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Bustos v. Dennis

United States District Court, W.D. Texas, San Antonio Division

May 8, 2017

ERNEST BUSTOS, Plaintiff,
v.
GREGG A. DENNIS, d/b/a IIS BENEFIT ADMINISTRATORS, INVESTMENT INSURANCE SERVICES, INC., d/b/a IIS BENEFIT ADMINISTRATORS, SOUTHERN NEVADA BENEFIT ADMINSITRATORS LLC, Defendants.

          ORDER

          XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE

         By Order Granting Defendants' Motion to Transfer (Docket no. 16) entered March 17, 2017, this case was transferred to the U.S. District Court for the District of Nevada. Now before the Court is Plaintiff's Motion to Amend Findings and Reconsider Ruling on Transfer (Docket nos. 18, 20) and Defendants' Response to Plaintiff's Motion (Docket no. 22). After careful consideration, the motion to amend and reconsider is DISMISSED for lack of jurisdiction.

         BACKGROUND[1]

         Plaintiff Ernest Bustos, a citizen of Texas, filed his original petition in this breach of contract action in state court on January 14, 2016, and Defendant Dennis removed the case to federal court on January 20, 2017. Docket nos. 1, 1-2. Plaintiff has since filed an amended complaint, in which he alleges that all defendants are citizens of Nevada. Docket no. 9.

         In his live complaint, Plaintiff alleges that he entered into an insurance distribution contract[2] with Defendants in 2015. Docket no. 9 at 5. Plaintiff alleges that he “was to act as an independent contractor for marketing and selling” Defendants' “Tri-Funding” insurance products. Id. at 4-5. Based on Plaintiff's allegations, the contract describes a hierarchical sales model[3] and multi-level marketing distribution scheme, [4] which would allow Plaintiff to enlist others to sell the insurance products.[5] Id. According to Plaintiff, the contract stipulated that he would receive training and on-going support throughout the contract term. Id. at 7-8. Plaintiff alleges that rather than helping him develop his “distribution system of agents, ”[6] Defendants ignored him and instead engaged in dealings with an unlicensed third-party that recruited others who might have otherwise joined Plaintiff's distribution system.[7] Id. at 8.

         After removing to this Court, Defendant Dennis filed a motion to transfer venue under 28 U.S.C. § 1404(a) on January 27, 2017. Docket no. 5. Dennis bases the motion on a forum-selection clause in the contract which states: “[a]ny litigation proceeding will be governed by and in the State of Nevada.” Docket no. 5 at 2. Plaintiff filed his opposition to transfer on February 13, and Dennis replied on February 24. Docket nos. 10, 13.

         The Court granted the Motion to Transfer Venue on March 17, 2017. Docket no. 16. The case was closed that day and transferred from the Western District of Texas to the District of Nevada, where a new file was opened on March 20, 2017. Docket no. 17; Bustos v. Dennis, et al., Case no. 2:17-CV-00822-KJD-VCJ (D. Nev. March 20, 2017). On April 3, 2017, Plaintiff filed a motion to amend and reconsider this Court's March 17 order granting transfer to Nevada. Docket nos. 18, 20.[8]

         DISCUSSION

         I. This Court lost jurisdiction to hear this case once transfer to the District of Nevada was complete.

         “It seems uncontroversial . . . that a transfer to another circuit removes the case from our jurisdiction, and numerous circuits have stated that rule plainly.” In re Red Barn Motors, Inc., 794 F.3d 481, 484 (5th Cir. 2015). In addition, “[i]t is well established that ‘[o]nce the files in a case are transferred physically to the court in the transferee district, the transferor court loses all jurisdiction over the case, including the power to review the transfer.'” Auto. Body Parts Ass'n. v. Ford Glob. Techs., LLC., 2015 WL 1517524, at *1 (E.D. Tex. Apr. 2, 2015) (quoting Schwartz v. Curtis, 2008 WL 4467560, at *1 (S.D. Tex. Oct. 2, 2008)); see also Chrysler County Corp v. Country Chrysler, Inc., 928 F.2d 1509, 1517 (10th Cir. 1991) (“The date the papers in the transferred case are docketed in the transferee court . . . forms the effective date that jurisdiction in the transferor court is terminated.”).

         The Fifth Circuit addressed this question in In re Sw. Mobile Homes, Inc., 317 F.2d 65, 66 (5th Cir. 1963). There, the district court granted the defendants' motion to transfer at a hearing where both parties were present. Id. Three days later, the Northern District of Texas transferred the case to the District of Colorado. Id. Then, two days after the case had been transferred and docketed in the transferor court, the party opposed to transfer filed a motion for leave to file a petition for mandamus. Id. As another court said of the decision in Sw. Mobile Homes, “the Fifth Circuit noted that the petitioner had not seasonably moved for a stay within which to seek review of the transfer, ” and that the district court had lost jurisdiction. Auto. Body Parts, 2015 WL 1517524, at *2 (“[I]t was ‘extremely doubtful' whether the Fifth Circuit still ‘ha[d] the power to compel the District Judge to vacate his order transferring the action.'”); see also March v. ABM Sec. Servs., Inc., 2010 WL 148405, *1 (S.D. Tex. Jan. 12, 2010) (holding that the court lacked jurisdiction to consider Plaintiff's motion for reconsideration of a decision to transfer because the record had already been transmitted to the transferor court).

         Here, this Court granted the motion to transfer on March 17 and transferred the case on March 21. Plaintiff did not file his motion to reconsider until April 3-thirteen days after the transfer-and never moved to stay the transfer order. Docket nos. 16, 17, 18. The case was transferred and docketed in the District of Nevada weeks before Plaintiff took any action with respect to this Court's transfer decision. Accordingly, Plaintiff's motion to reconsider is dismissed because the Court lacks jurisdiction to reconsider its transfer.

         II. The underlying decision to transfer the case was correct.

         Even if this Court had jurisdiction to consider Plaintiff's motion for reconsideration, the Court would not alter its ruling. Plaintiff contends that the forum-selection clause (“Any litigation proceeding will be governed by and in the State of Nevada”) is permissive, and argues that the Court misapplied the relevant transfer factors under 28 U.S.C. § 1404(a). The Court disagrees on both points “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.” 28 U.S.C. § 1404(a). As will be explained, the normal § 1404(a) analysis involves an inquiry into private interest factors and public interest factors. But this normal analysis changes significantly where there is a valid forum-selection clause. Thus, the Court will first re-examine the forum-selection clause in this case and then re-examine the § 1404(a) analysis in light of that clause.

         a. The forum-selection ...


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