SBRMCOA v. Bayside Resort Inc , 596 F. App'x 83 ( 2014 )


Menu:
  •                                                      NOT PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    _____________
    No. 14-1054
    _____________
    SBRMCOA, LLC, Individually and on
    behalf of its members,
    Appellant
    v.
    BAYSIDE RESORT, INC A CORPORATION;
    TSG TECHNOLOGIES, INC A CORPORATION;
    TSG CAPITAL, INC A CORPORATION;
    BEACHSIDE ASSOCIATES LLC
    _______________
    On Appeal from the District Court of the
    Virgin Islands
    (D.C. No. 3-06-cv-00042)
    District Judge: Hon. Curtis V. Gomez
    _______________
    Submitted Under Third Circuit L.A.R 34.1(a)
    December 11, 2014
    Before: CHAGARES, JORDAN and SHWARTZ, Circuit Judges.
    (Filed: December 16, 2014)
    _______________
    OPINION*
    _______________
    *
    This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
    does not constitute binding precedent.
    JORDAN, Circuit Judge.
    We are presented with the second appeal of Sapphire Beach Resort and Marina
    Condominium Association, LLC (the “Condominium Association” or “Association”)
    from an order of the District Court of the Virgin Islands referring this Racketeering
    Influenced Corrupt Organizations Act (“RICO”) suit to arbitration under the Federal
    Arbitration Act, 9 U.S.C. § 1, et seq. (“FAA”). Though we lack jurisdiction to consider
    the appeal, we can consider the Condominium Association’s alternative request for a writ
    of mandamus, and we conclude that the District Court’s failure to comply fully with our
    mandate in SBRMCOA, LLC v. Bayside Resort, Inc. (“SBRMCOA I”), 
    707 F.3d 267
    (3d
    Cir. 2013), warrants issuance of the writ.
    I.     Background
    This case involves a longtime dispute over the provision of freshwater to the
    Condominium Association. In 2006, the Association filed suit against three entities that
    are now Appellees: the Association’s sponsor, Bayside Resort (“Bayside”);1 the company
    that holds most of Bayside’s debts, Beachside Associates (“Beachside”); and the
    companies hired to construct a water treatment facility for the Condominium Association,
    TSG Technologies, Inc. and TSG Capital, Inc. (collectively “TSG”). The Association
    alleges RICO violations and various claims under Virgin Islands common law.
    Specifically, the Condominium Association alleges that Bayside was contractually
    obligated to provide to it both freshwater and service for wastewater at a reasonable rate.
    Generally, a sponsor is the entity – often the developer – that files the
    1
    condominium offering plan and declaration of condominium. E.g., Bacolitsas v. 86th &
    3rd Owner, LLC, 
    702 F.3d 673
    , 677 (2d Cir. 2012).
    2
    In 1999, Bayside contracted with TSG to construct, operate, and maintain a water system
    to fulfill those obligations. In 2001, however, Bayside ran into financial difficulties and
    pursued an agreement with TSG and Beachside in which Bayside assigned to Beachside
    and TSG its rights to supply water to the Condominium Association. As part of the plan,
    the rate that the Association would pay for water was to increase by 150% per gallon.
    Appellees needed the Condominium Association’s consent before they could implement
    this plan and, to secure it, they threatened to cease providing water services to the
    Condominium Association’s members, who then would be unable to obtain water from
    any other source. Yielding to those threats, the Association’s then-president signed a
    Water Supply Agreement and consented to the assignment of the water rights provisions.
