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Psara Energy, Ltd. v. Advantage Arrow Shipping, L.L.C.

United States Court of Appeals, Fifth Circuit

January 9, 2020

PSARA ENERGY, LIMITED, Plaintiff - Appellant
v.
ADVANTAGE ARROW SHIPPING, L.L.C.; ADVANTAGE TANKERS, L.L.C.;ADVANTAGE HOLDINGS, L.L.C.; FORWARD HOLDINGS, L.L.C., Defendants - Appellees PSARA ENERGY, LIMITED, Plaintiff - Appellant
v.
ADVANTAGE START SHIPPING, L.L.C.; ADVANTAGE TANKERS, L.L.C.;ADVANTAGE HOLDINGS, L.L.C.; FORWARD HOLDINGS, L.L.C., Defendants - Appellees

          Appeal from the United States District Court for the Eastern District of Texas

          Before KING, JONES, and DENNIS, Circuit Judges.

          EDITH H. JONES, CIRCUIT JUDGE

         Plaintiff Psara Energy Limited appeals the district court's January 2019 Order granting a motion to refer to arbitration this suit filed against Defendant-Appellees, Advantage Arrow Shipping, LLC; Advantage Holdings, LLC; Advantage Tankers, LLC; and Forward Holdings, LLC, (collectively, "the Advantage Defendants" or "Advantage"). We DISMISS this appeal for lack of appellate jurisdiction because the district court's Order, which administratively closed the case, is not a final, appealable order either as we have construed the Federal Arbitration Act ("FAA") or under any other theory.

         BACKGROUND

         In 2010, Psara entered into a bareboat charter agreement with Defendant Space Shipping, Ltd. ("Space Shipping") to charter the vessel CV STEALTH.[1] Through an amendment to the charter party later that year, Geden Holdings, Ltd. ("Geden") was made the "performance guarantor" of Space Shipping.

         In 2014, the CV STEALTH was detained in Venezuela for more than three years by prosecutorial authorities, and Space Shipping failed to return the ship by the latest contractual redelivery date of June 22, 2015. When the CV STEALTH was finally released from Venezuela, it was out-of-class and so extensively damaged due to neglect that it was incapable of sailing and in need of extensive repairs. Space Shipping towed the CV STEALTH to Trinidad where Psara took possession on March 24, 2018. She was sold as scrap. As a result of the damage, Psara initiated a London maritime arbitration claim against Space Shipping and Geden for damages equivalent to the repaired market value of the ship ($18, 000, 000.00) and amounts for unpaid charter hire, legal costs, interest, and other costs (an additional $1, 860, 063.80).

         Shortly after the contractual redelivery date but before it commenced arbitration, Psara discovered that Geden Holdings had transferred its entire fleet of vessels to other corporate entities (including the Advantage Defendants). Based on the transfer of the fleet, Psara brought the instant suit in April 2018 against Space Shipping, Geden, and the Advantage Defendants alleging breach of contract, fraudulent transfer and corporate succession theories. In conjunction with its lawsuit, Psara sought and obtained a maritime attachment against the ADVANTAGE ARROW, one of the defendants' vessels found within the Eastern District of Texas. Psara obtained similar relief against the MV ADVANTAGE START in the Eastern District of Louisiana. The Louisiana case was transferred to the Eastern District of Texas under 28 U.S.C. § 1404(a) and consolidated with Psara's case pending there.

         The Advantage Defendants' motions under Supplemental Admiralty Rule E(4)(f) to vacate the respective attachments were rejected, but the vessels were released upon the posting of substitute security.[2] In the case of the ADVANTAGE ARROW, the district court's order stated, "[t]he court will address the 'Motion to Vacate Attachment' at a later time."

         In June 2018, the Advantage Defendants moved for referral to arbitration in London on the basis that Psara's claims all arise from the charter party between Psara and Space Shipping, which contains a valid and enforceable arbitration clause. The Advantage Defendants contended that they should be included in Psara's ongoing arbitration proceedings against Space Shipping because Psara claims that the Advantage Defendants are a successor to Space Shipping and therefore liable for Psara's losses under the charter party. As Psara points out, however, the Advantage Defendants are non-signatories to the charter party and should not normally benefit from its arbitration provision. Al Rushaid v. Nat'l Oilwell Varco, Inc., 814 F.3d 300, 305 (5th Cir. 2016) (describing limited theories of nonsignatory participation in arbitrations).

         The district court granted the motion to refer to arbitration. The court found that the Advantage Defendants invoked the intertwined claims rule because without the underlying charter party and performance guarantee, Psara has no claims against the Advantage Defendants. Moreover, Psara cannot be permitted to sue the Advantage Defendants for contractual claims while insisting they are not entitled to the benefit of the arbitration clause in those underlying agreements. The district court further held that, while the dispute is being arbitrated, the Rule B attachments (for the vessels ARROW and START) remain in effect with posted security for Psara's potential arbitral award pursuant to the district court's jurisdiction under Sections 8 and 207 of the FAA. The district court then "administratively closed" the case, denied pending motions as moot, and retained jurisdiction to enforce any arbitration award.

         Months later, the district court denied Psara's motion to stay the referral to arbitration pending appeal, and this court denied an identical motion. Psara timely appealed.

         DISCUSSION

         A preliminary, and here dispositive, issue is whether the district court's order referring the suit to arbitration and administratively closing the case constitutes an appealable order. "If not, then this Court lacks jurisdiction and the appeal should be dismissed, which would pretermit any consideration of the merits of [the ...


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