Mar-Len of Louisiana, Inc. v. Parsons-Gilbane, a Joint Venture

732 F.2d 444, 1984 U.S. App. LEXIS 22310

• Court: Court of Appeals for the Fifth Circuit
• Decided: May 21, 1984
• Docket: 83-4772
• Status: Published

Opinions

W. EUGENE DAVIS, Circuit Judge:

On August 5, 1983, Mar-Len of Louisiana, Inc., filed suit against Parsons-Gil-bane, seeking reformation or voidance of modifications 022 and 039 to a contract for the construction of fire and flush water facility at Strategic Petroleum Reserves at the West Haekberry Storage Complex.

On August 16, 1983, Parsons-Gilbane removed the action to the U.S. District Court, Western District of Louisiana. On August 15, 1983, Parsons-Gilbane filed a motion to compel arbitration and to stay the proceedings. On November 30, 1983, the district court denied the motion to stay and to compel arbitration and ordered the trial of the validity of modifications 022 and 039. Parsons-Gilbane has appealed this interlocutory order. The central issue in the suit is whether the written modifications to the contract relating to performance of “extra” work by Mar-Len should be enforced as written or whether those provisions should be reformed because of economic duress which Mar-Len argues motivated it to agree to the modifications.

Mar-Len, relying on Enelow v. New York Life Insurance Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440 (1935) and Ettelson v. Metropolitan Life Insurance Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176 (1942), moves to dismiss the appeal on grounds that the denial of Parsons-Gilbane’s motion to stay and to compel arbitration is not appealable under 28 U.S.C. 1292(a)(1) because the order complained of was a ruling on a motion asserting an equitable defense in response to a suit seeking equitable relief.

Enelow and Ettelson establish the principle that when a party attempts to interpose an equitable defense to a legal cause of action the ruling on that defense is appealable as a grant or denial of an injunction under § 1292(a); but when an equitable defense is interposed to a traditional cause of action in equity, a ruling on the equitable defense is not appealable.

Parsons-Gilbane asserts that a distinction has been established by this court in La Nacional Platanera, S.C.L. v. North American Fruit & Steamship Corp., 84 F.2d 881 (5th Cir.1936) between an order staying the lawsuit under section 3 of the Arbitration Act and order compelling arbitration under section 4 of the Arbitration Act. Parsons-Gilbane argues that section 4 orders are always appealable irrespective of whether the underlying suit is at law or equity.

We disagree with this interpretation of La Nacional. In La Nacional, the action was at law and therefore the order compelling arbitration was appealable under the teaching of Enelow and Ettelson.

The first circuit, in Langley v. Colonial Leasing Co. of New England, 707 F.2d 1 (1st Cir.1983), addressed this precise issue. In Langley, a motion to stay and to compel arbitration was filed in response to a suit filed on a traditional equitable caúse of action.' The district court denied the motion and an appeal followed. The court of appeals concluded that no distinction should be drawn between section 3 and section 4 orders and that the order was not appealable since the underlying cause of action was equitable.

Since the underlying suit in this case seeks reformation of the contract, the suit is equitable in nature. 5 Moore’s Fed.Practice 38.22 (2d Cir.1967), Standard Chlorine of Delaware, Inc. v. Leonard, 384 F.2d 304, 308 (2nd Cir.1967). Therefore, under the unambiguous teaching of Enelow, the district court’s denial of ParsonsGilbane’s motion is not appealable.¹ We therefore lack jurisdiction to hear this appeal and it is DISMISSED.

1 . We agree generally with the criticism of the Enelow-Ettelson rule which has been characterized as "artificial," "medieval” and "outmoded”. City of Naples v. Prepakt Concrete Co., 494 F.2d 511, 512 (5th Cir.1974), cert. denied, 419 U.S. 843, 95 S.Ct. 76, 42 L.Ed.2d 71 (1974); Wallace v. Norman Industries, Inc., 467 F.2d 824, 827 (5th Cir.1972); and Glen Oaks Utilities, Inc. v. City of Houston, 280 F.2d 330, 333 (5th Cir.1960). The Supreme Court, however, cited Enelow and Ettelson with approval as recent as 1955 in Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 75 S.Ct. 249, 99 L.Ed. 233, and we feel bound to follow the rule until the Supreme Court changes it.