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Ask the Receiver

Posted Jul. 25, 2012 in Ask the Receiver

Should Receivers Appear Only Through Counsel To

Avoid Civil Liability?
by Peter A. Davidson
QUESTION: Should receivers appear only through counsel to avoid civil
liability?
ANSWER: In my last blog post I discussed a recent decision, In Re Shattuck,[i]
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which held that a receiver, who is not a lawyer, cannot appear in federal court
without a lawyer. The decision was based not only on 28 U.S.C. 1654 but also
on the fact that a receiver acting in a representative capacity and, not being a
lawyer, cannot represent third parties or entities. In thinking further about this
issue it dawned on me, like the boy who suddenly realized the emperor has no
clothes, what authority does a California receiver have to appear on behalf of
a receivership estate in state court? While no case directly on point was found,
a number of cases in similar proceedings are explicit that such a representative
cannot appear in court without an attorney.
In City of Downey v. Johnson,[ii] the Court held that neither a conservator nor

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executor of an estate can appear in court to defend or prosecute an action

without an attorney. In deciding the case the Court stated: We have found no
California statutory or case authority adjudicating whether a conservator or an
executor who is not a licensed lawyer may appear in his representative
capacity in propria persona in a judicial action or proceeding which is not an
integral part of the proceedings within the jurisdiction of the probate court.
The Court went on, however, after examining the law in other jurisdictions to
hold: that in the absence of statutory authorization, neither an executor,
administrator, nor a guardian may appear except through a licensed attorney
in proceedings involving matters other than his personal rights as such a
representative, e.g., accounting to a probate court. The Court agreed with the
philosophy underlying the decisions from other jurisdictions that nominal
representatives or even active fiduciaries, not themselves lawyers, should not
be permitted to conduct legal proceedings involving the rights or liabilities of
others without representation by attorneys duly qualified to practice law.
Indeed, the Court held that any pleadings filed by such non attorneys should be
stricken and indicated that to allow such pleadings or representation would
condone conduct constituting both a crime and a possible contempt of court.
Thirty five years later the Court in Hansen v. Hansen,[iii] felt compelled to
reemphasize that representatives of an estate cannot appear in court without
an attorney. Indeed, the Court of Appeal commenced its decision stating: We
publish our opinion to confirm the principal announced in City of Downey v.
Johnson that a conservator, executor or personal representation of a

decedents estate who is unlicensed to practice law cannot appear in propria

persona on behalf of the estate In the case, a personal representative filed a
complaint for breach of contract, fraud and breach of fiduciary duty. The Court
held that the trial court should have stricken the complaint. The Court not only
cited City of Downey v. Johnson, but held that since the passage of the State
Bar Act in 1927 non-attorneys may only represent their own interests in legal
proceedings. They may not represent the interest of another unless they are
active members of the State Bar. The Court further slightly criticized the City of
Downey decision where it suggested (but did not hold) that a non-lawyer
representative may appear in matters within the probate proceedings. The
Court felt this comment was dicta, as was the indication in the decision that the
executor might be able to appear without an attorney with regard to activities
personal to his or her office, such as seeking fees or filing a final report. The
Court indicated that the City of Downey court did not decide that issue and that
issue was also not before it.
While these two cases arise in the probate context, their reasoning appears
applicable to receivership proceedings. There is no statutory provision
permitting a receiver to appear in court without a lawyer.[iv] Indeed, Clark on
Receivers and other authorities point out that a receiver is not expected to be
rendering legal services or practicing law, but is instead expected to manage
the estate and hence should hire counsel for all legal matters. A receivership is
a court proceeding. Court proceedings and all matters relating thereto must be
conducted according to law, the usages and rules of equity and the rules of
procedure laid down by individual courts. It is impossible for one not trained in
the law to draw papers and to take part in a legal proceeding unless he has the
assistance of a trained lawyer. It, therefore, follows that unless the receiver is
himself an attorney he should in most cases have an attorney to assist him.
[v] Clark goes on to point out that even if a receiver is an attorney, unless he is
specifically hired to perform legal services, he should hire a lawyer to represent
him. It is generally true that when an attorney is appointed receiver, it is
expected that he will administer the estate and he is not expected to render
legal services to the estate unless he is so directed by the court. If he does
render such legal services and intends to charge for them in addition to his
services as receiver, he should have a clear understanding with the court
before he renders legal services. Clark at 115. See also, 55, Cal. Jur. 3rd,
Receivers 68 (2004) [It is not proper for the receiver to act as attorney.];
Shachatv v. Standard Auto Supply Co. 150 A. 183 (N.J. 1930) [a receiver is
not obligated to perform legal services for the benefit of the estate].
Based on the above authority, receivers should adopt the practice of employing
an attorney in all but the most rudimentary rents, issues and profits cases and
the courts should not be as reluctant, as they sometimes are, in allowing a
receiver, especially a receiver who is not an attorney, to employ counsel. To do
otherwise may subject the receiver to not only civil, but possibly criminal,
liability.
[i] 411 B.R. 378 (10th Cir. BAP 2009).
[ii] 263 Cal.App.2nd 775 (1968).
[iii] 114 Cal.App.4th 618 (2003).
[iv] Calif. Rules of Court, Rule 3.1180 states that, upon court approval, a receiver may employ an attorney.
[v] Clark on Receivers 642 (3rd Ed. 1992).

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