Two Old Hippies Llc v. Catch the Bus Llc

Citation784 F.Supp.2d 1221
Decision Date14 February 2011
Docket NumberNo. CIV. 10–0459 JB/RLP.,CIV. 10–0459 JB/RLP.
PartiesTWO OLD HIPPIES, LLC, Plaintiff,v.CATCH THE BUS, LLC, Gary Mack and Fallon Mack, Defendants.
CourtU.S. District Court — District of New Mexico

784 F.Supp.2d 1221

TWO OLD HIPPIES, LLC, Plaintiff,
v.
CATCH THE BUS, LLC, Gary Mack and Fallon Mack, Defendants.

No. CIV. 10–0459 JB/RLP.

United States District Court, D. New Mexico.

Feb. 14, 2011.


[784 F.Supp.2d 1221]

Rebecca L. Avitia, Thomas P. Gulley, Bannerman & Johnson, PA, Albuquerque, NM, for Two Old Hippies, LLC.Catch the Bus, LLC, Alamogordo, NM, Defendant pro se.Gary Mack, Alamogordo, NM, Defendant pro se.Fallon Mack, Alamogordo, NM, Defendant pro se.
MEMORANDUM OPINION AND DEFAULT JUDGMENT AGAINST DEFENDANT CATCH THE BUS, LLC
JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on the Plaintiff's Motion to Strike Pleadings

[784 F.Supp.2d 1222]

of and Enter Default Judgment Against Defendant Catch the Bus, LLC, filed November 2, 2010 (Doc. 27) (“Motion”). The Court held a hearing on January 12, 2010. The primary issue is whether the Court should strike Defendant Catch the Bus, LLC's pleading and enter default judgment against it, because Catch the Bus is no longer represented by counsel. The Court grants the Motion on the condition that, if Catch the Bus does not obtain counsel within ten days of this order, then the Court will enter this judgment.
PROCEDURAL BACKGROUND

On May 13, 2010, Two Old Hippies filed its Complaint for Breach of Contract, Breach of Warranty, Violation of the New Mexico Dealers Franchising Act, Violation of the New Mexico Unfair Practices Act, Violation of the Colorado Consumer Protection Act, Negligent Misrepresentation, and Rescission. See Doc. 1. Two Old Hippies brings this diversity action alleging claims under New Mexico state law for breach of contract—Count I; breach of warranty—Count II; violation of the New Mexico Motor Dealers Franchising Act, N.M.S.A.1978, §§ 57–16–1 through 57–16–16—Count III; violation of the New Mexico Unfair Trade Practices Act, N.M.S.A.1978, §§ 57–12–1 through 57–12–26—Count IV; negligent misrepresentation—Count VI; and rescission—Count VII. Two Old Hippies also brings a claim under Colorado law for a violation of the Colorado Consumer Protection Act C.R.S., §§ 6–1–101 through 6–1–115–Count V.

On June 23, 2010, the Defendants filed their Answer to Complaint for Breach of Contract, Breach of Warranty, Violation of the New Mexico Dealers Frachising [sic] Act, Violation of the New Mexico Unfair Practices Act, Violation of the Colorado Consumer Protection Act, Negligent Misrepresentation, and Rescission. See Doc. 6. On June 28, 2010, the Defendants filed their Jury Demand. See Doc. 9 (“Jury Demand”). The Defendants' Jury Demand requests a six-person jury “in the above-entitled cause of action.” Jury Demand at 1. Two Old Hippies did not file a jury demand in this case.

Counsel initially represented Catch the Bus. On August 19, 2010, the Court entered its order Allowing Withdrawal of Counsel, allowing Catch the Bus' counsel to withdraw. See Doc. 23. Two Old Hippies move the Court to strike Catch the Bus' pleadings and enter default judgment against Catch the Bus, pursuant to local rule 83.8(c) of the Local Rules of Civil Procedure for the United States District Court for the District of New Mexico. Catch the Bus did not respond to Two Old Hippies' Motion, and the Defendants did not appear at the January 12, 2010 hearing. At the hearing, the Court attempted unsuccessfully to contact Catch the Bus via telephone at three different telephone numbers—two of which Two Old Hippies's counsel used to communicate with the Defendants and one from a listing for Catch the Bus from its website—all of which were no longer in service. Two Old Hippies conceded at the hearing that the Court could not strike the filings of Gary Mack and Fallon Mack (together “Individual Defendants”).

LAW REGARDING PRO SE BUSINESS LEGAL ENTITIES

In the District of New Mexico, “[a] corporation or a partnership must be represented by an attorney authorized to practice before this Court.” D.N.M.LR–Civ. 83.7. Local rule 83.8(c) provides:

[784 F.Supp.2d 1223]

When the party is a corporation or partnership, the attorney must give notice in the motion to withdraw that a corporation or partnership can appear only with an attorney. Absent entry of appearance by a new attorney, any filings made by the party may be stricken and default judgment or other sanctions imposed.

