Aig Baker Sterling v. American Multi-Cinema, Inc.

• Decision Date: 18 August 2009
• Docket Number: No. 08-14600.,08-14600.
• Citation: 579 F.3d 1268
• Parties: AIG BAKER STERLING HEIGHTS, LLC, A.B. Olathe II Limited Partnership, Plaintiffs-Counter-Defendants-Appellants, v. AMERICAN MULTI-CINEMA, INC., Defendant-Counter-Claimant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

579 F.3d 1268

AIG BAKER STERLING HEIGHTS, LLC, A.B. Olathe II Limited Partnership, Plaintiffs-Counter-Defendants-Appellants, v. AMERICAN MULTI-CINEMA, INC., Defendant-Counter-Claimant-Appellee.

No. 08-14600.

United States Court of Appeals, Eleventh Circuit.

August 18, 2009.

Clyde O'Neal Westbrook, III, James A. Harris, Jr., Harris & Harris, LLP, Birmingham, AL, for Plaintiffs.

Scott Burnett Smith, Bradley, Arant, Rose & White, LLP, Huntsville, AL, Bernard J. Rhodes, Lathrop & Gage, LC, Kansas City, MO, for Defendant.

Appeal from the United States District Court for the Northern District of Alabama.

Before DUBINA, Chief Judge, and EDMONDSON and KRAVITCH, Circuit Judges.

EDMONDSON, Circuit Judge:

This appeal is about a district court's power to grant some relief from its judgment.

Several years ago American Multi-Cinema, Inc. (American) arbitrated a tax dispute with AIG Baker Sterling Heights, LLC and A.B. Olathe II LP (collectively, Baker), from whom American leased space in shopping centers. The arbitration panel concluded that American owed Baker under the terms of their lease agreements almost a million dollars to cover a portion of the taxes on those properties. But after the panel issued the award, American learned that it had already paid some of the taxes directly to the taxing authority. Then, in the district court, American, claiming a mistake in the award, sought modification of it to reflect the tax actually already paid. The district court accepted American's argument and revised the award, but this Court reversed on appeal in AIG Baker Sterling Heights, LLC v. Am. Multi-Cinema, Inc., 508 F.3d 995 (11th Cir. 2007) (Baker I).

On remand, the district court, per Baker I, entered a judgment confirming entirely the arbitration award. But the case did not stop there: the district court later granted American some relief—under Fed. R.Civ.P. 60(b)(5)—from the judgment to account for the taxes American had paid to the taxing authority.¹ Baker appeals this latter decision. Baker says that the district court violated the mandate in Baker I and went beyond the exclusive grounds for modifying an arbitration award under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16. Seeing no error, we affirm the district court order.

Background

American leased space from Baker in shopping centers located in Michigan and Kansas. The lease agreements required American to pay to Baker money to cover some of the taxes on those properties, and Baker was to pay the taxing authority all money due. A dispute arose over the amount of money that American owed Baker. The parties agreed to arbitrate the dispute in Kansas City, Missouri, and the arbitration panel awarded $866,425.18 to Baker.

A portion of the award—$226,771.76— represents money American owed Baker for taxes on the Kansas property in 2002. Ownership of the Kansas property changed in the middle of 2002, and the new landlord that replaced Baker then asked American to pay tax money that American owed Baker for the first half of 2002 directly to the taxing authority. American made the payment but has since realized that it should have paid Baker and that Baker should have paid the taxing authority. At the time of the arbitration, American, however, presented none of this "taxes-paid" information; instead, American stipulated that it paid to Baker no money for taxes on the Kansas property in 2002.

After arbitration, Baker filed an action in the Northern District of Alabama to confirm the arbitration award. American filed an answer and counterclaim in the Alabama district court and filed a separate action in the Western District of Missouri to modify the arbitration award to reflect the taxes American had paid to the taxing authority. The Missouri district court transferred its action to the Alabama district court, which consolidated the two cases. The Alabama district court then granted American's motion for modification of the arbitration award on the basis of an "evident material mistake" and reduced the award to account for the tax payment. Baker appealed.

This Court reversed on appeal in Baker I. We said, among other things, that American's failure to identify the taxes it paid to the taxing authority in the facts stipulated at arbitration was no "evident material mistake" within the meaning of the FAA. Baker I, 508 F.3d at 999-1000. We, therefore, concluded that the district court erred in modifying the arbitration award and remanded the case for further proceedings. Id. at 1003.

