Defendants Fail to Demonstrate That Indiana Mortgage Loan Servicer Regularly and Continuously Conducts Business in New York

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Posted on: Dec 28 2025

In New York, foreign business entities – e.g., corporations, limited liability companies, and partnerships authorized to do business in another jurisdiction or country – are required to register to do business with the Secretary of State.[1] The failure to receive such authority deprives the foreign entity of the ability to affirmatively access the courts of New York and subjects any action commenced by the foreign entity to dismissal.[2]

The purpose of the registration requirement is to regulate foreign companies that are conducting business within New York State so that they are not doing business under more advantageous terms than “those allowed a corporation of this State.”[3]

When applying BCL § 1312(a), the subject of today’s article, the relevant inquiry is whether the foreign entity is “doing business” in the State. The test of doing business in New York for the purpose of BCL § 1312(a) “is not the same as that for jurisdictional purposes.”[4] “Both raise constitutional questions, but the latter involves the due process clause while the former involves the interstate commerce clause.”[5] In construing statutes which license foreign corporations to do business within New York State, the courts try to avoid any interference by the State with interstate commerce.[6]

Whether a company is “doing business” in New York “depends upon the particular facts of each case with inquiry into the type of business activities being conducted.”[7] Moreover, “whether [the business entity] was doing business in New York” is determined by looking “at the time the action was commenced.”[8]

Notably, “not all business activity engaged in by a foreign corporation constitutes doing business in New York.”[9] A foreign corporation is permitted to transact “some kinds of business within the state without procuring a certificate” authorizing it to conduct business in New York.[10]

In order for a foreign corporation to be doing business in New York within the context of BCL § 1312, “the intrastate activity of the foreign corporation [must] be permanent, continuous, and regular.”[11] The entity’s activities cannot be “merely casual or occasional.…”[12]

New York courts consider a number of factors, both quantitative and qualitative, when considering the entity’s activity in the State.[13] Among the factors the courts consider are: (a) whether the entity maintains a physical presence or has employees located within the State;[14] (b) the frequency and regularity of activities within the State;[15] and (c) the volume and nature of the activities within the State.[16]

Merely entering into a single contract, engaging in an isolated piece of business, or engaging in an occasional undertaking will not suffice to invoke application of BCL § 1312.[17] Similarly, “the solicitation of business and facilitation of the sale and delivery of merchandise incidental to business in interstate and/or international commerce is typically not the type of activity that constitutes doing business in the state within the contemplation of section 1312 (a).”[18] However, regularly and continuously entering the State to solicit, complete and manage sales to customers in New York may constitute doing business in the State.[19]

The party seeking dismissal under BCL § 1312(a) must show that the business activities within the State were so systematic and regular as to manifest continuity of activity.[20] Absent sufficient evidence to establish that a plaintiff is doing business in the State, “the presumption is that the plaintiff is doing business in its State of incorporation … and not in New York.”[21]

Finally, if the foreign business entity is found to have been continuously and regularly conducting business in the State, the courts often refrain from dismissing the action.[22] Instead, the courts conditionally grant the dismissal motion and provide the plaintiff with a reasonable time period to cure its deficiency under BCL § 1320.[23]

In Forethought Life Ins. Co. v. 1442, LLC, 2025 N.Y. Slip Op. 07285 (2d Dept. Dec. 24, 2025), the Appellate Division, Second Department considered the foregoing principles in affirming the denial of a motion to dismiss on BCL § 1312(a) grounds.

Forethought Life was commenced by Forethought Life Insurance Company on September 12, 2022, an Indiana corporation, to foreclose upon a mortgage Extension and Modification Agreement and associated loan documents executed by defendant Rochel Miriam Kassirer, as the sole member of 1442 LLC, on February 5, 2020.

On May 22, 2023, defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(3), arguing that plaintiff lacked legal capacity to sue.

Plaintiff opposed the motion on several grounds, most notably that plaintiff was authorized to do business in New York pursuant to Section 590(1)(e) of the Banking Law.[24] Plaintiff argued that it was registered with DFS and that such registration authorized it to service mortgage loans in the State of New York.

The motion court denied the motion. The motion court found that plaintiff was “registered with DFS as an ‘exempt mortgage loan servicer.’” That filing, said the motion court, “allow[ed] Plaintiff to service loans within the state.” Accordingly, concluded the motion court, plaintiff “appear[ed] authorized to do business in New York.”

Defendants appealed.

The Appellate Division, Second Department, unanimously affirmed, focusing on the requirement that the intrastate activity of the foreign corporation be permanent, continuous, and regular, rather than whether registration with the DFS sufficed to satisfy the BCL. The Court found that “[t]he defendants failed to establish, prima facie, that the plaintiff ‘conducted continuous activities in New York essential to its corporate business.’”[25] “Therefore,” held the Court, “the presumption that the plaintiff does business not in New York but in its State of incorporation has not been overcome.”[26]

Takeaway

Under BCL § 1312(a), a foreign corporation must register to do business in New York if its activities in the state are permanent, continuous, and regular. If it fails to register, it lacks capacity to sue in New York courts. However, the burden is on the defendant to prove that the plaintiff’s business activities in New York are so systematic and regular as to constitute “doing business” under the statute. Occasional or incidental activities, or activities related to interstate commerce, do not meet this threshold. If the defendant cannot show continuous and essential intrastate activity, the presumption remains that the plaintiff conducts business in its state of incorporation, not New York.

