Doctor's Exchange of South Carolina v. Americas Best Contacts & Eyeglasses, Inc. , 26 F. App'x 236 ( 2002 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DOCTOR’S EXCHANGE OF SOUTH 
CAROLINA, PC; DIANE JURAS, Doctor,
Plaintiffs-Appellees,
v.  No. 01-1351
AMERICA’S BEST CONTACTS AND
EYEGLASSES, INCORPORATED,
Defendant-Appellant.

Appeal from the United States District Court
for the District of South Carolina, at Charleston.
David C. Norton, District Judge.
(CA-99-3577-2-23, CA-99-4241-2-18)
Argued: December 6, 2001
Decided: January 14, 2002
Before LUTTIG, KING, and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Kenneth Martin Willner, PAUL, HASTINGS, JANOF-
SKY & WALKER, L.L.P., Washington, D.C., for Appellant. Justin
O’Toole Lucey, JUSTIN O’TOOLE LUCEY, P.A., Mount Pleasant,
South Carolina, for Appellees. ON BRIEF: Barbara B. Brown, Diana
Embrey, PAUL, HASTINGS, JANOFSKY & WALKER, L.L.P.,
Washington, D.C.; Michael A. Scardato, MCNAIR LAW FIRM,
2 DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS
P.A., Charleston, South Carolina, for Appellant. Warwick R. Furr, II,
HOLLAND & KNIGHT, L.L.P., McLean, Virginia, for Appellee
Doctor’s Exchange.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Appellant America’s Best Contacts & Eyeglasses, Inc. ("AmBest")
appeals the February 2001 Order of the district court of South Caro-
lina granting Appellee Dr. Diane Juras’s motion to confirm an arbitra-
tion award. AmBest maintains that the court erred in its confirmation
order, in that it was entered without prejudice to a Title VII claim for
sexual harassment. As explained below, the district court did not err
in its ruling, and we affirm.
I.
Dr. Diane Juras is an optometrist licensed in the State of South
Carolina, while AmBest is a national retailer of eyeglasses and con-
tact lenses operating in twenty states. To aid its sale of eyewear, Am-
Best employs a licensed optometrist at each of its business locations
to conduct eye examinations. In 1997, AmBest decided to have its
optometrists employed by separate corporations, from which it would
lease the doctor-employees. Under South Carolina law, a professional
corporation engaged in providing medical services to the public must
be owned and controlled by licensed professionals; thus, AmBest
solicited Dr. Juras to incorporate and own the professional corpora-
tion called Doctor’s Exchange of South Carolina, P.C. ("Drex"). Dr.
Juras then became the president and sole shareholder of Drex, which
entered into a contract with AmBest (the "Services Contract") to pro-
vide optometric services at AmBest’s business locations in South Car-
olina.
DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS 3
In the summer of 1999, disagreements arose between AmBest and
Dr. Juras with respect to the Drex operations. First, the South Caro-
lina agency responsible for the practice of optometry issued a cease
and desist order to AmBest, requiring that it stop advertising free eye
examinations to promote the sale of eyewear. AmBest appeared to
ignore this cease and desist order, and Dr. Juras maintains that its fail-
ure to comply therewith jeopardized the medical licenses of the South
Carolina doctors employed by Drex. Secondly, an AmBest employee
in South Carolina initiated a claim against AmBest for sexual harass-
ment. Dr. Juras contends that when she did not support AmBest in
opposing this sexual harassment claim, and when she advised AmBest
that she had been similarly harassed, AmBest began threatening her.
In late August 1999, Dr. Juras stopped performing optometric ser-
vices at AmBest business locations in South Carolina, and began what
she characterized as a personal leave of absence to obtain medical and
legal advice. Dr. Juras contends that during her leave of absence, she
consulted counsel and discovered the existence of legal problems in
the business relationship between Drex and AmBest. One such prob-
lem was that AmBest had failed to calculate Drex’s compensation in
accordance with the Services Contract, resulting in Drex being under-
compensated for eye examinations performed by its optometrists.
On September 10, 1999, Dr. Juras filed a Title VII sexual harass-
ment claim against AmBest with the Equal Employment Opportunity
Commission (the "EEOC"). On September 13, 1999, AmBest sought
to exercise an option embodied in a contract between AmBest and Dr.
