158 Wash. 2d 603 | Wash. | 2006
Lead Opinion
Petitioner Ballard Square Condominium Owners Association (Association) .sued Dynasty Construction Company, the developer and builder of a condominium purchased by members of the Association, claiming that Dynasty breached the homeowners’ purchase and sale contracts. At the time the suit was brought, Dynasty was a dissolved corporation. The trial court granted summary judgment in favor of Dynasty, reasoning that suit was barred due to Dynasty’s dissolution. The Court of Appeals affirmed. We conclude that under the plain language of former RCW 23B.14.050(2)(e) (1989) as it existed when the Association commenced this suit, postdissolution claims could be brought against a dissolved corporation, subject to the relevant statute of limitations for the type of claim asserted.
¶2 However, a 2006 amendment to former RCW 23B-.14.340 (1995) applies retroactively and bars this suit.
FACTS
¶3 Ballard Square is a 20-unit condominium in Seattle that was developed, built, and sold by Dynasty. The first condominium unit was sold in May 1992, and the project
¶4 In November and December 1996, the Association asserts, homeowners began to notice leaks in the above-ground walls of the condominium. The Association says that although some homeowners had found leaks prior to this time in the subterranean garage and the roof, and noticed some window condensation, it is not suing for damage to these components of the condominium, which, the Association maintains, is unrelated to damage to the above-ground structure resulting from defects in the exterior walls and stucco system. Dynasty contends, on the other hand, that homeowners complained to the Association in mid-July 1993 about leaking walls and roof problems, that in December 1993 the Association presented Dynasty with a common element claim for leak repairs, and that in early 1995 the Association was still receiving complaints from the homeowners about leaking walls, roof problems, and cracked plasterboard.
¶5 In early 1997, the Association filed a claim with its property insurer. The insurer’s investigators found water leaking through the siding but under the applicable policy provisions paid only for repair of that part of the building in an imminent state of collapse. The investigation disclosed additional water damage, however, and the homeowners hired an architect to investigate. He concluded that severe water damage resulted from Dynasty’s failure to comply with applicable building laws and its failure to follow sound construction standards and its own plans and specifications. Estimated costs of repair exceed $1.4 million.
ANALYSIS
¶7 Review of a grant of summary judgment is de novo. Korslund v. DynCorp Tri-Cities Servs., Inc., 156 Wn.2d 168, 177, ¶ 12, 125 P.3d 119 (2005). Summary judgment is properly granted if there is no genuine issue as to any
¶8 The Association maintains that statutes in chapter 23B.14 RCW supplant the common law rule that causes of action terminate upon the dissolution of a corporation and authorize a postdissolution suit against a dissolved corporation. Dynasty maintains that the Court of Appeals correctly held that a postdissolution suit against a dissolved corporation can be brought only during the period when the corporation is winding up and liquidating its business and affairs.
¶9 At common law, when a corporation dissolved it ceased to exist for all purposes and therefore could not sue or be sued. 16A William Meade Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 8144 (perm, ed., rev. vol. 2003); see Bortle v. Osborne, 155 Wash. 585, 597, 285 P. 425 (1930). The common law rule has been modified by state legislatures, most of which have enacted statutes permitting corporations to sue and be sued as part of their winding up activities, and all of which have enacted statutes that, apart from the winding up process, permit suits by and against corporations for a limited time period. Id. The latter type of statute is generally known as a survival statute. Id.
¶10 The Washington State Legislature enacted a survival statute in 1965 as part of the Washington Business Corporation Act, former Title 23A RCW. Washington’s survival statute was virtually identical to section 98 of the 1959 Model Business Corporation Act. Former RCW 23A.28.250, Laws of 1965, ch. 53, § 108 (effective July 1, 1967). The survival statute, like section 98, provided that a corporation’s dissolution did not “take away” or “impair” lawsuits based on claims that existed prior to dissolution, provided the plaintiff sued within two years. Former RCW 23A.28.250.
