Party opposing arbitration has adequate remedy by appeal from final judgment; not entitled to instant mandamus relief, Texas Supreme Court rules

MANDAMUS REVIEW OF ORDER DENYING ARBITRATION VS. ORDER COMPELLING ARBITRATION - DISPARATE STANDARD APPLIED Texas Supreme Court sees less harm in wrongfully compelling arbitration, than in erroneously denying it; favors mandamus review of order denying motion to compel arbitration, but restricts availability of immediate mandamus relief against order compelling arbitration on finding that party opposing arbitration has adequate appellate remedy after the arbitration has taken place. Trial court properly stayed proceeding pending arbitration, rather than dismissing the case with final appealable order, thus setting stage for dispute over whether immediate appellate review of order sending the parties to arbitration could be sought (by petition for writ of mandamus). Court of Appeals granted mandamus relief to party resisting arbitration, only to be out-mandamused by the Texas Supreme Court, and ordered to withdraw its order. Arbitration to proceed in accordance with trial court's original order to compel. In Re Gulf Exploration, No 07-0055 (Tex. Apr. 17, 2009) ═══════════════════════════════ Justice Brister delivered the OPINION OF THE COURT: In In re Palacios, we held that mandamus relief was generally unavailable for orders compelling arbitration.[1] But we stopped short of saying it was never available, and noted the Fifth Circuit’s suggestion (which was not actually applied) in Apache Bohai Corp. v. Texaco China that mandamus review might be available if an applicant could show “clearly and indisputably that the district court did not have the discretion to stay the proceedings pending arbitration.”[2] As with any “narrow” provision for appellate review, numerous disappointed litigants have claimed the Apache Bohai “exception” applies to them.[3] But reviewing all arbitration orders to see if they comply with an exception “would inevitably frustrate Congress’s intent to move the parties . . . out of court and into arbitration as quickly and easily as possible.”[4] We granted oral argument to address more specifically when mandamus relief is available in connection with orders compelling arbitration. Finding it is unavailable here, we conditionally grant the writ. I. Background In this oil and gas suit, several working interest owners sued their operator, Great Western Drilling, when it drilled two successful wells for its own account nearby. They claim an opportunity to participate in those wells because Great Western had said it would protect their interests and had used confidential data they paid for. The parties’ joint operating agreements contain the following arbitration clause: Any dispute, controversy or claim arising out of or relating to this Agreement or the breach or validity thereof (“Dispute”) shall be referred to and finally settled by final and binding arbitration in Houston, Harris County, Texas . . . . The parties agree to use the Commercial Arbitration Rules of the American Arbitration Association and, to the maximum extent possible, the Federal Arbitration Act . . . . When the working interest owners demanded arbitration, Great Western filed this suit seeking a declaration that it owed the working interest owners neither arbitration nor anything on the underlying claim. The working interest owners moved to compel arbitration and stay litigation, which the trial court granted. Great Western sought mandamus relief in the court of appeals. That court recognized mandamus review was generally unavailable after Palacios, but found Great Western had satisfied Apache Bohai by showing the trial court had “clearly and indisputably” abused its discretion by compelling arbitration, so it conditionally granted mandamus relief.[5] The working interest owners seek relief from that order in this Court. II. Dismiss Instead Of Stay? In Green Tree Financial Corp. v. Randolph, the United States Supreme Court observed that the FAA “generally permits immediate appeal of orders hostile to arbitration . . . but bars appeal of interlocutory orders favorable to arbitration.”[6] Yet the FAA also allows appeal from “a final decision with respect to an arbitration.”[7] Construing the two together, the Supreme Court held there can be no immediate appeal of an order compelling arbitration if it stays the underlying case, but there can be an appeal if the underlying case is dismissed.[8] This appears to be the majority rule among the states as well. A few states have specific provisions for appealing orders compelling arbitration.[9] But most states (including Texas) have adopted the Uniform Arbitration Act, which like the FAA authorizes immediate appeal only from orders denying arbitration.[10] Nevertheless, a few Uniform Act states review all orders compelling arbitration,[11] and a few review none;[12] but most Uniform Act states follow Green Tree in allowing review if the order dismisses the case but not if it stays it.[13] We too have adopted this rule: “Courts may review an order compelling arbitration if the order also dismisses the underlying litigation so it is final rather than interlocutory.”[14] Thus, the order compelling arbitration in Childers v. Advanced Foundation Repair was immediately reviewable because the judgment stated that it was “final, disposes of all parties and all claims in this case, is appealable, and disposes of this case in the entirety.”[15] This is consistent with general Texas law that an order is final and appealable only if “it actually disposes of every pending claim and party or [ ] it clearly and unequivocally states that it finally disposes of all claims and all parties.”[16] At first blush, this rule appears to leave appellate review entirely at the discretion of the trial judge: stay the case and postpone review, or dismiss the case and allow it immediately. But in state courts this discretion is usually limited. Arbitrability is often the only issue in federal court because nondiverse parties may prevent removal of the underlying case from state court;[17] in such cases, even a stay order will be considered final if the federal action is effectively over.[18] But in the state courts, disputes about arbitrability and the merits must usually proceed in a single court under the rules of dominant jurisdiction.[19] Accordingly, a stay is generally the only appropriate order for a state court with jurisdiction of all issues. Indeed, the Texas Arbitration Act states that “[a]n order compelling arbitration must include a stay” of the underlying litigation.[20] During arbitration, a court order may be needed to replace an arbitrator,[21] compel attendance of witnesses,[22] or direct arbitrators to proceed promptly;[23] after arbitration, a court order is needed to confirm, modify, or vacate the arbitration award.[24] Consequently, dismissal would usually be inappropriate because the trial court cannot dispose of all claims and all parties until arbitration is completed.[25] It is in this context that one must read Apache Bohai C not as an all-purpose test for mandamus review, but as a test for reviewing whether the trial court should have dismissed rather than stayed the underlying case.[26] Palacios may have created some confusion on this issue, because after quoting Apache Bohai it went on to analyze whether the case was arbitrable rather than whether it should have been stayed. Accordingly, we clarify today that this “exception” applies not to the question whether an order compelling arbitration was correct, but to the question whether the case should have been dismissed rather than stayed. Here, the trial court stayed this case pending arbitration, so there is no final judgment. Great Western does not argue otherwise, or assert that the trial court erred in staying rather than dismissing this case. Accordingly, Apache Bohai does not apply. III. Mandamus Instead Of Interlocutory Appeal? Even when an order is not reviewable by interlocutory appeal, that does not always preclude review by mandamus.[27] In 1994, we authorized general mandamus review of orders either compelling or denying arbitration under the FAA.[28] But in Palacios we limited such review to orders denying arbitration, so that federal and state procedures would remain consistent after Green Tree.[29] We left open the question whether mandamus review of orders compelling arbitration should be entirely precluded, an issue we now address.[30] To be entitled to mandamus, “a petitioner must show that the trial court clearly abused its discretion and that the relator has no adequate remedy by appeal.”[31] In the context of orders compelling arbitration, even if a petitioner can meet the first requirement, mandamus is generally unavailable because it can rarely meet the second. If a trial court compels arbitration when the parties have not agreed to it, that error can unquestionably be reviewed by final appeal. In Perry Homes v. Cull, we rejected the argument that an order compelling arbitration must be reviewed before arbitration, noting that for many years this Court has reviewed such orders after arbitration in the final appeal.[32] Both federal and Texas statutes provide for vacating an arbitration award by final appeal if the arbitrators exceeded their powers.[33] If appeal is an adequate remedy for an order compelling arbitration, mandamus must be denied. There is no definitive list of when an appeal will be “adequate,” as it depends on a careful balance of the case-specific benefits and detriments of delaying or interrupting a particular proceeding.[34] But in balancing these matters, “our place in a government of separated powers requires us to consider also the priorities of the other branches of Texas government.”[35] Legislative acts encouraging or discouraging interlocutory review must weigh heavily in the balance of benefits and detriments.[36] Here, as both the federal and state arbitration acts pointedly exclude immediate review of orders compelling arbitration, any balancing must tilt strongly against mandamus review.[37] Of course, if an order compelling arbitration is wrong, the parties may waste time and money in arbitration. But standing alone, delay and expense generally do not render a final appeal inadequate.[38] That is especially true here because arbitration clauses are usually contractual and cover contractual claims. A party that prevails on a contractual claim can recover its fees and expenses,[39] even if they were incurred in collateral proceedings like arbitration.[40] The “adequacy” of an appeal may be a closer question when the legislature has weighed in on both sides of the balance. For example, we recently reviewed an order compelling arbitration in In re Poly-America, and granted mandamus relief regarding a waiver of statutory remedies, because it threatened to undermine the legislative workers compensation system as a whole.[41] By contrast, we denied mandamus relief as to other provisions because interference with the statute was no more than speculative.[42] The problem in Poly-America was that granting mandamus risked frustrating one statutory imperative, while denying it risked frustrating another. In those rare cases when legislative mandates conflict, mandamus “may be essential to preserve important substantive and procedural rights from impairment or loss, [and] allow the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments.”[43] But such conflicts are few, so the balance will generally tilt toward reviewing orders compelling arbitration only on final appeal. We recognize that any rule short of completely barring mandamus review runs the risk of delaying some arbitrations after a trial court has compelled them. Mandamus proceedings take time, even when relief is denied. But our rules allow an appellate court to deny mandamus relief without waiting for a response, and without handing down an opinion.[44] Summary denials do little to assist trial judges or explain matters to the parties, but they are especially appropriate in this context due to the legislative preference for moving cases to arbitration quickly. In this case, there are no counterbalancing legislative mandates. This arbitration agreement placed no limits on Great Western’s constitutional or statutory rights, other than the right to a jury trial that it expressly waived by agreeing to arbitration in the first place.The court of appeals believed this dispute was outside the scope of arbitration because the disputed wells were outside the parties’ area of mutual interest, and thus not within the scope of the arbitration clause.[45] But even assuming that is correct (an issue we do not reach), Great Western has not shown that its appellate remedy following arbitration is inadequate. Because it did not, the court of appeals erred in reviewing this order anyway. For the reasons stated above, we conditionally grant the petition for writ of mandamus. We direct the court of appeals to vacate its judgment and order the trial court to reinstate the order compelling arbitration. We are confident the court of appeals will comply, and our writ will issue only if it does not. _________________________ Scott Brister Justice OPINION DELIVERED: April 17, 2009 [footnotes omitted]

