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Self-Representation Rights For Single-Member Company

Our dear friend Lily has gone through a horrible, ongoing legal nightmare in the last 12 years.

Lily and her S corp filed a Complaint against the borrower for them to pay the loan. The borrower then filed a cross-Complaint against Lily, asserting the business was not at good standing. After spending more than $50k on attorney fees, and with the case going nowhere, Lily decided to represent herself in court. The court denied her request to self-represent, on the grounds that she and her S corp are separate entities. Soon after, Lily's opponent was awarded a default judgment of $160K against Lily's S corp without any trial on the matter. After the entry of the default judgment, the court granted the borrower's application to add Lily to the judgment as an additional judgment debtor. The Court stated that Lily and her S corp are “the one and the same”; and that she is the alter ego of her S corp; and that her S corp's entity should be disregarded, so she is liable for its debts. Lily argued that if she and her S corp are 'the one and the same', then she should be given the opportunity to trial the matters on the merits. The Court's decision to initially deny Lily's request to self-represent on the grounds that her and her S corp are separate entities, yet later asserting that Lily and her S corp are "the one and the same", is against the principle of due consideration, and has deprived her of her constitutional right of self-representation. Lily appealed to the California Appellate court, but failed. Due to her severe depression and GAD, she was unable to further appeal to the US Supreme court.

For more details about her story, please visit her FB profile: https://www.facebook.com/lily.resentment.5/posts/210117503253128

As Lily's long term friends, we support her fight for justice and fairness. We have launched a petition to California and to the US congress to change the law - specifically, S corps (including single-member LLC) should be given the right of self-representation in court rooms, especially those whose entities were disregarded involuntarily.

Statistic shows that 3 out of 5 people in civil cases go to court without a lawyer because they either cannot afford lawyers or do not trust lawyers. Statistics also show, among 30+ million registered businesses today, more than a quarter of them are S corporations or single member LLCs. Without a change in the law that would allow fair competition in court rooms, this would not only hurt the constitutional principle of self-defense, but also cause social turbulence in the long run, as more and more citizens choose self-representation as the most economical and accessible solution to seeking legal protection.

One shining example of a change in law that has benefited our society are the new laws on tax collection for S corps. These changes have led the way in efforts to providing a more practical, fair, and transparent method for tax collection. Millions of S corp or single-member LLC owners have embraced and benefited from the tax reform. Furthermore, federal and state governments have not lost authority or suffered financial loss due to the adoption of these new tax laws. As society has changed so dramatically over the last 30 years, reform and better practices in law is needed to accommodate our society, and to promote justice and fairness for all citizens.

Our friend Lily's case is the perfect example of how things can go so wrong for a small business owner under the existing law and statutes. The court and the judges are not the ones to blame for Lily's misfortune; rather, they could not rely on applicable and fair statutes to help guide them. The California Appellant court was not willing to rule on Lily's case because there was no case-law available, and no one was willing to take the risk of opening up Pandora's box.

It is now the time to take action and change the law to support today's economic and social climate. Let's pray that the injustice and suffering Lily has experienced in the California courts would never happen again to any one of the millions of Americans who pride themselves on being small business owners.