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DISTRICT OF COLUMBIA COURT OF APPEALS

No

. 13

- CV

- 977 C ONSTANTINE C ANNON LLP , A PPELLANT ,

V
. M ULLEN M ANAGEM ENT C O
. , I NC
. , A PPELLEE
. App eal from the Superior Court of the District of Columbia ( CAB

- 3079

- 08 ) (Hon. John Ramsey Johnson , Trial Judge) (Argued September 23 , 201 4 Decided September 3, 2015) John Jay Range , for appellant. S. Scott Morrison , with whom David C. Rohrbach was on the brief , for appellee

. Before W ASHINGTON , Chief Judge , B ECKWITH , Associate Judge , and K ING , Senior Judge

. B ECKWITH , Associate Judge : At the time the events in this case took place , a foreign corporation 1 was required to obtain a ce rtificate of authority from the

m ayor before transacting business in the District of Columbia. D.C. Code § 29

-

1 Defined as “a corporation for profit organized under laws other than the laws of the District of Columbia and special acts of Congress.” D.C. Code § 29

- 101.02 (2) (2001); see also D.C. Code § 29

- 101.02 (14) (2012 Repl.).2

101.99 (a) (2001). 2 T he m ayor could revoke that certificate if , among other things,
t he corporation failed to pay required fees or file its two

- year report
. D.C. Code §§ 29

- 101.115 (a) , - 101.122 (2001)

. The question presented in this case is whether
a contract entered into by a foreign corporation after its certificate of authority wa s

r evoked for those reasons is nevertheless enforceable

. We hold that it is, and accordingly affirm.

I. Appellee Mullen Management Co mpany, Inc., is a Delaware corporation that owns and leases an office building near McPherson Square in the city’s northwest quadrant. Mullen obtained a certificate of authority to transact business in D.C. on December 30, 1996. Appell ant Constantine Cannon LLP is a Delaware limited liability partnership whose attorneys practice law in the District. In early 2007, Cannon appr oached Mullen to inquire about leasing office space in Mullen’s building. T he parties signed a lease on November 3 0, 2007, and Cannon began to make improvements to the property as required by the lease. A dispute arose

2 The events in this case took place in 2007 and 2008 while the Business Corporation Act (BCA) was in effect. In 2010, the D.C. Council repealed the BCA and passed the Business Organizations Code. While this opinion refers primarily to the BCA provisions that govern this legal dispute, citations to analogous provisions in the current code are provided when approp riate. For instance, we note that a foreign corporation now must “register” to do business rather than procure a certificate of authority. D.C. Code § 29

- 105.02 (a) (2012 Repl.).3

shortly thereafter regarding the bu ilding’s air ventilation system , and Cannon directed its general contractor to stop work in February 2008 . Cannon refused to
pay its contractor, who then recorded a m echanic’s lien on the property for nearly two million dollars. Cannon then learned that Mullen’s certificate of authority had been revoked on September 10, 2007, eleven weeks before the lease was signed, after the D.C. Department of Consumer and Regulatory Affairs determined that Mullen “ failed and/or refused to file reports and pay all fees due and owing .” Ca nnon sent Mullen a letter o n March 6, 2008, contending that the lease was void for that reason. Mullen quickly appli ed to reinstate its certificate of authority , and the District issued a certificate of reinstat ement on March 14, 2008. Mullen then sued Cannon for breach of contract . Cannon filed a counterclaim seeking (1) a declaratory judgment that the lease was void because Mullen’s certificate of authority had been revoked prior to signing and (2) damages an d an injunction against enforcement of the lease because the lease was induced by fraudulent misrepresentation . On cross

motions for summary judgment, the trial court ruled that Cannon breached the lease and t he lease was not void even though Mullen’s certificate had been revoked

. Cannon amended its counterclaim six months later to add a new theory of fraud. After trial, the court entered judgment as a matter of law in favor of4

Mullen on both fraud claims and ordered Cannon to pay damages, attorney ’ s fees, and costs for its breach of contract

. Cannon appeal s the denial of its summary judgment motion , contending that the lease was void because Mullen’s certificat e of authori ty was revoked before the parties sign ed the contract.

