Opinion
CHANCERY NO. 03ZOAOOO-(CONSOLIDATED)
02-13-2004
IN RE: ZONING ORDINANCE AMENDMENTS ENACTED BY THE BOARD OF SUPERVISORS OF IN LOUDOUN County ON JANUARY 6, 2003 (CONSOLIDATED CASES): THIS DOCUMENT RELATES TO: WESTVIEW STABLES, INC. CHANCERY NO. 22513 ELYSIAN LAND, INC. CHANCERY NO. 22515 ESTATE OF ALBERT MORAN, ET.AL. CHANCERY NO. 22516 ESTATE OF ALBERT MORAN, ET.AL. CHANCERY NO. 22556 ROCK SPRINGS PROPERTIES, L.L.C. CHANCERY NO. 22573 ESTATE OF ANNE D. COCKERILL CHANCERY NO. 22604 FOUR SONS FAMILY, L.L.C. CHANCERY NO. 22608
CONSOLIDATED DECREE No. ___
MEMORANDUM OPINION AND DECREE
This case is before the Court on the responsive pleadings filed by the respondents. Counsel for the complainants, Estate of Albert Moran, et. al. (Chancery Nos. 22516 and 22556) represented that orders of non suit would be presented as to those actions. In addition, the parties indicated that an agreed order granting leave for Elysian Land, Inc. to amend would be submitted for entry. Accordingly, the issues raised as to the pleadings in such cases were not addressed in argument and need not be discussed further by the Court.
Westview Stables, Inc. has motioned the Court to cure a misnomer. Va. Code Ann. §8.01-6. It seeks to substitute the Trustee in Liquidation of the corporation for Westview Stables, Inc. Va. Code Ann. §13.1-753. Because it failed to file an annual report and pay the appropriate fee, Westview's corporate existence was automatically terminated on November 2, 1998. Va. Code Ann. §13.1-752. Respondents object to the motion and have filed a plea in bar and demurrer to Westview's bill of complaint.
The Court will deny Westview's motion to cure a misnomer and sustain the plea in bar and dismiss its complaint. Upon termination of Westview's corporate existence by reason of a failure to file and nonpayment of fees, the properties and affairs pass automatically to its directors as trustees in liquidation. The trustees are limited to doing those things necessary to a liquidation of the corporation and its affairs. Va. Code Ann. §13.1-753; Moore v. Occupational Safety and Health Review Commission, 591 F.2d 991 (1979). Termination of the corporate existence does not impair remedies available to the corporation for rights or claims existing prior to termination. Va. Code Ann. §13.1-755; Harris Exec. V. T.I. INC., et.al., 243 Va. 63 (1992). The instant claims arose long after termination.
In applying the provisions of Va. Code Ann. §8.01-6, the Supreme Court has made clear that, "…a misnomer is a mistake in name but not person." Rockwell v. Alman, Admr., et. al., 211 Va. 560 (1971). The dissolution of a corporation by operation of law for a failure to file and pay the requisite fees has, "...the legal effect of a de jure dissolution (of the corporation) as apposed to a de facto dissolution…". Moore at 995. In the instant case, the corporate existence of Westview had ceased at the time the instant cause of action arose. The corporation and trustee in liquidation are separate and distinct entities, thus, the misnomer statute may not be used to breathe life into a complainant that had lost its legal identity for purposes of instituting the instant action. Swann v. Marks, 252 Va. 181 (1996). Accordingly, the bill of complaint filed by Westview Stables Inc. will be dismissed with prejudice.
Rock Springs, LLC and Four Sons Family, LLC are not domestic limited liability companies. Rock Springs is an Indiana limited liability company that is authorized to do business in that state. Four Sons is a Delaware limited liability company authorized to do business in that state. They are not presently registered in the Commonwealth as required by statute. Va. Code Ann. §13.1-1052. As foreign limited liability companies transacting business in the Commonwealth, they are prohibited from, "…maintain[ing] any action, suit, or proceeding in any court of this Commonwealth until it has registered in this Commonwealth." Va. Code Ann. §13.1-1057 A.
It is further provided by statute that, "[t]he following activities of a foreign limited liability company, among others, do not constitute transacting business…1. [m]aintaining, defending, or settling any proceeding…." Va. Code Ann. §13.1-1059.
It [is] unlawful for any person to transact business in [the] Commonwealth as a limited liability company or to offer or advertise to transact business in [the] Commonwealth as a limited liability company unless the alleged limited liability company is either a domestic liability company or a foreign limited liability company authorized to transact business in [the] Commonwealth. Any person who violates this section shall be guilty of a Class 1 misdemeanor.
Va. Code Ann. §13.1-1007.
Respondents seek to distinguish the instant proceedings from Video Engineering Co. v. Foto-Video Electronics, Inc., 207 Va. 1027 (1967), based upon statutory changes affecting the scope of what constitutes "transacting business". In Video Engineering, the Supreme Court was asked to determine whether the commencement of an action by a foreign corporation that had failed to obtain a certificate of authority was barred by the provisions of Va. Code Ann. §13.1-119. That statute provided that,
No foreign corporation transacting business in this State without a certificate of authority shall be permitted to maintain any action, suit or proceeding in any court of this State, until such corporation shall have obtained a certificate of authority.***After an analysis of the laws of other states and of the Model Business Act, the Supreme Court determined that,
The failure of a foreign corporation to obtain a certificate of authority to transact business in this State shall not impair the validity of any contract or act of such corporation, and shall not prevent such corporation from defending any action, suit or proceeding in any court of this State. (Italics supplied).
Id. at 1028.
In the light of what appears to be the greater weight and trend of authority, the comment found under §117 of the Model Business Corporation Act, and our construction of the word "maintain" in [Phlegar v. Virginia Foods, Inc., 188 Va. 747 (1949)], supra, we are of the opinion that when plaintiff obtained a certificate of authority to engage in business in Virginia after instituting this action, the barrier set out in Code §13.1-119 was removed and plaintiff was afforded access to the court below to continue its action against the defendant.
Id. at 1030, 1031.
Respondents suggest that the changes in the statute evidence an intent on the part of the General Assembly to modify the Court's holding in Video Engineering, and proscribe the commencement of proceedings by a foreign corporation or limited liability company. Thus, they would suggest that should the legislature have intended that unregistered limited liability companies, such as the instant plaintiffs, might initiate proceedings and only be put on hold until they qualified it would have said so. Instead, the commencement of proceedings was left out of the list of activities not deemed to constitute the transaction of business in the Commonwealth. However, the list is not exhaustive. Indeed, the legislature purposefully left open the field of exclusions to include other activities. Applying the rule of nascitur a sociis to the provisions of Va. Code Ann. § 13.1-1059, the Court is of the opinion that the commencement of legal proceedings is among those activities not deemed to be included within the rubric of transacting business. The Court finds that the omission of the legislature was intended and that the holding in Video Engineering remains good law.
Accordingly, the demurrers and pleas in bar as to the complainants, Rock Springs Properties, LLC and Four Sons Family, LLC will be overruled. However, proceedings will be stayed as to such complainants until such time as they have duly registered in the Commonwealth.
The demurrer to the complaint of the Estate of Cockerill, et. al. will be sustained. The plea in bar will be overruled since the complaint fails to contain an allegation as to the qualification of the complainants executors. While the pleading could have been drafted with greater precision, it clearly states a cause brought by persons and not by the property of the decedent.
Where leave to replead has been granted, the complainant is granted ten days to file and amended pleading.
Entered this ___ day of February 2004.
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Thomas D. Horne, Judge Rule 1:13 Counsel may note their written exceptions to this Decree within twenty-one(21 days of entry.