Commonwealth Insurance v. Underwriters Inc.

846 F.2d 196
CourtCourt of Appeals for the Third Circuit
DecidedMay 16, 1988
DocketNo. 88-5056
StatusPublished
Cited by1 cases

This text of 846 F.2d 196 (Commonwealth Insurance v. Underwriters Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Commonwealth Insurance v. Underwriters Inc., 846 F.2d 196 (3d Cir. 1988).

Opinion

OPINION OF THE COURT

MANSMANN, Circuit Judge.

Commonwealth Insurance Company appeals from an order of the district court staying proceedings against all defendants in these consolidated actions pending the resolution of arbitration proceedings between Commonwealth and American Centennial Insurance Company, a defendant in one of the actions. We find that in light of the Supreme Court’s recent decision in Gulfstream Aerospace Corporation v. Mayacamas Corp., — U.S.-, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988), we lack appellate jurisdiction. Therefore we will dismiss this appeal.

I.

This appeal arises out of two consolidated actions by plaintiff Commonwealth seeking to avoid allegedly fraudulently obtained contracts for the purchase of reinsurance from American Centennial Insurance Corporation through two of American Centennial’s agents, The Underwriters Inc. and Barrett Treaty Corporation. Some of the challenged contracts contain clauses relegating to arbitration any disputes as to the construction or operation of the agreements. American Centennial, a defendant only in the action on the Underwriters’ contracts, demanded arbitration pursuant to these clauses. All of the defendants in both actions moved for a stay of proceedings, pursuant to Section 3 of the Arbitration Act, 9 U.S.C. § 3, pending the Commonwealth-American Centennial arbitration.

In opposition to the stay, Commonwealth claimed that its managing general agent, Fordinbridge International Ltd., exceeded its authority in entering into the contract containing the arbitration clause. The district court found that Commonwealth was unable to raise an issue of material fact as to the apparent authority of its agent to bind it to the arbitration provision. Therefore the court found the provision valid and ordered the stay pending arbitration. Commonwealth appealed.

Commonwealth originally predicated appellate jurisdiction on the so-called Ene-low-Ettelson doctrine which made a stay of an action at law pending arbitration automatically appealable as an injunction under 28 U.S.C. § 1292(a)(1)1 on the theory [198]*198that the stay was analogous to an equitable restraint of legal proceedings. During the pendency of this appeal the Enelow-Ettel-son doctrine was overruled by a unanimous Supreme Court in Gulfstream Aerospace Corp. v. Mayacamas Corp., (Gulfstream) — U.S. -, 108 S.Ct. 1133, 1142, 99 L.Ed.2d 296 (1988). In accordance with our continuing responsibility to make an independent determination of appellate jurisdiction, we ordered the parties to brief the issue of appellate jurisdiction in light of Gulfstream.

II.

Commonwealth asserts that we have appellate jurisdiction under 28 U.S.C. § 1291 pursuant to the collateral-order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). Alternatively, Commonwealth requests that we exercise our discretion either to grant a permissive appeal under 28 U.S.C. § 1292(b) or to treat the attempted appeal as a petition for a writ of mandamus. We examine these arguments in turn.

An order staying an action pending arbitration, entered as part of a continuing proceeding for other relief and not resulting in dismissal of the action, is not a “final decision” appealable under 28 U.S.C. § 1291.2 Rogers v. Schering Corp., 262 F.2d 180 (3d Cir.), cert. denied, 359 U.S. 991, 79 S.Ct. 1121, 3 L.Ed.2d 980 (1959). Commonwealth argues, however, that the stay order is appealable under the collateral-order doctrine of Cohen v. Beneficial Industrial Loan Corp. which allows an appeal from certain orders that finally determine claimed rights which are not ingredients of the cause of action and do not require consideration with it. 337 U.S. at 546-547, 69 S.Ct. at 1225-1226. In order to satisfy the collateral-order exception an order must (1) conclusively determine the disputed question, (2) resolve an important issue completely separate from the merits of the action, and (3) be effectively unre-viewable on appeal from a final judgment. Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978).

