Carruth et al v. Communities Foundation of Texas Inc et al

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
EMILY ELIZABETHANN
CARRUTH,
et al.,
§
§
§
Plaintiff, §
§
v. § No. 3:26-cv-0741-K (BT)
§
COMMUNITIES FOUNDATION OF
TEXAS, INC., et al.,
§
§
Defendants. §
FINDINGS, CONCLUSIONS, AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
Pro se plaintiffs Emily Elizabethann Carruth and Christopher Warren
Russell filed a complaint related to Carruth’s alleged status as a “federally verified
fiduciary” for the W.W. Caruth Jr. Foundation, a public charity. See Complaint at
6 (ECF No. 8). Plaintiffs appear to allege that Carruth is a fiduciary for the
Foundation because the IRS sent her a letter that disclosed the Foundation’s
employer identification number. Id. at 6, 9. Plaintiffs claim that Bank of America
is obstructing Carruth’s “federal fiduciary authority” to conduct a “required federal
audit.” Id. at 6. Plaintiffs allege that Communities Foundation of Texas (CFT)—a
Texas-based public charity—and the Holland & Knight law firm retaliated against
them after they reported financial irregularities and self-dealing to federal
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authorities. Id. Plaintiffs contend that all Defendants violated their constitutional
rights by blocking their access to “legitimate fiduciary and personal resources.”1 Id.
For the following reasons, however, Plaintiffs fail to establish subject matter
jurisdiction over their claims. The District Judge should sua sponte dismiss this
case without prejudice.
Legal Standards
The court “is duty-bound to examine its subject-matter jurisdiction sua
sponte.” Burciaga v. Deutsche Bank Nat’l Tr. Co., 871 F.3d 380, 384 n.4 (5th Cir.
2017).
Federal courts are courts of limited jurisdiction; “[t]hey possess only that
power authorized by Constitution and statute, which is not to be expanded by
judicial decree.” Kokkonen v. Guardian Life Ins. of Am., 511 U.S. 375, 377 (1994)
(citations omitted). Unless otherwise provided by statute, federal subject matter
jurisdiction requires: 1) an action “arising under the Constitution, laws, or treaties
of the United States,” see 28 U.S.C. § 1331; or 2) complete diversity of citizenship
between adverse parties combined with an amount in controversy exceeding
$75,000, see 28 U.S.C. § 1332.
Regarding federal question jurisdiction, the most common cases “arising
under” federal law “are those in which federal law creates the cause of action.”
1 Plaintiffs also filed two motions for preliminary injunctive relief, both of which
were denied. Ord. Denying TRO (ECF No. 5); Ord. Denying Supp. TRO (ECF No.
16).
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Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 808 (1986). In rare
situations, a case may arise under federal law “where the vindication of a right
under state law necessarily turn[s] on some construction of federal law.” Franchise
Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. California, 463 U.S.
1, 9 (1983).
But even if there is a claim under the Constitution or federal statutes, the
Supreme Court has stated that such suits should be dismissed for want of
jurisdiction where the alleged claim “is wholly insubstantial or frivolous.” Bell v.
Hood, 327 U.S. 678, 682-83 (1946). The Fifth Circuit has found a claim is “wholly
insubstantial and frivolous” under Bell when that “claim has no plausible
foundation.” Carmichael v. United Techs. Corp., 835 F.2d 109, 114 (5th Cir. 1988)
(quoting Williamson v. Tucker, 645 F.2d 404, 416 (5th Cir. 1981)). “Moreover, a
court may sua sponte dismiss a complaint for lack of subject matter jurisdiction
when the complaint is ‘patently insubstantial, presenting no federal question
suitable for decision.’” Isom v. United States Dep’t of Homeland Sec., 2021 WL
2232052, at *1-2 (E.D. Tex. Apr. 28, 2021), rec. accepted 2021 WL 2224345 (E.D.
Tex. June 2, 2021) (internal quotation marks omitted) (quoting Vasaturo v.
Peterka, 203 F. Supp. 3d 42, 44 (D.D.C. 2016) (quoting, in turn, Best v. Kelly, 39
F.3d 328, 330 (D.C. Cir. 1994)). This includes “bizarre conspiracy theories” and
“complaints resting on truly fanciful allegations.” Vasaturo, 203 F. Supp. 3d at 44.