Texas Supreme Court Decides In re Poly-America (Tex. 2008)

In re Poly-America, LP, No. 04-1049 (Tex. Aug. 29, 2008) (O'Neill)(arbitration in employment context, retaliatory termination, workers compensation system) MAJORITY OPINION (EXCERPT): In this retaliatory-discharge case, the employee’s employment contract contains an arbitration agreement that requires the employee to split arbitration costs up to a capped amount, limits discovery, eliminates punitive damages and reinstatement remedies available under the Workers’ Compensation Act, and imposes other conditions on the arbitration process. We must decide whether any or all of these provisions are unconscionable and, if they are, whether the contract’s severability clause preserves the arbitration right. We hold that the trial court did not abuse its discretion in allowing the arbitrator to assess the unconscionability of the agreement’s fee-splitting and discovery-limitation provisions as applied in the course of arbitration. We further hold that the arbitration agreement’s provisions precluding remedies under the Workers’ Compensation Act are substantively unconscionable and void under Texas law. However, those provisions are not integral to the parties’ overall intended purpose to arbitrate their disputes and, pursuant to the agreement’s severability clause, are severable from the remainder of the arbitration agreement, which we conclude is otherwise enforceable. Accordingly, we conditionally grant the petition for mandamus. * * * Conclusion We hold invalid, as substantively unconscionable and void, provisions of the parties’ contract that prohibit the award of punitive damages or reinstatement and thus inhibit effective vindication of Luna’s retaliatory-discharge claim in an arbitral forum. We further hold that the trial court did not abuse its discretion in allowing the arbitrator to determine whether the fee-splitting agreement and discovery limitations — as applied in the course of arbitration — are unconscionable. Because we find the invalid remedies-limitation provisions severable from the agreement to arbitrate, which we conclude is otherwise enforceable, the trial court did not abuse its discretion in compelling arbitration. Accordingly, we conditionally grant the writ of mandamus.

Grounds for vacating arbitration award under the FAA

POINT OF LAW FROM THE 5TH COURT OF APPEALS Vacatur under § 10(a)(4) of the FAA “Under the FAA, the validity of an arbitration award is subject to attack only on grounds listed in sections 10 and 11 of the Act.” Thomas James Assocs., Inc. v. Owens, 1 S.W.3d 315, 319-20 (Tex. App.-Dallas 1999, no pet.). A court may vacate an arbitration award “where the arbitrators exceeded their powers.” 9 U.S.C.A. § 10(a)(4) (West Supp. 2007). One way that a panel of arbitrators can exceed its powers under the FAA is by failing to follow the parties' agreement regarding the composition of the panel. For example, a panel of two arbitrators exceeds its powers by deciding a case if the parties' agreement requires arbitration before a panel of at least three arbitrators. Szuts v. Dean Witter Reynolds, Inc., 931 F.2d 830, 831-32 (11th Cir. 1991). Roehrs and McGrath argue that the arbitrators exceeded their powers in this case because the panel was not constituted in accordance with the arbitration agreement. They contend that the Agreement gave them an exclusive right to select one of the three arbitrators, and that the AAA had no power to disqualify their selected arbitrator on grounds of partiality. Thus, they argue, the AAA's disqualification of their selection, Mark Shank, violated the terms of the arbitration agreement and deprived the panel as later constituted of any authority to render a binding award against them. Alternatively, they argue that the AAA misapplied its own rules regarding disqualification of arbitrators for partiality. We reject their contentions and affirm FSI's traditional summary judgment on this counterclaim based on two conclusions. First, the evidence conclusively establishes that appellants did agree to abide by the AAA's standards regarding the impartiality of party-selected arbitrators. Second, the evidence establishes that the AAA's disqualification of Shank was not so irrational or in such manifest disregard of its own rules as to permit vacatur under the FAA. Roehrs v. FSI Holdings, Inc., No. 05-06-01432-CV, 246 SW3d 796 (Tex.App.- Dallas, Feb. 26, 2008, pet. denied by the Tex. Sup. Ct. June 20, 2008)

