KUHN, J.
Defendant-appellant, International Offshore Services, LLC (IOS) appeals the trial court's judgment granting summary judgment in favor of plaintiff-appellee, Stephen Williams, declaring that he was not prohibited from engaging in certain business operations by the terms of either an employment agreement or an operating agreement entered into by the parties. Also referred to this panel on review are two writ applications. Because we conclude that the trial court lacked subject matter jurisdiction over Williams' claims, we vacate the judgment granting declaratory relief, dismiss 2011 CW 1240 as moot, and grant 2011 CW 1318 to sustain the exception raising the objection of lack of subject matter jurisdiction.
In 2006, Williams founded IOS, a corporation which owns and operates several marine vessels that provide support services to the oil and gas industry. In January 2009, Williams sold the majority interest in IOS to Ferry Holdings Corp. (Ferry), a subsidiary of Platinum Equity LLC. As part of the sale, Williams retained a 20% ownership interest and also entered into an employment agreement to work as the CEO of IOS for two years following the sale (the Employment Agreement), which included a non-compete provision.
After serving his two-year term, Williams resigned as CEO of IOS in January 2011. Following his resignation, Williams purchased four liftboats through his newly formed company, Alliance Liftboats, LLC, for the purpose of providing liftboat services to the oil and gas industry.
On January 17, 2011, IOS and Ferry instituted a claim for arbitration with the American Arbitration Association, asserting that Williams breached the non-compete terms of the Operating Agreement and fiduciary duties he owed to IOS. IOS and Ferry requested that the arbitration panel: (1) enter an award in favor of IOS and Ferry and against Williams enjoining him from violating the Operating Agreement or his fiduciary duties; (2) declare the respective rights and obligations of Williams, IOS, and Ferry under the Operating Agreement; and (3) award damages to IOS and Ferry.
On January 19, 2011, Williams filed a petition for declaratory judgment, naming IOS as defendant. Although the original petition did not include any allegations about the non-compete provision in the
IOS filed a peremptory exception raising the objection of no cause of action and a dilatory exception raising the objection of prematurity, contending that it was entitled to a dismissal of Williams' claims as related to the Operating Agreement because Williams failed to abide by the arbitration agreement as set forth in the Operating Agreement. After a hearing on May 25, 2011, the trial court denied relief in open court, and on June 24, 2011, signed a judgment overruling IOS's exceptions of no cause of action and prematurity.
On July 8, 2011, IOS filed a writ application with this court, bearing number 2011 CW 1240, seeking review of the trial court's June 24, 2011 judgment, denying the exceptions of no cause of action and prematurity with regard to the claims as to the Operating Agreement.
During May 2011, Williams filed a motion for summary judgment, averring that there was no genuine issue of fact regarding whether he was competing against IOS in contravention of the terms of the non-compete clauses in the Employment Agreement and Operating Agreement. Williams requested that the trial court decree that he was not prohibited from engaging in certain specified business activities. Williams also sought a declaration that the non-compete and non-solicitation provisions in both the Employment Agreement and the Operating Agreement were null and unenforceable or, alternatively, did not prevent Williams from engaging in certain specified business.
Before the hearing on Williams' motion for summary judgment, however, IOS passed a corporate resolution stating that it released Williams from all claims arising from the non-compete provision as found in the Employment Agreement. In the corporate resolution, IOS expressly reserved all its rights in connection with the non-compete provision as found in the Operating Agreement.
On May 26, 2011, IOS filed a declinatory exception raising the objection of lack of subject matter jurisdiction, averring that as a result of its corporate resolution, there was no longer a justiciable claim or controversy regarding the Employment Agreement, and, thus, any claim relating to it should be dismissed for lack of subject matter jurisdiction. Because the exception was not filed in compliance with the required time period prior to the scheduled hearing date as mandated by the district court rules, the trial court declined to hear the exception prior to ruling on Williams' motion for summary judgment.
