731 F.2d 1141 (5th Cir. 1984), 83-3108, Tai Ping Ins. Co., Ltd. v. M/V Warschau

Docket Nº:83-3108.
Citation:731 F.2d 1141
Party Name:The TAI PING INSURANCE CO., LTD., et al., Plaintiffs-Appellees, v. M/V WARSCHAU, et al., Defendants. Alfred C. TOEPFER, Defendant-Appellant, v. CANADIAN TRANSPORT COMPANY, A DIVISION OF MACMILLAN BLOEDEL, LTD., a corporation, Defendant-Appellee.
Case Date:April 26, 1984
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 1141

731 F.2d 1141 (5th Cir. 1984)

The TAI PING INSURANCE CO., LTD., et al., Plaintiffs-Appellees,

v.

M/V WARSCHAU, et al., Defendants.

Alfred C. TOEPFER, Defendant-Appellant,

v.

CANADIAN TRANSPORT COMPANY, A DIVISION OF MACMILLAN BLOEDEL,

LTD., a corporation, Defendant-Appellee.

No. 83-3108.

United States Court of Appeals, Fifth Circuit

April 26, 1984

Page 1142

James R. Holmes, Harvey G. Gleason, New Orleans, La., for defendant-appellant.

James Hanemann, Franklin G. Shaw, New Orleans, La., for Tai Ping.

James R. Sutterfield, Donald A. Hoffman, New Orleans, La., for M/G Transport.

R. Glenn Bauer, Phelps, Dunbar, Marks, Claverie & Sims, George J. Fowler, III, New Orleans, La., for Canadian Transport.

F.A. Courtenay, Jr., Theodore W. Brin, New Orleans, La., for S.G.S. Control.

William E. O'Neil, Marcia L. Culley, New Orleans, La., for Cravat Coal.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before RUBIN and RANDALL, Circuit Judges, and SEAR [*], District Judge.

RANDALL, Circuit Judge:

The issue raised by this appeal is whether the district court abused its discretion in staying the London arbitration of a dispute between two of the defendants pending the outcome of the federal court litigation between all parties. Because we find that the district court abused its discretion, we vacate the stay of arbitration. Also before us is the appellant's motion to strike the brief of appellee Tai Ping, which was carried with the case and which we deny.

I. Factual and Procedural Background.

In 1975, defendant-appellant Kommanditgesellschaft Alfred C. Toepfer Schiffahrtsgesellschaft m.b.H. and Lumber Carriers ("Toepfer") time-chartered the M/V WARSCHAU to defendant-appellee Canadian Transport Company, Ltd. ("Canadian"). The charter provided, inter alia:

Page 1143

That should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons in London one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them, shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court. The Arbitrators shall be commercial men experienced in Shipping.

In 1981, Canadian voyage-chartered the M/V WARSCHAU to the Asia Cement Corporation for the carriage of a cargo of coal from New Orleans to Taiwan. The vessel set forth from New Orleans with the cargo. En route, the coal began spontaneously to heat and had to be off-loaded in Long Beach, California.

Asia Cement and its insurer, Tai Ping, filed suit in federal court against Canadian, Toepfer, and numerous other parties, claiming $720,000 in damages. Canadian filed a third-party complaint and cross-claim against Toepfer, seeking indemnity should Canadian be found liable to Asia Cement. Toepfer moved for a stay of the third-party complaint and cross-claim pending their arbitration in London pursuant to the arbitration clause in the time charter between Canadian and Toepfer. 1 Canadian, Asia Cement, and Tai Ping opposed the motion.

After a hearing, the district court granted Toepfer's motion to stay litigation of the third-party complaint and cross-claim pending arbitration. Tai Ping Ins. Co. v. Vessel M/V WARSCHAU, 556 F.Supp. 187 (E.D.La.1983). The court also ordered, however, that the arbitration be stayed pending the outcome of the main litigation in federal court. It is this latter order that forms the basis for this appeal.

II. Jurisdiction.

As an initial matter we note the appealability of the district court's order staying the arbitration. In Texaco, Inc. v. American Trading Transp. Co., 644 F.2d 1152, 1154 (5th Cir.1981), we held:

[A]n order granting a stay of arbitration pending outcome of litigation is an appealable interlocutory order under 28 U.S.C. Sec. 1292(a)(1).

See also City of Meridian, Miss. v. Algernon Blair, Inc., 721 F.2d 525 (5th Cir.1983).

III. The Stay of Arbitration.

In staying the arbitration between Canadian and Toepfer, the district court invoked the "inherent equitable power of a federal court to control its docket." 556 F.Supp. at 190. It went on to hold:

In this case, justice is best served by proceeding first with the main action, since the resolution of plaintiff's claims will determine whether there is any liability at all to plaintiff, and, if there is any such liability, will undoubtedly reach factual conclusions about the nature of and relative responsibility for any such liability. Specifically, the...

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