Opinion ID: 1580204
Heading Depth: 2
Heading Rank: 1

Heading: jurisdiction

Text: We must first determine whether the trial court had jurisdiction to issue the preliminary injunction after it ordered the dispute to arbitration. Holiday Isle contends that the trial court retained only limited jurisdiction once it compelled arbitration because, it says, the arbitration clause, which is identical in all the purchase agreements, does not reserve to the trial court any jurisdiction for temporary or preliminary equitable relief. Holiday Isle relies on the decision of the United States Court of Appeals for the Eighth Circuit in Manion v. Nagin, 255 F.3d 535, 538-39 (8th Cir.2001), holding that [i]n a case involving the Federal Arbitration Act (FAA), courts should not grant injunctive relief unless there is `qualifying contractual language' which permits it. Because, Holiday Isle asserts, the purchase agreements do not contain qualifying contractual language permitting the trial court to grant injunctive relief, the purchase agreements provide no grounds for the trial court to issue the preliminary injunction. The purchasers respond by arguing that because, when the trial court entered the preliminary injunction, the case was not under the jurisdiction of any arbitration association and an arbitrator had not been selected, [t]he trial court, in essence, was the only forum by which these matters could be resolved. Purchasers' brief at p. 23. The purchase agreements expressly provide that any arbitration proceedings shall not be conducted through the American Arbitration Association (AAA). However, the purchasers note that the purchase agreements also provide that disputes are to be submitted to arbitration under the Commercial Rules of the AAA or as the parties may later agree in writing. The purchasers further note that the Commercial Arbitration Rules of the AAA allow a party to seek interim measures from a judicial authority. Rule R-34(c) of the AAA's Commercial Rules provides: A request for interim measures addressed by a party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate. Nothing before us indicates that the parties, by agreement entered into after the purchase agreements, displaced the choice of the AAA's Commercial Rules set forth in the purchase agreements. The purchasers also note that in Drago v. Holiday Isle, L.L.C., 537 F.Supp.2d 1219 (S.D.Ala.2007), Holiday Isle also relied upon Nagin to argue that the federal district court lacked jurisdiction to issue an injunction because the case had been stayed pending arbitration. The court in Drago found that Nagin reflected a minority view and noted that the majority of federal courts ... have concluded that in limited situations a binding arbitration clause does not bar a plaintiff from seeking emergency injunctive relief or other provisional remedies in court. 537 F.Supp.2d at 1221. The court in Drago specifically adopted the reasoning of the Fourth Circuit Court of Appeals in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley, 756 F.2d 1048, 1052 (4th Cir.1985), as a basis for concluding that it may order equitable relief where an arbitral award could not return the parties substantially to the status quo. 537 F.Supp.2d at 1222. Here, if the trial court's preliminary injunction was appropriately issued, it could be said that an arbitral award would not return the parties to the status quo where the proceeds of the letters of credit had previously been disbursed to the beneficiary. We therefore apply the Commercial Rules of the AAA pursuant to the express terms of the purchase agreements and conclude that the trial court had jurisdiction to enter a preliminary injunction to order equitable relief to preserve the status quo. Whether the trial court erred in entering that injunction under the facts of this case is a separate issue.