    The Condominium Association then filed the instant suit, asserting, among other
    things, that the Water Supply Agreement was void because the Association’s Board of
    Directors was coerced into signing it and also lacked the authority to do so. Appellees
    moved to dismiss the complaint in favor of arbitration, relying on an arbitration clause in
    the Water Supply Agreement. The District Court entered an order dismissing the
    complaint and compelling arbitration. In the appeal that followed, we affirmed in part
    and reversed in part, holding that the District Court had not addressed a bona fide
    question as to whether the Board of Directors had the authority to enter into the Water
    Supply Agreement in the first place (i.e., whether the Board of Directors’ action was
    ultra vires). We noted a distinction between the authority of the Condominium
    Association and the more narrow authority of the Board of Directors. Thus, we vacated
    the District Court’s arbitration order and remanded the matter with an instruction for the
    3
    Court to determine whether the Board of Directors was authorized to enter into the Water
    Supply Agreement. More specifically, we reasoned that if, as the Association urged, the
    Water Supply Agreement was an amendment of the Declaration of Condominium, it was
    invalid. We thus connected the validity of the Water Supply Agreement to the issue of
    whether it was an unauthorized amendment of the Declaration of Condominium.
    On remand, the District Court allowed additional discovery and concluded that the
    Declaration of Condominium provided a “broad grant of authority” for the Board to
    manage the “affairs, policies, regulations and common property of the Condominium.”
    (App. at 12-13.) The Court reasoned that, because “the provision of water” constituted
    an “affair” of the Condominium Association, the Board was authorized to execute the
    Water Supply Agreement. The Court did not make any findings as to whether the Water
    Supply Agreement constituted an amendment of the Declaration of Condominium.
    Without either dismissing or staying the case, the Court again referred the matter to
    arbitration, and the Condominium Association has again appealed. When the District
    Court learned of this appeal, it issued an order staying the case and directing the parties to
    notify it when the “matter before the ... Court of Appeals for the Third Circuit is
    concluded.” (App. at 23-24.)
    The parties have now fully briefed the issues, including whether we have
    jurisdiction to hear an appeal of the District Court’s most recent order referring the matter
    to arbitration.
    4
    II.    Discussion2
    A.     Appellate Jurisdiction
    Under the Federal Arbitration Act (“FAA”), “[a]n appeal may be taken from . . . a
    final decision with respect to an arbitration.” 9 U.S.C. § 16(a)(3). Where a district court
    orders parties to resolve their dispute by arbitration and dismisses the case, the arbitration
    order is final and immediately appealable. Green Tree Fin. Corp. v. Randolph, 
    531 U.S. 79
    , 86-89 (2000). On the other hand, where a district court orders the parties to
    arbitration, but chooses to stay the proceedings, 9 U.S.C. § 16(b)(1), the FAA specifies
    that an immediate appeal is not available. 
    Id. at 87
    n.2 (“Had the District Court entered a
    stay instead of a dismissal in this case, that order would not be appealable.”). Thus, there
    is a “possible anomaly of different jurisdictional results depending on whether a district
    court dismisses or stays a case.” Blair v. Scott Specialty Gases, 
    283 F.3d 595
    , 602 (3d
    Cir. 2002).
    In the events leading to the present appeal, the District Court at first neither
    dismissed nor stayed the case, but rather ordered all claims to arbitration without
    2
    The District Court had subject matter jurisdiction under 28 U.S.C. § 1331. As a
    threshold matter, we must determine whether we have jurisdiction to hear this appeal.
    See Elliot v. Archdiocese of N.Y., 
    682 F.3d 213
    , 219 (3d Cir. 2012) (“Our jurisdictional
    inquiry must precede any discussion of the merits of the case for if a court lacks
    jurisdiction and opines on a case over which it has no authority, it goes beyond the
    bounds of authorized judicial action and thus offends fundamental principles of
    separation of powers.” (internal quotation marks omitted)). Both parties have indicated
    their consent to our appellate jurisdiction, but “it is well established that we have an
    independent duty to satisfy ourselves of our appellate jurisdiction regardless of the
    parties’ positions.” Kreider Dairy Farms, Inc. v. Glickman, 
    190 F.3d 113
    , 118 (3d Cir.
    1999). Our jurisdiction is thus addressed herein.
