Court Opinion

ID: 5117282
Source: CourtListenerOpinion
Date Created: 2021-10-08 19:00:32.253873+00
Date Added: 2024-06-11T08:22:01.649070
License: Public Domain

NOT PRECEDENTIAL

                         UNITED STATES COURT OF APPEALS
                              FOR THE THIRD CIRCUIT
                                  ______________

                                       No. 20-3324
                                     ______________

  AMERICAN NEIGHBORHOOD MORTGAGE ACCEPTANCE COMPANY, LLC
                  d/b/a Anniemac Home Mortgage

                                             v.

                          CROSSCOUNTRY MORTGAGE, INC.

           Todd Bailey; Shawn Miller; Steven LoBue; CrossCountry Mortgage, Inc.,
                                          Appellants

                        Appeal from the United States District Court
                               for the District of New Jersey
                                 (D.C. No. 2:20-cv-00874)
                         District Judge: Hon. Susan D. Wigenton
                                      ______________

                     Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                                     October 7, 2021
                                    ______________

               Before: SHWARTZ, NYGAARD, and FISHER, Circuit Judges.

                                 (Filed: October 8, 2021)

                                     ______________

                                        OPINION *
                                     ______________

SHWARTZ, Circuit Judge.

       *
        This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
       American Neighborhood Mortgage Acceptance Company, LLC d/b/a AnnieMac

Home Mortgage (“AnnieMac”) sued its former employees, Todd Bailey, Shawn Miller,

and Steven Lo Bue (collectively, “Individual Defendants”), and CrossCountry Mortgage,

LLC (“CrossCountry”) (collectively with Individual Defendants, “Defendants”). After

Individual Defendants moved to compel arbitration and stay the case, AnnieMac filed an

Amended Complaint that dropped all claims against them. The District Court dismissed

as moot Individual Defendants’ motion to compel arbitration, and Defendants appealed.

Because Individual Defendants’ motion to compel arbitration and stay the case was

mooted once AnnieMac’s Amended Complaint dropped its claims against them, we will

affirm the order dismissing their motion.

                                               I

                                              A

       AnnieMac and CrossCountry are mortgage lenders. Individual Defendants

worked for AnnieMac as co-branch managers and as loan officers, and they each signed a

Branch Manager Employment Agreement (“Employment Agreements”). These

Employment Agreements required them to keep AnnieMac’s information confidential

and included identical arbitration provisions that, in relevant part, state:

       Employer and Employee agree to submit to final and binding arbitration for
       any and all disputes, claims (whether in tort, contract, statutory or otherwise);
       and disagreements concerning (1) the interpretation or application of this
       Agreement, (2) Employee’s employment by Employer, or (3) the termination
       of this Agreement and the termination of Employee’s employment by
       Employer, including the ability to arbitrate any such controversy or claim.

App. 154, 171, 187. Individual Defendants left AnnieMac and joined CrossCountry.
                                               2
AnnieMac alleges that while Individual Defendants still worked for AnnieMac, they

diverted its employees, customers, loans, and other confidential information to

CrossCountry.

                                             B

        Based on this alleged misappropriation, AnnieMac sued Defendants for violating

federal and state law. Individual Defendants moved to compel arbitration and to stay the

action pending arbitration pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1,

et seq. 1

        AnnieMac then filed an Amended Complaint that named only CrossCountry as a

defendant. Defendants moved to strike the Amended Complaint as untimely, filed

without their consent, and filed without leave of the Court, all pursuant to Federal Rule of

Civil Procedure 15(a). The District Court denied Defendants’ motion to strike the

Amended Complaint and dismissed as moot Individual Defendants’ motion to compel

arbitration and stay the case.

        Defendants appeal. 2

        1
         CrossCountry joined the motion, but it did not argue that any of the claims
against it were arbitrable.
       2
         A motions panel dismissed the appeal “with respect to the order denying the
motion to strike the amended complaint and dismissing CrossCountry’s motion to
dismiss as moot,” ECF No. 20, and Defendants now concede that they did not appeal the
denial of their motion to strike the Amended Complaint.
                                            3
                                             II 3

                                             A

       Before turning to the merits of this appeal, we must determine whether we have

jurisdiction. Under the FAA, “[a]n appeal may be taken from . . . an order . . . refusing a

stay of any action under section 3 of” the FAA or “denying a petition under section 4 of”

the FAA to compel arbitration. 9 U.S.C. § 16(a)(1)(A)-(B). Thus, the FAA provides “an

exception to the final decision rule in 28 U.S.C. § 1291.” Bacon v. Avis Budget Grp.,

Inc., 959 F.3d 590, 597 (3d Cir. 2020). In other words, “[i]f we conclude that the order

[on appeal] denied a motion to compel arbitration, then we will exercise jurisdiction even

if that order is not final.” Id. “To determine whether [the order on appeal resolved] a

motion to compel arbitration, we examine (1) ‘the caption and relief requested in the

underlying motion’ and (2) ‘the label and the operative terms of the district court’s

order.’” Id. (quoting Devon Robotics, LLC v. DeViedma, 798 F.3d 136, 146-47 (3d Cir.

2015)).

