Source: https://caselaw.findlaw.com/us-8th-circuit/1884892.html
Timestamp: 2019-04-20 11:20:09+00:00

Document:
Before BENTON, SHEPHERD, and KELLY, Circuit Judges. Matthew M. Enenbach, Alison M. Gutierrez, Bartholomew L. McLeay, KUTAK & ROCK, Omaha, NE, for Plaintiff-Appellant. Mary L. Hewitt, James P. King, Robert Lawrence Lepp, Erin R. Robak, Mathew T. Watson, MCGILL & GOTSDINER, Omaha, NE, for Defendant-Appellee Theodore M. Seldin. Donald English, ENGLISH & GLOVEN LAW FIRM, for Defendant-Appellee Mark Schlossberg. Diana J. Vogt, SHERRETS & BRUNO, Omaha, NE, for Intervenor Plaintiffs-Appellants.
In 2010, feuding members of the Seldin family entered into a Separation Agreement to divide jointly owned assets. The Separation Agreement contained an arbitration clause, requiring the parties to arbitrate any claims involving their jointly owned property. Rather than arbitrating, Appellant Scott Seldin (“Scott”) filed a lawsuit for an accounting of a trust that he claims was not included in the Separation Agreement. The district court dismissed his claim, finding that the federal courts lacked subject matter jurisdiction to hear the lawsuit. We disagree.
Millard Seldin (“Millard”), Scott's father, created the Millard Seldin Children's Master Trust (“MSCM Trust”) in 1992. Theodore Seldin and Stanley Silverman (together “Appellees”) were designated as two of the trustees for the MSCM Trust. Scott, along with his siblings, Derry Seldin and Traci Seldin Moser (together “Intervenors”), were the beneficiaries of the trust. The MSCM Trust required an annual accounting of the trust assets. Scott alleges that Appellees breached their fiduciary duties as trustees and never submitted a trust report to Scott or Intervenors. The trust was dissolved in 2002.
In June 2012, Scott filed a second state court lawsuit, amending the complaint on October 10, 2012. In March 2013, the state court similarly dismissed the second lawsuit, ordering the parties to resolve their issues through arbitration. In September 2012, Scott filed a demand with the American Arbitration Association (the “AAA”) for the disqualification of the arbitrator. The AAA reaffirmed the arbitrator. Scott filed a Motion to Reconsider or Clarify Ruling, and the AAA denied the motion.
On April 27, 2017, after all of the briefing was submitted for this appeal, the arbitrator entered a Final Award, finding that the Appellees are entitled to recover from Scott a net amount of $2,977,031, plus post-award simple interest from the date of the award.1 On May 23, 2017, Appellees filed a Motion to Confirm Arbitration Award as Judgment in state court.
The sole issue decided in this appeal is whether the district court erred in granting Appellees' motion to dismiss for lack of subject matter jurisdiction. “We review de novo the grant of a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1).” City of Benkelman v. Baseline Eng'g Corp., 867 F.3d 875, 879-80 (8th Cir. 2017) (quoting Great Rivers Habitat Alliance v. FEMA, 615 F.3d 985, 988 (8th Cir. 2010)).
The district court granted Appellees' 12(b)(1) motion, finding that the court lacked subject matter jurisdiction to hear Scott's claim because the parties had entered into an arbitration agreement. This case is controlled by our decision in City of Benkelman v. Baseline Engineering Corp., where we held that a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction is not the appropriate mechanism to use to attempt to compel arbitration. Benkelman, 867 F.3d at 880-81. An arbitration agreement alone, without other statutory or binding jurisdictional limitations, does not divest the federal courts of subject matter jurisdiction. Id. (holding that “an arbitration agreement has no relevance to the question of whether a given case satisfies constitutional or statutory definitions of jurisdiction”). Rather, Rule 12(b)(6) or Rule 56 motions are the appropriate means for parties seeking to compel arbitration. Id. at 881.
Here, the parties entered an arbitration agreement, but the existence of that agreement alone does not deprive the federal courts of jurisdiction. Because a valid arbitration clause alone does not strip the federal courts of subject matter jurisdiction, we find that the district court erred in dismissing Scott's claim on that basis. See id. The appropriate procedure would have been for the district court to stay or dismiss the case based on a Rule 12(b)(6) or Rule 56 motion pending arbitration. See id.
The district court alternatively stated that it lacked subject matter jurisdiction over Scott's claim because res judicata and collateral estoppel apply. The Supreme Court has stated that “[p]reclusion, of course, is not a jurisdictional matter.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005); see also In re Athens/Alpha Gas Corp., 715 F.3d 230, 235 (8th Cir. 2013) (stating that res judicata is a “non-jurisdictional question”). Because preclusion is not a jurisdictional matter, the district court erred when it found that res judicata and collateral estoppel were sufficient grounds to grant a Rule 12(b)(1) motion. Rather, Rule 12(b)(6) or Rule 56 motions are the more appropriate vehicles for a dismissal based on preclusion. See A.H. ex rel. Hubbard v. Midwest Bus Sales, Inc., 823 F.3d 448, 453 (8th Cir. 2016) (Rule 12(b)(6)); Smith v. United States, 369 F.2d 49, 53 (8th Cir. 1966) (Rule 56).
The district court also found it lacked subject matter jurisdiction based on Rooker-Feldman. To the extent that Scott is a “state court loser” who is challenging the state court's order for his accounting claims to be arbitrated, we agree with the district court that Rooker-Feldman would apply, barring his claim in federal court. See Exxon Mobil, 544 U.S. at 284, 125 S.Ct. 1517. However, we think that it is unnecessary to reach the question of whether Rooker-Feldman applies here because the arbitration to which Scott was ordered to submit has already been completed. Thus, on remand the district court may hear a challenge to the enforcement of the arbitration award, but may not consider whether the state court's order to arbitrate accounting claims was appropriate. Furthermore, for the same reasons, we find it is unnecessary to consider Intervenors' appeal of the denial of their motion to intervene.
We reverse and remand to the district court for further proceedings consistent with this opinion.
1. We grant Appellees' Motion for Judicial Notice, requesting that this Court recognize that the arbitrator entered his Final Award and that Appellees have moved for the award to be confirmed as judgment.

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