In cases invoking diversity jurisdiction, each plaintiff’s citizenship must be
diverse from each defendant’s citizenship, and the amount in controversy must
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exceed $75,000. See 28 U.S.C. § 1332(a), (b). “The basis for diversity jurisdiction
must be ‘distinctly and affirmatively alleged.’” Dos Santos v. Belmere Ltd. P’ship,
516 F. App’x 401, 403 (5th Cir. 2013) (per curiam). “‘The failure to adequately
allege the basis for diversity jurisdiction mandates dismissal.’” Id. (quoting
Stafford v. Mobil Oil Corp., 945 F.2d 803, 805 (5th Cir. 1991)).
While pleadings by pro se plaintiffs are construed liberally, see, e.g., Perez
v. United States, 312 F.3d 191, 194–95 (5th Cir. 2002); Mass v. McDonald’s Corp.,
2004 WL 2624255, at *2 (N.D. Tex. Nov. 12, 2004), the court “must presume that
a suit lies outside [its] limited jurisdiction, and the burden of establishing federal
jurisdiction rests on the party seeking the federal forum.” Howery v. Allstate Ins.,
243 F.3d 912, 916 (5th Cir. 2001) (citations omitted). And “even though a
particular statute or rule need not necessarily be cited by name[,]” the party
asserting jurisdiction must allege the jurisdictional basis “affirmatively and
distinctly”; jurisdiction cannot be “established argumentatively or by mere
inference.” Ill. Cent. Gulf R.R. Co. v. Pargas, Inc., 706 F.2d 633, 636 (5th Cir. 1983)
(citations omitted). “[C]ourts are not obligated to search out the identity of a
party’s vaguely-pleaded claims.” Mass, 2004 WL 2624255, at *2. Ultimately, “[t]he
plaintiff is the master of his own pleadings, and even a pro se litigant has the right
to plead himself out of court, just as an attorney may do.” Estrada v. Dominguez,
2001 WL 506982, at *2 (N.D. Tex. May 14, 2001).
Federal courts do not have to—and in fact, should not—wait for a Rule
12(b)(1) motion to determine whether subject matter jurisdiction exists. On the
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contrary, “[i]f the court determines at any time that it lacks subject matter
jurisdiction, the court must dismiss the action.” Fed. R. Civ. P. 12(h)(3). The court
“is duty-bound to examine its subject-matter jurisdiction sua sponte.” Burciaga,
871 F.3d at 384 n.4; see also Ins. of Ir., Ltd. v. Compagnie des Bauxites de Guinee,
456 U.S. 694, 702 (1982) (explaining that while under Rule 12(h) defenses for lack
of personal jurisdiction are waived if untimely, even an appellate court may review
subject matter jurisdiction sua sponte).
Analysis
Plaintiffs claim that “[t]his action arises under the laws of the United States
and the U.S. Constitution.” Compl. at 8. But even construing Plaintiffs’ pleadings
liberally, they fail to establish federal question jurisdiction. Plaintiffs list three
causes of action: (1) “obstruction of federal fiduciary authority,” (2) “retaliatory
state-action and whistleblower interference,” and (3) civil rights violations. Compl.
at 6. None of these causes of action establish federal question jurisdiction on the
facts provided.
As for the first claim, “obstruction of federal fiduciary authority,” Plaintiffs
fail to allege that any federal statute or other law created the fiduciary authority
that Bank of America allegedly obstructed. Indeed, Plaintiffs left blank a portion of
the Complaint requiring them to “[l]ist the federal statutes, federal treaties, and/or
provisions of the United States Constitution that are at issue in this case.” Compl.
at 8. Plaintiffs’ failure to establish that federal law creates their obstruction-of-
fiduciary-duty authority claim is especially problematic because generally, state
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law creates fiduciary duty claims. See, e.g., Staggers v. Public Def. of Indiana,
2024 WL 1471113, at *1 (S.D. Ind. Mar. 1, 2024) (finding that breach of fiduciary
duty claim did not establish federal question jurisdiction where it was not “tied to
a federal statute”); Slingbaum v. M&T Bank Corp., 2018 WL 7954879, at *3
(W.D.N.Y. May 4, 2018) (“Federal question jurisdiction is lacking here because the
gist of plaintiffs’ complaint is that defendants breached their fiduciary duties to
plaintiffs, and fiduciary duty claims generally arise under state law, not federal
law.”), rec. accepted 2019 WL 1507322 (W.D.N.Y. Apr. 6, 2019); Woodly v.
Baltimore Gas & Elec., 743 F. Supp. 3d 689, 693 (D. Md. 2024) (noting that
“although individual federal statutes create fiduciary duties under certain
circumstances,” general breach of fiduciary duty claims are ordinarily creatures of
state law); see also Razo v. El Paso City Employees’ Pension Fund, 2010 WL
11506971, at *3 (W.D. Tex. June 2, 2010) (noting that breach of fiduciary duty
claim arises “under the common law of the State of Texas and [is] not clearly
founded directly upon federal law”).
