United States District Court for the District of Columbia
March 8, 2004.
BDC CAPITAL PROPERTIES, L.L.C., Plaintiff,
QUAN TRINH, Defendant
The opinion of the court was delivered by: ROSEMARY COLLYER, District Judge
Washington Work, Inc., a Maryland corporation certified to do
business in the District of Columbia, rented office space on Wisconsin
Avenue from BDC Capital Properties, L.L.C., in August 1992. Because the
corporation failed to stay current on its rent payments, BDC re-took
possession of the premises in the fall of 2000. BDC sued Washington Work
in April 2001 for damages. The parties reached a Stipulation of
Settlement ("Settlement") in June 2002, pursuant to which Washington Work
was to make monthly payments to settle its rent arrearage; despite the
Settlement, no such payments were forthcoming. BDC has now sued Quan
Trinh, president of Washington Work during the relevant time-frame,
alleging that he is liable for the corporation's debt.
Mr. Trinh has filed a motion to dismiss for failure to state a claim
upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). After careful
review of the parties' arguments and the undisputed facts, the Court
finds that the motion has merit and should be granted.
Washington Work first rented space from BDC located at 5028 Wisconsin
Avenue, N.W., Washington, D.C., under an August 28, 1992, Agreement of
Lease.*fn1 This Lease was amended on January 7, 1993, September 10,
1996, and September 26, 1996. From the time the lease was executed
through September 10, 2001, Washington Work maintained a Certificate of
Authority to do business in the District of Columbia. In April 2000,
prior to the revocation of Washington Work's Certificate of Authority,
Washington Work defaulted on the lease by failing to pay rent. BDC
obtained a judgment for possession of the premises against Washington
Work in the Superior Court of the District of Columbia. BDC then filed
suit against Washington Work on April 25, 2001, seeking a monetary
judgment for amounts owed under the lease. BDC Capital Props., L.L.C.
v. Washington Work, Inc., CA No. 01-0003197 (D.C. Super. Ct). On or
about July 26, 2002, Washington Work, through counsel, executed the
Settlement which required it to make a series of payments totaling
$150,000.000 starting in August 2002. The Settlement also provided that
if Washington Work failed to make the required payments, a Consent
Judgment in the amount of $340,000.00 would be entered in the Superior
Court. When Washington Work failed to make even the first payment, a
Consent Judgment was entered by the Superior Court on September 30, 2002.
Mr. Trinh, as President of Washington Work, signed the Consent Judgment.
This lawsuit was filed in April 2003.
Mr. Trinh has filed a motion to dismiss pursuant to Fed.R.Civ.P. 12
(b)(6). A Rule 12(b)(6) motion "tests the legal sufficiency of the
complaint." ACLU Found. of S. Cal. v. Barr,
952 F.2d 457, 472 (D.C. Cir. 1991). Under 12(b)(6), a court "does not
test whether the plaintiff will prevail on the merits, but instead
whether the claimant has properly stated a claim." Price v. Crestar
Sees. Corp., 44 F. Supp.2d 351, 353 (D.D.C. 1999). In reviewing
such a motion, the court accepts the allegations in the non-movant's
pleading as true and draws all reasonable inferences in the non-movant's
favor. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957);
Sinclair v. Kleindienst, 711 F.2d 291, 293 (D.C. Cir. 1983).
However, the court need not accept as true plaintiff's legal conclusions.
See Papasan v. Allain, 478 U.S. 265, 286 (1986). A complaint may
not be dismissed on a Rule 12(b)(6) motion "unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief." Conley, 355 U.S. at
BDC rests its claims against Mr. Trinh on D.C. CODE ANN. §
29-101.139 (2001 ed.),*fn2 which provides that persons who "assume to
act as a corporation without authority to do so shall be jointly and
severally liable for all debts and liabilities incurred or arising as a
result thereof." It argues that the rescission of Washington Work's
Certificate of Authority in September 2001 necessarily means that Mr.
Trinh "act[ed] as a corporation without authority after that date and is
thereby personally liable for all debts of the corporation arising out of
the Settlement and/or Consent Judgment (and unpaid rent) which postdate
that month. Opp. at 4-5. Mr. Trinh cites A. Tasker, Inc. v.