¶12 Dynasty has abandoned the argument that RCW 23B.14.340 bars the Association’s suit. Now Dynasty argues that the statutes do not address postdissolution claims, and therefore the common law controls as the Court of Appeals held. However, the Association correctly maintains that the statutes in the Washington Business Corporation Act have replaced the common law rule in its entirety. The statutory scheme shows the legislature’s intent that claims arising
¶13 The enactment of chapter 23B.14 RCW included RCW 23B.14.050(2)(e), which showed the legislature’s intent to cut any remaining ties to the common law rule that all claims against a corporation died upon dissolution of the corporation. RCW 23B. 14.050, as it existed when this action was commenced, stated in its entirety:
(1) A dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs, including:
(a) Collecting its assets;
(b) Disposing of its properties that will not be distributed in kind to its shareholders;
(c) Discharging or making provision for discharging its liabilities;
(d) Distributing its remaining property among its shareholders according to their interests; and
(e) Doing every other act necessary to wind up and liquidate its business and affairs.
(2) Dissolution of a corporation does not:
(a) Transfer title to the corporation’s property;
(b) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation’s share transfer records;
(c) Subject its directors or officers to standards of conduct different from those prescribed in chapter 23B.08 RCW;
(d) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;
(e) Prevent commencement of a proceeding by or against the corporation in its corporate name;
(f) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
(g) Terminate the authority of the registered agent of the corporation.
¶14 We agree that the language of subsection (2)(e) is not to be read in isolation. An appellate court reviews questions of statutory construction de novo. State v. Roggenkamp, 153 Wn.2d 614, 621, ¶ 9, 106 P.3d 196 (2005). The examination begins with the language of the statute and related statutes to determine whether plain statutory language shows the intended meaning of the statute in question. Rest. Dev., Inc. v. Cananwill, Inc., 150 Wn.2d 674, 682, 80 P.3d 598 (2003); Dep’t of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1, 11, 43 P.3d 4 (2002). If this examination leads to a plain meaning, that is the end of the inquiry. If, however, the statutory language is amenable to more than one reasonable interpretation, a court may then resort to legislative history, principles of statutory construction, and relevant case law to resolve the ambiguity and ascertain the meaning of the statute. Rest. Dev., 150 Wn.2d at 682.
¶15 Subsection (1) of RCW 23B.14.050 begins by stating that “[a] dissolved corporation continues its corporate existence” but then expressly limits this corporate existence to carrying on business that is “appropriate to wind up and liquidate [the corporation’s] business and affairs.” The first section then lists actions appropriately falling within this limitation, such as disposing of property and discharging liabilities.
¶[16 Subsection (2), however, does not mention winding up, nor does any part of the statute describe or refer collectively to events and actions listed in both subsections (1) and (2) as
¶17 The plain language of subsection (2)(e) permitted any suit to be brought by or against the corporation regardless of dissolution, and the plain language of both subsections shows that the introductory language in subsection (1) limiting activities to winding up and liquidating does not limit subsection (2)(e).
¶18 As indicated, related statutes are relevant and may help show the plain meaning of the provision at issue. Two other statutes in the chapter pertained to lawsuits against a dissolved corporation. The first of these is former RCW 23B. 14.340, discussed above. As explained, this statute required that claims existing prior to dissolution be brought within two years. The second is RCW 23B.14.060, which sets out requirements that must be met for a corporation to dispose of certain known claims against it within a shortened time period.
f 19 The language of RCW 23B.14.050(2)(e), read together with other statutes in chapter 23B.14 RCW relating to suits against a dissolved corporation, plainly allowed a post-dissolution suit against a dissolved corporation. Subsection (2) on its face permitted such suits, and there was no limitation in RCW 23B. 14.050 or in any other statute in the chapter that touched on suits against a dissolved corporation.
¶20 In summary, under the statutes in chapter 23B.14 RCW applicable at the time this action was commenced, a postdissolution claim against a dissolved corporation was authorized under former RCW 23B.14.050(2)(e).
