Chapter 1 - § 1.2 PARTIES

• Jurisdiction: Colorado

§ 1.2 Parties

Determining in whose name the lawsuit will be brought,²⁹ and which persons will be sued, necessitates an analysis of who are the proper parties to the controversy. This determination is fact-intensive and case-specific. The final determination of which parties will be included in the lawsuit will be based not only on legal considerations, but also on practical considerations, such as the ability to obtain jurisdiction over a potential defendant, and a potential defendant's financial ability to pay damages.

§ 1.2.1 Capacity to Bring Suit or Be Sued

To bring a lawsuit, or to be sued, a party must have the "capacity" to sue or be sued.³⁰ Capacity to sue relates to the right to come into court or maintain an action, as opposed to "standing" to bring a case, which relates to whether a party is entitled to seek relief on a claim.³¹ What is required for capacity to sue differs between a real person and a company. For a real person to have capacity to sue, he or she must have the legal status to bring a suit. In other words, he or she must be of legal age or must have a legal representative who is of legal age.³² For a foreign³³ or domestic entity to have the capacity to bring suit, and to "maintain a proceeding in any court in this state for the collection of its debts," an entity must not be a delinquent entity.³⁴ Generally, a foreign entity doing business in the state of Colorado must be registered as a foreign entity and in good standing with the state of Colorado. However, not all foreign entities in Colorado are required to be registered as foreign entities if they fit within the parameters of C.R.S.§ 7-90-801(b). Such entities may be able to bring a lawsuit without being registered as a foreign entity with the state of Colorado. The obvious public policy consideration behind the requirement that an entity be in good standing with the state of Colorado is that if an entity is going to take advantage of Colorado's legal system, it must also be in compliance with that system. Capacity to be sued does not carry the same requirement. An entity does not have to be in good standing with the State of Colorado to be sued. Indeed, it can be delinquent or dissolved and still be sued pursuant to the limitations of C.R.S. § 7-90-913. However, a company in bankruptcy is generally protected by a stay of legal proceedings and cannot be sued while the stay is in place without leave for relief from the bankruptcy stay from the bankruptcy court.³⁵

If an entity brings suit when it is delinquent or dissolved, but is subsequently reinstated, it will be "deemed for all purposes to have continued without interruption."³⁶ The entity should bring itself into compliance before bringing suit to avoid having to fight a motion to dismiss for lack of capacity to sue while racing to get the entity reinstated before the case is dismissed.

The attorney should carefully review the status of the client entity with regard to its capacity to bring suit in the state of Colorado before initiating legal action, and ensure that the client entity has or obtains the requisite capacity.

Selecting the Parties to the Lawsuit

Information regarding the identities of entities to be included in the lawsuit will come from a variety of sources, including the client, the documents involved, and research the lawyer or client performs. Sometimes the proper corporate or business entity to be sued is difficult to determine because of a complex history of acquisitions and mergers.

Whether to sue certain individuals or business entities will depend on the legal claims and the factual bases for those claims. For example, the decision of whether to sue a corporate officer in addition to the corporation itself will depend on many factors, including whether individual liability exists or whether there is a legitimate argument that the corporate veil has been "pierced." Additionally, if a plaintiff wants to avoid having a defendant remove the case to federal court under diversity jurisdiction, and the case would otherwise be removable, the plaintiff's attorney may want to consider including a non-diverse defendant (defendant with the same state citizenship as the plaintiff), but only if that non-diverse defendant is a proper defendant in the case.

