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Corporation Self Representation in New York Foreclosure Action

Author: LegalEase Solutions

QUESTION PRESENTED

Can Secured Lending Corp., a New York corporation with one shareholder, authorize an officer/agent of the corporation to represent it in a foreclosure action when the officer/agent is not a member of the New York bar or licensed attorney in New York or any other state?

 SHORT ANSWER

Per 28 U.S.C. § 1654, an individual has the right to represent himself pro se or by an attorney of his choice. However, a non-attorney litigant does not have the right to represent another individual litigant. Additionally, individuals may represent themselves pro se but this right is not extended to corporations and associations. It is well settled law that corporations can defend or prosecute in courts only through a licensed attorney. Also, the sole shareholder of a corporation cannot represent the corporation in a derivative suit.

RESEARCH FINDINGS

“The right to proceed pro se in civil actions in federal courts is guaranteed by 28 U.S.C. § 1654.” Iannaccone v Law, 142 F3d 553, 556 (2d Cir 1998). It provides : “In all courts of the United States the parties may plead and conduct their own cases personally or by counsel as, by the rules of such courts, respectively, are permitted to manage and conduct causes therein.” Id. However, certain qualifications are placed on the right to appear pro se. “[B]ecause pro se means to appear for one’s self, a person may not appear on another person’s behalf in the other’s cause. A person must be litigating an interest personal to him.” Id. See Pridgen v. Andresen, 113 F.3d 391, 393 (2d Cir.1997). “For example, a lay person may not represent a corporation or a partnership or appear on behalf of his or her own minor child.” Id. see Cheung v. Youth Orchestra Found. of Buffalo, Inc., 906 F.2d 59, 61 (2d Cir.1990).

In the instant case, Secured Lending Corporation is a corporation in New York desirous of moving pro se by assigning an agent or officer of the corporation in a foreclosure action. Secured Lending should be represented by an attorney as the law does not permit a lay person to represent a corporation.

The threshold question then turns into whether a given matter is the plaintiff’s own cause or that of another. “The basic question raised by (28 U.S.C. § 1654) is whether [a] stockholder’s derivative suit is the plaintiff’s ‘own case’ or is a suit belonging to the corporation.” Id. See Phillips v. Tobin, 548 F.2d 408, 411 (2d Cir.1976).

“This provision has been interpreted to allow for two types of representation: ‘that by an attorney admitted to the practice of law by a governmental regulatory body and that by a person representing himself. The statute does not allow for unlicensed laymen to represent anyone else other than themselves.’” Eagle Assoc. v Bank of Montreal, 926 F2d 1305, 1308 (2d Cir 1991).  (citing Turner v. American Bar Ass’n, 407 F.Supp. 451, 477 (N.D.Tex.1975), aff’d sub nom. Pilla v. American Bar Ass’n, 542 F.2d 56 (8 Cir.1976) (appeal from multi-district litigation); see also McShane v. United States, 366 F.2d 286 (9 Cir.1966) (individual prohibited from representing anyone other than himself)).The principal rationale for ordinarily requiring representation by a licensed attorney is that the conduct of litigation by a non lawyer creates unusual burdens not only for the party he represents but as well for his adversaries and the court. The lay litigant frequently brings pleadings that are awkwardly drafted, motions that are inarticulately presented, proceedings that are needlessly multiplicative. In addition to lacking the professional skills of a lawyer, the lay litigant lacks many of the attorney’s ethical responsibilities….

 

Lattanzio v COMTA, 481 F3d 137, 139 (2d Cir 2007) (citing Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 22 (2d Cir.1983)).