A hearing on Williams' motion for summary judgment was held on June 3, 2011. The trial court concluded that Williams was not prevented or prohibited by either the Employment Agreement or the Operating Agreement from engaging in the liftboat business, engaging in the business of providing oil and gas well plug and abandonment services, or engaging in any other specified business, and on June 21, 2011, signed a judgment granting summary
IOS subsequently filed a writ application, challenging the trial court's overruling of its exception of lack of subject matter jurisdiction. That writ application, like the earlier one, was also referred to the panel to which the related appeal was assigned. See Williams v. Int'l Offshore Services, L.L.C., 2011-1318 (La.App. 1st Cir.8/15/11) (an unpublished writ action). Lastly, IOS filed this appeal challenging the June 21, 2011 judgment, which granted Williams' motion for summary judgment on the merits of his claim for declaratory relief, and the July 12, 2011 overruling of the exception of lack of subject matter jurisdiction.
A court's subject matter jurisdiction is an issue that cannot be waived or conferred by the consent of the parties. The issue of subject matter jurisdiction may be raised at any time, even by the court on its own motion, and at any stage of an action. Joseph v. Ratcliff, 2010-1342 (La.App. 1st Cir.3/25/11), 63 So.3d 220, 224. Appellate courts have the duty to examine subject matter jurisdiction sua sponte, even when the parties do not raise the issue. Motorola, Inc. v. Associated Indent. Corp., 2002-0716 (La.App. 1st Cir.4/30/03), 867 So.2d 715, 717.
Subject matter jurisdiction is the legal power and authority of a court to hear and determine a particular class of actions or proceedings, based upon the object of the demand, the amount in dispute, or the value of the right asserted. La. C.C.P. art. 2. A judgment rendered by a court which has no jurisdiction over the subject matter of the action or proceeding is void. See La. C.C.P. arts. 3 and 925(C).
Both the federal and state arbitration acts indicate the strong legislative policies of both sovereigns favoring arbitration. See 9 U.S.C. § 1 et seq.; La. R.S. 9:4201 et seq.
At oral arguments, the parties verified to this court that Williams' claims under the Operating Agreement were in arbitration. Once arbitration has commenced, the courts are precluded from exercising jurisdiction. Peter Vicari General Contractor, Inc. v. St. Pierre, 02-250 (La.App. 5th Cir.10/16/02), 831 So.2d 296, 299 (citing Woodson Constr. Co., Inc., 459 So.2d at 570-71). Accordingly, sua sponte, we conclude that the trial court did not have subject matter jurisdiction over the claims arising out of the Operating Agreement and, therefore, incorrectly granted summary judgment in favor of Williams on this basis.
In appeal of the grant of summary judgment, as well in its writ application bearing number 2011 CW 1318, IOS challenges the trial court's denial of the exception of lack of subject matter jurisdiction insofar as Williams' claims to relief under the Employment Agreement. IOS urges that by virtue of the corporate resolution
If a case is moot, there is no subject matter on which the judgment of the court can operate. Council of City of New Orleans v. Sewerage and Water Bd. of New Orleans, 2006-1989 (La.4/11/07), 953 So.2d 798, 801. It is well settled that courts will not decide abstract, hypothetical, or moot controversies, or render advisory opinions with respect to controversies. In the Matter of E.W., 2009-1589 (La.App. 1st Cir.5/7/10), 38 So.3d 1033, 1036. Cases submitted for adjudication must be justiciable, ripe for decision, and not brought prematurely. A "justiciable controversy" is one presenting an existing actual and substantial dispute involving the legal relations of parties who have real adverse interests and upon whom the judgment of the court may effectively operate through a decree of conclusive character. Women's Health Clinic v. State, 2002-0016 (La.App. 1st Cir.5/10/02), 825 So.2d 1208, 1210, writ denied, 2002-2002 (La.11/1/02), 828 So.2d 586.