Juras, called the Capitalization and Shareholder Agreement (the "Cap-
italization Agreement"), requiring Dr. Juras to transfer her ownership
interest in Drex to another optometrist, when so directed by AmBest,
upon ten days’ notice. In addition, on September 14, 1999, AmBest
notified Drex that it was exercising its right to terminate the Services
Contract. That same day, AmBest demanded that Dr. Juras submit
their disputes to arbitration under her employment contract with Drex
(the "Employment Contract").
On September 20, 1999, Drex filed a two-count complaint against
AmBest in South Carolina state court alleging, first of all, breach of
contract with fraudulent intent and, secondly, unfair trade practices
under South Carolina law. AmBest promptly removed this civil action
4 DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS
to federal court. When Dr. Juras and AmBest were unable to agree to
a neutral arbiter for the arbitration that had been demanded by Am-
Best on September 14, 1999, Dr. Juras, in late November 1999, filed
her own suit against AmBest in South Carolina state court. Dr. Juras’s
lawsuit sought a declaratory judgment that the arbitration clause of
the Employment Contract was unenforceable or, alternatively, that it
had been breached. This proceeding was also removed to the district
court, and the two civil actions were then consolidated for further pro-
ceedings.
Thereafter, the parties wrangled extensively over who should be
involved in arbitration and concerning what issues should be arbi-
trated. On January 12, 2000, the district court conducted a hearing on
those questions, and it ordered the lawsuits referred to arbitration and
the litigation stayed pending the arbitration proceedings.1 AmBest
thereafter filed its complaint in arbitration with the American Arbitra-
tion Association (the "AAA"), asserting five counts against Dr. Juras:
(1) breach of contract pursuant to the Capitalization Agreement for
failing to transfer her ownership share of Drex as directed by Am-
Best; (2) breach of the Capitalization Agreement by continuing to
assert control over Drex; (3) breach of the Employment Contract by
failing and refusing to arbitrate her disputes with AmBest; (4) inten-
tional interference with contractual and economic relations between
AmBest and Drex; and (5) requesting declaratory judgment that Dr.
Juras had never owned Drex. In response, Dr. Juras counterclaimed
against AmBest in the AAA proceeding, alleging, in four counts: (1)
that she possessed no contractual obligation to arbitrate with AmBest;
(2) breach of the Services Contract by AmBest with fraudulent intent
1
During the district court hearing on January 12, 2000, the following
exchange occurred:
The Court: I don’t know whether the Title VII has
even been brought yet but once it is
brought it is going to the same place.
Counsel for Dr. Juras: It is not ripe yet, Your Honor. It is
pending.
The Court: Pending investigation. That is between
you all.
J.A. 236.
DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS 5
for failure to account for and pay optometric fees to Drex; (3) unfair
trade practices relating to AmBest’s illegal practice of medicine
through Drex; and (4) a request for transfer of corporate property to
Dr. Juras.
On March 1, 2000, the AAA appointed Cotton Harness III of
Charleston, South Carolina, to arbitrate the disputes between AmBest,
Dr. Juras, and Drex. Arbitration proceedings were conducted from
May 30, 2000, through June 2, 2000, and AmBest requested that
Arbiter Harness render a detailed award and opinion. In its post-
arbitration brief submitted to the arbiter, AmBest asserted that Dr.
Juras
broke off her relationship with America’s Best in August
1999. Although she gave extensive testimony at the hearing
about the circumstances leading up to her departure, that is
utterly beside the point here. Dr. Juras has filed a charge of
sexual harassment for which she seeks damages, including
damages for emotional distress, and those claims will be
heard and resolved separately.
J.A. 474 n.10 (emphasis added). The arbiter complied with AmBest’s
request for a full opinion, awarding Dr. Juras the sum of $37,500 in
compensatory damages, plus $30,000 in attorneys’ fees and costs (the
"Award").
Dr. Juras and Drex then returned to district court and, on August
2, 2000, moved to enroll the arbitration award.2 A footnote in their
motion to enroll contained the following request: "As this proceeding
has never involved Juras’ sexual harassment claim which remains
pending in front of the EEOC, Juras requests that a final order be
issued and these actions be dismissed without prejudice to her future
harassment claim." AmBest then, on August 9, 2000, filed its own
motion in the district court, seeking confirmation of the Award. The
2
The Federal Arbitration Act ("FAA") provides a procedure whereby
a court may "confirm" an arbitration award, but makes no reference to
such an award being "enrolled." 9 U.S.C. § 9. Because no party has con-
tested the use of the term "enroll" in these proceedings, we treat the
motion to enroll as being a request for confirmation under the FAA.
