Saturn Distribution Corp. v. Paramount Saturn, Ltd.

United States Court of Appeals

Fifth Circuit

F I L E D

IN THE UNITED STATES COURT OF APPEALS

April 10, 2003

FOR THE FIFTH CIRCUIT

Charles R. Fulbruge III

Clerk

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No. 02-20431

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SATURN DISTRIBUTION CORPORATION,

Plaintiff-Appellee,

versus

PARAMOUNT SATURN, LTD.,

Defendant-Appellant.

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Appeal from the United States District Court

for the Southern District of Texas

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Before BENAVIDES, STEWART, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

Appellant Paramount Saturn (“Paramount”) asserts on appeal that the district court erred in

granting Appellee Saturn Distribution Corporation’s (“Saturn”) motion to compel arbitration. We

affirm.

I. FACTS AND PROCEEDINGS

Upon entering into a franchise agreement with Saturn in December 1997, Paramount became

a Saturn franchisee in Houston, Texas. Subsequently, Paramount sought to purchase three additional

dealerships from Saturn. Sat urn did not sell the dealerships to Paramount. As a result, Paramount

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alleged that Saturn breached its statutory duty of good faith and fair dealing. Although the franchise

agreement contained a broad arbitration provision, Paramount argued that the dispute was not

arbitrable because the Texas Motor Vehicle Board (“TMVB”) had exclusive jurisdiction over the

dispute. The only issue before the district court was whether to grant Saturn’s motion to compel

arbitration. The district court granted Saturn’s motion to compel arbitration and closed the case

without dismissing it. The order compelling arbitration was labeled “Final Judgment” and stated

“[t]his is a final judgment.”

II. STANDARD OF REVIEW

We review de novo the district court's decision to compel arbitration. Catholic Diocese of

Brownsville v. A.G. Edwards & Sons, Inc., 919 F.2d 1054, 1056 (5th Cir. 1990); United Offshore

Co. v. Southern Deepwater Pipeline Co., 899 F.2d 405, 407 (5th Cir. 1990).

III. DISCUSSION

The instant dispute presents this Court with two issues: (1) whether the district court’s order

to compel arbitration was a final and appealable decision; and (2) whether the dispute is arbitrable.

First, the plain language of the FAA makes “final” decisions, whether hostile to arbitration

or not, immediately appealable, 9 U.S.C. § 16(a)(3), but prohibits appeals from interlocutory orders

favorable to arbitration. 9 U.S.C. § 16(b); Sphere Drake Ins. PLC v. Marine Towing, 16 F.3d 666,

667-68 (5th Cir. 1994). The order compelling arbitration, which arose out of independent

proceedings, was a “final decision” pursuant to Green Tree Fin. Corp.-Ala. v. Rudolph, 531 U.S. 79,

87-89 (2000) (holding that orders arising out of embedded proceedings are final decisions when

accompanied by a dismissal of all other claims and there is no stay of federal court proceedings), for

three reasons: (1) the district court closed the case, Am. Heritage Life Ins. Co. v. Orr, 294 F.3d 702,

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708 (5th Cir. 2002); (2) the order was labeled “Final Judgment” and included the language “this is

a final judgment,” which clearly expressed the intention of the court to “effectively [end] the entire

matter on its merits and [leave] nothing more . . . to do but execute the judgment,” Id. at 707 (holding

that the phrase “this case is closed” achieves the same purpose); and (3) the order was not

accompanied by a stay of federal court proceedings, Green Tree, 531 U.S. at 87 n.2; Am. Heritage

Life, 294 F.3d at 708 (holding that an order compelling arbitration can be a final decision if the stay

only relates to state court proceedings).

Second, the dispute is arbitrable because the statutory duty on which Paramount bases its

claim arises out of the parties’ franchise agreement, which contains a broad arbitration provision. Tex.

Rev. Civ. Stat. Ann. art. 4413(36), § 6.06(e) (Vernon Supp. 2001) (“Each party to a franchise

agreement owes a duty of good faith and fair dealing to the other party”); United Offshore Co. v.

Southern Deepwater Pipeline Co., 899 F.2d 405, 409 (5th Cir. 1990) (ho lding that “when parties

choose [broad arbitration provisions such as ‘any controversy or claim arising out of or relating to

this agreement’], only the ‘the most forceful evidence of a purpose to exclude the claim from

arbitration’ would render the dispute non-arbitrable”) (quoting Mar-Len of Louisiana, Inc. v.

Parsons-Gilbane, 773 F.2d 633, 636 (5th Cir. 1985)).

There are no legal restraints external to the parties’ arbitration agreement that foreclose the

arbitration of their dispute because the TMVB does not have exclusive jurisdiction of contractual

disputes between franchisors and franchisees in the motor vehicle industry. Tex. Rev. Civ. Stat. Ann.

art. 4413(36), §§ 1.02, 3.01(a) (Vernon Supp. 2001). Even if it did, the strong federal policy favoring

arbitration preempts state laws that act to limit the availability of arbitration. Southland Corp. v.

Keating, 465 U.S. 1, 16 (1984) (holding that through the FAA, “Congress intended to foreclose state

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legislative attempts to undercut the enforceability of arbitration agreements”); Circuit City Stores,

Inc. v. Adams, 532 U.S. 105, 122 (2001) (discussing the holding and continued vitality of Southland).

IV. CONCLUSION

Accordingly, and for essentially the reasons given by the district court, the judgment of the

district court is AFFIRMED.

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