Xcoal Energy & Resources v. Acciaierie D'Italia S.P.A.

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
XCOAL ENERGY & RESOURCES, 	)
)
Plaintiff/ 	)
Counter-Claim Defendant, 	)
)
v. 	) 	CIV. ACT. NO.: 1:23-cv-361-TFM-C
)
)
ACCIAIERIE D’ITALIA S.P.A., 	)
)
Defendant/ 	)
Counter-Claim Plaintiff, 	)
)
JAVELIN GLOBAL COMMODITIES, 	)
(UK) LTD., 	)
)
Intervenor/Plaintiff. 	)
REPORT AND RECOMMENDATION
This matter is before the court on the Motion to Dismiss and In The Alternative Motion for
Judgment on the Pleadings (Doc. 119) filed by the Plaintiff/Counter-Claim Defendant, Xcoal
Energy and Resources (“Xcoal”), against Intervenor/Plaintiff, Javelin Global Commodities, (UK)
LTD. (“Javelin”), and the Motion to Stay and Compel Arbitration (Doc. 140) filed by Xcoal against
the Defendant/Counter-Claim Plaintiff, Acciaierie D’Italia S.P.A. (“ADI”). The motions, which
have been fully briefed, have been referred to the undersigned Magistrate Judge for entry of a
report and recommendation pursuant to 28 U.S.C. Section 636(b)(1)(B) and S.D. Ala. Gen. LR.
72(a)(2)(S). 	(See 	also 	Doc. 	147). 	Upon 	consideration 	of 	all 	matters 	presented, 	it 	is
RECOMMENDED, for the reasons stated herein, that the Motion to Dismiss and In The
Alternative Motion for Judgment on the Pleadings be DENIED, and the Motion to Stay and
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Compel Arbitration be GRANTED. Set forth below are the undersigned’s Findings of Facts and
Conclusions of Law.
I. 	Xcoal’s Motion to Dismiss and in the Alternative Motion for Judgment on the
Pleadings
A. Findings of Facts
As security for claims against ADI arising out of the alleged breach of several contracts
that are subject to Swiss arbitration, Xcoal invoked the Federal Arbitration Act (“FAA”), and later
sought, under Rule B of the Supplemental Admiralty Rules pursuant to the Court’s admiralty and
maritime jurisdiction, attachment of a cargo of coal loaded on the MV BULK DESTINY (IMO
No. 9781994)(“Bulk Destiny”). The contracts between Xcoal and ADI, which are the subject of
their dispute, are discussed in detail infra.
Xcoal’s Verified Complaint (Doc. 1) and supporting Verification (Doc. 8) filed with the
Court on September 22, 2023, led the Court to issue the requested Rule B Attachment the same
day. (Doc. 9). The Rule B Attachment called for the seizure of property – specifically, coal –
aboard the Bulk Destiny. However, the cargo of coal that was the subject of the Rule B Attachment
was owned by Javelin, not ADI, at the time of the attachment.
On October 6, 2023, Javelin filed a Verified Complaint in Intervention in this action (the
“Intervening Complaint”) under the Court’s admiralty and maritime jurisdiction, within the
meaning of Rule 9(h) of the Federal Rules of Civil Procedure. (Doc. 50). The Intervening
Complaint alleged wrongful attachment of the cargo loaded on the Bulk Destiny against Xcoal.
(Doc. 50, Count I at ¶¶ 13-27; PageID.3-5). Javelin’s Complaint also sought damages related to
vessel detention, legal fees and costs (Id. at ¶¶ 13; 25; 28- 33). On June 26, 2024, Xcoal answered
Javelin’s Intervening Complaint. (Doc. 94).
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On November 22, 2023, Javelin filed a separate action against Xcoal alleging claims of
wrongful attachment/seizure, intentional interference with a contractual relationship, and tortious
interference with a contractual relationship initiating a new action in this district. (See Doc. 1 filed
in Cause No. 1:23-cv-00444-TFM-C at PageID.4-6). Javelin’s Complaint also sought damages
related to vessel detention, attorney’s fees and costs. (Id. at PageID.9-10). On December 20, 2023,
Xcoal answered the Complaint for Damages. (See Doc. 8 in Cause No. 1:23-cv-00444-TFM-C).
The Court later consolidated both matters into a single action (Cause No. 1:23-cv-00361-TFM-C;
See Memorandum Opinion and Order, Doc. 99).
On October 22, 2024, Xcoal filed its Motion to Dismiss and In The Alternative Motion for
Judgment on the Pleadings against Javelin. (Doc. 119). Xcoal requests that the Court dismiss
and/or enter judgment on the pleadings on Javelin’s claims for intentional interference with a
contract and tortious interference with a contract as alleged in Javelin’s Complaint for Damages
filed in Cause No. 1:23-cv-00444. (Doc.1).
B. Analysis and Conclusions of Law
Xcoal moves to dismiss Javelin’s claims for intentional and tortious interference with a
contract based on the theory that these “common law claims” are not available to Javelin because
they have a much lower evidentiary standard than what is required for an alleged claim of wrongful
attachment in a maritime case, which is bad faith. (Doc. 119, PageID.1067). In the alternative,
Xcoal seeks to have the Court enter judgment on the pleadings on Javelin’s claims for intentional
and tortious interference with a contract. Javelin argues the claims for interference with a contract
are available under federal admiralty law and Alabama state law, and they can be asserted in
addition to the wrongful attachment claim.