¶21 However, in 2006, the legislature amended chapter 23B.14 RCW, including RCW 23B.14.340.
The dissolution of a corporation either (1) by the filing with the secretary of state of its articles of dissolution, (2) by administrative dissolution by the secretary of state, (3) by a decree of court, or (4) by expiration of its period of duration shall not take away or impair any remedy available against such corporation, its directors, officers, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution or arising thereafter, unless action or other proceeding thereon is not commenced within two years after the effective date of any dissolution that was effective prior to June 7, 2006, or within three years after the effective date of any dissolution that is effective on or after June 7, 2006. Any such*616 action or proceeding against the corporation may be defended by the corporation in its corporate name.
On its face the amended statute requires that a post-dissolution cause of action be commenced within two years of dissolution if dissolution occurred prior to the June 7, 2006, effective date of the amendments. Here, dissolution occurred in 1995, long before the effective date of the amendments. The Association brought suit in 2002, well over two years after dissolution. By its plain language, RCW 23B. 14.340 as amended bars the Association’s suit.
¶22 The Association argues, however, that when applied to actions that accrued prior to enactment, a new limitations period runs from the effective date of the new statute. The Association also maintains that a statute of limitations cannot be applied retroactively to terminate an action that has already been commenced. Neither of these principles applies under the facts here, however.
¶23 The general rule, that as to preexisting actions a new limitations period runs from the date of its enactment, has an important qualifier. “[T]he limitation of the new statute, as applied to pre-existing causes of action, commences when the action is first subjected to the operation of the statute, unless the legislature has otherwise provided.” Hanford v. King County, 112 Wash. 659, 662, 192 P. 1013 (1920) (emphasis added); accord, e.g., O’Donoghue v. State, 66 Wn.2d 787, 791-92, 405 P.2d 258 (1965); Earle v. Froedtert Grain & Malting Co., 197 Wash. 341, 344, 346, 85 P.2d 264 (1938).
¶24 Here, the statute as amended provides that with regard to actions against corporations that dissolved before the amendment’s effective date, a two year limitations period applies. The statute thus clearly shows legislative intent that it applies to actions arising before its effective date.
¶25 Nor does it matter that this suit was commenced before enactment of the amendments to RCW 23B.14.340. The Association relies upon Shaurette v. Capitol Erecting
¶26 In 1000 Virginia Limited Partnership v. Vertecs Corp., 158 Wn.2d 566, 146 P.3d 423 (2006) (consolidated with Lombardi v. JTE Construction, Inc.), we discussed the basic rules respecting the prospective and retroactive application of new enactments in general. We observed that an amendment to a statute may be retroactively applied if the legislature intends that it apply retroactively and retroactive application does not impair a constitutional right. 1000 Virginia, 158 Wn.2d at 584; McGee Guest Home, Inc. v. Dep’t of Soc. & Health Servs., 142 Wn.2d 316, 324, 12 P.3d 144 (2000). A statute will also apply retroactively if it is curative or remedial. 1000 Virginia, 158 Wn.2d at 584; McGee, 142 Wn.2d at 324. “ A statute is remedial when it relates to practice, procedure, or remedies and does not affect a substantive or vested right.’ ” 1000 Virginia, 158 Wn.2d at 586 (quoting Miebach v. Colasurdo, 102 Wn.2d 170, 181, 685 P.2d 1074 (1984)).
