Court Opinion

ID: 3027182
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:37:37.947366+00
Date Added: 2024-06-11T09:51:54.944869
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 00-3150
                                   ___________

Patrick T. Manion, Jr.,               *
                                      *
            Plaintiff-Appellant,      *
                                      *
      v.                              *
                                      *    Appeal from the United
Stephen E. Nagin; Herzfeld &          *    States District Court for
Rubin; Herzfeld & Rubin, P.C.;        *    the District of Minnesota.
Nagin Gallop Figueredo, P.A.;         *
Boat Dealers' Alliance, Inc.,         *
                                      *
            Defendants-Appellees.     *
                                 ___________

                             Submitted: June 11, 2001
                                 Filed: July 6, 2001
                                  ___________

Before WOLLMAN, Chief Judge, HAMILTON1, and MURPHY, Circuit Judges.
                             ___________

MURPHY, Circuit Judge.

      This case grows out of an employment agreement Patrick Manion had with Boat
Dealers' Alliance, Inc. (BDA), a buying cooperative of independent retail marine
dealers. After Manion was terminated as executive director, he brought this action
against BDA and its general counsel Stephen E. Nagin and associated entities, alleging

      1
        The Honorable Clyde H. Hamilton, United States Circuit Judge for the Fourth
Circuit, sitting by designation.
breach of contract and of fiduciary duty, negligence, and interference with contract, and
seeking declaratory and injunctive relief. The district court2 denied preliminary
injunctive and declaratory relief, ordered the parties to arbitration, and stayed the
action. Manion appeals. We affirm the order denying a preliminary injunction and
dismiss the remainder of the appeal for lack of jurisdiction.

        Patrick Manion is a Minnesota resident with many years of experience in the
retail boat industry. In 1995, Manion hired attorney Stephen Nagin to help him
organize and operate a buying cooperative of independent retail marine dealers. With
Nagin's assistance, Boat Dealer's Alliance, Inc. (BDA), was incorporated in Florida
later that year. Nagin subsequently drafted a long term Management Agreement
(Agreement) between Manion and BDA. This Agreement, which provided that Manion
would serve as executive director of BDA for a period of not less than twenty years,
included an arbitration clause in the event of any dispute between the parties.3 The
Agreement also included a provision permitting either party to request interim judicial
relief:

             The power conferred by this paragraph is without prejudice to the
      right of a party under applicable law to request interim relief directly from
      any court, tribunal, or other governmental authority of competent
      jurisdiction, and to do so without prior authorization of the arbitrator(s).
      Such a request for interim relief neither shall be deemed incompatible
      with, nor a waiver of, the requirement of arbitration of disputes.

      2
        The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.
      3
       The Agreement specifically provided that "[i]n the event that any dispute arises
with respect to the interpretation, execution, or enforcement of this Agreement, the
same shall be submitted to binding arbitration."

                                          -2-
Another provision indicated that a party would be "entitled to injunctive relief in case
of any breach."

        In February 1999, the membership of BDA voted to terminate Manion's
employment for gross mismanagement. A year later, Manion filed this lawsuit against
BDA, Nagin, and various law firms with which Nagin was or had been affiliated (the
Nagin defendants). Manion's complaint alleged a breach of contract claim against BDA
and sought declaratory and injunctive relief. Against the Nagin defendants he alleged
breach of fiduciary duty, negligence, and interference with contract. Manion also
initiated a parallel arbitration proceeding with the American Arbitration Association for
determination of the issue of whether BDA had valid cause to terminate him.

       The arbitration proceedings were stayed while Manion brought motions in
district court, seeking injunctive relief against BDA for reinstatement of the salary and
benefits that it had discontinued on termination and declaratory relief regarding the
interpretation of the term "anniversary date" in the Agreement. BDA moved in turn to
dismiss this action and to compel arbitration, and the Nagin defendants moved for
dismissal or for a stay pending arbitration between Manion and BDA. The law firm of
Litchford and Christopher moved to dismiss the claims against it for lack of personal
jurisdiction.

