Keystone Shipping Co. v. New England Power Co.
| Decision Date | 09 January 1997 |
| Docket Number | No. 96-1800,96-1800 |
| Citation | 109 F.3d 46 |
| Parties | KEYSTONE SHIPPING COMPANY, Plaintiff-Appellant, v. NEW ENGLAND POWER COMPANY, Defendant-Appellee. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Joseph D. Steinfield with whom Joshua A. Davis, Boston, MA, C. Dylan Sanders, Jamaica Plain, MA, and Hill & Barlow were on brief, for appellant.
Stanley McDermott, III, with whom James D. Kleiner, New York City, Piper & Marbury L.L.P., and John F. Sherman, III, Westborough, MA, were on brief, for appellee.
Before CYR, Circuit Judge, CAMPBELL, Senior Circuit Judge, and STAHL, Circuit Judge.
This case involving an underlying dispute over who is to pay for some $14 million in repairs to a coal cargo ship requires us to resolve one question: whether claims asserted by defendant-appellee New England Power Company ("NEP") against plaintiff-appellant Keystone Shipping Co. ("Keystone") are arbitrable. We reach two conclusions pointing to the same result. First, because the issue has already been litigated by the parties in Massachusetts state court, it is precluded from relitigation under the doctrine of issue preclusion. Second, even if the issue were not precluded, we find that Keystone and NEP have a legally-enforceable agreement to arbitrate disputes like the one here. We thus affirm.
In order to resolve this appeal we must consider a long series of agreements and disputes between Keystone and NEP concerning the S.S. Energy Independence, now named the S.S. Energy Enterprise ("the Vessel"). The Vessel was constructed in the early 1980s by the New England Collier Company ("NECCO"), an unincorporated joint venture between Keystone and an NEP affiliate, New England Energy Incorporated ("NEEI"). NEP, in turn, chartered the Vessel from NECCO to deliver coal to its electric power plants. The joint venture agreement and the NEP time charter both contained arbitration provisions.
The relationship was not an entirely happy one and a dispute between the parties followed. In 1987, Keystone commenced arbitration against NEEI under the joint venture agreement, while NEP commenced arbitration against NECCO under the time charter. In a previous appeal to this Court, we held that the two arbitrations were amenable to consolidation by federal court order. See New England Energy Inc. v. Keystone Shipping Co., 855 F.2d 1, 8 (1st Cir.1988), cert. denied, 489 U.S. 1077, 109 S.Ct. 1527, 103 L.Ed.2d 832 (1989).
Before the arbitration was concluded, the parties settled their differences through a settlement agreement signed by Keystone, NEP, and NEEI in October 1989 ("the 1989 settlement agreement"). Under the agreement's terms, ownership of the Vessel was to pass from NECCO to Keystone or a Keystone nominee. The parties further agreed that the Vessel's new owner would time charter the Vessel to NEP on "terms and conditions agreed to by Keystone and NEP." They annexed a draft of the proposed new time charter ("the draft charter") to the settlement agreement. Like the then-operative NEP time charter, the draft charter contained a sweeping arbitration provision. In particular, Section 41 of the draft charter provided that "[a]ny and all differences and disputes of whatsoever nature arising out of this Charter which cannot be resolved by the parties shall be put to arbitration in the City of Boston ... before a board of three persons."
Keystone nominated Intercoastal Bulk Carriers, Inc. ("IBC") to be the Vessel's new owner. 1 In accordance with the settlement agreement, NECCO sold the Vessel to IBC and IBC, in turn, chartered the Vessel to NEP through a time charter agreement executed by IBC and NEP on December 27, 1989 ("the 1989 time charter"). The executed time charter was substantially similar to the October draft charter, but not exactly identical. The arbitration provisions in the two documents, however, were alike in all respects. That same day, December 27, Keystone and IBC entered into a management agreement which provided that Keystone would continue to manage the Vessel.
The executed 1989 time charter gave NEP the option to purchase the Vessel and terminate the charter with six months' prior, written notice. In 1994, NEP decided to exercise its option, resell the Vessel to International Shipholding Corp. ("ISC"), and then recharter the Vessel from ISC. On October 27, 1994, NEP and ISC signed a Memorandum of Agreement to this effect. Several days later, on November 1, 1994, NEP notified Keystone and IBC that it was exercising its six-month purchase option and would buy the Vessel on May 1, 1995. NEP concurrently demanded arbitration of its right to do this, because Keystone had previously communicated that it would contest NEP's right to exercise the purchase option. Keystone alleged that in the negotiations that produced the 1989 settlement agreement NEP had represented that it would not exercise the time charter's purchase option. NEP's exercise of the option, Keystone suggested, indicated that NEP had made misrepresentations at the time of the settlement negotiations and had violated Mass.Gen.Laws ch. 93A. A three-member arbitration panel was convened to hear the parties' dispute.
On March 15, 1995, the arbitration panel decided four threshold issues concerning NEP's service of the purchase notice and demand for arbitration in favor of NEP. IBC responded by filing an action in federal district court under 9 U.S.C. § 10 to vacate the arbitrators' ruling, but the court dismissed the complaint as premature. See Intercoastal Bulk Carriers, Inc. v. New England Power Co., No. 95-10880 RW2, . Thereafter, Keystone and IBC resumed arbitration of the dispute. On May 17, 1995, Keystone and IBC announced that they were withdrawing the challenge to NEP's right to exercise the purchase option from arbitration, leaving to the panel the issue of whether NEP's actions had violated Mass.Gen.Laws ch. 93A.
