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ZAPATA v. McHUG

Cite as 296 Neb. 216

John Zapata, an individual and as an assi

appellant, v. Donald McHugh, an indi

et al., appellees.

___ N.W.2d ___

Filed March 31, 2017. No. S-16-511.

1. Motions to Dismiss: Pleadings: Appeal and Error. A district court’s 

grant of a motion to dismiss on the pleadings is reviewed de novo, 

accepting the allegations in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.

2. Corporations: Attorney and Client. Business entities existing separate 

from their owners are not their own proper persons who may appear in 

court without the representation of an attorney.

3. Attorney and Client. Persons not licensed to practice law in Nebraska 

are prohibited from prosecuting an action or filing papers in the courts 

of this state on behalf of another.

4. ____. Abstractions cannot appear pro se.

5. ____. A layperson’s lack of professional skills and ethical obligations 

imposes undue burdens on opposing parties and the courts.

6. ____. The rule that a layperson cannot appear in court in a representative capacity cannot be circumvented by subterfuge.

7. Corporations: Assignments: Attorney and Client. An assignment of a 

distinct business entity’s cause of action to an assignee who then brings 

such suit requires that the assignee must be represented by counsel and 

cannot bring such action pro se.

8. ____: ____: ____. To permit a distinct business entity to maintain litigation through the device of an assignment would destroy the salutary 

principle that a corporation cannot act in legal matters or maintain litigation without the benefit of an attorney.

9. ____: ____: ____. When an assignee brings suit in his or her own 

name, the assignee is still bound by the business entity’s limitation 

that any legal action arising out of its interests must be represented 

by counsel.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

06/16/2017 09:13 AM CDT
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10. Actions: Pleadings: Parties. The character in which one is a party to 

a suit, and the capacity in which a party sues, is determined from the 

allegations of the pleadings and not from the caption alone.

Appeal from the District Court for Lancaster County: Stev

D. Burns, Judge. Affirm

John Zapata, pro se.

No appearance for appellees.

Heavican, C.J., Wright, Miller-Lerman, Cassel,

and Funke, JJ

Wright, J.

NATURE OF CASE

The plaintiff, as both an individual and an assignee, filed 

an action pro se to recover for wrongs allegedly committed 

against the assignor, a limited liability corporation (LLC). 

The district court dismissed the action on the grounds that 

the plaintiff engaged in the unauthorized practice of law and 

that the pleadings, accordingly, were a nullity. The district 

court reasoned that an LLC is an entity incapable of selfrepresentation and that the policy reasons requiring representation by an attorney of such entity’s interests cannot be circumvented through the assignment of the business entity’s cause of 

action to a layperson. The plaintiff appeals.

BACKGROUND

This action was brought pro se by John Zapata. The first 

pleading in the record is a “Mandatory Disclosure” filed under 

the caption, “John Zapata, an individual and as an Assignee, 

Plaintiff, v. Donald McHugh, an individual, et. al., Defendant.” 

The complaint is not in the record, but documents attached to 

the mandatory disclosure purported to describe $11,100 in lost 

rent and $21,973.41 in repair costs owed by Lincoln Metal 

Recycling and Donald McHugh in relation to an address on 

Saunders Avenue in Lincoln, Nebraska.
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At the pretrial conference on April 21, 2016, the court asked 

the parties to submit a joint pretrial conference order identifying the factual and legal issues to be tried. The court gave the 

parties 10 days to complete the order. The court, sua sponte, 

raised the issue whether Zapata could bring an action pro se 

based upon assignments from corporations on claims those 

organizations may have. The court gave the parties time to 

brief the issue.

The parties subsequently submitted a consolidated joint 

pretrial conference order, which stated that it superseded all 

prior pleadings in the case. The order stated that the claim 

was based on the fact that McHugh Metal Brokerage, LLC, 

vacated premises leased to it by Zapata’s assignor, Coljo 

Investments, LLC (Coljo), the owner of the premises. The 

pretrial order stated that Zapata was “an individual and an 

assignee” who filed his complaint pursuant to Neb. Rev. Stat. 