Moreover, even though the requirements of justiciability are satisfied when the suit is initially filed, when the fulfillment of these requirements lapses at some point during the course of the litigation before the moment of final disposition, mootness occurs. In such a case, there may no longer be an actual controversy for the court to address, and any judicial pronouncement on the matter would be an impermissible advisory opinion. Thus, jurisdiction, although once established, may abate if the case becomes moot. In the Matter of E.W., 38 So.3d at 1037.
Because IOS voluntarily waived its rights arising from the non-compete provisions in the Employment Agreement prior to rendition of summary judgment in favor of Williams, and in light of the allegations of Williams' petition, there was no justiciable controversy for the trial court, and consequently this court, to act upon; in other words, with the corporate resolution waiver, there no longer existed a controversy presenting an actual and substantial dispute involving the legal relations of the real adverse interests of the parties relative to the Employment Agreement. See Chauvin v. Wellcheck, Inc., 2005-1571 (La. App. 1st Cir.6/9/06), 938 So.2d 114, 118 (a litigant not asserting a substantial existing legal right is without standing to seek a declaratory judgment). Accordingly, we conclude that the trial court did not have subject matter jurisdiction over the claims arising out of the Employment Agreement and, therefore, incorrectly granted summary judgment in favor of Williams on this basis.
Because the trial court did not have jurisdiction over Williams' claims arising out of either the Operating Agreement (as those claims were in arbitration pursuant to the arbitration provision) or the Employment Agreement (as IOS's corporate resolution waiving any claims it may have had against Williams resulted in no justiciable controversy and, therefore, rendered
WHIPPLE, J., dissents & assigns reasons.
CARTER, C.J., dissents for the reasons assigned by WHIPPLE, J.
WHIPPLE, J, dissenting.
I respectfully dissent from the majority's opinion vacating the June 21, 2011 partial summary judgment and granting IOS's writ application in 2011 CW 1318 and dismissing the writ application in 2011 CW 1240, each of which I address individually below.
In this writ application, IOS challenges the trial court's denial of its exceptions of no cause of action and prematurity, filed in response to Williams's Second Supplemental and Amended Petition, wherein Williams challenged his obligations under the non-compete provision of the
At the hearing on IOS's exceptions of no cause of action and prematurity, the trial court denied the exceptions in open court, concluding that Williams's petition stated a cause of action and was not premature. Specifically, the trial court found that Williams had a cause of action and that "[w]hether or not that is concurrent with the arbitration agreement or not" was "not the issue for the [trial court]."
In the present matter, the parties do not dispute that there is a written arbitration provision in the Operating Agreement. Rather, the issue is whether this specific "non-compete issue" is referable to arbitration. IOS avers this issue is referable to arbitration, relying on the presumption of arbitrability and the language of the arbitration provision. IOS contends the arbitration provision in the Operating Agreement broadly covers "any controversy or claim." Thus, IOS argues, because Williams's supplemental petition for declaratory judgment seeks a declaration that the non-compete clause in the Operating Agreement would not restrict certain activities, this claim is subject to arbitration.
In opposition, Williams avers that public policy and judicial efficiency provide an exception under these particular facts, and that the non-compete issue should remain pending in the district court, ancillary to his original petition. As support, Williams
In sum, LSA-R.S. 23:921(A)(2) clearly provides that every choice of forum and choice of law clause in agreements between
In evaluating these "public policy" arguments, I note that the parties do not cite (nor have I found) a case where an arbitration clause was set aside specifically for being in violation of Louisiana's public policy against non-compete agreements. However, the clear language of LSA-R.S. 9:4201 provides an exception to arbitration clauses for "such grounds as exist at law or in equity for the revocation of any contract." Furthermore, as stated by the United State Supreme Court in M/S Bremen v. Zapata Off-Shore Company, 407 U.S. 1, 15, 92 S.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972), "A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision."
