Patton v. Johnson
Opinion
Over time, this case has become a procedural motley. In its current iteration, defendant-appellant Barry Johnson emphasizes his association with the Johnson Law Firm (JLF) in attempting to compel the plaintiffs, Rickie Patton and his wife Cathleen Marquardt, to arbitrate various tort claims (including their claims of legal malpractice). The district court, adopting a magistrate judge's report and recommendation (R&R) 1 and applying principles of collateral estoppel derived from Rhode Island law, determined that the appellant was barred from relitigating his contention that the claims should be heard before an arbitrator. The appellant assigns error. After threading our way through the labyrinth of prior proceedings, we affirm.
I. BACKGROUND
We briefly rehearse the background and travel of the case. In 2007, the plaintiffs retained defendants JLF and Steven M. Johnson to represent them in a products liability suit concerning an allegedly defective hernia mesh device (Kugel Mesh). 2
The parties executed an Attorney Representation Agreement (the ARA), which contained a three-paragraph arbitration provision. The plaintiffs did not, however, initial or otherwise specifically acknowledge the arbitration paragraphs.
JLF filed the plaintiffs' products liability suit in the United States District Court for the Southern District of Texas. As part of a centralized multi-district litigation proceeding,
see
When the suit was settled in 2015, a dispute arose among the plaintiffs, the appellant, JLF, and John Deaton (the Rhode Island-based local counsel retained by JLF). Central to this dispute were representations allegedly made by the appellant concerning settlement amounts. The dispute was not resolved, and the appellant came to believe that the plaintiffs would be filing a malpractice suit against him.
In an attempt to get out in front of such a suit, the appellant - in April of 2016 - filed a civil action against JLF and Patton in a Texas state court seeking to compel arbitration based on the provisions of the ARA. Patton challenged the court's jurisdiction over his person, as did Deaton (who had been impleaded by JLF). The Texas trial court rejected these jurisdictional challenges, striking the special appearances made on behalf of both Patton and Deaton. Deaton appealed, and the Texas Court of Appeals affirmed.
See
Deaton
v.
Johnson
, No. 05-16-01221-CV,
While Deaton's appeal was pending, JLF initiated a Judicial Arbitration and Mediation Service (JAMS) arbitration proceeding against Patton in Fort Worth, Texas. The appellant was not named as a party to the JAMS arbitration. Patton challenged JLF's right to arbitrate, arguing that the uninitialed arbitration paragraphs in the ARA were of no effect. By decision dated November 15, 2016, the arbitrator determined that the ARA did not contain a valid and enforceable agreement to arbitrate. Accordingly, the arbitrator dismissed the JAMS proceeding.
The plaintiffs made the next move. On April 3, 2017, they sued the appellant, JLF, and JLF's principal in a Rhode Island state court, asserting claims for malpractice, other torts, and unfair trade practices (all relating to the handling and settlement of the plaintiffs' Kugel Mesh suit). The defendants removed the suit to the United States District Court for the District of Rhode Island, noting diversity of citizenship and the existence of a controversy in the requisite amount.
See
With this foundation in place, the appellant turned his attention to the Rhode Island case, moving to stay the civil action and compel arbitration pursuant to the Federal Arbitration Act (FAA).
See
Back in Rhode Island, the appellant abandoned his reliance on the 2013 employment agreement. Nevertheless, he continued to pursue his motion to compel arbitration, relying exclusively on the uninitialed arbitration paragraphs contained in the ARA. He alleged in relevant part that he was not a party to the first JAMS arbitration and, thus, was not bound by the decision of the first JAMS arbitrator (who had found the uninitialed arbitration paragraphs in the ARA impuissant as to Patton). The plaintiffs opposed this motion, arguing that the appellant was in privity with JLF and was therefore precluded from re-litigating the issue of arbitrability under principles of collateral estoppel.
The court below referred the appellant's motion to compel arbitration to a magistrate judge, who applied Rhode Island law and concluded that principles of collateral estoppel foreclosed the appellant's attempt to invoke the arbitration provision of the ARA. Accordingly, the magistrate judge recommended that the appellant's motion to compel arbitration be denied.
See
Patton I
,
II. ANALYSIS
Before beginning our analysis, we pause to smooth out a procedural wrinkle. We then proceed to the merits.
