Cti-Container Leasing Corp. v. Uiterwyk Corp.

• Decision Date: 13 September 1982
• Docket Number: CTI-CONTAINER,No. 81-5758,81-5758
• Citation: 685 F.2d 1284
• Parties: LEASING CORPORATION, Plaintiff-Appellant, v. UITERWYK CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1284

685 F.2d 1284

CTI-CONTAINER LEASING CORPORATION, Plaintiff-Appellant, v. UITERWYK CORPORATION, Defendant-Appellee.

No. 81-5758.

United States Court of Appeals Eleventh Circuit.

Sept. 13, 1982.

Ober, Grimes & Shriver, Kieron F. Quinn, James B. Wieland, Baltimore, Md., for plaintiff-appellant.

Richard Candelora, Holland & Knight, Gregg D. Thomas, Tampa, Fla., Alfred E. Yudes, Jr., Philadelphia, Pa., for defendant-appellee.

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

Before GODBOLD, Chief Judge, ANDERSON, Circuit Judge, and HOFFMAN ^*, District Judge.

WALTER E. HOFFMAN, District Judge:

In October 1980, CTI-Container Leasing Corporation (CTI) brought this action against Uiterwyk Corporation (Uiterwyk) alleging the breach of leases for ocean cargo containers and other related equipment. ¹ Jurisdiction was asserted under diversity and admiralty and CTI designated its claim as a maritime claim within the meaning of Fed.R.Civ.P. 9(h). In February 1981, Uiterwyk moved to implead Iran and IEL as third-party defendants pursuant to Fed.R.Civ.P. 14. In March 1981, the United States Department of Justice filed the first of several Statements of Interest which expressed the United States' position concerning litigation involving American nationals and Iranian entities as a consequence of the Iran-United States Agreement that obtained the release of the American hostages in January 1981. On June 19, 1981, the district court without having ruled on Uiterwyk's impleader motion, stayed this action with the following order:

In each of these cases ² the United States has filed a statement of interest, and subsequent to that, a supplemental statement of interest.

The statement, in effect, is a motion for a stay of these proceedings, as a result of the agreement between the United States and the Government of Iran on January 19, 1981. 46 Fed.Reg. 7913-32 (January 23, 1981).

The Court is of the opinion that these cases should be, and they are, STAYED, pending determination by the Iran-United States Claims Tribunal of its jurisdiction to hear these claims. See Exec. Order No. 12,294, 46 Fed.Reg. 14,111 (Feb. 26, 1981). ³

We now decide CTI's appeal of this stay order.

I. FACTS

CTI is a Delaware corporation with its principal place of business in New York and is a lessor of ocean carrier cargo containers. Uiterwyk is a Florida corporation and acted as agent for entities whose business included carriage of cargo in international trade.

CTI as lessor and Uiterwyk as lessee entered into a number of leases for ocean cargo containers and other related equipment which are the basis of this action. CTI alleged that Uiterwyk failed to pay its obligations under such leases. Uiterwyk argued that it entered into the leases as agent for IEL, ⁴ which was an Iranian corporate entity and is now an alleged instrumentality of Iran. Uiterwyk alleged that IEL transported the containers and related equipment to Iran where they remain in custody and control of IEL and Iran.

II. DISCUSSION

A. Appellate jurisdiction

Uiterwyk argued that this court lacks appellate jurisdiction to review the district court's stay order. CTI argued that the stay order is reviewable as a 28 U.S.C. § 1291 ⁵ "final decision" pursuant to Hines v. D'Artois, 531 F.2d 726 (5th Cir. 1976). ⁶

In Hines, the Fifth Circuit found a stay order appealable because the order operated in practical effect as a "final order" under § 1291. The district court in Hines sua sponte stayed plaintiffs' 42 U.S.C. § 1983 employment discrimination action until plaintiffs initiated proceedings before the Equal Employment Opportunity Commission (EEOC) and pursued such proceedings to final administrative action. The Fifth Circuit held such order appealable because its practical effect placed plaintiffs out of court. See Idlewild Bon Voyage Liquor Corp. v. Epstein, 370 U.S. 713, 715 n.2, 82 S.Ct. 1294, 1296 n.2, 8 L.Ed.2d 794 (1962). The court concluded that the district court abused its discretion in staying the action until the conclusion of administrative proceedings and reversed the stay order.