II.

“ Summary judgment is appropriate only when there are no material facts in issue and when it is clear that the moving party is entitled to judgment as a matter of law.” Jones v. Thompson , 953 A.2d 1121, 1124 (D.C. 2008 ) (citation omitted)

. We review the trial court’s grant of summary judgment de novo. Id. T he trial
court rule d that the lease was valid despite the revocation of Mullen’s certificate for two independent reasons. We consider each in turn.

A.

T he trial court first ruled that the contract was enforceable under D.C. Code § 29

- 101.119 (b) (2001), which provides that “ [ t ] he failure of a foreign corporation to obtain a certificate of authority to transact business in the District shall not5

impair the validity of a contract or act of such corporation.” 3 To reach thi s conclusion, t he trial court implicitl y reasoned that a corporation “fail[s] . . . to obtain a certificate” when it does obtain a certificate but that certificate is subsequently revoked.

Mullen defends the trial court’s ruling by citing our opinion in Br own v. M Street Five, LLC , 56 A.3d 765 (D.C. 2012) , where we declined to enforce a
contract entered into by a Maryland corporation because Maryland had revoked the corporation’s charter prior to signing

. Id . at 771. In a footnote, the court cited D.C. Code § 29

- 101.119 (b) (2001) and stated that if the corporation “did exist as a valid Maryland corporation” when it signed the lease, the lease would have been enforceable even if D.C. had revoked its certificate of aut hority. Id. at 770 n.8. We cla rified, however, that that was “not the scenario presented to us in this appeal.” Id. Although we could resolve this case by following this footnote in Brown , we decline to do so for two reasons. First, the court itself noted the statement was unnecessary to its holding. See Alfaro v. United States , 859 A.2d 149, 154 n.8 (D.C. 2004) (sta ting that dict a has “no effect as indicating the law of the District”).

3 The current version of this provision is D.C. Code § 29

- 105.02 (c) (2012 Repl.).6

S econd, the c ourt’s statement was premised on a mistaken determination that the Distric t had revoked the corporation’s certificate of authority prior to signi ng the
contract , when the District had not

. Brown , 56 A.3d at 767 (lease signed August 1 2 , 2004; certificat e revoked September 1 3 , 2004). 4 Brown therefore does not dictate the outcome here

. Challenging the trial court’s ruling, Cannon argues that § 29

- 101. 119 (b) (2001) applies only to corporations that are never certified

— that is, corporations that completely “fail[]

. . . to obtain” a certificate, not those that d o obtain a certificate but have it revoked. Mullen, on the other hand, essentially asks us to interpret “failure . . . to obtain a certificate” in subsection 119 (b) to mean “without a certificate.” We agree with Cannon’s interpretation

. The word “obtain ” means “to gain or a ttain possession or disposal of, ” W EBSTER ’ S T HIRD N EW I NTERNATIONAL D ICTIONARY OF THE E NGLISH L ANGUAGE , U NABRIDGED 1559

4 We also decline to follow T.K., Inc. v. National Community Reinvestment Coalition, Inc. , 76 A.3d 895 (D.C. 2013), which stated that Brown “concluded that a foreign corporation, which had its certificate of authority revoked by the District, lac ked the authority to subsequently enter into an agreement to extend its lease.” Id. at 900. Brown actually held, however, that a foreign corporation lacked the power to contract because Maryland had revoked its corporate charter. 56 A.3d at 771. And as noted above, dicta in Brown actually suggested that if the corporation was a valid Maryland corporation when it entered the contract, the contract would have been enforceable even if the District had revoked its certificate of authority. Id. at 770 n.8.7

