Lack of Consideration argument with respect to arbitration agreement

The mutual surrender of the right to trial by jury that is necessarily part of an agreement to arbitrate disputes suffices as consideration under contract law.  

Regarding any lack-of-consideration argument, it is well-settled in Texas that "[a] mutual agreement to arbitrate claims provides sufficient consideration for an arbitration agreement." Sun Fab Indus. Contracting Inc. v. Lujan, 361 S.W.3d 147, 152 (Tex. App.-El Paso 2011, no pet.) (citing In re U.S. Home Corp., 236 S.W.3d 761, 764 (Tex. 2007) (orig. proceeding) (per curiam)); see In re Tenet Healthcare, Ltd., 84 S.W.3d 760, 767 (Tex. App.-Houston [1st Dist.] 2002, orig. proceeding) (holding arbitration agreement was supported by consideration where "the parties' agreement created mutual promises by both to forego their right to a jury trial"); In re Alamo Lumber Co., 23 S.W.3d 577, 579-80 (Tex. App.-San Antonio 2000, orig. proceeding) ("Since the parties surrendered their rights to trial by jury, these mutual promises supply valid consideration.").

SOURCE: CORPUS CHRISTI COURT OF APPEALS - Nos. 13-12-00564-CV AND 13-12-00620-C  - 6/27/2013  

Effect of interlocutory appeal on case pending the trial court

Can you stop the trial court from taking any further action in the case by filing an interlocutory appeal to challenge the denial of a motion to compel arbitration?  

The appeal does not stop the trial court in its tracks. Abatement may be sought, but is not automatic, as explained by Justice Karen Angelini of the San Antonio Court of Appeals in an August 15, 2013 order.  

4th Court of Appeals
in San Antonio 

ORDER 

Appellants seek to appeal from an interlocutory order denying a motion to compel arbitration. See TEX. CIV. PRAC. & REM. CODE ANN. 51.016 (West Supp. 2012) (providing that in a matter subject to the Federal Arbitration Act, a person may take an appeal from an interlocutory order under the same circumstances that an appeal from a federal court's order would be permitted). On August 6, 2013, appellants filed a motion to stay all trial court proceedings, including discovery and motion practice, until this appeal is resolved. On August 13, 2013, appellees filed a response to appellants' motion to stay all trial court proceedings. This response also contains a request that this appeal be dismissed for lack of jurisdiction.

While an appeal from an interlocutory order is pending, the trial court retains jurisdiction over the case and, unless prohibited by statute, may make further orders. TEX. R. APP. P. 29.5. If permitted by law, the trial court may even proceed with a trial on the merits. Id. However, the trial court must not make an order that interferes with or impairs the jurisdiction of the appellate court, or the effectiveness of any relief sought or that may be granted on appeal. Id.

In their notice of appeal, appellants claim they are entitled to an appeal of the trial court's interlocutory order based on section 51.016 of the Texas Civil Practice and Remedies Code. This statute, however, does not expressly require a stay of the trial court proceedings during the pendency of an appeal from an interlocutory order. See TEX. CIV. PRAC. & REM. CODE ANN. 51.016. Moreover, nothing indicates the appellants asked the trial court to stay its proceedings before asking this court to stay the trial court's proceedings. See id.; see also TEX. R. APP. P. 29.2 (providing that the trial court may permit an order granting interlocutory relief to be superseded and, if the trial court refuses, the appellate court may review the decision for an abuse of discretion).

Appellants' motion to stay all trial court proceedings is therefore DENIED. It is FURTHER ORDERED that appellees' request to dismiss this appeal for lack of jurisdiction is CARRIED WITH THIS APPEAL.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said court on this 15th day of August, 2013.

SOURCE:  SAN ANTONIO COURT OF APPEALS - Order in Cause No. 04-13-00525-CV issued 2013-08-15 

Exceptions to deadline for appealing denial of motion to compel arbitration - Don't count on them

The trial court's denial of a motion to compel arbitration can be appealed immediately, but the right to appeal expires faster than is the case for an appeal from a final judgment because such appeals are accelerated interlocutory appeals. There may be exceptions, but benefiting from them can get pretty tricky, as the following excerpt from the Dallas Court of Appeals in Pilot Travel Centers, LLC v. McCray illustrates. The lesson: Don't take any chances. Appeal within 20 days, or better still, less than 20 days.  

The clock keeps ticking 

Section 51.016 of the civil practice and remedies code provides that in a matter subject to the Federal Arbitration Act (FAA), a party may appeal from an interlocutory order of a district court "under the same circumstances that an appeal from a federal district court's order . . . would be permitted by 9 U.S.C. Section 16. TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2012); see CMH Homes v. Perez, 340 S.W.3d 444, 448-49 (Tex. 2011) (explaining that section 51.016 of the civil practice and remedies code provides for interlocutory appeals in FAA cases so long as "it would be permitted under the same circumstances in federal court under [9 U.S.C.] section 16"). Section 16 of the FAA provides an appeal may be taken from an order "denying an application under section 206 of this title to compel arbitration." 9 U.S.C.A. § 16(a)(1)(C) (West 2009); Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc., 347 S.W.3d 897, 900 (Tex. App.-Dallas 2011, pet. denied); Texas La Fiesta Auto Sales, LLC v. Belk, 349 S.W.3d 872, 877 (Tex. App.-Houston [14th Dist.] 2011, no pet.).

An appeal from an interlocutory order denying a motion to compel arbitration is an accelerated appeal. See TEX. R. APP. P. 28.1 ("Appeals from interlocutory orders (when allowed by statute) . . . are accelerated appeals."). In an accelerated appeal, the notice of appeal must be filed within twenty days after the judgment or order is signed. TEX. R. APP. P. 26.1(b); see also Iron Mountain Bison Ranch, Inc. v. Easley Trailer Mfg., Inc., 964 S.W.2d 762, 763 (Tex. App.-Amarillo 1998, no pet.) (interlocutory appeal is perfected by filing notice of appeal with trial court within twenty days after judgment or order is signed).

The record contains a November 12, 2012 Order denying Pilot Travel's motion to compel arbitration. The notice of accelerated appeal of the November 12, 2012 Order denying Pilot Travel's motion to compel arbitration had to be filed within twenty days after the date the order was signed. Because the twentieth day after the November 12, 2012 Order fell on Sunday, December 2, 2012, Pilot Travel's deadline for perfecting the appeal from that order fell on the following day, Monday, December 3, 2012. See TEX. R. APP. P. 4.1(a).[3] Pilot Travel filed its notice of appeal on December 28, 2012, beyond the twenty-day deadline for perfecting appeal of the interlocutory November 12, 2012 Order.

In an accelerated appeal, absent a rule of civil procedure 26.3 motion, the deadline for filing a notice of appeal is strictly set at twenty days after the appealable interlocutory order is signed. See In re K.A.F., 160 S.W.3d 923, 927 (Tex. 2005). However, if applicable, rule of civil procedure 306a may operate to extend the deadline for filing a notice of appeal of an interlocutory order. See TEX. R. CIV. P. 306a; see also John v. Marshall Health Servs., Inc., 58 S.W.3d 738, 740 (Tex. 2001). If a party affected by an appealable order has not, within twenty days after the order was signed, either received notice required by rule of civil procedure 306a(3) or acquired actual knowledge of the signing, then any period that, under the rules of appellate procedure, runs from the signing of the order will begin on the earlier of the date when the party receives notice or acquires actual knowledge of the signed order; however, no such period may begin to run more than ninety days after the judgment or order was signed. TEX. R. APP. P. 4.2(a)(1); see also TEX. R. CIV. P. 306a(4).

