In Re Global Processing, Inc

Filing 12

ORDER Accepting Report and Recommendation for 11 Report and Recommendation. The appeal filed by Global Processing, Inc., is dismissed. Signed by Chief Judge Leonard T Strand on 1/30/2024. (jlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CENTRAL DIVISION
IN RE:
GLOBAL PROCESSING, INC.,
Appellant,

No. C23-3040-LTS-KEM

vs.
ORDER ON REPORT AND
RECOMMENDATION

IOWA DEPARTMENT OF
AGRICULTURE AND LAND
STEWARDSHIP, et al.,
Appellees.
I.

INTRODUCTION

This case is before me on Appellant, Global Processing, Inc. (Global)’s, appeal
(Doc. 1) from an order of the United States Bankruptcy Court for the Northern District
of Iowa. Chief United States Magistrate Judge Kelly K.E. Mahoney has filed a Report
& Recommendation (R&R) (Doc. 11) recommending that I dismiss the appeal because
Global, a corporation, has failed to retain counsel as previously directed. Doc. 9. None
of the parties have filed objections to the R&R. The period for objections in accordance
with 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2) has expired.
II.

APPLICABLE STANDARDS

A district judge reviews a magistrate judge’s R&R under the following standards:
Within fourteen days after being served with a copy, any party may serve
and file written objections to such proposed findings and recommendations
as provided by rules of court. A judge of the court shall make a de novo
determination of those portions of the report or specified proposed findings
or recommendations to which objection is made. A judge of the court may
accept, reject, or modify, in whole or in part, the findings or

recommendations made by the magistrate judge. The judge may also
receive further evidence or recommit the matter to the magistrate judge with
instructions.
28 U.S.C. § 636(b)(1); see also Fed. R. Civ. P. 72(b); N.D. IA. L.R. 72(d), 72A
(allowing the referral of dispositive matters to a magistrate judge but not articulating any
standards to review the magistrate judge’s report and recommendation). Thus, when a
party objects to any portion of an R&R, the district judge must undertake a de novo
review of that portion.
Any portions of an R&R to which no objections have been made must be reviewed
under at least a “clearly erroneous” standard. See, e.g., Grinder v. Gammon, 73 F.3d
793, 795 (8th Cir. 1996) (noting that when no objections are filed “[the district court
judge] would only have to review the findings of the magistrate judge for clear error”).
As the Supreme Court has explained, “[a] finding is ‘clearly erroneous’ when although
there is evidence to support it, the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been committed.” Anderson v. City of
Bessemer City, 470 U.S. 564, 573 (1985) (quoting United States v. U.S. Gypsum Co.,
333 U.S. 364, 395 (1948)). However, a district judge may elect to review an R&R under
a more-exacting standard even if no objections are filed:
Any party that desires plenary consideration by the Article III judge of any
issue need only ask. Moreover, while the statute does not require the judge
to review an issue de novo if no objections are filed, it does not preclude
further review by the district judge, sua sponte or at the request of a party,
under a de novo or any other standard.
Thomas v. Arn, 474 U.S. 140, 150 (1985).
III.