In Forethought Life, the Court held that defendants failed to overcome this presumption. Registration with the DFS as an exempt mortgage loan servicer, by itself, did not demonstrate continuous business activity in New York. Therefore, plaintiff retained capacity to sue.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] See, e.g., BCL § 1312(a). This Blog examined BCL § 1312(a) in numerous articles, including: Foreign Corporation Not Engaged in Continuous and Systemic Business in New York Not Barred Under BCL § 1312(a) From Bringing Action, Failure to Demonstrate that Foreign Company Had Engaged in Systemic and Regular Activity in New York Results in Denial of Dismissal Motion Under BCL § 1312(a), Fraud and The Alleged Failure to Register Under BCL § 1312(a), and Dismissal of Complaint With Prejudice Due To Violation of BCL § 1312 Modified To Allow Unregistered Foreign Corporation To Register With The State. The legal discussion that appears in this article is reprinted from the foregoing articles.

[2] See United Envtl. Techniques, Inc. v. State Dept. of Health, 88 N.Y.2d 824, 825 (1996).

[3] Von Arx, A.G. v. Breitenstein, 52 A.D.2d 1049, 1050 (4th Dept. 1976); see also Central Care Solutions, LLC v. Grand Great Neck, LLC, 219 AD3d 1482, 1485 (2d Dept. 2023); National Lighting Co. v. Bridge Metal Indus., LLC, 601 F. Supp. 2d 556, 566 (S.D.N.Y. 2009) (additional citation omitted).

[4] Great White Whale Adver., Inc. v. First Festival Prods., 81 A.D.2d 704, 706 (3d Dept. 1981).

[5] Id.

[6] Id. (citations omitted).

[7] Id.

[8] Remsen Partners, Ltd. v. Southern Mgmt. Corp., No. 01 Civ. 4427, 2004 WL 2210254, at *3 (S.D.N.Y. 2004) (citation and internal quotation marks omitted) (alteration in original).

[9] Netherlands Shipmortgage Corp. v. Madias, 717 F.2d 731, 735-36 (2d Cir. 1983).

[10] Globaltex Group, Ltd. v. Trends Sportswear, Ltd., No. 09-CV-235, 2009 WL 1270002, at *3 (E.D.N.Y. May 6, 2009) (quoting Int’l Fuel & Iron v. Donner Steel, 242 N.Y. 224, 229 (1926)).

[11] Manney v. Intergroove Tontrager Vertriebs GMBH, No. 10 Civ. 4493, 2011 WL 6026507, at *8 (E.D.N.Y. Nov. 30, 2011) (quoting Netherlands Shipmortgage, 717 F.2d at 736) (alteration in original)).

[12] United Arab Shipping Co. (S.A.G.) v. Al-Hashim, 176 A.D.2d 569, 570 (1st Dept. 1991); see also Maro Leather Co. v Aerolineas Argentinas, 161 Misc. 2d 920, 923 (Sup. Ct., App. Term 1st Dept. 1994); Schwarz Supply Source v. Redi Bag USA, LLC, 64 A.D.3d 696, 696-97 (2d Dept. 2009).

[13] Netherlands Shipmortgage, 717 F.2d at 738.

[14] Uribe v. Merchants Bank of New York, 266 A.D.2d 21, 21 (1st Dept. 1999).

[15] G.P. Exports v. Tribeca Design, 147 A.D.3d 655, 656 (1st Dept. 2017).

[16] United Arab Shipping, 176 A.D.2d at 570.

[17] Netherlands Shipmortgage, 717 F.2d at 738; Von Arx, 52 A.D.2d at 1049; Airline Exch., Inc. v. Bag, 266 A.D.2d 414, 415 (2d Dept. 1999); 8430985 Canada Inc. v. United Realty Advisors LP, 148 A.D.3d 428 (1st Dept. 2017).

[18] Digital Ctr., S.L. v. Apple Indus., Inc., 94 A.D.3d 571, 572 (1st Dept. 2012) (citation omitted).

[19] Highfill, Inc. v. Bruce & Iris, Inc., 50 A.D.3d 742, 744 (2d Dept. 2008).

[20] JPMorgan Chase Bank, N.A. v. Didato, 185 A.D.3d 801, 802-803 (2d Dept. 2020); Maro Leather, 161 Misc. 2d at 923.

[21] Cadle Co. v. Hoffman, 237 A.D.2d 555 (2d Dept. 1997); JPMorgan Chase, 185 A.D.3d at 803; Airline Exch., 266 A.D.2d at 415.

[22] Tri-Term. Corp. v. CITC Indus., Inc., 78 A.D.2d 609 (1st Dept. 1980).

[23] E.g., Showcase Limousine, Inc. v. Carey, 269 A.D.2d 133, 134 (1st Dept. 2000), mod in part, 273 A.D.2d 20 (1st Dept. 2000); Uribe, 266 A.D.2d at 22 (noting that the failure of the plaintiff to register with the State may be cured prior to the resolution of the action); Credit Suisse Int’l v. URBI, Desarrollos Urbanos, S.A.B. de C.V., 41 Misc. 3d 601, 604 (Sup. Ct., N.Y. County 2013) (ordering plaintiff to comply with BCL § 1312 within 60 days or face dismissal of its complaint).

[24] Section 590(2)(b)(1) of the Banking Law prohibits corporations (and others) from engaging in the business of servicing mortgage loans unless they have first registered with DFS or, if an organization is an “exempt organization,” as defined in Section 590(1)(e) of the Banking Law. Plaintiff maintained that it was an exempt organization under the Banking Law.

[25] Slip Op. at *1 (citing JPMorgan Chase, 185 A.D.3d at 803 (alteration and internal quotation marks omitted)).

[26] Id. (citing id.; Construction Specialties v. Hartford Ins. Co., 97 A.D.2d 808, 808 (2d Dept. 1983)).

Tagged with: BCL, BCL § 1312(a), Commercial Litigation, Doing Business in New York, Registration By Foreign Company