United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
For the Fifth Circuit August 26, 2004
Charles R. Fulbruge III
Clerk
No. 03-31184
SOUTH LOUISIANA CEMENT, INC.,
Plaintiff-Counter Defendant-Appellant,
VERSUS
VAN AALST BULK HANDLING, B.V.,
Defendant-Appellee,
and
PBC SERVICES, INC.,
Defendant-Counter Claimant-Appellee.
Appeal from the United States District Court
For the Middle District of Louisiana
Before DeMOSS, STEWART, and PRADO, Circuit Judges.
DeMoss, Circuit Judge:
This is an appeal from the district court’s order sending all
the claims and counterclaims in this litigation to arbitration,
including the counterclaims of a non-signatory to the arbitration
agreement who wanted to participant in the arbitration. The
district court has not dismissed the case but rather stayed the
proceedings pending the arbitration and administratively closed the
case. We hold that because the district court ordered arbitration
and there is no final decision, the orders are not immediately
appealable and therefore this Court lacks jurisdiction.
BACKGROUND
This case arises out of the business relationships between
Plaintiff-Counter Defendant-Appellant South Louisiana Cement, Inc.
(hereafter “SLC”), Defendant-Counter Claimant-Appellee PBC
Services, Inc. (hereafter “PBC”), and Defendant-Appellee Van Aalst
Bulk Handling, B.V. (hereafter “Van Aalst”).
PBC is a Louisiana corporation based in Houma, Louisiana. The
principal business of PBC is the leasing and operating of equipment
to unload bulk cargo from vessels, particularly bulk cement. SLC
is also a Louisiana corporation based in Port Allen, Louisiana.
PBC and SLC have a business relationship going back several years.
In 2001, the two corporations had an oral agreement under which PBC
would provide the equipment and labor to unload bulk cement from
vessels for SLC. For these services, SLC would pay a price per ton
unloaded and would also guarantee a certain amount of work to be
performed by PBC, expressed in a minimum of tons of bulk cement.
In 2002, the two corporations entered into a written contract
which, inter alia, required PBC to assist SLC in purchasing its own
bulk cargo unloading equipment (“units”) from Van Aalst and to
operate, and provide labor, fuel, repairs, and maintenance for,
SLC’s purchased equipment. The written contract provided that SLC
would pay PBC at the rate of $200,000 per annum per unit (based on
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100,000 tons per annum at $2.00 per ton). If the tonnage were to
exceed 200,000 combined from both units, then SLC would compensate
PBC at $2.00 per ton for the tons in excess of 200,000.
Van Aalst is a limited liability company of the Netherlands.
Van Aalst is a part owner of PBC. In 2002, SLC and Van Aalst
entered into two contracts for the purchase of two used pneumatic
ship unloaders. The contracts provided for a limited warranty on
certain components of the unloaders for a period of 12 months
commencing after delivery. Both contracts also contained an
express arbitration agreement which covered “any dispute . . .
arising out of or related to” the contract. The unloaders
allegedly began experiencing mechanical problems shortly after SLC
put them into service. Relations between SLC and Van Aalst and SLC
and PBC deteriorated rapidly from that point. Litigation and this
appeal ensued.
The litigation began in the United States District Court for
the Eastern District of Louisiana on December 6, 2002. PBC filed
suit against SLC alleging that SLC had breached an oral agreement
to provide the minimum guaranteed tonnage agreed to between the
parties and also alleged that SLC had breached its written contract
to pay PBC as specified in the 2002 contract. In its answer to
PBC’s amended complaint, SLC requested the Eastern District to
abstain from ruling on the nonpayment claim, asserting that some of
the unpaid invoices were the subject of a subsequently filed state
court suit. SLC filed that related suit on April 2, 2002, in state
3
court in Baton Rouge against co-defendant Van Aalst for breach of
a warranty (pertaining to the bulk offloading equipment bought by
SLC from Van Aalst) and, in the alternative, against PBC for
failure to maintain and repair the unloaders. The suit was removed
to the United States District Court for the Middle District of
Louisiana on June 4, 2003. In its answer, Van Aalst asserted the
defense that the failure of the unloaders was due to improper
maintenance, thus implicating the 2002 contract between PBC and
SLC. On October 6, 2003, PBC filed an answer and counterclaim in
the Middle District litigation asserting an affirmative defense of
set off against monies owed by SLC and asserting counterclaims for
SLC’s failure to meet the minimum-tonnage guarantee and failure to
make payments due. PBC voluntarily dismissed its action in the
Eastern District on the grounds that it had asserted the same
claims in the Middle District by counterclaim and that all claims
arising from the business relationship of the three parties would,
therefore, be pending before one court.
Previously, on August 15, 2003, Van Aalst had filed a motion
to compel arbitration and a stay of litigation pending arbitration.
