ZARNOCH, J.
This case calls upon us to decide whether substituted service on the State Department of Assessments and Taxation ("SDAT") under Md. Rule 2-124(o)
On October 16, 2006, appellant,
Inexplicably, Rowhouses was not served with process through SDAT until November 5, 2009. On July 14, 2009, the circuit court issued a notification of contemplated dismissal, pursuant to Md. Rule 2-507, which prompted Thomas to file a motion to defer entry of the order of dismissal. On October 13, 2009, the court issued an Order Deferring Dismissal "to permit additional attempts of service." The order stated: "[i]f service has not been made on the Defendant(s) by the deferral date [January 15, 2010], the clerk shall enter on the docket, `Dismissed for lack of jurisdiction without prejudice' immediately as to all un-served Defendants." The clerk never made this entry on the docket, but as later actions indicate, treated January 15, 2010 as the date of dismissal.
On August 19, 2010, Rowhouses filed a motion to dismiss for insufficiency of service of process. On September 27, 2010,
This appeal followed.
Thomas presents the following issues for our review:
We answer yes to the first question and no to the second.
This case presents questions of statutory (and rule) interpretation, and "[w]e review a trial court's interpretation ... through a non-deferential prism." Polek v. J.P. Morgan Chase Bank, N.A., 424 Md. 333, 350, 36 A.3d 399 (2012) (internal citations omitted). See also State ex rel. Lennon v. Strazzella, 331 Md. 270, 273, 627 A.2d 1055 (1993) ("To interpret rules of procedure, we use the same canons and principles of construction used to interpret statutes.") When a circuit court grants a motion to dismiss, we must determine whether the court was "legally correct in its decision to dismiss." Menefee v. State, 417 Md. 740, 747, 12 A.3d 153 (2011).
Thomas contends that service on SDAT was proper because Md. Rule 2-124(o) is not limited to existing corporations. She argues that there is nothing in the plain language of its provisions preventing substituted service on SDAT in this case. Thomas also emphasizes that Rule 2-124(o) applies when a corporation has no resident agent, which is clearly the case here. In turn, appellees argue that Md. Rule 2-124(o) does not apply to a defunct corporation, but applies only to situations where an active corporation has a resident agent and that agent is not accessible for service. They also argue that a defunct corporation is not "required" to have a resident agent. Thus, Rule 2-124(o) did not apply.
Appellees further contend that service upon Rowhouses cannot be achieved
Ordinarily, service on a corporation is governed by Md. Rule 2-124(d), which provides:
As the undisputed facts make clear, at the time of service on SDAT, Rowhouses did not have a resident agent or any of the other corporate members listed in Md. Rule 2-124(d) who could have been served.
Under Maryland law, when a corporation has forfeited its corporate charter or has been dissolved — whether judicially, administratively, voluntarily or involuntarily — it is generally said to be "a legal non-entity" and "all powers granted to [the corporation] by law, including the power to sue or be sued, [are] extinguished generally as of and during the forfeiture period." Dual Inc. v. Lockheed Martin Corp., 383 Md. 151, 163, 857 A.2d 1095 (2004). Typically, "no suit can be brought against a forfeited corporation, except to the extent and under circumstances specifically authorized by statute." Georgetown
According to CA § 3-515, "[w]hen the charter of a Maryland corporation has been forfeited, until a court appoints a receiver, the directors of the corporation become the trustees of its assets for purposes of liquidation." This "corporate survivor" statute allows the director-trustees to sue or be sued "in the name of the corporation." The Court of Appeals has interpreted CA § 3-515 to grant directors-trustees power "only for the `winding up' of a corporation's affairs." As a consequence, "a trustee only may sue in the trustee's own name if there is a `rational relationship' between the suit and a legitimate `winding up' activity of the corporation." Dual Inc. v. Lockheed Martin Corp., 383 Md. 151, 163-164, 857 A.2d 1095 (2004) (internal citations omitted). However, "winding up" also generally includes paying all debts, obligations and liabilities of the corporation, distributing property and resolving pending suits against the corporation. See Fletcher Corporate Forms at § 3671 (4th ed.2001); and 16A Fletcher Cyclopedia of the Law of Corporations at § 8141 ("Fletcher"). Thus, under CA § 3-515, a corporation, whose charter has been forfeited and which is in the process of "winding up," is still "alive" for purposes of being sued to satisfy its debts and liabilities.
Fletcher, at § 8142, has a highly informative discussion of the development and operation of corporate survivor statutes such as CA § 3-515:
(Emphasis added). Id. at § 8142. See also 19 Am.Jur.2d Corporations (2004) at § 2475 ("Under statutory authority, the effect of the dissolution of a corporation has been described as not so much a change in its status as a change in its permitted scope of activity. Thus, it is held that dissolution does not destroy a corporation, or terminate its existence. Rather, upon dissolution, a corporation continues its existence, though its existence is limited, and the corporation generally may not carry on any business except to wind up and liquidate its business. Under this authority, dissolution is best understood not as the corporation's death, but merely as its retirement from active
Fletcher goes on to discuss the impact of dissolution on the "winding up" corporation's ability to accept service and its duty to continue to maintain a resident agent:
(Emphasis added). Fletcher at § 8146. See also 19 Am.Jur.2d Corporations (2004) at § 2433 ("Where a dissolved corporation is continued for a certain period of time for purposes of winding up its affairs, process may be served on the corporation. Observation: When the Secretary of State administratively dissolves a corporation for failing to submit its annual registration statements, some vestige of the corporate entity remains so that a creditor may still sue the corporation and serve the corporation by serving process upon the Secretary of State.")
Out-of-state cases support Fletcher's observations. An ALR annotation provides the following summary of law nationwide concerning service of process on defunct or dissolved corporations:
Annot.: Service of process upon dissolved domestic corporation in absence of express statutory direction, 75 A.L.R.2d 1399 (1961) at § 1(b).