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Pursuant to Fed. R. Civ. P. 12(b)(6), a defendant may move to dismiss a complaint on the
basis that the plaintiff has failed to state a claim upon which relief may be granted. See Fed. R.
Civ. P. 12(b)(6). To survive a motion to dismiss, a plaintiff must plead “only enough facts to state
a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007);
see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A Rule 12(b)(6) motion questions the legal
sufficiency of a complaint, and in assessing the merits of the motion, the court must assume that
all factual allegations set forth in the complaint are true. 	Powell v. Lennon, 914 F.2d 1459, 1463
(11th Cir. 1990). Moreover, all factual allegations shall be construed in the light most favorable
to the plaintiff. 	Brower v. County of Inyo, 489 U.S. 593, 598 (1989). When considering a motion
to dismiss, the court limits its consideration to the pleadings and all exhibits attached thereto.
Thaeter v. Palm Beach Cnty. Sheriff's Office, 449 F.3d 1342, 1352 (11th Cir. 2006).
The standard for granting a Rule 12(c) motion for judgment on the pleadings is identical
to that of a Rule 12(b)(6) motion to dismiss. EEOC v. Austal USA, LLC, 389 F. Supp. 3d 1015,
1018 (S.D. Ala. 2019) (citing Thomas v. Nat’l Union Fire Ins. Co., 2019 U.S. Dist. LEXIS 62689,
2019 WL 1573702, at *1 (M.D. Ala. Apr. 11, 2019)). In “determining whether a party is
entitled to judgment on the pleadings, we accept as true all material facts alleged in the non-
moving party’s pleading, and we view those facts in the light most favorable to the non-moving
party.” Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014). “If a comparison of the
averments in the competing pleadings reveals a material dispute of fact, judgment on the pleadings
must be denied.” Id. A judgment on the pleadings is only appropriate “when there are no material
facts in dispute, and judgment may be rendered by considering the substance of the pleadings
and any judicially noticed facts.” Horsley v. Rivera, 292 F.3d 695, 700 (11th Cir. 2002).
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To recover damages for wrongful seizure of a vessel, one must prove bad faith, malice or
gross negligence by the seizing party. Frontera Fruit Co. v. Dowling, 91 F.2d 293, 297 (5th Cir.
1937). According to Xcoal, Javelin is bound by the Frontera bad faith standard and cannot escape
it by alleging tortious interference claims, which are based on simple negligence. (Doc. 199; Doc.
134, PageID.1232). In support of its argument, Xcoal relies on Frontera Fruit Co. v. Dowling, 91
F.2d 293, 297 (5th Cir. 1937), Furness Withy (Chartering) Inc. Panama v. World Energy Sys.
Assoc., Inc., 855 F.2d 410 (11th Cir. 1988), and Industrial Maritime Carriers LLC v. Dantzler, 611
Fed.Appx. 600 (11th Cir. 2015), placing emphasis on the Eleventh Circuit Court’s findings in
Dantzler. In Dantzler, the Eleventh Circuit opined that the tortious interference claim was
“properly subsumed under the wrongful attachment claim” and declined to consider the claim
separate from the wrongful attachment claim.1 Industrial Maritime Carriers LLC v. Dantzler, 611
Fed.Appx. at 604. However, the Court in Dantzler did not address whether a claim for intentional
interference with a contractual relationship is subsumed by a claim for wrongful attachment, and
Xcoal does not discuss this claim with particularity.
Javelin argues that the Frontera bad faith standard does not preclude causes of action that
offer additional remedies, including state law claims, so long as the law applied by the court does
not thwart uniformity of admiralty law. (Doc. 134, PageID.1135). Javelin maintains that its claim
of tortious interference is available as a cause of action under federal maritime law but because
there is no federal statute or maritime rule relating to an action for tortious interference with
contractual relations in a maritime context, the court may apply state law. (Doc.132, PageID.1134-
1 The United States District Court for the Southern District of Florida did not consider the claim
for tortious interference with contract and/or business relationship separately from the wrongful
attachment claim, and this was not disputed by the parties on appeal. Industrial Maritime Carriers
LLC v. Dantzler, 611 Fed.Appx. at 604.
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35) (citing Sangha v. Navig8 Ship Mgmt. Pte. Ltd., No. CV 18-00131-KD-B, 2019 WL 1217327,
at *14 (S.D. Ala. Feb. 27, 2019), report and recommendation adopted sub nom. Sangha v. Navig8
Ship Mgmt. Pte Ltd., No. CV 1: 18-00131-KD-B, 2019 WL 1207944 (S.D. Ala. Mar. 14, 2019)
and Coastal Fuels Mktg., Inc. v. Florida Exp. Ship. Co., Inc., 207 F.3d 1247, 1251 (11th Cir. 2000)).
