Acosta v. Master Maintenance and Const. Inc.

• Decision Date: 08 June 2006
• Docket Number: No. 05-30126.,05-30126.
• Citation: 452 F.3d 373
• Parties: Ken ACOSTA; et al., Plaintiffs, Henry Chiro, Sr.; Jacqueline B. Chiro; Zachary Smith, III, Plaintiffs-Appellants, v. MASTER MAINTENANCE AND CONSTRUCTION INC.; et al., Defendants, Master Maintenance and Construction Inc.; Georgia Gulf Corp.; Payne & Keller Company Inc.; Lexington Insurance Co.; Louisiana Intrastate Gas Co.; LA Intrastate Gas Corp.; Hydrochem Industrial Services Inc.; LIG Liquids Co.; Equitable Resources Inc.; Associated Electric & Gas Insurance Services Ltd., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

452 F.3d 373

Ken ACOSTA; et al., Plaintiffs Henry Chiro, Sr.; Jacqueline B. Chiro; Zachary Smith, III, Plaintiffs-Appellants, v. MASTER MAINTENANCE AND CONSTRUCTION INC.; et al., Defendants Master Maintenance and Construction Inc.; Georgia Gulf Corp.; Payne & Keller Company Inc.; Lexington Insurance Co.; Louisiana Intrastate Gas Co.; LA Intrastate Gas Corp.; Hydrochem Industrial Services Inc.; LIG Liquids Co.; Equitable Resources Inc.; Associated Electric & Gas Insurance Services Ltd., Defendants-Appellees.

No. 05-30126.

United States Court of Appeals, Fifth Circuit.

June 8, 2006.

Robert Souren Abdalian (argued), New Orleans, LA, for Plaintiffs-Appellants.

Luis A. Leitzelar (argued), Joell Margaret Keller, Breazeale, Sachse & Wilson, Baton Rouge, LA, F. Barry Marionneaux, Marionneaux & Marionneaux, Plaquemine, LA, for Master Maintenance and Const. Inc., Georgia Gulf Corp., Payne & Keller Co. Inc., Lexington Ins. Co. and Hydrochem Indus. Services Inc.

Hal C. Welch, Lemle & Kelleher, New Orleans, LA, for Louisiana Intrastate Gas Co., LA Intrastate Gas Corp. and LIG Liquids Co.

D. Russell Holwadel, Adams, Hoefer, Holwadel & Eldridge, New Orleans, LA, for Associated Elec. & Gas Ins. Services Ltd.

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

Before JOLLY, HIGGINBOTHAM and SMITH, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The United States is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention"), which Congress has implemented at 9 U.S.C. § 201, et seq. ("Convention Act"). Among the Convention Act's provisions are jurisdictional grants giving the federal district courts original and removal jurisdiction over cases related to arbitration agreements falling under the Convention. This appeal asks whether Appellants' action is related to an arbitration agreement falling under the Convention and therefore removable to federal court, and if so, whether the unanimity rule applicable to removals under 28 U.S.C. § 1441(a) also applies to Convention Act removals. We need not decide this last question because even if the unanimity rule applies, it is satisfied here.

I

A

Appellants constitute a three-person subset of over 2,000 plaintiffs who brought state-law tort actions in Louisiana state court alleging injuries stemming from the September 1996 release of a mustard-gas agent at the Georgia Gulf Corporation ("GGC") facility in Plaquemine, Louisiana. Louisiana state law allows direct actions against a tortfeasor's insurers, so the plaintiffs named as defendants, in addition to GGC and several of its contractors, two foreign insurers, Primex, Ltd. ("Primex") and X.L. Insurance Company, Ltd. ("X.L."), whose insurance policies included arbitration clauses governing disputes over coverage.

In October 1998, the plaintiffs amended their complaints to assert intentional tort claims against GGC. Shortly thereafter, Primex and X.L. notified GGC in writing that they were disputing insurance coverage as a result of these new allegations. In December 1998, Primex and X.L. notified GGC that they had commenced arbitration pursuant to their policies' arbitration clauses. Five days later, and one day after a subset of defendants ("the LIG defendants")¹ were severed from the case by joint motion of the parties, Primex and X.L. removed this and scores of related cases to federal court, arguing that the allegations of an intentional tort created a coverage dispute between them and GGC, thus invoking the arbitration clauses of their insurance policies and bringing the action within the purview of the Convention Act and its provisions for removal. The plaintiffs filed a motion for remand to state court shortly thereafter, which the District Court denied in March 1999.