“This rationale ‘applies equally to all artificial entities.’” Rowland v. Cal. Men’s Colony, Unit II Men’s Advisory Coun., 506 U.S. 194, 202 (1993). “Accordingly, a layperson[1] may not represent a separate legal entity such as a corporation.” Lattanzio, 481 F3d at 139-40. See, e.g., Shapiro, Bernstein & Co. v. Cont’l Record Co., 386 F.2d 426, 427 (2d Cir.1967) (per curiam). The court has extended this reasoning to “partnerships and single shareholder corporations, as well as to shareholders who file derivative suits.” Id. See Jones, 722 F.2d at 23 (single shareholder corporation); Phillips v. Tobin, 548 F.2d 408, 415 (2d Cir.1976) (shareholder derivative suits).”

Although the right to appear pro se is guaranteed by the law, it is not without limitations. Corporations and associations must be represented by an attorney. The courts have affirmed this rule in various instances. A corporation is a legal as well as artificial entity that acts through its agents and exists only in the eyes of the law. Accordingly, law requires a corporation to act through special agents or attorneys. This applies to single shareholder corporations.

“Further, the Supreme Court has acknowledged that, ‘save in a few aberrant cases, the lower courts have uniformly held that 28 U.S.C. § 1654 … does not allow corporations, partnerships, or associations to appear in federal court otherwise than through a licensed attorney.’” Id. (citing Rowland, 506 U.S. at 202, 113 S.Ct. 716).“It is well established that a layman may not represent a corporation even if he is the sole shareholder.” U.S. ex rel. Mergent Services v Flaherty, 540 F3d 89, 92 (2d Cir 2008). See Nat’l Indep. Theatre Exhibitors, Inc. v. Buena Vista Distribution Co., 748 F.2d 602, 609 (11th Cir.1984); Cheung v. Youth Orchestra Found. of Buffalo, Inc., 906 F.2d 59, 61 (2d Cir.1990) (noting in dicta that ‘[s]ole shareholders of corporations are not allowed to represent such corporations pro se’).

“A non-lawyer general partner may not represent the partnership.” Id. See Eagle Assocs. , 926 F.2d at 1310 . Id. Similarly, the courts have held that “a litigant may not appear pro se to pursue a claim that a corporation has assigned to him.” see Niagara Frontier Transp. Auth., 722 F.2d at 23.

Hence, in the instant matter, Secured Lending cannot assign its agent who is not a member of the New York Bar or a licensed attorney in New York or any other state to appear on its behalf in the action for foreclosure.

“[A] corporation or voluntary association, is created to shield its members from liability and once formed is a legal entity distinct from its members.” Id. (see Tierra West Apts., LLC v. Bobadilla, N.Y.L.J., Apr. 21, 1999, at 27 (Civ.Ct., New York County); Monte Carlo, LLC v. Yorro, N.Y.L.J., May 7, 2003, at 25 (Dist.Ct., Nassau County)). Michael Reilly Design, Inc. v Houraney, 40 AD3d 592, 593-94 (2d Dept 2007). “Accordingly, [ ] a corporation or a voluntary association, . . . may only be represented by an attorney and not by one of its members who is not an attorney admitted to practice in the State of New York.” Id.

Affirming the decision of various courts that corporations cannot appear through lay representatives, the court in Turner held: “‘[c]orporations . . . are fictional persons, [ ] unable to represent themselves and the consistent interpretation of § 1654 is that the only proper representative of a corporation [ ] is a licensed attorney, not an unlicensed layman regardless of how close his association with the [ ] corporation.’” Eagle Assocs., 926 F2d at 1309. ( quoting Turner, supra, 407 F.Supp. at 476).

Therefore, in the matter at hand, Secured Lending Corporation cannot assign an unlicensed layperson to represent the corporation in an action for foreclosure.

CONCLUSION

The right to appear pro se is recognized by the courts subject to certain limitations. A non attorney litigant or a lay person cannot represent another individual litigant. He can only appear before the court for his own cause. Also, a corporation cannot be represented by a non attorney. The law makes it mandatory for a corporation to be represented by a licensed attorney.

[1] Layperson is defined in this case in the portion cited supra: it refers to ‘conduct of litigation by a non lawyer’.