[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 18, 2009
No. 08-14600
THOMAS K. KAHN
________________________
CLERK
D. C. Docket Nos. 03-01930-CV-BE-S,
03-02901-CV-BE-S
AIG BAKER STERLING HEIGHTS, LLC,
A.B. OLATHE II LIMITED PARTNERSHIP,
Plaintiffs-Counter-
Defendants-Appellants,
versus
AMERICAN MULTI-CINEMA, INC.,
Defendant-Counter-
Claimant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(August 18, 2009)
Before DUBINA, Chief Judge, EDMONDSON and KRAVITCH, Circuit Judges.
EDMONDSON, Circuit Judge:
This appeal is about a district court’s power to grant some relief from its
judgment.
Several years ago American Multi-Cinema, Inc. (American) arbitrated a tax
dispute with AIG Baker Sterling Heights, LLC and A.B. Olathe II LP (collectively,
Baker), from whom American leased space in shopping centers. The arbitration
panel concluded that American owed Baker under the terms of their lease
agreements almost a million dollars to cover a portion of the taxes on those
properties. But after the panel issued the award, American learned that it had
already paid some of the taxes directly to the taxing authority. Then, in the district
court, American, claiming a mistake in the award, sought modification of it to
reflect the tax actually already paid. The district court accepted American’s
argument and revised the award, but this Court reversed on appeal in AIG Baker
Sterling Heights, LLC v. Am. Multi-Cinema, Inc., 508 F.3d 995 (11th Cir. 2007)
(Baker I).
On remand, the district court, per Baker I, entered a judgment confirming
entirely the arbitration award. But the case did not stop there: the district court
later granted American some relief -- under Fed. R. Civ. P. 60(b)(5) -- from the
2
judgment to account for the taxes American had paid to the taxing authority.1
Baker appeals this latter decision. Baker says that the district court violated the
mandate in Baker I and went beyond the exclusive grounds for modifying an
arbitration award under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1–16.
Seeing no error, we affirm the district court order.
Background
American leased space from Baker in shopping centers located in Michigan
and Kansas. The lease agreements required American to pay to Baker money to
cover some of the taxes on those properties, and Baker was to pay the taxing
authority all money due. A dispute arose over the amount of money that American
owed Baker. The parties agreed to arbitrate the dispute in Kansas City, Missouri,
and the arbitration panel awarded $866,425.18 to Baker.
A portion of the award -- $226,771.76 -- represents money American owed
Baker for taxes on the Kansas property in 2002. Ownership of the Kansas property
changed in the middle of 2002, and the new landlord that replaced Baker then
asked American to pay tax money that American owed Baker for the first half of
1
We include the pertinent orders in an appendix to our opinion.
3
2002 directly to the taxing authority. American made the payment but has since
realized that it should have paid Baker and that Baker should have paid the taxing
authority. At the time of the arbitration, American, however, presented none of
this “taxes-paid” information; instead, American stipulated that it paid to Baker no
money for taxes on the Kansas property in 2002.
After arbitration, Baker filed an action in the Northern District of Alabama
to confirm the arbitration award. American filed an answer and counterclaim in
the Alabama district court and filed a separate action in the Western District of
Missouri to modify the arbitration award to reflect the taxes American had paid to
the taxing authority. The Missouri district court transferred its action to the
Alabama district court, which consolidated the two cases. The Alabama district
court then granted American’s motion for modification of the arbitration award on
the basis of an “evident material mistake” and reduced the award to account for the
tax payment. Baker appealed.
This Court reversed on appeal in Baker I. We said, among other things, that
American’s failure to identify the taxes it paid to the taxing authority in the facts
stipulated at arbitration was no “evident material mistake” within the meaning of
the FAA. Baker I, 508 F.3d at 999-1000. We, therefore, concluded that the district
4
court erred in modifying the arbitration award and remanded the case for further
proceedings. Id. at 1003.
On remand, the district court held a status conference. The district court
informed the parties that it wanted to credit American for the actual payment to the
taxing authority and asked the parties to brief how the district court could
legitimately accomplish that goal. In response, American suggested that the
district court take two steps: first, enter a judgment confirming the arbitration
award; and, second, grant American relief from the judgment under Rule 60(b)(5)
on the ground that the earlier tax payment had satisfied some of the judgment. The
district court adopted this approach over Baker’s objections. Baker now appeals
the decision to grant American some relief from the district court’s judgment.
