Make an out-of-state plaintiff post security for costs.

A plaintiff who is not a New York resident, a domestic corporation, or a licensed foreign corporation can be ordered under CPLR 8501(a) to post security for costs. Until it is posted, proceedings are stayed under CPLR 8502. Thirty days after the order, the court may dismiss the complaint on your motion.

What is security for costs, and when must the court order it?

Security for costs is money an out-of-state plaintiff must put up to cover the costs you would be awarded if you win. Under CPLR 8501(a), on the defendant’s motion the court shall order security where none of the plaintiffs is a New York resident, a domestic corporation, or a licensed foreign corporation when the motion is made.

The word in the statute is shall, not may, and the as-of-right motion may be made without notice. Where the residency test is met and no exemption applies, the order follows; what stays open is the amount. The statute carves out two situations: a plaintiff granted permission to proceed as a poor person, and a habeas corpus petitioner. Poor person relief is governed by CPLR 1101, so an adversary who wants to avoid the undertaking has to ask for it.

Read the caption as a residency question, not a merits question. The test is applied to the plaintiffs, plural. If even one of them qualifies, the as-of-right branch is gone. A single out-of-state individual, or an unlicensed out-of-state company, keeps it live.

Timing matters more than most defendants realize. The statute measures status “when the motion is made,” not when the lawsuit was filed. In Clement v Durban, the plaintiff commenced a personal injury action as a New York resident, then relocated to Georgia; the $500 order was granted and affirmed all the way up. Residence is a fact you prove, not an inference from a new mailing address.

I check the plaintiff’s address and entity status in the caption before I read the first cause of action.

CPLR 8501(b) is a separate, discretionary branch, worth a look when the plaintiff is a fiduciary rather than the real economic party. On motion with notice or on the court’s own initiative, security may be ordered in an action by or against an assignee or trustee for creditors, a trustee, a receiver or debtor in possession in bankruptcy, an executor or administrator, a committee, a conservator, a guardian ad litem, or a receiver. Nothing there is automatic.

Law: CPLR 8501(a), (b); CPLR 1101; CPLR 8503.

How much does CPLR 8503 require the plaintiff to post?

CPLR 8503 fixes the undertaking at $500 in counties within New York City and $250 in all other counties, or such greater amount as the court sets. Those figures are a floor, not a ceiling. Any larger number has to be earned with record support, which means an affidavit and documents, not an adjective.

Treat the minimum as the number you get for free and the greater amount as the number you argue for. A court given nothing to work with will give you the minimum, so build the record: the depositions the pleadings make inevitable, the records to be reproduced, the out-of-state witnesses, the likely motion practice. What is given is an undertaking, not necessarily cash.

Two notes on scale. Security for costs secures costs as the CPLR defines them, which go to the party in whose favor judgment is entered under CPLR 8101 unless the court finds an award inequitable. It is not security for attorney’s fees. The lower courts set their own floors: $50 in the justice courts, $200 in the city courts.

Law: CPLR 8503; CPLR 8101; UJCA 1900; UCCA 1900.

The undertaking is small. The stay that comes with it is not.

What happens if the out-of-state plaintiff does not post the security?

CPLR 8502 supplies the consequence. Until security is given under the court’s order, all proceedings other than proceedings to review or vacate that order are stayed. If security is not given at the expiration of thirty days from the date of the order, the court may dismiss the complaint on the defendant’s motion and award costs.

Unpack the stay. It follows from the statute once the order issues, so ask that the order recite it. The plaintiff cannot push discovery or press a summary judgment motion, and may do nothing but attack the security order. Read the text closely: the stay reaches all proceedings, including yours.

Then unpack the dismissal. The clock runs thirty days from the date of the order, not from service of anything. Dismissal is permissive, and a plaintiff who posts late but before the motion is decided will often keep the case. Calendar day thirty-one and move with proof that nothing was posted.

Law: CPLR 8502.

Is it constitutional to make a nonresident post security?

Yes. In Clement v Durban, 32 NY3d 337 (2018), the Court of Appeals held that CPLR 8501(a) and 8503 do not violate the Privileges and Immunities Clause of article IV, section 2 of the United States Constitution. The security provisions treat residents and nonresidents differently, and that different treatment survives the challenge. Expect the argument. It has been answered.

The policy is the one you invoke: a defendant who wins should not have to chase a costs judgment into the plaintiff’s home state.

Case: Clement v Durban, 32 NY3d 337 (2018), affg 147 AD3d 39 (2d Dept 2016).

When does BCL 1312(a) stop an unregistered out-of-state company from suing you?

Business Corporation Law 1312(a) bars a foreign corporation doing business in New York without authority from maintaining any action or special proceeding here unless and until it is authorized and has paid all New York fees and taxes imposed under the tax law or a related statute, plus penalties and interest. The bar reaches successors in interest.

This is the larger lever on the same theme. A company operating here without registering must stop the lawsuit, register with the Department of State, settle its tax account, and pay penalties and interest before it may proceed. A real bill and a real delay.