¶27 Thus, if the legislature intends that a statute apply retroactively, it will be applied retroactively unless it impairs a constitutional or vested right. A number of the cases that the Association cites, including Shaurette, involve tort or contract actions. As this court has recognized, an accrued cause of action is a vested right when it “ ‘springs from contract or from the principles of the common law.’ ” Robinson v. McHugh, 158 Wash. 157, 163, 291 P. 330 (1930) (emphasis omitted) (quoting Pritchard v. Norton, 106 U.S. (16 Otto) 124, 1 S. Ct. 102, 27 L. Ed. 104 (1882)). But, in contrast, a cause of action that exists only by virtue of a statute is not a vested right, and it can be retroactively abolished by the legislature. West v. Zeibell, 87 Wn.2d 198, 202, 550 P.2d 522 (1976); Haddenham v. State, 87 Wn.2d 145, 149, 550 P.2d 9 (1976); Sparkman & McLean Co. v. Govan Inv. Trust, 78 Wn.2d 584, 586-87, 478 P.2d 232 (1970); Hansen v. W. Coast Wholesale Drug Co., 47 Wn.2d 825, 826-27, 289 P.2d 718 (1955); Robinson, 158 Wash. at 163-64.
¶28 In 1000 Virginia, we held that RCW 4.16.326(l)(g) does not apply retroactively.
¶29 The Association maintains, however, that its breach of contract action “arose under the common law” and thus it falls within the rule that newly enacted limitations periods
¶30 As explained, the right to sue a dissolved corporation did not exist at common law; instead, the right exists by virtue of statutes in chapter 23B.14 RCW, i.e., the right exists as a matter of “legislative grace.” Accordingly, and by analogy to Haddenham, the Association’s cause of action is not a vested right regardless of the fact that the Association alleges breach of contract.
¶31 We conclude that the Association’s postdissolution claim falls within the rule that “[a]bolition of a statutory cause of action does not impair any vested right.” 1000 Virginia, 158 Wn.2d at 587 (citing West, 87 Wn.2d at 202; Haddenham, 87 Wn.2d at 149). Accordingly, RCW 23B.14.340, as amended in 2006, bars the Association’s suit.
CONCLUSION
¶32 Under former chapter 23B.14 RCW, as it existed when the Association commenced this action, a postdissolution action could be maintained against a dissolved corporation provided it was commenced within the statute of limitations applicable to the particular cause of action asserted. However, in 2006 the legislature amended RCW 23B. 14.340 to provide that a postdissolution action against a dissolved corporation that dissolved prior to the effective
Alexander, C.J., and C. Johnson, Bridge, Chambers, Owens, and Fairhurst, JJ., concur.
¶33
Senate Bill 6596, enacted by the 2006 legislature, significantly alters the statutory scheme regarding suits by and against a dissolved corporation. Laws of 2006, ch. 52. In order to respond to the parties’ arguments, this opinion first addresses chapter 23B.14 RCW, concerning dissolution of corporations, as it existed prior to the 2006 amendments. Then we turn to the effect of the 2006 amendments to RCW 23B.14.340 on the Association’s suit.
The Association’s complaint asserted additional claims, but the Association withdrew these claims in response to Dynasty’s motion for summary judgment.
The Association states that it brought this suit on its own behalf and on behalf of the homeowners, as it is authorized to do although it has no contract itself with Dynasty. The Association adds that the unit owners have also assigned their claims to the Association. See CP at 201-22. These assignments were all made in December 2003.
Dynasty filed a third party complaint against its stucco subcontractor. The trial court entered CR 54(b) findings and a final judgment dismissing plaintiff’s claims against Dynasty and staying Dynasty’s claims against the subcontractor pending the Association’s appeal.
Former RCW 23B.14.060 (1989) provided at the time this suit was commenced:
(1) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section.
(2) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date. The written notice must:
(a) Describe information that must he included in a claim;
(b) Provide a mailing address where a claim may be sent;
*614 (c) State the deadline, which may not be fewer than one hundred twenty days from the effective date of the written notice, by which the dissolved corporation must receive the claim; and
(d) State that the claim will be barred if not received by the deadline.
(3) A claim against the dissolved corporation is barred:
(a) If a claimant who was given written notice under subsection (2) of this section does not deliver the claim to the dissolved corporation by the deadline; or
(b) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice.
(4) For purposes of this section, “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.
The contract claim is not a claim that existed prior to Dynasty’s dissolution, as noted, and it was not a “known claim” within the meaning of RCW 23B.14.060, as that statute existed when this suit was commenced.
