Opinion
NO. 2018 CA 1098
07-11-2019
FLORIDA GAS TRANSMISSION COMPANY, LLC v. TEXAS BRINE COMPANY, LLC, et al.
Martin A. Stem, Leigh Ann Schell, Raymond P. Ward, Sara Valentine, Alexandra Roselli, New Orleans, Louisiana, Kathy Patrick (Pro Hac Vice), Angus J. Dodson (Pro Hac Vice), Laura J. Kissel (Pro Hac Vice), Houston, Texas, Brad D. Brian (Pro Hac Vice), Bethany W. Kristovich (Pro Hac Vice), Los Angeles, California, Attorneys for Appellant/Third-Party Defendant, Occidental Chemical Corporation Leopold Z. Sher, James M. Gamer, Peter L. Hilbert Jr., Christopher T. Chocheles, Jeffrey D. Kessler, New Orleans, Louisiana, Robert Ryland Percy III, Gonzales, Louisiana, Eric J. Mayer, Houston, Texas, Attorneys for Defendant/Appellee, Texas Brine Company, LLC
Martin A. Stem, Leigh Ann Schell, Raymond P. Ward, Sara Valentine, Alexandra Roselli, New Orleans, Louisiana, Kathy Patrick (Pro Hac Vice), Angus J. Dodson (Pro Hac Vice), Laura J. Kissel (Pro Hac Vice), Houston, Texas, Brad D. Brian (Pro Hac Vice), Bethany W. Kristovich (Pro Hac Vice), Los Angeles, California, Attorneys for Appellant/Third-Party Defendant, Occidental Chemical Corporation
Leopold Z. Sher, James M. Gamer, Peter L. Hilbert Jr., Christopher T. Chocheles, Jeffrey D. Kessler, New Orleans, Louisiana, Robert Ryland Percy III, Gonzales, Louisiana, Eric J. Mayer, Houston, Texas, Attorneys for Defendant/Appellee, Texas Brine Company, LLC
BEFORE: McDONALD, HIGGINBOTHAM, AND CRAIN, JJ.
CRAIN, J.
Occidental Chemical Corporation appeals a judgment vacating a ruling of the arbitration panel. We reverse and remand.
The facts and procedural history relevant to this appeal are set forth in Florida Gas Transmission Company, LLC v. Texas Brine Company, LLC , 18-0075 (La. App. 1 Cir. 7/1/19), ––– So. 3d –––– (" Florida Gas 0075 "), where this court found the trial court erred in rendering summary judgments declaring a salt lease terminated by confusion ("salt lease summary judgments"). Without addressing the merits of the confusion claim, we found Occidental and Texas Brine agreed the arbitrability of their claims must be decided by an arbitration panel, not the court. Florida Gas 0075 , ––– So. 3d at ––––.
On July 28, 2017, the arbitration panel found the salt lease did not terminate by confusion. Texas Brine then filed a motion in the trial court requesting the arbitration ruling be vacated, arguing the salt lease summary judgments had the effect of res judicata in the arbitration proceeding, precluding the panel from reaching a conclusion contrary to that of the trial court. The trial court agreed and signed a judgment on February 1, 2018, vacating the arbitration panel's July 28, 2017 ruling. Occidental appeals.
An appeal may be taken from an order confirming, modifying, correcting, or vacating an arbitration award. See La. R.S. 9:4215.
