Court Opinion

ID: 23966
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:16:46+00
Date Added: 2024-06-11T15:04:43.624030
License: Public Domain

UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT
                       ____________________

                          No. 00-11119
                        Summary Calendar
                      ____________________

         CHAUNCY C. BRANDOM; ROCHELLE SIVERSTON BRANDOM,

                                             Plaintiffs-Appellants,
                             versus

               GULF COAST BANK AND TRUST COMPANY,

                                              Defendant-Appellee.
_________________________________________________________________

           Appeal from the United States District Court
                for the Northern District of Texas
                         (3:00-CV-1342-G)
________________________________________________
                          April 16, 2001

Before HIGGINBOTHAM, WIENER, and BARKSDALE, Circuit Judges.

PER CURIAM:*

     At issue is the scope of the arbitration clause contained in

a promissory note executed by Chauncy C. Brandom and Rochelle

Siverston Brandom and payable to Gulf Coast Bank and Trust Company

(the Note). The Brandoms contest the district court’s dismissal of

the action without prejudice, in the light of its conclusion that

the arbitration clause controlled.

     *
      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this opinion should not be published and is not precedent except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.
      In June 1993, the Brandoms executed the Note in the original

principal amount of $18,460.         The Note contained an arbitration

clause which stated the parties

              agree[d] that all disputes, claims and
              controversies    between    [them],    whether
              individual, joint, or class in nature, arising
              from this Note or otherwise, including without
              limitation contract and tort disputes, shall
              be arbitrated pursuant to the Rules of the
              American Arbitration Association, upon request
              of either party.

(Emphasis added.)

      After several years of timely payments on the Note, the

Brandoms defaulted      and,   in   June   1998,   offered    to   settle    the

remaining $18,253 with Gulf Coast for $10,000.          Gulf Coast agreed,

accepted the payment, and notified the Brandoms the account had

been “PAID/SETTLED IN FULL”.

      In April 1999, the Brandoms sought to buy a new home.                While

meeting with the mortgage lender, they learned Gulf Coast had

reported to credit reporting agencies that a loan to the Brandoms

with a $13,080 balance had been charged off.            By reporting this

information, Gulf Coast allegedly severely damaged the Brandoms’

credit.   They sued Gulf Coast for, inter alia, libel, intentional

interference with contract, breach of contract, and violations of

the   Texas    Deceptive   Trade    Practices   Act   and    the   Texas    Debt

Collection Act.     The district court granted Gulf Coast’s motion to

compel arbitration and dismissed the action without prejudice.

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     A district court order compelling arbitration and dismissing

a party’s underlying claims is immediately appealable because it is

a “final decision with respect to an arbitration” within the

meaning of the Federal Arbitration Act. See Green Tree Fin. Corp.-

Ala. v. Randolph, 121 S. Ct. 513, 519-20 (2000) (citing 9 U.S.C. §

16(a)(3)).   The grant or denial of a motion to compel arbitration

is reviewed de novo.       See Webb v. Investacorp, Inc., 89 F.3d 252,

257 (5th Cir. 1996).

     There is, of course, a “liberal federal policy favoring

arbitration”.     Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 24 (1983).       Therefore, a motion to compel arbitration

under an arbitration clause “should not be denied unless it may be

said with positive assurance that the arbitration clause is not

susceptible of an interpretation that covers the asserted dispute.

Doubts   should    be    resolved    in    favor   of   coverage”.   United

Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S.

574, 582-83 (1960) (emphasis added); see Neal v. Hardee’s Food

Sys., Inc., 918 F.2d 34,            37 (5th Cir. 1990).        “[T]he basic

objective in this area is not to resolve disputes in the quickest

manner possible, no matter what the parties’ wishes, but to ensure

that commercial arbitration agreements, like other contracts, are

enforced according to their terms, and according to the intentions

of the parties”.        First Options of Chicago, Inc. v. Kaplan, 514

                                       3
U.S.    938,   947   (1995)    (internal     quotation     marks    and   citation

omitted).

       The Note’s arbitration clause encompasses “all disputes ...

arising from this Note or otherwise, including without limitation

contract and tort disputes”.          Both the Supreme Court and our court

have charactered such clauses as “capable of expansive reach”.

Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d

1061, 1067 (5th Cir. 1998) (citing Prima Paint Corp. v. Flood &

Conklin Mfg. Co., 388 U.S. 395, 397-98 (1967)).              Broad arbitration

clauses, like the one at issue, “are not limited to claims that

literally ‘arise under the contract,’ but rather embrace all

disputes between the parties having a significant relationship to

the contract regardless of the label attached to the dispute”. Id.

(emphasis      added).    As    the   Supreme    Court     has   explained,    the

“presumption in favor of postexpiration arbitration of matters

unless negated expressly or by clear implication [is] limited by

the vital qualification that arbitration [be] of matters and

disputes arising out of the relation governed by the contract”.

Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 204 (1991)

(internal quotation marks omitted).

       The Brandoms maintain their claims do not fall within the

scope    of    the   arbitration      clause    because,    under    Litton,    an

arbitration clause applies to claims arising after the expiration

of an arbitration agreement only if the parties expressly included

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post-expiration disputes within the agreement or if the claims fall

within three exceptions: disputes arising before expiration, or

involving infringement of a right vested under the agreement, or

surviving the agreement under contract principles. See Litton, 501

U.S. at 205-06. The Brandoms maintain their claims arose after the

Note was paid in full and no exception applies.

     The phrase “arising from the note or otherwise” suggests that

the arbitration clause extended beyond the settlement of the Note

(emphasis    added),   and   “ambiguities   as   to   the   scope   of   the

arbitration clause itself [are] resolved in favor of arbitration”,

Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62

(1995).     In the alternative, the first Litton exception applies:

because the dispute arises out of Gulf Coast’s description of the

settlement of the Note, it “involves facts and occurrences that

arose before expiration”.      Litton, 501 U.S. at 206.       Because the

dispute arises out of the contractual relationship and had a

significant relationship to the contract, it is subject to the

arbitration clause.
                                                              AFFIRMED

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