Administrative Management Services, Ltd., Inc. v. Royal American Managers, Inc.

• Decision Date: 14 September 1988
• Docket Number: No. 87-5573,87-5573
• Citation: 854 F.2d 1272
• Parties: RICO Bus.Disp.Guide 7034 ADMINISTRATIVE MANAGEMENT SERVICES, LTD., INC., Plaintiff-Appellee, v. ROYAL AMERICAN MANAGERS, INC., et al., Defendants, The Omaha Indemnity Company, a corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1272

854 F.2d 1272

RICO Bus.Disp.Guide 7034

ADMINISTRATIVE MANAGEMENT SERVICES, LTD., INC., Plaintiff-Appellee, v. ROYAL AMERICAN MANAGERS, INC., et al., Defendants, The Omaha Indemnity Company, a corporation, Defendant-Appellant.

No. 87-5573.

United States Court of Appeals, Eleventh Circuit.

Sept. 14, 1988.

Robert M. Brochin, Nancy A. Copperthwaite, Morgan, Lewis & Bockius, Miami, Fla., Francis M. Gregory, Jr., David T. Shelledy, Sutherland, Asbill & Brennan, Washington, D.C., J.D. Fleming, Jr., John W. Bonds, Jr., Sutherland, Asbill & Brennan, Atlanta, Ga., for defendant-appellant.

Stearns, Weaver Miller, Weissler, Alhadeff & Sitterson, P.A., Eugene E. Stearns, Miami, Fla., for Administrative.

Ursula Mancusi-Ungaro, Sparber, Shevin, Shapo, Hailbronner & Book, P.A., Thomasina H. Williams, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., Miami, Fla., for Royal, Wining and Shonacher.

Appeal from the United States District Court for the Southern District of Florida.

Before JOHNSON and HATCHETT, Circuit Judges, and ESCHBACH ^*, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge:

The appellant, Omaha Indemnity Company, appeals the district court's order denying its motion to compel arbitration under Sec. 4 of the Arbitration Act, 9 U.S.C. Sec. 4. The parties to a retrocessional reinsurance agreement disagree whether the arbitration provision of the contract obligates them to tripartite arbitration of their disputes. We need not address this issue since we find that this court lacks jurisdiction to consider this appeal.

I

In this diversity action, Administrative Management Services Syndicate, Ltd., Inc. ("AMS"), is suing Omaha Indemnity Company ("OI") and Royal American Managers, Inc. ("RAM") for breach of contract and fraud, among other claims. ¹ In 1983, OI and RAM entered a Management Agreement, whereby RAM agreed to underwrite and manage reinsurance business in OI's name. OI, RAM and AMS entered into a retrocessional reinsurance agreement wherein a portion of the risks accepted by RAM in OI's name pursuant to the Management Agreement were to be retroceded to AMS. OI was the reinsured, and AMS was the reinsurer. This reinsurance contract was to take effect at the same time as the Management Agreement. Subsequently, OI revoked RAM's authority to accept reinsurance business for it, but did not notify AMS of this change. As a result, OI allegedly underreported to AMS the volume of business that was ceded to AMS. In December of 1985, AMS ostensibly learned for the first time that RAM had written business in OI's name that exceeded AMS' maximum capacity to insure. The significant underwriting losses that resulted to AMS alerted the relevant Florida State authorities to order AMS to discontinue writing all insurance business.

On February 21, 1986, AMS began its suit against RAM on the reinsurance contract claims in the United States District Court for the Southern District of Florida. AMS later added as defendants OI, and two individuals, James R. Wining and Willie A. Schonacher, Jr. Wining and Schonacher were RAM's principals who negotiated the reinsurance contract. On April 3, 1986, OI began its suit against RAM, AMS, Wining and Schonacher for injunctive relief and damages in federal district court in Missouri. RAM and OI have subsequently agreed to arbitrate their differences pursuant to their Management Agreement. OI's complaint against RAM has been stayed in the federal district court in Missouri pending the arbitration hearing, although the discovery in that case has not been stayed.

OI requested AMS and RAM to submit to arbitration pursuant to the arbitration provision of the reinsurance contract. When AMS refused, OI petitioned the federal district court in Florida under Sec. 4 of the Arbitration Act to compel arbitration against AMS and RAM. ² The district court denied OI's motion because it found the arbitration provision void for lack of consideration and for indefiniteness. Although the arbitration provision is ambiguous as to which parties are covered by it, the court concluded that RAM was a party to both the reinsurance agreement and to the arbitration clause contained therein. Because the parties were not able to agree on one interpretation of the arbitration provision, the court was not able to reform the provision consistent with the parties' intent.