If we were to conclude that ambiguity did exist as to the meaning of RCW 23B.14.050(2)(e), and therefore looked to legislative history, our reading of the
chapter 14 dissolution does not have any of the characteristics of common law dissolution, which treated corporate dissolution as analogous to the death of a natural person and abated lawsuits, vested equitable title to corporate property in the shareholders, imposed the fiduciary duty of the trustees on the directors, who had custody of corporate assets, and revoked the authority of the registered agent. [RCW 23B.14.050(2)] expressly reverses all of these common law attributes of dissolution and makes clear that the rights, powers, and duties of shareholders, the directors, and the registered agent are not affected at dissolution and that suits by or against the corporation are not affected in any way.
Senate Journal, 51st Leg., Reg. Sess., App. at 3095 (Wash. 1989) (emphasis added). Thus, with enactment of subsection (2) of RCW 23B.14.050, dissolution is governed entirely by statute, including suits by or against a dissolved corporation.
The parties failed to bring these amendments to the court’s attention. Therefore, we asked for additional briefing, which the parties have provided.
Dynasty asks that we address this statute in the event we reverse the Court of Appeals on the issue whether a postdissolution suit is permitted under chapter 23B.14 RCW. In light of the amendment to RCW 23B.14.340, we do not reach the question whether RCW 4.16.326(l)(g) bars the Association’s suit. However, our holding in 1000 Virginia that this statute does not apply retroactively nevertheless answers the question.
In light of our disposition of this case, we also do not reach other arguments advanced by Dynasty, i.e., that the four-year statute of limitations in RCW 64.34.452(1) bars this suit and that the Association lacks standing because it does not itself have a contract with Dynasty.
Concurrence Opinion
(concurring) — I agree that the 2006 amendment to RCW 23B. 14.340 applies and bars the Ballard Square Condominium Owners Association’s (Association) suit brought 7 years after dissolution of the corporation (and 10 years after project completion). I write separately because the majority incorrectly assumes that prior to this amendment such a suit could have continued. However, at the time the Association filed suit, our law, and chapter 23B.14 RCW, provided no cause of action against a dissolved corporation for unknown claims (those based on events after dissolution). Thus, the Association’s suit against Dynasty is barred under either statutory scheme.
I. Pre-2006 Amendment Analysis
¶34 At early common law, all causes of action against a corporation terminated upon dissolution of the corporation; a corporation was viewed as a fictional person and dissolution as death. The debts of the terminated corporation were extinguished, its real property reverted to the grantor, and its personal property escheated. Bortle v. Osborne, 155 Wash. 585, 597, 285 P. 425 (1930); see also Theis v. Spokane Falls Gas Light Co., 34 Wash. 23, 29-30, 74 P. 1004 (1904). Common law largely controlled the law of corporations in Washington until statutory enactments changed that law.
¶35 In 1965, the Washington State Legislature adopted the Washington Business Corporation Act (WBCA), Laws of 1965, ch. 53, which was based largely on the national Model Business Corporation Act.
¶36 In 1984, the national Model Business Corporation Act was revised in response to extensive comment through
¶37 A statute abrogates the common law if the provisions of the statute are so inconsistent with and repugnant to the common law that both cannot simultaneously be in force. State ex rel. Madden v. Pub. Util. Dist. No. 1, 83 Wn.2d 219, 222, 517 P.2d 585 (1973). “It is a general rule of interpretation to assume that the legislature was aware of the established common-law rules applicable to the subject matter of the statute when it was enacted.” Id. “A statute which is clearly designed as a substitute for the prior common law must be given effect.” Id. at 221. However, “ ‘[a]bsent an indication that the Legislature intended to overrule the common law, new legislation will be presumed to be consistent with prior judicial decisions.’ ” Ballard Square Condo. Owners Ass’n v. Dynasty Constr. Co., 126 Wn. App. 285, 295-96 & n.39, 108 P.3d 818 (2005) (quoting In re Marriage of Williams, 115 Wn.2d 202, 208, 796 P.2d 421 (1990)).