(2002) , not merely to have possession of

. 5 It is true that s ubsections 119 (a) and (c) discuss corporations t hat transact business “without a certificate, ” b ut both of those subsections also contain language sugges ting th at they apply only to never

certified corp orations: subsection 119 (a) bars corporation s from filing suit in D.C. courts “until such corporatio n shall have obtained a certificate of authority,” and subsection 119 (c) assesses fees on corporations doing business without a certificate that must be paid “before any certificate of authority is issued.” D.C. Code § 29

- 101.119 (a), (c)

. 6 We therefore interpret subsection 119 (b) according
to its plain meaning to apply solely to corporations that have never obtained a certificate , and we conclude that D.C. Code § 29

- 101.119 (b) (2001) does not indicate that the contract here is valid

.
B.
In the alternative, the trial court ruled that the contract was enforceable pursuant to D.C. Code § 29

- 101.127 (d) (2001), which provides that “[u]pon the

5 See also D.C. Code § 29

- 101.06 (a)(4) (2012 Repl.) (distinguishing between corporations that have not “obtained” certificates of registration and those whose certificates were “terminated”).

6 We also decline to read “failure . . . to obtain a certific ate” to include failure to obtain a new certificate after revocation because this interpretation strains the statute’s clear text and, more significantly, a corporation does not actually obtain a new certificate of authority after revocation . It obtains a certificate of reinstatement. See D.C. Code § 29

- 101.127 (2001).8

issuance of the certificate of reinstatement, the revocation proceedings . . . shall be deemed to be annulled, and such corporations shall have such powers . . . as if the proclamation [of revocation] had not been issued.” 7 In other words , the trial court concluded that the contract was void when it was signed but then became valid when Mullen obtained a certificate of reinstatement on March 14, 2008. This ruling i s erroneous for t wo reasons. First, this interpretation of § 29

- 101.127 (d) (2001) contradicts our holding in Accurate Construction Co. v. Washington , 378 A.2d 681 (D.C. 1977), that reinstate ment does not validate a contract executed during a period of revocation

. Id. at 68 4

- 8 5. While Accurate concern ed a domestic corporation rather than a foreign corporation , a point we further discuss infra , th is distinction ha s no bearing on our interpretation of § 29

- 101.127 (2001) because that provision refers to both foreign and domestic corporations. 8 We are bound by Accurate ’s h ol d ing that reinstatement cannot breath e life into a void
contract
. Second, even if the trial court’s interpretation of § 29

- 101. 127 (2001) w ere

7 The comparable provision under the current code, D.C. Code § 29

- 106.03 (d) (2012 Repl.), would be irrelevant here because it applies only to domestic corporations.

8 See D.C. Code § 29

- 101.127 (a) (2001) (“A corporation, the articles of incorporation [domestic] or certificate of authority [foreign] of which have been revoked by proclamation . . . .”).9

correct, that provision would not help Mullen here because Cannon renounced th e contract before Mullen’s certificate of authority was reinstate d

. As stated above, i f reinstatement retroactively validate s a contr act signed by a revoked corporation , the contract must have been void up until the corporation’s certificate of authority was reinstated. Accordingly, Cannon must have had the right to renounce the
contract while it wa s still void

— otherwise Mullen would have unfettered control over the contract’s validity and could validate the contract by reinstating its certificate of authority even years later and even if Cannon had relied on the
contract being void

. See 36 A M
. J UR
. 2 D Foreign Corporatio ns § 263 (2015) (“[W]hen the foreign corporation has not complied with the doing business statute, the other party may rescind the contract . . . at least when he or she was not in pari delicto.”). Because Cannon renounced the contract prior to Mullen’s

r einstatement , the contract could n ot be subsequently validat ed even if we agreed with the trial court’s interpretation of § 29

- 101. 127 (d) (2001)

.
III. Although these provisions of the BCA do not indicate that the contract is valid, Cannon bears the burden of proving th at th e contract is invalid to avoid its enforcement

