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Subsequent Revival Of A Corporate Charter Cannot Save A Lawsuit
(April 2010) By Kevin M. Cox, Associate
For more information, contact Paul Farquharson.
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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