Standard of Review
We review the grant of relief under Rule 60(b) for an abuse of discretion.
High v. Zant, 916 F.2d 1507, 1509 (11th Cir. 1990). We review legal conclusions
de novo and factual findings for clear error. Young v. New Process Steel, LP, 419
F.3d 1201, 1203 (11th Cir. 2005); Reynolds v. McInnes, 338 F.3d 1221, 1226
(11th Cir. 2003).
5
Discussion
Baker claims that the district court abused its discretion in several ways by
granting American relief from the judgment in this case. But we see only two that
deserve much attention. First, Baker contends that the district court ignored the
law of the case and the mandate established by Baker I. Second, Baker asserts that
the district court violated the FAA by modifying the arbitration award for a reason
not authorized by that statute.
1. The Law of the Case Doctrine & the Mandate Rule
The law of the case doctrine and the mandate rule ban courts from revisiting
matters decided expressly or by necessary implication in an earlier appeal of the
same case. Barber v. Int’l Bhd. of Boilermakers, Iron Ship Builders, Blacksmiths,
Forgers, & Helpers, Dist. Lodge No. 57, 841 F.2d 1067, 1070–73 (11th Cir. 1988).
But neither principle applies “when the issue in question was outside the scope of
the prior appeal.” Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430
F.3d 1326, 1332 (11th Cir. 2005); see also Barber, 841 F.2d at 1070 (“The lower
6
court may consider anew issues not within [the mandate’s] compass.”) (internal
quotation marks omitted). Here, Baker claims that the district court violated both
principles on remand. We disagree.
In Baker I, we spoke in pertinent part about the power of courts to correct an
“evident material mistake” in an arbitration award. Baker I, 508 F.3d at 999–1001.
We said that the FAA “embraces only an evident material mistake that appears in a
description in the award,” and noted that a mistake occurs when an arbitrator
understands “wrongly” or identifies “incorrectly.” Id. at 999. We, however, saw
no “evident material mistake” in the award before us because American sought
modification of the award to remedy its own failure to inform the panel of the
payment to the taxing authority. Id. at 999–1000. We vacated the modified award
and sent the case back to the district court. Id. at 1003.
On remand, the district court entered a judgment entirely confirming the
award. Then the district court granted American relief from the district court’s
judgment (not the award) to reflect the earlier payment to the taxing authority.
Baker argues that this latter decision violated the law of the case and the mandate
from the earlier appeal. But as we have pointed out, we discussed in Baker I only
modification of the award; we decided nothing expressly or by necessary
implication about the district court’s power to grant American relief from a district
7
court judgment or to consider evidence of the payment to the taxing authority.
Baker I, therefore, has no decisive role to play here.2 The district court did not
violate the law of the case doctrine or the mandate rule on remand.
2. The FAA
The FAA severely limits judicial vacatur and modification of an arbitration
award. As the Supreme Court recently confirmed, sections 10 and 11 of the FAA
offer the exclusive grounds for expedited vacatur or modification of an award
under the statute. Hall Street Assocs. v. Mattel, Inc., 128 S. Ct. 1396, 1403 (2008).
Baker claims that the district court ignored this restriction when it -- for reasons
not listed in sections 10 or 11 -- gave American credit against the district court’s
judgment for the payment to the taxing authority. We do not see, though, how
those FAA sections control in the circumstances of this appeal: the district court
neither vacated nor modified the arbitration award. Instead, the district court
entered a judgment confirming the award and about two months after that granted
2
We stress that the final order and judgment before us in Baker I is materially different
from the final order and judgment before us today.
8
American some relief from the judgment under Rule 60(b)(5).3 Sections 10 and 11
say nothing about court judgments and do not control this appeal.