Before reaching the merits, we address Texas Brine's motion to dismiss this appeal, arguing a judgment issued by the trial court after the appeal was perfected renders the appeal moot. That judgment signed June 14, 2018, purportedly vacated all arbitration panel rulings. Texas Brine also moved to supplement the record on this appeal with the June 14th judgment. An appellate court must render its judgment upon the record on appeal. See La. Code Civ. Pro. art. 2164 ; Thibodeaux v. Rental Insurance Services, Inc. , 13-1947, 2015 WL 1882456, at *5 (La. App. 1 Cir. 4/24/15), writ denied , 15-1213 (La. 9/25/15), 178 So. 3d 567. While the lower court retains jurisdiction over certain matters while an appeal is pending, subsequent actions taken by the lower court pursuant to its retained jurisdiction are not part of the record on appeal and cannot be considered by this court. See La. Code Civ. Pro. art. 2088 ; Carr v. Gibbens , 15-0701, 2015 WL 5515906, at *4 (La. App. 1 Cir. 9/18/15) ; Thibodeaux , 2015 WL 1882456, at *5. For these reasons, we deny Texas Brine's motion to supplement and deny its motion to dismiss. See Carr , 2015 WL 5515906, at *4 (denying motion to supplement appellate record to include a judgment rendered after the appeal was perfected); Marchand v. Texas Brine Company LLC , 18-0621 (La. App. 1 Cir. 10/23/18) (unpublished order denying Texas Brine's motion to supplement the appellate record to include the same judgment referenced in the present motion).
We distinguish Trustee for Bondholders v. Southgate Suites LLC , 13-0242, 2013 WL 6506256 (La. App. 1 Cir. 12/10/13), where another panel of this court remanded the case for an evidentiary hearing that confirmed the plaintiff's mortgage, which was the basis of its claim, had been extinguished. The record on appeal was then supplemented with the evidence developed at the hearing. Id. at *2-3. Unlike Southgate , the present case was not remanded for an evidentiary hearing that, upon conclusion, necessitated supplementation of the record to include the evidence introduced at the hearing. Texas Brine also does not claim the requested supplementation, if allowed, will establish the extinction of Occidental's claims in this dispute.
We now turn to the merits of the appeal. Occidental assigns as error the trial court's application of the doctrine of res judicata to vacate the arbitration panel's ruling. According to Occidental, the arbitration panel must decide whether res judicata applies; or, alternatively, the salt lease summary judgments were subject to reversal on appeal and thus did not have the effect of res judicata.
Under the Federal Arbitration Acts (FAA), courts may vacate an arbitration decision only in very limited circumstances. See 9 U.S.C.A. § 10(a) ; Oxford Health Plans LLC v. Sutter , 569 U.S. 564, 568, 133 S. Ct. 2064, 2068, 186 L. Ed. 2d 113 (2013). A judgment vacating an arbitration award is reviewed de novo on appeal, with great deference given the arbitration panel's decision. See Downer v. Siegel , 489 F.3d 623, 626 (5th Cir. 2007), cert. denied , 552 U.S. 1063, 128 S.Ct. 721, 169 L. Ed. 2d 555 (2007) ; Potier v. Morris Bart, L.L.C. , 16-0879 (La. App. 4 Cir. 3/15/17), 214 So. 3d 116, 124, writ denied , 17-630 (La. 6/5/17), 221 So. 3d 45 (decided under the Louisiana Binding Arbitration Act).
In its reasons for the February 1, 2018 judgment, the trial court found the salt lease summary judgments were res judicata with respect to the same claim in the arbitration proceeding. Those salt lease summary judgments have now been vacated. See Florida Gas 0075 , ––– So. 3d at ––––. Because the salt lease summary judgments are no longer in effect, they cannot support a claim of res judicata. See La. R.S. 13:4231 (requiring a "valid and final judgment" for res judicata ); Armbruster v. Anderson , 18-0055 (La. App. 4 Cir. 6/27/18), 250 So. 3d 310, 317, writ denied , 18-1276 (La. 11/5/18), 255 So. 3d 1054 (holding that a judgment reversed on appeal has no res judicata effect); Anaya v. Legg Mason Wood Walker, Inc. , 07-0654 (La. App. 4 Cir. 5/14/08), 985 So. 2d 281, 289, writ denied , 08-1289 (La. 10/24/08), 992 So. 2d 1040 (holding that a vacated judgment has no res judicata effect). Consequently, the trial court erred in granting Texas Brine's motion on this basis.
Because absence of a final judgment precludes a finding of res judicata , we pretermit consideration of Occidental's alternative arguments that res judicata is not a valid basis to vacate an arbitration panel's award and that res judicata is an issue for the arbitration panel, not the court, to decide.
