Mary Hamel-Schwulst v. Country Place Mortgage, Ltd
406 F. App'x 906
5th Cir.2010Background
- In 2007 Hamel-Schwulst entered purchase, installation, and financing agreements for a Palm Harbor modular home, including an arbitration clause.
- CountryPlace mailed a modification to convert the construction loan to a permanent loan; Hamel-Schwulst refused to sign and to pay.
- Hamel-Schwulst filed suit seeking declaratory relief and various claims; Defendants sought to compel arbitration under the agreement.
- The district court granted arbitration; the arbitrator ruled for the Defendants, and the district court confirmed the award.
- Negrotto, the notary, later obtained bankruptcy, triggering disputes over a § 362 stay, which affected related proceedings.
- The Florida action against Negrotto was eventually stayed, lifted, and the Mississippi case proceeded to arbitration and post-arbitration challenges.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 362 stay prevented arbitration. | Hamel-Schwulst argues stay should apply to all defendants. | Negrotto stay applies to Negrotto only; co-defendants not barred. | § 362 does not extend to co-defendants; arbitration between Hamel-Schwulst and Defendants was proper. |
| Validity and scope of the arbitration provision. | Arbitration provision or entire contract could be void. | Arbitration clause is valid and broad to cover related claims. | Arbitration clause valid and scope broad enough to cover the dispute. |
| Jurisdiction to review the district court’s final judgment confirming the award. | Final judgment may be appealable only with Rule 54(b) certification. | District court properly disposed of claims against CountryPlace; Rule 54(b) certification satisfied. | Appeal proper; Rule 54(b) certification satisfied; judgment review is proper. |
| Whether the arbitrator exceeded authority warranting vacatur. | Arbitrator prejudiced Hamel-Schwulst due to alleged disability and conduct. | No misconduct or exceeding authority shown to vacate under § 10. | No basis to vacate under § 10; award affirmed. |
Key Cases Cited
- Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211 (5th Cir. 2003) (arbitration clause scope and contract validity issues delegated to arbitrator when not independently attacked)
- Banc One Acceptance Corp. v. Hill, 367 F.3d 426 (5th Cir. 2004) (two-step FAA inquiry; first determine arbitrability and scope)
- Pennzoil Exploration & Prod. Co. v. Ramco Energy, 139 F.3d 1061 (5th Cir. 1998) (broad arbitration clause includes disputes related to contract)
- Smith Barney, Inc. v. Henry, 775 So.2d 722 (Miss. 2001) (broad arbitration clause covers related claims under Mississippi law)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (arbitration clause validity not undermined by allegations against contract as a whole)
- Misco, Inc. v. United Paperworkers Int’l Union, 484 U.S. 29 (1987) (merits of claims cannot be reviewed on arbitration vacatur unless grounds exist under § 10)
- Laws v. Morgan Stanley Dean Witter, 452 F.3d 398 (5th Cir. 2006) (require prejudice shown to vacate for misconduct under § 10(a)(3))