Nor do Plaintiffs establish that their obstruction-of-fiduciary-authority
claim would require resolution of a substantial question of federal law. See
Howery, 243 F.3d at 916. This claim presents no substantial federal question. It
instead stems from an unfounded assertion that Carruth is a “federal” fiduciary for
the Caruth Foundation because the IRS sent her a letter that disclosed the Caruth
Foundation’s employer identification number. See Compl. at 9.
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Thus, because Plaintiffs fail to allege that federal law creates their
obstruction-of-fiduciary-authority claim or that their right to relief on this claim
“necessarily depends on resolution of a substantial question of federal law,” it does
not establish federal question jurisdiction. Singh v. Duane Morris LLP, 538 F.3d
334, 337-38 (5th Cir. 2008) (quoting Franchise Tax Bd., 463 U.S. at 27).
Next, Plaintiffs allege that Holland & Knight and CFT retaliated against
them for reporting financial irregularities and self-dealing to federal authorities.
Plaintiffs allege that these defendants helped initiate criminal proceedings against
them to obstruct an “active federal audit of foundation assets.” Again, though,
Plaintiffs plead no federal law that creates this cause of action, and, even giving
their Complaint a most liberal construction, none is apparent to the Court. Nor is
it apparent that this claim “necessarily depends on resolution of a substantial
question of federal law.” Singh, 538 F.3d at 337-38.
Finally, Plaintiffs claim that Defendants violated their rights under the
Fourth and Fourteenth Amendments to the Constitution. Compl. at 6. But
Plaintiffs allege no facts showing that Holland & Knight, CFA, and Bank of America
are state actors or that their conduct should be attributable to the state.2 There is
2 Plaintiffs also named the Tarrant County Criminal Court No. 2 as a defendant.
But a frivolous claim against a nonjural entity does not establish federal
jurisdiction. See, e.g., In re KSRP, Ltd., 809 F.3d 263, 267 (5th Cir. 2015) (noting
that a claim that invokes federal jurisdiction may be dismissed for lack of subject
matter jurisdiction when it is “wholly insubstantial and frivolous”) (cleaned up);
Marshall v. Abbott, 2022 WL 671009, at *4 (E.D. Tex. Feb. 4, 2022) (“Federal
courts in Texas have uniformly held that courts are nonjural entities that are not
subject to suit.”), rec. accepted 2022 WL 659159 (E.D. Tex. Mar. 4, 2022).
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no federal jurisdiction under 42 U.S.C. § 1983 against non-state actors. See
Lavergne v. Sanford, 570 F. App’x 385, 386 (5th Cir. 2014) (per curiam) (“There
is no federal jurisdiction under 42 U.S.C. § 1983 against non-state actors.”); Drake
v. St. Paul Travelers Ins. Co., 353 F. App’x 901, 905 (5th Cir. 2009) (per curiam)
(determining § 1983 was inapplicable to defendant who was not a state actor, such
that the court lacked subject matter jurisdiction over the claim against him).
Plaintiffs do not allege diversity jurisdiction, and there is no basis to find
such jurisdiction from their Complaint. There is no sign that complete diversity
exists among the parties or that the amount in controversy exceeds $75,000
exclusive of interest and costs. See 28 U.S.C. § 1332(a).
Leave to Amend
Ordinarily, “a pro se litigant should be afforded an opportunity to amend his
complaint before it is dismissed.” Brewster v. Dretke, 587 F.3d 764, 767-68 (5th
Cir. 2009). Even so, the Court need not grant leave to amend “if the plaintiff has
already pleaded his ‘best case.’” Id. at 768. As shown above, the facts as alleged by
Plaintiffs show a lack of subject matter jurisdiction in this Court that does not
appear to be curable by amendment. But the 14-day statutory objection period
(explained below) will allow Plaintiffs the chance to proffer facts, if any, that can
cure the jurisdictional deficiencies noted above.
Recommendation
The Court should dismiss Plaintiffs’ case without prejudice for lack of subject
matter jurisdiction.
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SO RECOMMENDED March 27, 2026.
______________________________
REBECCA RUTHERFORD
UNITED STATES MAGISTRATE JUDGE
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 specific finding or recommendation to which
objection is made, state the basis for the objection, and specify 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 Servs. Auto.
Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996).
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