United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT October 25, 2004
--------------------------------
No. 03-30894 Charles R. Fulbruge III
-------------------------------- Clerk
ROBERT ROCCO MIRE,
Plaintiff - Appellant
v.
FULL SPECTRUM LENDING INC. and
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
Defendants - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
Before BARKSDALE and PICKERING, Circuit Judges, and LYNN,*
District Judge.
LYNN, J: District Judge
This is an appeal from an order compelling arbitration. For
the reasons discussed below, we dismiss for lack of jurisdiction.
I. BACKGROUND
In 2000 and 2001, Appellant Robert Rocco Mire obtained two
loans, in the total principal amount of $45,000, from Appellee
Full Spectrum Lending, Inc. Both loans were secured by a
mortgage on Mire’s house. Appellee Mortgage Electronic
*
District Judge for the Northern District of Texas, sitting
by designation.
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Registration Services, Inc. (“MERS”) was the nominal mortgagee.
As part of both loan agreements, Mire and Full Spectrum
agreed to arbitrate before the National Arbitration Forum (“NAF”)
disputes which were connected to the loan transactions, other
than certain enumerated exceptions, which are inapplicable here.
They also agreed to arbitrate third party claims connected to the
loan transactions. At the top of the first page of each
agreement, in all capital letters, is typed “ARBITRATION
AGREEMENT.” On the line just below, in boldface and in all
capital letters, appears the following: “READ THE FOLLOWING
ARBITRATION AGREEMENT CAREFULLY.” On the second page, just above
Mire’s signature, in bold print and all capital letters, each
agreement states:
WAIVERS: BY ENTERING INTO THIS AGREEMENT, WE AND YOU
EACH KNOWINGLY AND VOLUNTARILY WAIVE (1) ANY AND ALL
RIGHTS EITHER HAVE UNDER LAW TO PURSUE REMEDIES IN
COURT, INCLUDING, BUT NOT LIMITED TO, A TRIAL BEFORE A
JURY, EXCEPT FOR THE EXCLUDED CLAIMS, (2) THE RIGHT TO
PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS
OF CLAIMANTS PERTAINING TO ANY CLAIM, AND (3) THE RIGHT
TO PRETRIAL DISCOVERY OTHER THAN THE LIMITED DISCOVERY
PROVIDED FOR IN THIS AGREEMENT.
YOU ACKNOWLEDGE THAT YOU HAVE CAREFULLY READ THIS
AGREEMENT AND AFFIRM THAT YOU UNDERSTAND ITS TERMS AND
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ARE ENTERING INTO THIS AGREEMENT VOLUNTARILY AND NOT IN
RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS AGREEMENT ITSELF.
In June of 2002, Mire defaulted on the July 2001 note. In
October of 2002, MERS initiated a foreclosure action against
Mire. In January of 2003, Mire filed suit in district court,
seeking, among other relief, a temporary restraining order and
preliminary injunction to prevent MERS from proceeding with
foreclosure. Mire alleged that he did not receive disclosures
that should have been given three days in advance of the loan
closings, in violation of the Homeownership and Equity Protection
Act (HOEPA), 15 U.S.C. § 1639. Mire further alleged that he
received inaccurate disclosures relating to the cost of the loan,
in violation of the Truth in Lending Act, 15 U.S.C. § 1604 et
seq. and Regulation Z, 12 C.F.R. § 226.
Full Spectrum and MERS filed a motion to compel arbitration
and to stay Mire’s lawsuit pending arbitration. In his
opposition, Mire argued that the arbitration agreements were
unenforceable because (1) they lacked mutuality; (2) they
unfairly limited discovery; (3) NAF is inherently biased in favor
of lenders; and (4) Mire could not afford to pay potentially
expensive arbitration costs.
On August 8, 2003, the district court concluded that the
arbitration agreements were enforceable and entered an order
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granting the motion to compel arbitration, and staying Mire’s
lawsuit pending arbitration. The district court further ordered
that the case be “administratively closed”. The district court
also denied Mire’s pending motion to compel discovery as moot.
Mire filed a timely notice of appeal. Full Spectrum and
MERS filed a motion to dismiss the appeal.
II. ANALYSIS
As a threshold matter, this Court must decide whether the
district court’s order compelling arbitration, staying
proceedings, and administratively closing the case constitutes an
appealable order. If not, then this Court lacks jurisdiction and
the appeal should be dismissed, which would pretermit any
consideration of the merits of Mire’s appeal.
The Federal Arbitration Act (“FAA”), 9 U.S.C. § 16, states
that an appeal may be taken from (1) a final order with respect
to an arbitration subject to the FAA (§ 16(a)(3)); (2) an order
refusing a stay of any action under section 3 of the FAA (§
16(a)(1)(A)); and (3) an order denying an application under
section 206 of the FAA to compel arbitration (§ 16 (a)(1)(C)).
The FAA further provides that “[e]xcept as otherwise provided in
section 1292(b) of title 28, an appeal may not be taken from an
interlocutory order - - (1) granting a stay of any action under
section 3 of this title....” 9 U.S.C. § 16(b)(1). Section 3 of
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the FAA states that once the trial court is satisfied that an
issue is referable to arbitration, the court “shall on
application of one of the parties stay the trial of the action
until such arbitration has been had....” In this case, the
district court followed these statutory directives when it
referred the action to arbitration and stayed Mire’s lawsuit.
The Supreme Court addressed the appealability of an order
compelling arbitration in Green Tree Financial Corp.- Alabama v.
