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Jones Walker, LLP v. Petaquilla Minerals, Ltd.

United States District Court, E.D. Louisiana

June 17, 2015

JONES WALKER, LLP
v.
PETAQUILLA MINERALS, LTD., Section: J(1)

ORDER AND REASONS

CARL J. BARBIER, District Judge.

Before the Court is a Motion to Stay Pending Arbitration (Rec. Doc. 34) filed by Defendant, Petaquilla Minerals, Ltd. (Petaquilla), and an Opposition thereto (Rec. Doc. 43) by Plaintiff, Jones Walker, LLP ("Jones Walker"). Having considered the motion, the parties' submissions, the record, and the applicable law, the Court finds, for the reasons expressed below, that the motion should be DENIED.

PROCEDURAL AND FACTUAL BACKGROUND

The facts comprising this matter are largely in dispute. The parties agree that in March 2012, Petaquilla engaged Global Hunter Securities, LLC ("GHS") to act as its non-exclusive advisor and exclusive placement agent in connection with an offering of approximately $150 million of Petaquilla's highyield debt instruments ("the Transaction"). GHS retained Proskauer Rose LLP ("Proskauer") to act as its legal counsel for matters related to the Transaction.

The exact relationship between Petaquilla and Jones Walker is in dispute. Jones Walker asserts that it was hired by Petaquilla to provide legal advice and representation in relation to the Transaction with GHS. However, in the instant motion, Petaquilla fails to mention this relationship, and instead argues that GHS hired both Jones Walker and Proskauer to serve as its legal counsel regarding the Transaction. Regardless of the exact nature of the relationship between Jones Walker and Petaquilla, Jones Walker billed over 1, 550 hours in legal services in connection with the Transaction, and Jones Walker and Petaquilla were in regular contact via telephone, email, and at least one in-person meeting in New Orleans, Louisiana, between March 2012 and February 2013. (Rec. Doc. 43, p. 10).

Jones Walker issued Petaquilla a number of invoices for its legal services rendered in connection with the Transaction, amounting to a total of $516, 198.51. (Rec. Doc. 43, p. 13). At the time of the issuance of this Order, Petaquilla has failed to pay for any of the legal services for which it was charged by Jones Walker. When Jones Walker's attempts to collect on the invoices failed, Jones Walker filed suit against Petaquilla in this Court on May 27, 2014. Petaquilla did not answer the complaint until after the Clerk's entry of default (Rec. Doc. 9) and Jones Walker's motion for default judgment. (Rec. Doc. 10). Petaquilla then filed a motion requesting that the Court dismiss the matter, arguing that the Court lacked personal jurisdiction. The Court denied Petaquilla's motion, finding that Petaquilla, as a foreign corporation, had sufficient contacts with the state of Louisiana so as to satisfy personal jurisdiction.

On March 5, 2015, while the present lawsuit was pending, GHS filed a Demand for Arbitration ("the GHS arbitration") against Petaquilla, seeking payment of expenses associated with the Transaction, which it described as "reasonable out-of-pocket expenses... including without limitation the fees, disbursements, and other charges of GHS's counsel." (Rec. Doc. 34-1, p. 3). Petaquilla then filed the instant motion, requesting that the Court stay the present matter pending the outcome of the GHS arbitration, alleging that the facts and claims composing the arbitration proceeding are so similar to those in the present matter that resolution of the present matter would have an irreparable and binding impact on the arbitration proceedings.

PARTIES' ARGUMENTS

Petaquilla first argues that the Court is mandated pursuant to the Federal Arbitration Act ("the FAA") to stay this matter for the duration of the arbitration between Petaquilla and GHS. As an alternative argument, Petaquilla also asserts that the Court should exercise its discretion to stay the matter due to the substantial similarities between the facts, issues, and defenses raised in the present litigation and the GHS arbitration. Jones Walker, in response, argues that the facts do not warrant either a mandatory or discretionary stay of this matter. Instead, Jones Walker first asserts that because it is a non-signatory to the arbitration clause entered into by Petaquilla and Jones Walker, Petaquilla, as a signatory defendant, cannot invoke a mandatory stay pursuant to the FAA. Jones Walker then contends that even if the Court finds that a mandatory stay may be invoked by a signatory defendant against a signatory plaintiff, a mandatory or discretionary stay is not warranted, because this matter is legally and factually distinct from the GHS arbitration.

LEGAL STANDARD & DISCUSSION

As an initial matter, it is necessary to clarify the exact relationship between Petaquilla and Jones Walker. In its motion, Petaquilla implies that the extent of its relationship with Jones Walker was its interaction with the law firm after GHS hired it to work alongside Proskauer and provide GHS with legal representation in matters related to the Transaction. However, Petaquilla's description of this relationship is intentionally misleading. Despite Petaquilla's glaring failure to mention such in the instant motion, the record unequivocally evidences that Petaquilla, and not GHS, hired Jones Walker to provide it with legal representation in the Transaction. The engagement letter executed by Petaquilla hiring GHS ("the Engagement Letter") specifically states that Petaquilla would hire independent legal counsel to assist it with legal matters connected to the Transaction, and would not rely on GHS for such services.[1] Moreover, Jones Walker has provided the Court with evidence of numerous communications between Petaquilla, Jones Walker, and others, which state that Jones Walker would be serving as Petaquilla's U.S. Counsel in regard to the Transaction, and none of which were ever disputed by Petaquilla. (Rec. Doc. 43, p. 6-8; Rec. Doc. 43-1, p. 2-3; Rec. Doc. 43-1, p. 10; Rec. Doc. 43-1, p. 34). Further, Jones Walker has provided affidavits in which their attorneys state that they met with a member of Petaquilla's board of directors on March 7, 2012 in New Orleans, at which time the director discussed confidential information related to the Transaction. (Rec. Doc. 43, p. 8; Rec. Doc. 43-1, p. 4).

Petaquilla has not presented the Court with any evidence to refute Jones Walker's contentions that Petaquilla had hired Jones Walker as legal counsel in connection with the Transaction. Nor does Petaquilla present any evidence to establish its allegations that GHS engaged Jones Walker to serve as its legal counsel for the Transaction. In an attempt to support this unsound allegation, Petaquilla simply presents a number of entries from Jones Walker's invoices which state that Jones Walker worked on several occasions with GHS while performing its services related to the Transaction. (Rec. Doc. 34-1, p. 4-6). However, this evidence does not prove that Jones Walker was hired by GHS. Instead, as clarified by Jones Walker, these entries merely demonstrate the nature of high bond yield transactions, in that they require legal counsel for the issuer of the bond, in this case Jones Walker, and the placement agent, in this case GHS, to work closely together to negotiate agreements. (Rec. Doc. 43, p. 8-9). In light of this evidence, the Court finds that contrary to Petaquilla's allegations, Jones Walker was not counsel for GHS, and instead was directly hired by Petaquilla as legal counsel in relation to the Transaction.

Having clarified the nature of the relationship between Petaquilla and Jones Walker, the Court may now turn to a discussion regarding whether Petaquilla has proven that either a mandatory ...


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