Opinion ID: 1218284
Heading Depth: 2
Heading Rank: 1

Heading: Mountaintop

Text: The circuit court ruled that Mountaintop's corporate existence ended two years after the secretary of state issued a certificate of dissolution to Mountaintop, and that the secretary of state therefore lacked authority to accept service of process on behalf of Mountaintop. [9] In connection with its ruling, the circuit court concluded that Mountaintop's plan of dissolution and liquidating trust complied with the statutory dissolution requirements set forth in chapter thirty-one et seq. of the Code. ALPOA first attacks the circuit court's ruling by contending that the certificate of dissolution issued by the secretary of state was invalid because Mountaintop's articles of dissolution were filed prematurely and included material misstatements of fact, in violation of West Virginia Code § 31-1-39 (1982 Replacement Vol.). ALPOA specifically contends that Mountaintop's distribution of assets to the liquidating trust did not comply with the statutory requirement that adequate provision be made for all corporate debts, liabilities, and obligations or the subsequent statutory distribution requirement. [10] Mountaintop, on the other hand, asserts that the circuit court's summary judgment order was correct. Mountaintop denies ALPOA's claim that Mountaintop was not dissolved in accordance with West Virginia law, contending that it complied with all of the statutorily mandated filing requirements. Mountaintop argues that it complied with the statutory adequate provision and distribution requirements by distributing its assets to a liquidating trust for the benefit of its creditors and shareholders. West Virginia Code §§ 31-1-127 to -129 (1982 Replacement Vol.) details the order and timing of actions to be taken by a corporation seeking to dissolve. After a plan of dissolution is adopted under West Virginia law, the dissolving corporation is required to execute and deliver to the secretary of state duplicate originals of a statement of intent to dissolve. Code § 31-1-127. Once the statement of intent to dissolve is filed, the corporation ceases its business activity, except as necessary for winding up its affairs. Code § 31-1-128. After a statement of intent to dissolve is delivered to and filed by the secretary of state, the dissolving corporation is required by law to immediately give written notice to each known creditor of the corporation, Code § 31-1-129(a), and to proceed to collect its assets, to pay or adequately provide for payment of its obligations, and to distribute all remaining assets to its shareholders. Code § 31-1-129(b). When all debts have been paid or adequately provided for, and all remaining assets distributed to the corporations shareholders, the corporation is required to execute and deliver duplicate originals of articles of dissolution to the secretary of state, Code § 31-1-39(a), who thereupon files the articles of dissolution and issues a certificate of dissolution to the corporation. W.Va.Code § 31-1-40(a) (1982 Replacement Vol.). The corporation is dissolved upon recording the certificate of dissolution in the office of the clerk of the county commission in which the corporation's certificate of incorporation was recorded. Code § 31-1-40(c). Pursuant to West Virginia Code § 31-1-48, an action for damages for claims existing prior to dissolution may be brought against the corporation, if suit is brought within two years after the effective date of the dissolution and within any other applicable statute of limitations period. Here, ALPOA's suit for damages arose out of both parol and written contract claims regarding development of the Alpine Lake subdivision and resort. Unquestionably, ALPOA filed its suit well within the five-year and ten-year statute of limitations periods applicable to contract claims under West Virginia Code § 55-2-6 (1981 Replacement Vol.). The circuit court, however, based its summary judgment order primarily on the fact that more than two years had passed from the date the certificate of dissolution was issued to Mountaintop and the date ALPOA filed suit. While it is true that late claims are barred by the two-year limitation period of West Virginia Code § 31-1-48, it is also true that, in order to have a regular, effective dissolution, the dissolving corporation must comply with all of the statutory conditions precedent. See 19 C.J.S. Corporations § 1644 (1940 and Supp.1987). Although this Court concludes that Mountaintop's use of a liquidating trust was permissible, [11] the record reveals that ALPOA was not given an appropriate opportunity to seek provision for its claims from the liquidating trustee. In fact, Mountaintop has not affirmatively shown on the record that it gave written notice to ALPOA immediately after filing of the statement of intent to dissolve, as required by West Virginia Code § 31-1-129(a). The record instead indicates that ALPOA was not notified of the dissolution until the liquidating trustee discussed the dissolution at an ALPOA board meeting on March 28, 1982, and nothing in the record indicates that the statutorily required written notice was ever given. [12] As a matter of law, the term creditor has been held to include the owner of any right of action against another, whether a claim or legal right for damages arising out of contract or tort. Coronet Mfg. Corp. v. May Furniture Co., 31 Ohio Misc. 131, 282 N.E.2d 588 (1971); see also 21 C.J.S. Creditor p. 1048 (1940). Here, ALPOA had a contract based claim for damages against Mountaintop prior to its dissolution. Therefore, ALPOA was a known creditor to whom Mountaintop was required to give written notice of the dissolution. In construing a similar dissolution notice requirement, a South Carolina court recently held: Failure to strictly comply with the mandates of the dissolution statutes effectively continues the corporation with respect to creditors whose rights are prejudiced by noncompliance. South Carolina Dept. of Social Services v. Winyah Nursing Homes, Inc., 282 S.C. 556, 562, 320 S.E.2d 464, 468 (Ct.App. 1984); see also, Bonsall v. Piggly Wiggly Helms, Inc., 275 S.C. 593, 274 S.E.2d 298 (1981); Swager v. Couri, 77 Ill.2d 173, 395 N.E.2d 921 (1979). In this case ALPOA has been prejudiced by Mountaintop's failure to strictly comply with the written notice requirement because ALPOA was thereby unaware of the time limitations for filing suit. As a result of Mountaintop's failure to give written notice, Mountaintop's de jure corporate dissolution is void as to ALPOA, and ALPOA's claims are not barred by the two-year limitation period. [13] The issues raised by ALPOA's complaint should not have been foreclosed from jury determination by summary judgment. ALPOA's complaint, based primarily on allegations of breach of contract and fraud and deceit, raises numerous questions of fact which should instead be tried by a jury. [14]