Reported / Citable
Background
Andrew J. Mitchell, an incarcerated former public adjuster proceeding without a lawyer, sued Allstate over settlement checks and disbursements connected to claims he adjusted. He alleged that Allstate failed to include his name on the payments and asserted state-law contract, public-adjuster, unfair-practices, and unjust-enrichment claims, along with federal claims.
Mitchell performed his adjusting work through Mitchell Adjusting International LLC (MAI), a Texas LLC of which he is the sole member. He purported to sue individually and as assignee of MAI’s receivables, but the documents attached to his complaint identified MAI as the additional payee on the disputed settlement checks.
The Court’s Holding
Magistrate Judge Andrew M. Edison recommended that the district court conditionally dismiss the action without prejudice unless Mitchell appears through licensed counsel within 30 days after adoption of the recommendation.
The recommendation concluded that MAI is the real party in interest because the claims arise from work and payment instructions involving MAI. An LLC may appear in federal court only through counsel, and Mitchell cannot evade that rule by relying on a purported assignment of MAI’s claims to himself. The parties have 14 days to object to the recommendation.
Key Takeaways
- An LLC cannot litigate in federal court through a nonlawyer member acting pro se.
- An assignment of an LLC’s claims to its sole member does not permit the member to prosecute the company’s claims without counsel.
- The recommended dismissal is without prejudice and gives Mitchell an opportunity to obtain licensed counsel.
Why It Matters
The recommendation reinforces that federal courts will look to the real party in interest, not merely the pleading’s label or an asserted assignment, when determining whether a pro se litigant is attempting to represent a business entity.
For businesses and their owners, the ruling underscores that claims belonging to an LLC require counsel in federal court, even where the owner is the company’s only member and has received an assignment of the claims.