On November 5, 2003, the Middle District granted the motion and
ruled that all the claims filed in the underlying litigation,
including PBC’s counterclaim, would be referred to arbitration.
The ruling administratively closed the case pending a final
arbitration decision. This appeal by SLC followed by Notice of
Appeal filed on December 3, 2003.
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DISCUSSION
I. Whether the district court’s orders constitute a final
decision immediately appealable under 9 U.S.C. § 16.
The district court on November 5, 2003, granted Van Aalst’s
motion to compel arbitration and to stay the litigation pending
arbitration and ordered that all claims including SLC’s original
claims and PBC’s counterclaims should be arbitrated.1 The court
also denied SLC’s motion to transfer PBC’s counterclaim to the
Eastern District and held that it was in the interest of justice
and judicial economy to allow all the claims to be litigated at the
same time in the Middle District. The court ordered the case
“administratively closed pending a final arbitration decision.”
Apparently, SLC attempted to continue discovery in the Middle
District; and therefore on December 2, 2003, the court clarified
that:
This case was administratively closed on November 5,
2003[,] because the Court granted a motion to compel
arbitration. The case will remain closed until the
arbitrator’s decision is received by the Court.
All pending motions, including discovery motions, are
stayed pending completion of the arbitration process.
The Clerk will not accept any additional pleadings until
the arbitrator’s decision is received by the Court.
No separate document embodying the orders has been entered as a
final judgment.
Section 16 of the Federal Arbitration Act ("FAA"), 9 U.S.C.
1
As amended on November 6, 2003. This amendment corrected
language concerning the party that brought counterclaims, PBC.
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§ 16, governs appellate review of arbitration orders. Congress's
intent in enacting § 16 was to favor arbitration, and it did so by
authorizing immediate appeals from orders disfavoring arbitration
and forbidding immediate appeals from orders favoring arbitration.
Adams v. Ga. Gulf Corp., 237 F.3d 538, 540 (5th Cir. 2001) (citing
Forsythe Int'l, S.A. v. Gibbs Oil Co., 915 F.2d 1017, 1020 (5th
Cir. 1990)). The provisions relevant to this dispute vest the
courts of appeals with jurisdiction over "final decision[s] with
respect to an arbitration," 9 U.S.C. § 16(a)(3), while specifically
denying appellate jurisdiction over nonfinal orders staying
proceedings pending arbitration, id. § 16(b)(1). Therefore, this
Court’s jurisdiction turns on whether the district court's orders
constitute a final decision.
A final decision is one that "ends the litigation on the
merits and leaves nothing more for the court to do but execute the
judgment." Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 86
(2000) (citations and internal quotation marks omitted). Under
this definition, a dismissal is a final decision. Id. at 89. An
arbitration order entering a stay, as opposed to a dismissal, is
not an appealable final order. Apache Bohai Corp., LDC v. Texaco
China, B.V., 330 F.3d 307, 309 (5th Cir. 2003); Cargill Ferrous
Int'l v. SEA PHOENIX MV, 325 F.3d 695, 701-02 (5th Cir. 2003); see
also Green Tree, 531 U.S. at 87 n.2 ("Had the District Court
entered a stay instead of a dismissal in this case, that order
would not be appealable."); Saturn Distrib. Corp. v. Paramount
6
Saturn, Ltd., 326 F.3d 684, 686-87 (5th Cir. 2003) (finding the
district court order to be a final decision, in part because it was
not accompanied by a stay of proceedings).
Here, the district court did not dismiss the claims but
“administratively closed” the case and entered a stay pending
arbitration. SLC contends that when a district court enters an
order “administratively” closing and then staying an action and
referring all disputed matters to arbitration, leaving no live
issues before the district court, this Court should consider the
order or orders to be, in effect, a de facto dismissal and thus a
final decision appealable under § 16(a)(3).
SLC cites Green Tree in support of its argument that this
Court has jurisdiction to hear its appeal. SLC argues that the
orders in this case end the litigation on the merits and leave
nothing more for the court to do but execute the judgment after
arbitration and therefore can be considered a final decision
reviewable by this Court. In fact, SLC argues that once
arbitration is complete, SLC will have no recourse and will be
stuck with whatever the arbitrator decides.2 In Green Tree,
however, the district court had not only compelled arbitration but
2
SLC's argument is incorrect insofar as after the arbitration
has concluded, SLC should have whatever appeals are available under
the FAA, such as the right to appeal whether PBC’s counterclaims
should have been arbitrated, assuming the arbitrator ultimately
decides those claims. Likewise, the December 2, 2003, order of the
district court indicates the district court was under the
impression there may be additional matters for it to decide once
the arbitration is concluded.