. Nolan v. Nolan , 568 A.2d 479, 483 (D.C. 1990). We first address Cannon’s argument that the contract is invalid under Accurate . The plaintiff in10

Accurate sought to avoid liability on a promissory note she executed to a D.C. corporation whose articles of incorporation had been revoked by the District

. 378 A.2d at 683. Relying on D.C. Code § 29

- 938 (a) (1973), a predecessor to § 29

- 101.123 (a) (2001), 9 w e held that the contract was void because the corporation lacked the capacity to contract after revocation. 378 A.2d at 684. Although the defendant in Accurate was a domestic corporation, Cannon argues that its holding must apply equally to foreign corporations because of D.C. Code § 29

- 101.100 (2001), which states in relevant part that a foreign corporation “shall be subject to the same duties, restrictions, penalties, and liabilities now or hereafter imposed upon a domestic c orporation o f like character.” 10

But Cannon omits crucial language from Accurate that demonstrates its inapplicability to foreign corporations

— what exactly had been revoked from the corporation . The corporation in Accurate was domestic , so its articles of incorporat ion were revoked and the corporation was “deemed to have been dissolved” for all purposes except winding up its affairs. 378 A.2d at 684. In

9 This provision states in relevant part that after the m ayor issues an annual proclam ation listing all the revoked corporations in D.C., “the articles of incorporation or the certificate of authority, as the case may be, shall be void and all powers thereunder inoperative without further proceedings of any kind.”

10 The analogous provision in the current code is narrower in scope. See D.C. Code § 29

- 105.01 (c) (2012 Repl.).11

cont rast, Mullen had its certificate of authority revoked

— its articles of incorporation (filed in Delaware) remained valid. This distinc tion makes all the difference because a corporation’s existence

— and its conco mitant capacity to
contract

— stem s from its articles of incorporation , not its certificate of authority

. See 18 A M
. J UR
. 2 D Corporations § 123 (2015) (“[A] corporation cannot have agents, contract for itself, or be contracted with prior to its incorporation.”); D.C. Code § 29

- 302.03 (2012 Repl.) (noting that “corporate existence shall begin when the articles of incorporation are filed”); see also Accura te , 378 A.2d at 684 ( holding that D.C. corporation cannot contract after articles of incorporation revoked); Brown , 56 A.3d at 771 ( holding that Maryland corporation cannot
contract af

ter corporate charter revoked) ; cf. BDC Capital Props

. , L

. L

. C

. v. Trinh , 307 F. Supp. 2d 12, 14

- 15 (D.D.C. 2004) (“Despite its lack of a certificate of authority from D.C., a foreign corporation remains in existence and can continue to rely on its corporate form.”); A. Tasker, Inc. v. Amsellem , 315 A.2d 178, 180 (D.C. 1974) ( “[T he BCA ] do[es] not withdraw recognition of corporate existence from a foreign corporation which fails to comply with its provisions

. ”)

. So while

r evocation voids the certificate of authority and strips a corporati on of “all powers thereunder,” D.C. Cod e § 29

- 101.123 (a) (2001), capacity to contract is simply not a “power” stemming from a certificate of authority

— it stems from the fact of12

incorporation. 11
Cannon’s assertion that “[r]evoked foreign corporations and revoked domestic corporations are of like c haracter” is therefore incorrect

. 12 The District

can and does penalize foreign corporations that transact business in D.C. without a

11 For a similar reason, the contract is not invalid because of provisions in D.C. Code § 29

- 101.116 (2001) and § 29

- 101.117 (2001) indicating that a foreign corporatio n’s “authority to do business in the District shall cease” after its certificate of authority is revoked. We interpret “authority” to transact business differently from “capacity” to transact business. See Museum Boutique Intercontinental, Ltd. v. Picass o , 886 F. Supp. 1155, 1159 (S.D.N.Y. 1995) (citing B LACK ’ S L AW D ICTIONARY 803, 121 (5th Ed. 1979)) (distinguishing “capacity” and “authority” to sue). Capacity to act speaks to one’s ability to act

— without capacity to do business, a corporation cannot con tract. Brown , 56 A.3d at 771. But without authority to act, a corporation can still act; it is just subject to consequences for its unauthorized actions. This conclusion is consistent with our holding that a revoked foreign corporation can enter into valid contracts

— it has capacity to contract

— but it is subject to statutory penalties for conducting unauthorized business for which it lacks authority

. D.C. Code §§ 29

- 101.119 (c),

- 101.124 (2001)

. The analogous version of subsection 116 in the current code is § 29

- 105.11 (c) (2012 Repl.).