§ 25-302 (Reissue 2016). Zapata alleged that he paid consideration to Coljo in order to collect the alleged debt owed by 

the defendants.

The parties presented as legal issues whether there was a 

valid assignment to Zapata, whether Zapata was a real party in 

interest and had standing to bring the action, and whether the 

court had jurisdiction over the parties and the subject matter 

of the action.

As to the underlying merits, the parties stated that the legal 

issues were whether McHugh Metal Brokerage was liable to 

Zapata or Coljo arising out of the lease agreement, the nature 

and extent of any unpaid rentals, and the measure of damages 

for the reasonable cost for repairs to Coljo’s premises.

On May 19, 2016, the district court dismissed the action. 

The court considered the defendants to have moved for dismissal in the joint pretrial conference order. The court concluded that even if the assignment of any right of action by 

Coljo to Zapata was effective, Zapata could not proceed pro 

se with the action on the assigned claims. The court explained 

that the right to represent oneself pro se, as set forth in Neb. 
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Rev. Stat. § 7-101 (Reissue 2012), does not extend to the representation of any other person or entity. The court cited to several cases setting forth the general propositions that corporate 

entities cannot be represented pro se and that this rule cannot 

be circumvented through an assignment of the corporate claims 

to a pro se plaintiff.1

The court also cited to an unpublished case in Indiana 

involving Zapata himself, who brought the action as Zapata, 

doing business as Zapata Collection Services, “‘an Individual 

and as Assignee.’”2 In that case, the appellate court affirmed 

the dismissal of Zapata’s action. The court held that there 

was no bona fide assignment, because Zapata and the corporate assignor were inextricably linked; therefore, the alleged 

assignor of the claim for damages was the real party in interest and, as a corporate entity, was required to be represented 

by counsel.3

While the district court noted that in this case, Zapata did 

not list Coljo as a party, it found that such fact was not decisive, stating: “[Zapata] may not escape the fact that what he 

is attempting to litigate is not his claim. It is the claim of 

another which has merely been assigned to him. This is true 

even if [Zapata] is the one who will receive the entirety of 

any recovery.”

As for Zapata’s claim that he had a right to proceed pro se 

under Neb. Rev. Stat. § 25-304 (Reissue 2016), the district 

court stated that while Zapata had a right to bring an assigned 

1 See, Palazzo v. Gulf Oil Corp., 764 F.2d 1381 (11th Cir. 1985); Jones v. 

Niagara Frontier Transp. Authority, 722 F.2d 20 (2d Cir. 1983); Bischoff v. 

Waldorf, 660 F. Supp. 2d 815 (E.D. Mich. 2009); In re Thomas, 387 B.R. 

808 (D. Colo. 2008); People v. Adams, 243 P.3d 256 (Colo. 2010).

2 Zapata v. Ball State University, No. 18A04-1310-CC-534, 2014 WL 

3547028 at *1 (Ind. App. July 18, 2014) (unpublished opinion listed in 

table at 16 N.E.3d 491 (2014)).

3 Id.
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action in his own name, this did not excuse the requirement 

that an attorney is required when the action derives from a 

wrong to a corporation. The court concluded that permitting 

the present action to go forward would unlawfully circumvent § 7-101. The court found the proceedings were a nullity. 

Zapata appeals.

Zapata has brought similar pro se actions in Nebraska. In 

Zapata v. QBE Ins. Co.,

4

 the Nebraska Court of Appeals, in 

an unpublished opinion, affirmed the dismissal of an action 

brought by Zapata after being assigned a corporation’s claims. 

The Court of Appeals reasoned in relevant part that although 

Zapata may have identified himself as both an individual and 

assignee, his claims were for damages to the corporation. 

Citing to Steinhausen v. HomeServices of Neb.,

5

 the Court 

of Appeals concluded that Zapata could not prosecute any 

claim on behalf of the corporation, because he was not a 

licensed attorney.

ASSIGNMENTS OF ERROR

Zapata assigns as error, summarized and restated, that the 

district court erred in dismissing his complaint as an individual 

and as an assignee.

