a report. Therefore, NG Flooring met the exemption provided f or by N.J.S.A. 14A:13- 16(a) for the 2016 calendar year. That certificate remained in force through 2017, the year when NG Flooring completed its work for defendant. It was not until July 2019 when the certificate was revoked. A plain reading of the Reporting Act signifies that a foreign corporation need not file a business activity report while its certificate of authority is still valid. See First Fam. Mortg., 108 N.J. at 281 (not ing that "[p]ursuant to N.J.S.A.
14A:13 -16[(a), and ](b), a foreign corporation is not required to file, if it has16 A- 0775

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received . . . a certificate of authority to do business in this [S]tate"). Therefore, NG Flooring also meets the exemption for filing not ice of business activity reports for the years 2017 and 2018 while its certi ficate was still valid. NG Flooring would have been required to submit a bu siness activity report in December 2019 and annually thereafter only if it was "carrying on any activity" in New Jersey under N.J.S.A. 14A:13-15. See i d. at 279

- 82 , 2 87 (noting "the reporting requirement is carefully limit ed to those corporations that satisfy any of the conditions cited in N.J.S.A. 14A:13

- 15 "). There is no proof that NG Flooring carried on any such activity in Ne w Jersey since its certificate was revoked and no record facts indicate the contra ry. See Bonnier Corp. v. Jersey Cape Yacht Sales, Inc., 416 N.J. Super. 436, 444 (App. Div. 2010) (" Although the record before us is limited, it is apparent that defendant, as the moving party invoking what are, in essence, the win dfall benefits of N.J.S.A.
14A:13

- 11, has failed to sustain its burden by demonstrating that plaintiff has engaged in intrastate commerce within this State."). Hence, under a plain reading of the Reporting Act, N.J.S. A. 14A:13-14 to -22, NG Flooring i s beyond the scope of i ts annual requirements, and the statute's penalty of the denial of access to the co urts of this State does not apply. Even if we were to conclude otherwise, the trial co urt erred in dismissing the17 A- 0775

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complaint with prejudice and depriving NG Flooring of an opportunity to cure the filing omission pursuant to the criteria set fo rth in N.J.S.A. 14A:13 -20(c). Reversed. Plaintiff's complaint is reinstated, and the case is remanded for further proceedings. Jurisdiction is not retained.