However, rule of civil procedure 306a(4) is not self-executing. Subsection (5) of rule of civil procedure 306a provides a procedure that enables the trial court to change the date the appellate timetable begins to run from the actual date of the interlocutory order to the date on which the party received the clerk's notice or acquired actual knowledge that the trial court signed the order, whichever occurs first, as long as that date is not more than 90 days after the trial court signed the interlocutory order. TEX. R. CIV. P. 306a(5). "The party adversely affected is required to prove in the trial court, on sworn motion and notice, the date on which the party or his attorney first either received a notice of the judgment or acquired actual knowledge of the signing and that this date was more than twenty days after the judgment was signed." Id.; see Hone v. Hanafin, 105 S.W.3d 15, 18 (Tex. App.-Dallas 2002) (party must obtain order from trial court that reflects date the party or party's attorney first either received notice or acquired actual knowledge that the order was signed), rev'd on other grounds, 104 S.W.3d 884 (Tex. 2003) (per curiam). A parallel provision of the rules of appellate procedure affords additional time for filing documents related to the appeal under the same time parameters and in accordance with the procedures set out in rule of civil procedure 306a(5). TEX. R. APP. P. 4.2(b); see also TEX. R. CIV. P. 306a(5). After conducting the hearing contemplated by rule of civil procedure 306a(5), the trial court "must sign a written order that finds the date when the party or the party's attorney first either received notice or acquired actual knowledge that the judgment or order was signed." TEX. R. APP. P. at 4.2(c); Moore Landrey, L.L.P. v. Hirsch & Westheimer, P.C., 126 S.W.3d 536, 540 (Tex. App.-Houston [1st Dist.] 2003, no pet.). The requirements of rule 306a(5) are jurisdictional. Mem'l Hosp. of Galveston Cnty. v. Gillis, 741 S.W.2d 364, 365 (Tex. 1987) (per curiam); Nedd-Johnson v. Wells Fargo Bank, N.A., 338 S.W.3d 612, 613 (Tex. App.-Dallas 2010, no pet.).

Here, Pilot Travel asserted reliance on rule of civil procedure 306a in its objection and verified motion to vacate the January 16, 2013 Order. The sworn 306a motion served the purpose of establishing a prima facie case of lack of timely notice of the November 12, 2012 Order. See TEX. R. CIV. P. 306a(5). For purposes of appellate jurisdiction, rule of appellate procedure 4.2(c) requires that the trial court sign a written order, pursuant to rule of civil procedure 306a, that finds the date when Pilot Travel or Pilot Travel's attorney first either received notice or acquired actual knowledge that the November 12, 2012 Order denied Pilot Travel's motion to compel arbitration. See TEX. R. APP. P. at 4.2(c); see also Nedd-Johnson, 338 S.W.3d at 613; see also Gillis, 741 S.W.2d at 366 ("Rule 306a plainly requires that this proof be made in the trial court, not the court of appeals."). Without a finding of the date Pilot Travel or its attorney first received notice or actual knowledge of the November 12, 2012 Order, there can be no extension of the appellate timetable for Pilot Travel's notice of appeal of the denial of its motion to compel arbitration. See TEX. R. APP. P. 4.2(c); see also Nedd-Johnson, 338 S.W.3d at 613.

Pilot Travel cites In re C.L.C., No. 12-02-00348-CV, 2003 WL 252139 (Tex. App.-Tyler Feb. 5, 2003, no pet.) (mem. op. on reh'g) in support of its argument that, because the December 12, 2012 Order was the only order denying its motion to compel arbitration that it received, the December 28, 2012 notice of appeal was timely as filed within twenty days of December 12, 2012. However, unlike this case, in In re C.L.C., the trial judge signed an order that included a finding of the earliest date upon which either appellant or appellant's attorney received notice or actual knowledge of the judgment, and appellant's notice of accelerated appeal was timely as filed within twenty days of the date found by the trial judge. In re C.L.C., 2003 WL 252139, at *1.

Rule of appellate procedure 27.3 provides that after an order in a civil case has been appealed, if the trial court modifies the order, the appellate court must treat the appeal as from the subsequent order and may treat actions relating to the appeal of the first order as relating to the appeal of the subsequent order. TEX. R. APP. P. 27.3. While rule 27.3 contemplates the trial court's ability to modify or amend orders that have been appealed, neither the December 12, 2012 Order nor the May 1, 2013 Order modified or amended the trial court's November 12, 2012 Order. By denying Pilot Travel's motion to compel arbitration, the December 12, 2012 Order and the May 1, 2013 Order provided the same substantive ruling contained in the trial court's November 12, 2012 Order. Rule of appellate procedure 29.6 governs our jurisdiction to review "a further appealable interlocutory order concerning the same subject matter." See TEX. R. APP. P. 29.6. Because the December 12, 2012 Order and May 1, 2013 Order are substantively identical to the trial court's November 12, 2012 Order, neither order may be considered a further order of the trial court concerning Pilot Travel's motion to compel arbitration. See TEX. R. APP. P. 29.6(a)(1). To conclude otherwise would enable a trial court to alter an appellate timetable, and render an otherwise untimely appeal timely, simply by signing a subsequent order affording the same relief.

Pilot Travel acknowledged at submission that the trial court's May 1, 2013 Order denying Pilot Travel's motion to compel arbitration made no substantive change to the prior November 12, 2012 Order and December 12, 2012 Order denying Pilot Travel's motion to compel arbitration, and that it was not relying on the May 1, 2013 Order to restart the appellate timetable for filing this interlocutory appeal. Pilot Travel acknowledged it could offer no authority in support of a contention that a trial court can affect or extend the appellate timetable by signing a subsequent order containing the same denial of a motion to compel arbitration contained in the November 12, 2012 Order. See City of Houston v. Estate of Jones, 388 S.W.3d 663, 667 (Tex. 2012) (permitting interlocutory appeal of a denial of a motion to reconsider a plea to jurisdiction "would effectively eliminate the requirement that appeals from interlocutory orders must be filed within twenty days after the challenged order is signed," and "[t]hat would work against the main purpose of the interlocutory appeal statute, which is to increase efficiency of the judicial process."); Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 358 (Tex. 2001) ("Allowing interlocutory appeals whenever a trial court refuses to change its mind . . . would invite successive appeals and undermine the [interlocutory appeal] statute's purpose of promoting judicial economy."). However, according to Pilot Travel, even though the December 12, 2012 Order made no change to the trial court's November 12, 2012 denial of Pilot Travel's motion to compel arbitration other than crossing out the date of November 12, 2012 and writing in the date of December 12, 2012, Pilot Travel contends its notice of appeal was timely because it received notice only of the December 12, 2012 Order, and, therefore, the appellate timetable did not begin to run until it received notice of the December 12, 2012 Order.

Pilot Travel's contention that under rule of civil procedure 306a, its appellate timetable for perfecting its interlocutory appeal ran from the date it or its attorney received notice or actual knowledge of the November 12, 2012 Order fails. Pilot Travel did not establish in the trial court the specific date it or its attorney received notice or actual knowledge of the November 12 Order, and Pilot Travel did not obtain a signed written order from the trial court that recites that specific date. See TEX. R. CIV. P. 306a(5); TEX. R. APP. P. 4.2(b), (c). Because Pilot Travel did not comply with rule of civil procedure 306a(5), it is not entitled to receive an extension of time for perfecting its appeal under rule 4.2. See TEX. R. APP. P. 4.2(b), (c).

Pilot Travel's notice of interlocutory appeal was due, but not filed, within twenty days after the November 12, 2012 appealable interlocutory order was signed. To conclude otherwise would defeat the purpose of the interlocutory appeal statute. Thus, Pilot Travel's notice of appeal was not timely perfected under rule of appellate procedure 26.1(b). See Tex. R. App. P. 26.1(b).

Without a timely filed notice of appeal, this Court lacks jurisdiction. See TEX. R. APP. P. at 25.1. Although the Texas Supreme Court has directed us to construe the rules of appellate procedure reasonably and liberally so that the right to appeal is not lost by imposing requirements not absolutely necessary to effectuate the purpose of a rule, see Verburgt v. Dorner, 959 S.W.2d 615, 616-17 (Tex. 1997), we are prohibited from expanding the scope of our jurisdiction by enlarging the time for perfecting an appeal in a civil case in a manner not provided for by rule. See TEX. R. APP. P. 2; see also In re T.W., 89 S.W.3d 641, 642 (Tex. App.-Amarillo 2002, no pet.). Rule of appellate procedure 2 expressly prohibits this Court from suspending the requirements of the appellate rules in a manner which will "alter the time for perfecting an appeal in a civil case."

Consequently we do not address the merits of this interlocutory appeal. We dismiss this interlocutory appeal for want of jurisdiction. See TEX. R. APP. P. at 42.3(a).

JUDGMENT

In accordance with this Court's opinion of this date, the appeal is DISMISSED. It is ORDERED that appellees Joan McCray, James McCray, and Shamekia Gullatte, as Next Friend of Brandon Gullate, recover their costs of this appeal from appellant Pilot Travel Centers, LLC.

SOURCE: Pilot Travel Centers, LLC v. McCray, No. 05-13-00002-CV (Tex.App.- Dallas, July 10, 2013)

[1] The January 16, 2013 Order states the trial court considered appellees' "Motion for Judgment Nunc Pro Tunc, and the response thereto." However, the record contains no motion for judgment nunc pro tunc, nor any response by Pilot Travel to such a motion. See TEX. R. CIV. P. 316 (permits trial court to correct mistakes and incorrect recitals in judgments but only after reasonable notice of any application for correction is given to opposing party).

