Cheval International et al v. Smartpak Equine, LLC

Filing 112

ORDER re 104 MOTION for order allowing August Anderson to turn Cheval into sole proprietorship. On or before 12/16/16 Plaintiff Anderson must file with the Clerk and serve on opposing counsel proof that the legal structure of Cheval International has been changed to a sole proprietorship. If Cheval International is not converted to a sole proprietorship it must obtain new counsel of record on or before 12/16/16. Signed by U.S. District Judge Lawrence L. Piersol on 11/22/16. (SLW)

filed
UNITED STATES DISTRICT COURT

NOV22 20I6

DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION

CIV. 14-5010

CHEVAL INTERNATIONAL and

AUGUST K. ANDERSON,

Plaintiffs,
ORDER

SMART?AK EQUINE,LLC,

*

PAAL GESHOLT and

*

REBECCA MINARD,

*
*

Defendants.

*
*

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Plaintiff, August Anderson,has moved this Court for an Order allowing her to "turn Cheval
International baek into her own sole proprietorship," and to allow the sole proprietorship to he
substituted as a plaintiffin place ofthe limited partnership so that August Anderson can represent
both plaintiffs pro sc.(Doc. 104 at p.2.)

In their response. Defendants argue that the limited partnership structure of Cheval
International has not been dissolved and cannot be ignored. (Doc. 110 at p. 5.) Defendants point

out that the proper forum for judicial dissolution of a limited partnership is the state circuit court,
see SDCL § 48-7-802. But state law also provides for nonjudicial dissolution, see SDCL § 48-7801. Anderson states that she is capable ofchanging Cheval Intemational into a sole proprietorship
in "less than two weeks." (Doc. 104 at p. 3.)

Although the Court has found no South Dakota decisions on this point, courts in other

jurisdictions have explicitly recognized that a sole proprietorship is not a separate entity from its
owners. See, e.g., West Bend Mut. Ins. Co. v. Allstate Ins. Co.,776N.W.2d 693,706(Minn. 2009)

("[Ujnlike a sole proprietorship, a corporation is a separate legal entity from its owners and
shareholders.");Kenville v. United States, 1997 WL1037853,at *4(D.N.D.Nov.6,1997)("[Sjole

proprietorships are not considered separate legal entities from the owner");Bethel v. SunlightJanitor
iServ.jSSl S.W.2d616,621(Mo. 1977)(enbanc)("[s]oleproprietors... are not separate and distinct

from the business they own."); see also Geneva College v. Sebelius, 929 F.Supp.2d 402, 429
(W.D.Pa.2013)(explaining that "there [was] no legal separation between [the sole proprietorship]

and its owner," that the sole proprietorship's "claims are actually [the owner's] claims," and the
owner could "assert in his own name the claims asserted by [the sole proprietorship]" (citing 1
William Meade Fletcher, Fletcher Cyclopedia of the Law of Corporations § 23 (2012))).

Courts in other jurisdictions in which sole proprietorships are viewed as having no
independent legal existence have allowed sole proprietorships to proceed pro sc. See, e.g., Hudson
Valley Black Press v. Internal Revenue Serv., 307 F.Supp.2d 543, 544 and n. 2(S.D.N.Y. 2004)
(noting that plaintiff, a sole proprietorship, may appear pro se in federal court);Lowery v. Hoffman,
188 F.R.D. 651, 653-54 (M.D.Ala. 1999)("An individual owner may in general represent a sole
proprietorship, for a sole proprietorship and its owner are essentially one and the same.");see also
RZSHoldings A Wv.PD VSA Petroleo S.A.,506 F.3d 350,354 n.4(4th Cir. 2007)
(recognizing that
a sole proprietorship may litigate pro se because it has no legal identity separate from the proprietor);
Lattanzio v. COMTA,481 F.3d 137,140(2d Cir. 2007)(same).

If Plaintiff Anderson intends to convert Cheval International from a limited partnership to

a sole proprietorship, she must move quickly to dissolve the limited partnership and to provide this
Court and opposing counsel with proofthat the legal structure ofthe company has been changed to
a sole proprietorship. If the proof is sufficient, the Court will allow substitution of the named

plaintiff as "August Anderson, d/b/a/ Cheval International, a sole proprietorship,'" and will allow

'This is in conformity with a South Dakota Supreme Court case filed on behalf of a sole
proprietorship. See Wasserburger v. Consolidated Management Corp., 459 N.W.2d 561 (S.D.
1990).

the plaintiff to proceed pro se.^ This Court intends to keep the dates set forth in the Scheduling
Order issued on October 14, 2016.

Furthermore, even though Plaintiff Anderson did not intend the Court to see her emails to
Defendants' counsel sent on October 26 and 27, 2016, copies of the emails were attached to
Defendants' Response to Plaintiff Anderson's Response to Motion to Withdraw. (Doc. 110.)

Though Plaintiff may harbor ill feelings toward Defendants, she cannot allow her ill feelings to
influence her conduct towards Defendants or their lawyers. We are to deal with one another with
respect and not call opposing counsel "Spawns of Satan" or "Devil's Minions." This type of
antagonistic behavior needs to end, and the Court will expect a higher standard of conduct to exist
from now on. Accordingly,

IT IS ORDERED:

(1)

That on or before December 16, 2016, Plaintiff Anderson must file with the Clerk

and serve on opposing counsel proofthat the legal structure of Cheval International
has been changed to a sole proprietorship.
(2)

That if Cheval International is not converted to a sole proprietorship it must obtain
new counsel of record on or before December 16, 2016.

"Rule 25(c)ofthe Federal Rules ofCivil Procedure governs the substitution ofparties during
pending litigation due to a transfer of interest such as corporate dissolution. See Froning 's, Inc. v.
Johnston Feed Serv., Inc., 568 F.2d 108, 110 (8th Cir. 1978). Further, Rule 25(c)"is designed to
allow an action to continue unabated when an interest in a lawsuit changes hands, rather than
requiring the initiation of an entirely new lawsuit." ELCA Enter Inc. v. Sisco Equip. Rental &
Sales, Inc., 53 F.3d 186, 191 (8th Cir. 1995)(citing Gen. Battery Corp. v. Globe-Union, Inc., 100
F.R.D.258,261(D.Del. 1982))(internal quotations omitted).It is a"procedural rule that is necessary
for the efficient functioning ofthe federal courts ... [and] it allows for the efficient operation ofthe
federal courts in the event ofa transfer of interest." Gen. Battery Corp., 100 F.R.D. at 262-63. The
decision whether to allow substitution is discretionary. Froning's, Inc., 568 F.2d at n. 4.

Dated this

day of November, 2016.

BY THE COURT:

LaWence L. Piersol
sLmited States District Judge
ATTEST:

JOSEPH HAAS,CLERK

(SEAL)

DEPUTY