¶38 Here, we must determine to what extent Washington statutory law had supplanted the common law notion that a corporation died at dissolution. Thus, we must analyze the pre-2006 statutory scheme and its underlying legislative intent vis-a-vis the common law.
¶39 Statutory interpretation is a question of law that this court reviews de novo. Philippides v. Bernard, 151 Wn.2d 376, 383, 88 P.3d 939 (2004). “The primary goal of statutory interpretation is to ascertain and give effect to the legislature’s intent and purpose.” In re Parentage of J.M.K., 155 Wn.2d 374, 387, 119 P.3d 840 (2005). This goal may be achieved by considering the statute as a whole, giving effect to all of the statutory language, and using related statutes to help identify the legislative intent underlying the provision at issue. Id. If, after this inquiry, a statute might still be accorded more than one reasonable meaning, the statute is ambiguous and courts may resort to aids to construction,
A. Former RCW 23B.14.050 (1989) — Model Act § 14,05
¶40 Former RCW 23B.14.050, titled “Effect of dissolution,” provides:
(1) A dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs, including:
(a) Collecting its assets;
(b) Disposing of its properties that will not be distributed in kind to its shareholders;
(c) Discharging or making provision for discharging its liabilities;
(d) Distributing its remaining property among its shareholders according to their interests; and
(e) Doing every other act necessary to wind up and liquidate its business and affairs.
(2) Dissolution of a corporation does not:
(a) Transfer title to the corporation’s property;
(b) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation’s share transfer records;
(c) Subject its directors or officers to standards of conduct different from those prescribed in chapter 23B.08 RCW;
(d) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;
(e) Prevent commencement of a proceeding by or against the corporation in its corporate name’,
(f) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
*623 (g) Terminate the authority of the registered agent of the corporation.
(Emphasis added.)
¶[41 This statute is identical to section 14.05 of the national Model Act. Revised Model Bus. Corp. Act § 14.05 (1985) (RMBCA). The Washington State Legislature did not officially adopt the comments to the 1984 Model Act, but the comments were published in the Senate Journal. Thus, this court may use the comments as persuasive authority. The comments provide:
Proposed subsection 14.05(a) [former RCW 23B.14.050(1)] provides that dissolution does not terminate the corporate existence but simply requires the corporation thereafter to devote itself to winding up its affairs and liquidating its assets; after dissolution, the corporation may not carry on its business except as may be appropriate for winding-up.
The Proposed Act uses the term “dissolution” in the specialized sense described above and not to describe the final step in the liquidation of the corporate business. This is made clear by Proposed subsection 14.05(b) [former RCW 23B.14.050(2)], which provides that chapter 14 dissolution does not have any of the characteristics of common law dissolution, which treated corporate dissolution as analogous to the death of a natural person and abated lawsuits, vested equitable title to corporate property in the shareholders, imposed the fiduciary duty of trustees on directors who had custody of corporate assets, and revoked the authority of the registered agent. Proposed subsection 14.05(b) expressly reverses all of these common law attributes of dissolution and makes clear that the rights, powers, and duties of shareholders, the directors, and the registered agent are not affected by dissolution and that suits by or against the corporation are not affected in any way.
Senate Journal, 51st Leg., Reg. Sess., App. at 3095 (Wash. 1989) (emphasis added). Essentially, the term “dissolution” as used in RCW 23B.14.050, subsections (1) and (2), refers to the winding up period.
¶42 Dynasty correctly points out that RCW 23B.14.050 is limited to the context of winding up and thus only
¶43 In contrast, the Association argues that the plain language of RCW 23B.14.050(2)(e) allows suits against dissolved corporations: “ ‘[d]issolution of a corporation does not. . . [p] revent commencement of a proceeding ... against a corporation.’ ” Pet’r’s Suppl. Br. at 8 (quoting RCW 23B-.14.050(2)(e)). The majority erroneously agrees with the Association’s broad analysis. Majority at 606.1 conclude the statutory changes were more limited.
