415 F.3d 145 (1st Cir. 2005), 04-2303, Municipality of San Juan v. Corporacion Para El Fomento Economico De La Ciudad Capital

Docket Nº:04-2303.
Citation:415 F.3d 145
Party Name:MUNICIPALITY OF SAN JUAN, Plaintiff, Appellant, v. CORPORACI
Case Date:July 14, 2005
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 145

415 F.3d 145 (1st Cir. 2005)

MUNICIPALITY OF SAN JUAN, Plaintiff, Appellant,



No. 04-2303.

United States Court of Appeals, First Circuit.

July 14, 2005.

Heard May 2, 2005.


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Francisco J. Amundaray-Rodriguez with whom Mercado & Soto, P.S.C. was on brief for appellant.

Roberto Abesada-Aguet with whom Harold D. Vicente and Vincente & Cuebas were on brief for appellee.

Before Selya, Circuit Judge, Coffin, Senior Circuit Judge, and Howard, Circuit Judge.

COFFIN, Senior Circuit Judge.

The Municipality of San Juan, plaintiff-appellant in this action, contends that defendant-appellee Corporacion para el Fomento Economico de la Ciudad Capital (COFECC) misused federal block grant funds the agency was assigned to disburse, and the Municipality consequently seeks the return of all remaining federal funds held by COFECC, damages, and declaratory and injunctive relief establishing that the trustee relationship between the two entities was properly terminated. The district court granted COFECC's motion to compel arbitration of all issues and dismissed the case without prejudice. After careful review of the facts and relevant legal principles, we affirm.

I. Background

In July 1982, the Municipality and the Government Development Bank of Puerto Rico executed a deed of trust ("Deed of Trust No. 5" or "Deed of Trust") that designated the Bank, as trustee, to administer funds granted to the Municipality by the United States Department of Housing and Urban Development (HUD). The Deed of Trust contains a broad arbitration clause requiring that disputes that arise between the parties "with regard to their responsibilities and obligations under this contract" shall be resolved through arbitration. The Deed of Trust also provides that the Municipality can terminate the contract upon sixty days' notice and after appointment of a successor trustee.

In 1983, COFECC succeeded the Bank as trustee, and the transition was effectuated through a series of one-year delegation contracts between the Municipality and COFECC that renewed automatically unless written notice was given thirty days before expiration. Deed of Trust No. 5 remained the governing document for the trusteeship and was explicitly incorporated

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into the first several delegation agreements. Annual contracts between the Municipality and COFECC were executed through 1992, with the last written agreement terminating on June 30, 1992.1 The parties continued their relationship beyond that point, however, through "tacit" extension of their contractual arrangement.2 In May 2003, the Municipality sent a letter terminating the trustee agreement, giving the sixty days notice required by the Deed of Trust and thus intended to take effect on July 30, 2003. The Municipality asserts that COFECC improperly used thousands of dollars of federal money and failed to comply with regulatory requirements governing the use of federal grant funds, including maintaining an adequate accounting and auditing system. The Municipality sought return of all unused funds.

COFECC disputed the termination of its trustee status and did not turn over any funds to the Municipality. In August 2003, the Municipality filed this action, seeking breach of contract damages, the return of any remaining federal funds held by COFECC, and injunctive and declaratory relief terminating both the parties' relationship and COFECC's authority to use the federal monies. COFECC argued that all of the issues were arbitrable, and the district court ultimately agreed.3 On appeal, we review only the court's ruling that the duration of the trusteeship - i.e., the validity of the Municipality's attempt to terminate the relationship - must be arbitrated. The arbitrability of the breach of contract issues is not before us.4

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We briefly address a preliminary jurisdictional issue before explaining why we conclude that the district court correctly referred the termination issue to the arbitrator.

II. Discussion

A. Finality of a Dismissal Without Prejudice

COFECC argues that the district court's decision compelling the parties to arbitrate, accompanied by dismissal of the case without prejudice, resulted in a judgment that was not final and appealable under the Federal Arbitration Act, 9 U.S.C. § 16 (a) (3) .5COFECC's cursory argument is arguably insufficient to warrant our full attention, see, e.g., Smilow v. Southwestern Bell Mobile Sys., Inc., 323 F.3d 32, 43 (1st Cir. 2003) ("Issues raised on appeal in a perfunctory manner (or not at all) are waived."), but since we view the agency's assertion as plainly without merit, we choose to take the opportunity to state so explicitly.

In Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 86-87 (2000), the Supreme Court held that a district court's order directing arbitration and dismissing all of the claims before it was "final" within the meaning of section 16(a)(3) and therefore appealable. The action in Green Tree had been dismissed with prejudice, and COFECC...

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