Court Opinion

ID: 2761213
Source: CourtListenerOpinion
Date Created: 2014-12-16 18:00:45.270118+00
Date Added: 2024-06-11T12:17:02.722661
License: Public Domain

NOT PRECEDENTIAL
                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                  _____________

                                       No. 14-1054
                                      _____________

                          SBRMCOA, LLC, Individually and on
                               behalf of its members,
                                                Appellant

                                             v.

                     BAYSIDE RESORT, INC A CORPORATION;
                    TSG TECHNOLOGIES, INC A CORPORATION;
                       TSG CAPITAL, INC A CORPORATION;
                          BEACHSIDE ASSOCIATES LLC
                                _______________

                         On Appeal from the District Court of the
                                       Virgin Islands
                                (D.C. No. 3-06-cv-00042)
                          District Judge: Hon. Curtis V. Gomez
                                     _______________

                       Submitted Under Third Circuit L.A.R 34.1(a)
                                  December 11, 2014

           Before: CHAGARES, JORDAN and SHWARTZ, Circuit Judges.

                                (Filed: December 16, 2014)
                                     _______________

                                        OPINION*
                                     _______________

       *
        This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
JORDAN, Circuit Judge.

       We are presented with the second appeal of Sapphire Beach Resort and Marina

Condominium Association, LLC (the “Condominium Association” or “Association”)

from an order of the District Court of the Virgin Islands referring this Racketeering

Influenced Corrupt Organizations Act (“RICO”) suit to arbitration under the Federal

Arbitration Act, 9 U.S.C. § 1, et seq. (“FAA”). Though we lack jurisdiction to consider

the appeal, we can consider the Condominium Association’s alternative request for a writ

of mandamus, and we conclude that the District Court’s failure to comply fully with our

mandate in SBRMCOA, LLC v. Bayside Resort, Inc. (“SBRMCOA I”), 707 F.3d 267 (3d

Cir. 2013), warrants issuance of the writ.

I.     Background

       This case involves a longtime dispute over the provision of freshwater to the

Condominium Association. In 2006, the Association filed suit against three entities that

are now Appellees: the Association’s sponsor, Bayside Resort (“Bayside”);1 the company

that holds most of Bayside’s debts, Beachside Associates (“Beachside”); and the

companies hired to construct a water treatment facility for the Condominium Association,

TSG Technologies, Inc. and TSG Capital, Inc. (collectively “TSG”). The Association

alleges RICO violations and various claims under Virgin Islands common law.

       Specifically, the Condominium Association alleges that Bayside was contractually

obligated to provide to it both freshwater and service for wastewater at a reasonable rate.

      Generally, a sponsor is the entity – often the developer – that files the
       1

condominium offering plan and declaration of condominium. E.g., Bacolitsas v. 86th &
3rd Owner, LLC, 702 F.3d 673, 677 (2d Cir. 2012).
                                             2
In 1999, Bayside contracted with TSG to construct, operate, and maintain a water system

to fulfill those obligations. In 2001, however, Bayside ran into financial difficulties and

pursued an agreement with TSG and Beachside in which Bayside assigned to Beachside

and TSG its rights to supply water to the Condominium Association. As part of the plan,

the rate that the Association would pay for water was to increase by 150% per gallon.

Appellees needed the Condominium Association’s consent before they could implement

this plan and, to secure it, they threatened to cease providing water services to the

Condominium Association’s members, who then would be unable to obtain water from

any other source. Yielding to those threats, the Association’s then-president signed a

Water Supply Agreement and consented to the assignment of the water rights provisions.

       The Condominium Association then filed the instant suit, asserting, among other

things, that the Water Supply Agreement was void because the Association’s Board of

Directors was coerced into signing it and also lacked the authority to do so. Appellees

moved to dismiss the complaint in favor of arbitration, relying on an arbitration clause in

the Water Supply Agreement. The District Court entered an order dismissing the

complaint and compelling arbitration. In the appeal that followed, we affirmed in part

and reversed in part, holding that the District Court had not addressed a bona fide

question as to whether the Board of Directors had the authority to enter into the Water

Supply Agreement in the first place (i.e., whether the Board of Directors’ action was

ultra vires). We noted a distinction between the authority of the Condominium

Association and the more narrow authority of the Board of Directors. Thus, we vacated

the District Court’s arbitration order and remanded the matter with an instruction for the

                                              3
Court to determine whether the Board of Directors was authorized to enter into the Water

Supply Agreement. More specifically, we reasoned that if, as the Association urged, the

Water Supply Agreement was an amendment of the Declaration of Condominium, it was

invalid. We thus connected the validity of the Water Supply Agreement to the issue of

whether it was an unauthorized amendment of the Declaration of Condominium.

       On remand, the District Court allowed additional discovery and concluded that the

Declaration of Condominium provided a “broad grant of authority” for the Board to

manage the “affairs, policies, regulations and common property of the Condominium.”