[2] In its objection to the January 16, 2013 order and motion to vacate that order, Pilot Travel stated it was never served with a motion for judgment nunc pro tunc.

[3] On appeal, the parties do not dispute the trial court conducted a hearing on Pilot Travel's motion to compel arbitration on November 16, 2012. However, no reporter's record containing a transcript of the November 16, 2012 hearing has been filed with this Court. Even assuming the November 12, 2012 date of signature on the order was incorrect and should have been November 16, 2012, the deadline for filing an accelerated appeal of a November 16, 2012 denial of Pilot Travel's motion to compel arbitration would have been December 6, 2012.

Under rule of appellate procedure 26.3, an appellate court may extend the time to file a notice of appeal if, within fifteen days after the deadline for filing the appeal notice, the party files a notice of appeal in the trial court and a motion for extension of time complying with rule of appellate procedure 10.5(b) in the court of appeals. See TEX. R. APP. P. 26.3. In Verburgt v. Dorner, 959 S.W.2d 615, 617 (Tex. 1997), the Texas Supreme Court held that a motion for extension of time is implied when a party, acting in good faith, files a cost bond within the fifteen-day period in which the party would be entitled to move to extend the filing deadline under the rules of appellate procedure. To be entitled to an implied fifteen-day extension to file its notice of appeal under rule of appellate procedure 26.3 from the November 12, 2012 Order, Pilot Travel would have had to file its notice of appeal by December 18, 2012. To be entitled to an implied fifteen-day extension to file its notice of appeal under rule of appellate procedure 26.3 from November 16, 2012, Pilot Travel would have had to file its notice of appeal by December 21, 2012.

Trial court order compelling arbitration not immediately appealable

Can an order compelling arbitration signed by a trial judge be challenged in an immediate appeal so as to avoid the need to arbitrate? Generally no. Arbitration is favored. An order denying arbitration is a different matter. Texas statute authorizing interlocutory appeal tracks federal provision for such appeals.

Under the Federal Arbitration Act (FAA), an order compelling arbitration and granting a stay is not immediately reviewable. In re Gulf Exploration, LLC, 289 S.W.3d at 842; see 9 U.S.C.A. § 16(b)(1),(3)(West 2009)(interlocutory orders compelling arbitration and staying proceeding are not immediately reviewable under the FAA). Because such an order is not appealable under the FAA, it is not appealable under Section 51.016 of the Texas Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2012)(in matters subject to the FAA, an appeal is available only under the same circumstances that an appeal from federal district court's order would be permitted).

    MEMORANDUM OPINION FROM EL PASO   

In this employment-discrimination and -retaliation case, Benjamin Tice, Jr. appeals from the trial court's order granting El Paso Education Initiative, Inc. d/b/a Burnham Wood Charter School District's motion to compel arbitration and stay the proceedings. El Paso Education Initiative now moves to dismiss the appeal for want of jurisdiction.[1] Concluding that we lack jurisdiction over this appeal, we dismiss it.

It is well settled that appellate courts have jurisdiction over final judgments. Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). A judgment is final if it disposes of all pending parties and claims. Id. An order compelling arbitration and staying proceedings pending arbitration does not dispose of all claims and parties. In re Gulf Exploration, LLC, 289 S.W.3d 836, 840-41 (Tex. 2009)(orig. proceeding). Thus, the trial court's order at issue here is interlocutory.

Appellate courts have jurisdiction to consider immediate appeals of interlocutory orders only if a statute explicitly confers appellate jurisdiction. See Stary v. DeBord, 967 S.W.2d 352, 352-53 (Tex. 1998). If a statute authorizes an interlocutory appeal, we strictly construe it. CMH Homes v. Perez, 340 S.W.3d 444, 447-48 (Tex. 2011); Nazareth Hall Nursing Ctr. v. Castro, 374 S.W.3d 590, 593 (Tex.App.-El Paso 2012, no pet.); Lucchese, Inc. v. Solano, 388 S.W.3d 343, 348 (Tex.App.-El Paso 2012, no pet.). The substance and function of the interlocutory order from which an appeal is taken controls our interlocutory jurisdiction. Castro, 374 S.W.3d at 593; Solano, 388 S.W.3d at 348; Texas La Fiesta Auto Sales, LLC v. Belk, 349 S.W.3d 872, 878 (Tex.App.-Houston [14th Dist.] 2011, no pet.). When a party attempts to appeal a non-appealable interlocutory order, we have no jurisdiction except to dismiss the appeal. Cantu Servs., Inc. v. United Freedom Assoc., Inc., 329 S.W.3d 58, 63 (Tex.App.-El Paso 2010, no pet.) [Quotation marks omitted].

Under the Federal Arbitration Act (FAA), an order compelling arbitration and granting a stay is not immediately reviewable. In re Gulf Exploration, LLC, 289 S.W.3d at 842; see 9 U.S.C.A. § 16(b)(1),(3)(West 2009)(interlocutory orders compelling arbitration and staying proceeding are not immediately reviewable under the FAA). Because such an order is not appealable under the FAA, it is not appealable under Section 51.016 of the Texas Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2012)(in matters subject to the FAA, an appeal is available only under the same circumstances that an appeal from federal district court's order would be permitted).

Here, both parties agreed at trial that the arbitration agreement was governed by the FAA, not the Texas General Arbitration Act (TAA).[2] The trial court's order compelling arbitration and staying the proceedings pending arbitration is therefore not reviewable by interlocutory appeal. We thus lack jurisdiction to consider Tice's appeal. Appellee's motion to dismiss the appeal for want of jurisdiction is hereby granted. Accordingly, we dismiss the appeal for want of jurisdiction.

SOURCE: EL PASO COURT OF APPEALS - No. 08-13-00014-CV – 1/13/2013

When should a motion to compel arbitration be granted, when not?

General principles of determining arbitrability as articulated by the Corpus Christi Court of Appeals in a recent appellate opinion.

STANDARD OF REVIEW AND APPLICABLE LAW

"We review a trial court's denial on a motion to compel arbitration for an abuse of discretion." Nazareth Hall Nursing Ctr. v. Melendez, 372 S.W.3d 301, 304 (Tex. App.-El Paso 2012, no pet.) (citing Sidley Austin Brown & Wood, LLP v. J.A. Green Dev. Corp., 327 S.W.3d 859, 862-63 (Tex. App.-Dallas 2010, no pet.)). Under that standard, "we defer to the trial court's factual determinations if they are supported by evidence, but we review the trial court's legal determinations de novo." In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009); see Melendez, 372 S.W.3d at 305.

"Whether an arbitration clause imposes a duty to arbitrate is a matter of contract interpretation and a question of law for the Court to review de novo." Ascendant Anesthesia PLLC v. Abazi, 348 S.W3d 454, 458 (Tex. App.-Dallas 2011, no pet.). "In a de novo review, the trial court's decision is given absolutely no deference." Id.

Although Villareal opposes arbitration, he does not contest that the FAA applies to the Account Agreement with Edward Jones.

"A party seeking to compel arbitration under the FAA must establish that (1) there is a valid arbitration clause, and (2) the claims in dispute fall within that agreement's scope." In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011) (orig. proceeding); see In re East Rio Hondo Water Supply Corp., No. 13-12-538-CV, 2012 Tex. App. LEXIS 9098, at *10 (Tex. App.-Corpus Christi Oct. 29, 2012, orig. proceeding) (mem. op.). "When deciding whether claims fall within an arbitration agreement, courts employ a strong presumption in favor of arbitration." In re Rubiola, 334 S.W.3d at 225.

"Nonetheless, the strong policy in favor of arbitration cannot serve to stretch a contractual clause beyond the scope intended by the parties or to allow modification of the unambiguous meaning of the arbitration clause." Osornia v. AmeriMex Motor & Controls, Inc., 367 S.W.3d 707, 712 (Tex. App.-Houston [14th Dist.] 2012, no pet.).

"To determine whether a claim falls within the scope of the agreement, courts must `focus on the factual allegations of the complaint, rather than the legal causes of action asserted.'" In re Rubiola, 334 S.W.3d at 225 (quoting Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 900 (Tex. 1995)); In re Stanford Group, 273 S.W.3d 807, 813 (Tex. App.-Houston [14th Dist.] 2008, orig. proceeding) ("We look at the facts alleged, rather than the legal causes of actions presented, and consider whether the facts touch matters covered by the underlying arbitration agreement.") Generally, under the FAA, state law governs whether the contracting parties agreed to arbitrate and federal law determines the scope of the arbitration clause. In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005) (orig. proceeding); see In re Rubiola, 334 S.W.3d at 224 ("Under the FAA, ordinary principles of state contract law determine whether there is a valid agreement to arbitrate.").

