Rosales v. Adir International LLC

Background

Valeria Garza Rosales alleged that Adir International LLC attempted to collect a debt after she filed for bankruptcy. She claimed that Adir’s conduct violated 11 U.S.C. § 362(k), which allows damages for violations of the bankruptcy law’s automatic stay, and also amounted to an invasion of privacy under state common law.

Rosales filed for bankruptcy in the United States Bankruptcy Court for the District of Minnesota on June 24, 2024. The bankruptcy clerk’s office notified listed creditors that the filing triggered an automatic stay prohibiting further collection attempts. Rosales alleged that Adir sent her an email and a text message in July 2024 and continued sending text messages, emails, and making phone calls in August 2024. Her attorney also sent Adir direct notice of the bankruptcy filing.

Adir moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), arguing that the District Court lacked personal jurisdiction over it. Separately, the District Court asked the parties to explain why the case should not be referred to the Bankruptcy Court. Rosales opposed referral; Adir supported it.

Referral of the Automatic-Stay Claim

The court explained that bankruptcy courts may hear and decide core proceedings arising under the Bankruptcy Code. The District of Minnesota’s local rule refers all bankruptcy cases and proceedings to its bankruptcy judges.

The court concluded that a claim seeking damages under § 362(k) for violating the automatic stay is a core bankruptcy proceeding because the automatic stay is created by federal bankruptcy law. The court also found that the Bankruptcy Court was better suited to address issues such as whether Adir had notice of Rosales’s bankruptcy case. The court rejected Rosales’s arguments concerning the simplicity of the claim, her asserted desire for a jury trial, and judicial economy. It stated that referral would not impair her ability to have a jury trial before the District Court if one were available and appropriate.

Invasion-of-Privacy Claim

The court treated Rosales’s invasion-of-privacy claim as a state-law claim supported in federal court only through supplemental jurisdiction. Supplemental jurisdiction is a court’s discretionary authority to hear related state-law claims when a federal claim is also present. Because the automatic-stay claim was being referred and the court declined to exercise supplemental jurisdiction over the remaining state-law claim, the court dismissed the invasion-of-privacy claim without prejudice.

Disposition

The court ordered that Count 1, the § 362(k) automatic-stay claim, be referred to the Bankruptcy Court. It dismissed Count 2, the invasion-of-privacy claim, without prejudice. It denied Adir’s motion to dismiss for lack of personal jurisdiction as moot. The order did not resolve the merits of either claim.