We instead turn our attention to section 13 of the FAA. That provision says
that a judgment confirming an arbitration award, once entered, has the same force
and effect as a judgment in a standard civil action and is subject to all the
provisions of law relating to those judgments. 9 U.S.C. § 13; see also Parsons &
Whittemore Ala. Mach. & Servs. Corp. v. Yeargin Constr. Co., 744 F.2d 1482,
1484 (11th Cir. 1984). The provisions of law include Rule 60(b).4 See, e.g., Fid.
Fed. Bank, FSB v. Durga Ma Corp., 387 F.3d 1021, 1023–24 (9th Cir. 2004)
(stating that “judgment confirming an arbitration award is treated similarly to any
other federal judgment” and concluding that district court did not abuse its
discretion when it corrected judgment confirming arbitration award under Rule
3
Nor did the district court, as Baker contends, revisit the merits of a matter decided at
arbitration. The panel addressed three specific questions: (1) How much money must American
pay Baker for taxes under the terms of their lease agreements? (2) How much money has
American already paid Baker for taxes under the terms of their lease agreements? and (3) How
much money does American, therefore, owe Baker for taxes under the terms of their lease
agreements? The district court in no way disturbed the panel’s answers to those questions; the
district court focused solely on the taxes American had paid to the taxing authority -- not to
Baker -- and how the money paid for the taxes satisfied some of the tax money obligation the
panel concluded that American owed Baker under the terms of their lease agreements.
4
Fed. R. Civ. P. 81(a)(6)(B) says that the Federal Rules of Civil Procedure apply in
actions related to arbitration “to the extent applicable” and except as otherwise provided for in
the FAA. We accept that this language may mean that courts cannot use Rule 60(b) to modify or
vacate an arbitration award or, perhaps, to grant relief from a judgment confirming an award for
reasons covered in sections 10 or 11 of the FAA. This appeal is different, however; it is about
partial payment of a judgment debt.
9
60(b)); Baltia Air Lines, Inc. v. Transaction Mgmt., Inc., 98 F.3d 640, 642 (D.C.
Cir. 1996) (stating that “Rule 60(b) is an appropriate vehicle by which to challenge
a judgment confirming an arbitration award”); Clarendon Nat’l Ins. Co. v. TIG
Reinsurance Co., 183 F.R.D. 112, 117 (S.D.N.Y. 1998) (section 13 of FAA
provides that judgments confirming arbitration awards are subject to Rule 60(b)).
Under Rule 60(b), a court may relieve a party from a judgment if “the
judgment has been satisfied, released, or discharged . . . .” Fed. R. Civ. P.
60(b)(5). This authority encompasses the power to declare a judgment satisfied
“when damages are paid before trial or a tortfeasor or obligor has paid the
judgment debt.” Gibbs v. Maxwell House, A Div. of Gen. Foods Corp., 738 F.2d
1153, 1155 (11th Cir. 1984).
Two old cases involving Rule 60(b) seem particularly pertinent here. In
Ferrell v. Trailmobile, Inc., 223 F.2d 697 (5th Cir. 1955), a defendant allegedly
failed to pay one of eighteen installments on a truck trailer. Id. at 698. Although
the defendant claimed that he had made the payment, the district court entered a
judgment in favor of the plaintiff. Id. The defendant later secured copies of
documents that conclusively proved that he made the disputed payment; so, he
moved the district court for relief from the judgment under Rule 60(b). Id. The
district court denied the request. Id. This Court reversed on appeal and said “[i]f,
10
in fact, practically conclusive evidence shows that the [defendant] had actually
paid all eighteen installments for the purchase of the trailer, it is obvious that the
judgment should be set aside to prevent a manifest miscarriage of justice.” Id. We
remanded the case for a hearing on the Rule 60(b) motion. Id. at 699.
This Court later reached a similar result in Johnson Waste Materials v.
Marshall, 611 F.2d 593 (5th Cir. 1980). In Marshall, the government sued several
defendants for violating the Fair Labor Standards Act of 1938, 29 U.S.C. §§
201–19. Id. at 595. At trial, the government introduced employee-testimony on
the number of hours worked and the wages paid; the defendants offered no
documentary evidence to rebut the testimony and were found liable. Id. at 595–96.
