No Registration, No Lawsuit Thumbnail

No Registration, No Lawsuit

On December 8, 2021, the First District Court of Appeals affirmed the trial court’s entry of summary judgment in favor of defendant Fabrication Automation, LLC d/b/a Fast Machine Tools in finding that plaintiff ProMac Technologies, LLC did not have standing to file suit. The Court held that because ProMac transacted business in Ohio, but was not registered to do business in Ohio, it could not maintain the proceeding under R.C. 1705.58.

ProMac sued Fabrication Automation for breach of contract, unjust enrichment, and failure to pay commissions. ProMac conceded that it is a foreign LLC and was not registered with the Ohio Secretary of State. The question for the Court of Appeals was whether ProMac’s activities constituted “transacting business” in Ohio pursuant to R.C. 1705.58. The First District held that the exchange of continuous emails in 2018 to negotiate an August 2018 contract where ProMac would procure sales of products to Ohio customers, the fact the contract had no end date, and the fact that ProMac had at least one sale in Ohio was considered transacting business in Ohio because it constituted “carrying on and transacting * * * a substantial part of its ordinary or customary business” in Ohio. The Court distinguished ProMac’s activities from collecting debt in Ohio, which is not considered transacting busines pursuant R.C. 1705.58.

This case is a warning to make sure simple corporate formalities are in order, or you could potentially create unnecessary hurdles in attempting to recover damages. A copy of the decision can be accessed here.

Related practices