North Carolina Court of
Appeals Decides Case
That Impacts
Small Business Owners |
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One who is his own
lawyer has a fool for a client
- Old Proverb
Does a
corporation involved in litigation in the District and Superior
Courts of the State of North Carolina have to hire an attorney
or may an officer of the corporation, who is not a licensed
attorney, appear on the corporation’s behalf? Non-attorney
corporate employees are permitted to act on behalf of a
corporation in the State of North Carolina in some limited
capacities. For example, a corporation does not need to be
represented by an attorney in small claims court. In addition, a
corporate employee who is not an attorney can prepare legal
documents in connection with a business transaction. However,
until recently, no case had previously addressed whether a
corporation could, through a non-attorney employee or officer,
represent itself in litigation in the District and Superior
Courts. As a result of the efforts of two Smith Debnam
attorneys, Gerald H. Groon, Jr. and Matthew Roehm, that issue
has now been addressed. On December 31, 2002, the North Carolina
Court of Appeals ruled in the case of Lexis-Nexis, Division
of Reed Elsevier, Inc. v. Travishan Corporation that a
corporation must be represented by a duly admitted and licensed
attorney in any litigation proceeding brought in the District
and Superior Courts of North Carolina.
Lexis-Nexis provides legal
research services. Travishan Corporation is a Delaware
corporation doing business in the State of North Carolina. Ms.
Florence Amelia Smith is Travishan’s “CEO, President,
Chairman, Design Engineer, Theoretical Physicist, Promoter,
Administrative Management, Attorney Pro Se, Marketing
Researcher, Developer, Editor, Investigative Reporter, Writer,
Graphic Artist, and Publicist.” According to Ms. Smith,
Travishan Corporation is in the business of developing an “Air
Ground Transportation and Security System”, a “Fuel Center
for the Twenty First Century”, numerous screenplays, a daily
newspaper, and assorted restaurants and property ventures.
Travishan Corporation contracted with Lexis-Nexis in order to
gain access to the Lexis-Nexis database. Lexis- Nexis
subsequently provided $2,922.26 worth of services to Travishan
for which it was not paid. As a result, a lawsuit was
filed against Travishan Corporation seeking damages in the
amount of $2,922.26. Travishan Corporation responded by filing
an Answer and Counterclaims seeking to recover damages against
Lexis-Nexis in the amount of over four hundred million dollars
($400,000,000.00). Travishan claimed that it had suffered these
damages when Lexis- Nexis discontinued its service. The Answer
was signed by Florence Amelia Smith with the notation after her
name "CEO, President, Chairman". Below her signature
was the notation "Travishan Corporation, Pro Se".
North Carolina General Statute §
84-4 provides that, with the exception of persons appearing on
their own behalf, only licensed attorneys may practice law in
North Carolina. In addition, North Carolina General Statute §
84-5 states that a corporate entity may not practice law (a
corporation may, however, be represented by an attorney who is
also an employee of the corporation ). As a result, Smith Debnam
attorneys have taken the position that a corporation must be
represented by an attorney if it is involved in litigation in
the District and Superior Courts of North Carolina. Ms. Florence
Amelia Smith is not an attorney. As a result, a motion was filed
on behalf of Lexis-Nexis seeking to strike the Answer and
Counterclaims of Travishan Corporation. Notwithstanding the
arguments and supporting case law, the Judge who presided over
the hearing denied the motion of Lexis-Nexis. The Judge made his
decision after consulting with the North Carolina State Bar. The
North Carolina State Bar advised the Judge that, in its opinion,
the appearance by Ms. Smith on behalf of Travishan Corporation
did not constitute the unauthorized practice of law.
After approximately two years of
grinding its way through the trial courts, the case found its
way before the North Carolina Court of Appeals. Lexis-Nexis had
appealed the decision of the District Court Judge allowing Ms.
Smith to represent Travishan Corporation in litigation. The
North Carolina Court of Appeals reversed the decision of the
District Court Judge by holding that a corporate officer could
not represent the interests of the corporation in District
Court, even though that officer was the president, CEO, and sole
shareholder of the corporation.
The ruling in the case of Lexis-Nexis,
Division of Reed Elsevier, Inc. v. Travishan Corporation
marked the first time that the courts in North Carolina have
adopted a general rule that a corporation must be represented by
an attorney in litigation in District and Superior Court. The
North Carolina Court of Appeals did affirm that a corporation
did not need to be represented by an attorney in small claims
court. The court also noted that a corporate officer may make an
appearance on behalf of a corporation. However, the North
Carolina Court of Appeals made it clear that while an agent of a
corporation could negotiate with an opposing party (thus making
an implied appearance on behalf of the corporation) it did not
follow that the agent could also conduct litigation on behalf of
the corporation.
The case has received significant
attention. It was featured on the front page of the January 6,
2003 issue of Lawyers Weekly and identified as the “case of
the week” on their internet site during that same week. The
case was also analyzed by Thomas L. Fowler in an article
appearing in the January 2003 issue of the Campbell Law
Observer. It has become a case that is cited on a regular basis
by attorneys across the State of North Carolina. Certainly, one
of the ruling’s greatest impact will be on small business
owners who will be forced to weigh the need to hire an attorney
for litigation as an additional cost factor when choosing
whether or not to incorporate.