Ultimately, Javelin’s position is that its claims of tortious and intentional interference with a
contract are not preempted or barred by maritime law and can be plead in addition to the wrongful
attachment claim. In its Reply (Doc. 134), Xcoal avers Javelin’s mixed pleading structure violates
the uniformity of admiralty law, specifically the bad faith standard, because such a pleading
structure allows the application of different state standards to liability and damages stemming from
tortious interference to replace the uniform standard created by Frontera, which has been
consistently applied by courts to wrongful attachment cases. (Doc. 134, PageID.1233-1234). Xcoal
expresses concern with Javelin’s mixed pleading structure, specifically the availability of punitive
damages for interference with a contract under differing state laws, which could discourage parties
from exercising their legal right to seek security via arrest of attachment. (Doc. 134, PageID.1239).
As evidenced in the parties’ respective briefs, the claims of interference with a contract and
wrongful attachment are very much interconnected. And while the claims for tortious and
intentional interference may ultimately be subsumed under the wrongful attachment claim and/or
not available to Javelin in an admiralty case, such a determination at this point in the lawsuit would
be premature. It is notable that the plaintiff in Dantzler appealed the District Court’s entry of
summary judgment for Defendant. Unlike Dantzler, the Court in this case is at a disadvantage, as
the record for consideration on a Motion to Dismiss is limited for a case of this magnitude. Further,
Xcoal has not provided any case law precedent signifying that claims for tortious and/or intentional
interference with a contract should be dismissed early in litigation rather than later when the court
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has the benefit of reviewing evidence based not solely on the pleadings but also any depositions,
interrogatories, and affidavits. If the Court were to dismiss Javelin’s claims at this time based on
the pleadings alone, such a decision could be potentially prejudicial to Javelin under the complex
circumstances of this case. Conversely, the undersigned finds no harm or burden in allowing
Javelin to proceed with these claims pending further orders of the Court.
Based on the foregoing, the Motion to Dismiss and In The Alternative for Judgment on the
Pleadings should be denied.
II. 	Xcoal’s Motion to Stay and Compel Arbitration
A. Findings of Facts
As discussed supra, this lawsuit was commenced by Xcoal’s filing of a Complaint seeking
a writ of attachment under Rule B of the Supplemental Rules for Admiralty or Maritime Claims
and Asset Forfeiture Actions. Xcoal attached a cargo of coal loaded aboard the vessel Bulk Destiny
seeking security for the arbitrations based on ADI’s alleged failure to pay for other shipments of
coal supplied by Xcoal, and associated transportation and related costs. The Complaint specifically
alleged that the action was to obtain security in aid of foreign arbitration pursuant to 9 U.S.C. §8.
(Doc. 1, PageID.1). The Complaint reiterated in paragraph 8 that it was an action to obtain security
in aid of foreign arbitration (Id., PageID.2). Moreover, the Complaint noted that the pertinent
agreements provided for arbitration in Switzerland pursuant to Swiss law. (Id., ¶9).
The agreements identified in the Complaint were respectively entered into by ADI and
Xcoal in 2022 and 2023 and were attached to Mr. Joel Momper’s declaration, which was filed into
the record by Xcoal (Doc. 47-1, PageID.419-528). The contracts consist of two Master Agreements
and five Spot Purchase Agreements.
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Xcoal and ADI entered into a Master Agreement dated February 8, 2022 (Doc. 47-1,
PageID.425-434). Clause 4.2 in the 2022 Master Agreement (Doc. 47-1, PageID.426) incorporated
the dispute resolution and choice of law provisions in Appendix I “General Terms and Conditions,”
which was attached to the Master Agreement. General Terms and Conditions Clauses 10 and 11
called for disputes to be resolved under Swiss law through arbitration in Zurich, Switzerland
pursuant to the rules of the International Chamber of Commerce. (Doc. 47-1, PageID.432).
In 2022, Xcoal and ADI entered into two Spot Purchase Agreements for different grades
of coal which were subject to the 2022 Master Agreement. The 2022 Spot Purchase Agreements
are:
- 	Spot Purchase Agreement dated February 8, 2022 (Doc 47-1, PageID.436-446)
and Amendment No. 1 thereto dated February 8, 2022 (Doc 47-1, PageID.447-
452); and
- 	Spot Purchase Agreement dated February 8, 2022 (Doc 47-1, PageID.454-464)
and Amendment No. 1 thereto dated April 20, 2022 (Doc 47-1, PageID.465-
470).
For 	the 	2023 	contracts, 	Xcoal 	and 	ADI 	followed 	the 	same 	model: 	a 	Master
Agreement with corresponding Spot Purchase Agreements for different grades of coal. The parties
entered into Master Agreement No. MA_ADI/Xcoal_2023 between Xcoal and ADI dated March
14, 2023 (Doc 47-1, PageID.472-482). 	The 2023 Master Agreement Clause 4.2 incorporated
the dispute resolution and choice of law provisions in Appendix I “General Terms and
Conditions,” which was attached to the Master Agreement (Doc 47-1, Page ID.474). 	General
Terms and Conditions Clauses 10 and 11 called for disputes to be resolved under Swiss law
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through arbitration in Zurich, Switzerland pursuant to the rules of the International Chamber
of Commerce. (Doc 47-1, PageID.481).
Xcoal and ADI entered into three Spot Purchase Agreements that were subject to the
March 14, 2023, Master Agreement:
- 	Spot Purchase Agreement No. ADI_Xcoal 1/2023 between ADI and Xcoal
dated March 14, 2023 (Doc 471-1, Page ID.484-495);
- 	Spot Purchase Agreement No. ADI_Xcoal 2/2023 between ADI and Xcoal
dated March 14, 2023 (Doc 47-1, Page ID.497-508); and
- 	Spot Purchase Agreement No. ADI Xcoal 3/2023 between ADI and Xcoal
dated March 14, 2023 (Doc 47-1, Page ID.510-521).
