Construction Law

Three year statute of limitations for claims against dissolved LLCs begins to run on date of administrative dissolution

By Brett Hill

In Serrano on California Condominium Homeowner's Association v. First Pacific Development et al, the Court of Appeals answered the question of when the statute of limitations begins to run on LLCs that have dissolved.

The case is the first published case to interpret when dissolution occurs under Washington's Limited Liability Act, RCW 25.15 et seq., which was enacted in June 2006.  The question before the court was when is the "effective date of dissolution" for an LLC that has been administratively dissolved.  Under the statute, the statute of limitations for claims against LLCs is three years after the "effective date of dissolution."

The subcontractor in this case argued that the effective date of dissolution occurred when the subcontractor's LLC was administratively dissolved.  The general contractor argued that the effective date for an LLC that has been administratively dissolved did not occur until two years after administrative dissolution when the LLC's affairs have been "wound up" under RCW 25.15.270 and its certificate of formation is cancelled by the Secretary of State under RCW 25.15.290(4).

The Court of Appeals sided with the subcontractor and ruled that the "effective date of dissolution" occurred when the LLC was administratively dissolved.  Therefore, the three year statute of limitations began to run on the date of administrative dissolution.

Full post as published by Construction Law Blog on March 18, 2008 (boomark / email).