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had also dismissed the underlying claims. 531 U.S. at 83.
Further, the Supreme Court noted that had the district court
entered a stay rather than a dismissal, the order would have been
unappealable. Id. at 87 n.2. Thus, even where dismissal is
appropriate, i.e., all claims have been referred to arbitration,
the entry of a stay rather than a dismissal bars appellate
jurisdiction. Apache Bohai Corp., 330 F.3d at 309.
Here, the district court specifically stayed the proceedings
in its December 2, 2003, order; and it appears the December 2,
2003, order was an attempt to clarify any misunderstanding caused
by its November orders that “administratively closed the case
pending a final arbitration decision.”
SLC also cites American Heritage Life Insurance Co. v. Orr,
294 F.3d 702, 708 (5th Cir. 2002), in which a panel of this Circuit
found appellate jurisdiction despite the absence of a dismissal.
In American Heritage, this Court held that an order compelling
arbitration and ordering the case "CLOSED" was a reviewable final
decision. Id.; but see ATAC Corp. v. Arthur Treacher's, Inc.,
280 F.3d 1091, 1099 (6th Cir. 2002) (holding that an order to
compel arbitration, stay, and close proceedings is not an
appealable final decision). The district court in American
Heritage had issued an order staying state court proceedings,
compelling arbitration, and closing the case, leaving nothing to do
but execute the judgment. 294 F.3d at 708. In that context, this
Court held that "closing" the case was functionally
8
indistinguishable from dismissal. Id. ("[T]here is no practical
distinction between 'dismiss' and 'close' for purposes of this
appeal.").3
This Circuit, however, has held post-American Heritage that
unlike a dismissal a stay, by definition, constitutes a
postponement of proceedings, not a termination, and thus lacks
finality. Apache Bohai Corp., 330 F.3d at 309. “Further, as other
courts have noted, entry of a stay rather than a dismissal
‘suggests that the district court perceives that it might have more
to do than execute the judgment once arbitration has been
completed.’” Id. (quoting ATAC Corp., 280 F.3d at 1099).
Consequently, although it may be true that in some instances the
entry of a stay disposes of most or all issues in a case, that fact
alone does not render it the functional equivalent of a dismissal.
Id.4
3
In a concurring opinion, Judge Dennis noted that it is common
for district courts to retain jurisdiction pending arbitration but
this creates an administrative problem because the case is likely
to be dormant for a long time. 294 F.3d at 714-715 (Dennis, J.,
concurring). Administratively closing a case solves this problem
by “providing a vehicle for the district court to remove the case
from its active files without making any final adjudication;
[t]hus, the administrative closure reflects nothing more than the
federal courts' overarching concern with tidy dockets; it has no
jurisdictional significance.” Id. at 715 (Dennis, J., concurring)
(citing Lehman v. Revolution Portfolio, LLC, 166 F.3d 389, 392 (1st
Cir. 1999)).
4
The Apache Bohai court did note that in its case, “by contrast,
the court did not purport to close the case administratively, nor
did it attempt in any other way to terminate its involvement in the
proceedings.” 330 F.3d at 310.
9
Here, there is no indication that the district court intended
to dismiss the case but simply failed to do so through an
oversight. See Gulf Guar. Life Ins. Co. v. Conn. Gen. Life Ins.
Co., 304 F.3d 476, 483 (5th Cir. 2002) (recognizing that "the
intention, as well as the effect [of the order], was to dismiss
[the action]" and therefore finding the case reviewable as an
immediate appeal). Rather, here the court entered an order
expressly granting a stay of the proceedings pending arbitration
and indicated motions, discovery, and additional pleadings would be
accepted after the court received the arbitrator’s decision, but in
the meantime the case was “administratively closed.” See Corion
Corp. v. Chen, 964 F.2d 55, 56 (1st Cir. 1992) (finding that
although the district court had ordered a case “administratively
closed” there was no final decision and therefore the order
compelling arbitration was not immediately appealable).
Accordingly, we hold that administratively closing a case is
not a dismissal or final decision. Likewise, based on the language
of the district court’s orders in this case, there has not been a
final decision by the district court. Because the district court
ordered arbitration, according to 9 U.S.C. § 16, the orders are not
reviewable by this Court in this immediate appeal. Therefore, this
Court lacks jurisdiction and the appeal must be dismissed.
CONCLUSION
Having carefully reviewed the record of this case, the
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parties’ respective briefing and arguments, for the reasons set
forth above this Court lacks jurisdiction to hear this appeal and
therefore dismisses the appeal.
DISMISSED.
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South Louisiana Cement, Inc. v. Van Aalst Bulk Handling, B.V.
Court: Court of Appeals for the Fifth Circuit
Date filed: 2004-08-26
Citations: 383 F.3d 297
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