Litigation

Oregon Court of Appeals OKs contract claim despite delayed business registration

By Matt Hedberg

Under Oregon statutory law, at 648.135(1), a person operating under an assumed business name cannot file suit on behalf of that business unless the assumed name is registered with the state.  The Oregon Court of Appeals held last week that, even if a party lacked standing to sue because its business name was unregistered, its filing of a registration while the lawsuit is pending can cure the defect.

In Pacific Coast Recovery Service, Inc. v. Janice Jean Johnston, a collection agency appealed from a judgment of dismissal, arguing that the trial court erred in holding that the collection agency lacked standing to maintain an action for breach of contract.  The trial court had determined that, because the collection agency's assignor -- the business that had retained the agency to collect the debt -- had not registered its assumed business name under ORS 648.007 at the time the action was filed, the collection agency was precluded from pursuing its lawsuit. 

In reversing the trial court, the Court of Appeals held that, because the collection agency's assignor had registered by the time the trial court ruled on the motion to dismiss, the asserted lack of standing had been "cured" before the trial court granted the motion to dismiss.  The statutory "cure" will not, however, help plaintiffs where the statute of limitations has expired before registration of the assumed business name.  In those circumstances, according to the Court of Appeals, the action will be barred.

Full post as published by Northwest Business Litigation Blog on May 13, 2008 (boomark / email).