The author of this article is Mr.
Gerald H. Groon, Jr. Mr. Groon is an equity partner at Smith
Debnam and practices in its Creditors’ Rights practice group.
He may be reached at (919) 250-2117 or by email at hgroon@smithdebnamlaw.com.
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MARK YOUR CALENDARS
Smith Debnam to relocate in October 2003!
This
October, Smith Debnam, a long-time resident on New Bern Avenue
in Raleigh, will be relocating to the Landmark Center at 4601
Six Forks Road. The
decision was made to move to this central and convenient
location within one-quarter mile of the I-440 Beltline in order
to provide improved facilities to better meet the needs of our
clients, attorneys and staff.
Over
the next few months, construction crews will be working
continuously to prepare the fourth floor of the Landmark Center
building to the Firm’s specifications, renovating over 30,000
square feet to provide custom designed lobby and conference room
facilities, upgraded training and employee facilities, as well
as fresh new office and work areas for its attorneys and staff. The current schedule projects our relocation to occur
beginning Friday, October 17th, allowing us to reopen
our offices for regular business on Monday, October 20th.
Excitement
and preparation for the move have already begun, as we start to
purge our non-essential clutter and detail plans for the orderly
relocation of our equipment, furniture and files.
Although the Landmark Center office space to be occupied
by the firm will not significantly increase our overall square
footage, increased efficiency gained in the layout and
utilization of space will effectively provide a significant
increase in the firm’s physical capacity for growth.
Our Director of Administration, Brian Gilman, has worked
diligently with architects and Landmark Center management during
the planning phase to take advantage of the unique architectural
aspects of this facility and to provide an attractive yet
efficient work environment in which to host our nearly 30
attorneys and 85 staff members.
While the firm will occupy nearly the entire fourth
floor, an additional 4,500 square feet of vacant space will be
available to the firm to support additional future expansion
needs.
The
Firm will be providing detailed change of address notices as our
actual relocation date nears.
While our physical address will change, we will be
retaining our primary Post Office Box address indefinitely, and
our telephone and fax numbers will remain unchanged.
Smith
Debnam greatly anticipates its upcoming presence as a new
landmark in North Raleigh.
Various events and additional information are planned to
continue to inform you of our progress and to expose you to our
new location and facilities – so stay tuned.
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Our
Commitment to Public Service
We
may be in the lazy days of summer, but you wouldn’t know it at
Smith Debnam. The Firm’s attorneys and staff are busily
engaged in many activities outside of the everyday work scope.
Smith Debnam is proud to be involved in a broad range of various
civic, charitable and community activities throughout each year.
Among those activities are the following:
Professional and Civic Leadership
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Smith
Debnam serves as the sole editor for the Douglas Forms
book, which is utilized by attorneys throughout the state
and includes forms for civil litigation, business
transactions, estate planning, family law and real estate.
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Named partner
Byron Saintsing is currently editing the update revisions to
the Construction Law Deskbook published by the North
Carolina Bar Association.
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Attorney
Connie Carrigan, a partner at Smith Debnam and a member of
its Construction Law practice group, currently serves on the
Board of Directors of the Wake County Bar Association and 10th
Judicial District.
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Attorney
Cynthia McAlister, a partner at Smith Debnam, whose practice
concentration is in Domestic Law, is serving a three-year
term on the Board of Directors of the Adolescent Pregnancy
Prevention Coalition of North Carolina.
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Firm
attorneys annually volunteer at The Healing Place, a
facility dedicated to the comprehensive detoxification and
rehabilitation of homeless individuals suffering from
alcohol and drug problems. Our attorneys provide legal
counsel for these men as they deal with current issues and
prepare to re-enter society.
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Attorney
Aaron Bailey, an associate in the Firm’s Creditors’
Rights practice, serves as co-chair of the Education
Committee of the Wake County Young Lawyers Division. He has
created a Credit Management and Consequences course,
which he presents to local area high school students.
Community
and Charitable Activities
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This past
holiday season, Smith Debnam employees raised the spirits of
20 underprivileged children when they donated bags full of
holiday packages to the Friends of Wake County Guardian Ad
Litem. The Firm’s donations went to children removed from
home environments of abuse and neglect in an effort to
preserve their health and safety.
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The Firm has been recognized by the
local Helping Hand Mission for its donations of clothes,
non-perishable goods and other food items to those in
need.
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Smith Debnam participates in the
annual United Way campaign, with staff and attorneys
having raised over $14,000 in contributions for this
organization over the past two years.
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Smith Debnam sponsors and hosts blood
drives twice a year in coordination with the Triangle
American Red Cross. The Firm’s staff, attorneys and
business partners provide the gift of life through a
substantial donation of blood each drive. (Our next
drive will be held at the firm on Tuesday, September 23,
2003.)
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This summer a
team of attorneys and staff represented Smith Debnam at the
2003 Komen NC Triangle Race for the Cure, sporting
custom-designed T-shirts that recognized our commitment to
partnering with the community in the fight against breast
cancer.
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Smith Debnam
attorneys and staff will pull together as a team this fall
to help build a family home through Habitat for Humanity of
Wake County.
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