Arbitration agreements containing phrases such as "relating to" are interpreted broadly. In re Guggenheim Corporate Funding, LLC, 380 S.W.3d 879, 887-88 (Tex. App.-Houston [14th Dist.] 2012, orig. proceeding) (citing In re Bank One, N.A., 216 S.W.3d 825. 826-27 (Tex. 2007) (resolving doubt as to scope of arbitration agreement covering disputes "arising from or relating in any way to this Agreement" in favor of coverage); 950 Corbindale, L.P. v. Kotts Capital Holdings Ltd. P'ship, 316 S.W.3d 191, 196-97 (Tex. App.-Houston [14th Dist.] 2010, no pet.) (holding that broad arbitration provision defining "disputes" as "any dispute under or related to the partnership agreement or any document executed pursuant to the partnership agreement or any of the transactions contemplated by the partnership agreement shall be subject to arbitration" applied to all claims); TMI Inc. v. Brooks, 225 S.W.3d 783, 791 n.7 (Tex. App.-Houston [14th Dist.] 2007, orig. proceeding) (holding that phrase "arising out of and/or related to" in arbitration agreement is "broad form in nature, evidencing the parties' intent to be inclusive rather than exclusive")). "

However, if the facts alleged in support of the claim stand alone, are completely independent of the contract, and the claim could be maintained without reference to the contract, the claim is not subject to arbitration." Serv. Corp. Int'l v. Lopez, 162 S.W.3d 801, 810 (Tex. App.-Corpus Christi 2005, no pet.); see Osornia, 367 S.W.3d at 714 n.4.; AutoNation USA Corp. v. Leroy, 105 S.W.3d 190, 195 (Tex. App.-Houston [14th Dist.] 2003, orig. proceeding); see also In re Estate of Rowan, No. 05-06-681-CV, 2007 Tex. App. LEXIS 4466, at *8-9 (Tex. App.-Dallas June 7, 2007, no pet.) (mem. In construing the arbitration provision, we first determine whether it is possible to enforce the contract as written, without resort to parol evidence. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003).

In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument. In re Guggenheim Corporate Funding LLC, 380 S.W.3d at 887 (citing J.M. Davidson, 128 S.W.3d at 229). In the arbitration context, we must give effect to the parties' intent, whether enforcing an agreement to arbitrate or construing an arbitration clause. Id. Following arbitration jurisprudence, we apply a common-sense examination of the underlying claim and the forum-selection clause to determine if the claim comes within the scope of the clause. Id. (citing In re Lisa Laser USA, Inc., 310 S.W.3d 880, 884 (Tex. 2010) (orig. proceeding) (per curiam)). "A contract is unambiguous if it can be given a definite or certain legal meaning." J.M. Davidson, 128 S.W.3d at 229. "On the other hand, if the contract is subject to two or more reasonable interpretations after applying the pertinent rules of construction, the contract is ambiguous, creating a fact issue on the parties' intent." Id. A contract is not ambiguous merely because the parties disagree on its meaning. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006). The issue of contractual ambiguity may be considered sua sponte by a reviewing court. See Progressive Cnty. Mut. Ins. Co. v. Kelley, 284 S.W.3d 805, 808 (Tex. 2009). op.).

SOURCE:   CORPUS CHRIST-EDINBURG COURT OF APPEALS - 13-12-00166-CV – 2/21/2013

Undue delay renders mandamus relief unavailable

Due diligence is required in seeking mandamus relief. That alone will not guarantee success, of course; but if you wait too long before deciding to complain about the trial court judge in the court of appeals, you may as well forget it.

PER CURIAM MEMORANDUM OPINION FIRST COURT OF APPEALS IN HOUSTON

By petition for writ of mandamus, relator, Cox Ventures, Inc. d/b/a Media Ink, seeks mandamus relief compelling the trial court to vacate its order granting Real Party in Interest, KNG L.L.C. d/b/a Texas Direct Bindery & Letterpress's application to compel arbitration and motion to sever.[1] We deny Cox's petition for writ of mandamus.

Background

On October 4, 2011, KNG sued Cox alleging claims based on a sworn account, breach of contract, quantum meruit, and unjust enrichment. Following the filing of its original answer, Cox asserted a counterclaim against KNG alleging breach of contract and conversion. KNG timely filed its answer.

KNG subsequently filed an application to compel arbitration of Cox's counterclaim and a motion to sever it from KNG's claims. Cox filed its response and a counter-motion to compel arbitration of all of the parties' claims. On April 9, 2012, the trial court signed an order granting KNG's application to compel arbitration of Cox's counterclaim and its motion to sever.

Discussion

On September 28, 2012, Cox filed this petition for writ of mandamus. In its petition, Cox complains that the trial court abused its discretion by compelling arbitration of Cox's counterclaim and severing it from KNG's claims rather than compelling arbitration of all of the parties' claims.

Mandamus is an extraordinary remedy; it is not issued as a matter of right but rather at the discretion of the court. Rivercenter Assocs. v. Rivera, 858 S.W.2d 366, 367 (Tex. 1993). Mandamus relief is not an equitable remedy but its issuance is largely controlled by equitable principles. Id. One such principle is that "[e]quity aids the diligent and not those who slumber on their rights." Id. (quoting Callahan v. Giles, 155 S.W.3d 793 (1941)).

Here, Cox filed its petition for writ of mandamus nearly six months after the court signed its April 9 order.[2] Cox offers no justification for its delay in seeking mandamus relief and the record reveals none. Delay alone provides ample ground to deny mandamus relief. See International Awards, Inc. v. Medina, 900 S.W.2d 934, 936 (Tex. App.-Amarillo 1995, orig. proceeding) (finding four-month delay between court's severance order of counterclaim and relator's petition for writ of mandamus provided grounds to deny requested relief); Furr's Supermarkets, Inc. v. Mulanax, 897 S.W.2d 442, 443 (Tex. App.-El Paso 1995, orig. proceeding) (denying relator's motion for leave to file petition for writ of mandamus filed four months after court's oral discovery ruling and one month after written order was signed and where relator offered no explanation for delay); Bailey v. Baker, 696 S.W.2d 255, 256 (Tex. App.-Houston [14th Dist.] 1985, orig. proceeding) (denying motion for leave to file petition for writ of mandamus where relator waited nearly four months to file motion and provided no justification for delay). 
  
Accordingly, we deny Cox's petition for writ of mandamus and lift the stay entered on September 26, 2012.

SOURCE: HOUSTON COURT OF APPEALS  FIRST DISTRICT - No. 01-12-00879-CV - 3/7/2013

[1] The underlying case is KNG, L.L.C. d/b/a Texas Direct Bindery & Letterpress v. Cox Ventures, Inc. d/b/a Media Ink, Cause No. 1002161, pending in County Civil Court at Law No. 1 of Harris County, Texas, the Honorable Debra Ibarra Mayfield, presiding.  

What happens to additional parties in the same lawsuit that are not required to arbitrate when others are sent to arbitration?

Fort Worth Court of Appeals says when arbitration stay kicks in, it also affects other parties in the lawsuit that are not required to submit to arbitration, i.e. the entire action is stayed. The appellate panel opinion does not discuss whether a motion to sever the portion of the case not subject to arbitration would be appropriate.  

Whether Suit Must Be Abated Pending Arbitration

In their second issue, appellants contend the trial court also erred by failing to stay the underlying proceedings pending resolution of arbitration. Federal law requires courts to stay litigation of claims that are subject to arbitration until arbitration is completed. 9 U.S.C.A. § 3; In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 195-96 (Tex. 2007) (orig. proceeding). Even when a party has brought arbitrable claims against one party and claims not subject to arbitration against another party in the same lawsuit, courts should stay all litigation. See In re Merrill Lynch Trust Co., 235 S.W.3d at 195-96. Accordingly, because we have determined that appellees' claims against appellants are subject to arbitration, we conclude and hold that the litigation must be stayed pending arbitration. See In re Helix Energy Solutions Group, Inc., 303 S.W.3d 386, 403 (Tex. App.-Houston [14th Dist.] 2010, orig. proceeding). We sustain appellants' second issue.

SOURCE: FORT WORTH COURT OF APPEALS - No. 02-12-00276-CV – 2/14/2013

Trial court judge strayed beyond the gateway area - mandamus granted

Houston Court of Appeals holds that trial court went beyond its limited role of determining gateway matters and strayed into arbitrators' territory by taking up issues of manner and procedure relating to the arbitration process.

