Characterizing the lawsuit as an "impermissible collateral attack" on an arbitration award, a Louisiana federal district court has dismissed a court action filed by a disappointed party against a subsidiary of the company that prevailed in arbitration.

In Reliable Onshore Services Co., L.L.C. v. Tanner Marine Co., No. Civ. A. 08-3500, 2008 WL 3876416 (E.D. La. Aug. 20, 2008), Reliable and Tanner agreed to resolve a commercial dispute through arbitration. The arbitration panel issued an award resolving all disputes between Reliable, Tanner, and their subsidiary companies.

Later, Reliable filed suit against Tanner and one of its subsidiaries, TMC, in a Louisiana state court for breach of contract and unjust enrichment relating to the agreement which was the subject of the parties’ prior arbitration proceeding. Tanner removed the lawsuit to federal court. Reliable filed a motion to remand to state court, alleging that TMC, like Reliable, was a Louisiana corporation and defeated the complete diversity requirement in federal court.

Tanner alleged that TMC was improperly joined for the purposes of defeating diversity jurisdiction. Reliable argued that it had distinct claims against TMC as a separate entity. Furthermore, Reliable contended that the arbitration proceeding did not resolve its claims against TMC because TMC was not a party before the panel and the arbitrators exceeded their authority in resolving Reliable’s claims against TMC.

The Court denied Reliable’s motion to remand and dismissed its claims against Tanner and TMC. It found Reliable’s actions "constitute an impermissible collateral attack on the arbitration panel’s award" and found that Reliable "fail[ed] to state a cause of action for which relief may be granted." Therefore, the Court refused to remand, retained jurisdiction, and dismissed Reliable’s claims.

However, the Court did suggest that Reliable could still sustain a motion to vacate, amend, or correct the arbitration award if the panel did in fact exceed its powers, instead of attacking the award through separate litigation.