On remand, the district court held a status conference. The district court informed the parties that it wanted to credit American for the actual payment to the taxing authority and asked the parties to brief how the district court could legitimately accomplish that goal. In response, American suggested that the district court take two steps: first, enter a judgment confirming the arbitration award; and, second, grant American relief from the judgment under Rule 60(b)(5) on the ground that the earlier tax payment had satisfied some of the judgment. The district court adopted this approach over Baker's objections. Baker now appeals the decision to grant American some relief from the district court's judgment.

Standard of Review

We review the grant of relief under Rule 60(b) for an abuse of discretion. High v. Zant, 916 F.2d 1507, 1509 (11th Cir.1990). We review legal conclusions de novo and factual findings for clear error. Young v. New Process Steel, LP, 419 F.3d 1201, 1203 (11th Cir.2005); Reynolds v. McInnes, 338 F.3d 1221, 1226 (11th Cir.2003).

Discussion

Baker claims that the district court abused its discretion in several ways by granting American relief from the judgment in this case. But we see only two that deserve much attention. First, Baker contends that the district court ignored the law of the case and the mandate established by Baker I. Second, Baker asserts that the district court violated the FAA by modifying the arbitration award for a reason not authorized by that statute.

1. The Law of the Case Doctrine & the Mandate Rule

The law of the case doctrine and the mandate rule ban courts from revisiting matters decided expressly or by necessary implication in an earlier appeal of the same case. Barber v. Int'l Bhd. of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, & Helpers, Dist. Lodge No. 57, 841 F.2d 1067, 1070-73 (11th Cir.1988). But neither principle applies "when the issue in question was outside the scope of the prior appeal." Transamerica Leasing, Inc. v. Inst. of London Underwriters, 430 F.3d 1326, 1332 (11th Cir.2005); see also Barber, 841 F.2d at 1070 ("The lower court may consider anew issues not within [the mandate's] compass.") (internal quotation marks omitted). Here, Baker claims that the district court violated both principles on remand. We disagree.

In Baker I, we spoke in pertinent part about the power of courts to correct an "evident material mistake" in an arbitration award. Baker I, 508 F.3d at 999-1001. We said that the FAA "embraces only an evident material mistake that appears in a description in the award," and noted that a mistake occurs when an arbitrator understands "wrongly" or identifies "incorrectly." Id. at 999. We, however, saw no "evident material mistake" in the award before us because American sought modification of the award to remedy its own failure to inform the panel of the payment to the taxing authority. Id. at 999-1000. We vacated the modified award and sent the case back to the district court. Id. at 1003.

On remand, the district court entered a judgment entirely confirming the award. Then the district court granted American relief from the district court's judgment (not the award) to reflect the earlier payment to the taxing authority. Baker argues that this latter decision violated the law of the case and the mandate from the earlier appeal. But as we have pointed out, we discussed in Baker I only modification of the award; we decided nothing expressly or by necessary implication about the district court's power to grant American relief from a district court judgment or to consider evidence of the payment to the taxing authority. Baker I, therefore, has no decisive role to play here.² The district court did not violate the law of the case doctrine or the mandate rule on remand.

2. The FAA

The FAA severely limits judicial vacatur and modification of an arbitration award. As the Supreme Court recently confirmed, sections 10 and 11 of the FAA offer the exclusive grounds for expedited vacatur or modification of an award under the statute. Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576, 128 S.Ct. 1396, 1403, 170 L.Ed.2d 254 (2008). Baker claims that the district court ignored this restriction when it—for reasons not listed in sections 10 or 11— gave American credit against the district court's judgment for the payment to the taxing authority. We do not see, though, how those FAA sections control in the circumstances of this appeal: the district court neither vacated nor modified the arbitration award. Instead, the district court entered a judgment confirming the award and about two months after that granted American some relief from the judgment under Rule 60(b)(5).³ Sections 10 and 11 say nothing about court judgments and do not control this appeal.

We instead turn our attention to section 13 of the FAA. That provision says that a judgment confirming an arbitration award, once entered, has the same force and effect as a judgment in a standard civil action and is subject to all the provisions of law relating to those judgments. 9 U.S.C. § 13; see also Parsons & Whittemore Ala. Mach. & Servs. Corp. v. Yeargin Constr. Co., 744 F.2d 1482, 1484 (11th Cir. 1984). The provisions of law include Rule 60(b).⁴ See, e.g., Fid. Fed. Bank, FSB v. Durga Ma Corp., 387 F.3d 1021, 1023-24 (9th Cir.2004) (stating that "judgment confirming an arbitration award is treated similarly to any other federal judgment" and...