Section 1.1 to Appendix I – General Terms and Conditions to each Master Agreement
defines “Dispute” as follows: “any dispute, controversy or claim arising out of or in connection
with 	the 	Master 	Agreement, 	including 	any 	question 	regarding 	its 	existence, 	validity,
interpretation, breach, termination and non-contractual claims or disputes.” Further, under Section
10, entitled “Settlement of disputes,” sub-part 10.1 provides that:
“In the event of any Dispute between the Parties which cannot be settled by
mutual agreement and/or in an amicable manner within 30 days of its
notification by either Party, such Dispute shall be finally settled by
arbitration in accordance with the rules of International Chamber of
Commerce (hereinafter “ICC”) of arbitration in force on the date when the
dispute is submitted for arbitration to the ICC. The seat of arbitration shall
be Zurich, Switzerland.”
B. Analysis and Conclusions of Law
On November 8, 2024, Xcoal filed its Motion to Stay and Compel Arbitration and
Memorandum in Support of Motion to Stay and Compel Arbitration against ADI. (Doc. 126; Doc.
127). Xcoal requests the Court stay ADI’s Counterclaim and issue an order compelling ADI to
arbitrate the claims in its Counterclaim under the ongoing Swiss arbitration pursuant to the
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arbitration clause under Section 1.1 to Appendix I of the Master Agreements. ADI opposes Xcoal’s
Motion on the bases that Xcoal waived its alleged right to arbitrate ADI’s Counterclaim, and the
wrongful attachment claim is outside the scope of the arbitration clause.
1. 	Legal Standard for Compelling Arbitration
Xcoal seeks to compel arbitration under the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, also known as the New York Convention. “In 1958, the
United Nations Economic and Social Council adopted… the New York Convention. In 1970, the
United States acceded to the treaty, which was subsequently implemented by Chapter 2 of the
Federal Arbitration Act (“FAA”).” Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257, 1262 (11th Cir.
2011). “Congress's purpose and intent, in enacting the Convention Act, was ‘to encourage the
recognition and enforcement of commercial arbitration agreements and international contracts and
to unify the standard by which the agreements to arbitrate are observed and arbitral awards are
enforced in the signatory countries.’” Acosta v. Master Maint. & Const. Inc., 452 F.3d 373, 376
(5th Cir. 2006) (citing Scherk v. Alberto–Culver Co., 417 U.S. 506, 520 n. 15, 94 S.Ct. 2449, 41
L.Ed.2d 270 (1974)). “The Federal Arbitration Act [], 9 U.S.C. § 1, et seq., is the approximate
domestic equivalent of the Convention; it guarantees enforcement of domestic arbitral contracts
and awards, but with slightly different rules of applicability.” McDermott Int'l, Inc. v. Lloyds
Underwriters of London, 944 F.2d 1199, 1208 (5th Cir. 1991). The FAA provisions apply
residually to the Convention and apply only where they do not conflict with the Convention’s
terms. Bautista v. Star Cruises, 396 F.3d 1289, 1297 (11th Cir. 2005); see also 9 U.S.C. § 208.
Chapter One of the FAA provides that written arbitration agreements in any maritime
transaction or contract “shall be valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract.” 9 U.S.C. §2. The FAA requires that
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courts place arbitration clauses on “equal footing with other contracts.” 	Solymar Invs., Ltd. v.
Banco Santander S.A., 672 F.3d 981, 988 (11th Cir. 2012). The language of an arbitration clause
must be analyzed in the context of the entire contract, and the contract interpreted to effectuate the
parties’ intent. Campbell v. Verizon Wireless, LLC, No. CIV.A. 14-0517-WS-N, 2015 WL 416484,
at *3 (S.D. Ala. Jan. 29, 2015).
The United States Supreme Court has emphasized that “questions of arbitrability must be
addressed with a healthy regard for the federal policy favoring arbitration.” Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983). Therefore,
“[i]n construing arbitration agreements under the FAA to give effect to the parties’ intent, courts
must take into account the strong federal policy favoring enforcement of arbitration agreements.”
Campbell, 2015 WL 416484, at *3. Indeed, “as a matter of federal law, any doubts concerning the
scope of arbitral issues should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp.
v. Mercury Constr. Corp., 460 U.S. 1, 24-25. “When interpreting an arbitration agreement, due
regard must be given to the federal policy favoring arbitration, and ambiguities to the scope of the
arbitration clause itself resolved in favor of arbitration.” Campbell, 2015 WL 416484, at *3
(quoting Inetianbor v. CashCall, Inc., 768 F.3d 1346, 1353 (11th Cir. 2014)). The United States
Court of Appeals for the Eleventh Circuit has also emphasized the strong presumption in favor of
arbitration, including with respect to international commercial disputes. Lindo v. NCL (Bahamas),
Ltd., 652 F.3d 1257, 1272 (11th Cir. 2011). However, “this presumption in favor of arbitrability
applies ‘only where a validly formed and enforceable arbitration agreement is ambiguous about
whether it covers the dispute at hand, and where the presumption is not rebutted.’” Campbell, 2015
WL 416484, at *3 (citing Martinez v. Carnival Corp., 744 F.3d 1240, 1246 (11th Cir.2014)).