On this basis, Williams counters that the operative language of the non-compete agreements in the Employment Agreement and Operating Agreement are identical and are both governed by Louisiana law.
In particular, I note that LSA-R.S. 9:4201 specifically provides an exception to the application of arbitration clauses for "such grounds as exist at law or in equity," which include judicial efficiency and the prevention of inconsistent decisions. Moreover, given the status of the parties, the nature of their relationship, and the timing and purpose underlying the confection of the subsequent Operating Agreement, I find no error in the trial court's ruling denying these exceptions by the defendant.
Although it is well established that arbitration is favored under state and federal law, IOS's arguments in this writ application raise several concerns. Plaintiffs petition for declaratory relief involves interpretation of a non-competition clause. Virtually the same non-competition clause is found in the Employment Agreement
However, the more compelling argument is that since the claim involves a non-compete clause between an employee and employer, allowing the defendants to transfer the claim to the arbitration panel and forcing plaintiff to be bound thereby would violate LSA-R.S. 23:921(A)(2) and the public policies therein. Although this precept is qualified by In Re Gulf Fleet Holdings, wherein the court held that the public policy considerations of LSA-R.S. 23:921 — unequal bargaining power and loss of livelihood — do not come into play where the employee is the former owner of the company and the employment agreement was part of a multi-million dollar purchase of the company, these considerations are seemingly inapplicable under the particular facts presented herein. Specifically, in this case, the dispute involves two contractual agreements, the employee/owner has specifically agreed and acknowledged in both contracts that there is a reservation of some rights to compete, and the district court is exercising lawful jurisdiction to consider, in a properly filed declaratory judgment action by the employee, the very same provision which would be at issue in the subsequently confected Operating Agreement.
Accordingly, I conclude the trial court did not err in denying IOS's exceptions of no cause of action and prematurity, and hereby deny this application for supervisory writs. Thus, I find no error in the trial court's exercise of jurisdiction and to render declaratory judgment addressing the parties' respective claims and defenses related to the non-compete provisions in both the Operating Agreement and Employment Agreement.
In this writ application, IOS challenges the trial court's denial of IOS's exception of lack of subject matter jurisdiction regarding Williams's claim for declaratory judgment as to his obligations under the
The corporate resolution passed by IOS provides, in pertinent part, as follows:
In denying the exception of lack of subject matter jurisdiction, the trial court stated as follows:
If a case is moot, there is no subject matter on which the judgment of the court can operate. Council of City of New Orleans v. Sewerage and Water Board of New Orleans. 2006-1989 (La.4/11/07), 953 So.2d 798, 801. It is well settled that courts will not decide abstract, hypothetical, or moot controversies, or render advisory opinions with respect to controversies. In the Matter of E.W., 2009-1589 (La.App. 1st Cir.5/7/10), 38 So.3d 1033, 1036. Cases submitted for adjudication must be justiciable, ripe for decision, and not brought prematurely. A "justiciable controversy" is one presenting an existing actual and substantial dispute involving the legal relations of parties who have real adverse interests and upon whom the judgment of the court may effectively operate through a decree of conclusive character. Women's Health Clinic v. State, 2002-0016 (La.App. 1st Cir.5/10/02), 825 So.2d 1208, 1210, writ denied, 2002-2002 (La.11/1/02), 828 So.2d 586.
Moreover, even though the requirements of justiciability are satisfied when the suit is initially filed, when the fulfillment of these requirements lapses at some point during the course of the litigation before the moment of final disposition, mootness occurs. In such a case, there may no longer be an actual controversy for the court to address, and any judicial pronouncement on the matter would be an impermissible advisory opinion. Thus, jurisdiction, although once established, may abate if the case becomes moot. In the Matter of E.W., 38 So.3d at 1037.
