Court Opinion

ID: 4713484
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:39:24.906452+00
Date Added: 2024-06-11T08:04:12.255492
License: Public Domain

J.M. Johnson, J.
(concurring) — I agree that the 2006 amendment to RCW 23B. 14.340 applies and bars the Ballard Square Condominium Owners Association’s (Association) suit brought 7 years after dissolution of the corporation (and 10 years after project completion). I write separately because the majority incorrectly assumes that prior to this amendment such a suit could have continued. However, at the time the Association filed suit, our law, and chapter 23B.14 RCW, provided no cause of action against a dissolved corporation for unknown claims (those based on events after dissolution). Thus, the Association’s suit against Dynasty is barred under either statutory scheme.
I. Pre-2006 Amendment Analysis
¶34 At early common law, all causes of action against a corporation terminated upon dissolution of the corporation; a corporation was viewed as a fictional person and dissolution as death. The debts of the terminated corporation were extinguished, its real property reverted to the grantor, and its personal property escheated. Bortle v. Osborne, 155 Wash. 585, 597, 285 P. 425 (1930); see also Theis v. Spokane Falls Gas Light Co., 34 Wash. 23, 29-30, 74 P. 1004 (1904). Common law largely controlled the law of corporations in Washington until statutory enactments changed that law.
¶35 In 1965, the Washington State Legislature adopted the Washington Business Corporation Act (WBCA), Laws of 1965, ch. 53, which was based largely on the national Model Business Corporation Act.
¶36 In 1984, the national Model Business Corporation Act was revised in response to extensive comment through*621out the country. In 1989, the Washington State Legislature substantially revised the WBCA, Laws of 1989, ch. 165, to incorporate many provisions of the national 1984 Revised Model Business Corporation Act (Model Act).
¶37 A statute abrogates the common law if the provisions of the statute are so inconsistent with and repugnant to the common law that both cannot simultaneously be in force. State ex rel. Madden v. Pub. Util. Dist. No. 1, 83 Wn.2d 219, 222, 517 P.2d 585 (1973). “It is a general rule of interpretation to assume that the legislature was aware of the established common-law rules applicable to the subject matter of the statute when it was enacted.” Id. “A statute which is clearly designed as a substitute for the prior common law must be given effect.” Id. at 221. However, “ ‘[a]bsent an indication that the Legislature intended to overrule the common law, new legislation will be presumed to be consistent with prior judicial decisions.’ ” Ballard Square Condo. Owners Ass’n v. Dynasty Constr. Co., 126 Wn. App. 285, 295-96 & n.39, 108 P.3d 818 (2005) (quoting In re Marriage of Williams, 115 Wn.2d 202, 208, 796 P.2d 421 (1990)).
¶38 Here, we must determine to what extent Washington statutory law had supplanted the common law notion that a corporation died at dissolution. Thus, we must analyze the pre-2006 statutory scheme and its underlying legislative intent vis-a-vis the common law.
¶39 Statutory interpretation is a question of law that this court reviews de novo. Philippides v. Bernard, 151 Wn.2d 376, 383, 88 P.3d 939 (2004). “The primary goal of statutory interpretation is to ascertain and give effect to the legislature’s intent and purpose.” In re Parentage of J.M.K., 155 Wn.2d 374, 387, 119 P.3d 840 (2005). This goal may be achieved by considering the statute as a whole, giving effect to all of the statutory language, and using related statutes to help identify the legislative intent underlying the provision at issue. Id. If, after this inquiry, a statute might still be accorded more than one reasonable meaning, the statute is ambiguous and courts may resort to aids to construction, *622including legislative history. Id.’, Advanced Silicon Materials, L.L.C. v. Grant County, 156 Wn.2d 84, 90, 124 P.3d 294 (2005). Courts must “ ‘avoid readings of statutes that result in unlikely, absurd, or strained consequences.’ ” Id. (quoting Glaubach v. Regence BlueShield, 149 Wn.2d 827, 833, 74 P.3d 15 (2003)).
A. Former RCW 23B.14.050 (1989) — Model Act § 14,05
¶40 Former RCW 23B.14.050, titled “Effect of dissolution,” provides:
(1) A dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs, including:
(a) Collecting its assets;
(b) Disposing of its properties that will not be distributed in kind to its shareholders;
(c) Discharging or making provision for discharging its liabilities;
(d) Distributing its remaining property among its shareholders according to their interests; and
(e) Doing every other act necessary to wind up and liquidate its business and affairs.
