A dissolved Delaware corporation did not need a certificate of authority to transact business in North Carolina in order to petition for a partition of its real estate here, the state’s Supreme Court has ruled. The court reversed a 2017 holding by the Court of Appeals by adopting the reasoning of Judge Chris Dillon’s dissenting opinion from that ruling.
The corporation, Atlantic Coast Properties, wants to partition a 14 acres in Currituck County. Over many years the property passed through inheritance until two families each purportedly owned an undivided one-half interest—one still living on the property and another living out of state. ACP bought the out-of-state family’s interest in 2005.
ACP’s Delaware charter was suspended in 2013 due to tax delinquency and its North Carolina certificate was suspended the same year. The family argued that ACP’s subsequent conduct was thus null and void, and it was no longer a legal entity that could maintain the action. A Superior Court judge granted the motion, and last year the appeals court affirmed the ruling in a 2-1 decision from which Dillon dissented.
In a two-page per curiam ruling published May 11, the Supreme Court reversed the appeals court, for the reasons outlined in the dissent. Dillon had written that ACP was not “transacting business” in North Carolina by mere virtue of the fact that it owned real property there, and therefore did not need a certificate of authority in order to request the partition. The fact that ACP was dissolved did not change this result, he said.
“Our General Assembly has provided that a dissolved corporation may still dispose of its properties, it may do every other act necessary to wind up and liquidate its assets, and it is not otherwise prevented from commencing a proceeding in its corporate name,” Dillon wrote. “And our Supreme Court has held that a foreign corporation has the authority to deal with its real property in the same manner as a North Carolina corporation.”
Hood Ellis and Casey Peaden of Hornthal, Riley, Ellis & Maland in Elizabeth City represented ACP. Ellis noted that this is the second time the dispute has reached the Supreme Court. In 2016, the court upheld a Court of Appeals decision reversing a trial court order granting the family summary judgment.
“The Supreme Court ordered this case tried on the merits in 2016,” Hood said. “We regret that it took two years to end up where we started, but we are grateful that the court reaffirmed its prior ruling and that this case will finally be tried on the merits.”
Norm Shearin and Brian Pearce of Nexsen Pruet in Raleigh represented the family. Shearin could not be reached for comment on the decision.
The two-page decision is Atlantic Coast Properties, Inc. v. Saunders (Lawyers Weekly No. 010-039-18). The full text of the opinion is available online at nclawyersweekly.com.
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