FACTUAL BACKGROUND

Judge Mahoney summarized the factual and procedural background as follows:
Global Processing, Inc. filed for Chapter 11 bankruptcy in October 2022,
represented by Day Rettig Martin, P.C. In July 2023, Global filed an
appeal of a bankruptcy order in this court, challenging a ruling denying its
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motion to assume and assign certain executory contracts. 23-CV-3025-LTSKEM, Doc. 1. In October 2023, the bankruptcy court granted the United
States Trustee’s motion seeking to convert from Chapter 11 to Chapter 7
bankruptcy or in the alternative, to appoint a Chapter 11 trustee, finding
that Global “has been poorly and perhaps even fraudulently managed”; that
“cause” for conversion from chapter 11 to chapter 7 bankruptcy existed
based on a “substantial or continuing loss to or diminution of the estate and
the absence of a reasonable likelihood of rehabilitation”; and that the
appointment of a Chapter 11 trustee to manage Global would best serve the
interests of creditors and the estate by maximizing payments to creditors.
Global (through its attorneys Day Rettig) filed an appeal in this court of the
order finding a Chapter 11 trustee should be appointed. No. 23-CV-3040LTS-KEM, Doc. 1.
Global moved in the bankruptcy court for a stay pending appeal of the order
appointing a Chapter 11 trustee. The bankruptcy court denied this motion.
On November 1, 2023, the bankruptcy court granted the United States
Trustee’s application to appoint Terry Gibson as the Chapter 11 trustee and
his firm Wandro & Associates as counsel.
Doc. 9 (internal citations omitted); see also In re Global Processing, Inc., No. 22-00669
(Bankr. N.D. Iowa Oct. 24, 2022).
This case concerns Global’s second appeal (No. 23-CV-3040) challenging the
appointment of the Chapter 11 trustee. Doc. 1 at 1. Following that appointment, Global’s
attorneys, Day Rettig Martin (DRM), filed a motion to withdraw as counsel. Doc. 6.
On November 21, 2023, Judge Mahoney granted DRM’s motion to withdraw, finding
that its status as attorneys for Global terminated upon the appointment of the Chapter 11
trustee. Doc. 9 at 4. In her order, Judge Mahoney noted that while it was unlikely the
Chapter 11 trustee would pursue an appeal of its own appointment, the owner of Global
“could perhaps hire an attorney with his own funds (separate from the bankruptcy estate)
to pursue the appeals.” Id.
In order to pursue the present appeal, Judge Mahoney directed Global to retain
counsel by December 8, 2023, and stated that if Global failed to do so, then its appeal
would be dismissed for lack of counsel. Id. Global did not retain counsel. The Chapter
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11 trustee entered his appearance on November 27, 2023 (Doc. 10) and does not intend
to pursue the present appeal on Global’s behalf. Doc. 11 at 1.
IV.

ANALYSIS

Because neither party objected to the R&R, I have reviewed it for clear error.
Judge Mahoney correctly determined that Global’s appeal should be dismissed for lack
of counsel following the appointment of the Chapter 11 trustee. See In re Miell, No. 0901500, 2009 WL 2253256, at *2 (Bankr. N.D. Iowa July 27, 2009) (“After a debtor’s
status as debtor-in-possession is terminated, the debtor’s attorney’s status under § 327 as
attorney for debtor-in-possession is also terminated.” (citing Lamie v. U.S. Trustee, 540
U.S. 526, 532 (2004))); Ackra Direct Mktg. Corp. v. Fingerhut Corp., 86 F.3d 852, 857
(8th Cir. 1996) (“[T]he law does not allow a corporation to proceed pro se.”); see also
Fed. R. Civ. P. 41(b); Chambers v. NASCO, Inc., 501. U.S. 32, 49 (1991) (affirming
district court’s inherent power to dismiss sua sponte for failure to prosecute); Fetman v.
Aish Hatorah of N.Y. Inc., No. 1:17-cv-01247, 2018 WL 4288630, at *2 (E.D.N.Y.
Sept. 7, 2018) (“A district court has the power to dismiss a bankruptcy appeal for failure
to prosecute sua sponte.”).
In addition to the reasons provided by Judge Mahoney, Global failed to file any
briefing in accordance with Federal Rule of Bankruptcy Procedure 8018(a). See Doc. 8
at 1 (detailing briefing schedule and deadline of December 15, 2023); Fed. R. Bankr. P.
8018(a)(4) (“If an appellant fails to file a brief on time or within an extended time
authorized by the district court. . . the district court or BAP, after notice, may dismiss
the appeal on its own motion.”). As such, and as an alternative basis for dismissal, I
find that the appeal should be dismissed for failure to prosecute. See Nora v. Internal
Revenue Service, 728 F. App’x 512, 513 (8th Cir. 2019) (per curiam) (finding district
court did not abuse its discretion by dismissing bankruptcy appeal); Lennartson v.
Cristofono, No. 21-1979, 2022 WL 245527, at *1 (8th Cir. Jan. 27, 2022) (per curiam)
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(district court did not abuse its discretion in denying extension and dismissing bankruptcy
appeal).
Based on my review of the record, I find no error – clear or otherwise – in Judge
Mahoney’s recommendation to dismiss Global’s appeal. As such, I adopt the R&R in its
entirety.
V.

CONCLUSION

For the reasons set forth herein, I hereby adopt the Report and Recommendation
(Doc. 11) without modification. The appeal (Doc. 1) filed by Global Processing, Inc.,
is hereby dismissed.

IT IS SO ORDERED.
DATED this 30th day of January, 2024.

__________________________
Leonard T. Strand, Chief Judge

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