How to obtain judicial confirmation of arbitration award

As stated by the Dallas Court of Appeals: Procedural matters relating to the confirmation of arbitration awards in Texas courts are governed by Texas law even if the FAA supplies the substantive rules of decision. Hamm v. Millennium Income Fund, L.L.C., 178 S.W.3d 256, 260 n.3 (Tex. App.-Houston [1st Dist.] 2005, pet. denied). Under the TAA, the trial court shall confirm an arbitration award on application of a party unless grounds are offered for vacating, modifying, or correcting the award. Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (Vernon 2005). In similar language, the statute provides that the trial court shall vacate or modify an arbitration award on application if proper grounds are present. Id. §§ 171.088(a), 171.091(a). If the court does not vacate or modify the award, it shall confirm the award. Id. §§ 171.088(c), 171.091(c). A party seeking to modify or vacate an arbitration award bears the ultimate burden of proving the grounds for modification or vacatur. E.g., Eurocapital Group, Ltd. v. Goldman Sachs & Co., 17 S.W.3d 426, 429 (Tex. App.-Houston [1st Dist.] 2000, no pet.); see also Mariner Fin. Group, Inc. v. Bossley, 79 S.W.3d 30, 35 (Tex. 2002) (indicating that losing party bears ultimate burden of proving arbitrator's partiality as a ground of vacatur); Hamm, 178 S.W.3d at 268 (likening grounds for vacatur to affirmative defenses under Texas Rule of Civil Procedure 94). The TAA provides that each application made under its authority-apparently including not only applications for confirmation but also applications for vacatur and modification-shall be heard by the court “in the manner and with the notice required by law or court rule for making and hearing a motion filed in a pending civil action in a district court.” Tex. Civ. Prac. & Rem. Code Ann. § 171.093. The purpose of this provision is to expedite judicial treatment of matters pertaining to arbitration. Crossmark, Inc. v. Hazar, 124 S.W.3d 422, 430 (Tex. App.-Dallas 2004, pet. denied). There is, however, no single “manner” for making and hearing a motion in a civil case in Texas. The burdens of proof vary considerably, as does the permissibility of live and affidavit testimony in support and opposition. Compare, e.g., Tex. R. Civ. P. 120a (special appearance) with Tex. R. Civ. P. 166a (summary judgment). It is clear, however, that if a party seeking confirmation of an arbitration award seeks to dispose of its opponent's grounds for vacatur by means of a summary- judgment motion, the usual summary-judgment burdens apply. See, e.g., Crossmark, Inc., 124 S.W.3d at 430 (“[I]f a party chooses to follow summary judgment procedure rather than the simple motion procedure authorized by the [TAA], it assumes the traditional burdens and requirements of summary judgment practice.”). In Mariner Financial Group, for example, the supreme court reversed the confirmation of an award because the prevailing parties had sought confirmation via a traditional motion for summary judgment and failed to conclusively disprove the “evident partiality” of the arbitrator. 79 S.W.3d at 35. FSI's motions do not clearly identify any issues as to which it sought “confirmation of the award” as opposed to “summary judgment.” After review, we believe that the only fair reading of FSI's motions is that FSI sought summary judgment as to all grounds for vacatur and modification of the arbitration award asserted by Roehrs, McGrath, and the prevailing defendants. All of appellants' issues concern the trial court's rejection of their grounds for vacatur and modification. Accordingly, we will apply the summary-judgment standard of review to appellants' issues. The final procedural wrinkle is that FSI's motions clearly invoke the no-evidence provisions of Texas Rule of Civil Procedure 166a(i) without identifying the specific elements of appellants' counterclaims as to which there is no evidence. This defect may be raised for the first time on appeal, Crocker v. Paulyne's Nursing Home, Inc., 95 S.W.3d 416, 419 (Tex. App.-Dallas 2002, no pet.), but because appellants do not raise this defect as an issue on appeal, we may not consider it, Selz v. Friendly Chevrolet, Ltd., 152 S.W.3d 833, 838 (Tex. App.-Dallas 2005, no pet.). Accordingly, we will construe FSI's motions as presenting no-evidence challenges to all of appellants' counterclaims that are specifically mentioned in those motions. [Note: Click on case style below to read the full opinion, which also addresses other interesting legal issues pertaining to arbitration] Roehrs v. FSI Holdings, Inc., No. 05-06-01432-CV, 246 SW3d 796 (Tex.App.- Dallas, Feb. 26, 2008, pet. denied June 20, 2008)

Does choice-of-law clause trump the FAA in case involving interstate commerce?

Dallas Court of Appeals answered the question in: Roehrs v. FSI Holdings, Inc., No. 05-06-01432-CV, 246 SW3d 796 (Tex.App.- Dallas, Feb. 26, 2008, pet. denied June 20, 2008) FROM THE OPINION: Choice of law Appellants argue that the Federal Arbitration Act and the Texas Arbitration Act apply concurrently to the issues raised in this case. FSI argues that the TAA alone applies, based on a choice-of-law clause in the Stock Purchase Agreement. That clause provides, “This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to its ruled [sic] governing conflict of laws.” Whether the FAA applies in the face of a general choice-of-law clause such as this one presents a “particularly thorny question of contract construction.” Note, An Unnecessary Choice of Law: Volt, Mastrobuono, and Federal Arbitration Act Preemption, 115 Harv. L. Rev. 2250, 2250 (2002). The FAA generally governs the enforceability of an arbitration agreement when the transaction involves interstate commerce. 9 U.S.C.A. §§ 1-2 (West 1999); Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269-70 (Tex. 1992) (orig. proceeding). FSI does not dispute that the Agreement involves interstate commerce, but it contends that the parties' general choice-of-law clause trumps the FAA and requires application of the TAA. Some authorities support FSI's position. E.g., Ruedemann v. Energy Operators, Inc., 198 F. Supp. 2d 894, 896-97 (S.D. Tex. 2002). But the Texas Supreme Court has held that a choice-of-law clause will not be construed to select the TAA to the exclusion of the FAA unless the clause “specifically exclude[s] the application of federal law.” In re L & L Kempwood Assocs., L.P., 9 S.W.3d 125, 127-28 (Tex. 1999) (per curiam). A general choice-of-law clause such as the one in the Agreement does not satisfy this standard. Dewey v. Wegner, 138 S.W.3d 591, 596 & n.5 (Tex. App.-Houston [14th Dist.] 2004, no pet.). Accordingly, we apply the FAA, while recognizing that the TAA also applies to the extent it is consistent with the FAA. In re D. Wilson Constr. Co., 196 S.W.3d 774, 779-80 (Tex. 2006). On issues of federal law, such as the proper interpretation of the FAA, we must follow the decisions of the United States Supreme Court and the Texas Supreme Court; the decisions of other federal courts, by contrast, may be persuasive but are not binding on us. Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993). DANIEL ROEHRS, ET AL. v. FSI HOLDINGS, INC.; from Dallas County; 5th district (05-06-01432-CV, 246 SW3d 796, 02-26-08, pet. denied by the Texas Supreme Court June 20, 2008)

