Court Opinion

ID: 20848
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:38:28+00
Date Added: 2024-06-11T08:13:06.676646
License: Public Domain

UNITED STATES COURT OF APPEALS
                                       FIFTH CIRCUIT
                                        ____________
                                         No. 99-50520
                                        ____________

                 ERNEST BUSTOS,

                                                     Plaintiff - Appellant

                 versus

                 PRIMERICA FINANCIAL SERVICES, INC; PRIMERICA LIFE
                 INSURANCE COMPANY; PFS INVESTMENTS, INC;
                 PRIMERICA FINANCIAL SERVICES HOME MORTGAGES, INC

                                                   Defendants - Appellees
                                                ____________

                 PRIMERICA FINANCIAL SERVICES, INC; PRIMERICA LIFE
                 INSURANCE COMPANY; PFS INVESTMENTS, INC;
                 PRIMERICA FINANCIAL SERVICES HOME MORTGAGES, INC

                                                     Plaintiffs - Appellees

                 versus

                 ERNEST BUSTOS

                                                     Defendant - Appellant

                              Appeal from the United States District Court
                                    For the Western District of Texas
                              District Court Numbers 98-CV-605, 99-CV-3
                                              May 5, 2000
Before REAVLEY, SMITH, and EMILIO M. GARZA, Circuit Judges,

PER CURIAM:*

        Ernest Bustos entered into employment contracts with Primerica Financial Services, Inc. and

affiliated entities (collectively, “Primerica”). At issue in this appeal are restrictive covenants and

arbitration clauses contained in those contracts.

        Bustos was terminated by Primerica. He subsequently sued them, seeking declaratory and

injunctive relief concerning the scope of the covenants. Primerica responded with a separate suit to

   *
        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 R. 47.5, the court has determined that this opinion should not be published and is not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.
compel arbitration. After the cases were consolidated, the district court ordered Bustos to submit

to arbitration and preliminarily enjoined him from violating the covenants. Bustos appeals.

         We lack jurisdiction to review the court’s arbitration ruling. An arbitration ruling arises in

an “embedded” proceeding when it “arises in a suit in which one party or the other seeks some relief

other than an order requiring or prohibiting arbitration.” Altman Nursing, Inc. v. Clay Capital Corp.,

84 F.3d 769, 770-71 (5th Cir. 1996). The proceeding here was embedded because the court

consolidated Primerica’s suit to enforce the arbitration clause with Bustos’s suit to obtain declaratory

relief. See F.C. Schaffer & Assoc., Inc. v. Demech Contractors, Ltd., 101 F.3d 40, 41-42 (5th Cir.

1996). Because the ruling arose in an embedded proceeding, it “is interlocutory and hence not

appealable.” Altman, 84 F.3d at 772.

         We have jurisdiction to review the preliminary injunction. See 28 U.S.C. § 1292(a).1 We

review entry of a preliminary injunction for abuse of discretion, reviewing underlying issues of law

de novo and underlying factual determinations for clear error. See Affiliated Professional Home

Health Care Agency v. Shalala, 164 F.3d 282, 284-85 (5th Cir. 1999). Like the district court, we

look to whether Primerica sho wed: “(1) a substantial likelihood of success on the merits; (2) a

substantial threat that the movant will suffer irreparable injury if the injunction is denied; (3) that the

threatened injury outweighs any damage that the injunction might cause the defendant; and (4) that

the injunction will not disserve the public interest.” Id. at 285. For the reasons set forth in the

magistrate judge’s report and recommendation (which the district court adopted), the district court

did not abuse its discretion in finding that these four factors were met here. Accordingly, we affirm

its imposition of a preliminary injunction.

  1
         Our jurisdiction over the preliminary injunction ruling does not give us jurisdiction over the arbitration ruling.
Section 1292(a) only gives us jurisdiction over “[i]nterlocutory orders of the district courts . . . granting . . .
injunctions,” and the arbitration ruling was distinct from the grant of the injunction. Although the issues involved
partly overlapped, they were not the same. The arbitration ruling required a determination of whether the arbitration
clauses were enforceable, while the injunction ruling required consideration of, inter alia, whether Primerica showed
“a substantial likelihood” that the arbitration clauses were enforceable. Affiliated Professional Home Health Care
Agency v. Shalala, 164 F.3d 282, 285 (5th Cir. 1999).
         Nor is the arbitration ruling “inextricably intertwined” with the appealable injunction ruling. Bustos would
obtain substantial benefit from having the preliminary injunction reversed even if we hold that we lack jurisdiction to
consider the arbitration ruling. See Silver Star Enterprises, Inc. v. M/V Saramacca, 19 F.3d 1008, 1014 (5th Cir. 1994).

                                                           -2-
Affirmed in part and dismissed in part.

                                          -3-