A. Judicial Review of the R&R .
"[A]s Article I judicial officers, magistrate judges ordinarily may not decide motions that are dispositive either of a case or of a claim or defense within a case."
PowerShare, Inc.
v.
Syntel, Inc.
,
This dispositive/non-dispositive dichotomy has implications for judicial review. When a magistrate judge issues a recommended decision on a dispositive motion and an objection is interposed, district court review is de novo.
See
In this case, the magistrate judge treated the appellant's motion to compel arbitration as a dispositive motion and recommended a decision.
See
Patton I
,
But the district court came to the rescue: it recognized this discrepancy and treated the R&R as an order.
See
Patton I
,
That the error was harmless is all the more evident because the appellant's motion to compel turned on questions of law.
See
,
e.g.
,
PowerShare
,
B. The Merits .
We review de novo the district court's denial of a motion to compel arbitration.
See
Nat'l Fed'n of the Blind
v.
The Container Store, Inc.
,
To compel arbitration, the movant must demonstrate "that a valid agreement to arbitrate exists, that [he] is entitled to invoke the arbitration clause, that the other party is bound by that clause, and that the claim asserted comes within the clause's scope."
InterGen N.V.
v.
Grina
,
Some groundwork is helpful. "Collateral estoppel, sometimes called issue preclusion, bars parties from re-litigating issues of either fact or law that were adjudicated in an earlier proceeding" before a court or other tribunal of competent jurisdiction.
Robb Evans & Assocs., LLC
v.
United States
,
Vargas-Colón
v.
Fundación Damas, Inc.
,
As a threshold matter, the appellant posits that collateral estoppel principles are inapposite here because the arbitrator lacked the authority to decide the issue of whether an agreement to arbitrate existed. Although the plaintiffs argue that this issue was not properly preserved for appeal, our review of the record leaves us less sanguine. Thus, we proceed to consider the appellant's challenges to the arbitrator's authority to determine the arbitrability of claims arising in connection with the ARA.
To begin, the premise on which the appellant's argument rests is sound: as a customary tenant, collateral estoppel "is not implicated if the forum which rendered the prior 'judgment' (
viz.
, the arbitral award) lacked 'jurisdiction' over the putatively precluded claim."
Wolf
v.
Gruntal & Co.
,
The appellant's principal claim is that the arbitrator lacked authority to resolve the issue of arbitrability because that issue already had been resolved by the Texas state court when it rejected the jurisdictional challenges mounted by Patton and Deaton. In response to the magistrate judge's statement that "[i]t is difficult to discern a holding of this scope in the Texas state court materials filed by the parties,"
Patton I
,
Critically, there is nothing in the Texas state court's succinct jurisdictional determination that indicates it was predicated upon the arbitrability vel non of disputes under the ARA. Given the nature of the jurisdictional issue, it is equally likely that the Texas state court's retention of jurisdiction relied on the facts surrounding the plaintiffs' engagement of JLF. These facts indicated, among other things, that Texas was the place where the contract was formed and that Texas was the anticipated place of performance and payment.
See
,
e.g.
,
Griffith Techs., Inc.
v.
Packers Plus Energy Servs. (USA), Inc.
, No. 01-17-00097-CV,
The appellant has a fallback position. He argues that the first JAMS arbitrator exceeded his authority because the parties did not agree to submit the question of arbitrability to an arbitrator. This is whistling past the graveyard.
Parties to a contract may, by mutual agreement, place before an arbitrator "not only the merits of a particular dispute but also 'gateway' questions of 'arbitrability,'
such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy."
Henry Schein, Inc.
v.
Archer & White Sales, Inc.
, [--- U.S. ----, ----,
The "clear and unmistakable evidence" standard is demanding.
See
Shank/Balfour Beatty
v.
Int'l Bhd. Of Elec. Workers Local 99
,
The decision in
Cleveland Electric
is instructive. There, the Sixth Circuit determined that parties who "submitted the question of arbitrability to the arbitrator for his determination" and manifested no intent to "reserve the question of arbitrability for the court" had "clearly and unmistakably consented" to arbitrate questions of arbitrability.