Additionally, the attorney should review the statutes and case law applicable to the causes of action included in the lawsuit in conjunction with C.R.C.P. 19 to ensure that he or she either includes all indispensable parties in the action or properly pleads the reasons for non-joinder. Generally speaking, indispensable parties are those whose interests in the litigation are such that their failure to be included in the lawsuit will prevent complete relief from being able to be adjudicated between the parties already included, or those who have an interest relating to the subject of the lawsuit and whose absence will either injure their own interests or those of the already included parties.³⁷ Failure to join an indispensable party can be raised at any stage in the case, even on appeal, and is treated as a jurisdictional defect.³⁸

§ 1.2.2 Actions By and Against Partnerships and Partners

An unincorporated association or a partnership can bring suit in its own name.³⁹ However, when naming a partnership as a defendant in a lawsuit, any individual partners sought to be held individually liable in the suit must also be individually sued for the court to acquire jurisdiction over them for purposes of enforcing a judgment against the partners individually.⁴⁰

§ 1.2.3 Minors and Persons Under Incapacity

Representing a minor or a person under incapacity requires special considerations. These sometimes conflicting considerations are discussed in Colo. RPC 1.14 and should be evaluated on an individual basis.

To the extent reasonably possible, an attorney should treat a client with a disability just as he or she would treat any other client, with the same attention and respect to which every client is entitled.⁴¹ The attorney is required to keep the client's interests in mind at all times and, except when the attorney has decided it is necessary to take protective action under Rule 1.14(b), the attorney should look to the client and not to the client's family members when making decisions on behalf of the client.⁴² In some circumstances, the attorney may need to guard against disclosure of the client's disability in order to protect the client's position in litigation.⁴³

In other circumstances, when the attorney reasonably believes that the client is not able to act in his or her own best interests or does not have the capacity to understand or to make legally binding or critical decisions, the attorney may have to seek the appointment of a guardian or "take other protective action."⁴⁴

§ 1.2.4 Unknown Parties

C.R.C.P. 9(a) and 10(a) recognize the fact that sometimes the identities of some of the parties who may be involved in the lawsuit are not known, and allow for inclusion of unknown parties in a lawsuit. Unknown parties can be sued under any name, including "John Doe"; the unknown party designation must include the words "whose true name is unknown."⁴⁵ If the action is in rem, unknown parties must be designated as "all unknown persons who claim any interest in the subject matter of this action."⁴⁶ The Colorado Rules of Civil Procedure set out various requirements for pleading the information the pleader does know regarding the identification and interest of unknown parties.⁴⁷ In practice, however, the process of suing unknown parties has many complications. For example, a lawyer may want to bring suit against unknown parties to stay the statute of limitations while investigation is ongoing as to the identity of the proper party, but this practice will likely not toll the statute of limitations in Colorado unless the relation back requirements of C.R.C.P. 15(c) for adding a party can be satisfied.⁴⁸

A lawyer should begin investigating the identities of any unknown parties as soon as the client presents facts relating to the potential claim or cause of action involving that party. In some instances, however, because the client has waited so long to consult an attorney, suing an unknown party or parties may be necessary. Suing "John Does" is more often done when there are at least some named defendants, although the identity of some parties may still be unknown. In any case, when John Does are sued, the lawyer should act with all possible diligence to ascertain the identity of the unknown parties to avoid a myriad of difficulties that arise when unknown parties remain unknown for long periods of time in a case. Some of these difficulties include fighting motions to dismiss based on statutes of limitation once the John Does have been identified, delay in meeting court- or rule-imposed deadlines because all parties have not been served, and the inability to conduct meaningful discovery or provide adequate disclosures without all parties being identified.

§ 1.2.5 Claim Preclusion and Issue Preclusion

Before bringing an action, an attorney should consider whether an action or issue within an action would be barred under claim or issue preclusion principles because of prior litigation. Claim preclusion, formerly referred to as the doctrine of res judicata, prevents relitigation of claims previously resolved by final judgment in a case involving adequate identity of subject matter, claims for relief, and parties.⁴⁹ Issue preclusion, formerly referred to as collateral estoppel, prevents relitigation of an identical issue that was adequately and necessarily adjudicated by final judgment in a prior action, provided that the party against whom preclusion is sought was a party to, or in privity with, a party to the prior action...