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A case with huge legal (and lunchtime) implications

Picture the Copacabana scene from “Goodfellas,” the one with the famous tracking shot that follows Henry Hill as he walks into the packed club and gets the royal treatment as jealous clubgoers look on. Now replace the Copacabana with Chipotle and Henry with me, and you’ll get an idea of how I feel walking past the mile-long line of hungry guests at Chipotle as I pick up my takeout order I placed through my phone.

See, I love Chipotle; it’s my favorite place to get cheap, somewhat healthy food. So why am I talking about it on a legal blog for young lawyers?

Recently, the Court of Appeals granted certiorari in a case that is near and dear to my heart. It involves (you guessed it) Chipotle. Let me explain.

My office is conveniently located in downtown Annapolis, a place where you can throw a rock in any direction and probably hit a restaurant. But there is no Chipotle.

You can imagine my delight, then, when I heard that Chipotle was planning to open a new location in downtown Annapolis. You can also probably imagine the reaction of Moe’s Southwest Grill, a Virginia-based chain, when it heard that a Chipotle was opening a block away.

Moe’s was not as excited as me.

After the city’s Board of Appeals approved, over Moe’s objection, Chipotle’s application for a special exception to operate its restaurant in downtown Annapolis, Moe’s filed a petition requesting that the Anne Arundel County Circuit Court review the Board’s decision. The circuit court dismissed the petition, ruling that because Moe’s was a lessee of the premises it occupied and did not pay real property taxes, it lacked standing to challenge the Board’s decision.

Moe’s appealed the circuit court’s dismissal, and the Court of Special Appeals affirmed in a reported decision but for an entirely different reason. It determined dismissal was appropriate because at the time Moe’s filed its petition, it had forfeited its right to do business in Maryland for failing to file the proper registration and fees with the State Department of Assessments and Taxation.

This decision was really important, and not just because it makes Chipotle within walking distance of my office closer to reality. In affirming the dismissal, the Court of Special Appeals determined that a foreign limited liability company that forfeits its right to do business in Maryland may not maintain a lawsuit in Maryland, and more importantly, that any lawsuit filed while its right to do business is forfeited is a nullity.

This means that a foreign limited liability company cannot cure the forfeiture to keep the case going. In many cases, that’s not a big deal. The company can file the appropriate paperwork and fees to get in the good graces of SDAT and just refile its lawsuit. But in cases where a party is facing a deadline, whether it be a statute of limitations, or, as in Moe’s case, the 30-day window to seek judicial review of the Board of Appeals’s decision, this can be monumental.

In determining that Moe’s petition was a nullity, the Court also clarified its stance in cases involving Maryland limited liability companies that had forfeited their right to do business. Before the Chipotle case, although it could somewhat be gleaned from prior cases, no appellate court had stated definitively that a lawsuit filed by a Maryland limited liability company that had forfeited its charter was a nullity. (The case law and statutory law is much clearer in cases involving corporations that have forfeited their charters.)

It does not surprise me, then, that the Court of Appeals granted certiorari in this case. This is an issue that comes up a lot in cases–young lawyers, make sure your business clients are properly registered before filing suit!–and I am looking forward to seeing how the Court of Appeals comes down on this issue.

Until then, I guess I will just have to drive the ten minutes to the next-closest Chipotle.