STANDARD OF REVIEW

[1] A district court’s grant of a motion to dismiss on the 

pleadings is reviewed de novo, accepting the allegations in 

the complaint as true and drawing all reasonable inferences in 

favor of the nonmoving party.6

4 Zapata v. QBE Ins. Co., No. A-15-126, 2015 WL 9487813 (Neb. App. 

Dec. 29, 2015) (selected for posting to court website).

5 Steinhausen v. HomeServices of Neb., 289 Neb. 927, 857 N.W.2d 816 

(2015).

6 Anderson v. Wells Fargo Fin. Accept., 269 Neb. 595, 694 N.W.2d 625 

(2005).
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ANALYSIS

Layperson Cannot Repre

Zapata does not dispute the general rule that a layperson 

cannot represent a corporation or other distinct business entity 

existing legally separate from its owner—including an LLC.7

The rule that such entities may litigate only through a duly 

licensed attorney is “venerable and widespread.”8 This rule 

prohibits even presidents, major stockholders, and sole owners 

from appearing pro se in relation to causes of action involving 

the entity’s status as a business.9

[2] It is well settled that such business entities are artificial persons who cannot appear in their own behalf, but must 

appear through an agent; thus, they are not their own proper 

persons who may appear in court without the representation 

of an attorney.10 And “because self-representation by unskilled 

persons usually leads to delay, confusion and other difficulties 

in the judicial system, the state has no interest in extending 

the right of self-representation to corporations.”11

[3] Persons not licensed to practice law in Nebraska 

are prohibited from prosecuting an action or filing papers 

in the courts of this state “on behalf of another.”12 Under 

§ 7-101, no such “person” shall practice law in any action 

or proceeding “to which he is not a party.” Neb. Rev. Stat. 

§ 7-110 (Reissue 2012) expands upon the exception to the 

unauthorized practice of law for persons as a party, stating that plaintiffs shall have the liberty of prosecuting “in 

7 See Lattanzio v. COMTA, 481 F.3d 137 (2d Cir. 2007).

8 Jones v. Niagara Frontier Transp. Authority, supra note 1, 722 F.2d at 22.

9 See, Palazzo v. Gulf Oil Corp., supra note 1; Steinhausen v. HomeServices 

of Neb., supra note 5.

10 See Annot., 8 A.L.R.5th 653 (1992).

11 Id. at 653.

12 Steinhausen v. HomeServices of Neb., supra note 5, 289 Neb. at 934, 857 

N.W.2d at 825.
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their proper persons,” which we have said means, “‘in their 

own persons.’”13

[4] We have explained that an entity is an abstraction, not 

a person. “‘[A]bstractions cannot appear pro se.’”14 Distinct 

business entities must appear by counsel or not at all.15

[5] We applied this rule most recently in Steinhausen to 

affirm the dismissal of causes of action relating to an LLC’s 

status as a business, brought pro se by the sole owner of the 

LLC.16 We noted that the prohibition of the unauthorized 

practice of law protects citizens and litigants in the administration of justice from the mistakes of the ignorant on the 

one hand and the machinations of the unscrupulous on the 

other.17 A layperson’s lack of professional skills and ethical 

obligations imposes undue burdens on opposing parties and 

the courts.18

[6] We reasoned that while an LLC has the capacity to sue 

and be sued in its own name, the Legislature’s grace in conferring the significant privilege of limited liability “‘“carries 

with it obligations . . . to hire a lawyer . . . to sue or defend 

on behalf of the entity.”’”19 This, we said, is no less true for 

an LLC with a single owner.20 And we emphasized that “the 

rule that a layperson cannot appear in court in a representative 

capacity cannot be circumvented by subterfuge.”21

13 Id. at 935, 857 N.W.2d at 825.

14 Id. at 936, 857 N.W.2d at 826. See, also, Niklaus v. Abel Construction Co., 

164 Neb. 842, 83 N.W.2d 904 (1957).

15 See Ginger v. Cohn, 426 F.2d 1385 (6th Cir. 1970).

16 Steinhausen v. HomeServices of Neb., supra note 5.

17 Id.

18 Id.

19 Id. at 936, 857 N.W.2d at 826, quoting Smith v. Rustic Home Builders, 

LLC, 826 N.W.2d 357 (S.D. 2013). See, also, Niklaus v. Abel Construction 

Co., supra note 14.

