Defense contractor has no license, no right to sue

Daily Record, The (Baltimore), Sep 16, 2004 by Peter Geier

A black defense contractor lost his bid to sue Lockheed Martin Corp. for allegedly destroying his flight simulator business because he first filed his $1.3 billion lawsuit while his corporate charter was forfeited, the Court of Appeals held yesterday.

Furthermore, the tortious interference claims that J. Frederick Dual Jr., president and sole shareholder of Dual Inc., asserted in his amended complaint a year later were barred by the statute of limitations because they could not relate back to the original complaint, the appeals court held.

We hold that the initial complaint filed in this case was a nullity, Judge Glenn T. Harrell Jr. wrote for the court, and therefore ineffective for the purposes of tolling the running of the statute of limitations.

The court explained that a corporation with a forfeited charter, as was Dual Inc. from October 1997 until July 2002, is a legal non- entity, such that all powers granted to Dual Inc. by law, including the power to sue and be sued, were extinguished generally as of and during the forfeiture period.

The appeals court also dismissed Dual's contention that he had filed the action in his capacity as a trustee winding up the affairs of Dual Inc. and disposing of its assets as unavailing.

In fact, the record indicates not that Dual was 'winding up' Dual Inc.'s affairs after its charter became forfeit in 1997, but rather that he actively was conducting business during this time on behalf of a corporation with a forfeit charter, Harrell wrote, noting that this is a misdemeanor in Maryland.

Raymond D. Battocchi, who argued Dual's case at the Court of Appeals, declined to comment on the matter.

Lockheed's lawyer, Robert J. Mathias, was not available for comment.

Dual filed his original complaint pro se in Baltimore City Circuit Court in October 2001, asserting several causes of action for intentional torts relating to the termination of two contracts, and seeking punitive damages against Lockheed and two subsidiaries.

The two 1994 contracts at issue in the matter were:

* A Lockheed subcontract to Dual Inc. to provide Lockheed with engineering designs and related support for its Johnson Space Center Science Engineering and Technology contract with the National Aeronautics and Space Administration, which Lockheed terminated in May 1999; and

* A U.S. Air Force contract to develop a flight simulator to test the Air Force's Joint Surveillance Target Attack Radar System, in which Lockheed allegedly interfered and which the Air Force terminated for default in April 1999, effectively destroying his business.

Dual never served Lockheed with the 2001 complaint but, after reviving the corporate charter in July 2002 and retaining counsel, filed an amended complaint and served Lockheed in October 2002.

A year later, Baltimore City Circuit Judge Kay A. Allison dismissed the case, ruling that Dual improperly filed his first complaint as a non-lawyer on behalf of a corporation with a forfeited charter, and that though a lawyer filed an amended complaint after Dual revived his charter, the statute of limitations had run on his claims.

Dual appealed. The Court of Appeals took the case on its own initiative and affirmed.

Dual, a Vietnam-era U.S. Navy veteran, said in his original complaint that he founded his company in 1983 after he was forced to retire from the Navy with a 70 percent service-related disability in 1979.

The company was located first in Arlington, Va., then moved in 1997 to Lake Mary, Fla.

Dual's Central Florida location put it near STRICOM, the Army's simulation, training and instrumentation command, for which he did most of his contract work.

From 1993 to 1996, the magazine Black Enterprise listed Dual Inc. among the top 100 black-owned businesses nationwide in its annual rankings.

At its 1998 peak, Dual's company employed over 100 people, according to the Orlando (Fla.) Sentinel newspaper. Battocchi said yesterday that Dual is no longer in business.

Along with the Lockheed parent company, Dual had named Lockheed Martin Information Systems, of Orlando, Fla., and Lockheed Martin Space Operations, also known as Lockheed Martin Engineering and Science Co., of Houston, Tex., as defendants.

Lockheed Martin had sales of $31.8 billion last year and employs approximately 130,000 people worldwide, according to the company Web site.

WHAT THE COURT HELD

Case:

Dual Inc. et al. v. Lockheed Martin Corp. et al., CA No. 115, Sept. Term 2003. Reported. Opinion by Harrell, J. Filed Sept. 13, 2004.

Issue:

Did the circuit court err in dismissing the initial complaint as invalid? Did it err in ruling that the statute of limitations barred all the claims in the amended complaint because they had accrued more than three years before it was filed?

Holding:

No; affirmed. The initial complaint, filed while the corporate charter was forfeit, was a nullity because a defunct corporation loses the power to sue; therefore it was ineffective for purposes of tolling the running statute of limitations.