Wednesday, September 9, 2015

A Guy Named Moe, LLC v. Chipotle Mexican Grill of Colorado, LLC (Ct. of Special Appeals)

Filed:  May 29, 2015

Opinion by Krauser, C. J.

Holding:  A foreign limited liability company that had its right to do business in Maryland forfeited, but nonetheless continued to do business in Maryland, cannot maintain a suit in Maryland and the filing of a petition for judicial review filed during that time of forfeiture is void ab initio.

Facts:  A foreign limited liability company filed a petition requesting the circuit court review a decision of the City of Annapolis Board of Appeals.  The petition was filed within the 30-day period for filing a petition under Rule 7-203(a); however, the petition was filed several years after the company’s right to do business in Maryland had been forfeited.  An affidavit of a business manager of the company asserted that articles of revival and the accompanying payment were submitted prior to the filing of the petition.  The manager also asserted that four months after filing the petition with the circuit court, the company learned that the articles of revival were rejected.  The company subsequently obtained a certificate of good standing.

The circuit court dismissed the action citing lack of standing under Section 4-401(a) of the Land Use Article.  The court affirmed on different grounds.

Analysis:  The court agreed that the Maryland LLC Act allows a foreign limited liability company to “cure the infirmity” of forfeiture to maintain suit.  Yet, the court disagreed that securing the right to maintain suit permitted the company to rely on a petition it filed when it had no right to do so.  While no direct precedent was available, the court noted precedent recognizing that the forfeiture to do business in Maryland does not prevent a limited liability company from defending any action.  The court also noted that Section 4A-1009(a) of the Maryland LLC Act “expressly bars a foreign limited liability company from maintaining suit when it is doing business in Maryland with no right to do so.”

The court then reviewed corporate cases involving charter forfeitures, which support the notion that a limited liability company may not revive a suit, though timely filed, when the suit was initiated by an entity after the entity had lost the right to do business in Maryland and yet persisted in doing business in Maryland.

The full opinion is available in PDF.

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