(App. at 12-13.) The Court reasoned that, because “the provision of water” constituted

an “affair” of the Condominium Association, the Board was authorized to execute the

Water Supply Agreement. The Court did not make any findings as to whether the Water

Supply Agreement constituted an amendment of the Declaration of Condominium.

Without either dismissing or staying the case, the Court again referred the matter to

arbitration, and the Condominium Association has again appealed. When the District

Court learned of this appeal, it issued an order staying the case and directing the parties to

notify it when the “matter before the ... Court of Appeals for the Third Circuit is

concluded.” (App. at 23-24.)

       The parties have now fully briefed the issues, including whether we have

jurisdiction to hear an appeal of the District Court’s most recent order referring the matter

to arbitration.

                                              4
II.    Discussion2

       A.     Appellate Jurisdiction

       Under the Federal Arbitration Act (“FAA”), “[a]n appeal may be taken from . . . a

final decision with respect to an arbitration.” 9 U.S.C. § 16(a)(3). Where a district court

orders parties to resolve their dispute by arbitration and dismisses the case, the arbitration

order is final and immediately appealable. Green Tree Fin. Corp. v. Randolph, 531 U.S.
79, 86-89 (2000). On the other hand, where a district court orders the parties to

arbitration, but chooses to stay the proceedings, 9 U.S.C. § 16(b)(1), the FAA specifies

that an immediate appeal is not available. Id. at 87 n.2 (“Had the District Court entered a

stay instead of a dismissal in this case, that order would not be appealable.”). Thus, there

is a “possible anomaly of different jurisdictional results depending on whether a district

court dismisses or stays a case.” Blair v. Scott Specialty Gases, 283 F.3d 595, 602 (3d

Cir. 2002).

       In the events leading to the present appeal, the District Court at first neither

dismissed nor stayed the case, but rather ordered all claims to arbitration without

       2
         The District Court had subject matter jurisdiction under 28 U.S.C. § 1331. As a
threshold matter, we must determine whether we have jurisdiction to hear this appeal.
See Elliot v. Archdiocese of N.Y., 682 F.3d 213, 219 (3d Cir. 2012) (“Our jurisdictional
inquiry must precede any discussion of the merits of the case for if a court lacks
jurisdiction and opines on a case over which it has no authority, it goes beyond the
bounds of authorized judicial action and thus offends fundamental principles of
separation of powers.” (internal quotation marks omitted)). Both parties have indicated
their consent to our appellate jurisdiction, but “it is well established that we have an
independent duty to satisfy ourselves of our appellate jurisdiction regardless of the
parties’ positions.” Kreider Dairy Farms, Inc. v. Glickman, 190 F.3d 113, 118 (3d Cir.
1999). Our jurisdiction is thus addressed herein.

                                              5
addressing the status of the case. Despite that, the Condominium Association says we

have jurisdiction because the District Court’s order amounted to a dismissal. But, we

have not held that a case has been dismissed under the FAA absent express language

from the district court to that effect.3 In fact, we have held to the contrary. In Freeman v.

Pittsburgh Glass Works, LLC, 709 F.3d 240, 247 (3d Cir. 2013), we said that the district

court did not dismiss the case and thus did not relinquish jurisdiction when it

administratively closed the case but “never mentioned a dismissal – either with or

without prejudice.” Id. We concluded that “by closing the case – rather than dismissing

it – the [district] court maintained an implicit supervisory role over the arbitration” and

could have reopened the case at any time to resolve issues that arose during arbitration.

Id. at 248.

       Here, the District Court initially kept the case open and active on its docket, thus it

retained even more immediate control over the case than the district court did in

Freeman. In light of Freeman’s explicit rejection of the argument raised here in favor of

       3
          See, e.g., Lloyd v. HOVENSA, LLC, 369 F.3d 263, 268 (3d Cir. 2004) (“[A]
district court’s order compelling arbitration is usually an interlocutory order that cannot
be appealed. In this case, however, the District Court both compelled the parties to
arbitrate their dispute and also dismissed the matter with prejudice.” (citations omitted));
Blair, 283 F.3d at 602 (holding that dismissal without prejudice was final under FAA
because “[t]he Green Tree decision draws a distinction between dismissals and stays, but
does not draw any distinctions within the universe of dismissals.”); cf. In re Pharmacy
Benefits Managers Antitrust Litig., 700 F.3d 109, 115 (3d Cir. 2012) (“In an effort to
circumvent the nonappealability of Judge Robreno’s order [referring the case to
arbitration and staying it during the pendency], Plaintiffs sought several times, and
eventually obtained, an order lifting the stay and dismissing their complaint with
prejudice.”).

                                              6
jurisdiction, we cannot say that the District Court’s order constituted a dismissal, as the

order never even suggested it was such. Furthermore, the Court later issued an order

staying the case. While it is true that the subsequent order is not the relevant one for

determining appellate jurisdiction and was not entered pursuant to the FAA, it

persuasively shows that the District Court did not intend to dismiss the case. If it had so

intended, it would have had no reason to issue a stay order. Under the circumstances, it

seems clear that the District Court’s order referring the case to arbitration was an

unappelable interlocutory order under the FAA. Thus, we conclude that we lack

appellate jurisdiction in this case.