OPINION BY JANE BLAND

This is an interlocutory appeal and a companion petition for a writ of mandamus that challenge the trial court's order designating an arbitral forum. Donna Miller, both individually and as the executor of her deceased husband's estate, has sued her husband's former employers, Academy, Ltd. and Academy Managing Co., L.L.C. (Academy), contending that Academy breached its agreement, pursuant to its executive compensation plan, to pay the estate $2.4 million if Academy underwent a change of control within a three-year period.

Academy invoked the agreement's arbitration provision and moved in the trial court to compel arbitration, which it did. Then, in a motion to clarify that ruling, Miller asked the trial court to interpret the arbitration provision as not requiring administration by the American Arbitration Association. In its order granting Miller's motion, the trial court declared that "the previously ordered arbitration of this cause shall be conducted privately and without having to file and administer the arbitration with the American Arbitration Association."

 Academy seeks either appellate or mandamus relief from the trial court's order granting Miller's motion to clarify and supplementing its prior order compelling arbitration. We hold that we lack jurisdiction over Academy's appeal, but we exercise our mandamus jurisdiction to correct the trial court's error in interpreting a contract issue that properly belongs to the arbitrators. We therefore conditionally grant the writ.

Background

In 2007, Academy established an executive compensation plan, named "Plan I," for certain employees, including the decedent. Plan I contains the following arbitration provision:

Section 14. Dispute Resolution; Governing Law

(a) The exclusive venue for any action in respect of Section 13 of this Retention Plan shall be the state and Federal courts located in Harris County, Texas.

(b) Except as provided in Section 14(a) above, any controversy or claim arising out of or relating to this Retention Plan Shall be settled by arbitration in Harris County, Texas by three arbitrators appointed by the parties. If the parties cannot agree within 30 days on the appointment of arbitrators, one shall be appointed by the Company and one by the applicable Participant, and the third shall be appointed by the first two arbitrators. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association for resolution of commercial disputes, except with respect to the selection of arbitrators, which shall be as provided in this paragraph. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators have no authority to modify any provision of this Retention Plan other than a benefit specifically provided under or by virtue of the Retention Plan. If a Participant substantially prevails on at least one material issue which is the subject of such arbitration, the Company shall be responsible for all of the fees and expenses of the American Arbitration Association and the arbitrators. Otherwise, each party shall share the fees and expenses of the American Arbitration Association and the arbitrators equally.

Discussion

I. Appellate Jurisdiction

 The parties do not contend that their arbitration agreement is governed exclusively by either the Federal Arbitration Act or the Texas General Arbitration Act, and Academy has invoked both sections 51.016 and 171.098 of the Texas Civil Practice and Remedies Code as the basis for our jurisdiction over its appeal. As a threshold issue, Miller challenges whether appellate jurisdiction exists, contending that Academy's challenge to the trial court's order requiring a non-AAA-administered arbitration does not fall within any of the specific grounds for appeal that either of these sections authorizes.

Section 171.098(a)(1), the appeal provision of the state arbitration statute, requires, as a predicate to our interlocutory appellate jurisdiction, the filing of "an application to compel arbitration made under Section 171.021" and an order denying that application. TEX. CIV. PRAC. & REM. CODE ANN. § 171.098 (West 2012). To prevail under Section 171.021, such a motion must show the existence of an agreement to arbitrate that applies to the parties' dispute and that the opposing party has refused to arbitrate. TEX. CIV. PRAC. & REM. CODE ANN. § 171.021(a) (West 2012). Section 51.016 allows for state court appeals in agreements governed by the FAA. TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West 2012). Pertinent to this case, a party may appeal (1) an order refusing to stay litigation pending arbitration of its subject matter, (2) denial of a petition to order arbitration, and (3) an order denying an application to compel arbitration. Id. (incorporating grounds set forth in 9 U.S.C. § 16).

The appealed order, purporting to clarify the parties' rights under the arbitration agreement, does not fall within any of the types of appealable orders identified under either the state or federal statutes. We therefore lack appellate jurisdiction over Academy's attempted interlocutory appeal.

II. Mandamus Jurisdiction

Academy alternatively seeks mandamus relief, complaining that the trial court abused its discretion in signing the order, because it effectively denies Academy's right to arbitrate the underlying dispute according to the arbitration agreement's terms. A writ of mandamus issues to correct a clear abuse of discretion when no adequate remedy at law exists. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). A trial court has no discretion to apply the law incorrectly. Id. at 840. A party seeking relief from the failure to enforce a valid arbitration agreement, according to its terms, has no adequate remedy at law and is entitled to mandamus relief to correct the trial court's error. See In re Serv. Corp. Int'l, 355 S.W.3d 655, 657 (Tex. 2011) (orig. proceeding) (holding that mandamus relief is available from trial court's appointment of arbitrator in contravention of parties' agreement that they would select arbitrator by mutual agreement or, if unable to agree, seek appointment by AAA); see Aspen Tech., Inv. v. Shasha, 253 S.W.3d 857 (Tex. App.-Houston [14th Dist.] 2008, orig. proceeding) (granting relief from trial court's order compelling arbitration under clause in parties' 2006 agreement instead of under parties' 2008 agreement, which had valid arbitration clause that supplanted earlier one); accord BP Exploration Libya Ltd. v. ExxonMobil Libya Ltd., 689 F.3d 481, 496-97 (5th Cir. 2012) (vacating district court's order requiring parties to proceed to arbitration before five arbitrators, where parties had expressly agreed to arbitrate before three-member panel).

The parties' arbitration agreement provides that they are to select three arbitrators by mutual agreement, or, if they "cannot agree within 30 days on the appointment of arbitrators, one shall be appointed by the Company and one by the applicable Participant, and the third shall be appointed by the first two arbitrators." The parties apparently have no quarrel over this selection method, and they can comply with it before determining whether the arbitration is subject to formal AAA administration.

Because no obstacle to the appointment of the arbitrators exists, we next consider if the question decided by the trial court—whether the arbitration agreement requires the parties to file and administer the arbitration through the American Arbitration Association or merely requires that the arbitrators use the rules set forth by the AAA—is for the courts or the arbitrators to decide. In Green Tree Financial Corp. v. Bazzle, the United States Supreme Court explained the narrow scope of the judicial role in interpreting arbitration agreements:

In certain limited circumstances, courts assume that the parties intended courts, not arbitrators, to decide a particular arbitration-related matter (in the absence of "clea[r] and unmistakabl[e]" evidence to the contrary). AT&T Technologies, Inc. v. Communications Workers, 475 U. S. 643, 649 (1986). These limited instances typically involve matters of a kind that "contracting parties would likely have expected a court" to decide. Howsam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 83 (2002). They include certain gateway matters, such as whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy. See generally Howsam, supra. See also John Wiley & Sons, Inc. v. Livingston, 376 U. S. 543, 546-547 (1964) (whether an arbitration agreement survives a corporate merger); AT&T, supra, at 651-52 (whether a labor-management layoff controversy falls within the scope of an arbitration clause).

539 U.S. 444, 452 (2003); see also Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 82-83, 123 S. Ct. 588, 591 (2002) (holding that applicability of NASD time limit rule is matter presumptively for arbitrator, not for judge). The question of whether the parties agreed to formal AAA administration in this case concerns neither the validity nor the scope of the arbitration agreement. Consequently, the issue belongs to the arbitrators, not to the courts. See Howsam, 537 U.S. at 83; In re D. Wilson Constr. Co., 196 S.W.3d 774, 780-81 (Tex. 2006) (orig. proceeding); see also Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc., 347 S.W.3d 897, 902 (Tex. App.-Dallas 2011, pet. denied) (holding that challenge to Civilian Board of Contract Appeals' [CBCA] jurisdiction as arbitrator of dispute, as well as waiver and election-of-remedies complaints, "are matters of procedure that are for the arbitrator and not for the court," and conditionally granting writ of mandamus directing trial court to vacate portion of order requiring arbitration to proceed under AAA instead of CBCA); Am. Realty Trust, Inc. v. JDN Real Estate—McKinney, L.P., 74 S.W.3d 527, 531 (Tex. App.-Dallas 2002, pet. denied) (citing John Wiley & Sons v. Livingston, 376 U.S. 543, 557, 84 S. Ct. 909, 918 (1964) ("[I]f a court determines the parties have an obligation to submit the subject matter of a dispute to arbitration, `procedural' questions concerning the dispute . . . are left to the arbitrator.")). We hold that the trial court erred in straying past the gateway and into the arbitrators' presumptive arena by addressing whether the parties agreed to formal AAA administration and ordering that they did not.

