United States District Court, W.D. Texas, San Antonio Division
CAMPANILE INVESTMENTS LLC, JOAQUIN JUAN BOSCO GARZA MUGUERZA, Plaintiffs,
WESTMORELAND EQUITY FUND LLC, ED RYAN, AMERICAN ESCROW AND SETTLEMENT SERVICES, BERNARD FELDMAN, ELIAS CORREA MENENDEZ, ALAN FELDMAN, LYDECKER, LEE, BERGA & DE ZAYAS, LLC, Defendants.
ELIZABETH S. ("BETSY") CHESTNEY UNITED STATES
the Court is the above-styled cause of action. On April 24,
2019, the Court held a hearing, at which Plaintiffs and
Defendants Ed Ryan a/k/a Sandy Hutchens and Bernard Feldman
appeared through counsel. At the hearing, the Court heard
argument on the following pending motions: Defendant Sandy
Hutchens Motion to Compel Answers to Interrogatories and for
Protective Order [#97], Defendant Sandy Hutchens Motion to
Compel Arbitration and Dismiss or to Stay [#98],
Plaintiffs' Opposed Motion for Leave to File their Third
Amended Complaint [#99], Plaintiffs' Motion to Compel
Defendant Ed Ryan a/k/a Sandy Hutchens' Answers to
Plaintiffs' Interrogatories and Requests for Production
[#105], and Defendant Westmoreland Equity Fund LLC Motion to
Set Aside Default Judgment [#107].
close of the hearing, the Court indicated it would take the
motion to compel arbitration under advisement and allow the
parties seven days to file supplemental briefing. The Court
also issued certain oral rulings on the parties'
discovery disputes and Plaintiffs' request for leave to
file a Third Amended Complaint, which the Court now
memorializes with this written Order. Finally, the Court will
deny Hutchens's motion to set aside the Clerk's entry
of default against Defendant Westmoreland Equity Fund LLC
Court will grant Plaintiffs' motion to compel
Hutchens's answers to Plaintiffs' interrogatories and
requests for production, as Hutchens acknowledged at the
hearing that he has not responded to any of Plaintiffs'
discovery requests. Hutchens will have 14 days to respond to
Plaintiffs' interrogatories and requests for production
but may have 30 days to actually produce the relevant
responsive documents. Despite the untimeliness of
Hutchens's responses, the Court will not deem any
objections waived at this time in light of Mr. Hutchens's
pro se status. However, Mr. Hutchens is warned that
failure to comply with the deadlines in this Order could
result in deeming his objections waived.
Court will dismiss Hutchens's motion to compel
Plaintiffs' answers to interrogatories without prejudice
to refiling a motion to compel specifically identifying a
basis for challenging the objections raised by Plaintiffs.
The parties shall confer within the next 14 days on any
objections at issue, and Hutchens has 21 days to file any
renewed motion to compel.
Court will grant Plaintiffs' motion for leave to file an
amended complaint under the liberal standard for amending
pleadings set forth in Rule 15(a) of the Federal Rules of
Civil Procedure because Defendants failed to establish any
undue delay or bad faith on the part of Plaintiffs or any
undue prejudice the amendment would cause Defendants. See
United States ex rel. Steury v. Cardinal Health, Inc.,
625 F.3d 262, 270 (5th Cir. 2010).
Court will deny Hutchens's motion to set aside the
default judgment against Westmoreland. Hutchens asks the
Court to set aside the Clerk's entry of default against
Westmoreland and permit him to file an answer on
Westmoreland's behalf, alleging that Westmoreland was
never informed of service of Plaintiffs' complaint in
of whether Westmoreland was properly served, Westmoreland is
a single-member limited liability corporation
(“LLC”), which cannot represent itself without
licensed counsel in federal court. See Yanmar Am. Corp.
v. Vina Tractor Co., No. 3:12-CV-2479-M, 2013 WL
12123943, at *1 (N.D. Tex. Mar. 20, 2013) (denying motion to
set aside default judgment because “LLCs may not
represent themselves in federal court”); see also
Memon v. Allied Domecq QSR, 385 F.3d 871, 873 (5th Cir.
2004) (“Although 28 U.S.C. § 1654 authorizes
individuals to appear in federal courts pro se, the statute
is silent regarding corporations. The lack of authorization
in § 1654 has been interpreted as barring corporations
from appearing in federal court without an attorney.”);
Lattanzio v. COMTA, 481 F.3d 137, 140 (2d Cir. 2007)
(“Because both a partnership and a corporation must
appear through licensed counsel, and because a limited
liability company is a hybrid of the partnership and
corporate forms, . . . a limited liability company also may
appear in federal court only through a licensed
attorney.”) (internal citations omitted).
Court is not persuaded by Hutchens's argument that a
single-member LLC should be treated like a sole
proprietorship with respect to federal rules on pro
se representation. See M3Girl Designs LLC v. Purple
Mountain Sweaters, No. 3:09-CV-2334-G, 2010 WL 304243,
at *2 (N.D. Tex. Jan. 22, 2010) (sole proprietorship need not
be represented by an attorney because it “has a legal
existence only in the identity of the sole
proprietor”). Hutchens directs the Court to an IRS
informational bulletin explaining that, for income tax
purposes, the IRS treats a single-member LLC as a
“disregarded entity” with no existence separate
from its owner such that it can be included as part of its
owner's tax return. (Reply [#111] at 8.) Hutchens has
provided the Court with no authority, nor has the Court
identified one, that holds this IRS designation translates to
an ability to disregard an LLC's corporate entity for
purposes of self representation in federal court. See
Nest Int'l, Inc. v. Balzamo, No. CIV.A. 12-2087 JBS,
2012 WL 1584609, at *1 (D.N.J. May 3, 2012) (“Defendant
Balzamo cannot represent Defendant Zamo; even LLCs with a
single member must be represented by counsel because they
have a legal identity separate from their members.”).
This denial will be without prejudice to Westmoreland
retaining licensed counsel to represent it in this action.
IS THEREFORE ORDERED that Defendant Sandy Hutchens
Motion to Compel Answers to Interrogatories and for
Protective Order [#97] is DISMISSED WITHOUT
PREJDUICE. The parties are ordered to confer on the
issues raised in Defendant's motion, and Hutchens may
file a renewed motion to compel identifying the specific
bases for challenging Plaintiffs' objections on or before
May 16, 2019.
IS FURTHER ORDERED that Plaintiffs' Opposed
Motion for Leave to File their Third Amended Complaint [#99]
is GRANTED. The Clerk is directed to file
Plaintiffs' Third Amended Complaint [#99-1].
IS FURTHER ORDERED that Plaintiffs' Motion to
Compel Defendant Ed Ryan a/k/a Sandy Hutchens' Answers to
Plaintiffs' Interrogatories and Requests for Production
[#105] is GRANTED. Hutchens is ordered to
respond to Plaintiffs' discovery requests on or before
May 9, 2019 and produce all requested
documents on or before May 27, 2019.
IS FURTHER ORDERED that Defendant Westmoreland
Equity Fund LLC Motion to Set Aside Default Judgment [#107]
is DENIED WITHOUT PREJUDICE to Westmoreland
finding licensed counsel to represent it in this action.
IS FINALLY ORDERED that the parties provide the
Court with any supplemental briefing in support of or in
response to Defendant Sandy Hutchens's Motion to ...