OI appeals the district court's denial of its motion to compel arbitration against AMS. ³ AMS contends that we lack jurisdiction to consider this appeal. After oral argument, we requested both parties to submit supplemental briefs on the question of our jurisdiction. Omaha Indemnity alleges that we have jurisdiction in this action because it is appealable as a final order under 28 U.S.C. Sec. 1291, or as an exception to Sec. 1291 under the collateral-order doctrine, or as an interlocutory order under 28 U.S.C. Sec. 1292. We conclude otherwise, and now dismiss this appeal for lack of jurisdiction.

II

In support of its allegations that this Court has jurisdiction under Sec. 1291, OI contends that its petition to compel arbitration was an independent action because it was originally filed in a federal district court in Nebraska before it was transferred to the federal district court in Florida. OI thus seeks to characterize its petition as an "offensive" motion, rather than as a "defensive" motion filed in a pending suit. Although OI's characterization of its motion may be questionable, the distinction OI seeks to draw is irrelevant to our analysis. The dispositive factor in this case is whether all of the claims are included in OI's Sec. 4 motion. Since not only some of the claims, but also some of the parties, are not included in OI's motion, this Court cannot assert appellate jurisdiction here without contravening the very policy behind Sec. 1291.

The overarching concern behind Sec. 1291 is to avoid piecemeal litigation of claims. As the Supreme Court noted long ago:

From the very foundation of our judicial system the object and policy of the acts of congress in relation to appeals and writs of error ... have been to save the expense and delays of repeated appeals in the same suit, and to have the whole case and every matter in controversy in it decided in a single appeal.

McLish v. Roff, 141 U.S. 661, 665-66, 12 S.Ct. 118, 120, 35 L.Ed. 893 (1891). Most recently, the Supreme Court has reiterated that "as a general rule a district court's decision is appealable under this section only when the decision 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.' " Gulfstream Aerospace Corp. v. Mayacamas Corp., --- U.S. ----, 108 S.Ct. 1133, 1136, 99 L.Ed.2d 296 (1988) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)).

Our past decisions are consistent with this principle against piecemeal litigation. From the text of past opinions in which we have asserted Sec. 1291 jurisdiction, it is readily ascertainable that all of the claims in the underlying action were included in the Sec. 4 motion. In Seaboard Coast Line R.R. Co. v. Trailer Train Co., 690 F.2d 1343 (11th Cir.1982), we asserted jurisdiction over a district court order denying arbitration. Id. at 1344-45 n. 1. The plaintiff had sued the Trailer Train Company for breach of contract in failing to provide the plaintiff with documents it needed to support its claim for an investment tax credit. In the same complaint, the plaintiff requested the district court to stay the suit and compel arbitration, which the district court denied. The motion to compel arbitration encompassed the very claim before the court, such that all of the underlying claims were included.

In La Nacional Platanera v. North American Fruit & Steamship Corp., 84 F.2d 881 (5th Cir.1936), the former Fifth Circuit ⁴ found Sec. 1291 jurisdiction over an order denying a Sec. 4 motion. In La Nacional Platanera, the plaintiff sued in state court for losses that it incurred as a result of an alleged breach of a charter party contract. The defendant removed the action to federal district court. After the plaintiff's motion to remand the action to state court was denied, the plaintiff petitioned for an order to compel arbitration, which the district court also denied. The Fifth Circuit characterized this action as a "suit at law" rather than one in admiralty, ⁵ and found the district court's order to be "a final judgment and appealable." Id. at 882. From the text of this opinion, which describes this action as one for damages resulting from breach of contract and only refers to this single issue throughout the opinion, it is evident that the Sec. 4 motion covers this precise claim. Thus, we can reasonably assume that all of the plaintiff's claims in the underlying suit were included in the motion to compel arbitration. ⁶

In Naples v. Prepakt Concrete Co., 494 F.2d 511 (5th Cir.), cert. denied, 419 U.S. 843, 95 S.Ct. 76, 42 L.Ed.2d 71 (1974), the former Fifth Circuit again asserted Sec. 1291 jurisdiction, this time over an order granting a motion to compel arbitration. When a dispute arose between the parties, the City of Naples sued Prepakt and Prepakt's surety in Florida state court. Prepakt removed the case to federal district court in Florida. The district court granted Prepakt's motion to stay the City's suit and to compel arbitration. The arbitration took place in Cleveland, and Prepakt was awarded $90,000 as a result of the proceedings. When Prepakt petitioned the federal district court in Ohio to enforce the award, the City of Naples secured an injunction in the federal district court in Florida to enjoin further proceedings in any other federal district court. Prepakt appealed the injunction. From the facts outlined in the original opinion promulgated by the Fifth Circuit, 490 F.2d 182 (5th Cir.1974), as well as the synopsis contained in that court's denial of the plaintiff's petition for rehearing, 494...