Summary:
Church, who is married to the debtor, Nabors, ex-wife, owns Private Ridge Wealth Management, LLC (“PRWM”). Nabors filed a complaint with the Better Business Bureau, making allegations against PRWM, which Church alleged cost PRWM $6,000 in revenue. Church then in his individual capacity, brought suit against Nabors for making a false claim and obtained a default judgment holding that Nabors had caused malicious injury to PRWM. After Nabors filed bankruptcy, Church, acting without an attorney, brought an adversary proceeding seeking to have Nabors’ obligation to Church declared non-dischargeable pursuant to 11 U.S.C. § 523(a)(6). Nabors moved to dismiss the complaint arguing that Church lacked standing to bring the suit individually, rather than in the name of PRWM. After providing Church with 30 days to obtain counsel and/or brief the issue of standing, Church declined to obtain legal representation but did brief the issue himself (twice), arguing that he had standing to bring the adversary proceeding either because the original law suit was commenced in his name or, alternatively, because he owns 99% of PRWM.
The bankruptcy court found that to satisfy the requirement of standing, a plaintiff must demonstrate:
(1) it has suffered an "injury in fact" that is:
(a) concrete and particularized; and
(b) actual or imminent, not conjectural or hypothetical;
(2) the injury is fairly traceable to the challenged action of the defendant; and
(3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
Further, to have standing for a § 523(a)(6) claim, the plaintiff must show that he suffered the injury from the debtor’s “willful and malicious” actions. The bankruptcy court held that, even though the original law suit named Church as the plaintiff, the Better Business Bureau complaint was against PRWM and the state court judge found that the damage had been done to PRWM, not Church. PRWM and Church are separate legal entities and Church could not stand in PRWM’s shoes, even if he owned a 99% interest. Accordingly, the complaint was dismissed.
Commentary:
Fool for a client and all.
It is not clear how Church, in asserting that he was acting on behalf of PRWM, a corporate entity, was not committing the unauthorized practice of law. An individual may represent himself, but a corporation cannot be represented by a non-lawyer, except in limited circumstances, such as at a §341 Meeting of Creditors or small claims court. It is not clear if lawyers reading this, or I myself, have an obligation to report this representation by Church to the North Carolina State Bar.
For a copy of the opinion, please see:
Church v. Nabors - Standing of Owner of Corporation to Bring § 523(a)(6) Claim on Individually rather than by the Corporation
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