Do corporations need to be represented by counsel in small claims courts?
Usually, parties to a legal dispute have the option of hiring an attorney to represent them in a court case, but if the party involved is a corporation, an attorney’s representation of the corporation is required per Ind. Code 34-9-1-1(c). A recent Indiana Court of Appeals decision explained this long-standing rule, but also noted that there are certain exceptions in this statutory requirement and in small claims court the rules allow some business entities and corporations to represent themselves in certain circumstances.
In People for Community, Inc. v. City of Fort Wayne Neighborhood Code Compliance, 198 N.E.3d 19 (Ind. Ct. App. 2022), the underlying case involved a non-profit corporation whose plans to renovate a building for its use were stalled because of the COVID-19 pandemic. The building fell beyond disrepair and into being a hazard, structurally and as a breeding ground for vermin. The City of Fort Wayne condemned the building and ordered it demolished. The non-profit corporation lost its challenge of the demolition order in administrative proceedings with the organization’s president, Rev. Fincher, representing it.
The non-profit then sought judicial review at the trial court, again with Rev. Fincher representing it. As the case moved along, Rev. Fincher was told repeatedly by the trial court that the small claims court exceptions for non-profit corporations do not apply outside of that jurisdiction and he needed to obtain an attorney for People for the Community, Inc. Although he was given several chances by the trial court, Fincher was in no hurry to comply. At one point, he did try to convince the trial court he had hired an attorney, going so far as to name a local attorney. That turned out not to be true. Not a good look for Rev. Fincher. After giving the non-profit multiple warnings, and ample time for securing counsel, the trial court eventually granted a motion to dismiss by Fort Wayne, which was based on Rev. Fincher’s lack of authority to represent the non-profit corporation.
Challenging the dismissal on appeal, People for Community Inc. was finally represented by counsel, but it was too late. The appellate court affirmed the lower court dismissal and reasoned that the trial court provided plenty of warnings and chances for People for the Community to understand that this was not small claims jurisdiction, the exceptions permitting representation without counsel did not apply, and therefore, counsel for the non-profit corporation was required.
In Indiana, legal claims involving an amount in controversy up to $10,000 can be brought in small claims court. The small claims rules Ind. S.C. Rule 8(C)(2) and 8(C)(3) specify who must represent certain type of business entities in small claims court. With claims under $6,000 a sole proprietorship or general partnerships may be represented by the sole proprietor, partner, owner, counsel or by a designated full-time employee. For amounts over $6,000 (up to the threshold jurisdictional limit of $10,000), the rules state the sole proprietorship or general partnerships must be represented by counsel or the sole proprietor, partner or owner, themself.
All other corporate entities also have some flexibility in small claims up to $6,000 where the entity may be represented by counsel, owner, or a designated full-time employee of the corporate entity. But even in small claims court, for controversies with an amount exceeding $6,000, corporations, LLCs, and LLPs must be defended or represented by counsel.
The author thanks Summer Legal Clerk Rama Sobhani for his helpful research and drafting assistance.