Leyva v. Hunter-Kelsey of Texas LLC - Corporation et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
VICTORIA DIVISION
LINDA V. LEYVA,
Plaintiff,
VS.
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CIVIL ACTION NO. 6:25-CV-00059
HUNTER-KELSEY OF TEXAS LLC -
CORPORATION, et al.,
Defendants.
MEMORANDUM AND RECOMMENDATION TO DISMISS
Plaintiff Linda V. Leyva is proceeding pro se and in forma pauperis (“ifp”) in this
civil action. This case is subject to screening pursuant to the in forma pauperis statute. 18
U.S.C. §§ 1915(e)(2).1 For the reasons set forth below, the undersigned respectfully
recommends the federal causes of action raised in Plaintiff’s Amended Complaint (Counts
1, 2, 3, and 7) be DISMISSED with prejudice under 28 U.S.C. § 1915(e)(2)(B) because
Plaintiff fails to state claims on which relief may be granted. To the extent Plaintiff seeks
to raise state law claims and invoke the Court’s supplemental jurisdiction, the undersigned
recommends the Court decline to do so and DISMISS without prejudice Plaintiff’s state
law claims.
1 Ms. Leyva is a civilian who is not in custody. Nevertheless, section 1915(e)(2)(B) screening applies equally to
prisoner as well as non-prisoner in forma pauperis cases. See Newsome v. Equal Emp’t Opportunity Comm’n, 301
F.3d 227, 231–33 (5th Cir. 2002) (affirming dismissal of non-prisoner claims for frivolity and failure to state a claim
under § 1915(e)(2)(B)(i) and (ii)).
United States District Court
Southern District of Texas
ENTERED
November 24, 2025
Nathan Ochsner, Clerk
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I. JURISDICTION
The Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331. This case has
been referred to the undersigned magistrate judge for case management and making
recommendations on dispositive motions pursuant to 28 U.S.C. § 636.
II. BACKGROUND AND PLAINTIFF’S ALLEGATIONS
A. Procedural Background
Plaintiff, proceeding pro se, filed a complaint and application to proceed ifp on
September 26, 2025. See Leyva v. Hunter-Kelsey of Texas et al, 6:25-mc-0008 (filed Sept.
26, 2025)(D.E. 1). Plaintiff’s ifp application was granted on the same date. (D.E. 2, 6:25-
mc-0008). In Plaintiff’s Original Complaint, she named 15 defendants, in connection with
the foreclosure of her residence located in DeWitt County, Texas. Plaintiff’s Original
Complaint was confusing and difficult to understand. Therefore, the undersigned ordered
Plaintiff to file an amended complaint. (D.E. 6). In the order to file an amended complaint,
Plaintiff was admonished her complaint was deficient and subject to dismissal for many
reasons, including but not limited to:
• Failure to allege a basis for this Court’s jurisdiction;
• Failure to state her claims clearly;
• Failure to allege sufficient facts to indicate any defendant is liable or
responsible to Plaintiff;
• Making conclusory allegations not supported by facts;
• Concerning her Section 1983 claims, failing to allege she has been deprived
of a right secured by the Constitution and laws of the United States;
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• Concerning her Section 1983 claims, failing to allege a person did an
unlawful act under the color of law. See Pease v. First Nat. Bank, 335 Fed.
App’x 412, 414 (5th Cir. 2009) (non-judicial foreclosure did not involve
sufficient state action to give rise to 1983 claim);
• Failure to allege a plausible legal theory why any defendant is liable to her
or is otherwise named as a defendant; and
• Her claims may be frivolous.
