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Florida Gas Transmission Company, LLC v. Texas Brine Company, LLC

Court of Appeals of Louisiana, First Circuit

July 11, 2019

FLORIDA GAS TRANSMISSION COMPANY, LLC
v.
TEXAS BRINE COMPANY, LLC, ET AL.

          On Appeal from The 23rd Judicial District Court, Parish of Assumption, State of Louisiana Trial Court No. 34, 316 The Honorable Thomas J. Kliebert Jr., Judge Presiding

          Martin A. Stern, Leigh Ann Schell, Raymond P. Ward, Sara Valentine, Alexandra Roselli, New Orleans, Louisiana Kathy Patrick (Pro Hac Vice), Angus J. Dodson (Pro Hac Vice), Laura J. Kissel (Pro Hac Vice), Houston, Texas Brad D. Brian (Pro Hac Vice), Bethany W. Kristovich (Pro Hac Vice), Los Angeles, California Attorneys for Appellant/Third-Party Defendant, Occidental Chemical Corporation

          Leopold Z. Sher, James M. Garner, Peter L. Hilbert Jr., Christopher T. Chocheles, Jeffrey D. Kessler, New Orleans, Louisiana Robert Ryland Percy III Gonzales, Louisiana Eric J. Mayer Houston, Texas Attorneys for Defendant/Appellee, Texas Brine Company, LLC

          BEFORE: McDONALD, HIGGINBOTHAM, AND CRAIN, JJ.

          CRAIN, J.

         Occidental Chemical Corporation appeals a judgment vacating a ruling of the arbitration panel. We reverse and remand.

         The facts and procedural history relevant to this appeal are set forth in Florida Gas Transmission Company, LLC v. Texas Brine Company, LLC, 18-0075 (La.App. 1 Cir. 7/1/19), __So. 3d__("Florida Gas 0075"), where this court found the trial court erred in rendering summary judgments declaring a salt lease terminated by confusion ("salt lease summary judgments"). Without addressing the merits of the confusion claim, we found Occidental and Texas Brine agreed the arbitrability of their claims must be decided by an arbitration panel, not the court. Florida Gas 0075, __So. 3d at __.

         On July 28, 2017, the arbitration panel found the salt lease did not terminate by confusion. Texas Brine then filed a motion in the trial court requesting the arbitration ruling be vacated, arguing the salt lease summary judgments had the effect of res judicata in the arbitration proceeding, precluding the panel from reaching a conclusion contrary to that of the trial court. The trial court agreed and signed a judgment on February 1, 2018, vacating the arbitration panel's July 28, 2017 ruling. Occidental appeals.[1]

         Before reaching the merits, we address Texas Brine's motion to dismiss this appeal, arguing a judgment issued by the trial court after the appeal was perfected renders the appeal moot. That judgment signed June 14, 2018, purportedly vacated all arbitration panel rulings. Texas Brine also moved to supplement the record on this appeal with the June 14th judgment. An appellate court must render its judgment upon the record on appeal. See La. Code Civ. Pro. art. 2164; Thibodeaux v. Rental Insurance Services, Inc., 13-1947, 2015WL1882456 *5 (La.App. 1 Cir. 4/24/15), writ denied, 15-1213 (La. 9/25/15), 178 So.3d 567. While the lower court retains jurisdiction over certain matters while an appeal is pending, subsequent actions taken by the lower court pursuant to its retained jurisdiction are not part of the record on appeal and cannot be considered by this court. See La. Code Civ. Pro. art. 2088; Carr v. Gibbens, 15-0701, 2015WL5515906 *4 (La.App. 1 Cir. 9/18/15); Thibodeaux, 2015WL1882456 at *5. For these reasons, we deny Texas Brine's motion to supplement and deny its motion to dismiss. See Carr, 2015WL5515906 at *4 (denying motion to supplement appellate record to include a judgment rendered after the appeal was perfected); Marchand v. Texas Brine Company LLC, 18-0621 (La.App. 1 Cir. 10/23/18) (unpublished order denying Texas Brine's motion to supplement the appellate record to include the same judgment referenced in the present motion).[2]

         We now turn to the merits of the appeal. Occidental assigns as error the trial court's application of the doctrine of res judicata to vacate the arbitration panel's ruling. According to Occidental, the arbitration panel must decide whether res judicata applies; or, alternatively, the salt lease summary judgments were subject to reversal on appeal and thus did not have the effect of res judicata.

