APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. F. Dennis Saylor, IV, U.S. District Judge.
J. Patrick Yerby, with whom Brian Keane and The Kaplan/Bond Group were on brief, for appellant.
David S. Smith, with whom Robert P. Snell, Amy Maher Rogers, Law Offices of Steven B. Stein, and Farrell McAleer & Smith LLP were on brief, for appellee.
Before Howard, Chief Judge, Selya and Lynch, Circuit Judges.
LYNCH, Circuit Judge.
Out of this maritime case come useful lessons for those who seek to challenge the validity of arbitration clauses in contracts they have signed.
Plaintiff Rodney Farnsworth, III, entered into a salvage contract with defendant Towboat Nantucket Sound, Inc. (" TNS" ), to obtain help when Farnsworth's boat went aground on rocks one night near the Weepeckett Islands in Buzzards Bay. Farnsworth later tried to rescind the whole contract, claiming that he had signed it under duress, and disputed the sum owed to TNS.
The chronology of events is important. The parties by agreement submitted the dispute to a panel of three arbitrators pursuant to a binding arbitration clause in the salvage contract. After the arbitration proceeding had started, Farnsworth chose to file this lawsuit, seeking a preliminary injunction against the arbitration and a declaration that the salvage contract was unenforceable because Farnsworth had entered into it under duress. His complaint drew no distinction between the obligation to arbitrate and the merits issue of what payment was owed to TNS. The district court denied the motion for injunctive relief and stayed the case pending the outcome of the arbitration. The arbitration panel found in favor of TNS and ordered Farnsworth to pay a salvage award of $60,306.85. The district court confirmed that award over Farnsworth's objection.
Farnsworth appeals, arguing that the district court erred in confirming the arbitration award without first addressing his duress claim as to the arbitration clause. We hold that, because Farnsworth did not challenge the validity of the arbitration clause specifically in his complaint (or indeed at any time before the conclusion of the arbitration proceedings), the district
court correctly found that the duress claim in all its aspects was for the arbitrator to resolve. Essentially, Farnsworth did too little, too late. We affirm.
On the evening of July 28, 2012, Farnsworth was anchoring his boat, the M/Y AURORA, in the Weepecket Island anchorage in Buzzards Bay. The boat's depth sounder malfunctioned and Farnsworth inadvertently allowed the vessel to drift aground. Farnsworth requested a tow over his marine radio, and TNS's vessel the NORTHPOINT responded to his call. Farnsworth also made contact with the Coast Guard, which instructed him that, if he had any problems, he should " make the appropriate hail" and the Coast Guard would assist.
The merits issue in this case turns on whether the contract which ensued was a towage or a salvage contract. The difference between the two is important under maritime law because towage is compensated at a contract rate, whereas a salvor is entitled to an equitable award equal to a portion of the value of the salvaged property. 2 T.J. Schoenbaum, Admiralty and Maritime Law § 16-1 (5th ed. 2014); see also Faneuil Advisors, Inc. v. O/S Sea Hawk, 50 F.3d 88, 92 (1st Cir. 1995) (describing the law of salvage). Salvage service generally " commands a larger award," and a salvage contract creates a preferred maritime lien. Evanow v. M/V Neptune, 163 F.3d 1108, 1114 (9th Cir. 1998).
The parties sharply differ over what happened in the hours after Farnsworth made contact with the NORTHPOINT. Farnsworth's complaint alleges that the NORTHPOINT crew members " attempt[ed] to create a salvage" by taking various actions designed to make the AURORA's situation appear worse than it actually was. The complaint maintains that the " AURORA was undamaged, completely buoyant, and watertight," and needed only a tow, rather than a salvage. The complaint alleges that when Farnsworth resisted TNS's efforts to create a salvage, the NORTHPOINT intentionally pulled the AURORA onto charted rocks, damaging her hull; next ordered Farnsworth to drop anchor in dangerous, unprotected waters; and then sent two large men on board the AURORA to coerce Farnsworth to sign a contract giving TNS the rights to a salvage award for towing the AURORA. The complaint alleges that Farnsworth " ...