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2. 	Whether Arbitration is Properly Compelled as to ADI’s Claims Against Xcoal
This case involves international commerce, thus implicating the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention,”
incorporated into the Federal Arbitration Act and found at 9 U.S.C. §201 et seq.; 9 U.S.C. §202).
In determining whether to compel arbitration under the Convention, courts conduct “only
a very limited inquiry.” Psara Energy, Ltd. v. Space Shipping, Ltd., 427 F. Supp. 3d 858, 862 (E.D.
Tex. 2019). “An arbitration agreement falls under the Convention if the agreement ‘arises out of a
legal relationship, whether contractual or not, which is considered as commercial, including a
transaction, contract, or agreement described in Section 2 of this title.’” Id.; see also 9 U.S.C. §
202 (1970). Therefore, the Convention governs the enforcement of an arbitration agreement if (1)
it is in writing, (2) the place of the arbitration is in a country that is a signatory to the Convention,
(3) the dispute arises out of a commercial relationship, and (4) at least one of the parties is not a
citizen of the United States. Psara Energy, Ltd. v. Space Shipping, Ltd., 427 F. Supp. 3d at 862.
“If the arbitration agreement satisfies these four requirements, the court must order arbitration
unless it finds that the arbitration agreement is “null and void, inoperative or incapable of being
performed.” Id. (citing Freudensprung v. Offshore Tech. Servs. Inc., 379 F.3d 327, 339 (5th Cir.
2004) and quoting the New York Convention, art. II(3)).
Here, all four requirements to compel arbitration under the Convention are satisfied. Each
Spot Purchase Agreement at issue was subject to a corresponding Master Agreement. The
applicable Master Agreements and their General Terms and Conditions contain written arbitration
clauses. (Doc.47-1, PageID.425-434 and Doc. 47-1, PageID.472-482). Section 1.1 to Appendix I
– General Terms and Conditions to each Master Agreement defines “Dispute” as “any dispute,
controversy or claim arising out of or in connection with the Master Agreement, including any
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question regarding its existence, validity, interpretation, breach, termination and non-contractual
claims or disputes.” Clause 10 of the General Terms and Conditions in each Master Agreement
provides for arbitration in Switzerland, which is a signatory to the Convention (as is the United
States). (See https://www.newyorkconvention.org/contracting-states/contracting-states; Doc. 47-
1, PageID.432; Doc. 47-1, PageID.481). 	The dispute between Xcoal and ADI arises out of a
commercial legal relationship between Xcoal and ADI, as reflected in the Master Agreements
dealing with the sale and supply of coal. ADI is an Italian entity registered in the Companies
Register of Milan (Italy) with its registered office in Milan, Italy. (Doc. 47-1, PageID.425; Doc.
47-1, PageID.473).
Since ADI challenges Xcoal’s request to compel arbitration of ADI’s claims by asserting
the issues of waiver and scope, the Court will address each of ADI’s arguments in turn.
3. 	Whether Xcoal Waived the Right to Compel Arbitration
“[T]he Convention's ‘null and void’ clause ... limits the bases upon which an
international arbitration agreement may be challenged to standard breach-of-contract defenses.”
Bautista v. Star Cruises, 396 F.3d 1289, 1302 (11th Cir. 2005) (citing DiMercurio v. Sphere
Drake Ins. PLC, 202 F.3d 71, 79 (1st Cir.2000)). “The limited scope of the Convention's null
and void clause ‘must be interpreted to encompass only those situations—such as fraud, mistake,
duress, and waiver—that can be applied neutrally on an international scale.’” Id. Although not
presented as a “null and void” defense, ADI argues waiver albeit limited to its wrongful
attachment claim. According to ADI, under the totality of the circumstances analysis, Xcoal’s
conduct since ADI asserted its wrongful attachment claim has not been consistent with Xcoal’s
right to arbitrate that claim. Having reviewed the facts presented by Xcoal and ADI as well as
the record, the undersigned finds ADI’s waiver argument fails.
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“Despite the strong policy in favor of arbitration, a party may, by its conduct, waive its
right to arbitration.” Sherrard v. Macy's Sys. & Tech. Inc., 724 F. App'x 736, 739 (11th Cir. 2018)
(citing Garcia v. Wachovia Corp., 699 F.3d 1273, 1277 (11th Cir. 2012)). In determining whether
a party has waived its right to arbitration, the Court considers “whether a party has substantially
invoked the litigation machinery prior to demanding arbitration.” Pinnacle Constructors Grp. LLC
v. SSC Tuscaloosa Apartments LLC, No. 23-13397, 2024 WL 3042536, at *2 (11th Cir. June 18,
2024) (citing Gutierrez v. Wells Fargo Bank, NA, 889 F.3d 1230, 1236 (11th Cir. 2018)). All facts
presented must be analyzed by the Court “under the totality of the circumstances” to determine
whether a party “has acted inconsistently with the arbitration right[.]” S & H Contractors, Inc. v.
