Jackson v. Small Business Administration et al

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
LINDRA I. JACKSON, 	§
Plaintiff, 	§
§
v. 	§ 	No. 3:23-CV-2677-S-BW
§
SMALL BUSINESS 	§
ADMINISTRATION, et al., 	§
Defendants. 	§ 	Referred to U.S. Magistrate Judge1
FINDINGS, CONCLUSIONS, AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
Before the Court is Plaintiff’s Original Petition, filed on December 4, 2023.
(Dkt. No. 2.) Based on the relevant filings and applicable law, the Court should
DISMISS this action for failure to state a claim under 28 U.S.C. § 1915(e)(2)(B).
I. BACKGROUND
Plaintiff Lindra I. Jackson filed this pro se action against the United States, the
United States Small Business Administration (“SBA”) and its Administrator, Rapid
Financial Services, LLC (“Rapid Financial”), Rocket Mortgage, LLC (“Rocket
Mortgage”), Quicken Loans, and Rocket Companies, Inc. (“Rocket Companies”) in
connection with the SBA’s denial of an economic injury disaster loan (“EIDL”) for
her business. (See id. at 2.) According to Jackson, Defendant Rapid Financial is “the
chosen third party contractor granted the government contract to be the COVID
EIDL loan processor to assist with the large volume of loan requests” and is an
1 By Special Order No. 3-251, this pro se case has been automatically referred for full
case management. By Special Order No. 3-354, it was transferred and reassigned to the
undersigned on August 23, 2024. (See Dkt. No. 7.)
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affiliate of Defendant Rocket Mortgage; Defendant Rocket Mortgage and Defendant
Quicken Loans are subsidiaries of Defendant Rocket Companies, and each of these
Defendants appears to be sued in the aforementioned capacities. (Id. at 3-4.)
Jackson is “unaware” of Defendants Rapid Financial, Rocket Mortgage, Quicken
Loans, and Rocket Companies’s “level of involvement in her loan processing.” (Id.)
Jackson is the sole owner of LJ Professional and Financial Services, LLC
(“LJPFS”), a business registered in Texas. (See id. at 2.) In 2020, Jackson applied to
the SBA on behalf of LJPFS for an EIDL based on the COVID-19 pandemic. (See
id. at 5.) The SBA denied the application on April 18, 2020 “due to ‘unsatisfactory
credit history.’” (Id.) The SBA continued to deny the EIDL application for LJPFS
following Jackson’s subsequent requests for reconsideration, appeals, and new
applications. (See id. at 5-6.) Jackson now brings claims against the various
Defendants stemming from the denial of an EIDL under the Federal Torts Claims
Act (“FTCA”), the Equal Credit Opportunity Act (“ECOA”), the Administrative
Procedure Act (“APA”), and 42 U.S.C. § 1981.2 (See id. at 2-4.) She seeks monetary
damages and declaratory and equitable relief. (See id. at 2, 15-16, 18.)
2 Jackson filed a prior action in this Court against the SBA and its Administrator and
the United States under the APA, the FTCA, and the Declaratory Judgment Act in
connection with the same denials of an EIDL for LJPFS. See Jackson v. Small Bus. Admin.,
No. 3:22-CV-986-S-BH, 2022 WL 18456351 (N.D. Tex. Dec. 16, 2022), rec. adopted, 2023
WL 375351 (N.D. Tex. Jan. 24, 2023). That action was dismissed for lack of subject matter
jurisdiction. See id.
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II. PRELIMINARY SCREENING
Because Jackson has been granted leave to proceed in forma pauperis, her
complaint is subject to preliminary screening under 28 U.S.C. § 1915(e)(2). Section
1915(e)(2) provides for sua sponte dismissal of a complaint, or any portion thereof, if
the Court finds it “is frivolous or malicious” or “fails to state a claim on which relief
may be granted.” 28 U.S.C. § 1915(e)(2)(B)(i), (ii); see also Neitzke v. Williams, 490
U.S. 319, 325 (1989).
A complaint is frivolous when it “lacks an arguable basis either in law or in
fact.” Neitzke, 490 U.S. at 325. A complaint fails to state a claim upon which relief
may be granted when it fails to plead “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Mere
“labels and conclusions” and “formulaic recitation[s] of the elements of a cause of
action” are insufficient to state a claim upon which relief may be granted. Id. at 555.
The same analysis for determining a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) applies to determine whether a complaint fails to state a claim
under § 1915(e)(2)(B)(ii). See Hale v. King, 642 F.3d 492, 497 (5th Cir. 2011).
III. ANALYSIS
The Court must always liberally construe pleadings filed by pro se litigants.
See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (noting pro se pleadings “must be held
to less stringent standards than formal pleadings drafted by lawyers”); Fed. R. Civ. P.
8(e) (“Pleadings must be construed so as to do justice.”). Even under this liberal
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construction, however, Jackson’s complaint fails to state a viable legal claim on
which relief may be granted.
