Zapata v. McHugh, 296 Neb. 216

Background

John Zapata, pro se, filed suit "as an individual and as an Assignee" to recover rent and repair costs alleged to be owed to Coljo Investments, LLC (an assignor) related to leased premises.
The complaint and supporting materials alleged Coljo assigned its claims (approximately $11,100 rent and $21,973.41 repairs) to Zapata; the complaint itself is not in the record but the joint pretrial order described the assignment and issues.
The district court sua sponte questioned whether Zapata could prosecute assigned claims pro se and gave the parties time to brief the issue; the joint pretrial order identified standing, assignment validity, and jurisdiction as contested legal issues.
The district court dismissed Zapata’s action, concluding that an LLC (and similar business entities) cannot be represented by a nonlawyer and that allowing an assignee to proceed pro se would circumvent the rule requiring attorney representation for business entities; it treated the pleadings as a nullity for unauthorized practice of law.
Zapata appealed, arguing he could proceed pro se as the named individual plaintiff and assignee; the Nebraska Supreme Court reviewed the dismissal de novo.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a nonlawyer assignee may prosecute causes of action that arose from a distinct business entity (LLC) pro se	Zapata: as the assignee and named individual, he may prosecute the suit pro se under statutes allowing parties to represent themselves	Defendants: allowing Zapata to proceed would circumvent the rule that corporations/LLCs must be represented by counsel and would constitute unauthorized practice of law	Held: Assignee cannot proceed pro se; assignment does not avoid requirement that suits based on a business entity’s claims be litigated by licensed counsel
Whether the pleadings are a nullity due to unauthorized practice of law	Zapata: captioning himself as an individual and assignee permits self-representation	Defendants: filings constitute unauthorized practice because the claims derive from the LLC/assignor	Held: Filings that prosecute assigned corporate/LLC claims pro se amount to unauthorized practice and are nullities
Whether the caption (naming Zapata "individual and as Assignee") changes capacity analysis	Zapata: caption shows he is suing in his individual capacity too	Defendants: substance of pleadings controls, not caption	Held: Capacity is determined from pleadings' allegations; here Zapata’s interest is only as assignee, so caption does not permit pro se representation
Timeliness of raising unauthorized-practice issue	Zapata: challenge was untimely and court erred in allowing it	Defendants: issue can be raised whenever apparent; unauthorized practice makes filings void	Held: Because the filings were a nullity, timeliness objection fails; court properly dismissed for unauthorized practice

Key Cases Cited

Palazzo v. Gulf Oil Corp., 764 F.2d 1381 (11th Cir. 1985) (corporate claims cannot be prosecuted pro se by laypersons)
Jones v. Niagara Frontier Transp. Authority, 722 F.2d 20 (2d Cir. 1983) (venerable rule that business entities must be represented by counsel)
Bischoff v. Waldorf, 660 F. Supp. 2d 815 (E.D. Mich. 2009) (policy reasons bar nonlawyer assignees from prosecuting corporate claims)
Steinhausen v. HomeServices of Neb., 289 Neb. 927 (2015) (Nebraska Supreme Court: LLC claims require lawyer representation; abstractions cannot appear pro se)
Eli’s, Inc. v. Lemen, 256 Neb. 515 (1999) (assignee is proper party but remains subject to defenses and entity-based limitations)
Shamey v. Hickey, 433 A.2d 1111 (D.C. 1981) (dismissing suit where assignee functioned as collection agent, preventing circumvention of requirement for counsel)
Biggs v. Schwalge, 341 Ill. App. 268 (1950) (assignee/stockholder cannot use assignment as subterfuge to practice law pro se)