482 F.3d 207 (3rd Cir. 2007), 06-2542, Ehleiter v. Grapetree Shores, Inc.
|Citation:||482 F.3d 207|
|Party Name:||Jack EHLEITER v. GRAPETREE SHORES, INC., Appellant.|
|Case Date:||April 06, 2007|
|Court:||United States Courts of Appeals, Court of Appeals for the Third Circuit|
Argued Dec. 4, 2006.
[Copyrighted Material Omitted]
Joel H. Holt (Argued), St. Croix, USVI, Attorney for Appellee.
Charles E. Engeman (Argued), Simone R.D. Francis, Ogletree, Deakins, Nash, Smoak & Stewart, St. Thomas, USVI, Attorney for Appellant.
Before McKEE, BARRY and STAPLETON, Circuit Judges.
STAPLETON, Circuit Judge.
After litigating this case before the Superior Court of the Virgin Islands ("Superior Court") for nearly four years, Appellant Grapetree Shores, Inc. ("GSI") moved to stay the court proceedings pending arbitration pursuant to Section 3 of the Federal Arbitration Act ("FAA"). The Superior Court denied the motion, finding that GSI had waived any right it may have had by actively litigating the plaintiff's claims. The Appellate Division of the District Court of the Virgin Islands ("Appellate Division") affirmed the decision of the Superior Court on appeal.
This interlocutory appeal presents three principal issues. First, we must examine the contours of appellate jurisdiction under the FAA to determine whether the Appellate Division had jurisdiction over GSI's appeal from the Superior Court's denial of its Section 3 motion, and whether we, in turn, have jurisdiction to review the Appellate Division's order affirming the Superior Court's ruling. We conclude that Section 16(a)(1)(A) of the FAA conferred appellate jurisdiction on the Appellate Division to review the Superior Court's decision, and also provides the basis for our jurisdiction over GSI's appeal from the Appellate Division's decision. Second, we must determine if the issue of whether a party seeking arbitration has waived its right thereto by litigating the case in court remains a
question for the trial court, rather than an arbitrator, to decide in the wake of Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002), and Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003) (plurality opinion). We conclude that it does. Third, we must consider whether the Superior Court correctly found on the merits that GSI waived any right it had to arbitrate by actively litigating this case before that court. We agree with both the Superior Court and the Appellate Division that a finding of waiver is compelled under the facts and circumstances of this case. Accordingly, we will affirm the judgment of the Appellate Division.
Appellant GSI is the owner of real property in the Virgin Islands which it leased to Treasure Bay VI Corp. ("TBVI"). At all times here relevant, TBVI operated a casino known as the Divi Carina Bay Casino ("the Casino") on the GSI-owned property. Appellee Jack Ehleiter was employed with TBVI as a card dealer and at the commencement of his employment, entered an Hourly Employment Agreement ("the Agreement") with TBVI, setting forth the terms and conditions of his employment.
Ehleiter allegedly slipped and fell while walking down an employee stairway of the casino. In April 2001, he filed a complaint against GSI in the Superior Court (then known as the Territorial Court of the Virgin Islands), seeking damages for personal injuries he allegedly sustained as a result of the fall. GSI filed an answer to the complaint with affirmative defenses and, over approximately the next four years, the parties engaged in extensive discovery. Both parties submitted and responded to several sets of interrogatories and requests for production of documents, took numerous depositions, 1 and submitted several expert reports. On May 13, 2003, while discovery was still ongoing and in response to a court order, the parties submitted a joint stipulation certifying their readiness for trial by December 1, 2004. The parties participated in a mediation session on November 16, 2004, but were unable to resolve the dispute. On December 2, 2004, in response to a motion filed by Ehleiter requesting a trial date, the Superior Court entered an order scheduling trial for February 14, 2005 and requiring all discovery be completed by January 5, 2005. Five days later, on December 7, 2004, GSI moved to continue the trial date, noting that the date that had been set by the Superior Court conflicted with a previously scheduled trial involving GSI's counsel. In the motion, GSI requested a new trial date in March or April 2005. On December 10, 2004, the Superior Court granted GSI's request, and rescheduled the trial for March 31, 2005.