       B.     Mandamus4

       We are not, however, without a means to require compliance with our mandate in

SBRMCOA I. The Condominium Association has asked that we consider the appeal as a

petition for a writ of mandamus under 28 U.S.C. § 1651, and we can do that. Allegheny

Int’l, Inc. v. Allegheny Ludlum Steel Corp., 920 F.2d 1127, 1133 (3d Cir. 1990). One

traditional function of the writ of mandamus is to confine a district court “‘to a lawful

exercise of its prescribed jurisdiction or to compel it to exercise its authority when it is its

duty to do so.’” Will v. United States, 389 U.S. 90, 95 (1967) (quoting Roche v.

Evaporated Milk Ass’n, 319 U.S. 21, 26 (1943)). Although mandamus is an

extraordinary remedy to be used sparingly, we have previously noted that it is “the

       4
         We exercise plenary review over whether a district court properly proceeded in
accordance with the mandate and law of the case as established on appeal. Cooper
Distrib. Co., Inc. v. Amana Refrigeration, Inc., 180 F.3d 542, 546 (3d Cir. 1999).

                                               7
obvious remedy ... when a district court has failed to adhere to the mandate of an

appellate court.” In re Chambers Dev. Co., 148 F.3d 214, 224 (3d Cir. 1998) (internal

citations and quotation marks omitted); see also Citibank, N.A. v. Fullam, 580 F.2d 82,

86-87 (3d Cir. 1978) (appellate courts “have uniformly granted such writs ... where the

district court has failed to adhere to an order of the court of appeals”).

       It is well established that a trial court “has no power or authority to deviate from

the mandate issued by an appellate court.” Briggs v. Pa. R. Co., 334 U.S. 304, 306

(1948) (collecting cases). Moreover, “[i]t is axiomatic that on remand for further

proceedings after [a] decision by an appellate court, the trial court must proceed in

accordance with the mandate and the law of the case as established on appeal.” Bankers

Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir. 1985). “A trial court must

implement both the letter and spirit of the mandate, taking into account the appellate

court’s opinion and the circumstances it embraces.” United States v. Kennedy, 682 F.3d
244, 253 (3d Cir. 2012) (internal quotation marks omitted).

       Here, while perhaps understandably perceiving its ruling as dealing with the

question we identified in our opinion accompanying remand, the District Court did not

comply fully with our mandate.5 In SBRMCOA I, we highlighted the need for the District

       5
         In SBRMCOA I, we repeatedly directed the District Court, on remand, to
“determine whether the Board was, in fact and law, authorized to execute the Water
Supply Agreement.” 707 F.3d at 272. See also id. at 273 (instructing the district court to
answer the “question as to whether the Board was authorized to sign the Water Supply
Agreement”); id. at 275 (directing the district court to determine “whether [the] Board
possessed the authority to enter into the Water Supply Agreement”). The District Court
in fact did answer that question. Thus, the District Court’s decision to answer the
                                               8
Court to determine whether the Board’s entry into the Water Supply Agreement

constituted an amendment of the Declaration of Condominium and, thus, was ultra vires.

We noted the possibility that the Water Supply Agreement could be an amendment of the

Declaration, and we explained how an amendment would have properly been effectuated.

SBRMCOA I, 707 F.3d at 272. The District Court instead focused on whether the Water

Supply Agreement touched on an “affair” of the Condominium Association and thus was

authorized.6 It never mentioned the amendment issue we directed to its attention and

which comprised the entirety of Appellant’s briefing on remand.

       Thus, the District Court failed to address a crucial question and its ruling on

remand is at least incongruous with the “spirit” of our mandate. Kennedy, 682 F.3d at

253. We will therefore issue a writ of mandamus. Citibank, 580 F.2d at 86-87 (“Despite

federal appellate courts’ general reluctance to grant writs of mandamus, they have

uniformly granted such writs in one situation where the district court has failed to adhere

to an order of the court of appeals.”).7

ultimate question, though not in the manner we directed, is perhaps an error of our own
making.
       6
        The District Court also noted that the Declaration of Condominium does not
otherwise prohibit the Board from entering into contracts. This very brief analysis did
not, however, address the question of whether the Declaration of Condominium had been
amended.
       7
       Our decision to return this to the District Court again should not be understood as
implying any view on the questions presented.
                                             9
III.   Conclusion

       For the forgoing reasons, we will dismiss the appeal for lack of jurisdiction but

will grant the petition for a writ of mandamus and direct the District Court to vacate its

order referring the parties to arbitration. We will also order the District Court to

determine whether the Water Supply Agreement constituted an unauthorized amendment

of the Declaration of Condominium and, based upon this determination, whether the

Board was authorized in law and fact to enter into the Water Supply Agreement.

                                             10