Government of Virgin Islands v. Lansdale

Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit
1-28-2009
Govt of VI v. Lansdale
Precedential or Non-Precedential: Non-Precedential
Docket No. 07-2886
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 07-2886
____________
GOVERNMENT OF THE VIRGIN ISLANDS;
BUREAU OF INTERNAL REVENUE
v.
WILLIAM M. LANSDALE;
MARIANTHI LANSDALE;
LA ISLA VIRGEN, INC.;
MARINA PACIFICA OIL COMPANY;
LONESOME DOVE PETROLEUM COMPANY,
Appellants
____________
No. 08-1674
____________
In re: WILLIAM M. LANSDALE;
MARIANTHI LANSDALE,
Petitioners
____________
On Appeal from the District Court of the Virgin Islands
Division of St. Thomas
(D.C. Nos. 01-cv-00157 and 92-cv-00079)
District Judge: Honorable Raymond L. Finch
____________
Argued December 10, 2008
Before: FISHER, JORDAN and STAPLETON, Circuit Judges.
(Filed: January 28, 2009)
John J. Gibbons (Argued)
Kevin C. McNulty
Gibbons
One Gateway Center
Newark, NJ 07102-5310
Attorneys for Appellants and Petitioners
James L. Hymes, III
Bart F. Higgins (Argued)
Law Offices of James L. Hymes, III
5065 Norre Gade, Suite 3
P.O. Box 990
St. Thomas, VI 00804
Attorneys for Government of the Virgin Islands
and Bureau of Internal Revenue
Aquannette Chinnery-Montell
Office of Attorney General of Virgin Islands
Department of Justice
34-38 Kronprindsens Gade
GERS Complex, 2nd Floor
Charlotte Amalie
St. Thomas, VI 00802
Attorney for Bureau of Internal Revenue
Mark D. Hodge
Hodge & Francois
1340 Taarneberg
Charlotte Amalie
St. Thomas, VI 00802
Richard Vanneck
9800 Buccaneer Mall, Suite 9
St. Thomas, VI 00802
Attorneys for Lonesome Dove Petroleum Company
2
Maria T. Hodge (Argued)
Hodge & Francois
1340 Taarneberg
Charlotte Amalie
St. Thomas, VI 00802
Phillip S. Stenger
Stenger & Stenger
4095 Embassy Drive, Suite A
Grand Rapids, MI 49546
Attorneys for Joanne E. Bozzuto
____________
OPINION OF THE COURT
____________
FISHER, Circuit Judge.
William Lansdale and Marianthi Lansdale appeal three orders entered by the
District Court of the Virgin Islands disposing of motions involving tax receivership and
arbitration proceedings. The Lansdales have also filed a petition for a writ of mandamus.
The Virgin Islands Bureau of Internal Revenue (“VIBIR”) and the Receiver have filed
motions to dismiss the appeal for lack of jurisdiction. For the reasons set forth below, we
will dismiss the appeal for lack of jurisdiction and deny the petition for a writ of
mandamus.
3
I.
We write exclusively for the parties, who are familiar with the factual context and
legal history of this case. Therefore, we will set forth only those facts necessary to our
analysis.1
A.
In 1991, the VIBIR obtained a tax deficiency judgment in the District Court
against La Isla Virgen, Inc., a Lansdale-owned company, in the amount of
$21,895,969.00.2 The District Court subsequently appointed a Receiver on behalf of the
Lansdale corporations to locate and secure assets belonging to the corporations. In 1998,
the VIBIR filed a complaint against the Lansdales seeking to hold them personally liable
for their corporations’ tax liability.
Following court-ordered mediation, the VIBIR and the Lansdales executed a final
settlement agreement (“FSA”) in November 2002. Pursuant to the FSA, the VIBIR was
entitled to a settlement amount of $6.5 million and the VIBIR agreed to “promptly request
the Receiver to file a final accounting; request, with [the VIBIR’s] full cooperation and
support, that the Court discharge the Receiver; and authorize [the] Receiver to return full
1
The complex factual and legal history of this case is well documented in previous
rulings by the District Court. See Gov’t of the Virgin Islands v. Lansdale, 172 F. Supp. 2d
636 (D.V.I. 2001); Gov’t of the Virgin Islands v. Lansdale, Nos. 2001-157, 1992-0079,
2004 WL 1918753 (D.V.I. Aug. 23, 2004).
2
La Isla Virgen merged into Marina Pacifica Oil Company in 1988 and Marina
Pacifica merged into Lonesome Dove Petroleum Company in 1992.