         Under the Federal Arbitration Acts (FAA), courts may vacate an arbitration decision only in very limited circumstances. See 9 U.S.C.A. § 10(a); Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 568, 133 S.Ct. 2064, 2068, 186 L.Ed.2d 113 (2013). A judgment vacating an arbitration award is reviewed de novo on appeal, with great deference given the arbitration panel's decision. See Downer v. Siegel, 489 F.3d 623, 626 (5th Cir. 2007), cert, denied, 552 U.S. 1063, 128 S.Ct. 721, 169 L.Ed.2d 355 (2007); Potier v. Morris Bart, L.L.C., 16-0879 (La.App. 4 Cir. 3/15/17), 214 So.3d 116, 124, writ denied, 17-630 (La. 6/5/17), 221 So.3d 45 (decided under the Louisiana Binding Arbitration Act).

         In its reasons for the February 1, 2018 judgment, the trial court found the salt lease summary judgments were res judicata with respect to the same claim in the arbitration proceeding. Those salt lease summary judgments have now been vacated. See Florida Gas 0075, __ So.3d at__. Because the salt lease summary judgments are no longer in effect, they cannot support a claim of res judicata. See La. R.S. 13:4231 (requiring a "valid and final judgment" for res judicata); Armbruster v. Anderson, 18-0055 (La.App. 4 Cir. 6/27/18), 250 So.3d 310, 317, writ denied, 18-1276 (La. 11/5/18), 255 So.3d 1054 (holding that a judgment reversed on appeal has no res judicata effect); Anaya v. Legg Mason Wood Walker, Inc., 07-0654 (La.App. 4 Cir. 5/14/08), 985 So.2d 281, 289, writ denied, 08-1289 (La. 10/24/08), 992 So.2d 1040 (holding that a vacated judgment has no res judicata effect). Consequently, the trial court erred in granting Texas Brine's motion on this basis.[3]

         Texas Brine alternatively argues the trial court properly vacated the arbitration ruling, because the arbitration panel engaged in "misconduct" or "exceeded [its] powers." See 9 U.S.C.A. § 10(a)(3) and (4). Misconduct requiring vacating an award must involve more than an error of law; rather, it must deprive a party of a fair hearing. Rainier DSC 1, L.L.C. v. Rainier Capital Mgmt., L.P., 828 F.3d 362, 364 (5th Cir. 2016). An arbitration panel exceeds its authority only if it acts outside the scope of its contractually delegated authority by issuing an award reflecting its own notions of economic justice rather than drawing its essence from the contract. See Oxford Health Plans LLC, 569 U.S. at 569, 133 S.Ct. at 2068. Because the parties bargained for the arbitrators to interpret their contract, a decision even arguably construing or applying the contract must stand, regardless of a court's view of its demerits. Oxford Health Plans LLC, 569 U.S. at 569, 133 S.Ct. at 2068. A party seeking to vacate an award under Section 10(a)(4) of the FAA bears a heavy burden. See Oxford Health Plans LLC, 569 U.S. at 569, 133 S.Ct. at 2068.

         Texas Brine presented limited evidence in support of this claim. On appeal, it primarily argues the arbitration panel, in arriving at its decision the salt lease did not terminate by confusion, failed to address or reconcile the trial court's contrary ruling on the same claim, and disregarded Texas Brine's request to allow for briefing and argument as to the preclusive effects of the trial court's ruling. For the reasons provided in Florida Gas 0075, the arbitration panel had the exclusive authority to determine the arbitrability of the salt lease confusion claim. By exercising that authority, the panel did not commit misconduct or exceed its authority merely because its conclusion on the merits of the claim differed from ...


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