In Re: Red Barn Motors, Inc. ( 2015 )

Case: 15-30067 Document: 00513122177 Page: 1 Date Filed: 07/20/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-30067 FILED
July 20, 2015
Lyle W. Cayce
Clerk
In re:
RED BARN MOTORS, INCORPORATED; BARBARA A. RICHARDSON;
DONALD B. RICHARDSON;
LOUISIANA’S FIRST CHOICE AUTO AUCTION, L.L.C.,
Petitioners.
Petitions for Writs of Mandamus to
the United States District Court
for the Middle District of Louisiana
Before SMITH, ELROD, and HIGGINSON, Circuit Judges.
PER CURIAM:
These petitions for writs of mandamus ask us to order the United States
District Court for the Middle District of Louisiana to vacate its transfer to the
Southern District of Indiana. The petitions were filed more than three months
after the transfer and after proceedings had begun in the transferee court. We
deny the petitions.
I.
Red Barn Motors, Incorporated (“Red Barn”), is a car dealership that, in
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No. 15-30067
2011, entered into an agreement with Dealer Services Corporation (“DSC”) for
DSC to finance Red Barn’s purchase of vehicles at auction. According to Red
Barn’s complaint, when it would buy a vehicle at auction, sometimes six to
eight weeks would elapse before the auction house would obtain the title and
transfer it to DSC. Red Barn contends that DSC would not pay the auction
house until DSC received the title but would charge interest and fees starting
from when Red Barn made the purchase, weeks before DSC transferred the
funds to the auction house.
In March 2013, Red Barn stopped making payments to DSC on its line
of credit, whereupon DSC began seizing some of Red Barn’s assets. In April,
Red Barn delivered about a dozen vehicles to Louisiana’s First Choice Auto
Auction, L.L.C. (“First Choice”), to sell, but First Choice delivered them to DSC.
Red Barn declared bankruptcy that month. At some point, DSC was absorbed
by NextGear Capital, Inc. (“NextGear”).
II.
Red Barn sued NextGear and First Choice in the Middle District of Loui-
siana, claiming breach of contract and unjust enrichment by NextGear and
conversion by both defendants. NextGear moved to transfer the case to the
Southern District of Indiana under 28 U.S.C. § 1404(a). 1 NextGear attached
to its motion a copy of the promissory note that Red Barn had tendered to DSC,
which stated that Red Barn consented to personal jurisdiction and venue in
the state and federal courts of Marion and Hamilton Counties, Indiana, and
that any claims by Red Barn against DSC arising out of the promissory note
would be brought in those courts.
1“For the convenience of parties and witnesses, in the interest of justice, a district
court may transfer any civil action to any other district or division where it might have been
brought or to any district or division to which all parties have consented.”
2
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First Choice and Red Barn opposed the transfer. Red Barn contended
that this was an exceptional case in which a forum-selection clause should not
be enforced; it also alleged that NextGear had intended to breach the promis-
sory note when signing it and had therefore procured the contract by fraud.
First Choice, meanwhile, contended that venue would be improper in Indiana
because First Choice was a Texas company with its principal place of business
in Louisiana, and all of the events relating to the lawsuit took place in Louisi-
ana. Additionally, First Choice stated that the forum-selection clause could
not be applied against it because it was not a signatory.
NextGear responded, in relevant part, that First Choice could be bound
to the forum-selection clause under the doctrine of direct-benefits estoppel,
which in some circumstances can make a forum-selection clause effective
against a nonsignatory. 2 NextGear contended that First Choice was aware of
the financing agreement because the purchase forms executed by First Choice
and Red Barn noted DSC as the financer. Additionally, NextGear asserted
that First Choice benefited from the agreement because it allowed Red Barn to
buy First Choice’s vehicles.
The court held a hearing on the transfer motion in July 2014 and granted
it in September 2014. The court reasoned that First Choice had knowingly
exploited the contract. Because § 1404(a) allows transfer to a venue to which
the parties have consented, the court held that the case could be transferred to
the Southern District of Indiana even though that court probably would not
otherwise have personal jurisdiction over First Choice. The court then con-
ducted the rest of the transfer analysis, ultimately concluding that this was
2See, e.g., Vloeibare Pret Ltd. v. Lloyd’s Register N. Am., Inc., No. 14-20538, 2015 U.S.