Amsellem, 315 A.2d 178 (D.C. 1974), for the proposition that persons
acting on behalf of a corporation that does not possess a certificate of
authority are not personally liable for the corporation's debts. Motion
The exact timing of events is important to the resolution of this case.
April 2000: Washington Work defaulted on
Fall 2000: BDC obtained a judgment for
possession and Washington Work left the premises
April 2001: BDC sued Washington Work for
amounts due under the lease
September 10, 2001: Washington Work's
Certificate of Authority in D.C. revoked
July 2002: Counsel for Washington Work
August 2002: Washington Work failed to make
the first payment under the Settlement
September 2002: Consent Judgment entered
against Washington Work, signed by Mr. Trinh as
October 2002: Washington Work's corporate
charter in Maryland forfeited
Based on this history and D.C. CODE ANN. § 29-101.139, Count I of
the complaint would hold Mr. Trinh liable for the Consent Judgment in the
amount of $340,000 because the Stipulation and Judgment were executed
after the Certificate of Authority was revoked. Count II would reopen the
Consent Judgment and hold Mr. Trinh liable for Washington Work's
nonpayment of rent under the lease for the period September 10, 2001
through January 1, 2003, because of the revocation of the Certificate of
As argued by Mr. Trinh, Tasker v. Amsellem provides an
authoritative interpretation of B.C. law and precludes this suit.*fn3 In
that case, a mechanical contracting firm obtained a default judgment
against Normandie Builders, Inc., the builder that had hired it.
Normandie Builders had no certificate of authority to do business in the
District of Columbia. When the judgment was not paid, the contractor sued
the officers and directors of Normandie Builders, arguing that they were
"jointly and severally liable . . . `as a result of their unwarranted
assumption of corporate powers
within the District of Columbia.'" 315 A.2d at 179. Framing the
question as "whether failure [to obtain a certificate of authority]
results in the withdrawal of the recognition of a foreign corporation's
existence," the D.C. Court of Appeals concluded, "We think it does not."
Id. at 180. In other words, persons who act as if they were a
corporation when they have no such authority (because, for instance, the
corporation does not exist), will be held personally liable for such
debts as they incur. But persons properly authorized who act for an
actual foreign corporation will not be held personally liable for
corporate debt even if the corporation has failed to obtain a certificate
of authority to do business in D.C.*fn4 Despite its lack of a
certificate of authority from B.C., a foreign corporation remains in
existence and can continue to rely on its corporate form to protect its
officers from personal liability for corporate debt. Id. (Since
a noncomplying "corporation's contracts are valid, personal liability for
officers and directors cannot be premised on the general rule that an
agent who fails to bind his principal binds himself. Since the agent in
this situation does bind his principal, he does not bind hmself.");
see also Cargille, Inc. v. Am. Park Prods., Inc., 415 F. Supp. 876
(D.S.B. 1976). This analysis applies to both claims advanced by BBC
relating to the Consent Judgment and damages for unpaid rent.*fn5
There was a point in October 2002 when Washington Work forfeited its
corporate charter in Maryland. After that point, any actions by Mr. Trinh
on behalf of the "corporation" might arguably fall under D.C. Code §
29-101.139. See Georgetown Park Assocs., Inc. v. Foot Traffic,
Inc., No. 00ca438, slip op. at 3 (D.C. Super. Ct. Oct. 25, 2000)
(denying summary judgment because of disputed facts as to whether
corporate officers "could be personally liable for obligations incurred
while Foot Traffic was dissolved."). However, there is no alleged action
by Mr. Trinh in or after October 2002; his last alleged act was to sign
the Consent Judgment in September 2002, at a time when Washington Work's
corporate existence was not in doubt. Under the authority of
Trasker, § 29-101.139 does not make Mr. Trinh liable for
Washington Work's corporate debt.
The motion to dismiss is GRANTED and the Complaint is
dismissed with prejudice.
A separate Order accompanies this Memorandum Opinion.
For the reasons stated in the Memorandum Opinion separately and
contemporaneously issued this 8th day of March, 2004, it is hereby
ORDERED that Defendant's Motion to Dismiss is
GRANTED; and it is
FURTHER ORDERED that the Complaint is DISMISSED
with prejudice. This is a final appealable Order. See FED. R.
APP. P. 4(a).