More than a year later, the defendants moved to set aside or reform the judgment
under Rule 60(b) after locating cancelled payroll checks and other evidence that
established that the plaintiffs were due less than awarded to them at trial. Id. at
596. The district court concluded, however, that the evidence was neither newly
discovered nor secured through due diligence and denied the defendants any relief.
Id. at 597.
We reversed on appeal. Id. at 601. We said that the defendants, to receive
relief from the judgment under Rule 60(b)(5), were not obligated to produce newly
discovered evidence or to demonstrate due diligence in securing that evidence. Id.
11
at 599. Instead, we said that the defendants needed only to produce conclusive
evidence that they partially satisfied the judgment. Id. at 599–600. To rule
otherwise, we stressed, would effectively grant the plaintiffs a windfall: “Reducing
the judgment . . . by the amount that defendants have already paid will not deprive
the employees of the wages that they properly earned. When defendants pay the
remainder of the judgment, the employees will have received the full amount to
which the trial court determined they were entitled. They will only be denied a
windfall recovery.” Id. at 600–01 (emphasis added).
The district court found the reasoning in Ferrell and Marshall applicable
here. The district court stated that American presented “unrefuted evidence” of the
payment to the taxing authority, including copies of the pertinent checks and
affidavits showing that Baker paid no portion of the pertinent taxes.5 Based on that
evidence, the district court concluded that American had already satisfied some of
the judgment against it and, therefore, was entitled to some relief under Rule
60(b)(5). The district court declared that its decision avoided Baker’s “knowing
5
American submitted to the district court copies of the cancelled checks that American
sent to the taxing authority and the payment receipts from the taxing authority. American also
submitted affidavits that said that American paid the 2002 taxes directly to the taxing authority,
Baker paid no portion of the 2002 taxes to the taxing authority, and Baker owes no taxes to the
taxing authority for 2002. Baker introduced nothing to rebut this evidence.
12
receipt of a quarter-of-a-million dollar windfall.” We see no abuse of discretion in
this decision.
We begin with Ferrell and Marshall. We accept that those decisions do not
fit perfectly here: they involved judgments entered after civil trials and not after
arbitration. But section 13 of the FAA provides that a judgment which has
confirmed an award is to be treated no better or worse than any other civil
judgment: “The judgment so entered shall have the same force and effect, in all
respects, as, and be subject to all the provisions of law relating to, a judgment in an
action; and it may be enforced as if it had been rendered in an action in the court in
which it is entered.” 9 U.S.C. § 13. So, the district court did not err by extending
our precedents dealing with judgments in civil actions to the case before it.
Considering the law, we turn to the facts found by the district court in this
case. Like the defendants in Ferrell and Marshall, American submitted conclusive
evidence to the district court that American paid the taxes on the Kansas property
directly to the taxing authority and thereby had satisfied some of the judgment
against American.6 Baker, although given every opportunity to do so, never
6
Baker asserts that the district court erred in finding that American partially satisfied the
judgment. Baker says that the many years between the payment to the taxing authority and the
entry of judgment, as well as that Baker did not physically receive the payment, precludes the
payment from satisfying the judgment. But Baker cites no authority for this position, and we are
not persuaded by it. See Torres-Troche v. Municipality of Yauco, 873 F.2d 499, 501 n.7 (1st
Cir. 1989) (“Rule 60(b)(5) should serve as the basis for a motion to correct, regardless of the
time at which a judgment is satisfied. The Rule should not be interpreted so strictly that it
13
contradicted the evidence of payment or denied that the tax payment satisfied the
obligation Baker would have otherwise had to pay to the taxing authority. Baker
directly benefitted concretely from American’s payment to the taxing authority. In
the light of the facts as well as the precedents, we cannot say that the district court
abused its discretion by granting American some relief from the judgment under
Rule 60(b)(5).
Conclusion
We affirm the order of the district court.
AFFIRMED.
forecloses a litigant from alerting a court to the prior satisfaction of a final judgment.”).
Nor did the district court give American credit for an amount greater than the
$226,771.76 the arbitration panel concluded that American owed Baker for the 2002 taxes. The
amended final order explicitly states that the district court granted American “partial relief from
[the] judgment in the amount of $326,197.52, representing $226,771.76 in taxes previously paid
to the taxing authority plus $99,425.76 in prejudgment interest on that amount . . . .” (emphasis
added).
