LNV Corporation v. Harrison Family Business, LLC et al

Filing 108

ORDER Directing non-individual defendants to secure replacement counsel in order to participate in any remaining proceedings. Signed by Judge Ellen L. Hollander on 3/16/2016. (c/m 3/16/2016 nd2s, Deputy Clerk)

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March 16, 2016
MEMORANDUM TO MR. HARRISON (via U.S. MAIL) AND COUNSEL (via CM/ECF)
Levin 1. Harrison, IV
P.O. Box 310
Tilghman, MD 21671
Re:

LNV Corporation v. Harrison Family Business, LLC, et al.
Civil Action No. ELH-14-03778

Dear Mr. Harrison and Counsel:
On March 14, 2016, Robin R. Cockey, Ashley A. Bosche, and the firm of Cockey,
Brennan & Maloney, P.c. moved for leave to withdraw as counsel for all defendants, including
Harrison Country Inn and Sport Fishing Center, Inc.; Harrison Family Business, LLC ("HFB");
the Estate of Levin F. Harrison III; and the Estate of Roberta 1.. Harrison. See ECF 105
("Motion"). By Order of March 15, 2016, I granted the Motion. ECF 107.1
As you know, on January 15, 2016, I entered a Consent Judgment in favor of LNV
Corporation. ECF 99. The case remains open, however, because of the appointment of a
Receiver as to HFB. See ECF 79. Any remaining proceedings are likely to address the
receivership, including the issue of the Receiver's fees.
As to any remaining proceedings, the individual defendants may elect to represent
themselves or obtain counsel. However, the non-individual defendants may appear only through
counsel.
.
It "has been the law for the better part of two centuries ... that a corporation may appear
in the federal courts only through licensed counsel." Roland v. Cal. Men's Colony, 506 U.S.
194, 201 (1993). See also Local Rule 101.l(a) ("All parties other than individuals must be
represented by counsel."). The same is true of a limited liability company or LLC. See Cluck-U,

I was satisfied that defense counsel complied with Local Rille 101.2. Counsel filed a
certificate complying with the Rule's notice requirements. ECF 105 at 4. Counsel certified that
"written notice has been mailed to or otherwise served upon Defendants at least seven (7) days
previously advising Defendants of counsel's proposed withdrawal and notifying them either to
have new counsel enter an appearance or to advise the Clerk that they will be proceeding without
counsel." !d.; see ECF 105-1.
1

