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Artificial Entities Cannot Represent Themselves in Court

Dutch Village Mall v. Pelletti, 162 Wn. App. 531 (2011). Artificial Entities Cannot Represent Themselves in Court.

This is old case law, but King County District Courts have starting enforcing the ruling. This holding is particularly difficult for small bail bonds companies as it requires them to hire counsel to resolve exonerations. We have not seen this used regarding King County Justifications.

Small business incorporate for lots of reasons including: limiting personal liability of shareholders, protecting personal assets, and limiting tax liability. The holding of Dutch Village Mall finds that although a corporation may be a small, closely held corporation, that does not allow the owners to represent themselves.

The case of Dutch Village Mall v. Pelletti, 162 Wn. App. 531 was decided in 2011. The court held that artificial entities (corporations, limited liability corporations), cannot be represented by an owner in court (unless that individual is an attorney), but instead must be represented by an attorney.

Dutch Village Mall was an LLC that owned a shopping mall in Whatcom County. The LCC was owned solely by Jay Lei. Pelletti was a tenant at the mall. Jay Lei filed a complaint against Pelletti on the LLC's behalf. Lei filed a motion for default. Pelletti moved to strike the pleadings because an attorney did not sign them. Lei responded that he should be able to represent his single member LLC in court the same as if he were representing himself. Lei conceded that he was not an attorney. The court dismissed the motion, and awarded sanctions against Lei.

"Washington law, with limited exception, requires individuals appearing before the court on behalf of another party to be licensed in the practice of law." Lloyd Enters., Inc. v. Longview Plumbing & Heating Co., 91 Wn. App. 697, 701, 958 P.2d 1035 (1998), review denied, 137 Wn.2d 1020 (1999). Because a corporation is an artificial entity, necessarily its interests in a court proceeding must be represented by a person acting on its behalf. Representing another person or entity in court is the practice of law. To practice law, one must be an attorney. RCW 2.48.170. Thus Washington, like all federal courts, follows the common law rule that corporations appearing in court proceedings must be represented by an attorney. Lloyd, 91 Wn. App at 701.

One recognized exception to the common law rule is that a corporation may appear in small claims court through a person who is not an attorney due to the statutory bar against representation by an attorney in small claims court. State ex rel. Long v. McLeod, 6 Wn. App. 848, 496 P.2d 540, review denied, 81 Wn.2d 1004 (1972).

The United States Supreme Court has stated that the rationale for the common law rule "applies equally to all artificial entities." Rowland v. Cal. Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194, 202, 113 S. Ct. 716, 121 L. Ed. 2d 656 (1993). The court described as "aberrant" those few federal cases holding otherwise, including one that conditionally permitted a sole shareholder to appear for a closely held corporation. Rowland, 506 U.S. at 202 & n.5. In the same vein, we recently held that the rule applies equally to limited liability companies. Marina Condo. Homeowner's Ass'n v. Stratford at the Marina, LLC, 161 Wn. App. 249, 263-64, 254 P.3d 827 (2011).

The personal right of self-representation is not in dispute. A person "may appear and act in any court as his own attorney without threat of sanction for unauthorized practice." Wash. State Bar Ass'n v. Great W. Union Fed. Sav. & Loan Ass'n, 91 Wn.2d 48, 56, 586 P.2d 870 (1978). But a layperson's right of self-representation applies "only if the layperson is acting solely on his own behalf" with respect to his own legal rights and obligations. Bar Ass'n, 91 Wn.2d at 57.

 

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