14
APPENDIX
15
Case 2:03-cv-01930-KOB Document 58 Filed 05/01/2008 Page 1 of 2FILEE
2008 May-01 P
04:37 U.S DISTRIC
COURT ND Of
A LA BA M/
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF
ALABAMA SOUTHERN DIVISION
AIG BAKER STERLING
HEIGHTS, LLC, A. B. OLATHE II
LIMITED PARTNERSHIP,
Plaintiffs,
ICONSOLIDATED
V. LEAD CASE: CV-03-BE-1930-S
JMEMBER CASE: CV-03-BE-2901-S
AMERICAN MULTI-CINEMA,
INC.
Defendant.
FINAL ORDER
This case is before the court on remand from the Eleventh Circuit Court of Appeals. See
AIG Baker Sterling Heights, L. L. C'. v. American Multi-Cinema, Inc., 508 F.3d 995 (11th Cir.
2007). For the reasons stated in the memorandum opinion entered contemporaneously, the court
CONFIRMS the arbitrators' award of $866,425.18, and ENTERS JUDGMENT in favor of
Plaintiff AIG Baker Sterling Heights, LLC in the amount of$1,l51,523.31 ($866,425.18 plus
$285,098.13 in prejudgment interest, consistent with the Plaintiffs calculation in doc. 49). AMC
has already paid $539,375.75, with a balance of $612,147.56 remaining to be paid on the
judgment. This judgment shall not be duplicative of the arbitration award itself, and Plaintiff
may not seek to recover double this amount by enforcing both the arbitration award and this
•i udgment.
This case is hereby DISMISSED WITH PREJUDICE,T costs taxed as paid.
As noted previously, this court did not decide AMC's counterclaims fir
Case 2:03-cv-01930-KOB Document 58 Filed 05/01/2008 Page 2 of 2FILE[
DONE and ORDERED this 1st day of May, 2008.
K ON OWEN BO DRE UNITED
STATES DISTRICT JUDGE
CAM fee offsets on the merits, see doe. 31; therefore, that part of the court's
decision is without prejudice.
Case 2:03-cv-01930-KOB Document 71 Filed 07/18/2008 Page 1 of 2FILEE
2008 Jul-18 A
08:48 US. DISTRIC
COURT N D 01
ALA BA Mi
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF
ALABAMA SOUTHERN DIVISION
MG BAKER STERLING I
HEIGHTS, LLC, A. B. OLATHE II
LIMITED PARTNERSHIP,
Plaintiffs, I
ICONSOLIDATED
V. LEAD CASE: CV-03-BE-1930-S
IMEMBER CASE: CV-03-BE-2901-S
AMERICAN MULTI-CINEMA,
INC.
Defendant.
AMENDED FINAL ORDER
For the reasons stated in the memorandum opinion entered contemporaneously, the court
hereby GRANTS "Defendant American Multi-Cinema's Motion for Partial Relief For Judgment
Pursuant to Rule 60(b)(5)" (doc. 59) and Plaintiffs' "Motion to Amend or Modify Final Order"
(doe. 61). Accordingly, the court amends and restates its judgment of May 1, 2008 as follows:
This case is before the court on remand from the Eleventh Circuit Court of Appeals. See
AIG Baker Sterling Heights, LL.C. i American Multi-Cinema, Inc., 508 F.3d 995 (11th Cir.
2007). For the reasons stated in the memorandum opinion entered on May 1, 2008, the court
CONFIRMS the arbitrators' award of $866,425.18, and ENTERS JUDGMENT in favor of
Plaintiffs AIG Baker Sterling Heights, L.L.C. and A. B. Olathe II Limited Partnership.jointly, in
the amount of$l,151,523.31 ($866,425.18 plus $285,098.13 in prejudgment interest, consistent
with the Plaintiffs' calculation in doc. 49).
Pursuant to Rule 60(b)(5), the court grants Defendant American Mutli-Cinema, Inc.