    5
    addressing the status of the case. Despite that, the Condominium Association says we
    have jurisdiction because the District Court’s order amounted to a dismissal. But, we
    have not held that a case has been dismissed under the FAA absent express language
    from the district court to that effect.3 In fact, we have held to the contrary. In Freeman v.
    Pittsburgh Glass Works, LLC, 
    709 F.3d 240
    , 247 (3d Cir. 2013), we said that the district
    court did not dismiss the case and thus did not relinquish jurisdiction when it
    administratively closed the case but “never mentioned a dismissal – either with or
    without prejudice.” 
    Id. We concluded
    that “by closing the case – rather than dismissing
    it – the [district] court maintained an implicit supervisory role over the arbitration” and
    could have reopened the case at any time to resolve issues that arose during arbitration.
    
    Id. at 248.
    Here, the District Court initially kept the case open and active on its docket, thus it
    retained even more immediate control over the case than the district court did in
    Freeman. In light of Freeman’s explicit rejection of the argument raised here in favor of
    3
    See, e.g., Lloyd v. HOVENSA, LLC, 
    369 F.3d 263
    , 268 (3d Cir. 2004) (“[A]
    district court’s order compelling arbitration is usually an interlocutory order that cannot
    be appealed. In this case, however, the District Court both compelled the parties to
    arbitrate their dispute and also dismissed the matter with prejudice.” (citations omitted));
    
    Blair, 283 F.3d at 602
    (holding that dismissal without prejudice was final under FAA
    because “[t]he Green Tree decision draws a distinction between dismissals and stays, but
    does not draw any distinctions within the universe of dismissals.”); cf. In re Pharmacy
    Benefits Managers Antitrust Litig., 
    700 F.3d 109
    , 115 (3d Cir. 2012) (“In an effort to
    circumvent the nonappealability of Judge Robreno’s order [referring the case to
    arbitration and staying it during the pendency], Plaintiffs sought several times, and
    eventually obtained, an order lifting the stay and dismissing their complaint with
    prejudice.”).
    6
    jurisdiction, we cannot say that the District Court’s order constituted a dismissal, as the
    order never even suggested it was such. Furthermore, the Court later issued an order
    staying the case. While it is true that the subsequent order is not the relevant one for
    determining appellate jurisdiction and was not entered pursuant to the FAA, it
    persuasively shows that the District Court did not intend to dismiss the case. If it had so
    intended, it would have had no reason to issue a stay order. Under the circumstances, it
    seems clear that the District Court’s order referring the case to arbitration was an
    unappelable interlocutory order under the FAA. Thus, we conclude that we lack
    appellate jurisdiction in this case.
    B.     Mandamus4
    We are not, however, without a means to require compliance with our mandate in
    SBRMCOA I. The Condominium Association has asked that we consider the appeal as a
    petition for a writ of mandamus under 28 U.S.C. § 1651, and we can do that. Allegheny
    Int’l, Inc. v. Allegheny Ludlum Steel Corp., 
    920 F.2d 1127
    , 1133 (3d Cir. 1990). One
    traditional function of the writ of mandamus is to confine a district court “‘to a lawful
    exercise of its prescribed jurisdiction or to compel it to exercise its authority when it is its
    duty to do so.’” Will v. United States, 
    389 U.S. 90
    , 95 (1967) (quoting Roche v.
    Evaporated Milk Ass’n, 
    319 U.S. 21
    , 26 (1943)). Although mandamus is an
    extraordinary remedy to be used sparingly, we have previously noted that it is “the
    4
    We exercise plenary review over whether a district court properly proceeded in
    accordance with the mandate and law of the case as established on appeal. Cooper
    Distrib. Co., Inc. v. Amana Refrigeration, Inc., 
    180 F.3d 542
    , 546 (3d Cir. 1999).
