Wellness Wireless, Inc. v. Infopia America, L.L.C.
- Summarized by Craig Geno , Craig M Geno PLLC
- 9 years 9 months ago
- Citation:
- Fifth Circuit No. 14-20024
- Tag(s):
-
- Ruling:
- Civil action originally filed in district court was dismissed by the district court due to lack of subject matter jurisdiction because "the bankruptcy court's jurisdiction is implicated pursuant to 28 U.S.C. Sec. 1334." The Fifth Circuit reversed. Under 28 U.S.C. sec. 1334(b), the district courts have original-but not exclusive-jurisdiction of all civil proceedings under Title 11, or that arise in, or are related to, cases under Title 11. Bankruptcy courts are within the purview of the district courts, and are assigned cases by way of district court referrals under 28 U.S.C. sec. 157 (a). Often, cases are automatically assigned to the bankruptcy courts by local rule. Here, the district court could have assigned the case to the bankruptcy court; failure to do so was not an issue on appeal and is not jurisdictional. Accordingly, the district court should not have dismissed the case.
in addition, the district court also erred in dismissing the case because a necessary and indispensable party could not be joined because it was in bankruptcy. The Fifth Circuit ruled that this potential party had no interest in the subject of the litigation and joinder of it was not relevant to the ultimate outcome.
- Procedural context:
- The aggrieved party appealed the district court's dismissal, for lack of jurisdiction, of a civil action originally brought in district court. the Fifth Circuit reversed and remanded.
- Facts:
- Diabetes Center of America ("DCA") sued HealthPia America ("HA"), alleging a business dispute. Infopia agreed to pay DCA $800,000 on behalf of HA. Infopia made one $500,000 payment to DCA and agreed to pay the balance over time in a promissory note.DCA agreed to release all claims against HA. Infopia defaulted, which breached the settlement and the conditional release of DCA claims against HA.
DCA subsequently assigned Wellness Wireless("WW) all its rights under the note. Infopia paid DCA $300,000 to be released from all claims of DCA. Soon after, DCA filed bankruptcy. WW then tried to collect under the note, eventually filing an original civil action against Infopia in district court. DCA admitted it had no further rights under the note.
- Judge(s):
- Reavley, Jones and Elrod
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