Diktic, Inc. v. Somerset Refinery, Inc.

• Decision Date: 18 July 2003
• Docket Number: NO. 2002-CA-000301-MR.,2002-CA-000301-MR.
• Parties: DIKTIC, INC. APPELLANT v. THE SOMERSET REFINERY, INC. AND FRANCIS B. LYNCH APPELLEES.
• Court: Kentucky Court of Appeals

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DIKTIC, INC. APPELLANT v. THE SOMERSET REFINERY, INC. AND FRANCIS B. LYNCH APPELLEES.

NO. 2002-CA-000301-MR.

Court of Appeals of Kentucky.

Rendered July 18, 2003.

APPEAL FROM PULASKI CIRCUIT COURT, HONORABLE WILLIAM T. CAIN, JUDGE, ACTION NO. 99-CI-00900.

Larry F. Sword, Somerset, Kentucky, BRIEF FOR APPELLANT.

James V. Magee, Jr., Cincinnati, Ohio, BRIEF FOR APPELLEES.

BEFORE: BUCKINGHAM, DYCHE, AND JOHNSON, JUDGES.

OPINION

AFFIRMING

BUCKINGHAM, JUDGE:

Diktic, Inc., appeals from a summary judgment rendered by the Pulaski Circuit Court in favor of The Somerset Refinery, Inc., and Francis B. Lynch. We affirm.

In 1994, Francis Lynch, a resident of South Carolina, and other persons were interested in purchasing a refinery owned by The Somerset Refinery, Inc., in Somerset, Kentucky. However, federal government agencies had filed a civil action against the Somerset Refinery for injunctive relief, fines, and penalties amounting to more than $376 million for environmental law violations. Lynch contacted Diktic and Elijah Petty, chairman of Diktic's board of directors, to perform an environmental analysis of the Somerset Refinery in order to assist Lynch's group in acquiring it. Petty was a chemical engineer, and Diktic was an environmental and chemical process engineering consulting company. Eventually, the parties entered into a written contract.

On October 20, 1999, Diktic filed a civil action in the Pulaski Circuit Court against The Somerset Refinery, Inc., and Lynch. Diktic alleged that it was owed $396,835.38 for services it had provided. On December 11, 2001, the circuit court awarded summary judgment in favor of The Somerset Refinery, Inc., and Lynch. The court held that Diktic lacked the standing and capacity to maintain the civil action. First, the court held that Diktic had transacted business in Kentucky in violation of KRS¹ 271B.15-010(1) which provides that "[a] foreign corporation shall not transact business in this state until it obtains a certificate of authority from the secretary of state." Further, the court cited KRS 271B.15-020(1) which states that "[a] foreign corporation transacting business in this state without a certificate of authority shall not maintain a proceeding in any court in this state until it obtains a certificate of authority." Second, the court stated that Diktic provided engineering services in Kentucky even though it was not licensed to do so. The court concluded that this action violated KRS 322.020 and KRS 322.060. Further, the court relied on Board of Educ. of Ferguson Indep. Graded Sch. Dist. v. Elliott, 276 Ky. 790, 125 S.W.2d 733 (1939), and held that the contract between the parties was void because Diktic was not a licensed engineering firm in this state. This appeal by Diktic followed.

Diktic raises the following arguments in its appeal: (1) that its activity was business transacted in interstate commerce and was thus excluded from the KRS 271B.15-010(1) requirement that it obtain a certificate of authority; (2) that even if it had engaged in business within the Commonwealth that would have required it to register, it was error to dismiss the complaint for services performed based on a failure to register; (3) that it did not perform engineering services in Kentucky; (4) that even if its work could be deemed to be the providing of engineering services within this state, the circuit court nonetheless erred by preventing it from suing to recover for the services it provided; (5) that The Somerset Refinery, Inc., and Lynch profited from Diktic's efforts and are estopped from denying its authority to act or to sue; and (6) that summary judgment was improper because there were genuine issues of material fact and because it was not permitted to complete discovery.

We do not believe that it is necessary to address any of these issues in order to dispose of this appeal. We deem it unnecessary to determine whether there were genuine issues of material fact concerning whether Diktic transacted business in this state, whether Diktic performed engineering services in this state, and other issues. Rather, we conclude that Diktic lacked the capacity to sue at the time it filed the civil action in the Pulaski Circuit Court and that it was thus precluded from maintaining the action.

In Diktic's complaint filed in the circuit court on October 20, 1999, it averred that it was "a duly organized corporation authorized to do business in the Commonwealth of Kentucky." During discovery, Somerset Refinery and Lynch learned that Diktic had been incorporated in the state of Illinois in 1977 but that its corporate charter had been administratively dissolved effective October 1, 1992. Therefore, Diktic had been dissolved as a corporation when it entered into the contract with Somerset and Lynch in 1994 and when it filed the civil action in 1999. Furthermore, Diktic had not been reinstated as a corporation...