Case 2:03-cv-01930-KOB Document 71 Filed 07/18/2008 Page 2 of 2FILEE
("AMC") partial relief from this court's judgment in the amount of $326,197.52, representing
$226,771.76 in taxes previously paid to the taxing authority plus $99,425.76 in prejudgment
interest on that amount, with a net balance of $825,325.79 due directly to Plaintiffs. AMC has
already paid Plaintiffs $539,375.75. and deposited with the court $285,950.44, which the Clerk
of Court disbursed to Plaintiffs' counsel on June 16, 2008. Therefore, nothing remains to be
paid on thejudgment.' Thisjudgment shall not be duplicative of the arbitration award itself
and PlaintifTs may not seek to recover double this amount by enforcing both the arbitration
award and this judgment,2
The costs incurred in this proceeding are taxed as paid.
DONE and ORDERED this 17th day of July, 2008.
- ON OWEN BO DRE UNITED
STATES DISTRICT JUDGE
AMC deposited forty cents too much with the court, but did not
oppose Plaintiffs' withdrawal of the forty-cent overage. See doc. 69.
This court previously dismissed AMC's counterclaims for CAM fees
without prejudice. See doc. 31.
-2
KRAVITCH, J., concurring in part and dissenting in part:
I concur in Part 1 of the majority’s opinion, holding that the district court did
not violate the mandate of AIG Baker Sterling Heights, LLC v. American Multi-
Cinema, Inc., 508 F.3d 995 (11th Cir. 2007) (“Baker I”) by modifying the
arbitration award under Federal Rule of Civil Procedure 60(b)(5).
In Part 2, the majority affirms the district court’s application of Federal Rule
of Civil Procedure 60(b)(5) to amend the judgment confirming the arbitration
award. Because, however, I believe that the Federal Arbitration Act (the “FAA”)
does not allow modification of arbitration awards in the manner used by the district
court, I respectfully dissent from Part 2 of the majority’s decision.
It is well-established that judicial review of arbitration awards is “narrowly
limited.” Baker I, 508 F.3d at 999 (quoting Rosensweig v. Morgan Stanley & Co.,
494 F.3d 1328, 1333 (11th Cir. 2007)). An arbitration decision may be reversed
only rarely, and “the fact that a court is convinced [the arbitrator] committed
serious error does not suffice to overturn his decision.” Major League Baseball
Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001); see also O.R. Sec., Inc. v.
Prof’l Planning Assocs., Inc., 857 F.2d 742, 747 (11th Cir. 1988) (holding that
allowing relitigation of the merits of a claim would violate the basic purpose of the
FAA to create a fast, inexpensive resolution of disputes). The FAA itself provides
16
limited grounds upon which a court may undo an arbitration award. See 9 U.S.C.
§§ 10, 11. This court already determined in Baker I that the arbitration award in
this case, however, could not lawfully be modified under those provisions.
The majority holds that Rule 60(b)(5) may be used to modify a judgment
confirming an arbitration award even though the same arbitration award may not
be modified under the FAA. Although the Federal Rules apply to court
proceedings involving arbitration awards, see Fed. R. Civ. P. 81(a)(6)(B), they
apply “only to the extent that matters of procedure are not provided for in those
statutes.” O.R. Sec., Inc., 857 F.2d at 745. Because the FAA provides for methods
to correct an arbitration award, see 9 U.S.C. §§ 10, 11, the Federal Rules should
not be read to provide alternative ways to modify arbitration awards. Furthermore,
Rule 60(b) should not be used to circumvent other requirements of the law.
Pitchess v. Davis, 421 U.S. 482, 489-90 (1975) (holding that Rule 60(b) cannot be
used to alter a conviction which was barred from review under habeas rules). It is
obvious from the procedural history in this case that Rule 60(b) was used as an end
run around the FAA after §§ 10 and 11 were found to be inapplicable. The district
court unsuccessfully attempted to modify the award under the FAA, sought advice
from the litigants about how to get around the frustration of that attempt, and then
relied on Rule 60(b) to do exactly what it had been told was impossible under the
17
FAA. The FAA prevents courts from using Rule 60(b) in this manner to avoid the
strict limitations on judicial review set forth in the FAA. See Lafarge Conseils et
Etudes, S.A. v. Kaiser Cement & Gypsom Corp., 791 F.2d 1334, 1338-39 (9th Cir.