6 DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS
parties thereafter litigated in district court, inter alia, whether the
Award should be confirmed without prejudice to the sexual harass-
ment claim. AmBest objected to Dr. Juras’s above-quoted request on
several grounds, among them its assertion that the Award in fact
included the Title VII sexual harassment claim. By its Order of Febru-
ary 8, 2001, the district court ruled against AmBest, and it granted
confirmation of the Award without prejudice to Dr. Juras’s Title VII
claim. AmBest has timely appealed, and we possess jurisdiction pur-
suant to 28 U.S.C. § 1291.
II.
We review de novo a decision of a district court to confirm an arbi-
tration award. Peoples Sec. Life Ins. Co. v. Monumental Life Ins. Co.,
991 F.2d 141, 145 (4th Cir. 1993). In general, of course, we give great
deference to such awards. Upshur Coals Corp. v. United Mine Work-
ers of America, 933 F.2d 225, 229 (4th Cir. 1991). However, a district
court’s findings of fact underlying its decision to confirm an arbitra-
tion award are reviewed for clear error. Peoples Sec. Life Ins. Co.,
991 F.2d at 145 (finding that whether arbitrator was impartial was
underlying factual finding entitled to clear error review).3
III.
In its appeal, AmBest asserts that the district court improperly
vacated or modified the Award by confirming it without prejudice to
the Title VII sexual harassment claim (which it maintains was actu-
ally decided by Arbiter Harness). It also contends that Dr. Juras’s
Title VII claim is barred by the doctrine of res judicata. As explained
below, each of these contentions is without merit.
3
AmBest maintains that a de novo standard of review applies to all
issues presented in this appeal. However, we have previously determined
that a district court’s conclusion that an arbiter was impartial is a finding
of fact, and that such findings are reviewed for clear error. See Peoples
Sec. Life Ins. Co., 991 F.2d at 145; see also First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938, 947-48 (1995) (review of confirmation of
arbitration award "should proceed like review of any other district court
decision, . . . e.g., accepting findings of fact that are not ‘clearly errone-
ous’ but deciding questions of law de novo").
DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS 7
A.
While there were references made in the arbitration proceedings to
Dr. Juras’s sexual harassment claim against AmBest, Arbiter Harness
carefully limited the evidence to the disputes raised in arbitration. For
example, when AmBest’s counsel asked an AmBest witness whether
Dr. Juras had ever made a sexual harassment claim, the witness
responded that she had not, but that she had simply "disappeared" and
refused to perform services for Drex. When Dr. Juras’s attorney asked
the witness whether he was aware of other complaints about the
alleged harasser, AmBest objected. Significantly, Arbiter Harness
inquired of counsel on the relevance of this testimony, and explicitly
limited its admission "to the contractual issues we’ve got before us."
Later in the proceedings, Dr. Juras’s counsel asked a witness
whether a letter from Dr. Juras to AmBest had asserted sexual harass-
ment. In response, AmBest’s attorney requested "an ongoing objec-
tion to the allegations of sexual harassment." Although Arbiter
Harness permitted the inquiry, he noted that it did not go to a sexual
harassment claim, and he limited its admission to "the purpose of
notice."4
The Award, as rendered by Arbiter Harness on July 26, 2000,
addressed only the nine claims submitted by the parties to the AAA.
It recited, however, as part of the factual background for the disputes,
that, "[i]n addition, Dr. Juras experienced alleged sexual harassment,"
and it found that "it appears that AmBest breached the various agree-
ments and continue [sic] on an intentional course to undermine Juras’
ability to function in her capacity as President of Drex and as an
optometrist for AmBest." Arbiter Harness also found that "[a]s I see
it, the breaches placed Dr. Juras in the position of significant exposure
and AmBest cannot benefit from its actions by terminating her rela-
tionship with Drex and severing her from employment." There is
nothing in the Award to indicate that the damages were to compensate
for a sexual harassment claim, and Arbiter Harness did not undertake
4
It is clear that Arbiter Harness did not admit the letter for purposes
of proving any facet of a Title VII claim, but rather only as notice of the
reason for Dr. Juras’s sudden departure and alleged breach of contract.