In Sisk v. Old Hickory Motor Freight, Inc., 222 N.C. 631, 24 S.E.2d 488 (1943), the Supreme Court of North Carolina addressed whether service was proper on the secretary of state as to a defunct corporation when there was a statute which provided the following:
Id. at 489.
In Sisk, the North Carolina Supreme Court rejected the contention that this alternative service of process statute did not apply to a forfeited corporation. The Court held that the service of process statute needed to be read in harmony with another North Carolina law, which allowed the continuation of a defunct corporation for the purpose of being sued. Id. The Court explained:
Id. at 490.
Although now superseded by a change in statute, Kopio's, Inc. v. Bridgeman Creameries, Inc., 248 Minn. 348, 79 N.W.2d 921 (1956), is also noteworthy. There, the Supreme Court of Minnesota applied its statute for alternative service on the secretary of state to a defunct corporation. The statute's language provided, "if a domestic corporation had no officer within the state upon whom service could be made, service of summons upon the corporation might be had by serving the secretary of state in the manner specified." Id. at 927. The Court relied on the general proposition that, "where a corporation may be sued after its dissolution, process may ordinarily be served upon the same persons or officers who could have been properly served if the corporation had not been dissolved." Id. at 926. After a review of out of state authority, the Court observed, "[s]ervice on the secretary of state under such statute is uniformly held to constitute valid service on a dissolved corporation whose existence has been extended for the purpose of defending suits." Id. at 927.
The Court of Appeals of Wisconsin also found that its statute providing alternative service on the secretary of state applied to a dissolved corporation, although not explicitly mentioned in the statute's language. The statute provided, "[w]henever a corporation fails to appoint or maintain a registered agent in this state, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then the Secretary of State shall be an agent of such corporation upon whom any such process ... may be served." Wisconsin Finance Corp. v. Garlock, 140 Wis.2d 506, 410 N.W.2d 649, 652 (App. 1987).
In summary, these out of state cases hold that if there is a statutory provision extending the life of the corporation for suit or winding up the corporation's affairs, service may be made in any method which would have been appropriate when the corporation was in existence.
A case from the U.S. District Court for Maryland has interpreted service on SDAT to be proper under Rule 2-124(o) when the defendant corporation's resident agent was "no longer at the address reflected
In our view, consistent with these authorities, Md. Rule 2-124(o) must be read together with the text and purpose of CA § 3-515. This conclusion is not just a product of a wise canon of construction regarding related provisions, it also reflects the express intent of the General Assembly in CA § 1-401 that recognizes the interrelationship of statutory provisions governing service on corporations and the Maryland Rules of Procedure. See n. 12, supra. If the rule and statute are construed together, when a technically defunct, but winding up corporation, has no resident agent, service on SDAT is entirely appropriate and consistent with Rule 2-124(o).
Rowhouses argues that a defunct corporation in "winding up" mode is not required to have a resident agent and that therefore, Rule 2-124(o) does not apply. However, CA § 3-515 rebuts that contention, because it authorizes suits against the corporation and in its own name. When the General Assembly has expressly authorized such actions against a defunct corporation, why should the rules be read as closing a reasonable avenue to the prosecution of such suits? Moreover, Rowhouses' position is inconsistent with CA § 2-108(a)(2) ("Each Maryland corporation shall have ... [a]t least ... one resident agent.") and caselaw generally, see Fletcher, supra, at § 8146. In addition, the text of Rule 2-124(o) applies not only when a resident agent is inaccessible, but also when a resident agent "is dead," as is the case here.
Nonetheless, appellees argue that prior to effectuating service, Thomas "failed to diligently pursue service upon other available surviving directors, including one upon whom Thomas' counsel had successfully obtained service in at least one prior case." This argument, which was not addressed by the circuit court, is flawed. First, no director, other than Eric Patten, was listed in the articles of incorporation for Rowhouses; and secondly, the allegedly surviving director appellees suggested Thomas should have served, Cianchette, died during the course of the proceedings. Had Thomas served Cianchette, she would have been in the same position.
The Court of Appeals has held that when a plaintiff wants to sue the director-trustees of a corporation no longer in existence, he or she is required to "undertake a reasonable search for the identity of the director-trustees." The source of Rowhouses' "reasonable search" requirement is our decision in Scott v. Seek Lane Venture, Inc., 91 Md.App. 668, 605 A.2d 942 (1992). In that case, we upheld the setting-aside of a foreclosure of an equity of redemption of property of a defunct corporation. The appellee knew the corporation was defunct and made no attempt to make a reasonable search for the identity of the director-trustees. Id. at 687, 605 A.2d 942. The appellee failed to examine "the corporation's
Certainly Scott does not suggest that CA § 3-515 establishes that individualized service on director-trustees is the exclusive method of service when a corporate charter has been administratively forfeited, and the corporation is without a resident agent, has notice of a lawsuit, and is represented by counsel. We hold that service on SDAT was proper in this case and reverse the circuit court's grant of Rowhouses' motion to dismiss.
Thomas also contends that because Patten, as trustee, would have been individually subject to service for claims against Rowhouses, it follows that his estate should also be able to accept service on behalf of the corporation. Appellees state that Thomas' argument is legally flawed, as corporations are only subject to service in the manner allowed by law. We agree with appellees that service on the Estate of Eric Patten would not constitute proper service of process with respect to Rowhouses.
Individual liability differs from corporate liability. Although Patten was a trustee for Rowhouses, no law establishes that his estate could become a trustee as well. The plain language of CA § 3-515 does not include the estate of the former director.
Accordingly, we affirm the circuit court's dismissal of claims against appellee Estate of Eric Patten.
