People start LLCs and other juridical entities in order to obtain a shield from personal liability.  Interests change over time which can cause difficulties later.  Brach v Levine    2012 NY Slip Op 51312(U)   Decided on July 16, 2012   Supreme Court, Kings County   Battaglia, J. is an example. 

Despite the shocking allegation that defendant " Levine allegedly altered the documents, and on November 15, 2006, the mortgage was recorded as against 420 Marcy Avenue, LLC, plaintiff 519 Marcy LLC, and Frankwink Properties, Inc., in addition to 222 Skillman, LLC, 189 Spencer LLC, and 401 Bedford LLC.  Levine allegedly altered the signature page by "adding wholly new parties to the agreement" we see that litigation against him is difficult.

"In their pre-answer motion to dismiss, defendants Michael J. Levine and D’Agostino, Levine, Landesman & Lederman, LLP contend that they are entitled to dismissal of the action as against them on the grounds that plaintiffs Mendel Brach, Moshe Roth, and 519 Marcy LLC either lack capacity to sue (see CPLR 3211[a][3]) or lack standing to bring the action. In addition, Defendants contend that the allegations in the Verified Complaint do not state a valid cause of action for fraud because, among other things, neither Mendel Brach nor Moshe Roth were party to any of the alleged transactions, and did not sustain any actual damages as a result of Defendants’ alleged fraudulent conduct. (See CPLR 3211[a][7]"

"In Community Board 7 of the Borough of Manhattan v Schaffer (84 NY2d 148 [1994]), the Court of Appeals discussed the distinction between dismissal for lack of capacity, lack of standing, and for failure to state a cause of action.

"[T]he concept of capacity is often confused with the concept of standing, but the two legal doctrines are not interchangeable. Standing is an element of the larger question of justiciability’. The various tests that have been devised to determine standing are designed to ensure that the party seeking relief has a sufficiently cognizable stake in the outcome so as to cast the dispute in a form traditionally capable of judicial resolution. Often informed by considerations of public policy, the standing analysis is, at its foundation, aimed at advancing the judiciary’s self-imposed policy of restraint, which precludes the issuance of advisory opinions.
Capacity,’ in contrast, concerns a litigant’s power to appear and bring its grievance before the court. The concept of a lack of capacity, which has also occasionally been intermingled with the analytically distinct concept of a failure to state a cause of action, does not admit of precise or comprehensive definition. Capacity, or the lack thereof, sometimes depends purely upon a litigant’s status." (Id. at 154-55 [internal quotation marks, brackets, and citations omitted].)
In addressing these issues with respect to plaintiff 519 Marcy LLC, Defendants’ contention is most easily resolved based upon lack of capacity to sue pursuant to CPLR 3211(a)(3). (See e.g. Security Pacific National Bank v Evans, 31 AD3d 278, 279 [1st Dept 2006] [an objection to "plaintiff’s status [as a non-existent corporation] is properly understood as questioning legal capacity, not standing"].)

In this regard, Defendants contend that 519 Marcy LLC lacks legal capacity to sue because it was merged into 222 Skillman, LLC on February 11, 2003, and has been an inactive entity since 2003. It has been held that a business corporation that is merged with, and completely absorbed by, another corporation ceases to exist as an independent jural entity, and, therefore, lacks legal capacity to sue. (See Westside Federal Savings & Loan Association of New York City v Fitzgerald, 136 AD2d 699, 699 [2d Dept 1988]; see also e.g. Lance International, Inc. v First National City Bank, 86 AD3d 479, 480 [1st Dept 2011] [dissolved corporation lacks capacity to sue unless in the course of winding up its affairs]; cf. Security Pacific National Bank v Evans, 31 AD3d at 279.) "

""Generally corporations have an existence separate and distinct from that of their shareholders and an individual shareholder cannot secure a personal recovery for an alleged wrong done to a corporation. The fact that an individual closely affiliated with a corporation (for example a principal shareholder, or even a sole shareholder), is incidentally injured by an injury to the corporation does not confer on the injured individual standing to sue on the basis of either that indirect injury or the direct injury to the corporation". (New Castle Siding Co., Inc. v Wolfson, 97 AD2d 501, 502 [2d Dept 1983], aff’d 63 NY2d 782 [1984]; see also Baccash v Sayegh, 53 AD3d 636, 639 [2d Dept 2008] ["Although it is undisputed that the plaintiff is Bridal Coutrue’s sole officer and shareholder, a corporation has a separate legal existence from its shareholders even where the corporation is wholly owned by a single individual"].) "[C]ourts are loathe to disregard the corporate form for the benefit of those who have chosen that form to conduct business". (Baccash v Sayegh, 53 AD3d at 639 [quoting Harris v Stony Clove Lake Acres, 202 AD2d 745, 747 (3d Dept 1994)].) [*5]

The caselaw cited above appears to consider the issue in terms of both "standing to sue" (New Castle Siding Co., Inc. v Wolfson, 97 AD2d at 502) and "having a cause of action" (id.) . However, in Matlinpatterson ATA Holdings LLC v Federal Express Corp. (87 AD3d 836 [1st Dept 2011], the court analyzed the "standing" issue as a "threshold matter" in the context of a motion for failure to state a cause of action pursuant to CPLR 3211(a)(7), and continued to consider whether any recognizable cause of action could be discerned from the complaint despite noting that the plaintiff may not have had "standing". (See id.) Similarly, in Baccash v Sayegh (53 AD3d 636), the court addressed the issue in terms of the plaintiff’s failure to prove at trial the elements of a cognizable cause of action. (See id. at 639.) In this regard, the court found that the plaintiff, the sole shareholder and owner of a corporation, did not prove that she suffered any direct damages as result of the defendant’s legal malpractice. (See id. at 640.)

In Sealy v Clifton, LLC (68 AD3d 846 [2d Dept 2009]), the Second Department held that an individual plaintiff, who owned a 50% interest in an limited liability company, did not have "legal capacity to sue" for partition of a property owned by a limited liability company of which he was member. (See id., at 847.) The court also noted that a member of a limited liability company "has no interest in specific property of the limited liability company". (See id.; see also Limited Liability Company Law § 601; see also e.g. Yonaty v Glauber, 40 AD3d 1193, 1195 [3d Dept 2007].) "

After all this, the individual plaintiff’s complaint is dismissed.