4
control of Lonesome Dove to the Lansdales along with all corporate records (financial
and otherwise) of Lonesome Dove.” The Lansdales agreed to “immediately thereafter
cause Lonesome Dove to use its best efforts to sell all non-liquid assets owned by
Lonesome Dove,” and “[a]ll proceeds from the asset liquidation” would then “be paid to
[the VIBIR] and [would] not be credited toward” the $6.5 million. The FSA also
included a dispute resolution provision, which stated that “[a]ny controversy, claim or
dispute” which arose “out of or relate[d] to” the FSA, was to be resolved by arbitration.
The District Court appointed Joanne Bozzuto as the successor Receiver and, following
the appointment, the Receiver began the process of filing years of Lonesome Dove
delinquent tax returns, drafting security agreements, and marshaling corporate oil and gas
assets into the receivership.
As the receivership investigation progressed, the Lansdales sought arbitration
pursuant to the FSA because they perceived that the VIBIR was not complying with the
FSA’s provision requiring the VIBIR to promptly request termination of the receivership.
The Lansdales raised three issues to the arbitrator: (1) Whether the oil and gas royalties
being collected by the Receiver were to be credited against the $6.5 million cash portion
of the settlement; (2) whether the VIBIR violated the FSA by failing to move for the
termination of the receivership; and (3) what Lonesome Dove’s non-liquid assets were, to
which the VIBIR was entitled to the proceeds of sale.
5
On May 10, 2006, the arbitrator entered an Interim Arbitration Decision and
Award resolving the first and second issues raised by the Lansdales, finding that (1) the
oil and gas royalties were to be considered liquid assets which were to be credited toward
the $6.5 million settlement sum, and (2) the VIBIR was required to request the Receiver
to file a final accounting and request the District Court to discharge the Receiver in order
to return control of Lonesome Dove to the Lansdales.
B.
The Lansdales timely appeal three orders issued by the District Court following the
arbitrator’s Interim Award. First, on July 24, 2006, the Lansdales filed a motion in the
District Court to confirm the arbitrator’s Interim Award, and on August 3, 2006, the
VIBIR filed a motion to vacate it. On May 30, 2007, the District Court denied both
motions in a single order (“Arbitration Order”), explaining in a memorandum opinion that
because the arbitrator decided only two of the three issues submitted for arbitration, the
Interim Award was not a final award to be reviewed for confirmation or vacation.
Second, on August 31, 2006, the Receiver filed a motion petitioning the District
Court to rule that the Court had exclusive jurisdiction over determining the rightful assets
of Lonesome Dove. On May 14, 2007, the District Court denied the Receiver’s motion
(“Determination Order”). The District Court explained that “if any issue is nonarbitrable,
the arbitrator lacks jurisdiction over it” and the District Court could vacate the award if
the arbitrator exceeded his power, but concluded that “it was not the appropriate juncture
6
to” decide whether it had exclusive jurisdiction over “[t]he determination of what assets
are the corporate properties of Lonesome Dove, how and when those assets are to be
liquidated, and the distribution proceeds.”
Third, on November 15, 2006, the Receiver filed a motion asking the District
Court to order William Lansdale to return over $1.6 million to Lonesome Dove. On
May 14, 2007, the District Court granted the Receiver’s motion (“Turnover Order”),
stating that the Receiver “submitted uncontradicted evidence that William M. Lansdale
diverted revenues from oil and gas leases that are the undisputed assets of Lonesome
Dove.”
II.
We begin by addressing the appellees’ assertion that we lack jurisdiction over
these orders. We “exercise de novo review over an argument alleging a lack of appellate
jurisdiction.” Reilly v. City of Atlantic City, 532 F.3d 216, 223 (3d Cir. 2008). Under 28
U.S.C. § 1291, we have jurisdiction over “final decisions” of the District Court. Ortiz v.
Dodge, 126 F.3d 545, 547 (3d Cir. 1997). To constitute an appealable final decision,
§ 1291 “most often requires that a district court issue a decision that completely ends the
litigation,” In re Carco Electronics, 536 F.3d 211, 213 (3d Cir. 2008), in order to further
the interest of avoiding inefficient piecemeal appeals. Frederico v. Home Depot, 507
F.3d 188, 192 (3d Cir. 2007).
7
We agree with the appellees that none of the three orders constitute final decisions
under § 1291 because this “matter remains open, unfinished [and] inconclusive.” Cohen
v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949); see also Aluminum Co. of Am.
v. Beazer E., Inc., 124 F.3d 551, 557 (3d Cir. 1997) (stating that a final decision “will
fully resolve all claims presented to the district court” and “after the decision has been
issued, there will be nothing further for the district court to do”). Specifically, the
Arbitration Order refrains from confirming or vacating the Interim Award in anticipation
of further arbitration proceedings, the Determination Order declines to rule that certain
asset determinations belong solely to the District Court, and the Turnover Order does not
conclusively resolve the ongoing asset determinations. See Isidor Paiewonsky Assocs.,
Inc. v. Sharp Props., Inc., 998 F.2d 145, 150 (3d Cir. 1993) (explaining that a final
decision “disposes of the whole subject” and “gives all the relief that was contemplated”)
(internal quotation marks and citation omitted).