Challenge to MSA-based divorce arbitration fails

In this family law case the mediator also acted as arbitrator on unresolved issues under the mediated settlement agreement (MSA) between the spouses. Husband's complaints of unconscionableness, improper denial of continuance, and argument that arbitrator exceeded his authority and should not have acted both as mediator and arbitrator fail. San Antonio Court of Appeals affirms trial court's entry of judgment on arbitration award. Mann v. Mann (Tex. App.- San Antonio, Mar. 5, 2008, pet. denied) Donald Emerald Mann, Jr. appeals the final divorce decree entered by the trial court based on an arbitration award. Donald contends the trial court erred in entering the decree because: (1) the provision in a mediated settlement agreement requiring arbitration was the result of procedural unconscionability; (2) the arbitrator exceeded his powers; and (3) the arbitrator refused to postpone the hearing after a showing of sufficient cause for the postponement. We affirm the trial court's judgment. (1) Background On August 10, 2006, Donald and Deborah mediated the claims and controversies regarding the dissolution of their marriage and entered into a mediated settlement agreement ("MSA"). The MSA included a provision requiring the parties to resolve any remaining substantive issues through binding arbitration with the mediator, Sol Casseb, III, as the arbitrator. In furtherance of this provision, an arbitration was scheduled for November 10, 2006, at 1:30 p.m. On November 8, 2006, Donald's attorney, Barry L. Efron, sent a letter to Deborah's attorney, Frederick Zlotucha, and Casseb stating that Donald would be out of town and could not attend the arbitration. The letter also stated that Efron was unaware of the specific outstanding issues and had not received the decree proposed by Zlotucha. On November 9, 2006, Casseb sent a letter to Efron and Zlotucha stating that the arbitration would proceed as scheduled. Casseb noted his understanding that Donald had purportedly fired Efron as his attorney; however, Casseb stated that Efron would remain as the attorney of record unless and until a court entered an order removing him. Casseb cautioned that a party who failed to appear or instructed his/her attorney not to appear at an arbitration does so at his/her peril. Also on November 9, 2006, Michele Petty sent a letter to Casseb stating that she had been retained to represent Donald. Petty's letter stated that Donald would not be able to attend the arbitration due to a job interview in Dallas. Petty's letter further stated that Donald had received no notice of the issues to be arbitrated and had only received a copy of the proposed decree that afternoon. Although Petty filed a motion for substitution of counsel on November 9, 2006, it was not scheduled for a hearing until November 15, 2006. On November 10, 2006, Casseb sent a letter to Efron, Petty, and Zlotucha acknowledging receipt of Petty's letter but noting he had not received an official entry of appearance or order of substitution from the trial court. As a result, Casseb stated he could not consider her requests. Casseb further noted his understanding that the date for the arbitration "was booked some time ago and that it was convenient to all." "Rather than argue via telephone or letter," Casseb stated his intent to start the arbitration at the scheduled time "subject to any pending motions by any counsel of record." On November 10, 2006, Donald filed a motion to quash the arbitration and an objection to Casseb as arbitrator; however, the arbitration proceeded as scheduled. An arbitration award was entered with a final decree of divorce attached. Deborah filed a motion to enter the final decree of divorce, and Donald filed a motion to set aside the arbitration award. At a hearing on these motions, the trial judge refused to allow testimony regarding the arbitration proceedings in Casseb's absence. The trial judge stated he would hear testimony from Casseb and entered the decree subject to Donald's ability to present Casseb's testimony at a motion for new trial or motion to set aside the arbitration award. Instead of setting a hearing before the trial court, Donald noticed Casseb for a deposition. After a hearing, the trial court ordered that no testimony could be elicited or any documents obtained from Casseb without first obtaining leave of court. The trial court subsequently denied Donald's motion for new trial. 1. Donald initially contends that the arbitration provision contained within the MSA is procedurally unconscionable because Donald was fraudulently induced into agreeing to the provision. See In re Foster Mold, Inc., 979 S.W.2d 665, 667-68 (Tex. App.--El Paso 1998, orig. proceeding) (noting that "procedural unconscionability - an issue which relates to the actual making or inducement of the agreement to arbitrate - is not subject to arbitration, but rather is reserved for appropriate judicial review"); see also Tex. Civ. Prac. & Rem. Code Ann. §171.088 (Vernon 2005) (trial court must vacate arbitration award if award was obtained by fraud or undue means). The record, however, contains no evidence to support this contention. Although Donald argues that the trial court refused to consider evidence, the trial court only conditionally refused to hear evidence subject to Donald setting a hearing with Casseb present to testify. The trial court's conditional refusal is consistent with section 154.073 of the Texas Civil Practice and Remedies Code which precludes the participants or mediator from testifying regarding an alternative dispute resolution proceeding subject to an in camera hearing by the trial court on the issue of confidentiality. Tex. Civ. Prac. & Rem. Code Ann. § 154.073 (Vernon 2005); Rutherford v. Blanks, No. 04-95-00770-CV, 1996 WL 355354, at *2-3 (Tex. App.--San Antonio June 28, 1996, writ denied) (noting procedure and finding waiver where party failed to follow procedure); see also Vick v. Waits, No. 05-00-01122-CV, 2002 WL 1163842, at *3 (Tex. App.--Dallas June 4, 2002, pet. denied) (refusing to create exception to the confidentiality provisions of section 154.073 for claims of fraud). Similarly, the trial court's order quashing Casseb's deposition ordered Donald to seek leave of court in order to elicit testimony or evidence from Casseb. Because the record contains no evidence supporting Donald's claim of procedural unconscionability, this issue is overruled. 2. Donald next complains that the trial court erred in entering the decree because Casseb should have been precluded from serving as the arbitrator since he was the mediator. See Tex. Civ. Prac. & Rem. Code Ann. §171.088 (Vernon 2005) (trial court must set aside arbitration award if rights were prejudiced by misconduct of arbitrator). A mediator can, however, serve as an arbitrator if the parties consent. In re Cartright, 104 S.W.3d 706, 714 (Tex. App.--Houston [1st Dist.] 2003, orig. proceeding) (noting mediator should not act as arbitrator in the same or a related dispute without the express consent of the parties). In this case, the parties expressly consented by executing the MSA. See Gaskin v. Gaskin, No. 2-06-039-CV, 2006 WL 2507319, at *3 (Tex. App.--Fort Worth Aug. 31, 2006, pet. denied) (noting parties expressly contractually consented to the mediator as arbitrator by executing mediated settlement agreement). Accordingly, Donald's complaint is overruled. 3. Donald further complains that the trial court erred in entering a decree based on the arbitration award because Casseb exceeded his powers as arbitrator. See Tex. Civ. Prac. & Rem. Code Ann. §171.088 (Vernon 2005) (trial court must set aside arbitration award if arbitrator exceeds powers). Donald initially contends that the provision in the decree requiring him to pay for the children's health insurance until they turned twenty-five was contrary to section 154.001 of the Texas Family Code which only provides for a trial court to order support for a child until the child turns eighteen or graduates from high school. See Tex. Fam. Code Ann. § 154.001 (Vernon Supp. 2007). The parties to a divorce, however, may contractually agree to extend support for a child beyond eighteen years of age. Bruni v. Bruni, 924 S.W.2d 366, 367 (Tex. 1996). In this case, the parties agreed to submit all substantive issues not resolved in the mediation to binding arbitration. As a result, they contractually agreed to be bound by the arbitrator's decision. Donald further contends that the arbitrator exceeded his powers because the issues he reached were not within the scope of the arbitration provision and several provisions were added to the decree that did not appear in the MSA. See Barsness v. Scott, 126 S.W.3d 232, 241 (Tex. App.--San Antonio 2003, pet. denied) (noting arbitrators exceed their authority when they decide matters not properly before them). In the MSA, however, the parties agreed to resolve "any remaining substantive issues, which were not resolved through Mediation, by binding Arbitration." Therefore, the arbitrator was within the scope of the arbitration provision in adding provisions to the final decree that resolved substantive issues that the MSA did not address. 4. Donald finally asserts that the trial court erred in entering the decree based on the arbitrator's award because the arbitrator refused to postpone the hearing after a showing of sufficient cause for the postponement. See Tex. Civ. Prac. & Rem. Code Ann. §171.088 (Vernon 2005). The grounds a trial court would find sufficient to support a motion for continuance are instructive in determining whether a party has shown sufficient cause for the postponement of arbitration. Hoggett v. Zimmerman, Axelrad, Meyer, Stern & Wise, P.C., 63 S.W.3d 807, 811 (Tex. App.--Houston [14th Dist.] 2001, no pet.). A continuance is not required to be granted simply because a party is unable to be present. Gold Rush, Inc. v. Wayne, No. 13-05-497-CV, 2006 WL 2076725, at *2 (Tex. App.--Corpus Christi July 27, 2006, pet. denied). If a party is unable to appear due to a business engagement, the party must show such things as: (1) diligence used to arrange for the party's presence; (2) conflicting business engagement could not be rescheduled; (3) party's personal presence required at business engagement; and (4) conflicting engagement could not be handled by someone else. Hoggett, 63 S.W.3d at 811. Moreover, if absence of counsel is urged as a ground for a continuance, the movant must show that the absence of counsel was not due to the party's own fault or negligence. State v. Crank, 666 S.W.2d 91, 94 (Tex. 1984). In this case, the record establishes that the date of the arbitration was booked for some time on a date that was convenient to all. The record does not establish the reason Donald scheduled a job interview on a date that would conflict with the arbitration or the reason the interview could not be rescheduled. Furthermore, the record establishes that Donald did not fire his attorney until two days before the scheduled arbitration date; therefore, the record does not establish that the absence of counsel to represent Donald at the arbitration was not due to Donald's own fault or negligence. Accordingly, the trial court did not err in concluding that the record failed to establish sufficient cause for the postponement. The trial court's judgment is affirmed. Alma L. López, Chief Justice 1. Although Deborah contends that this appeal should be dismissed because Donald accepted the benefits of the divorce decree by selling a house he was awarded, the issues raised in this appeal do not challenge the express provisions of the MSA but only those proceedings, including the arbitration, that followed the execution of the MSA. Since Donald was awarded the house in the MSA, and the MSA is binding on both Donald and Deborah, the reversal of the judgment could not possibly affect Donald's right to the benefit he accepted under the MSA. See Carle v. Carle, 234 S.W.2d 1002, 1004 (Tex. 1950) (recognizing exception to waiver of appeal through acceptance of benefits of judgment where reversal of judgment cannot possibly affect appellant's right to benefits secured); see also Tex. Fam. Code Ann. § 6.602 (Vernon 2006) (providing that mediated settlement agreement in context of dissolution of marriage is binding and party is entitled to judgment thereon). DONALD E. MANN, JR. v. DEBORAH BADAL MANN AND SOL CASSEB, III; from Bexar County; 4th district (04-07-00154-CV, ___ SW3d ___, 03-05-08, pet. denied by Texas Supreme Court July 18, 2008) (divorce arbitration per MSA)

