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Subsequent Revival Of A Corporate Charter Cannot Save A Lawsuit

Tri-County Unlimited, Inc. v. Kids First Swim School, Inc., No. 0004 (Md. App. Mar. 3, 2010) available at http://mdcourts.gov/opinions/cosa/2010/4s09.pdf

Tri-County Unlimited, Inc. ("Tri-County"), brought suit in the Circuit Court for Howard County against Kids First Swim School, Inc. and Gary Roth (collectively, "Defendants"), alleging that it was owed for labor and materials expended in fulfilling its contractual obligations to build a swimming pool. On the day of trial, Defendants filed a Motion to Dismiss, alleging that Tri-County was legally incapable of filing suit because its corporate charter had been forfeited at the time the lawsuit was filed. On the same day, the Court heard argument regarding the Motion to Dismiss, during which Tri-County argued that its charter had been revived; thus restoring its right to sue retroactively.

The circuit court granted the Motion to Dismiss and dismissed the complaint without prejudice. In so doing, the circuit court found that Tri-County's charter had been forfeited at the time it filed suit and that subsequent revival of the charter did not restore the suit. The circuit court denied Tri-County's Motion for Reconsideration and Tri-County then noted an appeal. The issue on appeal was whether Tri-County's subsequent revival of its charter restored its right to sue when its charter had been forfeited at the time the suit was filed.

Tri-County argued that the revival of its charter restored its right to sue retroactively. The Court of Special Appeals, however, disagreed and held that the revival of a corporation's right to sue did not answer the real question before it. The court believed that the real issue was whether a corporation can validate a lawsuit that it initiated when its charter was forfeited ? and therefore, it legally did not exist ? by reviving its charter. After a review of the case law, the Court of Special Appeals concluded that the answer is no.

In affirming the circuit court's decision, the Court of Special Appeals held that the circuit court was correct in dismissing Tri-County's Complaint because Tri-County's corporate charter was forfeited at the time the suit was filed, and the subsequent revival of that charter did not save the lawsuit. Essentially, the complaint was null and void.


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