Green Tree Servicing v. Charles–Appellate Jurisdiction


Compelling Arbitration, Fifth Circuit / Wednesday, November 29th, 2017

In Green Tree Servicing, L.L.C. v. Charles, 872 F.3d 637 (5th Cir. 2017), the Fifth Circuit Court of Appeals addressed an unusual procedural circumstance in determining whether it had jurisdiction to consider an appeal of an order compelling arbitration. The appeal involved two separate civil actions involving the same parties and essentially the same dispute.

Background

Charles contracted with Jim Walters Homes to build and finance a home in Mississippi. He later filed suit in Mississippi state court against the builder, his mortgage servicer, its parent company and others (“Charles I”). Charles I was subsequently removed to federal court on diversity jurisdiction and administratively due to the decision of Jim Walters Homes and Walter Energy to file for bankruptcy. Green Tree and Walter Investment initiated a separate action against Charles as plaintiffs to compel him to arbitrate the claims asserted against them in Charles I (“Charles II”) to stay the proceedings as to Green Tree and Walter Investment in Charles I. After the filing of Charles II, the district court reopened Charles I. The district court in Charles II later granted the motion to compel arbitration, ordered that the proceedings in Charles I be stayed as to the claims against Green Tree and Walter Investment, and entered judgment dismissing Charles II with prejudice. Charles appealed the district court’s dismissal of Charles II. Green Tree and Walter Investment argued that the district court’s order compelling arbitration was not a “final decision with respect to arbitration” and the Fifth Circuit lacked jurisdiction over the appeal.

Appellate Jurisdiction

Section 16 of the Federal Arbitration Act (“FAA”) authorizes courts to consider an appeal only from “a final decision with respect to an arbitration.” A final decision has been defined as one that ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment. An arbitration order entering a stay, as opposed to a dismissal, is not an appealable final order. The Fifth Circuit noted that it would have jurisdiction if it were only examining the district court’s order in Charles II because the district court granted the motion to compel arbitration, entered a judgment compelling the arbitration, and dismissed the case with prejudice, thus constituting a final order. However, because the claims in Charles I against Green Tree and Walter Investment are still pending in the district court and had only been stayed, it was not an appealable final order.

The Other Greentree Cases

The Fifth Circuit also addressed a slew of identical cases brought by the same movants and counsel for both sides, with the same result. See Green Tree Servicing, L.L.C. v. Mathis, 17-60104, 2017 WL 5479587 (5th Cir. Nov. 14, 2017); Green Tree Servicing, L.L.C. v. Campbell, 17-60106, 2017 WL 5479588 (5th Cir. Nov. 14, 2017); Green Tree Servicing, L.L.C. v. Dove, 17-60116, 2017 WL 5479591 (5th Cir. Nov. 14, 2017); Green Tree Servicing, L.L.C. v. Ducksworth, 17-60109, 2017 WL 5479590 (5th Cir. Nov. 14, 2017); Green Tree Servicing, L.L.C. v. Horne, 17-60112, 2017 WL 5564663 (5th Cir. Nov. 17, 2017); Matter of Haynes Green Tree Servicing, L.L.C. v. Haynes, 17-60113, 2017 WL 5712666 (5th Cir. Nov. 27, 2017); Green Tree Servicing, L.L.C. v. Miller, 17-60108, 2017 WL 5891689 (5th Cir. Nov. 28, 2017).

Documents

Luke Gilman is an attorney at Jackson Walker in Houston, Texas, specializing in arbitration and ancillary litigation in federal and state court.