No agreement to arbitrate, ergo no involuntary arbitration

Motion to compel party to arbitrate denied in the absence of express agreement to submit dispute to binding arbitration. Travelers Indemnity Co. v. Texas Municipal League, No. 01-08-00062-CV (Tex.App.- Houston [1st Dist.] July 17, 2008)(Keyes) (arbitration disputes) (no express agreement to arbitrate, motion to compel arbitration denied) FROM THE OPINION BY JUSTICE EVELYN KEYES Travelers has not proven that a valid binding arbitration agreement exists. (3) The agreement uses permissive language, stating that "[e]ither party may, by written request to the other party, seek to arbitrate any dispute," and the agreement further provides that "[f]ollowing receipt of a request for arbitration, the non-requesting party shall, within thirty (30) days by written response, accept or reject such a request." It is clear that the parties intended that one party could reject the other party's request to seek arbitration. If we were to hold that the arbitration provision here is mandatory, the language allowing a party to reject a request for arbitration would be meaningless, and we would be failing to give effect to all of the provisions of the agreement. See Davidson, 128 S.W.3d at 229. Travelers argues that the arbitration clause requires the parties to submit to arbitration once one of the parties requests it and cites In re U.S. Home Corporation in support of its contention. See 236 S.W.3d 761 (Tex. 2007). In In re U.S. Home, two contracts governed the relationship between the parties. Id. at 765. The parties signed a sales agreement that clearly required arbitration and a warranty agreement that provided that either party "may request" arbitration. Id. The Texas Supreme Court stated,We must construe the parties' contracts together if we can, rather than allowing one to cancel the other. . . . While the warranty's clause allowed either party to request arbitration, nothing in it suggests arbitration was optional if either did; to the contrary, the clause constituted a binding promise to arbitrate if either party requested it. Id. (internal citations omitted). Here, the agreement between the parties is clearly distinguishable from that in In re U.S. Home. The parties had no agreement similar to the sales agreement in In re U.S. Home, which required the parties to arbitrate their claims. Furthermore, unlike the warranty agreement in In re U.S. Home, the reinsurance agreement between Travelers and TML-JSIF does contain language suggesting that arbitration was optional if either party requested arbitration. The agreement between Travelers and TML-JSIF clearly states that one party can reject the other party's request to seek arbitration. Travelers also argues that an interpretation that construes the arbitration language as optional would render Article XIV of the reinsurance agreement meaningless. Travelers cites several cases from other jurisdictions in which courts have held that arbitration clauses that use permissive language should still be interpreted as requiring arbitration once a party requests arbitration. See United States v. Bankers Ins. Co., 245 F.3d 315, 320-21 (4th Cir. 2001); Am. Ital. Pasta Co. v. Austin Co., 914 F.2d 1103, 1103 (8th Cir. 1990); Ceres Marine Terminals, Inc. v. Int'l Longshoremen's Assoc., Local 1969, 683 F.2d 242, 246 (7th Cir. 1982); Local 771, I.A.T.S.E., AFL-CIO v. RKO Gen., Inc., 546 F.2d 1107, 1115-16 (2nd Cir. 1977); J.C. Bonnot v. Congress of Indep. Unions Local No. 14, 331 F.2d 355, 359 (8th Cir. 1964); Deaton Truck Line, Inc. v. Local Union 612, 314 F.2d 418, 421 (5th Cir. 1962); TM Delmarva Power, L.L.C. v. NCP of Va., L.L.C., 557 S.E.2d 199, 201 (Va. 2002); Orthopedic Phys. Therapy Ctr. v. Sports Therapy Ctrs., Ltd., 621 A.2d 402, 403 (Me. 1993); City of Louisa v. Newland, 705 S.W.2d 916, 917 (Ky. 1986). However, those cases are also distinguishable because none of the arbitration clauses in those cases contains language that indicates a party may reject a request to seek arbitration. See, e.g., Bankers Ins. Co., 245 F.3d at 318 ("[A] misunderstanding or dispute may be submitted to arbitration for a determination [that] shall be binding upon approval by the FIA."); Am. Ital. Pasta Co., 914 F.2d at 1103-04 (providing that the parties should first attempt to settle disputes "in a manner that is fair and equitable to both parties before either party can exercise the right of any legal action," and concluding, "If both parties agree that a dispute or disagreement is of such a nature that it cannot be settled as provided for above, then such dispute or disagreement may be submitted to arbitration[.]"); TM Delmarva Power, 557 S.E.2d at 201 ("If any material dispute, disagreement or controversy concerning this Agreement is not settled in accordance with the provisions [for resolution by conciliators,] then either Party may commence arbitration hereunder by delivering to the other Party a notice of arbitration."). Here, if we were to hold that arbitration was required once Travelers requested it, we would render meaningless the provision that the parties could choose to reject a request to arbitrate. Furthermore, Article XIV still has meaning under our interpretation because it requires the parties to follow through with the arbitration process once they have agreed to seek arbitration, and it provides the procedure that the parties must follow in the event that an arbitration ever actually takes place. Our interpretation of the reinsurance agreement between Travelers and TML-JSIF gives meaning to all portions of the agreement. See Davidson, 128 S.W.3d at 229.We conclude that the parties did not express an intent to arbitrate in Article XIV of the reinsurance agreement. In fact, they clearly expressed the intent that either party be able to reject the other party's request to seek arbitration. See Wachovia Securities, 186 S.W.3d at 113 (holding that language of agreement must clearly indicate intent to arbitrate before parties can be compelled to arbitrate). Travelers has failed to prove that a valid arbitration agreement exists, and, therefore, we hold that the trial court did not err in denying Travelers' motion to compel arbitration. See Kellogg Brown & Root, 166 S.W.3d at 737; Wachovia Securities, 186 S.W.3d at 113 (holding that a party cannot be compelled to arbitrate without an agreement to arbitrate). We overrule Travelers's sole issue. Travelers Indemnity Company v. Texas Municipal League Joint Self-Insurance Fund, for itself and as Subrogee of the City of Bunker Hill Village Appeal from 125th District Court of Harris County, TX Trial Court Judge: Hon. John Coselli Other arbitration cases decided by Houston Courts of Appeals 2008 arbitration decisions from the Texas Supreme Court