1986) (holding that FAA modification provisions provide the exclusive means by
which an arbitration award may be modified and, therefore, Rule 60(b) may not be
used to modify a judgment confirming such an award); Corey v. New York Stock
Exch., 691 F.2d 1205, 1212-13 (6th Cir. 1982) (finding that “[t]he [FAA] provides
the exclusive remedy for challenging an award”). In Hall Street Assocs., LLC v.
Mattel, Inc., 128 S.Ct. 1396 (2008), the Supreme Court recently emphasized the
narrow nature of the judicial review permitted under the FAA. The Court held that
parties could not contractually agree in an arbitration agreement to expand judicial
review of arbitration proceedings. Id. at 1400-01. The Court explained that such
arbitration agreement provisions are void because §§ 10 and 11 of the FAA
“provide the FAA’s exclusive grounds for expedited vacatur and modification” of
arbitration awards. Id. at 1403. The Court further stated that the modification and
vacatur provisions should be read as the exclusive means for modifying an
arbitration award because “[a]ny other reading opens the door to the full-bore legal
and evidentiary appeals that can ‘rende[r] informal arbitration merely a prelude to a
more cumbersome and time-consuming judicial review process,’ and bring
18
arbitration theory to grief in post-arbitration process.” Id. at 1405 (quoting
Kyocera Corp. v. Prudential-Bache Trade Servs, Inc., 341 F.3d 987, 998 (9th Cir.
2003)) (alteration in original). Just as the parties may not use contract law to avoid
the exclusive nature of the FAA modification provisions, the courts cannot use the
Federal Rules of Civil Procedure to re-open arbitrated issues.1
American and the majority rely on two cases for the proposition that
American’s own failure to uncover the evidence of its payment of the 2002 taxes
through due diligence should not prevent the court from using Rule 60(b)(5):
Ferrell v. Trailmobile, 223 F.2d 697 (5th Cir. 1955) and Johnson Waste Materials
v. Marshall, 611 F.2d 593 (5th Cir. 1980). These cases show that Rule 60(b) may
be used to reform judgments based upon post-judgment-discovered evidence that
the judgment had been paid, even if that evidence could have been discovered at
the time of trial. Although Ferrell and Johnson Waste would excuse American’s
failure to discover the payments before trial, these cases do not involve arbitration
1
American cites to language from Hall Street stating that §§ 10 and 11 do not exclude
review “based on authority outside the statute,” 128 S.Ct. at 1406, in support of its argument that
the Federal Rules may be used to modify judgments. The above language in Hall Street,
however, was followed with the statement that “[t]he FAA is not the only way into court for
parties wanting review of arbitration awards: they may contemplate enforcement under state
statutory or common law . . . .” Id. The Court then discussed cases involving enforcement of
arbitration awards through statutes other than the FAA. Thus, I read the above language to refer
only to alternatives for enforcing an arbitration award, and not to suggest that parties enforcing
an award under the FAA may replace certain provisions of the FAA with other legal authorities.
Here, Baker sought enforcement through the FAA, and American has never contested the
applicability of the FAA.
19
awards and therefore do not support the conclusion that Rule 60(b)(5) may be
applied to actions confirming arbitration awards.2
Because I believe that Rule 60(b) may not be lawfully applied to modify an
arbitration award, I would reverse. See Wexler v. Lepore, 385 F.3d 1336, 1338
(11th Cir. 2004) (“An error of law constitutes an abuse of discretion.”).
Moreover, it is unclear to me that Rule 60(b)(5) would apply to the facts of
this case, even if it were generally applicable to judgments confirming arbitration
awards.
First, Rule 60(b) cannot be used to provide post-judgment relief to which
that party would not have been entitled in the original judgment. See Bear Valley
Mutual Water Co. v. Riddell, 493 F.2d 948, 950 (9th Cir. 1974). Here, American
was not entitled to modification of the arbitration award based on its tax payment
2
Ferrell and Johnson Waste demonstrate that Rule 60(b) should be used to avoid an
inequitable result. Courts, however, frequently allow inequitable or erroneous arbitration
decisions to stand in order to effectuate the national policy favoring quick resolution of disputes
through binding arbitration. See e.g., Hall Street, 128 S.Ct. at 1409 (upholding an arbitration
decision despite the presence of what the dissent called “a rather glaring error of law”).
