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Maryland Court of Special Appeals finds that Service of Process upon the Estate of a Deceased Corporate Director is not Valid Service upon a Defunct Corporation
Thomas v. Rowhouses, Inc.
In Thomas v. Rowhouses, Inc., Maryland’s intermediate appellate court, the Court of Special Appeals, found that a plaintiff effected service of process upon a defunct corporation by serving the Maryland State Department of Assessment and Taxation (“SDAT”), but not by serving the estate of its former director. In this case, the Court was confronted with whether Christina Thomas (“Plaintiff”) successfully served process upon Rowhouses, Inc. (“Rowhouses”), where Plaintiff served both SDAT and the Estate of Eric Pattern (“the Estate”), who was one of the corporation’s former directors. Reversing the Baltimore City Circuit Court’s decision dismissing the case for lack of proper service, the Court held that service upon SDAT was proper, though service upon the Estate was not. Therefore, the Court remanded the case back to the Circuit Court for Plaintiff to continue her case against Rowhouses.
Plaintiff sued Rowhouses and the Estate in the Circuit Court for Baltimore City for injuries arising out of alleged lead paint poisoning. In her Complaint, Plaintiff alleged that she was exposed to lead paint while living in a home owned, maintained, or operated by Rowhouses. At the time suit was filed, Rowhouses had forfeited its charter, and its corporate director, Eric Patten, had passed away. Plaintiff sought to serve process upon Rowhouses by serving SDAT, pursuant to MD. RULE 2-124(o). Though suit was filed on October 16, 2006, Rowhouses was not served via SDAT until November 5, 2009.
The Court dismissed Plaintiff’s claim for failing to serve Rowhouses within 120 days of initiating suit. After a flurry of motions, the Court eventually entered a date of dismissal on January 15, 2010. Nevertheless, Plaintiff filed a Request to Reissue Summons, and on May 18, 2010, served process upon the Estate. When the Estate attempted to file an Answer, the Circuit Court clerk rejected the Estate’s filing, having closed the case on January 16, 2010. On August 9, 2010, Rowhouses filed a Motion to Dismiss based on insufficiency of service of process, and on September 27, 2010, the Estate filed a Motion to Quash Summons and Vacate Service. The Circuit Court granted both motions. Regarding Rowhouses, the Circuit Court held that MD. RULE 2-124(o) did not permit service upon a corporation that had forfeited its charter, because the corporation had ceased to be a legal entity. Regarding the Estate, the Circuit Court held that MD. CODE ANN., CORPS. & ASS’NS § 3-515 did not permit service of process upon the personal representative of a deceased director. Plaintiff appealed to the Maryland intermediate appellate court, the Court of Special Appeals.
Judge Robert A. Zarnoch wrote the opinion of the Court of Special Appeals, holding that while CORPS. & ASS’NS § 3-515 did not permit service upon the Estate, Rowhouses could be properly served through SDAT. The Court found that CORPS. & ASS’NS § 3-515 is effectively a “winding up” provision, providing obligations and liabilities of a corporation be paid upon forfeiture of its charter, extending the responsibilities passed its legal existence. MD. RULE 2-124(o), which permits a plaintiff to serve a corporation through SDAT, was found to operate in conjunction with CORPS. & ASS’NS § 3-515, such that service upon SDAT is entirely appropriate when a defunct, but “winding up,” corporation has no resident agent. Therefore, the Court held that the Circuit Court erred in granting Rowhouses’ Motion to Dismiss, and remanded the case to the Circuit Court so that litigation could proceed against Rowhouses.
Service upon the Estate could not constitute proper service upon Rowhouses. Premising its finding upon the dividing line between individual and corporate liability, the Court rejected Plaintiff’s argument that the Estate should be subject to service for claims against Rowhouses. Rather, the Estate did not become amenable to service for claims against Rowhouses simply because Mr. Patten, as trustee, was amenable to service for claims against Rowhouses. While CORPS. & ASS’NS § 3-515 requires a corporation to meet certain obligations extending past its legal existence, the provision’s language does not permit service upon the estate of a former director. Therefore, the Court affirmed the Circuit Court’s finding that service of process against the Estate did not constitute proper service of process against Rowhouses.
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