Employer did not waive arbitration, Houston Court says

In Re Bison Building Materials No. 01-07-00003-CV (Tex.App.- Houston [1st dist.] June 26, 2008)(Radack) (opinion in pdf) (arbitration mandamus, employment, workplace injury, no waiver of right to arbitrate found) Trial Court: 212th District Court of Galveston County Judge: Hon. Susan Elizabeth Criss Dispostion: Mandamus granted to compel arbitration; interlocutory appeal dismissed in parallel proceeding Applying the Supreme Court's "totality-of-the-circumstances" language, Houston's First Court of Appeals compels arbitration by mandamus, saying employer did not waive right to arbitrate by moving for summary judgment. FROM THE OPINION: Whether Bison substantially invoked the judicial process is a question of law that we determine from the totality of the circumstances of this particular case. See id. The dispositive inquiry is whether Bison, as the party seeking arbitration, invoked the judicial process to such a degree that its actions resulted in prejudice or detriment to Sombrano. See In re Citigroup Global Mkts., No. 06-0886, 2008 WL 2069835 at *1 (Tex. May 16, 2008) (citing Perry Homes, 2008 WL 1922978 at *4). [ DISTINGUISHING PERRY HOMES] In contrast, the totality of the circumstances in this case does not support Sambrano’s contention that Bison waived its right to arbitration by substantially invoking the litigation process. To the contrary, whether by its summary judgment or by arbitration, Bison’s consistent posture was not to invoke litigation, but to avoid it, whether based on Sambrano’s post-injury waiver of litigation, by summary judgment, or, when that failed, by arbitration. Bison did not seek to compel arbitration on the eve of trial, and the record does not affirmatively support Sambrano’s contention in this Court that Bison delayed seeking a hearing on its motion. Bison’s motion for summary judgment did not “go to the merits,” but to Sambrano’s post-injury waiver of any litigation for her injuries, and the record presented does not show that discovery was either full or complete. Finally, Sambrano failed completely to establish any prejudice or detriment to her arising from Bison’s seeking to compel arbitration. We therefore hold that Bison did not substantially invoke the litigation process to Sambrano’s prejudice or detriment. Conclusion We conditionally grant the petition for mandamus in Cause No. 01-07-00003-CV. We are confident that the trial court will vacate its order denying Bison’s motion to compel arbitration and will issue the writ only if the trial court refuses to vacate its order in compliance with this opinion. We dismiss the interlocutory appeal in Cause No. 01-07-00029-CV for lack of jurisdiction. Cf. In re D. Wilson Constr. Co., 196 S.W.3d at 783–84 (dismissing interlocutory appeal as moot because both TGAA and FAA applied). We deny all pending motions and lift our stay order of January 8, 2007.