“Standing jurisprudence contains two strands: Article III [or constitutional]
standing, which enforces the Constitution’s case-or-controversy requirement, and
prudential standing, which embodies judicially self-imposed limits on the exercise of
federal jurisdiction.” Pelletier v. Victoria Air Conditioning, Ltd., 780 F. App’x 136, 139
(5th Cir. 2019) (citation and internal quotation marks omitted). “One principle of
prudential standing requires ‘that a plaintiff generally must assert his own legal rights
and interests, and cannot rest his claim to relief on the legal rights or interests of third
parties.’” Superior MRI Servs., Inc. v. Alliance Healthcare Servs., Inc., 778 F.3d 502, 504
(5th Cir. 2015) (quoting United States v. Johnson, 632 F.3d 912, 919-20 (5th Cir.
2011)). A complaint that lacks prudential standing is properly dismissed for failure
to state a claim. Pelletier, 780 F. App’x at 139.
Here, Jackson expressly states—and her allegations show—that she “is suing
for the Defendants’ mishandling of the business’s application for federal emergency
aid,” namely an EIDL, which denial Jackson alleges resulted in injury to her
personally. (Dkt. No. 2 at 2 (emphasis added).) In relevant part, the SBA is
authorized by statute to issue EIDLs only to a “small business concern, private
nonprofit organization, or small agricultural cooperative[.]” 15 U.S.C. § 636(b)(2).
There is no such statutory authority for the SBA to issue EIDLs to individual
business owners such as Jackson. As such, the only EIDL applicant in this action is
LJPFS, and any actionable claims or injuries relating to and arising from the denial
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of a COVID-19 EIDL belong to LJPFS, not Jackson individually. See, e.g., Huang v.
Small Business Admin., No. 22-CV-03363-BLF, 2022 WL 3111809, at *1 (N.D. Cal.
Aug. 4, 2022); see also Jackson, 2022 WL 18456351, at *9 n.5 (noting Jackson’s
apparent lack of prudential standing and citing Huang, 2022 WL 3111809, at *1-2).
Jackson cannot adopt the alleged violations against and injuries to LJPFS as
her own, and she fails to allege any direct injury she suffered independent of LJPFS’s
alleged injuries.3 See L & F Homes & Dev., L.L.C. v. City of Gulfport, 538 F. App’x 395,
408 (5th Cir. 2013) (holding that a member of an LLC lacked standing to sue a third
party for economic harm allegedly incurred by the LLC because a “stockholder in a
corporation does not have standing to bring suit in his own name for injuries
sustained by the corporation. . . . This is true even where that individual is the sole
shareholder of a corporation.”). Defendants’ alleged actions affected LJPFS as an
LLC, and LJPFS is the only real party in interest who is entitled to enforce the rights
allegedly at issue in this action. Jackson—the only Plaintiff in this case—therefore
fails to state a claim upon which relief may be granted. Accordingly, the Court
should dismiss the complaint for failure to state a claim.
3 For instance, Jackson alleges economic injury and various aspects of emotional
injuries, including insomnia, irregular sleep patterns, mood swings, irritability, depression,
feelings of worthlessness, and suicidal thoughts. Each of these alleged injuries indirectly
stems from and is derivative of the alleged harm to LJPFS, and they do not save the
complaint. See, e.g., Van Deelen v. Jones, No. 4:23-CV-03729-AM, 2024 WL 3852349, at *9-
10 (S.D. Tex. Aug. 16, 2024).
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IV. OPPORTUNITY TO AMEND
Although a pro se plaintiff ordinarily should be granted leave to amend the
complaint before dismissal, leave is not required when she has already pled her “best
case.” Brewster v. Dretke, 587 F.3d 764, 767-68 (5th Cir. 2009). The facts and claims
alleged by Jackson demonstrate that she cannot state a claim upon which relief may
be granted because LJPFS is the real party in interest as the EIDL applicant whose
application, and the denial thereof, constitutes the basis the claims asserted.4
Jackson’s deficiency does not appear to be curable by amendment. The Court
therefore concludes that granting leave to amend under these circumstances would
be futile and cause needless delay.
V. RECOMMENDATION
The Court should DISMISS this action for failure to state a claim under 28
U.S.C. § 1915(e)(2)(B).
SO RECOMMENDED on March 5, 2026.
____________________________________
BRIAN McKAY
UNITED STATES MAGISTRATE JUDGE
4 Even if LJPFS were named as a plaintiff in this action—which it is not—it could
neither represent itself pro se nor be represented by Jackson, a non-lawyer. See, e.g., Travis v.
Hall Tires and Collection, LLC, No. 3:23CV209-MPM-RP, 2023 WL 6055499, at *1 (N.D.
Miss. Sept. 15, 2023) (“[A] limited liability company may not represent itself of have an
owner or officer represent it in federal court unless that person is a licensed attorney.”).
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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); F ED . R. C IV. 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).
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