12 While Cannon correctly notes that a D.C. corporation continues to exist for three years after its articles of incorporation are revoked, see T.K. , 76 A.3d at 900, Cannon again disregards crucial language: domestic corporations remain in existence solely for the purpose of winding up their affairs as described in D.C. Code § 29

- 101.123 (c)

- (d) (200 1). The contracts in both Accurate and Brown were invalid even though the corporations continued to exist for the purpose of winding up. Accurate , 378 A.2d at 684; Brown , 56 A.3d at 771.13

valid certificate of authority. See D.C. Code §§ 29

- 101.119 (c ),

- 1 01.124 (2001). 13
But since the BCA does not expressly indicate that a corporation lacks capacity to contract while its certificate is revoked , we have no basis to abrogate the basic legal principle that a corporation’s capacity to contract stems from its incorporation. See D istrict of Col umbia Pub. Sch. v. D istrict of Columbia Dep’t of Emp’t Servs. , 95 A.3d 1284, 1288 (D.C. 2014) (noting that we will not interpret statutes to abrogate common law unless the words “plainly import”). W e therefore conclude that a corporation’s capacity to con tract is unaffected by revocation of its certificate of authority.

IV.

Cannon makes t wo additional arguments in support of its contention that the contract here is void because Mullen’s certificate of authority wa s revoked. First, Cannon notes that D.C. Code § 29

- 101.124 (2001) imposes civil or criminal penalties for “exercis[ing] or attempt[ing] to exercise any powers . . . under a certificate of authority of a foreign corporation which has been revoked.” Cannon therefore argues that the contract is void by “common law rule of long standing” that prohibits enforcement of contracts violating a criminal law. While this court

13 The contemporary versions of these statutes are D.C. Code § 29

- 1 05.02 (f) (2012 Repl.) and § 29

- 101.06 (a)(4) (2012 Repl.).14

has recognize d this general principle, see McMahon v. Anderson, Hibey & Blair , 728 A.2d 656, 658 (D.C. 1999), it has no application here

. T he contract here was
not formed for an illegal purpose

— for example, illegal drug sales or prostitution. Cf. id. at 659 (invalidating leases that, while legal on their face, were made for an illegal purpose). T he BC A’s penalty provisions are merely a way for the District
to enforce its broader regulatory scheme by punishing corporations for doing business without a license.

While we have held that doing business without the appropriate license void s contracts in some circumstances, we have done so only when the licensing scheme is a “prohibitory regulation enacted to protect the public,” especially those aimed at preventing “ fraudulent and unscrupulous practices.” Capital Const. Co. v. Plaza W. Coop

. Ass’n , 604 A.2d 428, 430 (D.C. 1992) ; Lloyd v. J ohnson , 45 App. D.C. 322, 329

- 31 (1916) (declining to invalidate contract when licensing rule

was to raise revenue , not “to protect the public from fraud , ” Banks v. McCosker , 34 A. 539 ( Md

. 1896) , or for “moral[] and general welfare” reasons); see also Stu rdza v. United Arab Emirates , 11 A.3d 251, 257 (D.C. 2011) (noting that the common law r ule is for consumer protection and applies when the licensing scheme is “designed to protect the public” (quoting Truitt v. Miller , 407 A.2d 1073, 1079 (D.C. 1979)) )

