Reviewing The Pauper Rule. A New In Forma Pauperis (IFP) Opinion in Texas Federal Court

Before the Court is the Application to Proceed in District Court Without Prepaying Fees or Costs of Plaintiff Alicia Ann Linwood, as trustee of Alicia Linwood Revocable Living Trust (the “Linwood Trust”), filed on October 31, 2024. (Dkt. No. 4.) Based on the relevant filings and applicable law, the Court should DENY the application and DISMISS the action.

I. BACKGROUND

This action concerns multiple claims, including breach of contract, fraud, and wrongful foreclosure, relating to a foreclosure on residential property.

(See Dkt. No. 3.)

Alicia Ann Linwood first filed claims and sought emergency relief on July 30, 2024 in Linwood v. Finance America LLC, No. 3:24-CV-1963-B-BT.

See Dkt. No. 3, Linwood, No. 3:24-CV-1963-B-BT.

Linwood sought to proceed in forma pauperis  (“IFP”) without paying the filing fees, but her motion to do so was denied after U.S. District Judge Jane J. Boyle concluded that, based on Linwood’s reported income and expenses, she failed to establish that payment of the filing fee would cause an undue financial hardship.

Dkt. Nos. 4, 8, Linwood, No. 3:24-CV-1963-B-BT.

Judge Boyle ordered Linwood to either pay the filing fee or submit a clarifying application to proceed IFP no later than September 6, 2024.

Dkt. No. 8, Linwood, No. 3:24-CV-1963-B-BT.

By October 7, 2024, Linwood had not done either of those things, and Judge Boyle dismissed the action without prejudice.

Dkt. Nos. 13, 14, Linwood, No. 3:24-CV-1963-B-BT.

Weeks later, on October 31, 2024, Linwood filed the instant action, this time in the capacity as trustee of the Linwood Trust.

(See Dkt. No. 3.)

She again sought emergency injunctive relief and applied to proceed IFP.

(See Dkt. Nos. 4, 5.)

Linwood noted that, unlike in the prior action, she completed the IFP application based on the trust’s income and liabilities, not her own personal economic circumstances.

(Dkt. No. 3 ¶ 2.)

Her motion for emergency relief has been denied.

(Dkt. Nos. 6, 13.)

On November 25, 2024, the undersigned magistrate judge entered a Notice of Deficiency and Order concerning Linwood’s attempt to represent the Linwood Trust pro se.

(Dkt. No. 12.)

The order noted Linwood’s inability to represent the trust as a non-lawyer and provided her an opportunity to proceed in this action in one of two ways.

No later than December 16, 2024, Linwood could either:

(1) pay the $405 filing fee as required by Judge Boyle’s order in the prior case and file an amended  complaint asserting claims personally,

or

(2) retain counsel to represent the trust in this action.

(Dkt. No. 12 at 2.)

The order warned that failure to do either of these things by December 16 would result in a recommendation that this case be dismissed.

(Id.)

On December 11, 2024, Linwood filed a motion by which she sought:

(1) a “stay” of the property sale,

(2) an extension of the deadline by which she must pay the filing fee,

(3) to reopen the prior action in which she proceeded as an individual,

and

(4) a trial.

(Dkt. No. 14 at 1.)

In the filing, Linwood advised that although she filed this case as trustee for the trust, “she now seeks to proceed pro se as an individual[.]”

(Id. at 3.)

The undersigned denied Linwood’s motion to stay and to reopen the prior action but granted Linwood’s request for an extension to pay the filing fee and allowed her to file an amended complaint asserting claims on her behalf rather than as trustee.

(Dkt. No. 15.)

Linwood was given until January 6, 2025, to do so and was again warned that failure to do so may result in a recommendation that this action be dismissed.

(Id. at 2.)

Linwood did not comply with that order, and, on January 7, 2025, the undersigned provided her “a final opportunity” to comply by January 21, 2025, by either

(1) having counsel appear on behalf of the trust,

or

(2) filing an amended complaint asserting claims on her behalf and paying the filing fee or submitting an application to proceed IFP.

(Dkt. No. 16.)

Rather than take a course of action provided, on January 21, 2025, Linwood instead filed a motion seeking  reconsideration of the Court’s ruling that she, as a non-lawyer, could not represent the trust pro se.

(Dkt. Nos. 17, 18.)

Linwood has not paid the filing fee or filed an amended complaint in this action.

Nor has she retained counsel to represent the trust.

In the operative complaint, Linwood purports to represent the trust pro se.

II. LEGAL STANDARDS AND ANALYSIS

In the federal courts of the United States, “parties may plead and conduct their own cases personally or by counsel.”

28 U.S.C. § 1654.

Although individuals have the right to represent themselves or proceed pro se under this statute,

“individuals who do not have a law license may not represent other parties in federal court even on a next friend basis.”