(D.E. 6). Despite these deficiencies, the undersigned found Plaintiff should be given one
opportunity to file an amended complaint to try and cure these defects. Plaintiff was
directed to plead her best case because she may not be granted further leave to amend. She
was further admonished the amended complaint would be the only operative pleading and
will take the place of the original complaint. (D.E. 6). On November 12, 2025, the Court
received Plaintiff’s Amended Complaint. (D.E. 12). In Plaintiff’s Amended Complaint,
Plaintiff names the following defendants:
(1) 818 W. 10th LLC – Corporation;
(2) Hunter-Kelsey of Texas LLC – Corporation;
(3) Mack Brooks LLC – Corporation;
(4) Lillian Wilson LLC – Corporation;
(5) Estate for Charles Eads Brown C/O Cathy Lynn Brown – Attorney;
(6) Peter Squier – President/Director;
(7) Natalie Carson – DeWitt County Clerk (Individual Capacity);
(8) A. Jay Condie – DeWitt County Clerk (Individual Capacity);
(9) Ashley D. Mraz – Tax Assessor-Collector;
(10) Denise Moore – Chief Appraiser (Individual Capacity);
(11) Ken Paxton OCCC General Counsel (Individual Capacity);
(12) Michael Rigby – OCCC General Counsel (Individual Capacity);
(13) Leslie L. Pettijohn – OCCC Commissioner (Individual Capacity);
(14) Janet L. Walsh – Notary Public
(15) Robert Edward Schendel
(16) Stan Miller – Notary Public
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(17) Darin P. Hathcock – Real Estate Agent
(18) Dylan Arthur Schultz – Attorney
(19) Nikolaos P. Starvos – Attorney
(20) Rick Leon Farley – Loan Originator
(21) Steven A. Wehlmann SR – Retired Pct 2 Constable (Induvial Capacity).
(D.E. 12).
B. Factual Background
Plaintiff’s Amended Complaint remains difficult to understand, however, the
undersigned will undertake to summarize the facts and Plaintiff’s claims. Plaintiff alleges
the defendants engaged in deceptive practices and executed fraudulent schemes “through
formed LLCs in Texas.” She alleges the defendants “intertwine with one another in
collusion of Fraud and Conspiracy that tie to State Officials, Attorney, Loan Originators,
and Notary Publics involved with Property Tax Lending Companies in Texas.” (D.E. 12,
p. 7). Plaintiff alleges the defendants target poor minorities who are property owners who
are delinquent on their property taxes and then sell or transfer the tax liens without the
consent or knowledge of the property owners. (D.E. 12, p. 7).
Plaintiff alleges she was behind on her property taxes from 2007-2010 in the amount
of $4,438.05 and that she was fraudulently induced to enter into a property tax loan
application in January 2010. Plaintiff alleges she paid on the loan through 2015 but became
delinquent due to illness and an inability to work. Plaintiff does not describe the
proceedings, but she references a civil action filed in the 267th DeWitt County District
Court which she later describes as a non-judicial foreclosure which occurred on November
8, 2016. (D.E 12, p. 12). Plaintiff alleges she reached an agreement with her lenders to
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avoid foreclosure, but that Defendant Mack Brooks LLC wrongfully foreclosed on her
property on December 6, 2016. Plaintiff raised complaints with the Office of Consumer
Credit Commissioner (OCCC). Plaintiff further alleges Defendant Peter Squier admitted to
wrongfully foreclosing on Plaintiff’s property and that he tried to coerce Plaintiff to sign a
new contract. When Plaintiff refused to sign the new agreement, Defendants Peter Squier
and Hunter-Kelsey pursued Plaintiff’s eviction from the property at DeWitt County
Precinct 2 Court in action CS# EV17-0311. Plaintiff alleges the judge was biased against
her and she was ordered evicted from the property on September 29, 2017. The judgment
was signed on October 9, 2017. Plaintiff appealed her eviction, and a hearing was held on
February 1, 2018, in the 135th DeWitt District Court in Cuero, Texas. The parties reached
an agreement where Plaintiff was given until April 22, 2018, to move out of the property.
On March 23, 2018, certain defendants and their employees arrived at Plaintiff’s residence
and removed her property and changed the locks. Law enforcement authorities arrived and
refused to stop Plaintiff’s eviction from the property despite Plaintiff having a court order
giving her until April 22, 2018, to move out. Plaintiff alleges Hunter-Kelsey was later
found in contempt of court, presumably for evicting Plaintiff prior to the date of the
eviction, but nevertheless, Plaintiff was left homeless. (D.E. 12, pp 7-12).
