Washington's LLCA time-bars general contractor from pursuing claims

Overturning a trial court ruling, the Washington Court of Appeals, Division One, yesterday ruled that the “effective date of dissolution” of an administratively dissolved limited liability company under the Washington Limited Liability Company Act (LLCA), RCW 25.15 et seq., is three years from the date of administrative dissolution, not the date the limited liability company’s certificate of formation is canceled. The LLCA provides that the affairs of a limited liability company that is administratively dissolved are “wound up” under RCW 25.15.270 and its certificate of formation is canceled under RCW 25.15.290(4) two years after the administrative dissolution date.  The LLCA, at RCW 25.15.270, sets forth several different methods of dissolution of a limited liability company.  The Court’s ruling in Belltown Waterproofing, Inc., v. Clear Brook Construction meant that general contractor Clear Brook Construction Limited’s construction defect claims against subcontractor Belltown Waterproofing, LLC were barred by the statute of limitations.

The case aptly demonstrates that a general contractor’s potential risk does not end at project completion.  Clear Bank is not the first and will certainly not be the last general contractor to get caught in the middle between an owner’s claim brought within, but near the end of, the applicable statute of limitations, and the applicable statute of limitations and/or statute of repose the general contractor must meet in order to timely bring its claims against its subcontractors.