BALDOCK, Circuit Judge.
The threshold question presented in this state law diversity action is whether we have appellate jurisdiction over the district court's non-final order denying confirmation
In June 2012, a hailstorm damaged Plaintiff KCOM's motel. Soon a dispute arose between KCOM, the insured, and Defendant Employers Mutual Casualty (EMC), the insurer, over the extent of the damage. In October 2012, following receipt of an inspection report, KCOM submitted a proof of loss of $631,726.87. EMC admitted coverage but not the amount of loss. Dissatisfied, KCOM invoked the insurance contract's appraisal provision:
Aplt's App. at 45.
During the appraisal process, which according to KCOM had gone awry (here the details are unimportant), KCOM sued EMC in Colorado state court seeking damages arising from EMC's allegedly unreasonable delay in failing to pay the full amount due under the policy. Count I of KCOM's complaint alleged EMC's breach of contract, Count II alleged unreasonable delay and denial of benefits, and Count III alleged bad faith breach of an insurance contract. EMC removed the suit to federal district court on the basis of diversity jurisdiction. The district court stayed the matter pending completion of the appraisal process.
In October 2014, the umpire and EMC's appraiser (recall EMC had retained the latter pursuant to the policy's appraisal provision) agreed to an appraisal award of $208,445.57. KCOM objected to the award and refused EMC's tender. When KCOM refused to dismiss its lawsuit, EMC filed a motion to confirm the appraisal award in the district court. In its motion, EMC posited that the appraisal award was subject to the provisions of the Colorado Uniform Arbitration Act (CUAA), and therefore asked the court to confirm the award pursuant to Colo. Rev. Stat. § 13-22-222. KCOM opposed EMC's motion, and in its own motion for partial summary judgment asked the court to hold the CUAA inapplicable to the appraisal process and declare the appraisal award invalid due to procedural improprieties. In the alternative, KCOM moved to vacate the appraisal award pursuant to CUAA § 13-22-223. In an oral ruling delivered in June 2015, the district court summarily denied both parties' motions.
Aplt's App. at 213-14.
A week later EMC filed a notice of appeal from the denial of its motion to confirm the appraisal award. Surprisingly, EMC cited the CUAA as the basis for federal appellate jurisdiction, telling us that "[p]ursuant to C.R.S. § 13-22-228, an order denying confirmation of an award is immediately appealable." EMC told us the same thing in its docketing statement. As a result, the Clerk of this Court, prior to briefing, entered an order directing EMC to "explain[ ] any federal law or rules that would permit the Court to exercise jurisdiction over this attempted appeal." EMC responded that because the appraisal process outlined in the insurance policy sufficiently resembled classic arbitration, the process fell within the purview of the Federal Arbitration Act (FAA). And the FAA, specifically 9 U.S.C. § 16(a)(1)(D), provides for an interlocutory appeal from the denial of a motion to confirm an arbitration award. The Clerk referred the jurisdictional question to this panel.
Apparently having learned little from the Clerk's jurisdictional inquiry, EMC in its opening brief falls back into the error of its old ways and claims CUAA § 13-22-228 provides us with jurisdiction over its interlocutory appeal. EMC's jurisdictional statement makes no reference to the FAA or other federal law. Instead, it reads: "This Court has jurisdiction over this appeal because appraisals pursuant to an insurance policy are arbitration pursuant to the [CUAA]. Consistent with the CUAA, EMC filed a motion to confirm the appraisal award, which was denied. The denial of a motion to confirm award is immediately appealable pursuant to C.R.S. § 13-22-228(1)(c)." Aplt's Br. at 2. Later, EMC reaffirms its view in the argument section of its brief: "The CUAA, rather than the FAA, is the applicable statute to rely on because, from the outset, this has been a diversity action."
Let us begin our critique of EMC's faulty jurisdictional analysis by pointing out the obvious. As an inferior federal court established by Congress pursuant to Article III of the United States Constitution, we exercise limited subject matter jurisdiction. This is axiomatic. Inferior Article III courts "may only hear cases when empowered to do so by the Constitution and by act of Congress."
We may exercise jurisdiction over EMC's present appeal only if federal law empowers us to do so. This was the entire point of the Clerk's inquiry. But apart from telling us the FAA can save the day because it is effectively the same law as the CUAA, EMC's jurisdictional argument is devoid of any substantive analysis. EMC's analysis amounts to little more than the claim that the appraisal process in this case is the same thing as classic arbitration, followed by its claim that the district court's order denying confirmation of the appraisal award is immediately appealable whatever the source of our jurisdiction because federal and state law are interchangeable. We disagree with the latter claim and express no opinion on the former. At this point, EMC is spared a summary dismissal only because we have an independent obligation to examine our own subject matter jurisdiction "even if the defendant has made no efforts — or very poor ones — to convince us."
CUAA § 13-22-222, under which EMC brought its motion to confirm, reads in its entirety:
Colo. Rev. Stat. § 13-22-222 (emphasis added). By comparison, FAA § 9 provides for confirmation of an arbitration award under much narrower circumstances:
9 U.S.C. § 9 (emphasis added).
Had EMC brought its motion to confirm the appraisal award under 9 U.S.C. § 9, and had the district court denied the motion, our appellate jurisdiction under 9 U.S.C. § 16(a)(1)(D) would be crystal clear.
