Stemcor USA Inc. v. CIA Siderurgica Do Para Cosipar

• Decision Date: 08 May 2019
• Docket Number: NO. 2018-CQ-1728,2018-CQ-1728
• Citation: 283 So.3d 1014
• Parties: STEMCOR USA INCORPORATED v. CIA SIDERURGICA DO PARA COSIPAR, et al.
• Court: Louisiana Supreme Court

283 So.3d 1014

STEMCOR USA INCORPORATED

v.CIA SIDERURGICA DO PARA COSIPAR, et al.

NO. 2018-CQ-1728

Supreme Court of Louisiana.

May 8, 2019

Rehearing Denied June 26, 2019

ON CERTIFIED QUESTION FROM THE UNITED STATES FIFTH CIRCUIT COURT OF APPEALS

JOHNSON, Chief Justice

We accepted the certified question presented to this court by the United States Fifth Circuit Court of Appeals in Stemcor USA Incorporated v.CIA Siderurgica Do Para Cosipar, et al , 740 Fed. Appx. 70 (5th Cir. 2018) : "Is a suit seeking to compel arbitration an ‘action for a money judgment’ under Louisiana's non-resident attachment statute, La. Code Civ. Proc. art. 3542 ?"

For the reasons set forth below, we answer the question as follows: Louisiana Code of Civil Procedure article 3542 allows for attachment in aid of arbitration if the origin of the underlying arbitration claim is one pursuing money damages and the arbitral party has satisfied the statutory requirements necessary to obtain a writ of attachment.

FACTS AND PROCEDURAL HISTORY¹

This case involves a dispute between two creditors, each of which attached the same pig iron owned by the common debtor, America Metals Trading L.L.P. ("AMT"). Daewoo International Corp. ("Daewoo"), a South Korean trading company, entered into a series of contracts with AMT in May 2012 for the purchase of pig iron, to be delivered in New Orleans. The sale contracts contained arbitration clauses. Although Daewoo made payments under the contracts, AMT never shipped the pig iron. Daewoo sued AMT in the United States District Court for the Eastern District of Louisiana seeking an order compelling AMT to arbitrate the dispute pursuant to the terms of the contract and also seeking a writ of attachment of AMT's pig iron on board the M/V Clipper Kasashio under the Louisiana non-resident attachment statute, Louisiana Code of Civil Procedure article 3542. The writ was granted and served by the U.S. Marshals Service on December 22, 2012.

Thyssenkrupp Mannex GMBH ("TKM") entered into six contracts with AMT for the purchase of pig iron between June 2010 and February 2011. AMT failed to deliver the pig iron. On December 28, 2012, TKM filed suit for damages in the 24th Judicial District Court for Jefferson Parish, Louisiana, and sought a writ of attachment over the same pig iron that Daewoo attached on December 22, 2012. TKM's state court writ of attachment was served on the cargo on December 29, 2012. TKM then moved to intervene in Daewoo's federal suit. TKM sought a federal writ of attachment over the pig iron, which was granted and served on the cargo on January 11, 2013. On that same day, all parties moved in federal court to sell the pig iron. The funds from the sale of the pig iron were placed in the registry of the court. According to the parties, the funds from the sale of the pig iron are insufficient to satisfy the debt owed to either party.

On May 9, 2016, TKM moved to vacate Daewoo's attachment. As it relates to the issue before this court, TKM argued that the attachment could not stand because La. C.C.P. art. 3542 does not permit attachment in aid of arbitration. The federal district court agreed and vacated Daewoo's writ. Stemcor USA, Inc. v. Am. Metals Trading, LLP , 199 F.Supp. 3d 1102 (E.D. La. 2016), vacated in part sub nom. , Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar , 870 F.3d 370 (5th Cir. 2017), opinion withdrawn and superseded on reh'g , 895 F.3d 375 (5th Cir. 2018). The court explained that Federal Rule of Civil Procedure 64 permits district courts to borrow state remedies for the seizure of property to secure a potential judgment, but state law determines when and how a provisional remedy is obtained. Stemcor , 199 F.Supp. 3d at 1122. Noting that La. C.C.P. art. 3542, Louisiana's non-resident attachment statute, allows a party to obtain a writ of attachment in "any action for a money judgment, whether against a resident or a nonresident, regardless of the nature, character, or origin of the claim, whether it is for a certain or uncertain amount, and whether it is liquidated or unliquidated," the court stated the issue as "whether Daewoo's suit to compel arbitration and obtain provisional relief is an ‘action for a money judgment’ to which Louisiana's non-resident attachment statute applies." Id. at 1122. The court looked to the definition of "money judgment" in Black's Law Dictionary, which defines it as "a judgment for damages subject to immediate execution , as distinguished from equitable or injunctive relief." Black's Law Dictionary (10^th ed. 2014) (emphasis added by the federal district court). In finding Daewoo's suit to compel arbitration was not an "action for money judgment" for purposes of Louisiana's non-resident attachment provision, the district court reasoned:

