Green Tree Servicing, L.L.C. v. Henry House

890 F.3d 493
CourtCourt of Appeals for the Fifth Circuit
DecidedMay 14, 2018
Docket17-60164
StatusPublished
Cited by6 cases

This text of 890 F.3d 493 (Green Tree Servicing, L.L.C. v. Henry House) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Green Tree Servicing, L.L.C. v. Henry House, 890 F.3d 493 (5th Cir. 2018).

Opinion

PRISCILLA R. OWEN, Circuit Judge:

Henry House, Linda Murrell (the House Parties), and other plaintiffs sued Green Tree Servicing and various other entities (the Green Tree Parties) in a related action.

*496 1 The Green Tree Parties initiated the present suit in federal district court seeking to compel arbitration of claims asserted by the House Parties. The district court granted the motion to compel, holding that (1) all of the Green Tree Parties had standing to compel arbitration even though some were not signatories to the arbitration agreement; and (2) the parties had agreed to delegate questions regarding arbitrability to the arbitrator. We affirm.

I

Henry House purchased a house and surrounding real property from Jim Walter Homes, Inc. and Mid-State Trust IV in 1998. To obtain financing from the sellers, House pledged the real property as collateral. The parties memorialized the transaction by executing a sales contract, promissory note, and deed of trust. The sales contract expressly incorporated four exhibits, including an Arbitration Agreement. The Arbitration Agreement provided:

The parties agree that, at the election of either party, any controversy or claim arising out of or relating to this contract, or the breach thereof, whether asserted as in tort or contract, or as a federal or state statutory claim, arising before, during or after performance of this contract, shall be settled by binding arbitration in accordance with the Comprehensive Arbitration Rules and Procedures administered by J?A?M?S/Endispute, and judgment upon the award rendered by the arbitrator may be entered in any Court having jurisdiction thereof. The parties agree and understand that they choose arbitration instead of litigation to resolve disputes.

In 2016, the House Parties and other plaintiffs commenced a lawsuit- Green Tree Servicing, L.L.C. v. Billy Brown -in Mississippi state court ( Brown ). The suit alleged that Jim Walter Homes and some of the Green Tree Parties induced House to sign the sales contract by promising to construct a house in accordance with manufacturer specifications, house plans, and building codes, but that those defendants actually delivered a dwelling that was "substandard, incomplete, defective, and dangerous." Based on these allegations, House and the other plaintiffs brought claims that included civil conspiracy, breach of contract, negligence, false statements/fraud, and deceit.

The complaint in Brown alleged that Jim Walter Homes "sold, assigned, or conveyed" the sales contract and related documents "to Walter Mortgage Company, LLC, then to Walter Investment Management Corp. or one of the Mid State Trust Entities, and ultimately to Wilmington Trust Co., Green Tree [Servicing], and their predecessors, who in turn attempted to sell, assign, or convey said instruments" to the other defendants. This "lending engine," the Brown complaint alleged, facilitated the "home built on your lot" scheme in which the Green Tree Parties and Jim Walter Homes acted as conspirators and joint venturers to originate, pool, and securitize mortgages like House's. According to the complaint, "[w]ithout a willingness of [these parties] to purchase such ill-gotten paper, there would be no market or incentive to perpetuate this wrongful scheme." The complaint in Brown asserted that each of the Green Tree Parties "aided and abetted each other in each and every act ... that is the subject of this action" and that each was "liable jointly and severally for the unlawful, deceptive, deceitful and misleading acts and/or omissions of each and every one" of its co-parties. The Green Tree Parties removed Brown to federal district court.

*497 While the Brown case was pending, the Green Tree Parties filed the present suit and sought to compel arbitration of the House Parties' claims against the Green Tree Parties. The district court granted the motion to compel arbitration, ruling that even though Green Tree Servicing (Green Tree) and the Walter Investment Management Corporation (WIMC) were not signatories to the arbitration agreement, they had standing to enforce it under Mississippi law's intertwined claims test. The court held that, by incorporating the JAMS rules, the parties agreed to delegate questions as to arbitrability to the arbitrator. The district court referenced the version of the JAMS Comprehensive Arbitration Rules and Procedures, effective as of 2014, which provide:

Jurisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought, and who are proper Parties to the Arbitration, shall be submitted to and ruled on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter. 2

Based on this clause, the district court also held that the House Parties' claims that the sales contract was procedurally and substantively unconscionable must be decided by the arbitrator. The district court remanded the Brown case to state court due to lack of diversity jurisdiction.

On appeal, the House Parties contend that (1) under Mississippi law, the intertwined claims test does not apply to Green Tree and WIMC, which did not exist at the time the arbitration agreement was signed; (2) they did not assent to delegate arbitrability and that, in any event, the district court relied on the wrong version of the JAMS rules; and (3) the district court failed to address claims in their pleadings regarding fraud in the inducement.

II

We first address our jurisdiction. There are three issues: (1) did the district court's "Final Judgment" administratively close the case, (2) in light of this court's precedent, 3 how does the fact that the district court had another case pending before it that involved many of the parties in the present case and similar issues affect the finality of the "Final Judgment" compelling arbitration, and (3) was the notice of appeal premature, and if so, was it nevertheless effective.

This court has jurisdiction over "a final decision with respect to an arbitration that is subject to this title." 4 A decision is final if it "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment." 5 An order compelling arbitration is typically appealable because "once the court compel[s] arbitration, there [is] nothing more for it to do but execute the judgment." 6 However, when a district court stays or administratively closes a case pending arbitration, the order is not appealable because the "substantive claims have not *498 been dismissed by any district court." 7

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Bluebook (online)
890 F.3d 493, Counsel Stack Legal Research, https://law.counselstack.com/opinion/green-tree-servicing-llc-v-henry-house-ca5-2018.