Texas Supreme Court Finds No Waiver of Right to Enforce Arbitration Clause

Back to Business as Usual on the Arbitration Front COMMENT BY WOLFGANG HIRCZY DE MINO The arbitration-friendly Texas Supreme Court recently made headlines by holding - for the first time - that the right to arbitrate was (implicitly) waived by substantially invoking the judicial process and conducting discovery. It overturned a substantial arbitration award in favor of consumers in a residential construction dispute with a builder who also happens to be a major contributor to the judicial election campaigns of the incumbents on the court. In ruling for Perry Homes, and remanding for a trial on the merits, which the home owners had avoided by moving for arbitration shortly before the trial setting, the Court based its decision on the "totality of the circumstances." Arguably, the totality-of-the circumstances test amounts to no test or jurisprudential guideline at all, while preserving for the Court full discretion to resolve what constitutes waiver on a case-by-case basis ad hoc. The contours of what constitutes waiver-by-conduct remain nebulous, putting litigants who do not immediately pursue arbitration at risk. In this subsequent case, the Court finds no waiver, as has been its pattern prior to Perry Homes v. Cull (Tex. 2008). Resolving the petition in a per curiam opinion, it issues a mandamus order requiring the judge of the trial court to send the parties to arbitration. In Re Fleetwood Homes of Texas, LP, No. 06-0943 (Tex. June 20, 2008)(orig. proc.) (per curiam) (mandamus granted to compel arbitration) Also see prior post: Texas Supreme Court Finds No Waiver - In Re CitiGroup ═══════════════════════════════════════════ In Re Fleetwood Homes of Texas (Tex. 2008) (orig. proc.) ═══════════════════════════════════════════ PER CURIAM [Note: links are not part of the court's opinion; footnote omitted; go to court's web site to read opinion in pdf) Parties that “conduct full discovery, file motions going to the merits, and seek arbitration only on the eve of trial” waive any contractual right to arbitration. In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 764 (Tex. 2006). The relators here did none of those, instead merely discussing a potential trial setting and sending a set of written discovery the day before moving to compel arbitration. The trial court held the relators waived arbitration, and a divided court of appeals denied mandamus relief. ___ S.W.3d ___. We disagree, and thus conditionally grant it. See In re Weekley, 180 S.W.3d 127, 130 (Tex. 2005) (“Mandamus relief is proper to enforce arbitration agreements governed by the FAA.”). Fleetwood Enterprises, Inc., manufactures mobile homes. In January 2005 it signed a dealer agreement with Gulf Regional Services, Inc., an owner and developer of mobile home parks in southeast Texas that also sells and leases mobile homes. The agreement included an arbitration clause covering “any dispute, controversy or claim among the Parties.” In August 2005 Fleetwood cancelled the agreement on the ground that Gulf was planning to sell or use mobile homes at a location other than that specified in the dealer agreement.After Gulf filed suit in October 2005, Fleetwood filed an answer demanding arbitration, but did not actually move to compel arbitration until July 2006. Gulf opposed the motion on two grounds: express waiver and unconscionability.“[A] party waives an arbitration clause by substantially invoking the judicial process to the other party’s detriment or prejudice.” Perry Homes v. Cull, ___ S.W.3d ___, ___ (Tex. 2007). Waiver is a legal question for the court based on the totality of the circumstances, and asks whether a party has substantially invoked the judicial process to an opponent’s detriment, the latter term meaning inherent unfairness caused by “a party’s attempt to have it both ways by switching between litigation and arbitration to its own advantage.” Id. at __. Gulf argues that Fleetwood expressly waived arbitration, pointing to several emails from Fleetwood’s counsel regarding a proposed trial setting, culminating in the following:I have reviewed the Setting Request and would ask that we try to get a setting in March . . . . Given the documentation I received last week and the work we need to do as a result of those documents, Fleetwood is not going to be in a position to try this case in December. If you are agreeable to this, we could sign an agreed Setting Request, otherwise, I will have to oppose the request after you submit it and request a later setting.We need not decide whether Gulf is correct that express waiver is governed by different rules than those that govern implied waiver, as we disagree that this rises to the level of an express waiver. Nothing in this communication expressly waives arbitration or revokes the arbitration demand Fleetwood included in every answer it filed.Instead, the question here is whether Fleetwood impliedly waived arbitration by failing to pursue its arbitration demand for eight months while discussing a trial setting and allowing limited discovery. We have already answered that question “No.” In EZ Pawn Corp. v. Mancias, we held a party had not waived arbitration by filing an answer, discussing a docket-control order, sending written discovery, noticing a deposition, and agreeing to postpone a trial setting. 934 S.W.2d 87, 90 (Tex. 1996). Gulf points out correctly that the movant in EZ Pawn had not yet “discovered” the arbitration clause until after these actions had already taken place. Id. at 89. But our opinion was based on the nonmovant’s failure to show any prejudice, id. at 90, a requirement we recently reaffirmed. See Perry Homes, __ S.W.3d at __. As in EZ Pawn, the evidence here is legally insufficient to support a finding of prejudice. Gulf does not explain how it possibly could have been prejudiced by exchanging emails about a trial setting. Moreover, while these communications are a factor to be considered in the totality-of-the-circumstances, they are not the only factors. See id. at ___. Here, Fleetwood took no depositions, although it noticed one deposition before cancelling it.[1] It served one set of written discovery the day before it moved to compel arbitration. It filed no dispositive motions, nor did it wait until the eve of trial to move to compel. Taken together, these actions are not enough to overcome the presumption against waiver. See In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 763 (Tex. 2006); In re Bruce Terminix, 988 S.W.2d 702, 704 (Tex. 1998). Gulf also argues the arbitration clause is substantively unconscionable, citing two reasons. First, it asserts that arbitration limits its right to discovery. But limited discovery is one of arbitration’s “most distinctive features.” Perry Homes, ___ S.W.3d at ___; see also Preston v. Ferrer, ___ U.S. ___, ___ (2008) (“A prime objective of an agreement to arbitrate is to achieve streamlined proceedings and expeditious results.”). Gulf’s argument that “streamlined” discovery makes arbitration unconscionable would nullify almost all arbitration agreements. We hold that arbitration’s limits on discovery for both parties does not make it unconscionable. See In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006) (“The test for substantive unconscionability is whether, given the parties’ general commercial background and the commercial needs of the particular trade or case, the clause involved is so one-sided that it is unconscionable under the circumstances existing when the parties made the contract.” (internal quotation marks omitted)). Second, Gulf asserts the agreement here is unconscionable because it allows the prevailing party to recover attorney’s fees. It is true that absent a contractual agreement like this, Texas law allows attorney’s fees only for a prevailing plaintiff. See Tex. Civ. Prac. & Rem. Code § 38.001–.002. But allowing both parties to recover fees hardly makes an agreement “one-sided”; such agreements, common in commercial contexts, surely make them less so. Because Gulf has failed to show that Fleetwood waived its contractual right to arbitration, we conditionally grant Fleetwood’s petition for writ of mandamus and direct the trial court to compel arbitration. We are confident that the trial court will promptly comply, and our writ will issue only if it does not. OPINION DELIVERED: June 20, 2008