Daewoo's complaint does not ask this court for an immediately executable damages award. It seeks a provisional attachment and an order compelling AMT to arbitrate Daewoo's contract claims in the parties' designated tribunal. That Daewoo seeks a provisional attachment remedy does not itself render Daewoo's suit a "money judgment" action. Otherwise, attachments would be self-justifying; through its issuance, every attachment would automatically satisfy article 3542, rendering that provision's limiting language superfluous and without legal effect.

Nor does Daewoo's request to compel arbitration bring its suit within the ambit of article 3542. In ruling on a petition to compel arbitration, a court does not rule on the merits of the underlying claims, much less award damages to the prevailing party. Instead, it conducts only a limited inquiry into whether there is a (sic) agreement to arbitrate the matter that falls under the Convention. In that sense, a petition to compel arbitration resembles a declaratory judgment action, which, according to Black's Law Dictionary, is the antithesis of an action for a "money judgment." Given the disconnect between the attachment statute's language and the nature of Daewoo's suit, it is telling that Daewoo fails to cite a single Louisiana case permitting a party to attach property under the non-resident attachment statute pending arbitration.

Id. at 1122–23 (internal citations removed). The federal district court further reasoned that Louisiana's arbitration statutes suggest that pre-arbitration attachments are not available under Louisiana law. Id. at 1124. According to the district court, none of the provisions in Louisiana Arbitration Law, La. R.S. 9:4201, et seq. , "authorizes or even contemplates attachment of property in connection with arbitration proceedings." Id. The court also placed particular importance on its mistaken belief that Louisiana had not enacted legislation based on the Model Law on International Commercial Arbitration relative to attachment in pending arbitration proceedings, stating:

In recent years, a number of states have enacted legislation based on the Model Law on International Commercial Arbitration prepared by the United Nations Commission on International Trade Law ("UNCITRAL"). Consistent with the UNCITRAL Model Law, these states expressly authorize courts to attach property pending arbitration proceedings. Louisiana has neither adopted the UNCITRAL Model Law's interim relief provisions nor enacted anything resembling the legislative model. That Louisiana has not joined other states in expressly authorizing pre-arbitration attachment suggests that the remedy is foreign to Louisiana law and policy.

Id. (Emphasis added)(Internal citations removed). Contrary to the district court's statement, Louisiana has, in fact, adopted the UNCITRAL Model Law on interim measures in arbitration, which provides, "[i]t is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant the measure." La. R.S. 9:4249 (added by Acts 2006, No. 795, § 1).

On Daewoo's appeal, the United States Fifth Circuit Court of Appeal initially vacated the district court's order. Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar , 870 F.3d 370 (5th Cir. 2017), opinion withdrawn and superseded on reh'g , 895 F.3d 375 (5th Cir. 2018). In a split opinion, the Fifth Circuit declined to adopt a categorical approach to the question of whether La. C.C.P. art. 3542 allows for attachment in aid of arbitration, but agreed with the district court that a suit to compel arbitration (like Daewoo's suit) is not directly an action for a money judgment. 870 F.3d at 377. The court reasoned: "A motion to compel arbitration seeks an order requiring a party to take an action–namely, to arbitrate the dispute. Accordingly, a suit seeking to compel arbitration is not an ‘action for a money judgment,’ and Daewoo's suit seeking to compel arbitration cannot underlie a Louisiana non-resident attachment writ." Id. at 378. However, the court ultimately found Daewoo's writ was valid on other grounds unrelated to the issue before this court. Judge Graves concurred, finding the underlying action seeking to compel arbitration is clearly an "action for a money judgment" under La. C.C.P. art. 3542. Judge Graves reasoned that Daewoo has made it clear from the outset that it would be pursuing a money judgment, and the "nature, character, or origin of the claim" just happened to be arbitration. Id. at 380.

On panel rehearing, the Fifth Circuit withdrew its prior opinion and affirmed the district court in a split opinion, thereby vacating Daewoo's attachment. Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar , 895 F.3d 375 (5th Cir. 2018). As it relates to the issue before this court, the Fifth Circuit again agreed with the district court that a suit to compel arbitration is not directly an action for a money judgment under Article 3542. Id. at 383. The Fifth Circuit reversed its previous ruling that the attachment was valid on other grounds. Judge Graves dissented, once more finding the underlying action seeking to...