United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
FISH Senior United States District Judge.
the court is the defendants' motion to transfer venue,
under 28 U.S.C. § 1412, to the Eastern District of Texas
(docket entry 10). For the reasons stated below, the
defendants' motion is granted.
December 17, 2015, the plaintiff, Minerva Leal
(“Leal”), commenced this breach of contract
action in the County Court at Law No. 3 in Dallas County,
Texas against Fountain Carwash -- Coit, Ltd.
(“Coit”), Fountain Carwash Management, Inc., Tim
Bednar, and Jeffrey Bednar (collectively, “the
defendants”). Defendants' Notice of Removal
(“Notice”) at 1 (docket entry 1); Plaintiff's
Petition to Enforce Settlement Agreement (“Original
Petition”) (docket entry 1-1). Leal seeks to enforce a
settlement agreement that she entered into with the
defendants. Original Petition ¶¶ 10-16. The
agreement called for the defendants to pay Leal $1000 and to
“indemnify Leal against any and all insurance
subrogation claims in consideration of Ms. Leal releasing the
[defendants] and dismissing her claims.” Id.
Leal commenced the instant action contending that the
defendants have refused to pay a pending subrogation claim.
See id. ¶¶ 17-35.
December 14, 2016, the defendants removed the case to this
court pursuant to 28 U.S.C. §§ 1334 and 1452.
Notice at 1. Prior to removing the case, on December 13,
2016, Coit filed a voluntary petition under Chapter 7 of
title 11 of the United States Code in the United States
Bankruptcy Court for the Eastern District of Texas.
Id. On January 8, 2017, the defendants filed the
instant motion to transfer this case to the United States
District Court for the Eastern District of Texas, Sherman
Division, for potential referral to the United States
Bankruptcy Court for the Eastern District of Texas.
Defendants' Motion to Transfer (“Motion”)
(docket entry 10). Notably, Leal did not file a response. The
motion is now ripe for decision.
defendants contend that 28 U.S.C. § 1412 is the proper
basis for transfer.Section 1412 states, “A district
court may transfer a case or proceeding under title 11 to a
district court for another district, in the interest of
justice or for the convenience of the parties.” 28
U.S.C. § 1412. By its text, section 1412 applies to
title 11 actions, which are “core proceedings”
that arise in the bankruptcy context. Matter of
Wood, 825 F.2d 90, 97 (5th Cir. 1987). Here, the
defendants imply that the instant action is not entirely a
core proceeding because it also includes related
claims. See Motion at 3 n.1.
1412 does not explicitly state whether “a case or
proceeding under title 11” includes claims that are
related to title 11 actions. Moreover, the Fifth Circuit has
not decided this issue. System v. Limited, No.
13-373-SDD-EWD, 2016 WL 4059705, at *3 n.26 (M.D. La. July 6,
2016) (“The Fifth Circuit has not yet determined
whether § 1412 applies only to core
proceedings.”), report and recommendation adopted sub
nom. Firefighters' Retirement System v. Citgo
Group Limited, No. CV 13-373-SDD-EWD, 2016 WL
4059666 (M.D. La. July 27, 2016). District courts within the
Fifth Circuit are split as to whether section 1412 applies to
transfers involving related claims or whether section 1404
controls those transfers. Compare Rumore v. Wamstad,
No. CIV. A. 01-2997, 2001 WL 1426680, at *2 (E.D. La. Nov.
13, 2001) (holding that section 1412 applies only to core
proceedings and not related claims) with Marquette
Transportation Company v. Trinity Marine Products, Inc.,
No. CIVA 06-0826, 2006 WL 2349461, at *4 (E.D. La. Aug. 11,
2006) (holding that Congress intended for section 1412 to
apply to both core proceedings and related claims). Some
courts in the Northern District of Texas have held that
section 1412 permits the transfer of cases containing related
claims. See LSREF2 Baron, LLC v. Aguilar, No.
3:12-CV-1242-M, 2013 WL 230381, at *4 (N.D. Tex. Jan. 18,
2013) (Lynn, J.) (holding that Congress intended for section
1412 to apply to not only core proceedings, but also cases
that are merely related to a bankruptcy proceeding); In
re Adkins Supply, Inc., No. 11-10353-RLJ-7, 2015 WL
1498856, at *4 (Bankr. N.D. Tex. Mar. 27, 2015) (noting that
section 1412 is the appropriate statute for transfers
involving claims “related to” title 11 actions).
