Mitchell v. Pearl Delta Funding, LLC et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
ANDREW J MITCHELL, 	§
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Plaintiff,
v. 	3:26-cv-00125
PEARL DELTA FUNDING, LLC, et al.,
Defendants.
ORDER ADOPTING MAGISTRATE JUDGE’S
MEMORANDUM AND RECOMMENDATION
On April 23, 2026, all pretrial matters in this case were referred to United
States Magistrate Judge Andrew M. Edison under 28 U.S.C. § 636(b)(1). Dkt. 6.
Judge Edison filed a memorandum and recommendation sua sponte on April 30,
2026, recommending that the court order the conditional dismissal of this lawsuit
without prejudice unless the plaintiff appears through licensed counsel within 30
days from the date the memorandum and recommendation is adopted. Dkt. 8.
On May 12, 2026, the plaintiff filed his objections to the memorandum and
recommendation. 	Dkt. 	11. 	The 	plaintiff 	simultaneously 	filed 	a 	motion 	for
appointment of counsel and a motion to stay, requesting the same relief requested
in his objections. Dkts. 12, 13. Because these motions request the same relief
requested in the plaintiff’s objections, the court will address these two motions
alongside the plaintiff’s objections. In accordance with 28 U.S.C. § 636(b)(1)(C),
this court is required to “make a de novo determination of those portions of the
United States District Court
Southern District of Texas
ENTERED
May 28, 2026
Nathan Ochsner, Clerk
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[magistrate judge’s] report or specified proposed findings or recommendations to
which objection [has been] made.” After conducting this de novo review, the court
may 	“accept, 	reject, 	or 	modify, 	in 	whole 	or 	in 	part, 	the 	findings 	or
recommendations made by the magistrate judge.” Id.; see also Fed. R. Civ. P.
72(b)(3).
The court has carefully considered the objections; the memorandum and
recommendation; the pleadings; and the record. The court accepts Judge Edison’s
memorandum and recommendation and adopts it as the opinion of the court.
The plaintiff first 	objects that “M&R 	treats the [complaint’s attached
documents] as dispositive while overlooking the agency relationship by which
Plaintiff was the disclosed principal behind his son and signatory.” Dkt. 11 at 4.
This objection is overruled. Agency law has no application to the question of
whether the plaintiff, standing in his LLC’s shoes, may appear pro se or must be
represented by counsel. To the extent the plaintiff believes that he has claims in his
individual capacity, and not as the sole member of his LLC, the plaintiff will be
permitted to amend his complaint to make such claims clear.
In his second objection, the plaintiff argues that he “need not establish first-
party reliance to recover under RICO for wire-fraud predicates; he need only
establish direct injury to his business or property proximately caused by the
predicate acts.” Dkt. 11 at 6. In support, the plaintiff cites the Supreme Court’s
decision in Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (2008). Bridge,
like Sprint, is inapplicable here because it says nothing about whether a non-
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attorney can represent an LLC’s interests, or whether the sole member of an LLC
has RICO standing based on injuries derived from harm to his LLC. The relevant
authority is National Enterprises, Inc. v. Mellon Financial Services Corp. No. 7,
847 F.2d 251 (5th Cir. 1988), in which the Fifth Circuit rejected the notion of
derivative RICO standing. Here, as in National Enterprises, “the only sound
perspective is to view [the plaintiff]’s injury of non-payment as flowing from the
legitimate contractual relationship [his LLC] had [with the defendants].” Id. at
254; see also Grow Mich., LLC v. LT Lender, LLC, 50 F.4th 587, 596 (6th Cir.
2022) 	(observing 	that 	“derivative 	losses 	are 	not 	direct 	injuries 	for 	RICO
purposes”); 	Lunnon, 	2022 	WL 	17729999, 	at 	*7 	(upholding 	“district 	court’s
determination that [the plaintiff’s LLC] was the proper plaintiff on the RICO claim
. . . and that [the plaintiff], who is not a licensed attorney, could not represent [his
LLC] on the RICO claim”).
In his third objection, the plaintiff objects that he has standing as the real
party in interest under Sprint Communications Co. v. APCC Services, Inc., 554
U.S. 269 (2008). This objection is overruled. Sprint did not address whether a non-
lawyer may proceed pro se on behalf of a limited liability entity and has no bearing
here.
The 	plaintiff 	also 	objects 	that 	Judge 	Edison 	wrongly 	recommended
dismissal without first affording the plaintiff an opportunity to cure under Rule
17(a) and Wieburg v. GTE Southwest Inc., 272 F.3d 302 (5th Cir. 2001). This
objection is overruled. Unlike here, the court in Wieburg dismissed the action
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outright. Judge Edison recommended conditional dismissal if the plaintiff does
not appear through licensed counsel within 30 days. If the plaintiff appears
through licensed counsel, the action will not be dismissed. If the plaintiff does not
appear through licensed counsel, the action will be dismissed, but only once the 30
days have passed. Conditional dismissals are a standard means for dealing with
the substitution of the real party in interest. See, e.g., Wright v. Sears Roebuck &
Co., No. CIV.A. 09-1498, 2010 WL 6032803, at *5 (W.D. La. Oct. 19, 2010)
(holding that the remedy under Rule 17 is conditional dismissal unless the real
party in interest joins the litigation), report and recommendation adopted, No.
CIV.A. 09-1498, 2011 WL 867252 (W.D. La. Mar. 10, 2011).
In his fourth objection, the plaintiff argues that Judge Edison should have
considered appointing counsel under 28 U.S.C. § 1915(e)(1) and Naranjo v.
Thompson, 809 F.3d 793 (5th Cir. 2015). This objection is overruled. The United
States Supreme Court held more than 30 years ago that § 1915 extends only to
natural persons. See Rowland, 506 U.S. at 208. Thus, the court has no power to
appoint counsel to a corporate plaintiff—or to a non-lawyer attempting to assert a
corporate plaintiff’s claims—under § 1915.
While the Fifth Circuit has recognized a district court’s “inherent power to
appoint counsel for an insolvent corporate criminal defendant,” this court is
unaware of any authority that would support appointing counsel for a corporate
plaintiff in civil litigation. Naranjo, 809 F.3d at 802. Assuming the court has such
inherent power, the court declines to use it. If the value of this litigation is as great
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as the plaintiff believes, he should have no difficulty securing counsel on a
contingency basis. It is for this reason that the court also declines to appoint
counsel to the plaintiff in his individual capacity.
It is therefore ordered that:
(1) 	Judge 	Edison’s 	memorandum 	and 	recommendation 	(Dkt. 	8) 	is
approved and adopted in its entirety as the holding of the court;
(2) 	The plaintiff has 30 days from the date of this order to file an amended
complaint asserting claims solely in his individual capacity and not as
the sole member of his LLC or as an assignee of its claims;
(3) 	The plaintiff’s motion for appointment of counsel (Dkt. 12) is denied;
(4) 	This case is conditionally dismissed unless, within 30 days from the
entry of this order, the plaintiff appears through licensed counsel to
assert claims belonging to his LLC or files an amended complaint
asserting only individual claims against the defendants and not as his
LLC’s sole member or as an assignee of his LLC’s claims; and
(5) 	The plaintiff’s motion to stay (Dkt. 13) is granted, in that all other
deadlines in this case are stayed for the next 30 days.
SIGNED on Galveston Island this 27th day of May, 2026.
______________________________
JEFFREY VINCENT BROWN
UNITED STATES DISTRICT JUDGE
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