(2) Dissolution of a corporation does not:
(a) Transfer title to the corporation’s property;
(b) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation’s share transfer records;
(c) Subject its directors or officers to standards of conduct different from those prescribed in chapter 23B.08 RCW;
(d) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;
(e) Prevent commencement of a proceeding by or against the corporation in its corporate name’,
(f) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
*623(g) Terminate the authority of the registered agent of the corporation.
(Emphasis added.)
¶[41 This statute is identical to section 14.05 of the national Model Act. Revised Model Bus. Corp. Act § 14.05 (1985) (RMBCA). The Washington State Legislature did not officially adopt the comments to the 1984 Model Act, but the comments were published in the Senate Journal. Thus, this court may use the comments as persuasive authority. The comments provide:
Proposed subsection 14.05(a) [former RCW 23B.14.050(1)] provides that dissolution does not terminate the corporate existence but simply requires the corporation thereafter to devote itself to winding up its affairs and liquidating its assets; after dissolution, the corporation may not carry on its business except as may be appropriate for winding-up.
The Proposed Act uses the term “dissolution” in the specialized sense described above and not to describe the final step in the liquidation of the corporate business. This is made clear by Proposed subsection 14.05(b) [former RCW 23B.14.050(2)], which provides that chapter 14 dissolution does not have any of the characteristics of common law dissolution, which treated corporate dissolution as analogous to the death of a natural person and abated lawsuits, vested equitable title to corporate property in the shareholders, imposed the fiduciary duty of trustees on directors who had custody of corporate assets, and revoked the authority of the registered agent. Proposed subsection 14.05(b) expressly reverses all of these common law attributes of dissolution and makes clear that the rights, powers, and duties of shareholders, the directors, and the registered agent are not affected by dissolution and that suits by or against the corporation are not affected in any way.
Senate Journal, 51st Leg., Reg. Sess., App. at 3095 (Wash. 1989) (emphasis added). Essentially, the term “dissolution” as used in RCW 23B.14.050, subsections (1) and (2), refers to the winding up period.
¶42 Dynasty correctly points out that RCW 23B.14.050 is limited to the context of winding up and thus only *624establishes how the corporate existence continues during that winding up process. Resp’t’s Suppl. Br. at 8-9. Accordingly, Dynasty maintains, the provision allows commencement of actions only during the winding up period. Id. Dynasty also argues that because RCW 23B. 14.050 does not address or authorize actions commenced after the wind up period, the common law has not been abrogated or supplanted regarding such post-dissolution claims. Resp’t’s Suppl. Br. at 8-9.
¶43 In contrast, the Association argues that the plain language of RCW 23B.14.050(2)(e) allows suits against dissolved corporations: “ ‘[d]issolution of a corporation does not. . . [p] revent commencement of a proceeding ... against a corporation.’ ” Pet’r’s Suppl. Br. at 8 (quoting RCW 23B-.14.050(2)(e)). The majority erroneously agrees with the Association’s broad analysis. Majority at 606.1 conclude the statutory changes were more limited.
¶44 All of the subsections of former RCW 23B. 14.050(2) refer to acts or events that continue during winding up but cease to occur following wind up. For example, a corporation must liquidate and discharge liabilities during the winding up period. Likewise, quorum and voting requirements continue during winding up but terminate when the winding up period is over. Logically, subsection (2)(e) must adhere to this same pattern; commencement of actions may continue against the corporation during the winding up period but not afterward.
¶45 The plain language of former RCW 23B. 14.050 abrogates the common law rule of death at dissolution in favor of allowing (requiring) corporations a period to wind up. As noted above, at common law, the debts of the corporation were extinguished at dissolution, its real property reverted to the grantor, and its personal property escheated. Bortle, 155 Wash. at 597. Former RCW 23B. 14.050(2) provides, among other things, that dissolution does not immediately transfer title or prevent transfer of shares. Because former RCW 23B. 14.050 continues the existence of the corporation through the winding up period, a corporation no longer dies *625immediately at dissolution. Therefore, the common law has been abrogated, but only to the extent it is contradicted by statute. However, those aspects of the common law not plainly contradicted by former RCW 23B. 14.050 remain in force. Ballard Square Condo., 126 Wn. App. at 290, 295; see also State ex rel. Madden, 83 Wn.2d at 222; In re Marriage of Williams, 115 Wn.2d at 208.