Corp. v. e.ue. of Md, Inc., DKC-1O-2105, 2010 WL 3516937, at *1 (D. Md. Sept. 7, 2010)
("The applicable law is clear: as a limited liability company, [the defendant] needs an attorney.
See Vick v. Wong, 263 F.R.D. 325, 328 n. I (E.D. Va. 2009) ('[A] limited liability company ...
cannot appear pro se, even if represented by one of its members, but must be represented by an
attorney.'); Sea Island Co. v. The IRI Grp., LLC, No. 3:07cv013, 2007 WL 2997660, at *1
(W.D.N.C. Oct. 12, 2007) ('[T]he law is well-established that corporate entities and other nonhuman entities, such as limited liability companies, can appear in federal court only through
counsel.'); Gilley v. Shoffner, 345 F. Supp. 2d 563, 567 (M.D.N.C. 2004) ('[A] limited liability
company may not appear in this case or seek relief pro se. '); cf Allied Colloids, Inc. v. Jadair,
Inc., No. 96-2078, 1998 WL 112719, at *1 (4th Cir. Mar. 16, 1998) ('[A]lmost every court to
address this issue has held that a corporation may not appear pro se but must be represented only
by duly licensed counsel.')").
In addition, when an estate has beneficiaries or creditors other than the personal
representative, the estate must be represented through counsel. See United States v. Nazarian,
DKC-IO-2962, 2011 WL 1559378, at *1 (D. Md. Apr. 25, 2011). As Judge Chasanow has
explained, id:
The courts are in general agreement that where an estate has beneficiaries
other than the personal representative (or administrator or executrix) the estate
must be represented by counsel. See Witherspoon v. Jeffords Agency, Inc., 88
F.App'x 659 (4th Cir. 2004) (unpublished per curiam); Shepherdv. Wellman, 313
F.3d 963, 970 (6th Cir. 2002); Malone v. Nielsen, 474 F.3d 934, 937 (7th Cir.
2007); Pridgen v. Andresen, 113 F.3d 391, 393 (2d Cir. 1997); cfGuest v.
Hansen, 603 F.3d 15, 17 (2d Cir. 201O)(holding that personal representative can
represent an estate if it is the sole creditor or beneficiary). As explained by the
United States Court of Appeals for the Second Circuit in Pridgen "when an estate
has beneficiaries or creditors other than the administratrix or executrix
[or personal representative], the action cannot be described as the litigant's own,
because the personal interests of the estate, other survivors, and possible creditors
will be affected by the outcome of the proceedings." 113 F.3d at 393 (internal
quotations omitted). Although courts have not had occasion to rule on whether
the personal representative of an insolvent estate is excused from the ban
on pro se representation, other organizational entities, such as corporations or
non-profit entities, have not been permitted to proceed pro se simply because they
lacked resources to pay counsel. See, e.g., Taylor v. Knapp, 871 F.2d 803, 806
(9th Cir. 1989) (refusing to permit non-profit organization to proceed without
counsel even though organization had argued it lacked funds to pay an
attorney); Richdel, Inc. v. Sunspool Corp., 699 F.2d 1366, 1366 (Fed. Cir.
I 983)("Nothing in our Rules suggests that an exception is to be made because of
the expense
a corporation
will incur by appearing
through
an
attorney"); Beaudreault v. ADF, Inc., 635 F. Supp. 2d 121, 122 (D.R.I
.2009) (declining to create an exception to requirement that corporations cannot
proceed pro se based solely on a corporation's inability to pay for legal

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representation); cf In re Holliday's Tax Services, Inc., 417 F.Supp. 182, 185
(E.D.N.Y. 1976), afj'd, 614 F.2d 1287 (2d Cir. 1979) (permitting a lay sole
shareholder to represent his small and impecunious corporation in petitioning for
an arrangement under Chapter XI of the Bankruptcy Act, but noting that the
bankruptcy court could require the corporation to obtain professional counsel if it
found that "lay representation [was] causing a substantial threat of disruption or
injustice," or that "changed economic conditions mar d]e it possible for the
corporation to obtain an attorney"). []There is no reason to treat an insolvent estate
differently.
As a result, a corporation cannot represent itself or appear through a non-attorney officer;
an LLC cannot represent itself or appear through a non-attorney member; and an estate with
beneficiaries or creditors other than the personal representative cannot be represented by the
personal representative. However, a district court has discretion to grant a continuance to allow
such parties to secure replacement counsel. See RZS Holdings AVV v. PDVSA Petroleo S.A., 506
F.3d 350, 356 (4th Cir. 2007).
Local Rule 101.2(b), which pertains to any party other than an individual, provides that,
"[i]n the event that within thirty (30) days of the filing of the motion to withdraw, new counsel
has not entered an appearance, the Court may take such action, if any, that it deems appropriate,
including granting the motion to withdraw and dismissing any affirmative claim for relief
asserted by the party and/or directing the party to show cause why a default should not be
entered on claims asserted against it." The Rule is couched in permissive language. In my view,
it establishes a 30-day "safe harbor" period that follows the filing of a motion to withdraw,
during which a defendant other than an individual may obtain new counsel.

In light of the foregoing, if the non-individual defendants wish to obtain counsel, they are
directed to secure replacement counsel. In the absence of counsel, they cannot participate in any
remaining proceedings.
Despite the informal nature of this letter, it is an Order of the Court and the Clerk is
directed to docket it as such.
.
Sincerely,
/s/
Ellen Lipton Hollander
United States District Judge

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