Plaintiff alleges some of the notaries associated with Hunter-Kelsey and the
foreclosure of Plaintiff’s residence were investigated or reprimanded and resigned their
notary commissions. On May 10, 2019, Plaintiff’s neighbor Robert E. Schendel purchased
the subject property from Hunter-Kelsey. Plaintiff later discovered that documents used to
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foreclose on her property were falsely notarized without her presence or knowledge. On
September 28, 2021, Plaintiff filed documents (presumably in DeWitt County, Texas)
seeking to revoke the property tax lien, deed of trust, foreclosure sale deed, and warranty
deed due to fraud. Without explaining how, Plaintiff obtained documents indicating her
name was re-recorded as the owner of the subject property. Plaintiff later received a letter
from the attorney of Plaintiff’s former neighbor Robert E. Schendel (the new owner of the
property) that if Plaintiff stepped foot on the property she would be arrested for trespassing.
(D.E. 12, p. 14). Plaintiff states that on October 29, 2021, she received a letter from the
DeWitt County District Attorney, but she does not explain the contents of this letter.
Plaintiff filed this action September 26, 2025. (D.E. 12, pp. 12-14).
C. Plaintiff’s Claims for Relief
Plaintiff identifies her claims as “counts.” She alleges the following Counts:
• Count 1: Violation of 42 U.S.C. § 1983 (Conspiracy to deprive Plaintiff of
her rights and privileges secured under the 14th Amendment);
• Count 2: Violation of 42 U.S.C. § 1981 (Discrimination on the basis of race
and ethnicity in making and enforcing a contract related to property);
• Count 3: Conspiracy to Violate Civil Rights (42 U.S.C. § 1985)(Conspiracy
to deprive Plaintiff of equal protection for a discriminatory reason);
• Count 4: Breach of Contract (State Law Claim);
• Count 5: Fraud (State Law Claim);
• Count 6: Wrongful Foreclosure (State Law Claim);
• Count 7: Violation of Federal and Texas Arbitration Laws (State & Federal
Law Claims).
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III. LEGAL STANDARDS
Plaintiff has been permitted to proceed IFP and therefore, her complaint is subject
to screening under 28 U.S.C. § 1915(e)(2)(B), which imposes a screening responsibility on
the district court when the plaintiff has been granted IFP status. That section provides for
sua sponte dismissal of a complaint if the Court finds that it (1) is frivolous or malicious;
(2) fails to state a claim upon which relief may be granted, or (3) seeks monetary relief
against a defendant who is immune from such relief.
A complaint is frivolous when “it lacks an arguable basis either in law or fact.”
Neitzke v. Williams, 490 U.S. 319, 325 (1989). A claim is legally frivolous under § 1915
when it is based on an “indisputably meritless legal theory.” Id. at 327. A court may
dismiss a complaint as frivolous if, after providing the plaintiff the opportunity to present
additional facts, when necessary, the facts alleged are clearly baseless. Denton v.
Hernandez, 504 U.S. 25, 32-34 (1992). A claim is factually frivolous if the facts are
“clearly baseless, a category encompassing allegations that are ‘fanciful,’ ‘fantastic,’ and
‘delusional.’” Hicks v. Garner, 69 F.3d 22, 25 (5th Cir. 1995) (quoting Denton v.
Hernandez, 504 U.S. 25, 33-34 (1992) (citations omitted).
A complaint fails to state a claim upon which relief may be granted if the factual
allegations are not sufficient to raise a right to relief above the speculation level. Bell
Atlantic Corp. v. Twombly, 500 U.S. 544, 555 (2007). Dismissal for failure to state a claim
is appropriate when the plaintiff has failed to plead “enough facts to state a claim to relief
that is plausible on its face.” Id. at 570. Plaintiffs must state enough facts to “nudge[] their
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claims across the line from conceivable to plausible.” Id. In considering whether to
dismiss a complaint for failing to state a claim upon which relief may be granted, all factual
allegations in the complaint must be taken as true and construed favorably to the plaintiff.
Fernandez-Montez v. Allied Pilots Assoc., 987 F.2d 278, 284 (5th Cir. 1993) (citation
omitted). Further, pro se pleadings are reviewed under a less stringent standard than those
drafted by attorneys, and such pleadings are entitled to a liberal construction that includes
all reasonable inferences that can be drawn from them. Haines v. Kerner, 404 U.S. 519,
520 (1972). However, “conclusory allegations or legal conclusions masquerading as
factual conclusions will not suffice” to prevent dismissal for failure to state a claim.
