Complaint of Hornbeck Offshore (1984) Corp., 92-7261

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Citation: 981 F.2d 752
• Docket Number: No. 92-7261,92-7261
• Parties: In the Matter of the COMPLAINT OF HORNBECK OFFSHORE (1984) CORPORATION and Hornbeck Offshore Operators, Inc., for Exoneration from or Limitation of Liability, as Owners and Owners pro hac vice of the M/V H.O.S. Goliath. HORNBECK OFFSHORE (1984) CORPORATION, Hornbeck Offshore Operators, Inc., The Embassy of the Republic of Tunisia and The Office of Cereales of the Republic of Tunisia, Appellees, v. COASTAL CARRIERS CORPORATION, Claimant-Appellant.
• Decision Date: 06 January 1993

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981 F.2d 752 1993 A.M.C. 1248 In the Matter of the COMPLAINT OF HORNBECK OFFSHORE (1984)
CORPORATION and Hornbeck Offshore Operators, Inc., for
Exoneration from or Limitation of Liability, as Owners and
Owners pro hac vice of the M/V H.O.S. Goliath.
HORNBECK OFFSHORE (1984) CORPORATION, Hornbeck Offshore
Operators, Inc., The Embassy of the Republic of
Tunisia and The Office of Cereales of
the Republic of Tunisia, Appellees,
v.
COASTAL CARRIERS CORPORATION, Claimant-Appellant. No. 92-7261. United States Court of Appeals,
Fifth Circuit. Jan. 6, 1993.
Rehearing Denied Feb. 5, 1993.

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Robert V. Corbett, Cardillo & Corbett, New York City and Robert C. Davee, Eastham, Watson, Dale & Forney, Houston, TX, for claimant-appellant.

John K. Meyer, Meyer, Orlando & Evans, Houston, TX, for Hornbeck Offshore.

Edward J. Patterson, Jr., Royston, Rayzor, Vickery & Williams, Galveston, TX, and William N. France and Richard Singleton, Healy & Baillie, New York City, for Embassy of Rep. of Tunisia and Office of Cereales of the Rep. of Tunisia.

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

Before JONES and BARKSDALE, Circuit Judges, and PRADO ¹, District Judge.

BARKSDALE, Circuit Judge:

In issue is the wide reach of the Federal Arbitration Act, 9 U.S.C. § 1, et seq. Appellant Coastal was owner of a barge carrying cargo for appellee Tunisia that sank while under tow by a boat chartered by Coastal from the other appellees (Hornbeck); and it appeals from the denial of a stay pending arbitration in Hornbeck's limitation of liability action. We REVERSE.

I.

In November 1989, Tunisia voyage-chartered a barge and tow from Coastal, to transport wheat from California to Tunisia; and, in turn, Coastal chartered the tow from Hornbeck. The Coastal/Hornbeck towage agreement contained an arbitration clause, providing that "[s]hould any dispute arise between [them], the matter in dispute shall be referred to [arbitration]".

In March 1990, the laden barge sank while under tow in the Atlantic. The parties dispute whether Hornbeck, Coastal, or both were at fault. In March 1991, Hornbeck filed an action in federal court in Texas under the Limitation of Liability Act, 46 U.S.C.App. §§ 181, et seq. ² Accordingly, in that action, Tunisia filed a claim for loss of the wheat; Coastal, for indemnity and/or contribution under the towage agreement, in the event that Tunisia obtained judgment against it in separate proceedings. ³ Subsequently, Coastal moved to

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stay the limitation proceeding, under § 3 of the Federal Arbitration Act (FAA), pending arbitration of the contribution/indemnity claim between it and Hornbeck. Without stating the bases for its ruling, the district court denied the motion. ⁴

II.

We have appellate jurisdiction under § 16(a)(1)(A) of the FAA, which provides: "an 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). ⁵ Coastal contends that the district court erred in denying the stay, asserting that the arbitration clause is broadly worded to encompass the indemnity/contribution dispute. We review de novo the district court's order. See Neal v. Hardee's Food Systems, Inc., 918 F.2d 34, 37 (5th Cir.1990).

A.

The FAA "is a congressional declaration of a liberal policy favoring arbitration". Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). Section 3 of the FAA, 9 U.S.C. § 3, provides for a stay of legal proceedings whenever the issues in a case are within the reach of an arbitration agreement. Midwest Mechanical Contractors, Inc. v. Commonwealth Constr. Co., 801 F.2d 748, 751 (5th Cir.1986). ⁶ This provision is mandatory: "If the issues in a case are within the reach of the agreement, the district court has no discretion under section 3 to deny the stay". Id.

In ruling on a motion for a stay under § 3, and pursuant to the plain wording of that section, a court must "first determine whether there is a written agreement to arbitrate"; then, "whether any of the issues raised are within the reach of that agreement". Id. at 750. Here, there is no dispute that there is a written agreement to arbitrate. Therefore, at issue is whether Coastal's claim for indemnity and/or contribution against Hornbeck is within the reach of that agreement. As noted, it provided for arbitration of "any dispute" arising between Hornbeck and Coastal.

This circuit distinguishes between broad and narrow arbitration clauses. If the clause is broad, the action should be stayed and the arbitrators permitted to decide whether the dispute falls within the clause. Sedco v. Petroleos Mexicanos Mexican Nat'l Oil, 767 F.2d 1140, 1145 n. 10 (5th Cir.1985) (quoting Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64

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(2d Cir.1983)). On the other hand, if the clause is narrow, the matter...