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Single Member LLCs Must Use Counsel in PA Court of Common Pleas

Litigation is expensive. All too often, a person or company will have to abandon a claim because the cost of litigation is simply too high to justify pursuit of the claim.

In Pennsylvania, Magisterial District Justice (MDJ) courts were set up to address this problem. Often referred to as "small claims courts" or "people's courts," the MDJ courts are designed to handle civil claims of up to $12,000. A person or entity can file a claim by completing a form, attaching copies of the supporting documentation, and paying a relatively small filing fee. The MDJ court personnel will handle the matters of serving the claim upon the defendant and scheduling a hearing. Moreover, at the MDJ hearing, individuals do not have to use an attorney, and even entities (such as corporations or limited liability companies) can be represented by a qualified person who is not an attorney.

A major problem with using an MDJ court is that the losing party may quickly and inexpensively appeal to the next highest court (the Court of Common Pleas). When that occurs, a new trial takes place as if the MDJ hearing had never taken place. Moreover, the rigors of proper pleadings and rule compliance make it extremely difficult for someone other than an attorney to handle a matter which has been appealed to the Court of Common Pleas.

The PA Courts of Common Pleas have had rules requiring use of an attorney for corporations for many years. However, a narrow question remained: Would a single member LLC whose sole member properly represented the LLC at the MDJ level be forced to hire an attorney to handle the case after it had been appealed to the Court of Common Pleas? The answer is "yes." In the case of David R. Nicholson, Builder, LLC v. Jablonski (2017 PA Super 153, decided May 19, 2017), President Judge Gantman's opinion put the matter to rest: Even if an LLC has only one member, and even if that one member was qualified to handle the case at the MDJ level, the LLC must use an attoney once the case has reached the Court of Common Pleas.

---Ken Milner