Nor do any of the three orders fall within the narrowly-construed collateral order
doctrine. See We, Inc. v. City of Philadelphia, 174 F.3d 322, 324 (3d Cir. 1999) (“Under
the ‘collateral order’ doctrine, . . . a decision of a district court may be appealable as a
‘final decision’ under 28 U.S.C. § 1291 if it (1) ‘conclusively determine[s]’ the disputed
question; (2) ‘resolve[s] an important issue completely separate’ from the merits of the
action; and (3) is ‘effectively unreviewable’ on appeal from a final judgment.”) (quoting
Coopers & Lybrand v. Livesay, 437 U.S. 463, 468-69 (1978)).
8
The Lansdales argue alternatively that jurisdiction over the three orders exists
independent of § 1291. First, the Lansdales assert that we have jurisdiction to review the
District Court’s Arbitration Order under section 16 of the Federal Arbitration Act
(“FAA”). We disagree. The FAA provides, inter alia, that a party may appeal an order
“confirming or denying confirmation of an award or partial award.” 9 U.S.C.
§ 16(a)(1)(D). Here, the District Court declined to confirm or vacate the Interim Award
on the ground that it was not final and therefore not ripe for confirmation or vacation.
The District Court reasoned that if it were to confirm the Interim Award – which only
resolved two of the three issues submitted to arbitration – and terminate the receivership
upon the VIBIR’s motion, the arbitrator might be hindered in resolving the third issue still
pending in arbitration, involving the determination of the non-liquid assets belonging to
Lonesome Dove. Because the District Court postponed determining the parties’ dispute
until all three interrelated issues are resolved in arbitration, the Arbitration Order is not
appealable under § 16(a)(1)(D).3 See, e.g., Middleby Corp. v. Hussman Corp., 962 F.2d
3
The Lansdales rest their jurisdictional argument on the plain language of
§ 16(a)(1)(D), but their interpretation of that statutory provision ignores the context
provided by the rest of § 16. According to § 16(b), which designates certain orders
regarding arbitration as interlocutory, “an appeal may not be taken from an . . . order . . .
directing arbitration to proceed.” 9 U.S.C. § 16(b)(2). That was the practical effect of the
Arbitration Order here: it instructed the parties to complete arbitration before seeking
review of the award. Because § 16 was intended “to prevent the appellate aspect of the
litigation process from impeding the expeditious disposition of an arbitration,” David D.
Siegel, Practice Commentary: Appeals from Arbitrability Determinations, 9 U.S.C.A.
§ 16, at 352 (West Supp. 2008), permitting an appeal of the Arbitration Order would
frustrate rather than further the section’s purpose.
9
614, 616 (7th Cir. 1992) (finding that under § 16(a)(1)(D) a delay in confirmation “is a far
cry from ‘denying’ confirmation” because “the court promises final judgment at the
appropriate time”).
Next, the Lansdales assert that we may review the District Court’s Determination
Order pursuant to 28 U.S.C. § 1292(a)(2) and 9 U.S.C. § 16(a)(1)(A) and (B). We reject
both contentions. First, 28 U.S.C. § 1292(a)(2) provides appellate jurisdiction over
“[i]nterlocutory orders appointing receivers, or refusing orders to wind up receiverships
or to take steps to accomplish the purposes thereof, such as directing sales or other
disposals of property.” The Lansdales argue that by denying the Receiver’s motion for
the District Court to declare exclusive jurisdiction over the asset determination, the
Court’s Determination Order has the effect of refusing to wind up the receivership or to
take steps to carry out that purpose. However, § 1292(a)(2) must be “interpreted
narrowly” and “permit[s] appeals only from the three discrete categories of receivership
orders specified in the statute, namely [1] orders appointing a receiver, [2] orders refusing
to wind up a receivership, and [3] orders refusing to take steps to accomplish the purposes
of winding up a receivership.” In re Pressman-Gutman Co., 459 F.3d 383, 393 (3d Cir.
2006) (internal quotation marks and citation omitted). The Determination Order falls into
none of these three discrete categories and thus appellate jurisdiction does not exist under
§ 1292(a)(2).
