Mitchell v. McClenny et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
ANDREW J MITCHELL, 	§
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Plaintiff,
V. 	CIVIL ACTION NO. 3:26-cv-00092
JOHN MCCLENNY, et al.,
Defendants.
ORDER ADOPTING MAGISTRATE JUDGE’S
MEMORANDUM AND RECOMMENDATION
On March 25, 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. 9.
Judge Edison filed a memorandum and recommendation sua sponte on April 30,
2026, recommending that 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. 16.
On May 9, 2026, the plaintiff filed his objections to the memorandum and
recommendation. 	Dkt. 	17. 	The 	plaintiff 	simultaneously 	filed 	a 	motion 	for
appointment of counsel and a motion to stay, requesting the same relief requested
in his objections. Dkts. 18, 19. 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),
United States District Court
Southern District of Texas
ENTERED
May 20, 2026
Nathan Ochsner, Clerk
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this court is required to “make a de novo determination of those portions of the
[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 Judge Edison misapplied certain authorities
cited in his memorandum and recommendation, and that he treated as controlling
authority the opinion issued in M2 Technology, Inc. v. M2 Software, Inc., 589 F.
App’x 671 (5th Cir. 2014). Dkt. 17 at 5. This objection is overruled.
“It has been the law for the better part of two centuries . . . that a corporation
may appear in the federal courts only through licensed counsel.” Rowland v. Cal.
Men’s Colony, Unit II Men’s Advisory Council, 506 U.S. 194, 201–02 (1993). It is
this 	centuries-old, 	binding 	precedent 	that 	underpins 	Judge 	Edison’s
memorandum and recommendation. There does not need to be binding Fifth
Circuit authority for this court to follow the uniform rule adopted by ever federal
court to confront the issue and hold that where “the lay individual chose to accept
the 	advantages 	of 	incorporation,” 	he 	“must 	now 	bear 	the 	burdens 	of 	that
incorporation; thus, he must have an attorney present the corporation’s legal
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claims.” Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 23 (2d Cir. 1983)
(quotation omitted). It is irrelevant why the plaintiff wishes to represent his
corporate entity—every non-lawyer who seeks to represent a business entity in
litigation believes he has a compelling reason for doing so. The fact remains that
limited liability entities may appear in federal court only through licensed counsel,
and assignments may not be used to defeat that rule.
The plaintiff next objects that he has standing as the real party in interest
under Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269 (2008),
the Mandatory Victims Restitution Act, and his direct individual injury as the
licensed professional whose labor underpins the claims at issue. 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.
Nor does the Mandatory Victims Restitution Act have any bearing on
whether the plaintiff may represent his limited liability entity. The plaintiff, an
incarcerated felon, refers to himself as “the federally-directed restitution-recovery
vehicle.” Dkt. 17 at 6. The court is unfamiliar with this term, which does not appear
in any case law or the Mandatory Victims Restitution Act. The plaintiff argues that
because he allegedly “holds legal title to [his LLC’s] receivable under a federally-
disclosed transfer 	that pre-existed 	this litigation 	and 	was 	made for federal
restitution-coordination purposes,” he has standing. Id. The plaintiff “points to no
authority for his proposition that when [a federal district court in an unrelated
criminal action] determines an LLC is an individual [criminal defendant’s asset]
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for [restitution] purposes, the LLC should be disregarded for all purposes,
including when determining whether an LLC’s sole member has standing to assert
a RICO claim alleging harm to the LLC or when applying federal law requiring
business entities to appear in court only through licensed counsel.” Lunnon v.
United States, No. 21-2140, 2022 WL 17729999, at *6 (10th Cir. Dec. 16, 2022).
As for the plaintiff’s contention that he has claims against the defendants in
his individual capacity—namely, as “the licensed individual public adjuster whose
personal labor generated the compensation Defendants [allegedly] withheld”—
that contention is undercut by the plaintiff’s own pleadings. Dkt. 17 at 6. The only
contracts that the plaintiff attaches to his complaint show that Mitchell Adjusting
International, LLC was the contracting party, not the plaintiff individually. See
Dkt. 1-1 at 9–10, 14–19. All invoices came from Mitchell Adjusting International,
LLC, not the plaintiff individually. See id. at 25–29. Nevertheless, if the plaintiff
believes that he has claims to assert solely as an individual and not as the sole
member of his LLC or as an assignee of its claims, the court will permit him to
amend his complaint to assert such claims.
In his third objection, the plaintiff argues that “[f]ederal RICO standing is a
creature of federal law and is not subject to state-law assignment doctrine or
contract-form analysis” because “RICO standing turns on the causal chain between
the predicate acts and the injury, not on the form of the underlying contractual
relationship.” Dkt. 17 at 7. In support, the plaintiff cites the Supreme Court’s
decision in Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (2008). Bridge,
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like Sprint, is inapplicable here because it says nothing about whether a non-
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 fourth objection, the plaintiff argues 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 outright. Judge Edison recommended conditional dismissal if the plaintiff
does not appear through licensed counsel within 30 days. If the plaintiff does
appear 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
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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 fifth 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 as the plaintiff believes, he should have no
difficulty securing counsel on a contingency basis.
It is therefore ordered that:
(1) 	Judge Edison’s memorandum and recommendation (Dkt. 	16) is
approved and adopted in its entirety as the holding of the court;
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(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
an assignee or member of his LLC;
(3) 	The plaintiff’s motion for appointment of counsel (Dkt. 18) is denied;
(4) 	This case is conditionally dismissed unless, within 30 days from the
entry of this order, the plaintiff appears through licensed counsel 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. 19) is granted, in that all other
deadlines in this case are stayed for the next 30 days.
SIGNED on Galveston Island this 19th day of May 2026.
______________________________
JEFFREY VINCENT BROWN
UNITED STATES DISTRICT JUDGE
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