Furthermore, I do not agree with the majority that the equities so one-sidedly favor American.
American was the one who failed to review its own accounting records and discover the paid
taxes. And American stipulated before the arbitration panel that it had paid $0 taxes on the
property in question for 2002. Although Ferrell and Johnson Waste might excuse this lack of
diligence, I still believe that American’s fault in this case weighs against the use of Rule
60(b)(5) here. Also, there is an equitable interest in respecting the finality of the arbitrator’s
decision. See Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847 (1988) (Rehnquist, J.
dissenting) (“[A] very strict interpretation of Rule 60(b) is essential if the finality of judgments is
to be preserved.”).
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in the enforcement proceedings because it had no right to have the award modified
under the FAA. Baker I, 508 F.3d at 1001. It is not, therefore, entitled to seek this
relief under Rule 60(b)(5).
Second, this case differs in important ways from Ferrell and Johnson Waste,
and, in my opinion, these distinctions render application of Rule 60(b)(5)
inappropriate in this case, even if applicable to judgments confirming arbitration
awards generally. In Ferrell, the dispute centered around the appellant’s failure to
make installment payments on a truck he purchased from the appellee. 223 F.2d at
698. At trial, the appellant asserted that he had made three payments, but the
appellee denied it. Id. After judgment was entered against the appellant, he was
able to obtain copies of the money orders showing that he had in fact made the
payments. Id. This court held that, in light of such “practically conclusive
evidence” that the payments had been made, “the judgment should be set aside to
prevent a manifest miscarriage of justice.” Id. In Johnson Waste, this court built
upon Ferrell and concluded that a judgment may be reformed based upon evidence
that a portion of the obligation from which the judgment arose had been paid, even
if the payor could have discovered that evidence at trial through the exercise of due
diligence. 611 F.2d at 595. This court noted that this holding was appropriate in
“the exceptional circumstance where the evidence of payment is virtually
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conclusive.” Both Ferrell and Johnson Waste involved “practically conclusive
evidence” that the judgments rendered by the district court had actually been
satisfied by payments made by the losing party to the judgment-holding party prior
to trial. Here, however, the evidence is not “practically conclusive” that the
judgment was satisfied. First, the amount of American’s previously-undiscovered
payment to the taxing authority does not match the amount that the arbitrators
determined American was obliged to pay for 2002 for the Kansas property. The
arbitration decision states that American was liable for $226,770 whereas the
evidence produced by American indicates that American paid the tax authority
$248,624.57. This unexplained difference in liability calls into question the
reliability of American’s evidence. Accordingly, it was improper for the district
court to offset the arbitration award by the full amount of American’s payment to
the county when it was greater than the amount of liability for that period found by
the arbitration panel. Second, the payments made by American were not made to
the party to whom it is obligated to pay the judgment. Thus, the court had to re-
open questions resolved in the arbitration proceedings in order to determine
whether the payment satisfied the obligation upon which the award was based.
The fact that American’s evidence is not “practically conclusive” is crucial
to the availability of relief under Rule 60(b). See Ferrell, 223 F.2d at 698; see also
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Fleming v. New York Univ., 865 F.2d 478, 484 (2d Cir. 1989) (refusing to allow
relief under Rule 60(b)(3) where the evidence presented was “a mixed bag” rather
than the requisite “clear and convincing evidence,” and noting that granting relief
on such questionable evidence would allow relitigation of the merits on a 60(b)
motion); Niedland v. United States, 338 F.2d 254, 260 (3d Cir. 1964) (refusing to
apply Ferrell where the post-judgment evidence merely raised doubts – albeit
“grave doubts” – as to the correctness of the judgment rather than offering
conclusive proof that the judgment had been satisfied). Thus, even if I agreed that
Rule 60(b)(5) could be applied to judgments confirming arbitration awards, I
would limit such relief to cases involving uncontroverted, “practically conclusive”
evidence that payments were made to the party that secured the judgment. Those
circumstances are not present here.
For the foregoing reasons, I respectfully dissent from Part 2.
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