Verdicts

During the proceedings, the defendants discovered the extra funds the plaintiff had not disclosed to the judge and moved for dismissal, based on 28 U.S.C. ' 1915(e)(2)(A), which states that “the court shall dismiss the case at any time if the court determines that … the allegation of poverty is untrue.” The district court agreed with the defendants. It could have dismissed with or without prejudice, but opted to do so with prejudice, meaning that the plaintiff could not refile his claim.

The plaintiff appealed, but his lawyer failed to argue that the dismissal should have been without prejudice. The Seventh Circuit said it might have overlooked this oversight but for the fact that it would have upheld the district court's dismissal with prejudice in any case. It was unconvinced by the prisoner's contention that he was not aware that he had so much money in his trust accounting and that $10 was his best guess as to his assets; evidence was presented that a week before filing his in forma pauperis petition, the plaintiff spent $30 on postage and copying. Two weeks after that filing, he spent $500 on Christmas presents and $100 on clothing and books. The Seventh Circuit stated, “Although the district judge might have granted the plaintiff's in forma pauperis petition even if he'd disclosed his separate trust account, hiding assets is not a permissible alternative to seeking the judge's assistance. An applicant has to tell the truth, then argue to the judge why seemingly adverse facts (such as the trust fund in this case) are not dispositive. A litigant can't say, 'I know how the judge should rule, so I'm entitled to conceal material information from him.' “

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Federal Court Opts to Abstain from Hearing Wrongful Death Case

The U.S. District Court for the Northern District of Mississippi recently decided not to hear a wrongful death suit begun in state court but removed to federal court by the defendant doctor, who had filed for bankruptcy; although abstention was not required by law, it was proper in this case because Mississippi law on the subject is hard to apply. Henderson v. PHC-Cleveland, d/b/a/ Bolivar Medical Center,'2016 U.S. Dist. LEXIS 98674 (N.D. Miss. 7/22/16).

Plaintiff's decedent William C. Henderson died in March 2010 while undergoing a surgical procedure at Bolivar Medical Center in Cleveland, MS. His wife filed a wrongful death action on April 23, 2012, in the Circuit Court of the Second Judicial District of Bolivar County, MS. In it, she claimed that her husband's death resulted from the medical negligence of Dr. Patrick E. Sewell, Jr. She sought damages from both the doctor and the Medical Center. On Oct. 16, 2015, Dr. Sewell filed a petition for Chapter 7 bankruptcy, and he soon removed the wrongful death case to the U.S. District Court for the Northern District of Mississippi on the basis of the bankruptcy filing. See 28 U.S.C. ” 1334 and 1452.

Plaintiff Henderson sought remand to state court. Dr. Sewell countered that the wrongful death suit should remain in federal court because his Chapter 7 bankruptcy filing “relates” to Henderson's lawsuit within the meaning of 28 U.S.C. ' 1334(b), which provides that “the district courts shall have original but not exclusive jurisdiction of all civil proceedings … related to cases under title 11.” Looking at this language, the district court noted that Dr. Sewell's point “appear[ed] to be correct” but “the real issue, as with most bankruptcy removals, is whether this court is either required to abstain from hearing it or whether it should exercise its discretion to do so.”

Under 28 U.S.C. ' 1334(c)(2), a federal court is required to abstain from hearing cases based on “related to” bankruptcy jurisdiction if 5 factors are present: 1) A motion has been timely filed requesting abstention; 2) The cause of action is essentially one that is premised on state law; 3) The proceeding is non-core or related to the bankruptcy case; 4) The proceeding could not otherwise have been commenced in federal court absent the existence of the bankruptcy case; and 5) The proceeding has already been commenced and can be timely adjudicated in a state court forum. “Thus,” explained the court, “in cases where a timely motion for abstention has been filed, the law gives this court no choice but to abstain from hearing non-core cases premised on state law which could not have been commenced in federal court absent the existence of the bankruptcy case, so long as the case can be timely adjudicated in state court.”

The fourth element was not present in this case, however, as the plaintiff could have commenced her wrongful death suit in federal court based on diversity jurisdiction. Therefore, the federal court was not required by ' 1334(c)(2) to abstain from hearing the case.

The next question, then, was whether the court should exercise its discretion under 28 U.S.C. ' 1334(c)(1) to abstain from hearing the wrongful death matter. The court considered 14 factors, set out in Davis v. Life Investors Ins. Co. of America, 282 B.R. 186, 194 n.7 (S.D. Miss. 2002), to determine whether to abstain from exercising jurisdiction in favor of state court. In this case, these factors pointed to abstention, particularly that facts that the wrongful death action involved application only of state law, and that the law in Mississippi concerning wrongful death suits is extremely unsettled. Stated the court, “The Mississippi Supreme Court has lamented the 'beleaguered state of the law in wrongful-death actions,' see River Region Medical Corp. v. Patterson, 975 So. 2d 205, 208 (Miss. 2007), and it seems clear that Mississippi state courts are much better positioned to resolve any unsettled or unclear issues which might arise in this context.”

Other factors that counseled in favor of abstention were the lack of true relatedness between the wrongful death action and the bankruptcy proceeding; the State of Mississippi's greater interest in adjudicating the wrongful death action; and the fact that Henderson had pledged not to seek damages above Dr. Sewell's $1 million liability insurance coverage. The district court therefore remanded the case to the Circuit Court of Bolivar County.

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