Conclusion

We dismiss Academy's appeal for lack of jurisdiction. We conditionally grant mandamus relief to Academy and direct the trial court to vacate its March 5, 2012 order supplementing its earlier order compelling arbitration. We are confident the trial court will comply, and the writ will issue only if it fails to do so.

SOURCE: HOUSTON COURT OF APPEALS -  Nos. 01-12-00293-CV & 01-12-00356-CV – 2/21/2013

Don’t miss the deadline for interlocutory appeal, then try to mandamus the trial judge who did not order arbitration

First Court of Appeals (Houston) denies mandamus petition of a defendant who lost on a motion to compel arbitration under the FAA in the trial court, but did not avail itself of interlocutory appeal, which the Texas legislature authorized to obviate the need for the court of appeals to entertain mandamus petitions as a gap-filler mechanism. But the majority on the panel stops short of announcing a bright-line rule to the effect that mandamus is no longer available at all under these circumstances, based on the remedy of accelerated appeal having been created by statute. One panel member only concurred in the result.  

IN RE SANTANDER CONSUMER USA, INC ,
No. 01-12-00728-CV (Tex.App.- Houston [1^st Dist.] Feb. 21, 2013) (majority opinion by Justice Harvey Brown)

COMMENT: By failing to hold that an interlocutory appeal always constitutes an adequate remedy precluding mandamus relief (which is supposed to be extra-ordinary), the panel is only inviting more mandamus petitions by counsel for defendants who would rather arbitrate, but aren't diligent in bringing an immediate appeal, or are simply not up-to-speed on the change in the law, which has now been on the books for more than two years. A clear precedent ruling out mandamus relief would have been more useful, and would no doubt have prevented energy and time being spent on excursions to the courts of appeals in at least some subsequent cases in which a denial of arbitration was not timely appealed, since a mandamus petition would have been rendered an exercise in futility.     

OPINION BY HARVEY BROWN  

The trial court denied Santander Consumer USA, Inc.'s motion to compel arbitration pursuant to the Federal Arbitration Act.[1] Although the Civil Practice and Remedies Code provides for immediate, interlocutory review of the denial of a motion to compel arbitration under the FAA, Santander did not appeal the trial court's order. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2011) ("In a matter subject to the [FAA], a person may take an appeal . . . to the court of appeals from the judgment or interlocutory order of a district court, county court at law, or county court under the same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16."); 9 U.S.C. § 16(a)(1)(C) (2006) (FAA provision permitting appeals of orders denying application to compel arbitration); CMH Homes v. Perez, 340 S.W.3d 444, 448-49 (Tex. 2011) (explaining that section 51.016 provides for interlocutory appeals in FAA cases so long as "it would be permitted under the same circumstances in federal court under section 16"). Instead, after the expiration of the time for filing an interlocutory appeal, Santander challenged the trial court's order by petition for writ of mandamus. We conclude that the writ should not issue under the circumstances of this case, and we therefore deny Santander's petition.

Background

Jan Bonner executed a retail installment contract and security agreement with Ron Hoover RV and Marine for the purchase of boating equipment. An assignment from Ron Hoover to GEMB Lending, Inc. appears on the face of the contract. Santander alleges that it later acquired the contract from GEMB. When Santander attempted to collect amounts due under the contract from Bonner, Bonner filed the underlying lawsuit alleging that he was not liable to Santander on the contract and that Santander's collection efforts violated the Texas Fair Debt Collection Practices Act and the Texas Deceptive Trade Practices Act. Santander answered the lawsuit and moved to compel arbitration pursuant to an arbitration clause in the contract providing in pertinent part:

[A]ny claim or dispute in contract, tort, statute or otherwise . . . that arises out of or relates to your credit application, this Contract or any resulting transaction or relationship, including those with third parties who do no sign this Contract, is to be decided by neutral binding arbitration. . . . The Federal Arbitration Act (9 U.S.C. § 1 et seq.) governs this arbitration agreement and not any state law concerning arbitration, including state law arbitration rules and procedures.

Bonner opposed the motion to compel on the ground that Santander failed to establish that it had properly acquired the contract from GEMB. The trial court denied Santander's motion.

Rather than file a timely notice of interlocutory appeal from the trial court's order denying the motion to compel arbitration, Santander filed this petition for writ of mandamus more than forty days after the time for taking an interlocutory appeal had expired.

Mandamus Standard

The standard for the issuance of a writ of mandamus is well established. The writ will issue only if the trial court clearly abused its discretion and, relevant here, the relator has no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). Although "the standard's `operative word, "adequate", has no comprehensive definition' and demands a `careful balance of jurisprudential considerations that determine when appellate courts will use original mandamus proceedings to review the actions of lower courts,' mandamus will not issue when the law provides another plain, adequate, and complete remedy." In re Tex. Dep't of Family & Protective Servs., 210 S.W.3d 609, 613 (Tex. 2006) (orig. proceeding) (quoting In re Prudential, 148 S.W.3d at 135-36); see also In re Columbia Med. Ctr. of Las Colinas, Subsidiary, L.P., 290 S.W.3d 204, 207 (Tex. 2009) (orig. proceeding) ("Mandamus should not issue to correct grievances that may be addressed by other remedies."); State v. Walker, 679 S.W.2d 484, 485 (Tex. 1984) (orig. proceeding) (holding mandamus will not issue where there is "a clear and adequate remedy at law, such as a normal appeal").

Santander has not established its entitlement to mandamus relief

According to Santander, the Texas Supreme Court has determined that mandamus is the appropriate remedy for the wrongful denial of a motion to compel arbitration under the FAA without the necessity of demonstrating the lack of an adequate appellate remedy on a case-specific basis. See, e.g., In re Dillard Dept. Stores, Inc., 198 S.W.3d 778, 782 (Tex. 2006) (orig. proceeding, per curiam) (granting writ of mandamus and ordering trial court to vacate its order denying motion to compel arbitration without reviewing whether an adequate remedy existed); In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 763-64 (Tex. 2006) (orig. proceeding, per curiam) (same). The Court first addressed the issue of whether to grant mandamus relief to a party denied arbitration under the FAA in Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269, 272 (Tex. 1992) (orig. proceeding). There, the Court determined that a party improperly denied the benefit of arbitration under the FAA had no right to an interlocutory appeal and "urge[d] the legislature to consider amending the Texas [Arbitration] Act to permit interlocutory appeals of orders issued pursuant to the Federal Act." Id. at 272. The Court stated, "Such a procedure, already available for orders under the Texas Act, [would be] preferable to reliance on the writ of mandamus to fill this gap in appellate jurisdiction." Id. Until such time as the legislature acted, the Court determined that a party could seek mandamus relief or else the very subject of an appeal—the right not to litigate but to arbitrate as contracted for by the parties—would be rendered illusory. Id. Absent mandamus relief, the party seeking arbitration —would be deprived of the benefits of the arbitration clause it contracted for, and the purpose of providing a rapid, inexpensive alternative to traditional litigation would be defeated." Id. at 272-73.

The legislature responded to the Court's request and closed the gap in appellate jurisdiction by enacting section 51.016 of the Civil Practice and Remedies Code, which authorizes interlocutory appeals under the FAA in suits filed after September 1, 2009. See Act of June 19, 2009, 81st Leg., R.S., ch. 820, § 2, 2009 Tex. Gen. Laws. 2061 (codified at TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2011)); CMH Homes, 340 S.W.3d at 448-49.

Santander does not dispute that section 51.016 confers a right to prosecute an accelerated, interlocutory appeal of the trial court's order denying the motion to compel arbitration in this case. This is not a case in which the parties are uncertain whether the FAA applies—they have expressed agreement on that matter.[2] And the underlying case was filed in December 2011, more than two years after section 51.016's effective date. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016. Yet Santander does not offer any explanation for its failure to timely appeal the trial court's order. Instead, Santander argues that because section 51.016 uses permissive language—a party "may" appeal a judgment or interlocutory order that would be appealable under the FAA—its failure to exercise the appellate remedy provided therein does not constitute a waiver of the right to challenge the trial court's order by petition for writ of mandamus.[3] Id. Stated differently, Santander argues that because section 51.016 does not require an interlocutory appeal of the trial court's order as the sole means of challenging such an order, Santander may pursue mandamus relief under Texas Supreme Court authority predating the enactment of section 51.016. See, e.g., In re D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006) (orig. proceeding); Jack B. Anglin, 842 S.W.2d at 272. Thus, Santander essentially contends that a party improperly denied arbitration may always either take an interlocutory appeal or request mandamus relief and if it chooses mandamus, that party need not demonstrate any case-specific reason why an appeal was not adequate. Bonner, on the other hand, contends that because an avenue for immediate review exists through interlocutory appeal, a party may never obtain mandamus relief.

