Island Creek Coal Sales Co. v. City of Gainesville, Fla.

• Decision Date: 10 June 1985
• Docket Number: 84-5144,Nos. 84-5108,s. 84-5108
• Parties: ISLAND CREEK COAL SALES COMPANY, Plaintiff-Appellee, Cross-Appellant, v. The CITY OF GAINESVILLE, FLORIDA, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 437

764 F.2d 437

ISLAND CREEK COAL SALES COMPANY, Plaintiff-Appellee, Cross-Appellant, v. The CITY OF GAINESVILLE, FLORIDA, Defendant-Appellant, Cross-Appellee.

Nos. 84-5108, 84-5144.

United States Court of Appeals Sixth Circuit.

Argued April 18, 1985.

Decided June 10, 1985.

Bert T. Combs, M. Stephen Pitt, Wyatt, Tarrant & Combs, Louisville, Ky., Merrill S. Schell, Jo Ann Dale, argued, Louisville, Ky., for defendant-appellant, cross-appellee.

Charles Calk, R. Allen Webb, Gess, Mattingly, Saunier & Atchison, Lexington, Ky., Janet Kane, argued, Phillips, Nizer, Benjamin, Krim & Ballon, New York City, for plaintiff-appellee, cross-appellant.

Before MERRITT and WELLFORD, Circuit Judges, and EDWARDS, Senior Circuit Judge.

WELLFORD, Circuit Judge.

Two issues are involved in this continuing dispute between the parties who entered into a substantial long-term coal supply agreement. The first issue involves the power of a district court to enforce or clarify its judgment during the pendency of an appeal. The second issue involves the meaning and enforceability of an arbitration award under the Arbitration Act, 9 U.S.C. Secs. 1-11.

On July 26, 1978, Island Creek Coal Sales Company ("Island Creek") and the City of Gainesville ("Gainesville") entered into a long-term coal sales agreement, with the coal to be extracted from a mine known as "Holden 22" in Kentucky. The price of coal subsequently declined, and in January 1983 Gainesville sought to terminate the sales agreement. Gainesville, pursuant to the terms of the sales agreement, instituted an arbitration proceeding in Louisville, Kentucky. As a basis for terminating the agreement, Gainesville asserted that Island Creek had breached the contract by transferring operation of Holden 22 to another entity. Island Creek denied that it had transferred operation of the mine.

On May 10-11, 1983, a full evidentiary hearing was held before a three-member arbitration panel. Following the hearing, the panel informed the parties that it tentatively favored Island Creek's position. On May 16, prior to the issuance of any order by the panel, Gainesville announced its intention to terminate the agreement notwithstanding the pendency of the arbitrators' decision. On May 23 a telephone conference was held in which counsel for the parties and the arbitrators participated. Following the conference, the panel issued an interim order directing Gainesville to "continue performance of the contract ... by accepting shipments of coal from the Holden 22 mine...."

On May 31, 1983, Gainesville instituted an action in the Northern District of Florida, charging Island Creek with various acts of fraud and violations of federal and state racketeering laws, as well as seeking to avoid the decision of the arbitration panel. ¹ That same day Island Creek commenced the present action in federal court in the Western District of Kentucky, seeking confirmation of the arbitrators' award. The court immediately stayed any proceedings in Florida that might involve the arbitration award, and on July 22, 1983, entered judgment confirming the arbitrators' interim award. ²

Immediately following the entry of judgment, Gainesville filed its notice of appeal. While the appeal was pending, on September 9, 1983, Island Creek moved the district court to issue a contempt order against Gainesville because of Gainesville's persistent refusal to comply with the court's July 22 judgment. On October 21, 1983, the court, though refusing to hold Gainesville in contempt, issued an opinion in which it found that Gainesville was not in compliance with its judgment. Gainesville had not accepted nine shipments of coal tendered to it and delivered in Florida from Island Creek's mines between May 23 and July 22, the time between the arbitrators' interim order and its confirmation by the district court. The district court ordered Gainesville to enter into "a mutually agreeable time table" with Island Creek for the purpose of correcting its noncompliance, and also ordered Gainesville to "maintain the 'status quo' " by "accept[ing] 10,000 tons of coal every eight days." Judge Allen noted that he was not altering or modifying the July 22 award; rather, he was simply clarifying the award to force Gainesville to do what was required of it under the arbitrators' prior decision.