That same day, May 17, Keystone sued NEP in Massachusetts state court, claiming that NEP had made misrepresentations during the negotiations over the 1989 settlement agreement. NEP moved to dismiss Keystone's claims on the ground that they were governed by the arbitration provision of the 1989 time charter. Keystone responded that its claims against NEP did not arise under the 1989 time charter signed by NEP and IBC, but instead arose out of the 1989 settlement agreement, which did not have an arbitration provision. The state court agreed with NEP and dismissed Keystone's complaint. The state court concluded that the settlement agreement's provisions meant that Keystone was bound by the 1989 time charter's arbitration clause, notwithstanding the fact that Keystone had not signed the charter, which had been executed by its nominee, IBC, and NEP. See Keystone Shipping Co. v. New England Power Co., No. 95-1141-B (Mass. Superior Court, Essex County, August 17, 1995).
The dispute thus returned to the original arbitration panel, which, on August 21, 1995, concluded that NEP had the right to exercise the purchase option in the 1989 time charter. The arbitrators ordered IBC to sell the Vessel to NEP. Two days later, IBC filed an action in federal district court seeking to vacate the arbitrators' latest rulings. See Intercoastal Bulk Carriers, Inc. v. New England Power Co., C.A. No. 95-11881-GAO. Shortly thereafter, on September 5, 1995, Keystone filed a notice of appeal from the state court's decision to dismiss its state cause of action against NEP.
This was the state of legal affairs between the parties when, on September 20, 1995, IBC and NEP entered into a new settlement agreement ("the 1995 settlement agreement"). Under the new settlement agreement, IBC agreed to transfer the Vessel in accordance with NEP's wishes to ISC's nominee, Enterprise Ship Co. ("Enterprise"). The parties expressly acknowledged that the arbitration clause found in the 1989 time charter would govern the new settlement agreement. The settlement agreement also provided for the mutual release of claims by Keystone and IBC in favor of NEP and vice versa. There was one exception to this general release. Exhibit B of the agreement expressly provided that NEP did not release Keystone and IBC from "claims, if any, by reason of the Vessel not being in class at the Closing based upon a survey ... when the Vessel is drydocked immediately after the Closing."
On September 28, 1995, the Vessel's new owner, Enterprise, took title and sent the Vessel to a shipyard for the agreed-upon inspection. The survey that followed revealed corrosion damage to the Vessel's bulkheads and cargo holds exceeding the tolerances established by the American Bureau of Shipping, thereby making the Vessel unseaworthy. The ship inspectors refused to allow the Vessel to sail until the needed repairs were completed. NEP alleges that the bulk of the corrosion damage was a direct result of Keystone's failure to maintain the Vessel. The total cost to bring the Vessel to standard is claimed to be approximately $14 million dollars. NEP argues that Keystone and IBC are responsible for much of that amount under the terms of the 1989 time charter.
On December 20, 1995, NEP notified the arbitration panel that it desired to arbitrate its claims for the Vessel's repair costs against Keystone and IBC. Keystone denied that it was required to arbitrate NEP's claims, and on February 27, 1996 filed suit in federal district court seeking a stay of arbitration pursuant to Mass.Gen.Laws ch. 251, § 2(b). NEP cross-moved under the Federal Arbitration Act, 9 U.S.C. § 4, to compel arbitration. On May 24, 1996, the district court granted NEP's motion to compel, concluding that the arbitrability of NEP's claims against Keystone was an issue that had been previously decided in Massachusetts state court, and, in any event, was the result compelled by the merits. This appeal ensued.
We...
To continue reading
Request your trial
-
Kosilek v. Spencer
...actually decided in previous litigation between the parties, whether on the same or a different claim.” Keystone Shipping Co. v. New England Power Co., 109 F.3d 46, 51 (1st Cir.1997) (internal quotations and emphasis omitted). The Supreme Court has stated that “[t]o determine the appropriat......
-
Nogueras-Cartagena v. U.S.
...actually decided in previous litigation `between the parties, whether on the same or a different claim.'" Keystone Shipping Co. v. New England Power Co., 109 F.3d 46, 51 (1st Cir.1997) (citations omitted). "When the parties in a subsequent action are the same as those in a prior one, a part......
-
Evans v. Lorillard Tobacco Co.
...Bros. Printing, Inc. v. El Día, Inc., 490 F.3d 86, 90 (1st Cir.2007), citing Keystone Shipping Co. v. New England Power Co., 109 F.3d 46, 51 (1st Cir.1997). Further, “in cases where ... the application of offensive [collateral] estoppel would be unfair to a defendant, a trial judge should n......
-
In re Slosberg, Bankruptcy No. 97-20908
...516 U.S. 367, 375, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996); Marrese, 470 U.S. at 380, 105 S.Ct. 1327; Keystone Shipping Co. v. New England Power Co., 109 F.3d 46, 50 (1st Cir.1997); Reynolds-Marshall, 162 B.R. at 55. In order to carry preclusive force, the prior judgment must meet a four-pronge......
-
Collateral Estoppel and Prima Facie Effect
...was not a product of the parties’ consent and constitutes a final decision on the merits. Keystone Shipping Co. v. New England Power Co., 109 F.3d 46, 52 (1st Cir. 1997); Tocci Building Corp. v. Zurich Am. Ins. Co., 659 F. Supp. 2d 251, 257 (D. Mass. 2009); In re Tardugno, 510 B.R. 12, 20 (......
-
Table of Cases
...v. ESI-Lederle, Inc., , No. CIV. A. 96-1219, 1997 WL 560131 (E.D. Pa. Aug. 29, 1997), 65 Keystone Shipping Co. v. New England Power Co., 109 F.3d 46 (1st Cir. 1997), 246 Khan v. State Oil Co., 93 F.3d 1358 (7th Cir. 1996), rev’d on other grounds, 519 U.S. 1107 (1997), 187 In re Kidder Peabo......