¶44 All of the subsections of former RCW 23B. 14.050(2) refer to acts or events that continue during winding up but cease to occur following wind up. For example, a corporation must liquidate and discharge liabilities during the winding up period. Likewise, quorum and voting requirements continue during winding up but terminate when the winding up period is over. Logically, subsection (2)(e) must adhere to this same pattern; commencement of actions may continue against the corporation during the winding up period but not afterward.
¶45 The plain language of former RCW 23B. 14.050 abrogates the common law rule of death at dissolution in favor of allowing (requiring) corporations a period to wind up. As noted above, at common law, the debts of the corporation were extinguished at dissolution, its real property reverted to the grantor, and its personal property escheated. Bortle, 155 Wash. at 597. Former RCW 23B. 14.050(2) provides, among other things, that dissolution does not immediately transfer title or prevent transfer of shares. Because former RCW 23B. 14.050 continues the existence of the corporation through the winding up period, a corporation no longer dies
¶46 Thus, former RCW 23B.14.050 authorizes only actions against dissolved corporations brought during the winding up process; it does not allow for claims against corporations that have completed the process of winding up and finally dissolved. Because Dynasty had completed the winding up process long before the Association filed suit in October 2002, the Association’s suit was not authorized by former RCW 23B.14.050.
B. Former RCW 23B.14.340 (1989)
¶47 Former RCW 23B. 14.340 (formerly RCW 23A-.28.250), titled “Survival of remedy after dissolution,” provides:
The dissolution of a corporation . . . shall not take away or impair any remedy available against such corporation, its directors, officers, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within two years after the date of such dissolution. Any such action or proceeding against the corporation may be defended by the corporation in its corporate name.
(Emphasis added.)
¶49 The original version of this statute was enacted in 1965 as part of the WBCA, discussed above. Laws of 1965, ch. 53, § 108. The language of the original statute is substantially similar to the present statute and includes the language at issue here — “prior to such dissolution.” Id. The plain language of the statute obviates the need for legislative history in this instance.
¶50 “A fundamental canon of construction holds a statute should not be interpreted so as to render one part inoperative.” Davis v. Dep’t of Licensing, 137 Wn.2d 957, 969, 977 P.2d 554 (1999). A court should presume the legislature does not include unnecessary language when it enacts legislation. McGinnis v. State, 152 Wn.2d 639, 645, 99 P.3d 1240 (2004).
¶51 The plain language of former RCW 23B.14.340 indicates that it authorized only claims existing “prior to” dissolution. Ballard Square Condo., 126 Wn. App. at 291. To interpret the statute as applying to claims after dissolu
¶52 The Association then argues that the language in former RCW 23B.14.340 neither barred nor allowed a post-dissolution claim; it is silent on this point. As argued by the Association, the majority interprets this silence, together with its erroneous view of RCW 23B.14.050(2)(e), to conclude that “the statutes in the Washington Business Corporation Act have replaced the common law rule in its entirety.” Majority at 610 (emphasis added). Yet, as noted above, RCW 23B.14.050(2)(e) was actually intended only to supplant the common law rule of corporate death upon dissolution during the period of the winding up process. During that period, prior claims (and only prior claims) may be brought within two years.
¶53 Abrogation of the common law requires irreparable inconsistency. See State ex rel. Madden, 83 Wn.2d at 222. Such inconsistency is not presented by mere silence, and therefore the correct inference to be drawn from the statutory language is that, under the pre-2006 version of chapter 23B.14 RCW, the legislature did not modify the common law bar for post-dissolution claims. Ballard Square Condo., 126 Wn. App. at 287. Neither former RCW 23B.14.340 nor RCW 23B.14.050(2)(e) provides authorization for the Association’s suit against Dynasty. An additional provision of chapter 23B.14 RCW, and particularly the legislative history surrounding its enactment, confirms that there was no cause of action for post-dissolution claims, like the claim here, under the pre-2006 statutory scheme.