In
Here, EMC most certainly did not explicitly move pursuant to the FAA in the district court. Nor is it unmistakably clear from the four corners of its motion to confirm that EMC moved for relief provided for in the FAA. Quite the opposite is true. As its motion makes abundantly clear, EMC moved for relief only under the CUAA. That the CUAA and the FAA may overlap in some, even many, respects is immaterial. EMC was the master of its motion to confirm, and it simply did not invoke the FAA therein. EMC cannot now morph a motion brought under the CUAA into one brought under the FAA.
Stuck with a motion to confirm arising under Colorado state law, we suppose EMC could make the argument, albeit a novel one, that in enacting FAA § 16(a), Congress intended to authorize an interlocutory appeal from the denial of such motion. Section 16(a) provides in relevant part:
Specifically, EMC might seek to distinguish
What the textual argument we have described initially fails to recognize is that FAA § 16(a)(1)(D) authorizes post-arbitration interlocutory appeals from orders "confirming or denying confirmation of an award." Subsection (E) authorizes the same from orders "modifying, correcting, or vacating an award." Notably, subsections (D) and (E) account for the entirety of possible outcomes under FAA §§ 9, 10 and 11. Subsections (A), (B), and (C) meanwhile address pre-arbitration decisions thwarting the arbitration process entirely. Those subsections do not account for the entirety of outcomes under §§ 3, 4, or 206 of the FAA. Consistent therewith, FAA § 9(b) cites those same provisions in providing that an interlocutory appeal may not be taken from an order —
Only with the addition of FAA § 9(b) are all possible outcomes, those favoring and those disfavoring arbitration under §§ 3, 4 and 206, accounted for.
Perhaps more indicative of a limited Congressional intent underlying FAA § 16 is the fact that such an expansive reading of subsection (a)(1)(D) would permit parties like EMC, on their way to an interlocutory appeal, to circumvent Congress's view expressed in FAA § 9 that to qualify for judicial confirmation, the parties must have previously agreed "that a judgment of the court shall be entered upon the award made pursuant to the arbitration." Similarly, such a reading would allow those same parties to avoid FAA § 9's one-year limitations period where applicable. To be sure, a party may move under state law in cases such as this, just as EMC did, and avoid the entirety of the FAA's substantive provisions, including those of § 9. But if it does so, no interlocutory appeal pursuant to FAA § 16 is available. EMC cannot have its cake and eat it too.
Grasping at straws, EMC belatedly suggests in its reply brief that the collateral order doctrine is a convenient means of bypassing FAA § 9. The doctrine is a practical construction of the final judgment rule designed to "accommodate[ ] a `small class' of rulings, not concluding the litigation, but conclusively resolving `claims of right separable from, and collateral to, rights asserted in the action.'"
EMC states the purpose of its motion to confirm "was so that the parties did not have to litigate the amount of loss (and KCOM's breach of contract claim). In light of the district court's order, EMC may be forced to do so when it contends that the binding appraisal process and award mandate that it is not [required] to do so." Aplt's Reply Br. at 29. Unfortunately for EMC, we have squarely rejected the argument that a desire to avoid trial is alone sufficient to warrant invocation of the collateral order doctrine. "When determining whether an order is `effectively unreviewable' absent interlocutory review, `it is not mere avoidance of a trial, but avoidance of a trial that would imperil a substantial public interest, that counts.'"
So what is the "substantial public interest" or "particular value of high order," that our failure to hear EMC's appeal will jeopardize?
Not so fast. In support of its argument, EMC again cites state law, specifically CUAA § 13-22-214(4)(a), which generally provides an arbitrator is not competent to testify and may not be compelled to produce records in a collateral challenge to an arbitration award. But in diversity actions, "[d]iscovery is a procedural matter which is governed by the Federal Rules of Civil Procedure."
Admittedly, no court to our knowledge, federal or state, has ever endorsed subjecting arbitrators to carte blanche discovery, and for good reason. Access to such unlimited discovery "would make arbitration
For what it's worth, the CUAA expressly endorses such limited discovery by providing an arbitrator can be required to tell his or her side of the story where a movant "makes a prima facie showing" of "[e]vident partiality" or "[m]isconduct" by the arbitrator. Colo. Rev. Stat. §§ 13-22-214(4)(b)(II) & 13-22-223(1)(b). According to KCOM's motion for summary judgment, which encompassed its motion to vacate the appraisal award, EMC throughout the appraisal process had improper ex parte communications with its retained appraiser, who together with the umpire signed the final award. KCOM further asserts the panel improperly refused to postpone the final award pending an independent inspection of the motel roof — an inspection KCOM says was necessary because EMC or its retained appraiser claimed a prior roofing sample was not actually taken from the motel's roof.
Of course, we do not decide the precise contours of discovery as an initial matter in this or any other case. The district court is responsible in the first instance for making such discretionary decisions when objections arise. Rather, the point is simply this: The public interest does not demand that we now review the district court's order denying EMC's motion to confirm based on EMC's misguided notion that arbitrators are shielded from all discovery in suits challenging the arbitration process. Deferring review of the district court's order denying EMC's motion to confirm will not so imperil the interest EMC claims as to justify the cost of permitting an interlocutory appeal.
The Supreme Court's decision in
EMC's appeal is DISMISSED for want of appellate jurisdiction. We decline EMC's invitation to remand to the district court for the limited purpose of permitting EMC to seek certification for an interlocutory
APPEAL DISMISSED; CAUSE REMANDED.