. T he BCA may indirectly protect consumers by “bring[ing] such corporations under the supervision and the regulation of public officials

. . . [so ]15

that the public may have the same information respecting their background and financial standing[,] character and [] management which is demanded of domestic corporations.” Synanon Found

. , Inc. v. Bernstein , 503 A.2d 1254, 1268 (D.C. 1986) (separate statement of Mack, J.) (some alterations in original) (quoting Hill

Lanham Inc. v. Lightview Dev

. Corp. , 163 F. Sup p. 47 5 , 47 6 (D.D.C. 1957)). But

a n uncertified foreign corporation still must be legally organized under the laws of another state for its contracts to be valid , s ee Brown , 56 A.3d at 771 , so D.C. citizens are assured that any corporation with which they deal

— whether it has a certificate of authori ty or not

— has fulfilled the legal requirements of in c orporation in its home state. B y explicitly affirming the validity of contracts signed before a certificate of a uthority is obtained , see D.C. Code § 29

- 101.119 (b) (2001) , Congress 14 already concluded that the benefits of enforcing pre

- certification contracts outweigh concerns about public safety and consumer protection , and the D.C. Council included a similar provi sion in the Business Organizations Code at § 29

- 105.02 (2012 Repl.) . When a certificate is revoked for a corporation’s failure to pay fees and file reports, w e do not think that consumer protection concerns justify the “harsh and disproportionate” result of voiding contracts executed by

14 The BCA was initially passed by Congress in 1954, and the text of § 29

- 101.119 (b) (2001) was unchanged through codification in 1973 and recodification in 1981 and 2001. See Pub. L. No. 83

- 389, § 119, 68 Stat. 179, 227 (1954).16

noncompliant corporations

. 15 Sturdza , 11 A.3d at 258 (quoting Cevern, Inc. v. Ferbish , 666 A.2d 17, 20 (D.C. 1995)) ; see also Fritts v. Palmer , 132 U.S. 282, 289

- 90 (1889) (declining to invalidate real estate purchase by foreign corporation that failed to comply with Colorado’s certification laws). Finally, Cannon argues that the contract is void because of D.C. Code § 29

- 101.117 (2001), which specifies that revocation does not affect “any right of action upon any contrac t made by the corporation in the District before such revocation.” In Cannon’s view, thi s provision signifies that the legislature “deemed it necessary to explicitly provide that pre

- revocation contracts remain valid,” which “plainly suggests that post

- re vocation contracts do not.” We disagree. F irst of all, it is unclear that the provision means what Cannon says it does

— another plausible reading is that the provision does not address contract “validity” at all but i nstead affirms that an aggrieved party can still sue a revoked corporation for any “liability or obligation . . . incurred before the revocation. ” D.C. Code § 29

- 101.117

15 We do not address whether a post

- revocation contract would be enforceable if the corporation’s certificate w ere revoked for reasons that might implicate significant consumer protection concerns, such as when “the certificate of authority of the corporation was procured through fraud practiced upon the district,” “[t]he corporation has continued to exceed or abuse the authority conferred upon it by this chapter,” or “[a] misrepresentation has been made of any mater ial matter in any application, report, affidavit or other document submitted by such corporation pursuant to this chapter.” D.C. Code § 29

- 101.115 (a)(1), (2), (9) (2001).17

(explaining how to serve “process against the [revoked] corporation” (emphasis added)). In any event, we need not construe the statute authoritatively because w e decline to infer that the provision’s silence regarding post

- revocation contracts demonstrates the legislature’ s inten t to invalidate such contracts. Riggs Nat’l Bank v. District of Columbia , 581 A.2d 1229, 1255 (D. C. 1990) (“Silence is a treacherous guide to legislative intent.”).

V.

F or the reasons set forth in this opinion, we affirm the trial court ’s judgment that the Cannon

- Mullen lease was enforceable notwithstanding that it was signed after Mullen’ s certificate of authority to do business in the District was revoked for failure to pay fees and file reports

. So ordered.