Unpublished Disposition, 902 F.2d 39 (9th Cir. 1989)

MEMORANDUM^* 

Appellants Ventilatoren Stork Hengelo B.V. ("Stork") and Verenigde Machinefabrieken Stork N.V. ("Machine") timely appeal the district court's decision that appellee Forsikringsaktieselskabet Hafnia ("Hafnia") is not bound by an arbitration provision in a contract between Stork and a third party. Hafnia seeks attorney's fees for this appeal. We have no jurisdiction and therefore dismiss Stork's appeal and grant Hafnia sanctions.

FACTS AND PROCEEDINGS

Appellant Machine and its wholly owned subsidiary Stork are Dutch corporations. Stork does not do, and has never registered to do, business in California. Stork sold windmill blades to Nordtank A/S, a Danish windmill manufacturer. The contract governing that sale (the "Stork-Nordtank contract") contained an arbitration provision.

Nordtank then sold those windmills to Cannon, a United States developer, for use in California. The contract governing that sale (the "Nordtank-Cannon contract") did not contain an arbitration provision. Cannon was not a signatory to the Stork-Nordtank contract. Cannon does not do, and has never registered to do, business in California. Nordtank and Cannon jointly obtained warranty insurance from appellee Hafnia.

After installation of the windmills, Cannon experienced difficulties with them. Cannon sought recovery from the warranty insurance policy issued by Hafnia. Cannon executed a written assignment to Hafnia of all claims Cannon had against Stork for defective windmill blades.

Hafnia sued Stork in California state court for the defective design and manufacture of the windmill blades. Stork successfully removed to federal court. Stork then moved to compel Hafnia to arbitrate pursuant to the terms of the Stork-Nordtank contract. At the same time, Hafnia moved to remand the action back to state court for lack of subject matter jurisdiction based on 28 U.S.C. § 1447(c) (1982). The district court granted Hafnia's motion on November 22, 1988.

DISCUSSION

We have no jurisdiction to review a district court's remand order pursuant to 28 U.S.C. § 1447(d) if the district court remanded because it lacked subject matter jurisdiction. Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 276-77 (9th Cir. 1984). Likewise, we have no jurisdiction to review a district court's conclusions of law related to its determination that it lacks subject matter jurisdiction. See Hansen v. Blue Cross of California, No. 88-5910, slip op. at 14471-72 (9th Cir. Dec. 18, 1989). However, we have jurisdiction over a district court's conclusions of law that do not relate to its determination of jurisdiction. Pelleport, 741 F.2d at 276.

Stork seeks review of the district court's determination that the Stork-Nordtank arbitration clause does not bind Hafnia, claiming that decision was not related to its determination of matter jurisdiction.¹  We disagree.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention"), 9 U.S.C. § 201 et seq. provides the only ground for subject matter jurisdiction in this case. For the district court to have had subject matter jurisdiction under the terms of the Convention, the instant proceeding must " [relate] to an arbitration agreement or award ... under the Convention." 9 U.S.C. § 205.

Unless the Nordtank-Stork arbitration clause is enforceable by Stork against Hafnia, the proceeding could not have related to an arbitration agreement, and the district court would have had no subject matter jurisdiction. Thus, the question of whether the Nordtank-Stork arbitration clause binds Hafnia can in no way be construed as apart from the question of the district court's subject matter jurisdiction. They are in fact the very same question. Once the district court determined that the Hafnia was not subject to the arbitration clause, the district court could properly have done nothing but remand.

This case thus differs from those in which the substantive issue decided by the district court was unrelated to the issue of subject matter jurisdiction. See, e.g., Clorox v. United States Dist. Court for the N.D. of Cal., 779 F.2d 517, 520 (9th Cir. 1985) (district court's decision that Clorox had waived the right to remove was apart from issue of whether district court had jurisdiction and remand order was therefore reviewable); Pelleport, 741 F.2d at 276-77 (district court's decision that forum selection clause governed dispute was apart from issue of whether the district court had jurisdiction and remand order was therefore reviewable).

Appellants demonstrate no facts in support of their strained assertion that, in reality, the district court: (1) assumed jurisdiction existed; (2) held that Hafnia and Stork are not bound by the arbitration agreement in response to Stork's motion to compel arbitration; and (3) remanded this case to state court for some non-jurisdictional reason, despite the fact that once it determined conclusion (2) above, it had no jurisdiction to do anything but remand. We have no jurisdiction over this appeal.

We have discretion to impose attorney's fees and costs as appellate sanctions for frivolous appeals pursuant to Fed. R. App. P. 38. Kelley v. International Brother of Elec. Workers, 803 F.2d 516, 519 (9th Cir. 1986). An appeal is frivolous where the result is obvious and the arguments of error are wholly without merit. See Gattuso v. Pecorella, 733 F.2d 709, 710 (9th Cir. 1984).

In the instant case, Stork's argument that the district court's finding that Hafnia was not bound by the arbitration agreement was a determination unrelated to the district court's jurisdiction is wholly without merit. Hafnia brought the jurisdictional defect in this case to the attention of Stork's counsel before moving to dismiss the appeal. Even after our opinion was published in Hansen v. Blue Cross of California, 891 F.2d 1384 (9th Cir. 1989) (filed Oct. 2, 1989, amended Dec. 18, 1989) Stork continued to appeal, needlessly requiring the parties and the court to incur time and effort. We therefore award Hafnia its costs and attorney's fees for this appeal. Hafnia will file appropriate documents supporting the award of costs and fees with this court.

APPEAL DISMISSED.