Fernandez-Montez, 987 F.2d at 284. The complaint must state more than “an unadorned,
the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citation omitted). Dismissal is appropriate “only if it appears that no relief could
be granted under any set of facts that could be proven consistent with the allegations.”
Newsome, 301 F.3d at 231.
Plaintiff attempts to raise several claims based on federal law. Regarding Count 1,
Section 1983 of Title 42 of the United States Code provides a vehicle for redressing the
violation of federal law by those acting under color of state law. Nelson v. Campbell, 541
U.S. 637, 643 (2004). To prevail on a § 1983 claim, the plaintiff must prove that a person
acting under the color of state law deprived him of a right secured by the Constitution or
laws of the United States. 42 U.S.C. § 1983; West v. Atkins, 487 U.S. 42, 48 (1988). A
defendant acts under color of state law if he misuses or abuses official power and if there
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is a nexus between the victim, the improper conduct, and the defendant’s performance of
official duties. Townsend v. Moya, 291 F.3d 859, 861 (5th Cir. 2002).
Regarding Count 2, to establish a Section 1981 claim, a plaintiff must prove the
following elements: (1) the plaintiff is a member of a racial minority; (2) an intent to
discriminate on the basis of race by the defendant; and (3) the discrimination concerns one
or more of the activities enumerated in the statute. McCoy v. Homestead Studio Suites
Hotels, 390 F. Supp. 2d 577, 583 (S.D. Tex. 2005), aff’d, 177 Fed. Appx. 442 (5th Cir.
2006) (citing Green v. State Bar of Texas, 27 F.3d 1083, 1086 (5th Cir.1994)).
Regarding Count 3, Section 1985 of Title 42 of the United States Code, often
referred to as the Ku Klux Klan Act, creates a cause of action for conspiracy to interfere
with civil rights. Part of the Civil Rights Act of 1871, 42 U.S.C. § 1985 creates a private
civil remedy for three prohibited forms of conspiracy to interfere with civil rights.
Subsection (1) prohibits conspiracies to prevent federal officers from performing the duties
of their offices “by force, intimidation, or threat;” Subsection (2) concerns conspiracies
directed at the right of participation in federal judicial proceedings; Subsection (3) prohibits
conspiracies to “depriv[e] ... any person or class of persons the equal protection of the laws”
and those aimed at preventing a person from lawfully voting. Marceaux v. Lafayette City-
Par. Consol. Gov’t, 921 F. Supp. 2d 605, 642 (W.D. La. 2013). Sections 1 and 2 are
inapplicable in the present case.
The elements of a Section 1985(3) claim are: “(1) the defendants conspired (2) for
the purposes of depriving, either directly or indirectly, any person or class of persons of
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the equal protection of the laws, or of equal privileges and immunities under the laws, and
(3) one or more of the conspirators committed some act in furtherance of the conspiracy;
whereby (4) another person is injured in his person or property or deprived of having and
exercising any right or privilege of a citizen of the United States; and (5) the action of the
conspirators is motivated by a racial animus.” Marceaux, 921 F. Supp. at 642 (citing Wong
v. Stripling, 881 F.2d 200, 202–03 (5th Cir.1989)). Unlike a Section 1983 claim, Section
1985 does not require a state actor. Cervini v. Cisneros, 593 F. Supp. 3d 530, 539 (W.D.
Tex. 2022) (citing Paynes v. Lee, 377 F.2d 61, 63–64 (5th Cir. 1967)). However, “naked
allegation[s]” of discriminatory intent are too conclusory to survive a motion to dismiss.
Albert v. Carovano, 851 F.2d 561, 572 (2d Cir. 1988).
Regarding Count 7, Plaintiff alleges the foreclosure agreements were subject to
provisions requiring the parties to submit to arbitration. She alleges that she raised this
argument with the state court judge who overruled her objection. Plaintiff also alleges the
defendants violated unspecified state and federal laws.
