Duffy & Mcgovern Accommodation v. Qci Marine
| Decision Date | 09 May 2006 |
| Docket Number | No. 05-20973.,05-20973. |
| Citation | 448 F.3d 825 |
| Parties | DUFFY & McGOVERN ACCOMMODATION SERVICES, Petitioner-Appellant, v. QCI MARINE OFFSHORE, INC., Respondent-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Charles L. Stinneford (argued), Gordon, Arata, McCollam, Duplantis & Eagan, Houston, TX, Eric Ray Miller, Gordon, Arata, McCollam, Duplantis & Eagan, Baton Rouge, LA, for Petitioner-Appellant.
Robert W. Ohnesorge (argued), Harrison, Bettis, Staff, McFarland & Weems, Houston, TX, for Respondent-Appellee.
Appeal from the United States District Court for the Southern District of Texas.
Before HIGGINBOTHAM, DAVIS and STEWART, Circuit Judges.
After QCI sued DMAS in state court for breach of contract, DMAS removed and persuaded the federal district court to dismiss the case because a forum selection clause mandated venue in England. After settling some claims, QCI filed an almost identical suit in state court. After failing to convince the state court to dismiss the suit, DMAS asked the federal district court to enjoin the state proceedings. The court refused, concluding that its prior order was not preclusive. DMAS appeals, and we reverse and remand.
In February 2004, QCI Marine Offshore, Inc. filed a breach of contract suit1 against Duffy & McGovern Accommodation Services ("DMAS") in state court in Houston. Asserting diversity jurisdiction, DMAS removed to federal district court and filed a motion to dismiss, arguing that a forum selection clause in the contract mandated resolution of the case in England. The district court agreed, concluding that the forum selection clause was valid and enforceable and dismissing the case "without prejudice" on April 30. QCI appealed to this court.
On August 27, while the appeal was pending, QCI filed an almost identical breach of contract suit against DMAS in a different state court in Houston. Because an intervening settlement lowered the amount in controversy,2 this case could not be removed. QCI dropped its appeal to this court on September 28, before a decision was rendered.
DMAS answered the complaint and filed a motion to dismiss, arguing that under Texas law the forum selection clause should be enforced and, in the alternative, that the federal court's decision collaterally estopped QCI from arguing that the forum selection clause was invalid or unenforceable. QCI argued that the state court was free to redetermine the issue because the federal court dismissed the case "without prejudice" and because a dismissal based on a forum selection clause is similar to one based on forum non conveniens, which Texas courts agree is not preclusive.
On February 16, 2005, the state court denied DMAS's motion without comment. It also denied DMAS's motion to reconsider without comment. DMAS filed a petition for writ of mandamus in the Texas Court of Appeals, which that court denied without comment.
Finding no relief in state court, DMAS filed a complaint on July 8 in the same federal district court that dismissed the original case, seeking an injunction against the state court proceedings. DMAS argued that the injunction was proper because, under the "relitigation exception" to the Anti-Injunction Act, a federal court can enjoin state proceedings threatening to ignore an earlier, preclusive federal court order.3 QCI argued primarily that the state court order, concluding that the federal court order was not preclusive and that the forum selection clause was not binding, was itself preclusive under Parsons Steel, Inc. v. First Alabama Bank;4 it argued secondarily that the earlier federal order was not preclusive. DMAS replied that the state court order was not final, therefore not preclusive; hence the Parsons Steel bar was inapplicable.
After granting a preliminary injunction and holding a hearing, the district court dissolved the preliminary injunction and refused to issue a permanent one on August 1. The court concluded that although its prior judgment was final, it was not entitled to preclusive effect; it did not address QCI's contention that the state court order was preclusive. The court apparently held that collateral estoppel applies only to "issues of ultimate fact," not issues of law. It also stated in its short order that decisions regarding forum selection clauses are not "essential to the outcome of the ultimate issues involved" so that resolution of the present forum selection issue would not "lend sway one way or the other on the ultimate issues between the parties."
On August 4, DMAS filed a petition for writ of mandamus in the Texas Supreme Court, which that court denied without comment in September.
On August 12, DMAS filed a motion for new trial in the present case, arguing that the district court erred as a matter of law because collateral estoppel applies to prevent the relitigation of any issue, of fact or law, when the issue previously litigated was identical, actually litigated, necessary to the decision, and reviewed under the same standard. The court denied the motion without comment, and DMAS filed the present appeal. We granted DMAS's motion to expedite due to the imminent state trial. DMAS then filed a motion in the district court for a preliminary injunction pending the results of this appeal, which the court denied without comment.
Before reaching the merits, we pause to explain our jurisdiction. The federal district court had diversity jurisdiction over the original case. After it dismissed that case, QCI and DMAS settled some of the claims, reducing the amount in controversy to about $44,000. Although this would deprive the federal courts of diversity jurisdiction in a new suit based on contract law, this case arises under federal question jurisdiction because the dispute turns on the Anti-Injunction Act and the federal courts' equitable power to enjoin proceedings to effectuate their orders. This court has appellate jurisdiction over the district court's final judgment refusing to enjoin pursuant to 28 U.S.C. § 1291.