       Here, Individual Defendants’ motion is captioned as one “to compel arbitration

and stay this action under 9 U.S.C. § 3,” App. 93, and its accompanying brief asks the

District Court to “enter an Order compelling mandatory arbitration . . . and staying the

remaining claims,” App. 114. The order states that the “Motion to Compel

Arbitration/Stay is Dismissed as Moot.” App. 5. Because the dismissal order in effect

“declin[ed] to compel arbitration,” we have jurisdiction to review it. Sandvik AB v.

       3
           The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367.
                                                4
Advent Int’l Corp., 220 F.3d 99, 100, 103 (3d Cir. 2000) (recognizing Congress intended

that appellate courts “promptly” review “orders declining to compel arbitration”); see 9

U.S.C. § 16(a)(1). 4

                                              B5

       Having determined that we have appellate jurisdiction, we now turn to the merits.

The FAA provides that a district court “shall hear the parties, and upon being satisfied

that the making of the agreement for arbitration or the failure to comply therewith is not

in issue, the court shall make an order directing the parties to proceed to arbitration in

accordance with the terms of the agreement.” 9 U.S.C. § 4. Furthermore, the court “shall

on application of one of the parties stay the trial of the action until such arbitration has

been had in accordance with the terms of the agreement.” 9 U.S.C. § 3. Thus, “[t]he

FAA requires courts to stay litigation and compel arbitration of claims covered by a

written, enforceable arbitration agreement.” Bacon, 959 F.3d at 599.

       Once the District Court denied the motion to strike and accepted the Amended

Complaint, which omitted claims against Individual Defendants, those defendants were

no longer parties to this case. Thus, no case or controversy existed between AnnieMac

       4
         Cf. Quilloin v. Tenet HealthSystem Phila., Inc., 673 F.3d 221, 228 (3d Cir. 2012)
(“[W]e have the authority to review an appeal from the District Court’s order denying a
motion to compel arbitration, irrespective of the fact that the order was denied without
prejudice.”).
       5
         We exercise plenary review over a district court’s order denying a motion to
compel arbitration and stay the case. Brayman Const. Corp. v. Home Ins. Co., 319 F.3d
622, 624-25 (3d Cir. 2003); Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 925
(3d Cir. 1992).
                                             5
and Individual Defendants for the Court to resolve. Therefore, Individual Defendants’

motion to compel arbitration of the claims in the original Complaint against them was

moot. See Old Bridge Owners Coop. Corp. v. Twp. of Old Bridge, 246 F.3d 310, 314

(3d Cir. 2001) (“Mootness occurs when there is no live controversy left to be resolved.”).

       Defendants counter that the District Court should have decided Individual

Defendants’ motion to compel arbitration before allowing AnnieMac to amend its

Complaint. Before compelling a party to arbitrate, a district court must determine

“whether a concededly binding arbitration clause applies to a certain type of

controversy.” In re Remicade (Direct Purchaser) Antitrust Litig., 938 F.3d 515, 519 (3d

Cir. 2019) (quoting Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1416-17 (2019)). To do

so, a court must determine whether the complaint raises a dispute covered by the

arbitration agreement. Here, the Court had to first identify the operative complaint.

Once the Court denied the motion to strike the Amended Complaint, it became the

operative complaint because an amended complaint generally supersedes the original

complaint. Palakovic v. Wetzel, 854 F.3d 209, 220 (3d Cir. 2017). Because the

Amended Complaint controlled, the “type of controversy” set forth in the original

Complaint—which included AnnieMac’s claims against Individual Defendants—no

longer existed. As a result, there were no claims to arbitrate. The only remaining

defendant was CrossCountry, and it is not a party to the Employment Agreements

between AnnieMac and Individual Defendants, and no claims against it are otherwise

                                             6
subject to arbitration. 6 Therefore, the Court properly dismissed as moot Individual

Defendants’ motion to compel arbitration and stay the case. 7

                                            III

       For the foregoing reasons, we will affirm.

       6
         CrossCountry has not asserted that it, as a non-signatory to the arbitration
provisions, can compel AnnieMac to arbitrate its claims against CrossCountry.
       Nonetheless, Defendants contend that, even after the Amended Complaint
superseded the Complaint, Individual Defendants’ motion to compel arbitration was still
not moot because (1) the relevant arbitration provisions apply to “disputes” and
“disagreements” relating to the Employment Agreements, Appellants’ Br. at 25 (citing
App. 154, 171, 187); and (2) the Amended Complaint still presented such disputes and
disagreements even after Individual Defendants were dismissed from the case. Even if
we assume that the Amended Complaint includes the type of “disputes” or
“disagreements” covered by the arbitration provisions, the District Court could not
provide any relief to Individual Defendants once they were dropped from the operative
complaint. See U.S. ex rel. Atkinson v. PA. Shipbuilding Co., 473 F.3d 506, 516 (3d Cir.
2007) (noting that “parties that do not appear in amended complaints have a legitimate
expectation that they are no longer involved in the litigation”).
       7
         To conclude otherwise would force AnnieMac to pursue claims against
Individual Defendants that it has, at least for now, disavowed. This result would conflict
with the rule that a “plaintiff is the master of her own complaint.” Judon v. Travelers
Prop. Cas. Co. of Am., 773 F.3d 495, 505 (3d Cir. 2014).
                                                7