Texas Brine alternatively argues the trial court properly vacated the arbitration ruling, because the arbitration panel engaged in "misconduct" or "exceeded [its] powers." See 9 U.S.C.A. § 10(a)(3) and (4). Misconduct requiring vacating an award must involve more than an error of law; rather, it must deprive a party of a fair hearing. Rainier DSC 1, L.L.C. v. Rainier Capital Mgmt., L.P. , 828 F.3d 362, 364 (5th Cir. 2016). An arbitration panel exceeds its authority only if it acts outside the scope of its contractually delegated authority by issuing an award reflecting its own notions of economic justice rather than drawing its essence from the contract. See Oxford Health Plans LLC , 569 U.S. at 569, 133 S. Ct. at 2068. Because the parties bargained for the arbitrators to interpret their contract, a decision even arguably construing or applying the contract must stand, regardless of a court's view of its demerits. Oxford Health Plans LLC , 569 U.S. at 569, 133 S. Ct. at 2068. A party seeking to vacate an award under Section 10(a)(4) of the FAA bears a heavy burden. See Oxford Health Plans LLC , 569 U.S. at 569, 133 S. Ct. at 2068.
Texas Brine presented limited evidence in support of this claim. On appeal, it primarily argues the arbitration panel, in arriving at its decision the salt lease did not terminate by confusion, failed to address or reconcile the trial court's contrary ruling on the same claim, and disregarded Texas Brine's request to allow for briefing and argument as to the preclusive effects of the trial court's ruling. For the reasons provided in Florida Gas 0075 , the arbitration panel had the exclusive authority to determine the arbitrability of the salt lease confusion claim. By exercising that authority, the panel did not commit misconduct or exceed its authority merely because its conclusion on the merits of the claim differed from the trial court's ruling. The arbitration panel was not bound by the trial court's ruling, nor required to give it any weight or consideration in deciding the salt lease confusion claim.
Texas Brine also relies on a July 27, 2017 email from Occidental's counsel to the arbitration panel, copied to opposing counsel, advising the panel of the trial court's ruling on the confusion claim and requesting the panel "promptly issue its ruling on confusion." In a reply email the same day, Texas Brine's counsel urged "a rush to judgment without the benefit of the parties and panel's proper consideration of the ruling, evidence and briefing is not proper." The next day the arbitration panel issued a fifteen-page decision finding the salt lease did not terminate by confusion.
Texas Brine contends these circumstances suggest something nefarious in the panel's resolution of the confusion claim. The evidence does not satisfy Texas Brine's heavy burden of proving misconduct. The panel ruling shortly after learning of the trial court's ruling does not establish an error so affecting Texas Brine's rights "that it may be said that [Texas Brine] was deprived of a fair hearing." See Rainier DSC 1, L.L.C. , 828 F.3d at 364. Nor does the panel's ruling, replete with citations to the relevant contracts and legal authority, "simply reflect [the panel's] own notions of [economic] justice" rather than "draw[ing] its essence from the contract." See Oxford Health Plans LLC , 569 U.S. at 569, 133 S. Ct. at 2068 (quoting in part United Paperworkers International Union, AFL-CIO v. Misco, Inc. , 484 U.S. 29, 38, 108 S. Ct. 364, 371, 98 L. Ed. 2d 286 (1987) ). The trial court erred in granting Texas Brine's motion.
The trial court's February 1, 2018 judgment, vacating the arbitration panel's July 28, 2017 ruling, is reversed. This matter is remanded for further proceedings. This memorandum opinion is issued in accordance with Uniform Rules—Courts of Appeal, Rule 2-16.1B. All costs of this appeal are assessed to Texas Brine Company, LLC.
MOTION TO DISMISS AND MOTION TO SUPPLEMENT DENIED; JUDGMENT REVERSED; CASE REMANDED .
All pending motions are denied, and Texas Brine's exception of res judicata is denied.