CPR Mgmt., S.A. v. Devon Park Bioventures, L.P.

19 F.4th 236

CPR MANAGEMENT, S.A.,

v.DEVON PARK BIOVENTURES, L.P.; Devon Park Associates, L.P., Appellants in 20-2344 Deutsche Bank A.G., Appellant in 2343

Nos. 20-2343

20-2344

United States Court of Appeals, Third Circuit.

Argued October 14, 2021

Filed: November 22, 2021

K. Tyler O'Connell, Morris James, 500 Delaware Avenue, Suite 1500, Wilmington, DE 19801, Michael E. Gehring [ARGUED], Stephen G. Harvey, Steve Harvey Law, 1880 John F. Kennedy Boulevard, Suite 1715, Philadelphia, PA 19103, Counsel for Plaintiff-Appellee

James M. Yoch, Jr., Young Conaway Stargatt & Taylor, 1000 North King Street, Rodney Square, Wilmington, DE 19801, Quincy M. Crawford, III [ARGUED], Kevin C. Maclay, Nathaniel R. Miller, Todd E. Phillips, Caplin & Drysdale, One Thomas Circle, N.W., Suite 1100, Washington, DC 20005, Counsel for Defendants-Appellees

Forrest R. Hansen, Robert M. Palumbos [ARGUED], Duane Morris, 30 South 17th Street, Philadelphia, PA 19103, David G. Januszewski, Cahill Gordon & Reindel, 32 Old Slip, New York, NY 10005, Counsel for Third Party-Appellant

Before: SHWARTZ, NYGAARD, and FISHER, Circuit Judges.

OPINION

SHWARTZ, Circuit Judge

CPR Management, S.A. ("CPR") and Deutsche Bank A.G. ("Deutsche Bank") both claim entitlement to the proceeds emanating from a $50 million partnership interest (the "Proceeds") in Devon Park Bioventures, L.P. (the "Devon Park Interest"). An arbitrator directed Devon Park Bioventures, L.P. and its general partner, Devon Park Associates, L.P. (collectively, "Devon Park"), to distribute the Proceeds to CPR. Pursuant to the Federal Arbitration Act ("FAA"), CPR seeks to confirm the award, and Devon Park and Deutsche Bank seek to vacate it. In addition, Devon Park, who has no claim to the Proceeds, seeks to interplead Deutsche Bank for a determination as to who is entitled to the Proceeds. Because the District Court properly (1) struck Devon Park's interpleader claim, (2) confirmed the arbitration award, and (3) awarded prejudgment interest, we will affirm.

I

A

Sebastian Holdings, Inc. ("SHI"), owned by Alexander Vik, borrowed funds from Deutsche Bank. App. 740 ¶ 42; App. 741 ¶¶ 46-47; App. 737-38 ¶¶ 20-23. SHI entered a limited partnership agreement with Devon Park (the "LP Agreement"), App. 157, and invested $25 million to acquire the Devon Park Interest, App. 132 ¶ 16 .

Deutsche Bank issued margin calls in connection with its loan to SHI, but SHI claimed that it lacked funds to satisfy the calls. App. 737 ¶ 21. Deutsche Bank then sued SHI in the Commercial Court, Queen's Bench Division of the High Court of Justice in England and Wales for repayment of the loan and received a $235,646,345 judgment, which SHI has not satisfied. App. 737 ¶¶ 17, 22; App. 738 ¶ 28; App. 742 ¶ 61(a) .

SHI, however, twice transferred the Devon Park Interest. First, it allegedly sold the Devon Park Interest to VBI Corporation ("VBI"), a company allegedly controlled by Vik's father ("Vik, Sr."). App. 737-38 ¶ 23; App. 137 ¶ 43. SHI later allegedly assigned (via an Assignment Agreement) the Devon Park Interest to Universal Logistic Matters, S.A. ("ULM"), which later changed its name to CPR (another company allegedly related to Vik, Sr.).¹ App. 762-63 ¶ 132; App. 133 ¶ 17; App. 133 ¶ 20. SHI paid Devon Park millions of dollars for transferring the Devon Park Interest to ULM. App. 765 ¶¶ 148-50.

Devon Park eventually made fund distributions to the limited partners, but it had difficulties transmitting the Proceeds to CPR, App. 134 ¶¶ 22-25; App. 135-36 ¶¶ 32-41; App. 766, ¶ 155 , so it withheld most of them. App. 136 ¶ 41; App. 134 ¶ 24.

B

CPR believed that the failure to distribute the Proceeds violated the LP Agreement, so it initiated an arbitration to compel Devon Park to turn over the Proceeds. App. 769 ¶ 177. Deutsche Bank asked to intervene in the arbitration, but the arbitrator denied the request. App. 770 ¶ 178. Devon Park then answered CPR's arbitration demand and raised two counterclaims, one of which sought a declaration whether the Assignment Agreement is a valid, binding, and enforceable contract. App. 527.