¶46 Thus, former RCW 23B.14.050 authorizes only actions against dissolved corporations brought during the winding up process; it does not allow for claims against corporations that have completed the process of winding up and finally dissolved. Because Dynasty had completed the winding up process long before the Association filed suit in October 2002, the Association’s suit was not authorized by former RCW 23B.14.050.10 That the Association remained subject to the common law bar on suits against dissolved corporations at the time it filed its suit is further confirmed by an examination of two additional provisions of chapter 23B.14 RCW: RCW 23B.14.340 and RCW 23B.14.060.
B. Former RCW 23B.14.340 (1989)
¶47 Former RCW 23B. 14.340 (formerly RCW 23A-.28.250), titled “Survival of remedy after dissolution,” provides:
The dissolution of a corporation . . . shall not take away or impair any remedy available against such corporation, its directors, officers, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within two years after the date of such dissolution. Any such action or proceeding against the corporation may be defended by the corporation in its corporate name.
(Emphasis added.)
*626¶48 Dynasty and the Association agree that the plain language of this provision indicates that the legislature intended for the statute to apply only to claims existing prior to corporate dissolution. However, Dynasty further argues that this provision precludes the Association’s claim because it arose from acts prior to dissolution. Resp’t’s Ct. Requested Suppl. Br. at 12-13. In contrast, the Association argues that its claim is implicitly authorized by this provision because its claim is one arising after dissolution.11 Pet’r’s Suppl. Br. at 7-8.
¶49 The original version of this statute was enacted in 1965 as part of the WBCA, discussed above. Laws of 1965, ch. 53, § 108. The language of the original statute is substantially similar to the present statute and includes the language at issue here — “prior to such dissolution.” Id. The plain language of the statute obviates the need for legislative history in this instance.
¶50 “A fundamental canon of construction holds a statute should not be interpreted so as to render one part inoperative.” Davis v. Dep’t of Licensing, 137 Wn.2d 957, 969, 977 P.2d 554 (1999). A court should presume the legislature does not include unnecessary language when it enacts legislation. McGinnis v. State, 152 Wn.2d 639, 645, 99 P.3d 1240 (2004).
¶51 The plain language of former RCW 23B.14.340 indicates that it authorized only claims existing “prior to” dissolution. Ballard Square Condo., 126 Wn. App. at 291. To interpret the statute as applying to claims after dissolu*627tion would render the “prior to” language meaningless. Id.; majority at 610. The statute, by its plain meaning, did not authorize claims that accrued after dissolution. Id.; majority at 610-11.
¶52 The Association then argues that the language in former RCW 23B.14.340 neither barred nor allowed a post-dissolution claim; it is silent on this point. As argued by the Association, the majority interprets this silence, together with its erroneous view of RCW 23B.14.050(2)(e), to conclude that “the statutes in the Washington Business Corporation Act have replaced the common law rule in its entirety.” Majority at 610 (emphasis added). Yet, as noted above, RCW 23B.14.050(2)(e) was actually intended only to supplant the common law rule of corporate death upon dissolution during the period of the winding up process. During that period, prior claims (and only prior claims) may be brought within two years.
¶53 Abrogation of the common law requires irreparable inconsistency. See State ex rel. Madden, 83 Wn.2d at 222. Such inconsistency is not presented by mere silence, and therefore the correct inference to be drawn from the statutory language is that, under the pre-2006 version of chapter 23B.14 RCW, the legislature did not modify the common law bar for post-dissolution claims. Ballard Square Condo., 126 Wn. App. at 287. Neither former RCW 23B.14.340 nor RCW 23B.14.050(2)(e) provides authorization for the Association’s suit against Dynasty. An additional provision of chapter 23B.14 RCW, and particularly the legislative history surrounding its enactment, confirms that there was no cause of action for post-dissolution claims, like the claim here, under the pre-2006 statutory scheme.