A.J. Taft Coal Co., 906 F.2d 1507 (11th Cir. 1990), abrogated by Morgan v. Sundance, Inc., 596
U.S. 411, 142 S. Ct. 1708, 212 L. Ed. 2d 753 (2022). 	Until recently, the Eleventh Circuit also
required the party asserting waiver to show that it was prejudiced as the second step in the waiver
analysis. The prejudice requirement for waiver was abrogated by the United States Supreme Court
in Morgan v. Sundance, Inc., 596 U.S. 411 (2022). Prior to Morgan, when determining prejudice,
one factor the court could consider was “the length of delay in demanding arbitration and the
expense incurred by that party from participating in the litigation process.” Sherrard, 724 F. App'x
at 740 (quoting S & H Contractors, Inc. 906 F.2d 1507, 1514.) Considering prejudice is no longer
required to establish waiver, the undersigned does not place significant weight on delay in its
waiver analysis herein.
“[T]he purpose of the waiver doctrine is to prevent litigants from abusing the judicial
process.” Gutierrez, 889 F.3d at 1236. As such, “[t]he key ingredient in the waiver analysis is fair
notice to the opposing party and the District Court of a party’s arbitration rights and its intent to
exercise them.” Id. In Gutierrez, the United States Court of Appeals for the Eleventh Circuit
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reasoned by example that “if the court knows a party has potential arbitration rights that could
throw the case out of court, it can limit the scope of early discovery with this possibility in view,
in order to avoid significant expenditures if it turns out that the arbitration provision governs.” Id.
Further, fair notice at a relatively early stage of litigation is a primary factor in considering whether
a party has acted consistently with its arbitration rights. Id. at 1237.
In support of its waiver argument, ADI claims the following facts and circumstances
establish Xcoal evinced a clear intent to litigate ADI’s wrongful attachment claim, thus waiving
its right to arbitrate said claim: (1) Xcoal’s awareness of the Arbitration Clause predates this
proceeding; (2) Xcoal did not assert or preserve the defense of arbitration and award in its initial
Answer or First Amended Answer; (3) The Court and ADI noted that the wrongful attachment
claim would be litigated; (4) Xcoal asked the Court to consolidate ADI’s wrongful attachment
claim with Javelin’s non-arbitrable claim; and (5) Xcoal initiated discovery on ADI’s wrongful
attachment claim.
Prior to Xcoal filing its Complaint, Xcoal commenced two arbitrations against ADI, which
were later consolidated into one arbitration. (Doc. 47, PageID.409). Xcoal filed its Complaint with
the Court on September 22, 2023. (Doc. 1). The Complaint specifically alleged that the action was
to obtain security in aid of foreign arbitration pursuant to 9 U.S.C. §8. (Doc. 1, PageID.1). The
Complaint also stated that “Xcoal and ADI are parties to a series of five contracts that are in and/or
will be submitted to arbitration[.]” (Doc. 1, PageID.2). Xcoal claimed it anticipated commencing
arbitrations under the remaining three contracts. Id. Xcoal was well within its right to initiate this
action to obtain security in aid of foreign arbitration after commencing arbitration. Paramount
Carriers Corp. v. Cook Industries, Inc., 465 F.Supp. 599 (1979). And, Xcoal’s Complaint provided
notice of the pending arbitration and its intent to file additional claims therein.
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During the week following the filing of its Complaint, Xcoal nominated its arbitrator, (Doc.
47, PageID.409), and ADI filed its Answer and Counterclaim to Xcoal’s Requests for Arbitration.2
ADI’s Answer informed the arbitration tribunal of the attachment of cargo aboard the Bulk Destiny,
alleged that the attachment caused ADI damages and that Xcoal must be held liable for those
damages. ADI’s Counterclaim stated that it was “assessing the losses and damages from Xcoal’s
conduct,” including the alleged wrongful attachment of the Bulk Destiny and reserved the right to
supplement and amend its Counterclaim. Based alone on the language of its Counterclaim, which
was filed with the arbitration tribunal shortly after the attachment (and filing of Xcoal’s
Complaint), it is hard to imagine ADI did not entertain the possibility that either party might
attempt to include any future claims related to the attachment in the Swiss arbitration.
On October 19, 2023, following entry of an order vacating the maritime attachment and
arrest by Xcoal, ADI filed its Counterclaim in this case (Civil Action Number 1:23-cv-361)
asserting a claim for wrongful attachment. (Doc. 71). Xcoal filed an initial answer to ADI’s
Counterclaim, which it later amended twice. Xcoal did not assert an arbitration and award defense
in its initial Answer and First Amended Answer to ADI’s Counterclaim but included that defense
in its Second Amended Answer filed on October 9, 2024.
Xcoal’s failure to assert the affirmative defense of arbitration and award in its initial
Answer or First Amended Answer to ADI’s Counterclaim, alone, does not constitute a waiver of
its right to arbitrate, and the Court is not convinced this action (or inaction) by Xcoal helps to prove
any intent by Xcoal to litigate ADI’s claims rather than arbitrate. See Health Care Auth. for Baptist
Health v. Dickson, 330 So. 3d 805 (Ala. 2021) (finding that Plaintiff’s failure to include the defense
2 ADI’s Answer and Counterclaim submitted to the ICC Tribunal is subject to the parties’
Confidentiality Order, and a true and exact copy of the pleading was filed under seal with this
District Court.