Weber v. Garza, 570 F.2d 511, 514 (5th Cir. 1978);

see also

Guajardo v. Luna, 432 F.2d 1324 (5th Cir. 1970)

(holding that only licensed lawyers may represent others in federal court).

It is well-established that corporations are fictional legal persons who can only be represented by licensed counsel.

Rowland v. California Men’s Colony, 506 U.S. 194, 201-02 (1993);

Memon v. Allied Domecq QSR, 385 F.3d 871, 873 (5th Cir. 2004)

(citing Rowland and Donovan v. Rd. Rangers Country Junction, Inc., 736 F.2d 1004, 1005 (5th Cir. 1984)).

When a corporation declines to hire counsel to represent it, the court may dismiss its claims if it is a plaintiff or strike its defenses if it is a defendant.

See Donovan, 736 F.2d at 1005.

“The rationale for prohibiting pro se corporate representation also extends to trusts.”

United States v. Dolenz, 3:09-CV-13110-O, 2010 WL 428910 (N.D. Tex. Feb.  2, 2010)

(citing Retired Persons Fin. Servs. Clients Restitution Tr. v. U.S. Att’y for N. Dist. of Texas, No. 3:03-CV-2658-D, 2004 WL 937170, at *1 (N.D. Tex. Apr. 29, 2004) (collecting cases));

see also Wethy v. Barrett, Daffin, Frappier, Turner & Engle LLP, No. 3:13-CV-2547-N BH, 2013 WL 4436179 (N.D. Tex. Aug. 19, 2013);

Dillard Fam. Tr. v. Chase Home Fin., LLC, 3:11-CV-1740-L, 2011 WL 6747416, *5 (N.D. Tex. Dec. 23, 2011)

(“[A] non-attorney trustee may not represent a trust pro se.”).

In this action, Linwood, a non-lawyer, seeks to represent the Linwood Trust.

(See Dkt. No. 3.)

Her inability to represent the trust “pro se” has been brought to her attention, and she has been ordered to retain counsel to represent the trust in this action.

(Dkt. No. 12.)

She has had almost two months in which to cure this defect but has not done so.

The undersigned has provided, alternatively, an opportunity for Linwood to proceed with any claims she might have personally, but she has declined to amend her complaint to proceed individually. Instead, Linwood’s most recent filing seeks again only to proceed pro se as trustee of the Linwood Trust.

Linwood’s motion for reconsideration of the ruling disallowing her from representing the trust pro se is not well founded.

Federal statute provides that “[i]n all courts of the United States the parties pay plead and conduct their own cases personally or by counsel as, by the rules of such courts, are permitted to manage and conduct causes therein.”

28 U.S.C. § 1654.

Courts generally have understood this statute to mean that “artificial entities” cannot appear in federal court except through a lawyer.

See Rowland, 506 U.S. at 202-03; see also Retired Persons Financial Services Clients Restitution Trust, 2004 WL 937170, at *1.

Linwood cites state law to support  her contention that she has a right to represent the trust in this action.

(See Dkt. No. 17 at 2-4 (citing Tex. Prop. Code §§ 113.018, 113.051, 115.001).)

These provisions concern a trustee’s management and administration of a trust or a state court’s authority concerning trusts, but they do not authorize a non-lawyer trustee to appear in federal court pro se on behalf of a trust.

See Swenson v. United States, No. 2:12-CV-2058-JAM-CMK, 2013 WL 147814, at *3 (E.D. Cal. Jan. 14, 2013)

(rejecting similar assertions made under California law, noting that “[r]epresenting the interests of the trust is not equivalent [to] representing a trust in a legal action, which requires a licensed attorney”).

If Linwood is arguing that her interests and the trust’s interests are aligned to the point that she, as trustee, is merely representing her own personal interests, the undersigned has given her an opportunity to present her claims by filing an amended complaint and either paying the filing fee consistent with Judge Boyle’s order in the prior action or submitting an updated IFP motion based on her personal finances.

She has not done so.

And to the extent Linwood seeks to have the Court allow the trust to proceed IFP, such request should be denied because “only a natural person may qualify for treatment in forma pauperis under [28 U.S.C.] § 1915.”

Rowland, 506 U.S. at 196.

Linwood was warned almost two months ago that she is not permitted to represent the trust pro se.

See United States v. Slay, No. 1:11-CV-263, 2013 WL 1312559, at *10 (E.D. Tex. Feb. 27, 2013)

(recognizing that dismissal for failure to retain counsel to represent a legal entity requires warning and time to comply).

In  the time since, the undersigned has given her opportunities to proceed either by retaining counsel to represent the trust in this action or by asserting her claims and paying the filings fees or proving her eligibility to proceed IFP.

She has instead insisted on proceeding pro se on behalf of the trust and continues to seek IFP status based on the trust’s lack of income and expenses.