C. Former RCW 23B.14.060 (1989) — Model Act § 14.06
¶54 In addition to the statutes discussed above, the national Model Act contained two other sections addressing whether suits may be brought against dissolving or dissolved corporations. One section was adopted in Washington, the other was not. Specifically, the Model Act contained *628section 14.06, “Known claims against a dissolved corporation,” and section 14.07, “Unknown claims against dissolved a corporation.” RMBCA §§ 14.06, 14.07. Notably, the Washington State Legislature adopted only the “known claims” section, section 14.06, codified as former RCW 23B.14.060 (1989).
f55 Former RCW 23B. 14.060, titled “Known claims against a dissolved corporation,” provides, in pertinent part:
(1) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section.
(2) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date.
(3) A claim against the dissolved corporation is barred . . . :
(a) If a claimant who was given written notice under subsection (2) of this section does not deliver the claim to the dissolved corporation by the deadline; or
(b) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice.
(4) For purposes of this section, “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.
¶56 The legislature did not adopt the section of the Model Act entitled, “Unknown claims against a dissolved orporation,” section 14.07. This section would have allowed claims based on events occurring after the effective date of dissolution as long as such claims were brought within five years’ notice of dissolution. The rejected section 14.07 arguably would have filled a void left by “ [e] arlier versions of the Model Act [that] did not recognize the serious problem created by possible claims that might arise long after the dissolution process was completed. . . .” RMBCA § 14.07 cmt.
*629¶57 However, the Washington State Legislature chose not to adopt section 14.07. Ballard Square Condo., 126 Wn. App. at 293. The comment following section 14.06 sheds some light on why the legislature did not adopt section 14.07:
The [Corporate Act Revision Committee of the Washington State Bar Association] deferred possible adoption of RMA [Revised Model Act] section 14.07, which would have barred unknown claims after publication of notice. It was informed that the RMA drafters are studying the provision for possible revision. The Committee will reconsider RMA section 14.07 and Proposed section 14.34 in view of those revisions.
Senate Journal, 51st Leg., Reg. Sess., App. at 3096 (Wash. 1989).
¶58 The legislature specifically chose not to adopt the “unknown claims” section of the Model Act when it otherwise substantially adopted the Model Act — including the sections pertaining to claims arising prior to dissolution and “known claims.” This is an important and intentional omission, for it indicates that while the legislature specifically sought to allow known claims, it did not wish to establish an express cause of action for unknown (later discovered) claims. Ballard Square Condo., 126 Wn. App. at 295. Thus, RCW 23B.14.060 and its legislative history lend support to the conclusion that the legislature did not intend to alter the common law bar as to unknown, post-dissolution claims. In sum, analysis of former chapter 23B.14 RCW, particularly those provisions relevant to bringing suit against dissolved corporations, demonstrates that the Association could not bring its suit against Dynasty under either the former or current versions of that statutory scheme.
II. Conclusion
¶59 Because prior to 2006 the legislature had not abrogated the common law bar on claims against corporations which arise post-dissolution, the Association had no cause of action when it initially filed suit against Dynasty. Like*630wise, under the current version of chapter 23B.14 RCW, the Association’s claim is time barred. Therefore, I would hold that under both the current version of chapter 23B.14 RCW and prior corporations law of this state, the Association’s claim and any similar “unknown” claim against dissolved corporations are barred.
Sanders, J., concurs with J.M. Johnson, J.
Reconsideration denied January 22, 2007.

 The Association argues that Dynasty is still winding up because it is defending this lawsuit. However, it is illogical to conclude that a corporation that has otherwise liquidated its assets and ceased to exist is in the process of winding up merely because it must defend itself. To allow this result would mean that a corporation would be winding up forever at the will of plaintiffs’ lawsuits.

 The Association argues that cases from other jurisdictions support its interpretation. However, my research indicates that cases from other jurisdictions, involving substantially similar statutes, are split as to whether the statute applies only to claims existing prior to dissolution or whether the “prior to” language operates to prohibit claims accrued after dissolution. Compare Carreiro v. Rhodes Gill & Co., 68 F.3d 1443, 1450 (1st Cir. 1995) (finding that the language at issue — providing a two-year survival period only for liabilities incurred “prior to dissolution” — logically means that actions on liabilities incurred after dissolution do not survive at all, not even for the two-year wind-up period), with Gross v. Hougland, 712 F.2d 1034, 1040-41 (6th Cir. 1983) (holding that Kentucky Revised Statutes section 271A.515 — language virtually identical to RCW 23B.14.340' — did not affect the plaintiff’s ability to bring the action in district court because it applies only to claims which arise prior to dissolution).