       The court applied federal law to examine whether Manion's claims fell within
the scope of the arbitration agreement and concluded that the arbitration clause covered
disputes about interpretation of the terms of the Agreement. The court granted BDA's
motion to compel arbitration but stayed this action rather than dismissing it. It denied
Manion's requests for declaratory and injunctive relief, granted the motion of the Nagin
defendants to stay proceedings pending completion of arbitration between Manion and
BDA, and dismissed the law firm of Litchford and Christopher for lack of personal
jurisdiction.

                                          -3-
      Manion attempts to appeal all aspects of the district court's order except its
dismissal of Litchford and Christopher. He contends that the district court erred in
denying his contractual right to interim relief in aid of arbitration, in denying his motion
for declaratory relief (which is now described as a motion for partial summary
judgment), and in staying Manion's claims against the Nagin defendants. BDA and the
Nagin defendants contend that the entire appeal should be dismissed for lack of
appellate jurisdiction, but ask for affirmance if jurisdiction exists.

       We start with Manion's appeal from the denial of his motion for injunctive relief
because interlocutory appellate jurisdiction exists under 28 U.S.C. § 1292(a)(1). See
Morgenstern v. Wilson, 29 F.3d 1291, 1294-95 (8th Cir. 1994) ("if an interlocutory
order expressly grants or denies a request for injunctive relief . . . the order is
immediately appealable as of right"). A district court has broad discretion when ruling
on requests for preliminary injunctions, and we will reverse only for clearly erroneous
factual determinations, an error of law, or abuse of discretion. See Entergy, Arkansas,
Inc. v. Nebraska, 210 F.3d 887, 898 (8th Cir. 2000).

       In denying Manion's motion for an injunction, the district court relied on Peabody
Coalsales Co. v. Tampa Elec. Co., 36 F.3d 46 (8th Cir. 1994), for the proposition that
injunctive relief is inappropriate in a case involving arbitrable issues unless the contract
terms contemplate such relief and it can be granted without addressing the merits. The
district court observed that the Agreement between Manion and BDA did not contain
language similar to the contract in Peabody, which provided for continued performance
during the pendency of arbitration, and that it could not grant Manion's motion without
interpreting the Agreement and entangling itself in the merits. The court also noted that
Manion had not received his salary or benefits for nearly a year before filing this action
so an injunction was not needed to maintain the status quo.

      Manion claims that Peabody entitles him to injunctive relief. He maintains that
the Agreement contains the following qualifying language for such relief:

                                            -4-
              Both parties acknowledge that a lawsuit merely for damages that
      occur, or are likely to occur, as a consequence of a breach of any of the
      provisions of this Agreement will be inadequate, and that either party is
      entitled to injunctive relief in case of any breach, as well as all other
      relief available via law or equity.

             [The agreement to arbitrate] is without prejudice to the right of a
      party under applicable law to request interim relief directly from any
      court, tribunal, or other governmental authority of competent jurisdiction,
      and to do so without prior authorization of the arbitrator(s). Such a
      request for interim relief neither shall be deemed incompatible with, nor
      a waiver of, the requirement of arbitration of disputes (emphasis
      supplied).

       In a case involving the Federal Arbitration Act (FAA), courts should not grant
injunctive relief unless there is "qualifying contractual language" which permits it. See
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hovey, 726 F.2d 1286, 1292 (8th Cir.
1984). This approach is consistent with the plain meaning of the FAA and the
"unmistakably clear congressional purpose that the arbitration procedure, when selected
by the parties to a contract, be speedy and not subject to delay and obstruction in the
courts." Id. (citations omitted). A key issue in the case before the court is whether the
Agreement has such "qualifying contractual language."

