Djourabchi v. Self

240 F.R.D. 5, 67 Fed. R. Serv. 3d 136, 2006 U.S. Dist. LEXIS 90136, 2006 WL 3635333
CourtDistrict Court, District of Columbia
DecidedDecember 14, 2006
DocketCivil Action No. 06-810 (RCL)
StatusPublished
Cited by42 cases

This text of 240 F.R.D. 5 (Djourabchi v. Self) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Djourabchi v. Self, 240 F.R.D. 5, 67 Fed. R. Serv. 3d 136, 2006 U.S. Dist. LEXIS 90136, 2006 WL 3635333 (D.D.C. 2006).

Opinion

MEMORANDUM AND ORDER

LAMBERTH, District Judge.

Plaintiffs Babak Djourabchi and Monica Welt, District of Columbia residents, filed a two-count complaint [1] in this Court on May 2, 2006, seeking judgment in the amount of at least $627,310.98 plus interest, costs, and fees, against defendants Harry J. Self, Jr., a Maryland resident, and Self Construction, Inc. (“Self Construction”), a Maryland corporation. (Compl.HH 1-5.) Defendants answered [6] on June 12, 2006.

Jurisdiction is proper under 28 U.S.C. § 1332(a) and venue lies in this district under 28 U.S.C. § 1391(a)(2). Three motions are before the Court.

I. Factual Background

Plaintiffs’ claims arise out of a home improvement contract entered into with defendants on May 13, 2005 (“Agreement”), and a subsequent Addendum signed on July 30, 2005, providing for certain work to be performed by Mr. Self and Self Construction on plaintiffs’ residence. (Compl.HH 7-17.) Plaintiffs allege that defendants breached the Agreement and Addendum by failing to perform and complete work in a timely and workmanlike manner, refusing to compensate plaintiffs for damages and costs, and by failing to be licensed to perform work in the District of Columbia as a general contractor. (Compl.HH 18-20.) Plaintiffs further allege that defendants committed an unfair trade practice in violation of the D.C. Consumer Protection Procedures Act, D.C.Code § 28-3904, by accepting payment from plaintiffs to perform home improvement services without being licensed. (Compl.HH 21-26.) Defendants generally deny plaintiffs’ allegations, but in their answer, state that they “are without knowledge or information sufficient to form a belief as to the truth of’ plaintiffs’ allegations that defendants are unlicensed. (Ans. H16; see Compl. H16.) In a conelusory manner, defendants raise twenty-two “affirmative and negative defenses,” but do not [9]*9allege any facts in support of these defenses. (See Axis. ITU 27-33.)

II. Defendants’ Motion to Dismiss for Joinder of an Improper Party

On June 12, 2006, defendants filed a motion to dismiss for joinder of an improper party [4], seeking to release Mr. Self from the litigation in his individual capacity. Plaintiffs opposed [11] the motion on June 23; defendants never replied. Upon consideration of the motion and the opposition thereto, the Court finds that this motion shall be DENIED.

Defendant Harry J. Self, Jr. alleges that he is “an individual operating a corporation duly organized under the laws of the State of Maryland.” (Defs.’ Mot. [4] at 2.) Mr. Self further alleges that “[a]t all times relevant to the matter in dispute, ... [he] operated under the protection of limited liability provided a corporation under the laws of the State of Maryland and the District of Columbia.” (Id.) Mr. Self provided no evidentiary support for these assertions in his motion. (See id.) Citing Fed.R.Civ.P. 19(a) and 20(a), plaintiffs maintain that Mr. Self, in his individual capacity, is a proper and necessary party to both counts of the Complaint. (Pis.’ Opp. [11] at 1-3.) Plaintiffs argue that Mr. Self is not protected from personal liability (id. at 3-6) because Self Construction is not a corporation in good standing in Maryland (Compl.1T 6.). Plaintiffs submitted a certificate from the Maryland Department of Assessments and Taxation showing that the department forfeited Self Corporation’s charter on October 7, 1999. (Pis.’ Opp. [11] Ex. 1.) Nothing before the Court shows that Self Corporation’s charter has been revived.

This Court must accept the facts alleged in the complaint as true, and construe the complaint liberally in plaintiffs’ favor. See Kowal v. MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994). A person is a necessary party to an action if “in the person’s absence complete relief cannot be accorded among those already parties.” Fed. R.Civ.P. 19(a). In a diversity case, the status of a party under state law controls whether that party should be joined. CBS, Inc. v. Film Corp. of Am., 545 F.Supp. 1382, 1389 (E.D.Pa.1982); see also Fed.R.Civ.P. 17(b) (“The capacity of an individual ... to sue or be sued shall be determined by the law of the individuals domicile. The capacity of a corporation to sue or be sued shall be determined by the law under which it was organized.”). Whether plaintiffs can be accorded complete relief without Mr. Self as a party thus depends on Maryland law governing corporations.

Under Maryland law, forfeiture of a corporate charter renders that corporation’s powers “inoperative, null, and void ... without proceedings of any kind either at law or in equity.” Md.Code Ann., Corps. & Ass’ns § 3-503(d) (2006). With a forfeited charter, a corporation “is not legally in existence as a corporation and cannot function as a corporation.” Atlantic Mill & Lumber Realty Co. v. Keefer, 179 Md. 496, 20 A.2d 178, 180 (1941); see also Kroop & Kurland, P.A. v. Lambros, 118 Md.App. 651, 703 A.2d 1287, 1289 (1998) (forfeiture results in dissolution by operation of law).

Upon forfeiture, the corporation’s directors act as trustees, Md.Code Ann., Corps. & Ass’ns § 3-515(a) (2006), and may “[s]ue or be sued in their own names as trustees or in the name of the corporation,” id. § 3-515(c)(3). However, trustees are only vested with such powers as are “necessary or proper to liquidate the corporation and wind up its affairs.” Id. § 3-515(c)(4); see Patten v. Bd. of Liquor License Comm’rs, 107 Md.App. 224, 667 A.2d 940, 945 (1995) (explaining that these duties “are all related to completing existing corporate business”). A trustee may be a party to a suit under § 3-515(c)(3) only “if there is a ‘rational relationship’ between the suit and a legitimate ‘winding up’ activity of the corporation.” Dual Inc. v. Lockheed Martin Corp., 383 Md. 151, 857 A.2d 1095, 1102 (2004) (citing Patten, 667 A.2d at 945). The length of time between the forfeiture and the action at issue is one factor courts may consider in determining whether that action was a legitimate “winding up” activity. Patten, 667 A.2d at 945.

In this case, the Court finds that Self Corporation forfeited its corporate charter, has not revived its charter, and therefore has [10]*10no legal existence. Although Mr.

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240 F.R.D. 5, 67 Fed. R. Serv. 3d 136, 2006 U.S. Dist. LEXIS 90136, 2006 WL 3635333, Counsel Stack Legal Research, https://law.counselstack.com/opinion/djourabchi-v-self-dcd-2006.