Here, we discern much the same type of factual mosaic that the Sixth Circuit found persuasive in Cleveland Electric . JLF took the unequivocal position before the first JAMS arbitrator that, pursuant to JAMS rules, the arbitrator had the authority to adjudicate any "[j]urisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought." All of the parties to the first JAMS arbitration submitted briefs to the arbitrator on the issue of whether the claims asserted were arbitrable at all, and no one questioned the arbitrator's authority to decide that issue. Nor did any party seek to vacate the arbitrator's decision on such a ground. Given this history, we conclude that the parties to the first JAMS arbitration clearly and unmistakably accepted the proposition that the arbitrator possessed the requisite authority to determine whether claims arising under the ARA were arbitrable.
Our conclusion that the first JAMS arbitrator had authority to decide the issue of arbitrability brings us to the next facet of the appellant's asseverational array. The magistrate judge, following the parties' lead, applied Rhode Island law and concluded that collateral estoppel principles demanded the denial of the appellant's motion to compel arbitration.
See
Patton I
,
With respect to the preclusive effect of an unconfirmed arbitral award,
3
it is an open question whether, in this diversity action, we should apply the choice-of-law rules of the forum state (Rhode Island),
see
Cochran
v.
Quest Software, Inc.
,
Here, however, we need not explore this uncertain source-of-law terrain. In his briefing before the magistrate judge, the appellant stated unequivocally that the preclusive effect of the arbitrator's ruling "should be determined under Rhode Island law, because this issue does not involve the construction of the ARA and is therefore not subject to determination under Texas law." The other parties acquiesced. Where, as here, all parties agree to the application of a particular source of law, a court is "free to 'forego an independent analysis and accept the parties' agreement.' "
Hershey
v.
Donaldson, Lufkin & Jenrette Sec. Corp.
,
In this venue, the appellant reverses direction and assigns error to the district court's reliance on Rhode Island collateral estoppel law. But a party cannot so easily change horses in midstream, abandoning a position that he advocated below in search of a swifter steed. We think it self-evident that a party cannot invite the trial court to employ one source of applicable law and then - after the trial
court has accepted his invitation - try to convince the court of appeals that some other source of law would be preferable.
See
Lott
v.
Levitt
,
To be sure, in the memorandum of law that accompanied his objections to the magistrate judge's R&R, the appellant couched his arguments in terms of Texas collateral estoppel law. But this was little more than an attempt to lock the barn door after the horses had galloped away. A party cannot successfully urge a magistrate judge to apply a particular body of law and then, dissatisfied with the outcome that he invited, ask the district court to apply some other body of law.
See
Robb Evans & Assocs.
,
To say more on this point would be to paint the lily. Since the appellant has waived any argument for an alternative choice of law, we conclude that Rhode Island collateral estoppel principles must be applied here. To hold otherwise would be to sanction the use of misdirection as a tool for subsequent appellate advocacy.
See
Under Rhode Island law, the doctrine of collateral estoppel provides that an issue "that has been actually litigated and determined cannot be re-litigated between the same parties or their privies in future proceedings."
Commercial Union Ins. Co.
v.
Pelchat
,
In his briefs before this court, the appellant does not challenge the correctness of the district court's application of Rhode Island collateral estoppel principles. Rather, the appellant makes a more limited argument, submitting only that Texas collateral estoppel law should be applied. He does not argue at all that the court below misapplied Rhode Island collateral estoppel law.
"It is axiomatic that arguments not developed on appeal are abandoned."
Soto-Cintrón
v.
United States
,
III. CONCLUSION
We need go no further. For the reasons elucidated above, the judgment of the district court is affirmed , and the case is remanded for further proceedings consistent with this opinion.
The district court entered a brief order, which adopted and incorporated by reference the R&R.
See
Patton
v.
Johnson
(
Patton I
), No. 17-259WES,
Despite their identical surnames, the appellant is not related to Attorney Stephen M. Johnson, who is the principal of JLF (his eponymous law firm).
Under the Full Faith and Credit Act,
Reference
- Full Case Name
- Rickie PATTON and Cathleen Marquardt, Plaintiffs, Appellees, v. Barry JOHNSON, Defendant, Appellant, and Steven Johnson, Individually and as Law Offices of Steven M. Johnson D/B/A the Johnson Law Firm, Co-Defendants.
- Cited By
- 41 cases
- Status
- Published