The vehicle is a motion to dismiss for lack of capacity under CPLR 3211(a)(3), coupled with BCL 1312(a). In Highfill, Inc. v Bruce & Iris, Inc., a Louisiana corporation contracted to run a going out of business sale in New York, then sued for breach; the Second Department affirmed dismissal on the defendants’ undisputed evidence. Dismissable, but only on proof. Raise it in time, too: under CPLR 3211(e) a capacity objection is waived unless raised by pre-answer motion or in the responsive pleading.

Law: BCL 1312(a); CPLR 3211(a)(3), (e). Case: Highfill, Inc. v Bruce & Iris, Inc., 50 AD3d 742 (2d Dept 2008).

Who has to prove the plaintiff was doing business in New York?

You do. A defendant relying on BCL 1312(a) bears the burden of proving that the plaintiff corporation’s New York activities were not just casual or occasional, but so systematic and regular as to manifest continuity of activity in the jurisdiction. Absent that proof, the plaintiff is presumed to be doing business in its state of incorporation.

That presumption is the whole fight. Highfill states the standard, quoting S & T Bank v Spectrum Cabinet Sales, and asks whether the corporation engaged in a regular and continuous course of conduct here. One contract, one shipment, one isolated transaction will not do. The motion fails on adjectives.

I ask for the proof of the plaintiff’s New York activity before I decide whether a 1312 motion is worth making.

Evidence that tends to show systematic and regular activity:

• A New York office, showroom, warehouse, or jobsite trailer, and its lease.
• Employees or agents working here continuously, with payroll records.
• A repeated course of New York contracts over years, not one deal.
• A New York bank account used to run operations, not to park funds.
• The plaintiff’s own complaint, website, and filings describing operations here.

Cases: Highfill, 50 AD3d 742, 743 (2d Dept 2008); S & T Bank v Spectrum Cabinet Sales, 247 AD2d 373 (2d Dept 1998).

Does BCL 1312(a) void the contract or stop the plaintiff from defending?

No. BCL 1312(b) provides that failure to obtain authority does not impair the validity of any contract or act of the foreign corporation, does not impair the right of any other party to the contract to sue on it, and does not prevent the corporation from defending here. The bar is on maintaining a suit.

Set expectations before you commit to the motion. The bar suspends the action; it does not extinguish the claim. A plaintiff that registers and pays may proceed, and courts often fix a period to cure rather than dismissing outright. The value is the delay, the money owed to the state, and the leverage that creates. Do not count on the limitations period either; a termination that is not on the merits can leave room to come back.

Law: BCL 1312(b).

Does Limited Liability Company Law 808 do the same thing to a foreign LLC?

Limited Liability Company Law 808(a) provides that a foreign LLC doing business here without a certificate of authority may not maintain any action, suit, or special proceeding in any court of this state unless and until it receives one. Section 808(b) mirrors BCL 1312(b): the contract stays valid, and the LLC may still defend.

The analysis largely tracks the one for a foreign corporation: same doing-business question, same burden on you, same cure. Read the statutes side by side, though. LLC Law 808(a) conditions suit on receipt of the certificate and carries no express fees-and-taxes language, and LLC Law 808(c) protects a member or manager from personal liability on that ground alone.

One point cuts the other way. Under LLC Law 808(d), a foreign LLC doing business here without authority appoints the Secretary of State as its agent for service of process for claims arising out of that business. Being unregistered makes it easier to serve.

Law: Limited Liability Company Law 808(a), (b), (c), (d).

Security for costs or the unauthorized-business bar: which motion fits your case?

Security for costs under CPLR 8501(a) and the unauthorized-business bar under BCL 1312(a) answer two different questions. Security for costs asks only where the plaintiff is. The unauthorized-business bar asks what the plaintiff has been doing in New York and whether it registered and paid. One is nearly automatic and small. The other is contested and large.

One motion asks the plaintiff for an undertaking. The other asks the plaintiff to settle up with New York State. Both come before anyone argues the merits.

What should you do first if the plaintiff is an out-of-state person or company?

Three things, in order, before the answer is due. Confirm the plaintiff’s residence or state of incorporation as of today. Search the Department of State for a certificate of authority in the plaintiff’s exact legal name. Then decide which motion the facts support: one turns on the caption, the other on an evidentiary record.

• Pin down status now. Residency is measured when the motion is made. If the plaintiff moved out of New York, say so with proof.
• Check every plaintiff. One New York resident or licensed entity among them defeats the as-of-right branch.
• Ask for a greater amount, with support. Put anticipated costs and taxable disbursements in an affidavit.
• Calendar day thirty-one. Under CPLR 8502 the dismissal motion becomes available thirty days from the date of the order.
• Build the doing-business file first. Without proof, the presumption favors the plaintiff.
• Raise capacity early. Under CPLR 3211(e) the objection is waived unless raised by pre-answer motion or in the answer.
• Name the documents. Not “the agreement” — the 2022 supply contract, the credit application, the sale agreement.

If the plaintiff is an out-of-state individual, the CPLR 8501(a) motion is almost always worth making and the stay is the point. If the plaintiff is an out-of-state company that has worked here for years without registering, the BCL 1312(a) or LLC Law 808(a) motion changes the economics of the case.

Law: CPLR 8501, 8502, 8503, 8101, 1101, 3211; BCL 1312; LLC Law 808. Cases: Clement v Durban; Highfill, Inc. v Bruce & Iris, Inc.