Gainesville, on October 31, 1983, moved to vacate the district court's October 21 order. On December 1, 1983, the district court denied this motion and ordered Gainesville's compliance under pain of contempt. On December 12, 1983, Gainesville moved to amend the December 1 order. Following a hearing, the court on January 24, 1984, stayed its December 1, 1983 order pending the outcome of the appeal. The stay was conditioned, however, on Gainesville's posting a $1,469,000 bond "to secure its performance" of the December 1 judgment. The January 24 order required that Gainesville commence performance of its obligations within thirty days of receipt of the mandate. Forfeiture of the bond was predicated on Gainesville's failure to perform any of its obligations contained in the December 1, 1983 order.

Gainesville filed this timely appeal challenging the authority of the district court to enter these October, December and January orders. Island Creek cross-appeals, seeking to have the January 24 forfeiture order clarified to require forfeiture of the bond should Gainesville fail to accept and pay for the nine shipments tendered to it over 20 months ago.

It was on March 15, 1984, following Gainesville's second notice of appeal, that this court affirmed the July 22 order of the district court. We held that the district court properly confirmed the arbitrators' interim order, and rejected all of Gainesville's arguments to the contrary.

Generally, notice of appeal deprives the district court of jurisdiction of all matters forming the basis of the appeal. This rule, however, is neither a creature of statute nor is it absolute in character. Jago v. United States District Court, 570 F.2d 618 (6th Cir.1978).

[W]here the district court ... has a continuing duty to maintain a status quo and where, as the days pass, new facts are created by the parties and the maintenance of the status quo requires new action, ... an appeal from the supervisory order does not divest the court of jurisdiction....

Hoffman v. Beer Drivers & Salesmen's Local Union No. 888, 536 F.2d 1268, 1276 (9th Cir.1976). Where, as here, the district court is attempting to supervise its judgment and enforce its order through civil contempt proceedings, pendency of appeal does not deprive it of jurisdiction for these purposes. Farmhand, Inc. v. Anel Engineering Industries, Inc., 693 F.2d 1140, 1146 (5th Cir.1982); Brown v. Braddick, 595 F.2d 961, 965 (5th Cir.1979).

In the present case, the arbitration award ordered Gainesville to "continue performance of the contract ... by accepting shipments of coal from the Holden 22 mine...." In its July 22 order the district court confirmed this award. ³

Thereafter, Gainesville began accepting coal shipments from Island Creek. However, Gainesville refused to accept the nine May-July shipments, and also refused to pay anything for the first six shipments it did accept following the confirmation. Because of this, Island Creek sought to have Gainesville held in contempt. We conclude that the district court did not err in exercising jurisdiction over this matter despite the notice of appeal. The July 22 order was not stayed pending appeal, nor was a bond filed. The order was thus open to supervision and enforcement by the district court. Braddick, 595 F.2d 961.

Gainesville next argues that because the arbitrators' interim order only required that it accept future shipments, the district court lacked authority to order that it do anything more. Gainesville claims that by ordering it to accept the nine shipments at issue, and by requiring it to accept and pay for all shipments on a scheduled basis, and to pay for coal already received, the district court overstepped its limited authority under the Arbitration Act.

Indeed, it is true that, as a general principle, a court does not have the power or authority to correct or modify either an incomplete or ambiguous arbitration award. Instead, the case should be resubmitted to arbitration for clarification. See Annot., 36 A.L.R.3d 939, 945 (1971). The Arbitration Act grants the federal courts the authority to correct or modify an award only in limited circumstances. 9 U.S.C. Sec. 11. That statute provides in relevant part that

a district court may make an order modifying or correcting the award upon the application of any party to the arbitration--

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(c) Where the award is imperfect in matter of form not affecting the merits of the controversy.

The order may modify and correct the award, so as to effect the intent thereof and promote justice between the parties.

In this case the arbitrators' order...