However, exceptions to the mootness doctrine have been recognized. Under the voluntary cessation exception, if a defendant voluntarily stops wrongful conduct, then that change alone does not make a case moot unless the defendant shows with assurance that there is no reasonable expectation that the alleged violation will recur. Cat's Meow, Inc. v. City of New Orleans through Department of Finance, 98-0601 (La.10/20/98), 720 So.2d 1186, 1194. Where the defendant has voluntarily ceased the complained-of conduct, a court should consider: (1) whether there is any reasonable expectation that the alleged violation will recur; and/or (2) whether there are unresolved collateral consequences (such as an outstanding claim for compensatory or monetary relief). In the Matter of E.W., 38 So.3d at 1037.
The corporate resolution in the instant case does prevent IOS from asserting
Also, with regard to unresolved collateral consequences, as noted by Williams, the resolution of the extent of his obligations under the non-compete clause is relevant with regard to Williams's fiduciary obligations to IOS assumed pursuant to the Employment Agreement, for which IOS could presumably sue, alleging a violation of Williams's fiduciary duties based on his current business activities. Accordingly,
For these reasons, I would deny IOS's application for supervisory writs of review at IOS's costs, challenging the trial court's July 12, 2011 judgment denying IOS's exception of lack of subject matter jurisdiction.
Turning to the instant appeal, wherein IOS challenges the trial court's June 21, 2011 judgment granting Williams's motion for summary judgment, in the judgment, the trial court declared that Williams is not prevented by
With regard to the portion of the June 21, 2001 partial summary judgment declaring that Williams is not prevented or prohibited by the provisions of the
With regard to IOS's second assignment of error, wherein it contends that the trial court erred in granting summary judgment as to the terms of the non-compete provision of the
Moreover, because IOS has not challenged the
For these reasons, I respectfully dissent.
Zapata Off-Shore Company, 92 S.Ct. at 1916.
In response to this order, the record in this matter was supplemented with a September 22, 2011 Order, signed by the trial court, which states:
The June 21, 2011 judgment, which granted Williams's motion for summary judgment granted him the relief that he prayed for in his motion for summary judgment in that it granted him declaratory relief. The judgment, however, did not grant Williams all of the relief that he prayed for in his original and supplemental petitions in that it did not grant his prayer for all costs and reasonable attorney's fees, and as such, the judgment is not final under LSA-C.C.P. art. 1915(A). Accordingly, the June 21, 2011 judgment is "a partial summary judgment without the proper designation of finality" required by LSC.C.P. art. 1915(B), as set forth in this Court's September 19, 2011 Rule to Show Cause Order. See Joseph v. Ratcliff, 2010-1342 (La. App. 1st Cir.3/25/11), 63 So.2d 220, 224.
However, in considering the trial court's September 22, 2011 order in response to this court's show cause order decrees that the June 21, 2011 judgment "constitutes a full and final judgment as it grants the relief sought by plaintiff against the defendant and as such is immediately appealable," while it does not reference LSA-C.C.P. art. 1915 or 1915(B), I would nonetheless consider the language of the order as constituting the appropriate and proper certification of finality required by Article 1915(B), since it refers to the June 21, 2011 judgment as being a "full and final judgment" and "immediately appealable."
Moreover, based on a de novo review of the propriety of this certification, see R.J. Messinger, Inc. v. Rosenblum, 2004-1664 (La.3/2/05), 894 So.2d 1113, 1122, I find there is no just reason for delaying review of this partial summary judgment in that the issues raised in this appeal are closely aligned with the issues addressed by this court in the related writ applications that were referred to this panel. Accordingly, a review of the June 21, 2011 partial summary judgment at this time would facilitate final resolution of these issues in this case, thereby fostering judicial economy. Moreover, regarding the relationship between the adjudicated and unadjudicated claims, see Messinger, 894 So.2d at 1122, the remaining issues of costs and attorney's fees before the trial court are distinct from the issues presented in the present appeal such that a final determination may be made as to the issues presently before this court.
Accordingly, I would recall the Rule to Show Cause Order and maintain IOS's appeal of the June 21, 2011 partial summary judgment.