Court Opinion

ID: 19366
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:23:53+00
Date Added: 2024-06-11T14:55:16.043558
License: Public Domain

UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT

                                     No. 98-20887

ROY C. AMES, doing business as
Home Cooking Records; CLARITY
MUSIC,

                                        Plaintiffs - Counter Defendants - Appellants,

                                         versus
LES KIPPEL, ET AL.,
                                         Defendants,

LES KIPPEL; RELIX RECORDS, INC.,
                                         Defendants - Counter Claimants - Appellees,
RELIX MAGAZINE AND RECORDS;
SOUTHWEST WHOLESALE RECORDS
AND TAPES,

                               Defendants-Appellees.
___________________________________________________________________
             On Appeal from the United States District Court
                    for the Southern District of Texas
                             (H-95-CV-3238)
___________________________________________________________________

                                  December 14, 1999
Before POLITZ, GARWOOD and DAVIS, Circuit Judges.

PER CURIAM:*

   *
    Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
      Roy C. Ames challenges the district court’s confirmation of an arbitration
award and dismissal of his claims against Relix Records, et al. For the reasons

assigned, we affirm.

                                BACKGROUND
      Ames and Relix were parties to an arbitration proceeding in a dispute over

several license agreements that granted Relix the right to manufacture and sell

sound recordings by Johnny Winter. During the arbitration process, Ames was

ordered to produce certain documents, which he failed to do despite repeated orders
and warnings that his complaint would be dismissed and that an award would be
rendered in favor of Relix.
      Several months after the initial deadline for document production, Ames

alleged for the first time that the license agreements at issue had expired and
submitted a termination letter purportedly sent to Relix by Ames. Relix responded

that the letter was fraudulent, citing multiple inconsistencies. Finding that Relix
made a prima facie showing of fraud in connection with the letter, the arbitrator
directed Ames to respond to the fraud allegations and to comply with the previous

production orders. The arbitrator warned Ames that, absent a response, he would

find that the letter was fraudulent and that Ames intended to commit fraud upon the
arbitrator and the arbitration process. Again, Ames wholly failed to comply with

the arbitrator’s orders. The arbitrator thereafter concluded that the letter was

intentionally fraudulent.

      The arbitrator then invited both parties to submit evidence relevant to

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termination of the license agreements and relevant to the determination that Ames’
claims should be dismissed with prejudice without a hearing on the merits. Close

upon three months later, Ames again was advised by the arbitrator that he was in

default as to both the show cause and production orders. After providing Ames yet
another opportunity to show cause why a default judgment should not be rendered

against him and receiving no response, the arbitrator entered a preliminary award

for Relix and against Ames on every liability issue. The arbitrator entered a final

award against Ames, granting Relix $100,000 in actual damages, trebled to
$300,000, plus attorney’s fees and costs. Ames also was ordered to bear all of the
fees associated with the arbitration proceedings.
      Ames, d/b/a Home Cooking Records, and Clarity Music (collectively,

“Ames”) filed an action against Les Kippel; Relix Records, Inc.; Relix Magazine
and Records, Inc.; and Southwest Records and Tapes (collectively, “Relix”)

seeking to vacate the arbitration award. Ames also sought partial summary
judgment on his claims against Relix for copyright infringement and false
designation of origin. Relix moved to confirm the arbitration award.

      The district court denied Ames’ motions for partial summary judgment.

Concluding that there were no grounds upon which to reject or vacate the
arbitration award, the court rendered judgment confirming the award in its entirety.

The court, determining that all claims and counterclaims were subject to arbitration

and were addressed by the arbitration award, dismissed same with prejudice. This

appeal followed.