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of arbitration in its answer, alone, did not compel the conclusion that Plaintiff waived its right to
compel arbitration). A review of the record indicates that Xcoal’s participation in the lawsuit,
specifically 	regarding 	ADI’s 	claims, 	has 	been 	minimal. 	Following 	the 	filing 	of 	ADI’s
Counterclaim and Xcoal’s initial answer to same, this case sat mostly dormant until May 2024
when Judge Terry F. Moorer adopted the undersigned’s Report and Recommendation vacating the
arrest of the Bulk Destiny. The undersigned does not consider Xcoal’s participation in the Rule
26(f) planning meeting, its contribution to the Rule 26(f) report, its filing of an answer to Javelin’s
Intervening Complaint, or its request for a protective order, which were all filed after May 2024,
to have “substantially invoked the litigation machinery.” Pinnacle Constructors Grp. LLC v. SSC
Tuscaloosa Apartments LLC, 2024 WL 3042536, at *2. See also Sherrard, 724 F. App'x 736, 740.
Furthermore, discovery related to ADI’s claims has also been minor, as depositions have not been
scheduled or taken, and written discovery has not yet been completed. (Doc. 146, PageID.1569-
1570).
Any request by Xcoal for the Court to consolidate Javelin’s lawsuit (Civil Action Number
1:23-cv-444) with this action (Civil Action Number 1:23-cv-361) does not bear any significance
on Xcoal’s intentions regarding litigation of the wrongful attachment claim versus arbitration. (see
Doc. 88, PageID.768). The consolidation of the two cases was simply procedural. The Court also
does not find its reservation of certain issues and claims in various orders (Doc. 51; Doc. 63; Doc.
84), as requiring the parties to litigate ADI’s claims rather than arbitrate.
The facts show that ADI and the Court had fair notice of Xcoal’s right and intent to arbitrate
ADI’s wrongful attachment claim, and that under the totality of the circumstances analysis, Xcoal
acted consistently with its right to arbitrate. Thus, the undersigned finds that Xcoal has not waived
its right to arbitrate ADI’s claims.
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4. 	Whether the Arbitration Clause Covers the Dispute
ADI next challenges Xcoal’s request for arbitration based on scope, arguing that even if
the Court finds Xcoal did not waive its right to arbitrate the wrongful attachment claim, the claim
is outside the scope of the arbitration clause. ADI contends the wrongful attachment claim is a tort
claim that does not arise out of or in connection with the Master Agreement. Expanding on its
argument, ADI explains the Master Agreement is limited in scope, governing only business
transactions between ADI and Xcoal, not the right of attachment by Xcoal or Xcoal’s conduct in
seeking attachment. Thus, according to ADI, the wrongful attachment claim is not connected to
business transactions between ADI and Xcoal governed by the Master Agreements. The
undersigned finds ADI’s reasoning misplaced under these circumstances.
The FAA places arbitration agreements on “equal footing with other contracts,” and
therefore, such agreements must be interpreted by “reading the words of the contract in the context
of the entire contract and construing the contract to effectuate the parties’ intent.” Campbell v.
Verizon Wireless, LLC, No. CIV.A. 14-0517-WS-N, 2015 WL 416484, at *3 (S.D. Ala. Jan. 29,
2015). When considering the parties’ intent, the court must also keep in mind the statutory
presumption in favor of arbitration. 	However, “this presumption … is applied ‘only where a
validly formed and enforceable arbitration agreement is ambiguous about whether it covers the
dispute at hand, and where the presumption is not rebutted.’” Id.
In this case, neither party disputes the validity and general enforceability of the arbitration
agreement. Although the language is ambiguous concerning the wrongful attachment claim, there
is no question the language on its face is broad, inviting a liberal interpretation. The inclusive
clause of examples also suggests the parties intended the agreement to cover various types of
disputes and/or claims.
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The Master Agreement evidences that the parties agreed to arbitrate “any 	dispute,
controversy or claim arising out of or in connection with the Master Agreement, including any
question regarding its existence, validity, interpretation, breach, termination and non-contractual
claims or disputes.” ADI interprets this language narrowly. However, the terms “arising out of”
and “in connection with,” have been interpreted as broad by other courts, including the United
States Court of Appeals for the Eleventh Circuit. See, e.g., Ivax Corp. v. B. Braun of America, Inc.,
286 F.3d 1309, 1320 n.23 (11th Cir. 2002) (disagreeing, as dicta, with Ivax’s characterization of a
clause requiring arbitration of “any dispute arising out of or relating to [the contract at issue]” as
“narrow”); Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 76 (2nd Cir. 1998) (labelling a clause
that required arbitration of “[a]ny dispute, controversy or claim arising under or in connection with
[Oldroyd's employment agreement]” as “the prototypical broad arbitration provision”); Campbell,
2015 WL 416484, at *3 (describing the language “any controversy or claim arising out of or
relating to this agreement” and “any dispute that results from this agreement or from the Services
you receive from us” as “broad language”); and Elkjer v. Scheef & Stone, L.L.P., 8 F. Supp. 3d
845, 855 (N.D. Tex. 2014) (distinguishing broad arbitration clauses that require arbitration of “any
dispute that arises out of or relates to ‘the agreement, or disputes that are ‘in connection with’ the
agreement from narrow clauses that “use the phrase ‘arising out of’ or ‘arising under’ the
agreement”).
