Wednesday, February 27, 2013

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

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