App. LEXIS 6200, at *5−9 (5th Cir. Apr. 16, 2015) (per curiam) (unpublished); In re Lloyd’s
Register N. Am., Inc., 780 F.3d 283, 291−93 (5th Cir. 2015), petition for cert. filed (May 14,
2015) (No. 14-1366).
3
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not an exceptional case in which a forum-selection clause should not be
enforced. The clerk electronically transferred the case to the Southern District
of Indiana in September.
Red Barn waited until January 2015 to file the instant mandamus peti-
tion, and First Choice followed with its own petition in February. The case is
pending in Indiana, that court having temporarily stayed proceedings awaiting
the outcome of these petitions.
Both petitions claim that the district court erred in enforcing the forum-
selection clause against First Choice, a nonsignatory to the contract containing
the clause. They contend First Choice received no benefits under the contract
and had no knowledge of its terms and that applying the clause against it
through direct-benefits estoppel was therefore improper.
Although NextGear did not initially question our jurisdiction to order
mandamus, we have an independent obligation to determine our own jurisdic-
tion, even if the question is not raised or disputed by the parties. See, e.g.,
Sandy Creek Investors, Ltd. v. City of Jonestown, Tex., 325 F.3d 623, 626 (5th
Cir. 2003). We ordered supplemental briefing on the question whether this
court has jurisdiction to issue the writ. Because petitioners did not diligently
seek review of the transfer in this court, we deny the petitions.
III.
The All Writs Act, 28 U.S.C. § 1651, empowers us to issue writs of man-
damus, but that statutory authority does not itself confer jurisdiction. Regions
Bank of La. v. Rivet, 224 F.3d 483, 493 (5th Cir. 2000). We can issue a writ of
mandamus only if we have jurisdiction. See United States v. Denedo, 556 U.S.
904, 911 (2009). “The power conferred on [the circuit courts of appeals] by
4
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§ 1651 is limited to their appellate jurisdiction.” 3 Our jurisdiction for
mandamus “is not confined to the issuance of writs in aid of a jurisdiction
already acquired on appeal but extends to those cases which are within [our]
appellate jurisdiction although no appeal has been perfected.” Roche v. Evap-
orated Milk Ass’n, 319 U.S. 21, 25 (1943).
The jurisdiction of the courts of appeals extends to “appeals from all final
decisions of the district courts of the United States.” 28 U.S.C. § 1291. Gener-
ally, however, such an appeal can be taken only by “the court of appeals for the
circuit embracing the district,” 28 U.S.C. § 1294(1), so we can take appeals only
from district courts in Texas, Mississippi, and Louisiana and certain adminis-
trative agencies. 28 U.S.C. § 41. This case began in a Louisiana district court
but has been transferred to a district court in the Seventh Circuit, in which
any appeal would lie.
The Louisiana court, meanwhile, has lost its jurisdiction. In re Sw.
Mobile Homes, Inc., 317 F.2d 65, 66 (5th Cir. 1963). It is no longer capable of
making a final decision that would be appealed to us. No party contends that
the transfer order is an immediately reviewable decision. See In re Rolls Royce
Corp., 775 F.3d 671, 676 (5th Cir. 2014). This is not just a case in which no
appeal to the Fifth Circuit has been perfected; instead, it is a proceeding in
which no appeal to this court can be taken, short of the purely speculative pos-
sibility that the Indiana court transfers it back.