IV. ANALYSIS REGARDING PLAINTIFF’S FEDERAL CLAIMS
In Counts 1, 2, and 3, Plaintiff seeks to raise a Section 1983 claim, a claim for
Section 1981 discrimination and a Section 1985(3) conspiracy claim. In Count 7, Plaintiff
alleges the defendants violated state and federal laws when they did not submit to
arbitration of their dispute. Reviewing these claims, Plaintiff has not stated sufficient facts
to raise plausible claims under any of these theories of liability. Twombly, 500 U.S. at 555.
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Section 1983 claims require Plaintiff to allege a violation of federal law by those
acting under color of state law. Nelson, 541 U.S. at 643. Plaintiff has neither alleged a
violation of law against her nor that any such violation was done under the color of state
law. Section 1983 claims usually involve a state actor. The Fifth Circuit has recognized
situations where a private citizen can be considered to be acting under the color of state
law, but such actions must be “fairly attributable to the State.” Priester v. Lowndes Cty.,
354 F.3d 414, 423 (5th Cir. 2004). For non-state actors to be liable under § 1983, the
plaintiff must show a conspiracy between those defendants and state actors. Id. at 420.
Conclusory allegations will not suffice. “Conclusory allegations that do not reference
specific” facts tending to show an agreement are insufficient. Duke v. Collier, No. 6:24-
CV-85-JDK-KNM, 2025 WL 1605026, at *3 (E.D. Tex. June 6, 2025) (quoting
Montgomery v. Walton, 759 F. App’x 312, 314 (5th Cir. 2019)). While Plaintiff names
some defendants who are state employees, she has not stated any facts that any of these
defendants did any action which could be construed as a violation of any right protected
by the Constitution or law of the United States. To the extent Plaintiff alleges her rights
were violated by state actors, her allegations are conclusory and are not supported by the
facts. Plaintiff’s arguments regarding the existence of a conspiracy between state actors
and private citizens are also unsupported by any facts.
Regarding Count 2 and Plaintiff’s Section 1981 discrimination claim, Plaintiff
alleges she was discriminated on the basis of race, but her complaint does not allege any
facts to support that allegation. The facts indicate Plaintiff fell behind on her property taxes
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and the lien holders foreclosed on her property. Plaintiff’s allegations regarding
discrimination based on race are entirely conclusory. Naked allegations of discriminatory
intent are too conclusory to raise a plausible claim. Body by Cook, Inc. v. State Farm Mut.
Auto. Ins., 869 F.3d 381, 386 (5th Cir. 2017). Plaintiff’s 1985 claims also fail because of
an insufficient factual predicate. Plaintiff has not alleged facts that any of the defendants
conspired to deprive her of the equal protection of the laws, or of equal privileges and
immunities under the laws of the United States.
Regarding Count 7 and Defendants’ alleged failure to submit to arbitration, Plaintiff
has not stated what federal law the defendants violated or how the defendants’ failure to
arbitrate creates a separate cause of action in this case. Plaintiff alleges she presented the
matter of compelling arbitration to the state court who overruled the motion or request, but
Plaintiff fails to state a jurisdictional basis for this Court to review that decision. The
Federal Arbitration Act (“FAA”) does not create an independent basis for federal subject
matter jurisdiction although jurisdiction under the FAA may arise out diversity jurisdiction.
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983).
However, in the present case, Plaintiff has not alleged a basis for diversity jurisdiction
because all parties are alleged to be citizens of Texas. (D.E. 12, pp. 3-7); See 28 U.S.C. §
1332(a) (requiring complete diversity of citizenship among the parties); Exxon Mobil
Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 564 (2005).
Additionally, Plaintiff presented a motion or argument to the state court to compel
arbitration. The state court denied Plaintiff’s motion to compel arbitration years ago.
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Plaintiff never sought to remove the state court foreclosure action to federal court.
Accordingly, any attempt to seek federal court intervention is untimely. See 28 U.S.C. §
1446(b) (generally requiring a notice of removal be filed within 30 days of when the action
becomes removable).
Plaintiff’s allegations seeking to bring federal claims are not sufficient to raise a
right to relief above the speculation level for any of her claims. Twombly, 500 U.S. at 555.
The facts alleged by Plaintiff fail to allege any plausible federal claim. Id. Under the
judicial screening standard of 28 U.S.C. § 1915(e)(2)(B), Plaintiff’s federal claims are
subject to sua sponte dismissal for failing to state a claim upon which relief may be granted.