Upon further analysis, “‘[a]rising out of’ requires the existence of some direct relationship
between the dispute and the performance of duties specified by the contract.” Doe v. Princess
Cruise Lines, Ltd., 657 F.3d 1204, 1218 (11th Cir. 2011). “‘Connected with’ also connotes the
necessity of some direct connection[.]” Id. at 1219. Again, ADI argues the tort claim of wrongful
attachment does not arise out of or in connection with the Master Agreement and is therefore
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outside the scope of the arbitration clause. (Doc. 141, PageID.1482). The undersigned disagrees.
Xcoal sought attachment of coal aboard the Bulk Destiny as security for arbitrations based on
ADI’s alleged breach of certain Spot Purchase Agreements governed by the two Master
Agreements. Shortly after the Court vacated the attachment and arrest, ADI filed its claim for
wrongful attachment. ADI references the contracts between Xcoal and ADI in its Counterclaim,
specifically regarding its allegation that Xcoal improperly invoked the rules of maritime law in
Xcoal’s Complaint for attachment. (Doc. 71, PageID.711, ¶ 12). The facts indicate that ADI’s tort
claim has a “sufficient nexus” to the Master Agreements. Campbell, 2015 WL 416484, at *6.
“[W]here the parties agree that an arbitration clause exists but disagree as to whether their dispute
lies within its scope, arbitration should be compelled ‘unless it may be said with positive assurance
that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.’”
Campbell, 2015 WL 416484, at *6. While the arbitration clause in the Master Agreement does
not specify wrongful attachment as a type of claim subject to arbitration, it does not exclude it
either. In fact, the clause includes “non-contractual claims or disputes” as a type of claim the parties
agreed to arbitrate. Under the FAA, “parties must clearly express their intent to exclude categories
of claims from their arbitration agreement.” Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309,
1320 (11th Cir. 2002). See also Campbell, 2015 WL 416484, at *5 (quoting Weiner v. Tootsie Roll
Industries, Inc., 412 Fed.Appx. 224, 228 (11th Cir. Feb.2, 2011). Here, the parties’ arbitration
clause contains no restrictive language excluding the wrongful attachment claim or any other tort
claims, and “tort claims…are not automatically excluded from a contractual arbitration clause.”
Gregory v. Electro-Mechanical Corp., 83 F.3d 382, 384 (11th Cir.1996) Considering the federal
policy favoring arbitration when doubt exists regarding scope, and considering the broad
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arbitration clause here, the undersigned finds the arbitration clause covers the wrongful attachment
claim and should be arbitrated pursuant to the terms of the Master Agreements.
5. 	Whether ADI’s Counterclaim Should be Stayed Pending Arbitration
Xcoal requests that ADI’s counterclaim be stayed in this Court pending arbitration in
Switzerland. Pursuant to 9 U.S.C. § 3, the Court “shall upon application of one of the parties stay
the trial of the action until such arbitration has been had in accordance with the terms of the
agreement[.]” In the instant case, there are both arbitrable and non-arbitrable claims pending, as
there is no arbitration agreement between Xcoal and Javelin. However, the law is clear that the
Court has discretion about whether to stay non-arbitrable claims. Campbell, 2015 WL 416484, at
*9 (quoting Klay v. All Defendants, 389 F.3d 1191, 1204 (11th Cir. 2004)). Under these
circumstances, it is “feasible to proceed with the litigation” of the non-arbitrable claims while
ADI’s claims are arbitrated. See Campbell, 2015 WL 416484, at *9 (quoting Klay, 389 F.3d at
1204). Neither party requests a stay of Javelin’s claims, and the Court finds no reason to stay the
entire litigation. 	Therefore, the undersigned finds ADI’s Counterclaim alone should be stayed
pending arbitration.
III. 	Conclusion
For the foregoing reasons, it is recommended that the Motion to Dismiss and In the
Alternative Motion for Judgment on the Pleadings (Doc. 119) be DENIED, and the Motion to Stay
and Compel Arbitration (Doc. 126) be GRANTED.
Notice of Right to File Objections
A copy of this report and recommendation shall be served on all parties in the manner
provided by law. Any party who objects to this recommendation or anything in it must, within
fourteen (14) days of the date of service of this document, file specific written objections with the
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Clerk of this Court. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); S.D. Ala. GenLR 72(c). The
parties should note that under Eleventh Circuit Rule 3-1, “[a] party failing to object to a magistrate
judge’s findings or recommendations contained in a report and recommendation in accordance
with the provisions of 28 U.S.C. § 636(b)(1) waives the right to challenge on appeal the district
court’s order based on unobjected-to factual and legal conclusions if the party was informed of the
time period for objecting and the consequences on appeal for failing to object. In the absence of a
proper objection, however, the court may review on appeal for plain error, if necessary, “in the
interest of justice.” 11th Cir. R. 3-1. In order to be specific, an objection must identify the specific
finding or recommendation to which objection is made, state the basis for the objection, and
specify the place in the Magistrate Judge’s report and recommendation where the disputed
determination is found. An objection that merely incorporates by reference or refers to the briefing
before the Magistrate Judge is not specific.
DONE this the 7th day of February, 2025.
/s/WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE
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