C. Former RCW 23B.14.060 (1989) — Model Act § 14.06
¶54 In addition to the statutes discussed above, the national Model Act contained two other sections addressing whether suits may be brought against dissolving or dissolved corporations. One section was adopted in Washington, the other was not. Specifically, the Model Act contained
f55 Former RCW 23B. 14.060, titled “Known claims against a dissolved corporation,” provides, in pertinent part:
(1) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section.
(2) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date.
(3) A claim against the dissolved corporation is barred . . . :
(a) If a claimant who was given written notice under subsection (2) of this section does not deliver the claim to the dissolved corporation by the deadline; or
(b) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice.
(4) For purposes of this section, “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.
¶56 The legislature did not adopt the section of the Model Act entitled, “Unknown claims against a dissolved orporation,” section 14.07. This section would have allowed claims based on events occurring after the effective date of dissolution as long as such claims were brought within five years’ notice of dissolution. The rejected section 14.07 arguably would have filled a void left by “ [e] arlier versions of the Model Act [that] did not recognize the serious problem created by possible claims that might arise long after the dissolution process was completed. . . .” RMBCA § 14.07 cmt.
The [Corporate Act Revision Committee of the Washington State Bar Association] deferred possible adoption of RMA [Revised Model Act] section 14.07, which would have barred unknown claims after publication of notice. It was informed that the RMA drafters are studying the provision for possible revision. The Committee will reconsider RMA section 14.07 and Proposed section 14.34 in view of those revisions.
Senate Journal, 51st Leg., Reg. Sess., App. at 3096 (Wash. 1989).
¶58 The legislature specifically chose not to adopt the “unknown claims” section of the Model Act when it otherwise substantially adopted the Model Act — including the sections pertaining to claims arising prior to dissolution and “known claims.” This is an important and intentional omission, for it indicates that while the legislature specifically sought to allow known claims, it did not wish to establish an express cause of action for unknown (later discovered) claims. Ballard Square Condo., 126 Wn. App. at 295. Thus, RCW 23B.14.060 and its legislative history lend support to the conclusion that the legislature did not intend to alter the common law bar as to unknown, post-dissolution claims. In sum, analysis of former chapter 23B.14 RCW, particularly those provisions relevant to bringing suit against dissolved corporations, demonstrates that the Association could not bring its suit against Dynasty under either the former or current versions of that statutory scheme.
II. Conclusion
¶59 Because prior to 2006 the legislature had not abrogated the common law bar on claims against corporations which arise post-dissolution, the Association had no cause of action when it initially filed suit against Dynasty. Like
Sanders, J., concurs with J.M. Johnson, J.
Reconsideration denied January 22, 2007.
The Association argues that Dynasty is still winding up because it is defending this lawsuit. However, it is illogical to conclude that a corporation that has otherwise liquidated its assets and ceased to exist is in the process of winding up merely because it must defend itself. To allow this result would mean that a corporation would be winding up forever at the will of plaintiffs’ lawsuits.
The Association argues that cases from other jurisdictions support its interpretation. However, my research indicates that cases from other jurisdictions, involving substantially similar statutes, are split as to whether the statute applies only to claims existing prior to dissolution or whether the “prior to” language operates to prohibit claims accrued after dissolution. Compare Carreiro v. Rhodes Gill & Co., 68 F.3d 1443, 1450 (1st Cir. 1995) (finding that the language at issue — providing a two-year survival period only for liabilities incurred “prior to dissolution” — logically means that actions on liabilities incurred after dissolution do not survive at all, not even for the two-year wind-up period), with Gross v. Hougland, 712 F.2d 1034, 1040-41 (6th Cir. 1983) (holding that Kentucky Revised Statutes section 271A.515 — language virtually identical to RCW 23B.14.340' — did not affect the plaintiff’s ability to bring the action in district court because it applies only to claims which arise prior to dissolution).
