106 So. 3d 212
La. Ct. App.2012Background
- Williams founded IOS in 2006; IOS owns and operates vessels for oil/gas industry.
- In 2009 Williams sold the majority of IOS to Ferry (Platinum Equity); he retained 20% and became IOS CEO under a two-year Employment Agreement with a non-compete.
- A July 2009 Third Amended and Restated Operating Agreement added a non-compete and arbitration clause; Williams remained a party.
- After resigning as CEO in January 2011, Williams formed Alliance Lift-boats and engaged in lift-boat services.
- IOS and Ferry filed arbitration claims January 2011 alleging Williams breached non-competes and fiduciary duties; Williams filed a declaratory judgment action in January 2011 seeking relief against both agreements.
- IOS later passed a corporate resolution releasing Williams from Employment Agreement non-compete claims but preserving claims under the Operating Agreement; trial court granted Williams summary judgment on the merits while IOS challenged jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitrability of Operating Agreement claims | Williams arised under Operating Agreement subject to arbitration; court should defer. | Operating Agreement disputes must be arbitrated per clause; court lacked jurisdiction. | Operating Agreement claims were subject to arbitration; trial court lacked jurisdiction over those claims. |
| Effect of corporate resolution on Employment Agreement claims | Resolution mooted Williams' requests under Employment Agreement and divests jurisdiction. | Resolution does not extinguish Williams' obligations or leave a justiciable controversy. | Corporate resolution mooted Employment Agreement claims; however, the non-compete obligations remained relevant for other issues, so jurisdiction persisted in part. |
| Subject matter jurisdiction overall | Trial court properly granted declaratory relief; no lack of jurisdiction. | Because arbitration and the resolution affectability, the court lacked subject matter jurisdiction. | The trial court lacked subject matter jurisdiction over those claims; judgment vacated and related writs sustained or dismissed accordingly. |
Key Cases Cited
- Joseph v. Ratcliff, 63 So.3d 220 (La.App. 1st Cir. 2011) (subject-matter jurisdiction may be raised at any time and sua sponte by appellate court)
- Woodson Constr. Co., Inc. v. R.L. Abshire Constr. Co., Inc., 459 So.2d 566 (La.App. 3d Cir. 1984) (arbitration policy considerations in contract disputes)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S. 1972) (forum-selection clauses enforceable unless strongly conflicting with forum policy)
- Dahiya v. Talmidge International Ltd., 931 So.2d 1168 (La.App. 4th Cir. 2006) (public policy vs. arbitration enforcement under international context)
- In the Matter of E.W., 38 So.3d 1033 (La.App. 1st Cir. 2010) (mootness and exceptions to mootness; continuing jurisdiction considerations)
- Chauvin v. Wellcheck, Inc., 938 So.2d 114 (La.App. 1st Cir. 2006) (standing to seek declaratory relief when no substantial existing legal right)