- Case Type:
- Business
- Case Status:
- Dismissed
- Citation:
- 25-50854 (5th Circuit, Jun 04,2026) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Fifth Circuit held that, under 28 U.S.C. § 1334(d), it lacked jurisdiction to review the district court's decision to abstain from ruling on Plaintiff/Appellant's claims and to remand the matter back to state court under § 1334(c)(2). Further, the Fifth Circuit disregarded Plaintiff/Appellant's due process argument to try to create appellate jurisdiction on an otherwise unreviewable abstention order.
- Procedural context:
- The Fifth Circuit explained that 28 U.S.C. § 1334 grants federal court jurisdiction over bankruptcy proceedings, including state-court proceedings that have been removed to federal court under § 1452(a). However, courts may, and in some cases must, abstain from ruling on matters that they determine are best left to state courts. In that vein, § 1334(c)(1) allows a district court to abstain from ruling on a matter arising under or relating to a bankruptcy proceeding either "in the interest of justice, or in the interest of comity with State courts or respect for State law. . ." Alternatively, § 1334(c)(2) requires abstention when certain statutory conditions are met. Additionally, an appellate court's ability to review an abstention order is limited. Pursuant to § 1334(d), an abstention decision is not reviewable by a court of appeals, except for a district court's refusal to abstain from a mandatory-abstention proceeding under § 1334(c)(2). The Fifth Circuit rejected Cal-Tex’s framing of its appeal as an argument that LTM violated due process requirements by defectively serving its abstention motion electronically, explaining that the order being appealed determines whether appellate jurisdiction exists, not how the appellant frames or labels their argument.
- Facts:
- Plaintiff-Appellant Cal-Tex Compression Services, LLC, previously sued Defendant-Appellee LTM Consulting, LLC, in Texas state court for breach of contract, usury, and tortious interference relating to Cal-Tex's purchase of oil and gas compressors. LTM filed its counterclaims against Cal-Tex and other affiliated parties. Before the case could be resolved, Cal-Tex filed for Chapter 7 bankruptcy in the Southern District of Texas. Soon thereafter, two third-party defendants removed the case to bankruptcy court, which then, pursuant to § 1452(a), transferred the case to the United States District Court for the Western District of Texas. Once transferred, LTM moved for abstention and remand under § 1334(c)(2) as the case involved non-core, state law claims between nondiverse parties that did not create any independent basis for federal jurisdiction beyond its relation to Cal-Tex's ongoing bankruptcy matter. LTM served its motion electronically on Cal-Tex's counsel through the district court's filing system and Cal-Tex failed to respond. The district court granted the motion and determined abstention was mandatory because "the removed action was: (1) subject to a timely abstention motion; (2) based on state law; (3) related to a bankruptcy case; (4) unsupported by any independent basis for federal jurisdiction; and (5) capable of timely adjudication in the pending state-court action." The matter was then remanded back to state court. Afterwards, Cal-Tex appealed the district court's order remanding the case to the Fifth Circuit.
- Judge(s):
- Smith, Willett, Ramirez
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