Monday, July 26, 2004
Court of Appeal Rules:
Complaint Filed by Corporation Without Counsel Is Not Void
By KENNETH OFGANG, Staff Writer/Appellate Courts
A complaint filed by a self-represented corporation is not a nullity, the First District Court of Appeal ruled Friday, rejecting what the panel acknowledged to be long-standing authority to the contrary.
The justices reinstated a builder’s suit against the City of San Ramon. The trial court’s order of dismissal without leave to amend would have killed the suit, because the statute of limitations ran before the plaintiff’s attorney filed an appearance.
“We conclude respondent City’s objection to the complaint filed by the self-represented corporation raises a curable defect, and dismissal without leave to amend is not mandated,” Presiding Justice Barbara J.R. Jones wrote for Div. Five.
The lawsuit arose out of a claim for breach of contract by CLD Construction, Inc., which had agreed to build a skateboard facility for $227,700. CLD, represented by counsel at the time, alleged in its claim that it had suffered nearly $160,000 in damages as a result of the city providing defective architectural plans and submitting change orders that delayed the project.
The city rejected the claim, providing CLD the statutory notice that it had six months in which to sue. On the last day of the six-month period, CLD filed a complaint in Contra Costa Superior Court, signed by its president, a nonlawyer.
About three weeks later, the company filed a substitution of counsel designating San Francisco lawyer Terence O. Mayo as its attorney in the matter.
The city, however, moved to strike the complaint as a nullity. Judge Judith S. Sanders granted the motion on the basis of Paradise v. Nowlin (1948) 86 Cal.App.2d 897.
The Paradise court dismissed an appeal on its own motion, saying it was void because the appellant was a self-represented corporation. The appeal, it said, was “void by reason of the corporation’s lack of power to represent itself in an action in court.”
But Jones, in her opinion Friday, said Paradise was questionable as precedent. The decision, she explained, cited only three cases, all of which were from other states and two of which were not directly on point.
In more recent years, Jones noted, federal courts have consistently held that a self-represented corporation is entitled to a reasonable amount of time in which to retain counsel before its pleadings are stricken. State courts around the country, she explained, are divided as to whether failure of a corporation to have an attorney sign its papers renders them a nullity or is merely a correctable defect.
One California case, Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, ignored Paradise entirely and held that that where a nonlawyer director purported to appeal on behalf of a corporation, the appellant would be allowed to avoid dismissal by retaining counsel, Jones pointed out.
While the general rule that a nonlawyer may not appear in court on behalf of a corporation is a “venerable” one, Jones explained, California does make exceptions. A 1946 Court of Appeal case cited by the presiding justice held that a nonlawyer principal of a corporation may represent it in small claims court, where lawyers are not permitted to appear—a rule that was later codified.
Other cases cited by Jones held that a nonattorney officer or agent of a corporation may apply to domesticate a sister-state judgment, reasoning that since entry of the California judgment is a ministerial, rather than a judicial, act, the applicant is not practicing law.
Another case holds that a nonlawyer agent of a corporation may appeal an administrative ruling in order to secure a statutorily permitted de novo hearing in the trial court.
“Given the weight of nationwide authority and this state’s increasing acceptance of the view that representation of the corporation by an attorney is not an absolute prerequisite to the court’s fundamental power to hear or determine a case, we are persuaded it is more appropriate and just to treat a corporation’s failure to be represented by an attorney as a defect that may be corrected, on such terms as are just in the sound discretion of the court,” Jones wrote. “First and foremost, this approach honors the cornerstone jurisprudential policies that, in furtherance of justice, complaints are to be liberally construed...and disputes should be resolved on their merits.”
The case is CLD Construction, Inc. v. City of San Ramon, A102742.
Copyright 2004, Metropolitan News Company