20 Steinhausen v. HomeServices of Neb., supra note 5.

21 Id. at 935, 857 N.W.2d at 825.
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May Assignee of Business 

Right of Action Proce

Such Action 

We have said that the assignee of a cause of action is the 

proper and only party who can maintain the suit thereon.22 But 

whether the assignee of a corporation’s or other distinct legal 

entity’s cause of action may maintain such action pro se is an 

issue of first impression for our court.

Zapata reasons that if he is the proper party to this action, 

he must be able to proceed pro se pursuant to §§ 7-101 and 

7-110. However, the weight of authority from other jurisdictions is that an assignment does not erase the requirement that 

the suit arising from the entity’s status as a business must be 

represented by a duly licensed attorney.23

In Shamey v. Hickey,

24 the court explained that although the 

action was brought in the name of the assignee, the assignee 

had essentially assumed the role of a collection agent, and the 

corporation was thus able to avoid the need for representation 

by a member of the bar through the device of selling its claim 

to the assignee. The court stated that it could not sanction 

such a convenience and remanded the cause with directions to 

dismiss the action.25 The court explained that both collection 

agencies and individuals engage in the unauthorized practice 

22 Eli’s, Inc. v. Lemen, 256 Neb. 515, 591 N.W.2d 543 (1999).

23 See, Palazzo v. Gulf Oil Corp., supra note 1; Jones v. Niagara Frontier 

Transp. Authority, supra note 1; Bischoff v. Waldorf, supra note 1; Jones 

v. Dacosta, 930 F. Supp. 223 (D. Md. 1996); Mercu-Ray Industries, Inc. v. 

Bristol-Myers Company, 392 F. Supp. 16 (S.D.N.Y. 1974); Curtis v. U.S.,

63 Fed. Cl. 172 (2004); Shamey v. Hickey, 433 A.2d 1111 (D.C. 1981); 

Biggs v. Schwalge, 341 Ill. App. 268, 93 N.E.2d 87 (1950); Property 

Exchange & Sales v. Bozarth, 778 S.W.2d 1 (Mo. App. 1989). See, also, 

Roberts v. State, Dept. of Revenue, 162 P.3d 1214 (Alaska 2007); Heiskell 

v. Mozie, 65 App. D.C. 255, 82 F.2d 861 (1936).

24 Shamey v. Hickey, supra note 23.

25 Id.
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of law when they proceed pro se to recover on claims assigned 

by a corporation.26

Similarly, the court in Bischoff v. Waldorf27 held that an 

action brought pro se in the name of the layperson assignee, 

alleging various claims relating to wrongs allegedly committed 

against the assignor corporation, must be dismissed. The court 

pointed out the “compelling policy reasons” for the rule requiring representation of distinct business entities by attorneys.28

These included protection of the court and the public from 

irresponsible behavior of lay advocates. The court noted that 

the requirement of attorney representation in such actions also 

protected the various interests of a corporation’s managers, 

workers, investors, and creditors, which interests may not be 

aligned with the interests of the layperson assignee making the 

claim.29 In light of these important policy reasons for requiring attorney representation of claims relating to corporations, 

the court held that a nonlawyer may not circumvent those 

policy reasons through an assignment of corporate claims to 

an individual.30

In Biggs v. Schwalge,

31 the court affirmed the dismissal of 

an action brought in the name of the sole stockholder of a 

corporation and legal assignee of the corporation’s cause of 

action. The record showed that the stockholder had regularly 

appeared pro se by virtue of his status as assignee. The stockholder attempted to convince the court of his competence in 

legal representation despite the fact that he was not an admitted member of the bar. The court held that the stockholder 

was prohibited from proceeding pro se despite the exception 

26 Id.

27 Bischoff v. Waldorf, supra note 1.

28 Id. at 820.

29 Id.

30 See id.

31 Biggs v. Schwalge, supra note 23.
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to the prohibition of the practice of law by laypersons that 

