Auto Parts Manufacturing Mississippi, Inc. v. King Construction of Houston, L.L.C.
782 F.3d 186
| 5th Cir. | 2015Background
- APMM (stakeholder) contracted with Noatex to build a factory; Noatex subcontracted King. King filed a Stop Notice for $260,410.15, and APMM deposited that sum into the federal court registry and sued in interpleader.
- Noatex originally sued King in separate federal actions and removed APMM’s interpleader; the district court later concluded statutory interpleader under 28 U.S.C. § 1335 applied and APMM redeposited the funds.
- Kohn (Noatex’s law firm) claimed an attorney’s lien under an engagement agreement with Noatex that contained an arbitration clause and sued APMM in California; Kohn was later added to the interpleader.
- The district court discharged APMM as a disinterested stakeholder, enjoined claimants (Noatex, King, Kohn) from instituting proceedings against APMM about the fund without leave, and denied Noatex/Kohn’s motion to compel arbitration.
- King and Noatex later settled; King was dismissed from the appeals. Appellants (Noatex and Kohn) appealed the discharge/injunction and denial of arbitration; this opinion resolves those appeals.
Issues
| Issue | Plaintiff's Argument (APMM) | Defendant's Argument (Noatex/Kohn) | Held |
|---|---|---|---|
| Whether appeals as to King should be dismissed after settlement | N/A (did not oppose dismissal) | Appeal against King moot after settlement and distribution | Granted dismissal as to King |
| Whether the district court’s injunction/discharge is moot after distribution | Distribution moots issues; injunction unnecessary | Injunction remains a live issue and must be reviewed; Kohn may still sue APMM | Injunction is permanent, survives dismissal, appeal not moot; discharge and injunction affirmed |
| Whether statutory interpleader under § 1335 was proper (two+ adverse claimants; single fund; deposit; minimal diversity) | Interpleader was proper: single fund, deposit, adverse claims (King and Noatex), minimal diversity | Interpleader improper after Stop Notice statute declared unconstitutional; no real risk of multiple liability | § 1335 requirements met at filing; merits of claims irrelevant to stage one; interpleader proper |
| Whether APMM (non‑signatory) must arbitrate under Noatex–Kohn engagement agreement | APMM never agreed to arbitrate; estoppel inapplicable because claims do not depend on the engagement agreement | Equitable estoppel or related doctrines bind APMM to arbitration of fund dispute | APMM not bound to arbitrate; denial of motion to compel arbitration affirmed |
Key Cases Cited
- Rhoades v. Casey, 196 F.3d 592 (5th Cir. 1999) (explains two‑stage interpleader inquiry and when statutory interpleader elements are satisfied)
- Tashire, 386 U.S. 523 (U.S. 1967) (minimal diversity suffices for statutory interpleader jurisdiction)
- In re Bohart, 743 F.2d 313 (5th Cir. 1984) (interpleader statutes construed liberally to protect stakeholders from double liability and multiple suits)
- Tittle v. Enron Corp., 463 F.3d 410 (5th Cir. 2006) (threat of multiple vexatious litigation supports interpleader; fungibility of money does not defeat a single fund)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (party who has not agreed to arbitrate is entitled to a court decision on whether arbitration is required)