In Re: Red Barn Motors, Inc.
2015 U.S. App. LEXIS 12512
5th Cir.2015Background
- Red Barn Motors contracted with Dealer Services Corporation (DSC) for floorplan financing; DSC later became NextGear. Red Barn alleges DSC delayed title-related payments while charging interest/fees.
- After Red Barn defaulted in 2013, DSC/NextGear seized assets; First Choice Auto Auction delivered Red Barn vehicles to DSC. Red Barn filed bankruptcy.
- Red Barn sued NextGear and First Choice in the Middle District of Louisiana for breach of contract, unjust enrichment, and conversion.
- NextGear moved under 28 U.S.C. § 1404(a) to transfer to the Southern District of Indiana, relying on a promissory note with a forum-selection clause specifying Indiana courts (Marion and Hamilton Counties).
- The Louisiana court granted transfer, concluding First Choice—a nonsignatory—was bound by the forum-selection clause via direct-benefits estoppel; the case was electronically transferred to the Southern District of Indiana.
- Red Barn and First Choice filed mandamus petitions in the Fifth Circuit more than three months after transfer; the Indiana court stayed proceedings pending resolution of the petitions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether forum-selection clause applies to nonsignatory First Choice | Clause cannot bind First Choice; it received no benefits and lacked knowledge | First Choice knowingly exploited contract and benefited; direct-benefits estoppel binds nonsignatory | Transferor court properly applied direct-benefits estoppel; court did not reach merits on mandamus because of diligence issue |
| Whether Fifth Circuit has mandamus jurisdiction to order return after inter-circuit transfer | Petitioners seek mandamus to vacate transfer by Louisiana court | NextGear initially did not contest jurisdiction; court independently examined jurisdiction | Fifth Circuit lacks jurisdiction to order transferee court; transfer removed case from Fifth Circuit's appellate jurisdiction |
| Whether mandamus directing transferor to request return is appropriate remedy | Petitioners sought relief despite delay | Some circuits allow directing transferor court to request return in extreme cases | Even if remedy available, mandamus denied because petitioners were not diligent in seeking review |
| Whether petitioners were diligent in seeking review | Petitioners offered no adequate explanation for >3-month delay | Transfer order could only be challenged before transfer; petitioners had fair opportunity but did not act promptly | Petitioners were not diligent; lack of diligence is dispositive, so mandamus denied |
Key Cases Cited
- Regions Bank of La. v. Rivet, 224 F.3d 483 (5th Cir.) (discussing limits of All Writs Act relative to appellate jurisdiction)
- United States v. Denedo, 556 U.S. 904 (U.S.) (mandamus available only if court has jurisdiction)
- Roche v. Evaporated Milk Ass’n, 319 U.S. 21 (U.S.) (All Writs Act power limited to appellate jurisdiction)
- In re Sw. Mobile Homes, Inc., 317 F.2d 65 (5th Cir.) (transfer to another circuit removes case from transferor circuit’s jurisdiction)
- In re McBryde, 117 F.3d 208 (5th Cir.) (court of appeals lacks mandamus authority over out-of-circuit district courts)
- In re Warrick, 70 F.3d 736 (2d Cir.) (discussing directing transferor court to request return and diligence requirement)
- Cheney v. U.S. Dist. Court for Dist. of Columbia, 542 U.S. 367 (U.S.) (mandamus is discretionary; standards for granting writ)