Brandom v. Gulf Coast Bnk Trust

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this opinion should not be published and is not precedent except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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