Additionally, in the undersigned’s Order directing Plaintiff to file an amended complaint,
Plaintiff was admonished that she had not alleged a factual or legal basis to raise a plausible
claim against any of the defendants and that her complaint was subject to dismissal. (D.E.
6). Thus, she was provided notice of the deficiencies and an opportunity to replead. Her
failure to allege sufficient facts is a strong indication her claims lack a factual basis.
Further, the facts indicate the foreclosure and eviction proceedings which form the basis of
her complaints occurred in state court in DeWitt County, Texas. Plaintiff was admonished
in the Order to amend (D.E. 6) that federal courts do not serve as appellate courts for
decisions by state courts in civil cases. Guidry v. E. Feliciana Par. Policy Jury, 210 F.
Supp. 2d 802, 803 (M.D. La. 2002). The Fifth Circuit has held that “[c]onstitutional
questions arising in state proceedings are to be resolved by the state courts.” Liedtke v.
State Bar of Texas, 18 F.3d 315, 317 (5th Cir. 1994).
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Therefore, the undersigned respectfully recommends Count 1, Count 2, Count 3 and
the portion of Count 7 raising federal claims be dismissed with prejudice.
V. Plaintiff’s State Law Claims
In Counts 4 to7 Plaintiff seeks to raise state law claims for breach of contract, fraud,
wrongful foreclosure and violation of unspecified laws relating to arbitration. The Court
could elect to exercise supplemental jurisdiction over these state law claims pursuant to 28
U.S.C. § 1367. However, the Court has discretion to decline to exercise supplemental
jurisdiction if the Court dismisses the all the claims over which the Court has original
jurisdiction. 28 U.S.C. § 1367(c)(3). Indeed, the Supreme Court has instructed that courts
should avoid making needless decisions of state law. Lewis v. Jefferson Par. Hosp. Serv.
Dist. No. 2, 956 F. Supp. 2d 722, 735 (E.D. La. 2013), aff’d, 562 Fed. Appx. 209 (5th Cir.
2014) (citing United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966)). The
undersigned notes Plaintiff’s state law claims are just as devoid of a factual basis as her
federal claims and are also subject to dismissal. However, the undersigned views
Plaintiff’s state law claims differently from her federal claims. Having considered
Plaintiff’s amended complaint, the undersigned is of the opinion that Plaintiff would never
be able to allege a plausible federal claim arising out of the facts alleged. While Plaintiff
has currently failed to allege facts to state a plausible state law claim, it is at least
theoretically possible that she has a plausible claim. Therefore, the undersigned
recommends the Court decline to exercise supplemental jurisdiction and dismiss these
claims without prejudice.
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V. RECOMMENDATION
It is recommended that the federal causes of action raised in Plaintiff’s Amended
Complaint (Counts 1, 2, 3, and 7) be DISMISSED with prejudice under 28 U.S.C. §
1915(e)(2)(B) because Plaintiff fails to state claims on which relief may be granted. To the
extent Plaintiff seeks to raise state law claims and invoke the Court’s supplemental
jurisdiction, the undersigned recommends the Court decline to do so, and Plaintiff’s state
law claims be DISMISSED without prejudice.
Respectfully submitted on November 24, 2025.
_______________________________
Jason B. Libby
United States Magistrate Judge
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NOTICE TO PARTIES
The Clerk will file this Memorandum and Recommendation and transmit a copy to
each party or counsel. Within FOURTEEN (14) DAYS after being served with a copy of
the Memorandum and Recommendation, a party may file with the Clerk and serve on the
United States Magistrate Judge and all parties, written objections, pursuant to Fed. R. Civ.
P. 72(b), 28 U.S.C. § 636(b)(1), General Order No. 2002-13, United States District Court
for the Southern District of Texas.
A party’s failure to file written objections to the proposed findings, conclusions, and
recommendation in a magistrate judge’s report and recommendation within FOURTEEN
(14) DAYS after being served with a copy shall bar that party, except upon grounds of
plain error, from attacking on appeal the unobjected-to proposed factual findings and legal
conclusions accepted by the District Court. Douglass v. United Servs. Auto Ass’n, 79 F.3d
1415 (5th Cir. 1996) (en banc).
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