In Southwestern Mobile Homes, 317 F.2d at 66, we recognized it was
“extremely doubtful” that we had authority over a case once it was transferred
to a district court in a different circuit. It seems uncontroversial in this
In re Grand Jury Proceedings, 724 F.2d 1157, 1160 (5th Cir. 1984) (quoting 9 JAMES
3
W. MOORE ET AL., MOORE’S FEDERAL PRACTICE ¶ 110.28, at 315 (2d ed. 1983)).
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situation that a transfer to another circuit removes the case from our jurisdic-
tion, and numerous circuits have stated that rule plainly. 4
Although we lack jurisdiction to order the transferee district court to
return the case, 5 several circuits, where appropriate, have endorsed the
method of directing the transferor district court to request that the transferee
district court return the case. 6 In Southwestern Mobile Homes, we recognized
that using mandamus to undo a completed inter-circuit transfer risks “provok-
[ing] a possible conflict between the Circuits”; thus, if we even have the power
to reverse such a transfer, we should exercise it only if faced with “a very
extreme case.” 317 F.2d at 66–67. Here, that risk is tempered because the
transferee district court has expressly stayed all proceedings pending this
panel’s decision.
Despite the potential availability of this remedy, mandamus is not
warranted here. 7 A court of appeals should consider directing that the
4 See, e.g., White v. ABCO Eng’g Corp., 199 F.3d 140, 143 n.4 (3d Cir. 1999); Miller v.
Toyota Motor Corp., 554 F.3d 653, 655 (6th Cir. 2009); In re Nine Mile Ltd., 673 F.2d 242, 244
(8th Cir. 1982); Lou v. Belzberg, 834 F.2d 730, 733 (9th Cir. 1987); Chrysler Credit Corp. v.
Country Chrysler, Inc., 928 F.2d 1509, 1516–17 (10th Cir. 1991); Roofing & Sheet Metal
Servs., Inc. v. La Quinta Motor Inns, Inc., 689 F.2d 982, 988 n.10 (11th Cir. 1982); Starnes v.
McGuire, 512 F.2d 918, 924 (D.C. Cir. 1974) (en banc); see also Manchester v. U.S. Org. Crime
Drug Enforcement Task Force of Mid-Atl. Region, 900 F.2d 253 (4th Cir. 1990) (table).
5In re McBryde, 117 F.3d 208, 221 (5th Cir. 1997) (stating that we lack mandamus
authority over district courts in other circuits); see also Warrick, 70 F.3d at 737 (concluding
that court of appeals lacks power to compel out-of-circuit court to return a case).
6 See In re Warrick, 70 F.3d 736, 740 (2d Cir. 1995); Town of N. Bonneville, Wash. v.
U.S. Dist. Court, W. Dist. of Wash., 732 F.2d 747, 752 (9th Cir. 1984); In re Sosa, 712 F.2d
1479, 1480 & n.1 (D.C. Cir. 1983); In re Nine Mile Ltd., 673 F.2d 242, 244 (8th Cir. 1982).
Some courts have also held that a court of appeals has jurisdiction to vacate a completed
inter-circuit transfer if the case was transferred to a court in which it could not have origin-
ally been brought, although the mandamus order often involves a request that the transferor
court request the case back from the transferee court. See, e.g., Town of N. Bonneville, Wash.
v. U.S. Dist. Court, W. Dist. of Wash., 732 F.2d 747, 752 (9th Cir. 1984); Farrell v. Wyatt, 408
F.2d 662, 664–65 (2d Cir. 1969) (distinguishing between treatment of transfers that are
abuses of discretion and those that are beyond the transferor court’s power).
7 See Cheney v. U.S. Dist. Court for Dist. of Columbia, 542 U.S. 367, 381 (2004) (holding
6
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transferor district court request return of the case only where the case has been
transferred “despite the petitioner’s diligence.” 8 Petitioners did not timely seek
review of the transfer order. Although they could not have done so before the
case was transferred, they offer no explanation for waiting more than three
months before filing any petition for review. Petitioners have not been diligent
in seeking review of the transfer. 9
The petitions for writs of mandamus are DENIED.
that, to grant a writ of mandamus, a court, “in the exercise of its discretion, must be satisfied
that the writ is appropriate under the circumstances”).
8 Warrick, 70 F.3d at 740; see also Starnes, 512 F.2d 918 at 924 (holding that it is
“essential that procedures be adopted and observed that will provide plaintiffs a fair oppor-
tunity to seek review in the transferor circuit prior to the physical transfer of the record.”).
9 Because we find that petitioners’ had a fair opportunity to seek review but were not
diligent, we do not reach the merits of petitioners’ argument.
7