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                                      ANALYSIS
         We review the district court’s confirmation of the arbitration award de novo.2

Our review of an arbitrator’s award, however, is extremely deferential, and it will

be set aside only in the narrowest of circumstances.3 We will not reject an
arbitrator’s award if the matter was subject to arbitration and the arbitrator’s

decision “draws its essence” from the underlying contract.4 Further, we will not

reconsider an award based on alleged errors of fact or law or misinterpretation of

the contract.5 In determining whether an arbitrator exceeded his powers, we
resolve all doubts in favor of arbitration.6
         We have recognized that arbitrators may “devise appropriate sanctions for
abuse of the arbitration process.”7 It is apparent that Ames abused the arbitration

process by repeatedly refusing to comply with the arbitrator’s orders and warnings.
We also accept the arbitrator’s finding that Ames intentionally submitted a

   2
       Executone Info. Sys., Inc. v. Davis, 26 F.3d 1314 (5th Cir. 1994).
   3
    First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995). The Federal
Arbitration Act provides that an arbitration award shall not be vacated unless: (1)
the award was procured by corruption, fraud, or undue means; (2) there is evidence
of partiality or corruption in the arbitrator; (3) the arbitrator was guilty of
misconduct which prejudiced the rights of one of the parties; or (4) the arbitrator
exceeded his powers. 9 U.S.C. § 10(a); Gateway Techs., Inc. v. MCI Telecomms.
Corp., 64 F.3d 993 (5th Cir. 1995).
   4
       Executone, 26 F.3d at 1320.
   5
     Nauru Phosphate Royalties v. Drago Daic Interests, Inc., 138 F.3d 160 (5th
Cir.), cert. denied, __, U.S. __, 119 S. Ct. 179 (1998).
   6
       Executone, 26 F.3d at 1320.
   7
       Forsythe Int’l v. Gibbs Oil Co., 915 F.2d 1017, 1023 n. 8 (5th Cir. 1990).
                                            4
fraudulent document. Thus, we hold that it was within the arbitrator’s authority to
sanction Ames for his noncompliance and fraudulent conduct by determining all

liability issues against him and in favor of Relix.

      A close review of the briefs and record on appeal persuades that no grounds
exist upon which to vacate the arbitration award. We conclude that the terms of the

award rationally may be inferred from the underlying agreements. Our limited

role in the review of arbitration awards mandates that we affirm the district court’s

judgment confirming the award.
      Ames also complains of the district court’s denial of his two motions for
summary judgment. His first motion relates to his claim that Relix continued to
violate his copyrights after the Birds Can’t Row Boats license was terminated in

1994. His second motion seeks summary judgment on his claims that Relix
infringed his copyrights and falsely designated the origin of certain Birds songs on

its Best of the Blues Volumes II and III. We treat his challenges to the denial of
summary judgment as an appeal of the district court’s judgment dismissing all
claims based upon the court’s determination that they were subject to the parties’

arbitration agreements and resolved by the arbitration award. Ames contends that

the district court erred in concluding that the claims asserted in his summary
judgment motions were subject to arbitration. Specifically, he maintains that

neither of the claims contained in his summary judgment motions were based upon

a contract or an agreement containing an arbitration clause.

      Assuming, arguendo, that these claims were not subject to arbitration under

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the general arbitration provisions in the license agreements, we nonetheless agree
with the district court that these issues were presented for arbitration and properly

resolved by the arbitration award. We have noted that parties may agree to the

submission to arbitration of existing controversies without any prior contract or
agreement to do so.8 The record discloses that Ames previously submitted to the

arbitrator the issues set forth in his summary judgment motions.9 The arbitrator

specifically denied Ames’ request for damages on these issues in the final partial

award, which was reconfirmed in the final award.10 Accordingly, we hold that the
district court properly dismissed Ames’ claims with prejudice, as they were subject
to arbitration and addressed by the arbitration award.
         The judgment appealed is AFFIRMED.

   8
       General Motors Corp. v. Pamela Equities Corp., 146 F.3d 242 (5th 1998).
   9
    Ames’ Demand for Arbitration defines the nature of the dispute as “Breach of
Contracts/Copyright Infringement/Fraud.” Throughout the arbitration proceedings,
Ames advanced the same allegations upon which his summary judgment motions
are based. Ames also explicitly placed these issues before the arbitrator in his
10/11/96 Statement of Issues and his 10/24/96 Statement of Issues, which were
submitted to the arbitrator prior to the final arbitration hearing.
   10
        Specifically, the arbitrator noted that
         Mr. Ames’ damages for Relix’s infringement, after license
         termination, of Mr. Ames’ rights in Birds Can’t Row Boats . . . are
         denied as to Relix as part of the award based on Mr. Ames’ various
         malfeasances.

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