Randolph, 531 U.S. 79 (2000). In Green Tree, the district court
compelled arbitration, and dismissed the respondent’s claims with
prejudice, “leaving the court nothing to do but execute the
judgment.” Id. at 86. The Supreme Court held that “where, as
here, the District Court has ordered the parties to proceed to
arbitration, and dismissed all the claims before it, that
decision is ‘final’ within the meaning of § 16(a)(3), and
therefore appealable.” Id. at 89. In a footnote of particular
significance to this case, the Supreme Court noted that “[h]ad
the District Court entered a stay instead of a dismissal in this
case, that order would not be appealable. 9 U.S.C. § 16(b)(1).”
Id. at 87 n.2. Although Appellant asserts that this statement is
“dicta,” in fact, it merely repeats the statutory mandate of
§ 16(b)(1), which provides that an appeal may not be taken from
an interlocutory order granting a stay.
In 2002 and 2003, this court decided four cases dealing with
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the issue of appealability of arbitration orders. In the first
of the cases, American Heritage Life Ins. Co. v. Orr, 294 F.3d
702 (5th Cir. 2002), the district court entered an order
compelling arbitration, staying related state court litigation,
and “closing” the case. This court had to determine whether
those actions of the trial court amounted to an appealable final
order of dismissal. This court held that the order was
appealable, emphasizing that “there is no practical distinction
between ‘dismiss’ and ‘close’ for purposes of this appeal,” where
“[t]he application of each word results in a termination on the
merits, leaving the judgment-rendering court with nothing more to
do but execute the judgment.” Id. at 708.
Next, in Gulf Guaranty Life Ins. v. Connecticut General Life
Ins., 304 F.3d 476 (5th Cir. 2002), this court again had to
determine the finality of a district court’s decision. The
district court dismissed a lawsuit filed in 2000, which had been
consolidated with a lawsuit filed in 1996, which had been stayed
pending arbitration. The court again ordered arbitration, and
dismissed the lawsuit filed in 2000, but said nothing directly
about the status of the earlier stayed suit. This court
concluded that “[t]he district court’s failure to reference
explicitly the 1996 first-filed suit as dismissed in the court’s
... order compelling arbitration of the entire consolidated
action was simply an oversight. Clearly, the intention, as well
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as the effect, was to dismiss it.” Id. at 483. Finding that the
district court intended its order to be final, this court
concluded it had jurisdiction over the appeal.
In Saturn Distribution Corp. v. Paramount Saturn, Ltd., 326
F.3d 684 (5th Cir. 2003), this court determined that an order
compelling arbitration was a “final decision” pursuant to the
analysis of Green Tree because (1) the district court closed the
case; (2) the district court’s order was labeled a “Final
Judgment,” and contained language further describing it as a
final judgment, thereby clearly expressing the court’s intent to
end the entire matter on the merits; and (3) the district court’s
order was not accompanied by an explicit stay. Id. at 686-87.
The most recent authority of this court on the finality of
an order compelling arbitration is Apache Bohai Corp. v. Texaco
China, B.V., 330 F.3d 307 (5th Cir. 2003). In Apache Bohai this
court held that the district court’s order was not appealable
because it had not dismissed the case, but instead simply entered
a stay pending arbitration. Id. at 309. As Appellant argues
here, Apache Bohai maintained that “when a district court enters
an order staying an action and referring all disputed matters to
arbitration, leaving no live issues before the district court,
this court should consider the order to be, in effect, a de facto
dismissal and thus a final decision appealable under § 16(a)(3).”
Id. This court rejected that argument and explained that
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“although it may be true that in some instances the entry of a
stay disposes of most or all issues, that fact alone does not
render it the functional equivalent of a dismissal.” Id. “An
arbitration order entering a stay, as opposed to a dismissal, is
not an appealable final order.” Id. Accord, ATAC Corp. v.
Arthur Treachers, Inc., 280 F.3d 1091 (6th Cir. 2002) (case
stayed and closed). Referring to American Heritage, this court
noted in Apache Bohai that “[i]n this case, by contrast, the
court did not purport to close the case administratively, nor did
it attempt in any way to terminate its involvement in the
proceedings.” Id. at 310. In American Heritage, there is no
reference to an administrative closure. There, the district
court merely “closed” the case, and this court found that action
to be the equivalent of a dismissal.
Were it not for the administrative closure by the court
below, and the cited language in Apache Bohai, this case would be
easily disposed of, as one involving a non-appealable stay.
However, Appellant asserts that the administrate closure is akin
to a dismissal, and which the dictum in Apache Bohai suggests
would be a final, immediately appealable order.
Unlike the facts in Apache Bohai, here this court is
presented with an administrative closure by the court below.
District courts frequently make use of this device to remove from
their pending cases suits which are temporarily active elsewhere
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(such as before an arbitration panel) or stayed (such as where a
bankruptcy is pending). The effect of an administrative closure
is no different from a simple stay, except that it affects the
count of active cases pending on the court’s docket; i.e.,
administratively closed cases are not counted as active. See
Lehman v. Revolution Portfolio LLC, 166 F.3d 389, 392 (“This
method is used in various districts throughout the nation in
order to shelve pending, but dormant, cases.”) In contrast, cases
stayed, but not closed, are counted as active. This case still
exists on the docket of the district court and may be reopened
upon request of the parties or on the court’s own motion. That
situation is the functional equivalent of a stay, not a
dismissal, and is thus not an appealable order under the FAA.
This court thus does not have jurisdiction over this appeal and
does not reach the merits of Mire’s other issues.
III. CONCLUSION
For the foregoing reasons, this appeal is DISMISSED for lack
of jurisdiction. The case presents no appealable order.
DISMISSED
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Mire v. Full Spectrum Lending Inc.
Court: Court of Appeals for the Fifth Circuit
Date filed: 2004-10-25
Citations: 389 F.3d 163
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