Under the Anti-Injunction Act, a federal court can enjoin state court proceedings only in limited circumstances:
A Court of the United States may not grant an injunction to stay proceedings in a State Court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.5
The last exception, called the "relitigation exception," allows an injunction where state proceedings threaten to undermine a federal judgment having preclusive effect under the "well-recognized concept" of collateral estoppel.6 However, under the Full Faith and Credit Act, as construed by the Supreme Court in Parsons Steel,7 once the state court has finally determined in the first instance that the federal judgment is not preclusive, that issue is settled and the federal courts cannot enjoin the state proceedings.
Consequently, we must answer two questions, addressed in turn. First, whether the state order denying preclusive effect to the original federal order was itself preclusive under state law, for if it was, Parsons Steel forbids injunction. Second, if the state court has not foreclosed the issue, whether the federal district court was correct that its original order was not preclusive.
Under Parsons Steel, once a state court has "finally rejected" a claim that a federal order is preclusive, "the Full Faith and Credit Act becomes applicable and the federal courts must turn to state law to determine the preclusive effect of the state court's decision."8 This is true even if we disagree with the state court order, the proper avenue for appeal being the state court system and ultimately the United States Supreme Court.9
It is unclear from Parsons Steel whether state or federal law determines whether the state court has "finally rejected" the claim that the federal order is preclusive, leading to application of state preclusion law. Arguably, federal law should apply because "finality" is a precondition to using a body of state law. Yet, that body of state law is preclusion law, of which "finality" is an element, so if state preclusion law is to be used, the court might have to use state law to determine "finality." In a recent case this court followed the latter path; indeed, not only did we use state law to determine "finality," we used the whole of state preclusion law without first analyzing whether the state judgment was "final."10 In doing so, we implicitly interpreted Parsons Steel to require application of state preclusion law in all instances to determine the preclusive effect of a state judgment in federal court. In other words, we ask whether, under state law, the state order is preclusive. It happens here that question revolves around finality, as opposed to some other element of state preclusion law.
In this case, the state court order is not preclusive under Texas law because it is not a final judgment.11 Indeed, there is no judgment here at all, merely a court's interlocutory denial of a motion to dismiss. Although Texas law also makes preclusive final adjudications that are "adequately deliberated and firm," adjudications presumably "less" final than traditional "final judgments," the commonplace order here rejecting a motion to dismiss fails Texas's three-part test for determining such adjudications.12 QCI's citation to In re AIU Ins. Co., a recent decision of the Supreme Court of Texas, is misplaced since that case either supports DMAS or is not on point.13 This state order, like that in Vines v. University of Louisiana at Monroe,14 is not preclusive under state law.
Because the state order denying DMAS's motion to dismiss based on collateral estoppel is not preclusive under state law, Parsons Steel does not forbid a federal court injunction against the state proceedings.
The district court did not rely on Parsons Steel, instead basing its refusal to enjoin the state proceedings on its conclusion...
To continue reading
Request your trial
-
Aptim Corp. v. McCall
...is moot, we affirm the injunction without deciding whether the extension was proper.15 Duffy & McGovern Accommodation Servs. v. QCI Marine Offshore, Inc. , 448 F.3d 825, 828 (5th Cir. 2006) (quoting Chick Kam Choo , 486 U.S. at 147, 108 S.Ct. 1684 ); see also Vines v. Univ. of La. at Monroe......
-
In re Hodge, Case No: 08-36637 (Bankr. S.D. Tex. 1/12/2010)
...that is interlocutory and non-appealable is not final and cannot support a plea of preclusion. Duffy McGovern Accommodation Serv. v. QCI Marine Offshore, Inc., 448 F. 3d 825, 828 (5th Cir. 2006), and Mower v. Boyer, 811 S.W.2d 560, 562 (Tex. 1991). See also Avondale Shipyards, Inc. v. Insur......
-
Huawei Techs. Co. v. Yiren Ronnie Huang, & Cnex Labs, Inc., Civil Action No. 4:17-CV-00893
...Health Grp., LLC v. Bridging Health Option, LLC, 553 F.3d 397, 399 (5th Cir. 2008) (citing Duffy & McGovern Accommodation Servs. v. QCI Marine Offshore, Inc., 448 F.3d 825, 826 (5th Cir. 2006); Collin Cty. v. Siemens Bus. Servs., Inc., 250 F. App'x 45 (5th Cir. 2007)). 8. As previously ment......
-
D&J Invs. of Cenla v. Baker Hughes A GE Co.
...as the present issue.' ” City of Alexandria v. Davidson, CIV.A. 14-0723, 2014 WL 2891438, at *4 (W.D. La. June 25, 2014) (quoting Duffy, 448 F.3d at 830). counter that an injunction of the Declaratory Judgment Action based on collateral estoppel is not appropriate, contending that: (i) the ......