Dismissals are not always dismissals on the merits, and dissolved corporations are not always unable to sue in New York.  In this legal malpractice case, we see the intersection of Chapter 11, Tax Law 203-a, CPLR 205(a) and Res judicata.

In Moran Enters., Inc. v Hurst ;  2009 NY Slip Op 07807 ;  Decided on October 27, 2009 ;  Appellate Division, Second Department plaintiff corporation had several brushes with Bankruptcy.
"The plaintiff, Moran Enterprises, Inc. (hereinafter MEI), was incorporated in New York in January 1996. On or before August 15, 2000, MEI retained attorney Margaret Hurst to represent it in certain matters, including filing a Chapter 11 petition for bankruptcy on its behalf. In November 2000, Hurst left active practice and transferred her clients to another attorney. On December 27, 2000, MEI was dissolved by the Secretary of State pursuant to Tax Law § 203-a for failure to pay franchise taxes. On July [*2]23, 2001, MEI retained attorney Heath Berger and the law firm Steinberg, Fineo, Berger & Fischoff, P.C. (then known as Steinberg, Fineo, Berger & Barone, P.C.) (hereinafter together the Berger defendants) to file another Chapter 11 bankruptcy petition on its behalf."

"The Supreme Court erred in dismissing the complaint pursuant to CPLR 3211(a)(5). The principle of res judicata bars relitigation of claims where a judgment on the merits exists from a prior action between the same parties involving the same subject matter (see Matter of Hunter, 4 NY3d 260, 269). Dismissal of the prior action insofar as asserted by MEI was upheld by this Court on the ground that MEI failed to appear by an attorney as required by CPLR 321(a) (see Moran v Hurst, 32 AD3d 909). Such was not a determination on the merits and thus res judicata does not apply to bar commencement of another action based on the same transactions (see Sclafani v Story Book Homes, 294 AD2d 559; Matter of Farkas v New York State Dept. of Civ. Serv., 114 AD2d 563). Moreover, since the issue of MEI’s capacity to commence an action was not determined on appeal, collateral estoppel does not bar relitigation of that issue (see Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 200; Sabbatini v Galati, 43 AD3d 1136; Bergstol v Town of Monroe, 305 AD2d 348). Further, this action was timely commenced pursuant to CPLR 205(a). Contrary to the Berger defendants’ contention, the prior action was commenced by MEI within the meaning of CPLR 205(a), despite its dismissal for MEI’s failure to appear by an attorney "

"Pursuant to Tax Law § 203-a, the Secretary of State may dissolve a corporation by proclamation for the nonpayment of franchise taxes. Upon dissolution, the corporation’s legal existence terminates (see Lorisa Capital Corp. v Gallo, 119 AD2d 99, 109). A dissolved corporation is prohibited from carrying on new business (see Business Corporation Law § 1005[a][1]) and does not enjoy the right to bring suit in the courts of this state, except in the limited respects specifically permitted by statute (see Vantrel Enters. v Vantage Petroleum Corp., 270 AD2d 412; De George v Yusko, 169 AD2d 865; [*3]Lorisa Capital Corp. v Gallo, 119 AD2d 99, 110-111). "