10
Second, 9 U.S.C. § 16(a)(1)(A) and (B) permit an appeal from an order “refusing a
stay of any action under section 3 of this title” or an order “denying a petition under
section 4 of this title to order arbitration to proceed.” The Determination Order clearly
does not respond to a motion to stay or a motion to compel and thus does not fall under
the explicit language of § 16(a)(1)(A) or (B). However, the Lansdales argue that by
refusing to rule on the District Court’s jurisdiction over certain asset determinations, the
Determination Order has the same effect as an order denying a stay of district court
litigation and an order denying arbitration because the Receiver’s continuing role has, “in
practical terms,” restricted the arbitration proceedings. We disagree with this
characterization. The Determination Order plainly rejected the Receiver’s argument that
the District Court should effectively remove certain asset determinations from arbitration
by exercising exclusive jurisdiction, and therefore, contrary to the Lansdales’ assertion,
this ruling does not result in precluding arbitration of the issues committed to that forum.
Accordingly, the Lansdales’ argument that § 16(a)(1)(A) and (B) are implicated by the
Determination Order fails.
Finally, the Lansdales argue that the District Court’s Turnover Order is
immediately appealable under 9 U.S.C. § 16(a)(1) because the Turnover Order, like the
Determination Order, is equivalent to an order denying a motion to compel or refusing a
stay. Again, we disagree with the Lansdales’ characterization and find no alternative
basis for exercising jurisdiction over the Turnover Order. See, e.g., F.T.C. v. Overseas
11
Unlimited Agency, Inc., 873 F.2d 1233, 1235 (9th Cir. 1989) (finding that an order
directing funds to be turned over to a receiver is a non-final order and not appealable
pursuant to 28 U.S.C. § 1292(a)); United States v. Beasley, 558 F.2d 1200, 1201 (5th Cir.
1977) (finding no jurisdiction over a turnover order requiring funds to be paid to a
receiver); United States v. Chelsea Towers, Inc., 404 F.2d 329, 330 (3d Cir. 1968) (“The
order requiring the delivery of certain deposits to the receiver is neither final nor within
any category of appealable interlocutory orders.”).4
Therefore, we lack jurisdiction over the three orders that the Lansdales appeal
because the orders are not final under 28 U.S.C. § 1291 and there are no alternative
grounds for exercising jurisdiction at this time.
III.
The Lansdales have also filed a petition for a writ of mandamus, asking that we
direct the District Court “to stay or dismiss the pending litigation, discharge the receiver,
and finally and completely submit the contested issues to arbitration.”
Mandamus relief is “a drastic and extraordinary remedy reserved for really
extraordinary causes.” Cheney v. United States Dist. Court, 542 U.S. 367, 380 (2004)
4
The Lansdales also assert that the doctrine of pendent appellate jurisdiction
permits us to review these orders. Because there is no appellate jurisdiction over any of
the three orders, we reject this argument. See Hoxworth v. Blinder, Robinson & Co., Inc.,
903 F.2d 186, 209 (3d Cir. 1990) (“[P]endent appellate jurisdiction over an otherwise
unappealable order is available only to the extent necessary to ensure meaningful review
of an appealable order.”).
12
(internal quotation marks and citation omitted). We have explained that “mandamus is
not a mere alternative to an appeal and instead properly is viewed as a safety valve in the
final-judgment rule proving a drastic remedy . . . only in extraordinary circumstances in
response to an act amounting to a judicial usurpation of power.” In re Pressman-Gutman
Co., 459 F.3d at 398 (internal quotation marks and citation omitted). Thus, to qualify for
mandamus relief, a petitioner must demonstrate “that there is (1) ‘no other adequate
means’ to attain the relief sought, and (2) a right to the writ that is ‘clear and
indisputable[]’ and, (3) even if these first two conditions are met, the reviewing court in
its discretion must conclude that the writ ‘is appropriate under the circumstances.’” In re
Briscoe, 448 F.3d 201, 212 (3d Cir. 2006) (quoting Cheney, 542 U.S. at 380-81).
Upon careful review of the Lansdales’ assertions, we find that the petitioners have
failed to carry their burden of demonstrating entitlement to such extraordinary relief. The
Lansdales have not established they lack alternative adequate means to obtain relief,
given the availability of the arbitration process, and moreover, they have failed to
demonstrate a clear and indisputable right to the relief they seek. We are unconvinced
that issuing the writ is warranted under the circumstances of this case and, accordingly,
we will deny the petition for a writ of mandamus. Nevertheless, we are mindful of the
extraordinary length of time this matter has been pending and urge the District Court to
actively facilitate and encourage a final resolution. A receivership process that becomes
interminable is not appropriate.
13
IV.
For the foregoing reasons, we will dismiss the appeal for lack of jurisdiction and
deny the petition for a writ of mandamus.
14