Santander's argument relies on Hernandez v. Ebrom, a case in which the Texas Supreme Court determined that a defendant's failure to challenge the adequacy of an expert report by interlocutory appeal under section 51.014(a)(9) of the Civil Practice and Remedies Code did not bar the defendant from challenging the report by appeal from a final judgment. 289 S.W.3d 316, 318-19 (Tex. 2009); see TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(9) (West Supp. 2011) (authorizing interlocutory appeal of orders denying all or part of challenge to expert reports in health-care-liability claims). The Court reasoned, "The Legislature authorized health care providers to pursue interlocutory appeals from trial court denials of challenges to plaintiffs' expert reports, but we see no indication that the Legislature effectively mandated interlocutory appeals by providing that if no appeal was taken, then the health care provider waived the right to challenge the report under all circumstances." Id. at 319. While Hernandez supports Santander's assertion that a challenge to the trial court's denial of arbitration under the FAA is not waived by Santander's failure to pursue an interlocutory appeal, Hernandez does not clarify whether Santander may have immediate review of its challenge by petition for writ of mandamus. Hernandez merely protects Santander's right to assert his complaint at some later time, specifically, on appeal from a final judgment.[4] See id.

In the cases cited by Santander, which predate section 51.016's enactment, the Texas Supreme Court recognized mandamus as the appropriate remedy for the wrongful denial of motions to compel arbitration under the FAA only because there was no alternative appellate remedy at the time. See In re D. Wilson Constr. Co., 196 S.W.3d at 780; Jack B. Anglin, 842 S.W.2d at 272-73. Mandamus functioned as a "statutory `gap-filler.'"[5] In re Reece, 341 S.W.3d 360, 395 (Tex. 2011) (Willett, J., dissenting).

This case, however, is distinguishable from the cases in which parties challenging the denial of a motion to compel arbitration under the FAA were granted mandamus relief in the past because the statutory gap with respect to the availability of immediate appellate review no longer exists. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016. Thus, unlike the parties seeking relief before section 51.016's enactment, Santander had an avenue for immediate appellate review of the trial court's order denying its motion to compel arbitration under the FAA. See id. ("In a matter subject to the [FAA], a person may take an appeal . . . to the court of appeals from the judgment or interlocutory order of a district court, county court at law, or county court under the same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16."); 9 U.S.C. § 16(a)(1)(C) (permitting appeals of orders denying application to compel arbitration); see also TEX. R. APP. P. 29.3 (authorizing appellate courts to "make any temporary orders necessary to preserve the parties' rights until disposition of the [interlocutory] appeal. . . .").

This case could potentially raise the question of whether Santander's petition must be categorically denied because section 51.016 would have afforded Santander a remedy by appeal had Santander timely availed itself of the statute, as mandamus is not ordinarily available if another remedy, though it would have been adequate and complete, was not exercised. See In re Tex. Dep't of Family & Protective Servs., 210 S.W.3d at 613 ("[M]andamus will not issue when the law provides another plain, adequate, and complete remedy."); see also In re Columbia Med. Ctr., 290 S.W.3d at 207 ("Mandamus should not issue to correct grievances that may be addressed by other remedies."). But we need not decide that issue for every future case by announcing a rule applicable to all cases; instead we limit ourselves to the record presented here.

The Texas Supreme Court demonstrated judicial restraint in the application of mandamus principles in In re Texas Department of Family & Protective Services. There, the trial court abused its discretion by failing to dismiss a suit affecting the parent-child relationship within the statutory deadline. 210 S.W.3d at 613; see also TEX. FAM. CODE ANN. § 263.401(a) (West 2011) ("Unless the court has commenced the trial on the merits or granted an extension . . ., on the first Monday after the first anniversary of the date the court rendered a temporary order appointing the department as temporary managing conservator, the court shall dismiss the suit affecting the parent-child relationship. . . ."). The Court, after acknowledging the special need for accelerated disposition of cases involving child custody, concluded that, nevertheless, mandamus was not available because "an accelerated appeal provided an adequate remedy." In re Tex. Dep't of Family & Protective Servs., 210 S.W.3d at 613-14. The Court made clear that the scope of its holding was narrow, declining to foreclose mandamus relief from a trial court's failure to dismiss a SAPCR within the statutory deadline in all cases and stating that, "under the facts of this case, [the Court cannot] conclude that an accelerated appeal was not an adequate remedy." Id. at 614.

Following the Court's cautious approach in In re Texas Department of Family & Protective Services, we decline to announce a broad rule applying in all cases. Rather than state a blanket rule that mandamus is never available when a party does not take an interlocutory appeal from an order denying a motion to compel arbitration under the FAA (as suggested by Bonner and as the concurrence would hold), we conclude that judicial restraint requires us to consider only the circumstances presented by this case and to make a narrow holding that Santander has not demonstrated its entitlement to the writ here.[6]

First, Santander has not demonstrated that a timely filed, accelerated appeal would not have afforded it a complete and adequate remedy. It is unnecessary to determine whether, by creating an avenue of appeal under section 51.016, the Legislature has by implication negated one of the elements of obtaining mandamus relief (no adequate remedy by appeal) in other cases.[7] It is sufficient here to decide that under the facts of this case Santander has not demonstrated that the benefits of proceeding by mandamus outweigh the detriments. See In re Prudential, 148 S.W.3d at 136 (requiring "careful balance" of "jurisdprudential concerns" in determining whether "any benefits to mandamus review are outweighed by the detriments"). Prudential provides that the requirement of an "adequate" remedy on appeal is not subject to simple categories or bright-line rules and instead "is simply a proxy for the careful balance of jurisprudential considerations that determine when appellate courts will use original mandamus proceedings to review the actions of lower courts." Id. The test "is practical and prudential." Id. A complete analysis of the adequacy of appellate remedies requires consideration of the degree to which "important substantive and procedural rights" are subject to "impairment or loss" as one of the factors affecting the adequacy of appeal,[8] none of which is discussed by Santander.

Without briefing on the benefits and detriments of mandamus review, we conclude that it would be unnecessary and advisory to announce a bright-line rule that a party who fails to exercise its statutory remedy of interlocutory appeal has an adequate remedy in every circumstance.[9] We therefore refuse to speculate on whether a remedy that in fact existed through interlocutory appeal, but was not exercised, is always "adequate." Furthermore, it is unnecessary for us to decide whether practical or prudential concerns countenance ever permitting a party to proceed in an original proceeding or whether the balancing of such concerns would only create an impermissible end-run around the rules for filing interlocutory appeals. See, e.g., TEX. R. APP. P. 26.1(b) (requiring notice of accelerated appeal to be filed within twenty days after the judgment or order is signed). Nor will we speculate whether any exceptional circumstances exist here that would excuse Santander's failure to pursue an interlocutory appeal or otherwise warrant the issuance of mandamus relief in this case.

In refusing to engage in such speculation—without the benefit of any briefing pertinent to the issue—we are not, as our concurring colleague suggests, expressing an opinion that there could be circumstances under which section 51.016 might fail to provide a complete remedy. We merely decline to give an advisory opinion on that issue in this case. We conclude instead that Santander has not carried its burden to establish the inadequacy of its remedies on appeal, and therefore it has not established its entitlement to mandamus relief. See In re Reece, 341 S.W.3d at 374 (observing that mandamus is extraordinary remedy issued not as matter of right but at court's discretion).[10]

Conclusion

Having concluded that Santander has not established its entitlement to mandamus relief, we deny the petition. All outstanding motions are overruled as moot.

Trial court's order permitting arbitration-related discovery not reviewable by interlocutory appeal

Texas Court of Appeals in El Paso dismisses attempted appeal from order that postponed ruling on arbitrability pending arbitration-related discovery as unappealable by interlocutory appeal given that the order did not effectively deny arbitration and did not fit any of the categories of arbitration-related orders for which statute authorizes an immediate complaint to the appellate courts by an aggrieved party.  

ReadyOne Industries, Inc. v. Simental (Tex.App.- El Paso, Dec. 21, 2012)

OPINION BY JUSTICE ANTCLIFF

In this non-subscriber negligence case, ReadyOne Industries, Inc. brings an interlocutory appeal from the trial court's order permitting arbitration-related discovery.^[1] Because the trial court did not rule on the merits of ReadyOne's motion to compel arbitration, but rather expressly postponed its ruling on the motion until after the discovery it had ordered was completed, we dismiss the appeal for want of jurisdiction.

