Williams v. Martin Lakes Condominium

• Decision Date: 08 March 2007
• Docket Number: No. A06A1745.,A06A1745.
• Citation: 644 S.E.2d 424,284 Ga. App. 569
• Parties: WILLIAMS v. MARTIN LAKES CONDOMINIUM ASSOCIATION, INC.
• Court: Georgia Court of Appeals

284 Ga. App. 569

644 S.E.2d 424

WILLIAMS v. MARTIN LAKES CONDOMINIUM ASSOCIATION, INC.

No. A06A1745.

Court of Appeals of Georgia.

March 8, 2007.

Reconsideration Denied March 28, 2007.

Robert L. Tharp, Reginald A. Ross, Meriwether & Tharp, L.L.P., Alpharetta, for appellant.

Randall M. Lipshutz, James V. Zito, Adrian Britt, Lipshutz, Greenblatt & King, Atlanta, for appellee.

ELLINGTON, Judge.

Pursuant to a granted interlocutory appeal, Mary Ann Williams challenges an order of the State Court of Fulton County which denied her motion for summary judgment in this suit brought by Martin Lakes Condominium Association, Inc. ("the Association"), to collect past-due fees and assessments. Williams contends she was entitled to summary judgment because the Association, an administratively dissolved corporation, lacked the capacity to sue when it filed its complaint. Williams also contends the court should have enforced a settlement agreement. Finding no error, we affirm.

1. On appeal from a grant or denial of a motion for summary judgment, we review the evidence de novo, viewing it in the light most favorable to the nonmovant, to determine whether a genuine issue of fact remains and whether the moving party is entitled to judgment as a matter of law. Rubin v. Cello Corp., 235 Ga.App. 250, 510 S.E.2d 541 (1998).

The relevant, undisputed facts are as follows. On November 8, 1999, the Association, a nonprofit corporation, sued Williams to collect $1,220 in past-due fees and assessments on her condominium. Williams answered, asserting as a defense that the Association lacked the legal capacity to sue. The Association admits it was administratively dissolved on July 1, 1993. However, on June 1, 2000, the Association's corporate charter was reinstated. In denying Williams' motion for summary judgment, the state court concluded that the Association had legal capacity to sue because "reinstatement of its corporate status allows it to resume its business as if the administrative dissolution never occurred." We agree.

Under Georgia law, when a nonprofit corporation is administratively dissolved it "continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under [OCGA § ]14-3-1406." OCGA § 14-3-1421(c). A corporation that has been administratively dissolved may apply for reinstatement, and this may be done at any time. See OCGA § 14-3-1422(a). At present, Georgia law does not limit the period during which a corporation may apply for reinstatement.¹ When an administratively dissolved corporation has been reinstated, the reinstatement "relates back to and takes effect as of the effective date of the administrative dissolution and the corporation resumes carrying on its business as if the administrative dissolution had never occurred." OCGA § 14-3-1422(d). Further, this Code section "shall apply to all corporations administratively dissolved under [OCGA § ]14-3-1421 or any similar former statute, regardless of the date of dissolution." OCGA § 14-3-1422(e).

Although the appellate courts of this State have not addressed whether reinstatement under this Code provision revives the corporation such that it has the capacity to sue in that period between dissolution and reinstatement, we find case law from other jurisdictions persuasive. The Court of Appeals of Tennessee, considering a statute identical to ours, concluded that a reinstated homeowners association that had filed suit during its dissolution "possessed the legal capacity to pursue its appeal." Blaylock & Brown Constr. Co. v. The Collierville Bd., 23 S.W.3d 316, 324 (Tenn.App.1999). The court reasoned that

the sole purpose of the statute authorizing revocation and reinstatement of a corporate charter is to raise revenue for the state. The statute does not stand for the proposition that once a corporation's charter is revoked that corporation no longer exists and therefore any acts by the "corporation" are invalid. This is evident by the fact that reinstatement of the charter validates the corporation's existence and privileges from the date of revocation.

(Citations and punctuation omitted.) Id. at 323-324.

When considering whether a reinstated corporation had the capacity to contract during its dissolution, the Court of Appeals of Kentucky also found that reinstatement validates a dissolved corporation's interim acts. Fairbanks Arctic Blind Co. v. Prather & Assoc., 198 S.W.3d 143, 146 (Ky.App.2005). The court reasoned that

the object of (corporate dissolution and reinstatement statutes) being solely the raising of revenue for the State ... it would be inequitable to permit third persons, such as the defendants here, who had dealt with the corporation in the period when its charter had been forfeited to defend suits against them on this ground after the corporation had complied with (the reinstatement statute) and it had been reinstated as a corporation and entitled to all its franchises and privileges. In good conscience the...