    7
    obvious remedy ... when a district court has failed to adhere to the mandate of an
    appellate court.” In re Chambers Dev. Co., 
    148 F.3d 214
    , 224 (3d Cir. 1998) (internal
    citations and quotation marks omitted); see also Citibank, N.A. v. Fullam, 
    580 F.2d 82
    ,
    86-87 (3d Cir. 1978) (appellate courts “have uniformly granted such writs ... where the
    district court has failed to adhere to an order of the court of appeals”).
    It is well established that a trial court “has no power or authority to deviate from
    the mandate issued by an appellate court.” Briggs v. Pa. R. Co., 
    334 U.S. 304
    , 306
    (1948) (collecting cases). Moreover, “[i]t is axiomatic that on remand for further
    proceedings after [a] decision by an appellate court, the trial court must proceed in
    accordance with the mandate and the law of the case as established on appeal.” Bankers
    Trust Co. v. Bethlehem Steel Corp., 
    761 F.2d 943
    , 949 (3d Cir. 1985). “A trial court must
    implement both the letter and spirit of the mandate, taking into account the appellate
    court’s opinion and the circumstances it embraces.” United States v. Kennedy, 
    682 F.3d 244
    , 253 (3d Cir. 2012) (internal quotation marks omitted).
    Here, while perhaps understandably perceiving its ruling as dealing with the
    question we identified in our opinion accompanying remand, the District Court did not
    comply fully with our mandate.5 In SBRMCOA I, we highlighted the need for the District
    5
    In SBRMCOA I, we repeatedly directed the District Court, on remand, to
    “determine whether the Board was, in fact and law, authorized to execute the Water
    Supply 
    Agreement.” 707 F.3d at 272
    . See also 
    id. at 273
    (instructing the district court to
    answer the “question as to whether the Board was authorized to sign the Water Supply
    Agreement”); 
    id. at 275
    (directing the district court to determine “whether [the] Board
    possessed the authority to enter into the Water Supply Agreement”). The District Court
    in fact did answer that question. Thus, the District Court’s decision to answer the
    8
    Court to determine whether the Board’s entry into the Water Supply Agreement
    constituted an amendment of the Declaration of Condominium and, thus, was ultra vires.
    We noted the possibility that the Water Supply Agreement could be an amendment of the
    Declaration, and we explained how an amendment would have properly been effectuated.
    SBRMCOA 
    I, 707 F.3d at 272
    . The District Court instead focused on whether the Water
    Supply Agreement touched on an “affair” of the Condominium Association and thus was
    authorized.6 It never mentioned the amendment issue we directed to its attention and
    which comprised the entirety of Appellant’s briefing on remand.
    Thus, the District Court failed to address a crucial question and its ruling on
    remand is at least incongruous with the “spirit” of our mandate. 
    Kennedy, 682 F.3d at 253
    . We will therefore issue a writ of mandamus. 
    Citibank, 580 F.2d at 86-87
    (“Despite
    federal appellate courts’ general reluctance to grant writs of mandamus, they have
    uniformly granted such writs in one situation where the district court has failed to adhere
    to an order of the court of appeals.”).7
    ultimate question, though not in the manner we directed, is perhaps an error of our own
    making.
    6
    The District Court also noted that the Declaration of Condominium does not
    otherwise prohibit the Board from entering into contracts. This very brief analysis did
    not, however, address the question of whether the Declaration of Condominium had been
    amended.
    7
    Our decision to return this to the District Court again should not be understood as
    implying any view on the questions presented.
    9
    III.   Conclusion
    For the forgoing reasons, we will dismiss the appeal for lack of jurisdiction but
    will grant the petition for a writ of mandamus and direct the District Court to vacate its
    order referring the parties to arbitration. We will also order the District Court to
    determine whether the Water Supply Agreement constituted an unauthorized amendment
    of the Declaration of Condominium and, based upon this determination, whether the
    Board was authorized in law and fact to enter into the Water Supply Agreement.
    10