       Qualifying contractual language is "language which provides the court with clear
grounds to grant relief without addressing the merits of the underlying arbitrable
dispute." Peabody, 36 F.3d at 47, n. 3. The terms of the contract in Peabody provided
that performance of obligations under it "shall be continued in full by the parties during
the dispute resolution process," and this court concluded that the contract required
continued performance during arbitration, entitling the movant to an injunction. Id. at
47- 48. Under the FAA, courts are to issue orders "directing the parties to proceed to
arbitration in accordance with the terms of the agreement." Id. at 48 (emphasis
supplied). Where a "contract clearly requires continued performance during the

                                           -5-
arbitration process," the result is consistent with the congressional purpose to avoid
court delays and does not implicate concerns of courts becoming impermissibly
entangled in the merits of the underlying dispute. Id. (emphasis supplied).

         Careful examination of the Agreement here leads to the conclusion that it does
not contain qualifying language to provide "clear grounds to grant relief without
addressing the merits of the underlying dispute." Peabody, 36 F.3d at 47, n. 3. It is
true that the Agreement contemplates the possibility of interim judicial relief in the
event of a dispute between the parties. It does not provide that a party is automatically
entitled to injunctive relief, however, but only that a party may request such relief.
Unlike the Peabody contract, it does not specify that the parties' "respective obligations
. . . shall be continued in full by the parties during the dispute resolution process." The
provision allowing a party to request interim relief has been fulfilled since Manion filed
a motion for a preliminary injunction and it was ruled on by the district court. Another
provision in the Agreement states that a party is entitled to injunctive relief "in case of
any breach," but in order to issue such relief the district court would have been required
to determine that a breach had occurred and to have made a determination on the merits
of the underlying dispute, an issue for the arbitrator. See Peabody, 36 F.3d at 47-48;
Hovey, 726 F.2d at 1292.

       Manion has not shown that he could satisfy the traditional requirements for
injunctive relief, particularly the threat of irreparable harm. See Goff v. Harper, 60
F.3d 518, 520 (8th Cir. 1995). He had not been receiving compensation or benefits
from BDA for over a year before he filed his motion for a preliminary injunction, and
he should be able to be fully compensated if he succeeds on the merits. He also has not
shown that there is a probability that he will ultimately succeed on the merits. The
traditional test does not help Manion's attempt to get interim injunctive relief, and we
reject his argument that he has any type of automatic right to such relief under the
Agreement. We conclude that the district court did not abuse its discretion in denying
Manion's request for a preliminary injunction.

                                           -6-
        Manion also seeks to appeal the district court's denial of his motion for partial
summary judgment and its grant of the appellees' motion to compel arbitration and stay
proceedings, but we lack jurisdiction over these issues. Absent a district court
certification under 28 U.S.C. § 1292(b), and there is none here, an interlocutory order
directing arbitration and staying an action is not appealable. See 9 U.S.C. § 16(b); see
also Green Tree Corp. v. Randolph, 121 S.Ct. 513, 520 n. 2 (2000). Moreover, with
the exception of the small class of appealable interlocutory orders falling within the
collateral order doctrine, "a denial of summary judgment is not treated as final and
cannot be appealed until the conclusion of the case on the merits." Krein v. Norris, 250
F.3d 1184, 1187 (8th Cir. 2001). Manion has not shown that the remainder of his
appeal falls within the collateral order exception, and these issues are not "inextricably
intertwined" with the denial of the preliminary injunction or "necessary to ensure
meaningful review of the appealable [issue]." Kincade v. City of Blue Springs, 64 F.3d
389, 394 (8th Cir. 1995) (citations omitted). We therefore lack jurisdiction over these
issues.4

      We affirm the order of the district court denying injunctive relief and dismiss the
remaining issues for lack of appellate jurisdiction.

      4
        Manion asks for a writ of mandamus under 28 U.S.C. § 1651(a) if appellate
jurisdiction is lacking, but he has not made any showing that he is entitled to such
extraordinary relief. See In re Lane, 801 F.2d 1040, 1042 (8th Cir. 1986).

                                           -7-
A true copy.

      Attest:

         CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                           -8-