NIALL HANLEY individually and derivatively on behalf of ARCHBUILD GROUP LLC v. 214 MARGINAL STREET LLC, GEORGE KOURIS, PAUL MacNEELY and ANGELIQUE KOURIS.

Plaintiff Niall Hanley is one of three member/managers of Archbuild Group LLC. The other two member/managers are defendants George Kouris and Paul MacNeely, who allegedly handled its day to day affairs. Defendant Angelique Kouris is George's spouse and a real estate broker.

Mr. Kouris and Mr. MacNeely, with Ms. Kouris as the broker, acquired the property at 214 Marginal Street in East Boston in the name of defendant 214 Marginal Street LLC. Although the complaint is framed in ten separate counts — breach of contract, breach of fiduciary duty, failure to give proper accounting of corporate projects and assets, conversion, and violation of G.L. c. 93A, §11— this case, in essence, has only a single, central claim: [Note 1] that, due to the defendants' alleged use of funds and contract rights that properly belonged to Archbuild, and/or because the defendants allegedly usurped a corporate opportunity that was rightfully Archbuild's, Archbuild should be deemed the property's owner. See Demoulas v. Demoulas Super Markets Inc., 424 Mass. 501 (1997). As Mr. Hanley concedes, the case is thus a shareholder derivative action on behalf of Archbuild with Mr. Hanley himself having no individual claim to the property separate from the LLC's. [Note 2] Accordingly, this court has no subject matter jurisdiction over the case. Shareholder derivative actions are matters for the Superior Court.

Mr. Hanley does not object to where this leads (a dismissal of his complaint in this court, without prejudice to his right to refile it in Superior Court), so long as the Superior Court itself has subject matter jurisdiction over his claims. Understandably, he has no desire to fully litigate the case and then find whatever judgment he obtains is void because the Superior Court does not have such jurisdiction. The defendants stipulated that they will not raise that argument themselves, but parties cannot confer subject matter jurisdiction where it does not otherwise exist and it is an issue that can be raised at any time — even, for the first time, on appeal, and even, sua sponte, by the court itself. See Litton Bus. Sys., Inc. v. Comm'r of Revenue, 383 Mass. 619 , 622 (1981). Accordingly, Mr. Hanley raises two questions.

First, as he (correctly) notes, the Land Court regularly hears cases where title is at issue because of allegations of fraud, lack of competence, undue influence and the like. But this case is different from those for two reasons: first, because Mr. Hanley is one step removed from the real controversy — he has not wrongfully been deprived of title, only (allegedly) the LLC, and whether he has standing to bring a derivative claim on its behalf is a threshold issue of corporate law — and second because, even if he has such standing, the ultimate resolution of that claim has nothing to do with property law. The property is involved solely as an alleged corporate asset, not because of anything intrinsic to the property or to the transaction in which the property was acquired. Mr. Hanley does not seek to void the acquisition or challenge the property's boundaries or chain of title — issues of property law, clearly within the core of this court's subject matter jurisdiction, which this court's specialized knowledge, engineers, in-house title examiners, and records make it well-qualified to address. He only wants it declared an asset of the LLC (a matter of corporate, not property, law), and then put in the LLC's name.

Titling it in the LLC's name, however, leads to Mr. Hanley's second question. This is because the property is registered land, and he is concerned that this fact alone puts the case within the Land Court's exclusive jurisdiction and requires him to litigate it there. See G.L. c. 185, §1(a ½) (complaints affecting title to registered land, with the exception of actions commenced pursuant to G.L. c. 208 [divorce] or G.L. c. 209 [marital property], within land court's exclusive original jurisdiction). This shareholder derivative action, however, falls outside of that provision. As noted above, its issues have nothing to do with property law — the boundaries of the property, its chain of title, its easements or restrictions, its zoning, its division, its partition, or the validity of the acquisition of title from the seller. It does not call for an encumbrance on the property of any kind, or the modification or removal of such an encumbrance. It turns solely on questions of corporate law and G.L. c. 93A, and its sole request, as a matter of that law, is, effectively, for a declaration that the property is an asset of the LLC, yes or no. This the Superior Court can do. See Feinzeig v. Ficksman, 42 Mass. App. Ct. 113 , 115-117 (1997) (drawing the jurisdictional distinction as follows: Relying on registered land principles, the Superior Court could order the discontinuance of a trespass onto registered land.

What it could not do was fashion a judgment that had the effect of imposing a new encumbrance — in that case, an easement — on that land, recognizing that the Land Court, with its specialized knowledge and staff resources, has uniquely been charged by the Legislature with addressing that type of relief and implementing it in the registration system on the certificate of title).

If Mr. Hanley gets the declaration he seeks — as a matter of corporate law, the property is properly an asset of the LLC — he can bring it to the Land Court for implementation where, unlike Feinzig, it will be "simply a matter of mechanics," changing the name on the face of the certificate. Contrast Feinzig, 42 Mass. App. Ct. at 116 – 117. Litigating in the Superior Court will also enable him to have resolution of his tort and G.L. c. 93A, §11 claims which are clearly outside this court's jurisdiction.

Accordingly, this case is dismissed for lack of subject matter jurisdiction in this court, without prejudice to the plaintiff's ability to re-file it in Superior Court.

Judgment shall enter accordingly.

SO ORDERED.