While the arbitration was pending, Deutsche Bank sued CPR, SHI, and Devon Park in Delaware Chancery Court (the "Delaware Action"), and CPR and SHI in New York state court (the "New York Action"), alleging a conspiracy to commit fraud and seeking to unwind SHI's allegedly fraudulent transfer of the Devon Park Interest to CPR. App. 770-71 ¶¶ 179-89. Devon Park moved to stay the arbitration pending resolution of these state actions. App. 274-81. The arbitrator denied Devon Park's motion. App. 139 ¶ 60. In response, Devon Park informed the arbitrator that it would no longer participate in the arbitration. App. 139 ¶ 62; App. 628-31; App. 140 ¶ 69. The arbitrator thereafter held the scheduled final hearing and awarded CPR the Proceeds, plus prejudgment interest compounded quarterly, Supp. App. 209, but stayed Devon Park's obligation to pay CPR if doing so conflicted with any orders in the Delaware Action, App. 140 ¶¶ 66-67; App. 536.²

C

CPR petitioned the Pennsylvania Court of Common Pleas to confirm the arbitration award. App. 141 ¶ 75. Devon Park removed CPR's petition to the United States District Court for the Eastern District of Pennsylvania, App. 46, answered the petition, and attempted to interplead Deutsche Bank pursuant to Federal Rule of Civil Procedure 22. App. 46-49; App. 142 ¶¶ 81-84. Deutsche Bank answered the interpleader complaint and brought its own claims, seeking to set aside the purported transfer of the Devon Park Interest from SHI to CPR, to declare SHI and CPR alter egos, and to find Devon Park, CPR, and SHI liable for fraud and conspiracy. App. 775-81 ¶¶ 208-72.

The District Court struck the interpleader complaint and dismissed all third parties and claims, reasoning that (1) a motion to confirm an arbitration award is a motion, not a pleading; and (2) a pleading is a prerequisite to Rule 22 interpleader; so (3) Devon Park's interpleader action was procedurally improper. App. 1-4. The District Court then granted CPR's petition to confirm the arbitration award because the arbitrator had a basis to (1) refuse postponing the final hearing under 9 U.S.C. § 10(a)(3), as the parties had months to develop their case and had already engaged in substantial discovery; (2) dismiss Devon Park's counterclaim seeking a declaratory judgment concerning the Assignment Agreement's validity under 9 U.S.C. § 10(a)(4), as the arbitrator expressly allowed Devon Park to pursue discovery but Devon Park chose to quit the arbitration and thus failed to present its evidence concerning the counterclaim; and (3) award prejudgment interest, compounded quarterly. CPR Mgmt., S.A. v. Devon Park Bioventures, L.P., 463 F. Supp. 3d 525, 532-39 (E.D. Pa. 2020).

Devon Park and Deutsche Bank appeal.

II

A³

We have jurisdiction over Devon Park's appeal of the interpleader and confirmation orders pursuant to 28 U.S.C. § 1291 and 9 U.S.C. § 16(a). We also have jurisdiction over Deutsche Bank's appeal of the interpleader order.

Generally, we have jurisdiction over only "final decisions of the district courts of the United States[.]" 28 U.S.C. § 1291. "A final order is one that ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ " Gen. Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 311 n.3 (3d Cir. 2001) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945) ). The order striking Devon Park's interpleader did not end this litigation as to all claims and parties. When the District Court entered that order, it still had to address the arbitration dispute between CPR and Devon Park. Thus, the interpleader order was not then a final, appealable order. Cf. Gaines v. Sunray Oil Co., 539 F.2d 1136, 1140 (8th Cir. 1976) (holding that an order dismissing certain interpleader defendants from the action was not a final, appealable order because it "did not dispose of the rights and liabilities of all of the parties to this litigation"); CBS Steel & Forge Co. v. Shultz, 191 F.2d 683, 683 (9th Cir. 1951) (per curiam) (holding that an order dismissing a third-party complaint "was not a final decision, within the meaning of 28 U.S.C.[ ] § 1291, and was not appealable").

CPR wrongly contends that an order striking an interpleader complaint is equivalent to an immediately appealable order denying intervention under Rule 24 of the Federal Rules of Civil Procedure and so Deutsche Bank should have filed its appeal within thirty days of that order. See United States v. Alcan Aluminum, Inc., 25 F.3d 1174, 1179 (3d Cir. 1994). Rule 22 and Rule 24 serve different purposes. On one hand, Rule 22 interpleader allows a person or entity in possession of disputed property in which it has no interest to place the property with a court and then permits parties with an interest in the property to ask a court to resolve who has the right to the property. On the other hand, Rule 24 allows non-parties to ensure their interests in the merits of the case are not "adversely affected by litigation conducted without their participation." Stallworth v. Monsanto Co., 558 F.2d 257, 265 (5th Cir. 1977) ; see also Buckner v. Schaefer, 14 F.3d 593, 1993 WL 542143, at *1 (4th Cir. 1993) (Table) (per curiam) (noting that an important purpose of Rule 24 is the "protection of nonparties from adverse judgments entered in their absence"). When a non-party is denied intervention, it loses its ability to protect its interest in the merits of the litigation, and that ability can only be restored by a successful, immediate appeal. Here, the arbitration focused on whether Devon Park wrongly withheld the Proceeds from a limited partner under the terms of the LP Agreement. Deutsche Bank was not a party to that agreement and thus any ruling would not have resulted in an "adverse judgment" against it. While the award may have an impact on Deutsche Bank's collection efforts, that is not equivalent to an adverse...