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Atlantic Coast Properties, Inc. v. Saunders

Court of Appeals of North Carolina

November 7, 2017

ATLANTIC COAST PROPERTIES, INC., A Delaware Corporation, Petitioner
v.
ANGERONA M. SAUNDERS and husband, ALGUSTUS O. SAUNDERS, JR., LUCY M. TILLETT, PATRICIA W. MOORE-PLEDGER, GENEVIVE M. GOODMAN, LYNETTE C. WINSLOW, and CARLTON RAY WINSLOW, Respondents

          Heard in the Court of Appeals 16 October 2017.

         Appeal by petitioner from order entered 16 November 2016 by Judge Milton F. Fitch, Jr. in Currituck County No. 06 SP 26 Superior Court.

          Hornthal, Riley, Ellis & Maland, LLP, by M. H. Hood Ellis, for petitioner-appellant.

          Nexsen Pruet PLLC, by Norman W. Shearin, for respondent-appellees.

          CALABRIA, JUDGE.

         Where petitioner's petition failed to affirmatively aver its legal existence and capacity to sue, and petitioner challenged that fact neither at trial nor on appeal, the trial court did not err in entering summary judgment in favor of respondents. We affirm.

         I. Factual and Procedural Background

         On 7 April 2006, Atlantic Coast Properties, Inc. ("petitioner") filed a verified petition to partition a piece of real property in Currituck County. In this petition, petitioner alleged that it possessed a one-half undivided interest in the property, with the remaining interests divided evenly between Edna May Winslow and Angerona Lovie Moore Saunders, each owning a one-quarter undivided interest. On 17 May 2006, Edna Winslow, Angerona Saunders, and her husband, Algustus O. Saunders, Jr., filed an answer alleging, inter alia, that they had been in actual and exclusive possession of the property for over twenty years, that they were its sole owners, that petitioner had no interest in the property, and that they further had exercised adverse possession, and adverse possession under color of title. They further alleged that if petitioner possessed any interest in the property, it acquired that interest as a result of constructive fraud and unfair and deceptive practices. Due to the nature of these counterclaims, the Clerk of Court granted a motion to transfer the action to superior court.

         On 28 September 2007, Edna Winslow, Angerona Saunders, and Algustus Saunders moved for summary judgment. On 4 November 2013, the trial court entered a consent order substituting parties. Due to the death of Edna Winslow on 5 March 2013, her heirs at law were substituted as respondents. Thus, the caption was updated to list Lucy M. Tillett, Particia W. Moore-Pledger, Genevive M. Goodman, Lynette C. Winslow, and Carlton Ray Winslow, in addition to Angerona M. Saunders and Algustus O. Saunders, Jr., (collectively, "respondents") as respondents.

         On 29 May 2014, the trial court granted respondents' motion for summary judgment. Petitioner appealed, and on appeal, this Court reversed, holding that petitioner "forecasted sufficient evidence to create a genuine issue of material fact on the issue of whether W.G. Moore and his heirs recognized the title of their cotenants and defeated any claim of constructive ouster." Atl. Coast Props., Inc. v. Saunders, __ N.C.App. __, __, 777 S.E.2d 292, 298 (2015), aff'd per curiam, 368 N.C. 776, 783 S.E.2d 733 (2016). The matter was remanded to the trial court.

         On 16 October 2013, respondents filed a second motion for summary judgment.[1] In this motion, respondents alleged that petitioner was incorporated in Delaware on 26 October 2004; that petitioner's petition was filed on 31 March 2006, at a time when petitioner was not authorized to do business in North Carolina and therefore not a proper party to commence the proceeding; that petitioner was only issued a certificate of authority to do business in North Carolina on 16 August 2007; that on 13 March 2013, petitioner's corporate charter was suspended in Delaware due to tax delinquency; and on 15 May 2013, petitioner's certificate of authority in North Carolina was suspended for failure to comply with Department of Revenue requirements. Respondents therefore alleged that petitioner's conduct since its certificate of authority was suspended was null and void, and that petitioner was no longer a legal entity which could maintain the action. On 16 November 2016, the trial court granted respondents' motion, determining that:

[Petitioner]'s corporate charter in the State of Delaware was declared void on March 1, 2013, that [petitioner] and its registered agent, M. H[.] Hood Ellis, was sent a notification of revenue suspension from the North Carolina Department of the Secretary of State in May, 2013 which informed [petitioner] that "(a)ny act performed . . . during the period of suspension is invalid and of no effect"; and it further appearing to the Court that [petitioner]'s notice of appeal was filed and served on June 27, 2014 during the period of revenue suspension; and it also appearing to the Court that [petitioner] filed its petition herein prior to applying for a certificate of authority in the State of North Carolina and failed to plead its capacity to sue as required by Rule 9(a) of the Rules of Civil Procedure; and the Court takes judicial notice and concludes that the corporate charter of [petitioner] has been void in its state of incorporation since March 1, 2013, and that its certificate of authority has been suspended by the North Carolina Department of the Secretary of State since May 15, 2013 and not reinstated, and therefore any act performed by [petitioner] during the period of suspension from and after May 15, 2013 is invalid and of no effect, and [petitioner] does not have the capacity to maintain this action.

         The trial court therefore dismissed the ...


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