Over the course of the next six weeks, GSI filed a motion for summary judgment and a motion to implead a third party defendant, and Ehleiter filed a motion to amend his complaint to include a claim for punitive damages against GSI. All three motions had been fully briefed and were pending decision by the Superior Court when, on February 17, 2005, the final day for filing motions and only one day before the parties' joint final pretrial statement and proposed jury instructions were due, GSI filed a motion to stay the case pending arbitration pursuant to Section 3 of the Federal Arbitration Act, 9 U.S.C. § 3. In
its motion, GSI asserted, for the first time, that, as an affiliated company of TBVI, it was entitled to have the dispute arbitrated pursuant to the arbitration provisions in the Agreement entered into by Ehleiter and TBVI. Under the terms of that Agreement, Ehleiter agreed to arbitrate, inter alia, all claims against "affiliated companies" of TBVI arising from his employment.
In response, Ehleiter contended that GSI was not entitled to invoke the arbitration provisions of the Agreement because it was not an "affiliated company" of TBVI and that, in any event, GSI had waived whatever arbitration rights it had under the Agreement by actively litigating the matter for nearly four years. Over GSI's objections, the Superior Court concluded that the question whether GSI had waived any arbitration rights it had under the Agreement was for the court, rather than an arbitrator, to decide. Without resolving whether GSI was an "affiliate" of TBVI under the Agreement, the Superior Court denied GSI's motion, agreeing with Ehleiter that GSI had waived any right it had to arbitration by actively litigating the case.
GSI appealed the Superior Court's decision to the Appellate Division, and the Appellate Division affirmed. GSI timely filed this appeal, and we thereafter granted GSI's emergency motion to stay the proceedings in the Superior Court pending our resolution of the appeal.
Although the parties have not raised the issue, a court of appeals has both the inherent authority and a continuing obligation to assess whether it has jurisdiction over a case or controversy before rendering a decision on the merits. Lazy Oil Co. v. Witco Corp., 166 F.3d 581, 585 (3d Cir.1999); Shendock v. Director, Office of Workers' Compensation Programs, 893 F.2d 1458, 1461 (3d Cir.1990) (en banc). We must therefore determine as a threshold matter whether we have jurisdiction to consider the merits of this appeal from an order of the Appellate Division affirming the Superior Court's interlocutory order denying a motion to stay the court proceedings before it pending arbitration. As a predicate to that determination, we inquire also into the jurisdiction of the Appellate Division to review the Superior Court's interlocutory order. We conclude that Section 16(a)(1)(A) of the FAA conferred appellate jurisdiction on both courts. 9 U.S.C. § 16(a)(1)(A).
GSI sought to stay the proceedings before the Superior Court pursuant to Section 3 of the FAA, which provides as follows:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which the suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
9 U.S.C. § 3. 2 Section 16(a)(1)(A) provides that "[a]n appeal may be taken from an order refusing a stay of any action under
section 3 of this title." 9 U.S.C. § 16(a)(1)(A). 3
We first examine whether Section 16(a)(1)(A) authorized the Appellate Division to exercise jurisdiction over GSI's appeal of the Superior Court's order denying its Section 3 motion. GSI's stay motion in the Superior Court alleged that the claim at issue in that suit was within the scope of a written agreement to arbitrate and claimed entitlement to a stay mandated by Section 3. Its motion thus alleged a prima facie case of entitlement to a Section 3 stay. That motion was denied. It follows, from a literal reading of Section 16(a)(1)(A) and our interpretive case law, we conclude, that that section conferred jurisdiction on the Appellate Division to review the Superior Court's denial of a stay.
In reaching this conclusion, we are mindful of the facts that Section 3's mandatory stay provision applies only where the claims at issue are "referable to arbitration under an agreement in writing for such arbitration," 9 U.S.C.§ 3, and that the Appellate Division, like the Superior Court, did not resolve whether GSI was an "affiliate" of TBVI, an essential predicate to a finding that Ehleiter's claims were referable to arbitration under an agreement in writing. Instead, the Appellate Division, like the Superior Court, found that GSI had waived any right it may have...
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