Commonwealth relies on analogy to the facts in Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), where a stay of federal litigation in favor of a parallel state court action was held to be appealable as a final order under § 1291 and also under the collateral-order doctrine. In Moses Cone, however, there was only one issue in both the state and federal actions — arbitrability. Because the state court decision would be res judicata as to the question, there would be no further litigation in federal court. Therefore the stay also amounted to a dismissal. The order in Moses H. Cone met the Cohen criterion of “effective unreviewability except by immediate appeal” because the state court decision would finally determine the merits of the underlying dispute.

The requirement of effective unreviewability is unsatisfied by the order appealed here, however, because review of that order and the dispute resolved by it, i.e., the validity of the arbitration clause, will be available upon appeal from the final judgment after arbitration and the district court proceedings are concluded. See Rogers v. Schering Corp., 262 F.2d at 182. We find that we lack appellate jurisdiction under the language of § 1291 or under the collateral order doctrine.

III.

Commonwealth urges us to grant a permissive appeal to 28 U.S.C. § 1292(b),3 [199]*199asserting that we have the power to hear such an appeal even in the absence of certification by the district court. This argument is contrary to the clear statutory language of § 1292(b) and we reject it. Absent a certification order by the district court, we do not have authority to hear a question pursuant to § 1292(b).4

We recognize that interlocutory review of challenges to the validity of arbitration clauses would always have the potential to “materially advance the ultimate termination of the litigation” in accordance with § 1292(b) by eliminating the time required to obtain what may be an unenforceable arbitration award. However Congress’ clear intent in the Arbitration Act was “to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible.” Moses H. Cohen, 460 U.S.

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Related

Commonwealth Insurance Company v. The Underwriters, Inc., Joseph F. Ambriano, John A. Kraeutler, R. Donald Quackenbush, John A. Kraeutler, Inc., J.A.C.K. Holding Company Inc., Richard Greene, Joseph L. Kelley, J.D. Kelley, Inc., American Centennial Insurance Company, Beneficial Corporation, Richard H. Bate, Cecil M. Benadom, Charles W. Bowser, Robert C. Cannada, Elbert N. Carvel, Finn M.W. Caspersen, Freda R. Caspersen, Charles H. Donovan, William H., H. Ely, Jr., George R. Evans, David J. Farris, Leon A. Fults, James H. Gilliam, Jr., J. Thomas Gurney, Andrew C. Halvorsen, Charles E. Hance, J. Robert Hillier, Gerald L. Holm, Kenneth J. Kircher, Thomas P. McGough Robert R. Meyer, Steven Muller, Michael Regan, Susan Julia Ross, Robert A. Tucker, Susan M. Wachter, Richard A. Wagner, Arthur T. Ward, Jr., Charles H. Watts, Ii, Richard F. White, Russell W. Willey and K. Martin Worthy. Commonwealth Insurance Company v. Beneficial Corporation, Barrett Treaty Corporation, Dennis J. Vaughan & Co., Inc., R. Donald Quackenbush, William P. Barrett, Dennis J. Vaughan, Richard H. Bate, Cecil M. Benadom, Charles W. Bowser, Robert C. Cannada, Elbert N. Carvel, Finn M.W. Caspersen, Freda R. Caspersen, Charles H. Donovan, William H., H. Ely, Jr., George R. Evans, David J. Farris, Leon A. Fults, James H. Gilliam, Jr., J. Thomas Gurney, Andrew C. Halvorsen, Charles E. Hance, J. Robert Hillier, Gerald L. Holm, Kenneth J. Kircher, Thomas P. McGough Robert R. Meyer, Steven Muller, Susan Julia Ross, Robert A. Tucker, Susan M. Wachter, Richard A. Wagner, Arthur T. Ward, Jr., Charles H. Watts, Ii, Richard F. White, Russell W. Willey and K. Martin Worthy. Appeal of Commonwealth Insurance Company ("Commonwealth")
846 F.2d 196 (Third Circuit, 1988)

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846 F.2d 196, Counsel Stack Legal Research, https://law.counselstack.com/opinion/commonwealth-insurance-v-underwriters-inc-ca3-1988.