An interesting issue came to the attention of our office: apparently, some courts deny pro se (self-represented) appearance to sole proprietors for bringing issues arising out of their business. So the question is whether sole proprietors need to hire an attorney in order to resolve issues related to their business as sole proprietors.
For civil actions, the starting point is the statute CPLR 321(a) which states, in relevant part:
A party, other than one specified in section 1201 of this chapter, may prosecute or defend a civil action in person or by attorney, except that a corporation or voluntary association shall appear by attorney, except as otherwise provided in sections 1809 and 1809-A of the New York city civil court act, sections 1809 and 1809-A of the uniform district court act and sections 1809 and 1809-A of the uniform city court act, and except as otherwise provided in section 501 and section 1809 of the uniform justice court act.
If the issue relates to breach of contract civil action, Sections 1201 (family proceeding) is not applicable. CPLR 321(a) explicitly prohibits “corporation or voluntary association” from non-attoney appearances. Limited Liability Companies are within “corporation or voluntary association” clause because “[an] LLC, like a corporation or voluntary association, is created to shield its members from liability and once formed is a legal entity distinct from its members. Michael Reilly Design, Inc. v. Houraney, 40 A.D.3d 592, 593, 835 N.Y.S.2d 640 (2d Dept. 2007). Unlike LLC, corporation, or voluntary association, a “sole proprietor is someone who owns an unincorporated business by himself or herself.” See https://www.irs.gov/businesses/small-businesses-self-employed/sole-proprietorships. Since business is unincorporated, no distinct legal entity is created, therefore attributes of CPLR 321(a) restrictions appear as unavailable.
CPLR 321(a) does not appear to act as an impediment to proceeding pro se (self represented). But even if a court is still viewing sole proprietorship within CPLR 321(a) ambit as a corporation, corporation can validly assign a claim, even if the assignment is undertaken to circumvent the statutory prohibition against a corporation appearing for itself in court. Ficalora v. Town Bd. Government of East Hampton (2 Dept. 2000) 276 A.D.2d 666, 714 N.Y.S.2d 353, appeal dismissed 96 N.Y.2d 813, 727 N.Y.S.2d 692, 751 N.E.2d 940, reconsideration denied 96 N.Y.2d 897, 730 N.Y.S.2d 794, 756 N.E.2d 82. Although it would sound strange, because sole proprietorship and natural persons are not distinct, but under Ficalora v. Town Bd. Government of East Hampton authority, it is possible to argue that a sole proprietorship assigned claim to natural person as a matter of legal fiction.
In light of foregoing, CPLR 321(a) may not necessarily prevent sole proprietors from proceeding self-represented in their business matters.