D.N.M.LR–Civ. 83.8(c).1 Local rule 83.8(c) applies to limited liability companies, like Catch the Bus. See Roscoe v. United States, 134 Fed.Appx. 226, 228 (10th Cir.2005) (affirming an order from a “magistrate judge prohibit[ing] the LLC from proceeding without counsel”); Harrison v. Wahatoyas, LLC, 253 F.3d at 556 (“As a general matter, a corporation or other business entity can only appear in court through an attorney and not through a non-attorney corporate officer appearing pro se.”). “[B]usiness forms like corporations and limited liability companies generally protect individuals from personal liability unless the individual officer, director, shareholder or limited liability member actively participated in the wrongful acts, or cause otherwise exists to pierce the corporate veil.” In re Bruton, No. 7–09–13458 JA, No. 09–1187 J, 2010 WL 2737201, at *5 (Bkrtcy.D.N.M. July 12, 2010). While there are differences between a corporation—which is largely defined by its ability to issue shares and the rights of shareholder, see Business Corporation Act, N.M.S.A.1978, §§ 53–11–1 to 53–18–12—and a limited liability company—which “may conduct or promote any lawful business or purpose,” N.M.S.A.1978, § 53–19–6, under New Mexico substantive law, “there is no basis for distinguishing a limited liability company from a corporation on the question of a pro se appearance by someone who is not a licensed attorney.” Martinez v. Roscoe, 131 N.M. 137, 139, 33 P.3d 887, 889 (Ct.App.2001) (citation and internal quotation marks omitted). Both corporations and limited liability companies are profit seeking ventures. See N.M.S.A.1978, § 53–11–2(A) (“[C]orporation” or “domestic corporation” means a corporation for profit subject to the provisions of the Business Corporation Act....”); N.M.S.A.1978, § 53–19–6 (“A limited liability company may conduct or promote any lawful business or purpose.”). Both corporations and limited liability companies are distinct legal entities from their officers and agents, who are generally not personally liable for the business'

[784 F.Supp.2d 1224]

activities. Compare Bourgeous v. Horizon Healthcare Corp., 117 N.M. 434, 437, 872 P.2d 852, 855 (1994) (finding no personal liability when “claims against the individual defendants were solely claims based on actions taken within the scope of their employment”), with N.M.S.A.1978, § 53–19–13 (“Except as otherwise provided in the Limited Liability Company Act, the debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the limited liability company.”).

According to the United States Court of Appeals for the Tenth Circuit, “local rules of practice, as adopted by the district court, ‘have the force and effect of law, and are binding upon the parties and the court which promulgated them until they are changed in [an] appropriate manner.’ ” Smith v. Ford Motor Co., 626 F.2d 784, 796 (10th Cir.1980) (quoting Woods Constr. Co. v. Atlas Chem. Indus., Inc., 337 F.2d 888, 890 (10th Cir.1964), cert. denied, 450 U.S. 918, 101 S.Ct. 1363, 67 L.Ed.2d 344 (1981)). “[A]lthough district judges must follow local rules when adherence furthers the policies underlying the rules, they have discretion in applying and interpreting local rules.” Hernandez v. George, 793 F.2d 264, 267 (10th Cir.1986). “[C]onsiderable deference is accorded to the [court's] interpretation and application of [its] own rules of practice and procedure.” Bylin v. Billings, 568 F.3d 1224, 1230 n. 7 (10th Cir.2009) (quoting Smith v. Ford Motor Co., 626 F.2d at 796) (alterations in original).

In addition to being a District of New Mexico Local Rule, it has also been a long standing legal principle that a corporation must be represented by an attorney to appear in federal court. See Rowland v. Cal. Men's Colony, 506 U.S. 194, 201–03, 113 S.Ct. 716, 121 L.Ed.2d 656 (1993) (“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.”); Commercial & R.R. Bank of Vicksburg v. Slocomb, Richards & Co., 39 U.S. (14 Pet.) 60, 65, 10 L.Ed. 354 (1840) (“[A] corporation cannot appear but by attorney....”); Osborn v. Bank of the U.S., 22 U.S. (9 Wheat.) 738, 830, 6 L.Ed. 204 (1824) (“A corporation, it is true, can appear only by attorney, while a natural person may appear for himself.”); Tal v. Hogan, 453 F.3d 1244, 1254 (10th Cir.2006) (“It has been our long-standing rule that a corporation must be represented by an attorney to appear in federal court.”); DeVilliers v. Atlas Corp., 360 F.2d 292, 294 (10th Cir.1966) (“[A] corporation can appear in a court of record only by an attorney at law.”); Flora Constr. Co. v. Fireman's Fund Ins. Co., 307 F.2d 413, 414 (10th Cir.1962) (“The rule is well established that a corporation can appear in a court of record only by an attorney at law.”); Turner v. American Bar Assn., 407 F.Supp. 451, 476 (N.D.Tex.1975) (citing the “long line of cases” from 1824 to the present holding that a corporation may only be represented by licensed counsel).

The United States Court of Appeals for the Seventh Circuit specifically addressed limited liability companies in United States v. Hagerman, 545 F.3d 579 (7th Cir.2008). The Seventh Circuit held that limited liability companies cannot litigate unrepresented, because it is a separate legal entity from its members, and because the underlying policy for requiring corporations and partnerships to appear with counsel apply to limited liability companies:

We have not had occasion to rule on whether, like a corporation, an LLC can

[784 F.Supp.2d...

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