The Fifth Circuit relied on the following factors to treat the stay order as appealable under § 1291. First, the court cited Gillespie v. United States Steel Corp., 379 U.S. 148, 152-53, 85 S.Ct. 308, 310-311, 13 L.Ed.2d 199 (1964), for the principles that "the requirement of finality is to be given a practical rather than a technical construction," and when "deciding the question of finality the most important competing considerations are the inconvenience and costs of piecemeal review on the one hand and the danger of denying justice by delay on the other." (citations omitted). The court stated that such a practical construction of the finality doctrine "requires that when a plaintiff's action is effectively dead, the order which killed it must be viewed as final. Effective death should be understood to comprehend any extended state of suspended animation." Hines, supra, at 730; see also McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982).

Second, the circumstances of the case reinforced the court's conclusion that the stay order was a final order for § 1291 purposes. No EEOC complaint had been filed when the stay order was entered and a minimum delay of eighteen months was needed for final EEOC processing. The effect of such a "protracted and indefinite delay", id., at 732, was to put plaintiffs effectively out of court.

Finally, the district court had not yet addressed the merits of the action when it entered the stay order, and, therefore, "the inconvenience and costs of piecemeal review" were outweighed by "the danger of denying justice by delay." Id. The Fifth Circuit decided that these factors favored treating the stay as a final order, and we likewise feel that similar factors exist in the instant case that make this stay order a final order subject to appellate review.

The danger of denying justice by delay for CTI outweighs Uiterwyk's possible inconvenience and costs of piecemeal review. We have no way to estimate the months or even years that may pass before Uiterwyk's claims against Iran and IEL are decided by the Iran-United States Claims Tribunal ("Tribunal"), see NIC Leasing, Inc. v. Uiterwyk Corp., No. 81 Civ. 3866, slip op. at 9 (S.D.N.Y. March 1, 1982), and CTI, an American corporation, should not be denied its day in court against Uiterwyk, another American corporation, because the Tribunal might at some future date assert jurisdiction over Uiterwyk's action against Iran and IEL. Furthermore, Uiterwyk's argument that the delay from the stay order is outweighed by the possibility of inconsistent results from piecemeal review is without merit. CTI did not institute an action against Iran or IEL. Uiterwyk's claims against these two parties are contingent upon a finding in the district court of Uiterwyk's liability to CTI before the Tribunal can accurately enter a judgment in the Uiterwyk and Iran-IEL dispute.

By staying the action pending the Tribunal's determination of its jurisdiction over Uiterwyk's claim for a protracted and indefinite period, the district court placed CTI in an "extended state of suspended animation." Hines, supra, at 730. The practical effect of the stay order placed CTI "effectively out of court" and for such reason we hold that the stay order was a "final" order subject to appellate review under § 1291.

B. Merits of the stay order

CTI and Uiterwyk disagree as to whether the district court's stay order was a mandatory or discretionary stay. We conclude that the stay order as it affected Uiterwyk's third-party claims against Iran and IEL was mandatory in nature because such claims were suspended by Executive Order No. 12,294 as they are clearly within the Tribunal's jurisdiction. The district court was required to stay those claims, although it nevertheless retained jurisdiction over them. See Dames & Moore, supra, 453 U.S. at 684, 101 S.Ct. at 2989. We agree with the district court's stay order as it pertains to the stay of the third party action, but reach a contrary conclusion concerning the stay of the principal action of CTI against Uiterwyk. This portion of the stay order was discretionary in nature as the district court was not required to stay an action between two American corporations. ⁷

The inherent discretionary authority of the district court to stay litigation pending the outcome of related proceeding in another forum is not questioned. See generally Will v. Calvert Fire Insurance Co., 437 U.S. 655, 665, 98 S.Ct. 2552, 2558, 57 L.Ed.2d 504 (1978); Landis v. North American Co., 299 U.S. 248, 255, 57 S.Ct. 163, 166, 81 L.Ed. 153 (1936); P. P. G. Industries Inc. v. Continental Oil Co., 478 F.2d 674 (5th Cir. 1973). Our review of such an exercise of discretion is limited to an abuse of discretion standard. See McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982).

In McKnight, the Fifth Circuit recently vacated a stay order as an abuse of discretion because the stay continued an action for an indefinite period of time. In McKnight, the court stated:

The district court has a general discretionary power to stay proceedings before it in the control of its docket and in the interests of justice. Nevertheless, stay orders will be reversed when they are found to be immoderate of an indefinite duration. In Landis v. North American Co., 299 U.S. 248 (57 S.Ct. 163, 81 L.Ed. 153) (1936), the Supreme Court held that a "stay is immoderate and hence unlawful unless so framed in its inception that its force will be spent within reasonable limits, so far at least as they are susceptible of prevision and description."

667 F.2d at 479 (citations omitted).

It is difficult to accurately predict the time that CTI will be forced to stand aside if it is required to await the Tribunal's determination of its jurisdiction to hear these claims, but it can safely be described as an indefinite period of...