Both Northern District cases cite Marquette
Transportation Company, 2006 WL 2349461 in support of
their conclusions. See LSREF2 Baron, LLC, 2013 WL
230381, at *4; In re Adkins Supply, Inc., 2015 WL
1498856, at *2.
Marquette, the court held that section 1412 permits
transfers of cases containing related claims. Id. at
*4. The Marquette court looked to the term
“proceeding” in 28 U.S.C. §
-- the statute governing venue in title 11 cases --for
guidance interpreting the term “proceeding” in
section 1412. Id. “Proceeding” under
section 1409 explicitly includes actions related to core
proceedings. See 28 U.S.C. § 1409. The
Marquette court held that the word
“proceeding” in section 1412 should be accorded
the same breadth. Marquette Transportation Company,
2006 WL 2349461, at *4. It reasoned that if section 1412 did
not include related claims, then a court could only transfer
cases closely related to core proceedings under the
more-restrictive 28 U.S.C. § 1404. See id. at
*3. The court believed that such a requirement would
“hamper the well settled principle that the court in
which the bankruptcy case itself is pending is the proper
venue for adjudicating all related litigation.”
Id. at *4 (quoting Baker v. Muscletech Research
and Development, Inc., No. 06-C-492, 2006 WL 1663748, at
*2 (E.D. Wis. June 9, 2006)). It concluded that Congress, in
enacting section 1412, did not intend such a result.
Id. at *4.
reaching the opposite conclusion reason that Congress
intentionally omitted the “related to” language
in section 1412 to limit the jurisdiction of the bankruptcy
courts. See, e.g., Searcy v. Knostman, 155
B.R. 699, 707 (S.D.Miss. 1993). They point to the
“related to” language in section 1412's
predecessor, the now-repealed 28 U.S.C. § 1475.
Id. at 706-07. Section 1475 stated, “A
bankruptcy court may transfer a case under title 11 or a
proceeding arising under or related to such a
case to a bankruptcy court for another district, in
the interest of justice and for the convenience of the
parties.” 28 U.S.C. § 1475 (emphasis added).
However, section 1412 does not refer to related proceedings.
28 U.S.C. § 1412. Some courts explain that the omission
is evidence of Congressional intent that motions to transfer
actions that are related to title 11 cases should be
controlled by 28 U.S.C. § 1404. The purpose of the
[section 1412] supports this conclusion since the Amendments
were passed in response to the decision in Northern
Pipeline Construction Co. v. Marathon Pipe Line Co., 458
U.S. 50 (1982), in which the Supreme Court held that it was
unconstitutional for bankruptcy courts to have jurisdiction
over non-core bankruptcy proceedings. . . . [S]ection 1412
reflects Congress' intention to narrow the scope of the
bankruptcy courts' jurisdiction by treating civil actions
that are related to cases under title 11 differently from
cases or proceedings arising under title 11.
Murray, Wilson & Hunter v. Jersey Boats, Inc.,
No. CIV. A. 91-7733, 1992 WL 37516, at *3 (E.D. Pa. Feb. 21,
1992) (internal citations omitted) (quoting Goldberg
Holding Corporation v. NEP Productions, Inc.,
93 B.R. 33, 34 (S.D.N.Y. 1988)). However, Dunlap v.
Friedman's, Inc., 331 B.R. 674, 680 (S.D. W.Va.
2005) -- followed by several courts within the Fifth
Circuit -- disagreed with this reasoning. The
Dunlap court distinguished section 1475 from section
1412: “[S]ection 1475 . . . treated the bankruptcy
court as the transferor. Section 1412, on the other
hand, switched transfer authority to the district court
alone.” Dunlap, 331 B.R. At 679 (emphasis
added). This single amendment, it reasoned, satisfied
Congress's objective to limit the jurisdictional reach of
bankruptcy courts. See id. Moreover, the court
[If] . . . substantive effect should be given to the omission
of the [“related to”] language [in section 1412],
Congress did far more than deprive bankruptcy courts of the
authority to transfer related-to actions. It also deprived
the new district court transferor of the same power, whether
exercised under section 1412 or, most importantly, under
section 1404(a) pursuant to the well-settled rule ...