allows plaintiffs and defendants to defend “in their own proper 

person.”32 The court noted that “[i]t is a compliment to the 

profession that it should have this irresistible attraction for 

some laymen . . . .”33 Nevertheless, “[a]n assignment cannot 

be used as a subterfuge to enable plaintiff to indulge his overwhelming desire to practice law, without complying with the 

requirements for admission to the bar.”34

One case reaching a different result is Traktman v. City 

of New York,

35 wherein the court held that an action by an 

assignee to recover damages for breach of contract with the 

assignor corporation did not violate a statute that prohibited 

a corporation from appearing pro se, despite the fact that the 

assignment may have been made to circumvent it. The court 

did not explain its reasoning. This case has been limited 

by subsequent case law36 and cited by other jurisdictions as 

an outlier.37

[7,8] We agree with those cases that hold an assignment 

of a distinct business entity’s cause of action to an assignee 

who then brings such suit requires that the assignee must be 

represented by counsel and cannot bring such action pro se. 

The important policy reasons supporting the rule that corporations and other related legal entities must be represented by an 

attorney should not be easily circumvented. To permit a distinct business entity to maintain litigation through the device 

32 Id. at 271, 93 N.E.2d at 88.

33 Id.

34 Id.

35 Traktman v. City of New York, 182 A.D.2d 814, 582 N.Y.S.2d 808 (1992). 

Compare Rembrandt Personnel Group Agency v. Van-Go Transport Co., 

Inc., 162 Misc. 2d 64, 617 N.Y.S.2d 258 (1994).

36 Rembrandt Personnel Group Agency v. Van-Go Transport Co., Inc., supra

note 35.

37 See, In re Parrott Broadcasting Ltd. Partnership, 492 B.R. 35 (D. Idaho 

2013); In re Thomas, supra note 1.
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of an assignment would destroy the salutary principle that a 

corporation cannot act in legal matters or maintain litigation 

without the benefit of an attorney.38

[9] An assignee stands in the shoes of the assignor and 

accepts it subject to all available defenses.39 The assignment 

transfers to an assignee only the rights of the assignor.40 When 

an assignee brings suit in his or her own name, the assignee 

is still bound by the business entity’s limitation that any 

legal action arising out of its interests must be represented 

by counsel.

Zapata as Individua

[10] We find no merit to Zapata’s argument that because 

the caption of his action is, “John Zapata, as individual and as 

an Assignee,” he was a party to the suit as an individual who 

escapes the rules set forth above and who may proceed pro se. 

We explained in Steinhausen that the character in which one 

is a party to a suit, and the capacity in which a party sues, is 

determined from the allegations of the pleadings and not from 

the caption alone.41 There is nothing in the pleadings indicating that Zapata has an interest in the litigation apart from 

those derived from his capacity as an assignee. All the allegations concern the relationship between the defendants and the 

assignor, Coljo.

Zapata Engaged in Unauth

Practice 

Zapata engaged in the practice of law in bringing this 

action, and he is a “nonlawyer,” as defined by Neb. Ct. R. 

§ 3-1002(A). By bringing the assigned claim of Coljo pro se, 

38 Property Exchange & Sales v. Bozarth, supra note 23.

39 See, Vowers & Sons, Inc. v. Strasheim, 248 Neb. 699, 538 N.W.2d 756 

(1995); Johnson v. Riecken, 185 Neb. 78, 173 N.W.2d 511 (1970).

40 Ehlers v. Perry, 242 Neb. 208, 494 N.W.2d 325 (1993).

41 Steinhausen v. HomeServices of Neb., supra note 5.
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Zapata engaged in the unauthorized practice of law. We regard 

the unauthorized practice of law as a serious offense and consider any unauthorized practice a nullity.42 The district court 

was correct in dismissing Zapata’s action.

Timeliness of M

Given that Zapata’s filings before the court were a nullity 

as a matter of law, we find no merit to Zapata’s claims that 

the issue of his unauthorized practice of law was raised in 

an untimely manner and that the district court’s decision was 

in error.

CONCLUSION

For the foregoing reasons, we affirm the judgment of the 

district court.

Affirm

Stacy, J., not participatin

42 Kelly v. Saint Francis Med. Ctr., 295 Neb. 650, 889 N.W.2d 613 (2017).