Because Linwood has not availed herself of either of the viable options despite multiple opportunities to do, it is unlikely that additional extension of the deadline would result in compliance with court orders.

Fed. R. Civ. P. 41(b) “authorizes the district court to dismiss an action sua sponte for failure to prosecute or comply with a court order.”

Griggs v. S.G.E. Mgmt., L.L.C., 905 F.3d 835, 844 (5th Cir. 2018)

(citing McCullough v. Lynaugh, 835 F.2d 1126, 1127 (5th Cir. 1988)).

This authority “flows from the court’s inherent power to control its docket and prevent undue delays in the disposition of pending cases.”

Quiroz v. NFN Radas, No. 3:24-CV-2324-K-BN, 2024 WL 5171618, at *1 (N.D. Tex. Dec. 4, 2024)

(quoting Boudwin v. Graystone Ins. Co., 756 F.2d 399, 401 (5th Cir. 1985)),  accepted 2024 WL 5173320 (N.D. Tex. Dec. 19, 2024).

“And the Court’s authority under Rule 41(b) is not diluted by a party proceeding pro se, as ‘[t]he right of self-representation does not exempt a party from compliance with relevant rules of procedural and substantive law.’”

Id. at *2

(quoting Wright v. LBA Hosp., 754 Fed.Appx. 298, 300 (5th Cir. 2019)).

Dismissal under Rule 41(b) may be with or without prejudice.

See Fed.R.Civ.P. 41(b); see also Long v. Simmons, 77 F.3d 878, 880 (5th Cir. 1996).

“Although  lesser sanctions such as fines or dismissal without prejudice are usually appropriate before dismissing with prejudice . . . a Rule 41(b) dismissal is appropriate where there is a clear record of delay or contumacious conduct by the plaintiff and when lesser sanctions would not serve the best interests of justice.”

Nottingham v. Warden, Bill Clements Unit, 837 F.3d 438, 441 (5th Cir. 2016) (internal quotation marks and brackets omitted).

A party’s “stubborn resistance to authority” may justify dismissal with prejudice.

See McNeal v. Papasan, 842 F.2d 787, 792 (5th Cir. 1988).

Here, Linwood’s persistent failure to prosecute claims in compliance with court orders has been willful, but the undersigned concludes that it does not manifest a degree of contumaciousness warranting the complete dismissal of all claims with prejudice.

Linwood first filed claims in Case No. 3:24-CV-1963-B-BT but, once Judge Boyle denied her IFP motion and ordered her to pay the filing fee or submit a clarifying IFP motion, Linwood instead abandoned that lawsuit and allowed it to be dismissed without prejudice.

Less than a month later, she refiled the claims in this lawsuit, seeking to avoid payment of the filing fee by suing as trustee on behalf of the Linwood Trust and requesting IFP status based on the trust’s income and expenses (of which there are none).

After the undersigned pointed out that this is not a viable pathway for Linwood to pursue claims pro se, she has declined to file an amended complaint and pay the filing fee or submit an IFP motion based on her financial condition and has instead resubmitted an application to proceed IFP based on the trust’s financial circumstances.

(See Dkt. No. 17-3 (unsigned IFP application).)

By failing to avail herself of the available pathways to prosecute her claims, Linwood  has exhibited a level of disregard for court orders or manifested a disinterest in earnestly pursuing the claims she filed.

For this reason, and to preclude Linwood from seeking to relitigate the issues decided in this action by simply filing a third lawsuit based on these claims, the undersigned recommends that this action be DISMISSED with prejudice as to Linwood’s ability to proceed IFP and without prejudice in other respects.

III. RECOMMENDATION

The Court should DENY Plaintiff’s Application to Proceed in District Court Without Prepaying Fees or Costs, received on October 31, 2024 (Dkt. No. 4.), and DISMISS his action with prejudice with respect Linwood’s ability to proceed in forma pauperis under 28 U.S.C. § 1915 and otherwise without prejudice.

SO RECOMMENDED

INSTRUCTIONS FOR SERVICE AND NOTICE OF RIGHT TO APPEAL/OBJECT

A copy of this report and recommendation will be served on all parties in the manner provided by law.

Any party who objects to any part of this report and recommendation must file specific written objections within 14 days after being served with a copy.

See 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b).

To be specific, an objection must identify the finding or recommendation to which objection is made, state the basis for the objection, and indicate the place in the magistrate judge’s report and recommendation where the disputed determination is found. An objection that merely incorporates by reference or refers to the briefing before the magistrate judge is not specific.

Failure to file specific written objections will bar the aggrieved party from appealing the factual findings and legal conclusions of the magistrate judge that are accepted or adopted by the district court, except upon grounds of plain error.

See Douglass v. United Services Automobile Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996), modified by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending the time to file objections to 14 days).