Primex filed a motion to compel arbitration and stay the plaintiffs' actions, and the plaintiffs filed a motion requesting certification of the remand denial for immediate appeal under 28 U.S.C. § 1292(b). While these motions were pending, a settlement agreement was negotiated, but Appellants elected not to participate and pursued the litigation, which was eventually dismissed with prejudice on summary judgment in December 2004. Appellants appeal only to contest the District Court's jurisdiction. If jurisdiction exists for the District Court to have entertained this action, it is to be found in the Convention Act.

B

The provision of the Convention Act providing for removal is 9 U.S.C. § 205:

Where the subject matter of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the Convention, the defendant or the defendants may, at any time before the trial thereof, remove such action or proceeding to the district court of the United States for the district and division embracing the place where the action or proceeding is pending. The procedure for removal of causes otherwise provided by law shall apply, except that the ground for removal provided in this section need not appear on the face of the complaint but may be shown in the petition for removal. For the purposes of Chapter 1 of this title any action or proceeding removed under this section shall be deemed to have been brought in the district court to which it is removed.

The parties agree that the insurance policies' arbitration clauses "fall[] under the Convention" as defined in § 202.² We must therefore decide whether this action "relates to" the arbitration clauses within the meaning of § 205 and whether the failure of the LIG defendants to consent to removal defeats jurisdiction for lack of unanimous consent among defendants.

II

A

Section 205 does not explicitly define when an action "relates to" an arbitration agreement falling under the Convention. However, the federal courts have recognized that the plain and expansive language of the removal statute embodies Congress's desire to provide the federal courts with broad jurisdiction over Convention Act cases in order to ensure reciprocal treatment of arbitration agreements by cosignatories of the Convention.

Congress's purpose and intent, in enacting the Convention Act, was "to encourage the recognition and enforcement of commercial arbitration agreements and international contracts and to unify the standard by which the agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries." Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n. 15, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974). The unambiguous policy in favor of recognition of arbitration agreements falling under the Convention is reflected in provisions incorporating by reference the Federal Arbitration Act, 9 U.S.C. § 208,³ and independently and explicitly empowering courts to compel arbitration in accordance with the arbitration agreements involved. 9 U.S.C. § 206.⁴

Because "uniformity is best served by trying all [Convention] cases in federal court unless the parties unequivocally choose otherwise," McDermott Int'l, Inc. v. Lloyds Underwriters of London, 944 F.2d 1199, 1207-08 (5th Cir.1991), Congress granted the federal courts jurisdiction over Convention cases⁵ and added one of the broadest removal provisions, § 205, in the statute books. So generous is the removal provision that we have emphasized that the general rule of construing removal statutes strictly against removal "cannot apply to Convention Act cases because in these instances, Congress created special removal rights to channel cases into federal court." Id. at 1213.

With these considerations in mind, we turn to the statutory text and the meaning of the statutory phrase "relates to"; that is, we must decide whether the subject matter of the underlying lawsuit "relates to" the arbitration agreement in the insurance policy between the alleged tortfeasor and the defendant insurers. In Beiser v. Weyler, 284 F.3d 665 (5th Cir. 2002), we examined the plain meaning of the phrase, relevant Supreme Court dicta regarding the phrase, and Congressional use of the phrase in other statutes, e.g., 28 U.S.C. § 1334 (giving federal district courts jurisdiction over any state proceeding that "relates to" a bankruptcy case). We noted that the phrase "relates to" "conveys a sense of breadth" and "sweeps broadly. . . ." 284 F.3d at 669. We interpreted the phrase in a way that was sufficient to dispose of that case on its facts, namely, "whenever an arbitration agreement falling under the Convention could conceivably affect the outcome of the plaintiff's case, the agreement `relates to' the plaintiff's suit," 284 F.3d at 669 (emphasis in original), but we emphasized that the adopted rule for that case was not exhaustive of the cases in which jurisdiction would be appropriate.⁶

Appellants now assert that the definition given to the phrase "relates to" in Beiser means that jurisdiction is lacking here because Louisiana's direct-action statute cancels the binding effect of the arbitration clauses; thus, whatever is decided in the arbitration proceedings will not affect the outcome of the litigation.⁷ Even if this asserted effect of the Beiser rule on the arbitration clauses is correct, it does not dispose of the jurisdictional question, for as we have indicated, Beiser did not purport to establish a comprehensive rule disposing of all cases. Thus we return to the statutory text to determine whether the Convention Act's grant of jurisdiction extends to this case.

"Relate" means "to have connection, relation, or reference," AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (4th Ed.2000); see also Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). It is unarguable that the subject matter of the litigation has some connection, has some relation, has some reference to the arbitration clauses here. Appellants' assertion of claims against the insurers is, in part, an assertion of policy coverage of the insured's alleged torts. Common sense...