8 DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS
to analyze any such claim. Thus, it is clear on this record that the Title
VII claim was not arbitrated.
Nevertheless, AmBest maintains that the district court conducted a
faulty legal analysis of the Award by failing to apply the proper legal
standards for vacating or modifying an arbitration award. In fact,
however, the court’s review of the record was entirely proper, and it
found that Dr. Juras’s Title VII sexual harassment claim had not been
arbitrated and that no award had been made in connection with it.
Therefore, the decision to confirm the Award without prejudice to the
Title VII sexual harassment claim did not either modify or partially
vacate the Award.
B.
AmBest also asserts on appeal that the sexual harassment claim is
barred by the doctrine of res judicata. That term, under applicable
legal principles, encompasses the doctrines known as "issue preclu-
sion" and "claim preclusion." See In re Varat Enters., Inc., 81 F.3d
1310, 1315 (4th Cir. 1996). AmBest’s contention that the sexual
harassment claim should have been brought in the arbitration pro-
ceeding is actually an allegation of claim preclusion, i.e., that "the
later litigation arises from the same cause of action as the first."5 Id.Regardless of whether Dr. Juras’s sexual harassment claim arose
out of the same transaction or series of transactions as the arbitrated
claims, we have long recognized that claim preclusion does not apply
"when the parties have agreed to the splitting of a single claim."
Aldridge, 900 F.2d at 740 ("Since a principal purpose of the general
rule of res judicata is to protect the defendant from the burden of reli-
tigating the same claim in different suits, consent, in express words
or otherwise, to the splitting of the claim prevents the defendant from
5
The cause of action in a second litigation proceeding is identical to
the earlier one when it arises out of the same transaction or series of
transactions giving rise to the first litigation. Keith v. Aldridge, 900 F.2d
736, 740 (4th Cir. 1990). In such a circumstance, the decision in the ear-
lier litigation "bars litigation not only of every matter actually adjudi-
cated in the earlier case, but also of every claim that might have been
presented." Varat Enters., 81 F.3d at 1315.
DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS 9
invoking claim preclusion.") (internal citation and quotation omitted);
Restatement of Judgments 2d § 26 (noting that one exception to gen-
eral rule of claim preclusion is when "the parties have agreed in terms
or in effect that the plaintiff may split his claim, or the defendant has
acquiesced therein"). Most compellingly, AmBest advised Arbiter
Harness that Dr. Juras’s Title VII sexual harassment claim was not
before him, and it specifically asserted in its post-arbitration brief to
the arbiter that the "charge of sexual harassment" would be "heard
and resolved separately." See supra at 5.
As our former colleague Judge Sprouse has properly observed,
"[t]he course of litigation is determined, for the most part, by the
actions of the litigants." Young-Anderson v. Spartanburg Area Mental
Health Ctr., 945 F.2d 770, 774 (4th Cir. 1991). Where the parties
have agreed, in words or otherwise, to split a claim, a defendant may
not invoke claim preclusion from the earlier action. Id.; Keith, 900
F.2d at 740. Indeed, the district court, by its Order of February 8,
2001, granting confirmation of the Award, expressly decided that the
Title VII claim had not been arbitrated and that it was to be dealt with
separately.6 In so doing, the court found that "[a]fter being told by the
arbitrator that only the breach of contract claims were at issue and
after defendant specifically stated that the Title VII claim would be
dealt with separately, plaintiff will not now be precluded from prose-
cuting her Title VII claim." The record on this point is clear, and these
well-founded determinations of the district court are not clearly errone-
ous.7
6
AmBest also maintains on appeal that the district court committed
error by failing to consider whether Dr. Juras could have brought the
Title VII claim in the arbitration. The court’s determination, however,
based upon the record, was that the parties agreed to split the claims and
that the Title VII claim was to be dealt with separately. This finding ren-
ders any further analysis of that issue unnecessary.
7
While the proper standard of review of findings of fact underlying a
decision to confirm an arbitration award is clear error, see supra Part II
and n.3, we would, on de novo review, agree with the district court that
AmBest’s position is without merit.
10 DOCTOR’S EXCHANGE v. AMERICA’S BEST CONTACTS
IV.
For the foregoing reasons, the decision of the district court is
affirmed.
AFFIRMED