Patel v. New Jersey Department of Treasury, ___ N.J. Super. ___ (App. Div. 2024). Judge Sabatino’s opinion in this case began by explaining its background and the novel issue presented:. “This case of first impression resolves the proper means to attempt to rescind a certificate of dissolution and termination of a New Jersey limited liability company (“LLC”), which allegedly has been filed in error or without authorization. The statutory scheme for LLCs, N.J.S.A. 42:2C-1 to -94, contains no provision authorizing the New Jersey Department of the Treasury to perform such a rescission. The Department accordingly declined plaintiffs’ request to rescind a certificate of dissolution and termination that plaintiffs allege had been improperly filed by a former LLC member, advising that such relief can only be obtained through a court proceeding. Plaintiffs then filed a civil action in the Law Division, which transferred the dispute to this court.”
All parties eventually agreed that the statute did not empower the Department of the Treasury to act in these circumstances. So did the Appellate Division in this decision. Not only was the statute governing LLCs silent about any such power, but Judge Sabatino observed that “our statutory scheme governing corporations provides for revocation of dissolution by filing a ‘certificate of revocation.’ N.J.S.A. 14A:12-10. There is no parallel mechanism for LLCs, however, within the [LLC statute]” (emphasis by Judge Sabatino).
“That said, the counsel before us all agree there should be a clear avenue for the present members of an LLC to pursue the rescission of an LLC’s dissolution and termination on equitable grounds, in instances where the certificate has been filed improperly.” The implicit premise of that conclusion was that equity does not leave a wrong without a remedy. As Judge Sabatino put it, since statutes are to be read “sensibly,” the statute here “logically should accommodate a mechanism for rescinding a certificate of authority that was improperly filed and where such after-the-fact relief is supported by principles of equity.
The panel concluded that the appropriate mechanism was a civil action in the trial court. Judge Sabatino noted that that was how this case began, but he did not fault the trial court for transferring the case to the Appellate Division since, on its face and without the guidance of this decision, the matter appeared to be one involving the validity of the Department’s action and therefore properly to be filed in the Appellate Division in the first instance. The panel remanded the case and gave some instructions as to how a remand might proceed.