FACTUAL AND PROCEDURAL BACKGROUND

Alleging that she sustained an on-the-job injury, Margarita Simental sued ReadyOne for negligence. After filing an answer, ReadyOne moved to compel arbitration pursuant to an agreement requiring claims of on-the-job injuries to be submitted to binding arbitration. In response, Simental moved for limited discovery on the issue of arbitrability to "develop [her] case, and defend against [ReadyOne's] contentions that a valid arbitration agreement exists[,] . . . [and]. . . to develop or inquire into any factual issues that may preclude or discredit the existence of a valid arbitration agreement."

At the hearing on these matters, Simental argued that because her affidavit, attached to the response to ReadyOne's motion to compel arbitration, raised concerns about fraudulent inducement and no meeting of the minds, discovery on the validity of the arbitration agreement was required.[2] Simental also argued that her claims against ReadyOne are not arbitrable because the Franken Amendment[3] prevents federal contractors from enforcing agreements to arbitrate tort claims related to or arising out of negligent hiring, supervision, or retention.[4] After considering the parties' arguments, the trial court ordered limited discovery on the applicability of the Franken Amendment and on Simental's claims of fraudulent inducement and no meeting of the minds. In its order, the trial court made clear that "[it] has not provided a final ruling on Defendant's Motion to Compel Arbitration and will not provide such ruling until . . . the . . . discovery [ordered] should be complete."

JURISDICTION

ReadyOne contends that the trial court's order is reviewable by interlocutory appeal pursuant to Section 51.016 of the Texas Civil Practice and Remedies Code. See TEX.CIV.PRAC.&REM.CODE ANN. § 51.016 (West Supp. 2012). Simental, on the other hand, argues that ReadyOne cannot bring an interlocutory appeal of the trial court's order under Section 51.016 because the trial court did not rule on the merits of ReadyOne's motion to compel arbitration. We agree.

Standard of Review

Appellate courts have jurisdiction over interlocutory orders permitted by statute. See TEX.CIV.PRAC.&REM.CODE ANN. §§ 51.012 and 51.014 (West Supp. 2012). We strictly construe such statutes because interlocutory orders are a narrow exception to the general rule that interlocutory orders are not immediately appealable. CMH Homes v. Perez, 340 S.W.3d 444, 447-48 (Tex. 2011); Nazareth Hall Nursing Ctr. v. Castro, 374 S.W.3d 590, 593 (Tex.App.-El Paso 2012, no pet.); Lucchese, Inc. v. Solano, 08-11-00101-CV, 2012 WL 2409659, *2 (Tex.App.-El Paso 2012, no pet.). The substance and function of the interlocutory order from which an appeal is taken controls our interlocutory jurisdiction. Castro, 374 S.W.3d at 593; Solano, 2012 WL 2409659, at *3; Texas La Fiesta Auto Sales, LLC v. Belk, 349 S.W.3d 872, 878 (Tex.App.-Houston [14th Dist.] 2011, no pet.). When a party attempts to appeal a non-appealable interlocutory order, we have no jurisdiction except to dismiss the appeal. Cantu Servs., Inc. v. United Freedom Assoc., Inc., 329 S.W.3d 58, 63 (Tex.App.-El Paso 2010, no pet.) (quotation marks omitted).

Applicable Law

Section 51.016 of the Texas Civil Practice and Remedies Code provides that in a matter subject to the Federal Arbitration Act (FAA), a party may appeal from an interlocutory order of a district court "under the same circumstances that an appeal from a federal district court's order . . . would be permitted by 9 U.S.C. Section 16." TEX.CIV.PRAC.&REM.CODE ANN. § 51.016 (West Supp. 2012). Section 16 of the FAA identifies the types of orders from which an appeal may be taken. Pursuant to Section 16, an appeal may be taken from:

(1) an order—

(A) refusing a stay of any action under section 3 of this title,

(B) denying a petition under section 4 of this title to order arbitration to proceed,

(C) denying an application under section 206 of this title to compel arbitration,

(D) confirming or denying confirmation of an award or partial award, or

(E) modifying, correcting, or vacating an award;

(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or

(3) a final decision with respect to an arbitration that is subject to this title.

9 U.S.C.A. § 16(a)(West 2009).

Discussion

When strictly construed, Section 51.016 of the Texas Civil Practice and Remedies Code does not permit an interlocutory appeal from a trial court's order deferring ruling on a motion to compel arbitration. As established above, Section 16 of the FAA refers only to orders denying an application to compel arbitration and not to orders postponing a ruling on a motion to compel arbitration. See 9 U.S.C.A. § 16 (no express provision authorizing appeal from trial court's postponement of ruling on a motion to compel arbitration under the FAA). Accordingly, an order deferring a ruling on a motion to compel arbitration is not appealable under Section 16. Because such an order is not appealable under the FAA, it is not an appealable order under Section 51.016. See TEX.CIV.PRAC.&REM.CODE ANN. § 51.016 (in matters subject to the FAA, an appeal is available only under the same circumstances that an appeal from federal district court's order would be permitted). We therefore conclude that the trial court's order permitting arbitration-related discovery is not reviewable by interlocutory appeal.

ReadyOne argues that Section 16 "allow[s] an interlocutory appeal from a district court order that postpones a ruling on a motion to compel arbitration pending further discovery." In support of its argument, ReadyOne points us to several decisions from various intermediate federal appellate courts that stand for the proposition that if the substance of the order effectively denies a motion to compel arbitration, it is an appealable order under Section 16, even if the order does not determine conclusively whether the dispute should be referred to an arbitrator. [5] Although we may rely on decisions from intermediate federal appellate courts as persuasive authority, we are not persuaded by those relied upon by ReadyOne. See Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993)(stating that opinions from any federal or state court may be relied on a persuasive authority, but Texas appellate courts are obligated to follow only higher Texas courts and the United States Supreme Court). Here, unlike in the cases on which ReadyOne relies, the substance of the trial court's order did not effectively deny ReadyOne's motion to compel arbitration. Moreover, our sister court considered this identical issue in In re F.C. Holdings, Inc. and held that, "[r]egardless of whether arbitration is sought under the [FAA] or the Texas Arbitration Act, appeal is not available when a trial court defers ruling on a motion to compel arbitration." 349 S.W.3d 811, 815 (Tex.App.-Tyler 2011, orig. proceeding)(citations omitted). We are thus more persuaded by our reasoning and that of our sister court in In re F.C. Holdings, Inc. than by the reasoning of the federal appeals courts in the cases relied upon by ReadyOne.

CONCLUSION

Because the trial court's order permitting arbitration-related discovery and deferring ruling on ReadyOne's motion to compel arbitration is not an appealable order under Section 16 of the FAA, and thus, is not an appealable order under Section 51.016 of the Texas Civil Practice and Remedies Code, we do not have jurisdiction to consider ReadyOne's appeal. Accordingly, we dismiss the appeal for want of jurisdiction.

[1] ReadyOne also filed a companion petition for writ of mandamus seeking to compel the trial court to vacate its order.

[2] Simental's response to ReadyOne's motion to compel arbitration is not in the record. However, there is no doubt that ReadyOne was aware of its existence. At the hearing, counsel for ReadyOne acknowledged receiving Simental's response that day and, despite receiving it then, argued that Simental's affidavit was insufficient to require discovery on the issues of fraudulent inducement and no meeting of the minds. In any event, neither party complains about the absence of the response from the record, and more importantly, the response is unnecessary for the resolution of this appeal.

[3] Section 8116 of the Department of Defense Appropriations Act of 2010 is known as the Franken Amendment because of its author, Senator Al Franken of "Saturday Night Live" fame.

[4] Counsel for Simental informed the trial court that he had briefed this issue in the response to ReadyOne's motion to compel arbitration. As noted above in footnote two, the response is not in the record.

[5] See, e.g., Madol v. Dan Nelson Auto. Grp., 372 F.3d 997, 998-99 (8th Cir. 2004)(concluding that the district court's order that did not determine conclusively whether the dispute should be referred to an arbitrator, but rather rejected the magistrate judge's order compelling arbitration, stayed proceedings, and reopened discovery, was an appealable order under Section 16 because the order refused a stay and directed that the litigation proceed); Boomer v. AT&T Corp., 309 F.3d 404, 411-12 (7th Cir. 2002)(concluding that the district court's order explicitly denying a motion to compel arbitration was immediately appealable under Section 16, notwithstanding the issuance of a subsequent minute order directing the parties to confer and advise it regarding whether a separate trial on arbitrability of the claims was warranted).