Failure to appear for arbitration results in default judgment

Pro se appellant fails to convince court of appeals that default judgment should be set aside in child custody modification suit; no motion for new trial was filed in the court below. Llorance v. Sohi No. 01-07-00840-CV (Tex.App.- Houston [1st Dist.] Apr. 17, 2008)(Higley) (family law SAPCR modification, default judgment arbitration order affirmed) Opinion by Justice Higley Before Justices Nuchia, Hanks and Higley Full case style: Leezet Llorance v. Farhad Safavi Sohi Appeal from 257th District Court of Harris County Trial Court Judge: The Honorable Judy L. Warne Disposition: Family district court's judgment affirmed MEMORANDUM OPINION [Note: Footnotes omitted; to see full opinion, click on case name above] In this suit affecting the parent-child relationship, pro se appellant, Leezat Llorance, appeals the trial court’s default modification order, which modifies an earlier order establishing the parent-child relationship between Llorance’s minor child, F.P.L.S., and appellee, Farhad Safavi Sohi. Raising what we construe to be one issue, Llorance complains that the default modification order should be set aside because she was unable to attend the arbitration hearing, from which the modification order emanated, because F.P.L.S. was ill. We affirm. Background On September 28, 2004, the trial court signed an “Agreed Order Establishing the Parent Child Relationship” (“the agreed order”) in which Farhad Safavi Sohi was adjudicated to be the father of F.P.L.S. The agreed order appointed Llorance as F.P.L.S.’s sole managing conservator and named Sohi as possessory conservator. With respect to possession, the agreed order provided that, until F.P.L.S.’s fifth birthday on July 15, 2008, Sohi was entitled to supervised visitation with F.P.L.S. every Saturday. The agreed order further provided that, beginning July 15, 2008, Sohi would be entitled to visitation under a standard possession order, as set forth in Family Code sections 153.311 through 153.317. Sohi was also ordered to pay Llorance monthly child support in the amount of $256.00. On March 16, 2006, Sohi filed a petition seeking modification of the agreed order. Sohi requested that he immediately be given possession of F.P.L.S. pursuant to a standard possession order. He also requested that his monthly child-support payments be decreased. Llorance answered and filed a counter-petition in which she requested an increase in child support and alleged that Sohi should not be given possession of F.P.L.S. pursuant to a standard possession order. Llorance alleged that Sohi did not seek the modification in the best interest of F.P.L.S., rather he sought modification to “retaliate” against her and to cause her “financial ruin.” The modification action was tried by an arbitrator on August 31, 2007. Sohi and his counsel attended the arbitration hearing; however, Llorance did not attend. On that same day, the arbitrator signed an order entitled “Arbitrator’s Binding Order in Suit to Modify Agreed Order Establishing the Parent-Child Relationship” (“the default modification order”) in which the arbitrator noted that Llorance had not appeared at the arbitration hearing. In the default modification order, the arbitrator removed Llorance as F.P.L.S.’s sole managing conservator and appointed Sohi and Llorance as joint managing conservators. Llorance retained the right to establish F.P.L.S.’s primary place of residence with a geographic restriction. With respect to visitation, the arbitrator incorporated the statutory standard possession order. The modification order also increased Sohi’s monthly child support to $300.00. The trial court signed and adopted the modification order on September 27, 2007. Llorance did not file a motion for new trial. On October 2, 2007, Llorance filed a pro se notice of appeal in which she challenged the default modification order. In the notice of appeal, Llorance admitted she had received notice of the arbitration hearing, but alleged that she had been unable to attend because she had taken F.P.L.S. to the emergency room in the early morning hours of August 31, 2007, the day of arbitration. Llorance asserted that, on that morning, she had spoken to the arbitrator’s assistant and had repeatedly called and left messages for the arbitrator to inform the arbitrator that she could not attend arbitration because she had to take F.P.L.S. to the emergency room. Llorance claimed that the arbitrator never returned her calls. Llorance stated that F.P.L.S. was admitted to the hospital on August 31, 2007 and remained hospitalized until September 2, 2007. In the notice of appeal, Llorance further alleged that, on September 2, 2007, she faxed a letter to the arbitrator in which she explained why she had not attended trial and questioned why her telephone messages to the arbitrator had not been returned. Llorance also attached a copy of F.P.L.S.’s hospital discharge record. Llorance contended that the first response from the arbitrator came on September 27, 2007, when Llorance received a letter from the arbitrator informing her of the default modification order. In her notice of appeal, Llorance asked for a hearing date and requested that the original agreed order remain in effect until the appeal is determined. In support of the allegations in the notice of appeal, Llorance attached copies of her telephone records to show that she had made numerous attempts to contact the arbitrator, the September 2, 2007 letter that Llorance faxed to the arbitrator with the appended medical record, and the letter from the arbitrator notifying Llorance of the default modification order. Although not shown in the record, Llorance also asserts that arbitration had originally been set on April 11, 2007. On that date, Llorance claims that she and her then attorney had attended arbitration but that Sohi and his counsel had not appeared. According to Llorance, the arbitrator had contacted Sohi and rescheduled the arbitration. Llorance questions why Sohi was given an opportunity to reschedule arbitration and relies on this perceived inequitable treatment in challenging the default modification order on appeal. Llorance also questions why the arbitrator signed the default modification order, which was prepared by Sohi’s counsel, on the same date as the hearing. Llorance concludes her appellate brief by requesting that the default modification order be set aside and that the agreed order be reinstated. Analysis We begin by acknowledging that the same prerequisites for setting aside a “no-answer” default also apply to a “post-answer” default, such as the one at issue here. Cliff v. Huggins, 724 S.W.2d 778, 779 (Tex. 1987). Harris v. Burks, No. 01-06-00128-CV, 2007 WL 1776048 at *1 (Tex. App.—Houston [1st Dist.] June 21, 2007, no pet.) (mem. op.). When, as here, extrinsic evidence is necessary to challenge a default judgment, a motion for new trial is a prerequisite to complaining on appeal that it should be set aside. In re J.D.K., No. 02-06-280-CV, 2007 WL 2792487 at *1 (Tex. App.—Fort Worth Sept. 27, 2007, no pet.) (mem. op.) (citing, in part, Tex. R. Civ. P. 324(b)(1); Massey v. Columbus State Bank, 35 S.W.3d 697, 699 (Tex. App.—Houston [1st Dist.] 2000, pet. denied)). As mentioned, Llorance did not file a motion for new trial. Even if we construe her notice of appeal as a motion for new trial under the limited facts of this case, see J.D.K., 2007 WL 2792487 at *2, Llorance failed to show that the default modification order should be set aside and a new trial ordered. A trial court should set aside a default judgment and grant a new trial if (1) the failure to appear was not intentional or the result of conscious indifference but rather was due to accident or mistake; (2) the defendant sets up a meritorious defense; and (3) the granting of a new trial would not cause delay or otherwise injure the prevailing party. Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939); see In re R.R., 209 S.W.3d 112, 114–15 (Tex. 2006). Though she makes allegations pertinent to the first Craddock prong in her notice of appeal, Llorance neither sets up a meritorious defense nor asserts that granting a new trial would not cause delay or injure Sohi. Accordingly, we overrule Llorance’s complaint that the trial court improperly signed a default judgment against her for her failure to appear at arbitration. Conclusion We affirm the judgment of the trial court. Laura Carter Higley Justice Panel consists of Justices Nuchia, Hanks, and Higley.

In re Jindal Saw Limited (Tex.App.- Houston 2008)

In re Jindal Saw Limited No. 01-07-01068-CV (Tex.App.- Houston [1st Dist.] May 22, 2008) (Alcala) (workplace safety, occupational injury, worker's comp, nonsubscriber, arbitration, wrongful death, survival action) Opinion by Justice Else Alcala Panel Composition: Justices Tim Taft, Evelyn Keyes, and Elsa Alcala Full style of this case: In re Jindal Saw Limited, Jindal Enterprises LLC, and Saw Pipes USA Appeal from Probate Court No 1 of Harris County Trial Court Judge: Hon. Russell Austin Disposition: Grant Petition for Writ of Mandamus Attorneys: Levi G McCathern II, Jeffrey Christopher Wright Attorney Kurt B. Arnold, Marvin B. Peterson, Micajah Daniel Boatright By petition for writ of mandamus, relators, Jindal Saw Limited, Jindal Enterprises LLC, and Saw Pipes USA, Inc. (collectively, “Saw Pipes”), challenge the trial court’s October 11, 2007 order denying Saw Pipes’ motion to compel arbitration.[1] In two issues, Saw Pipes contends that the trial court abused its discretion by denying its motion to compel arbitration of the survival action and wrongful-death claims because an enforceable arbitration agreement exists and the claims fall within the scope of the arbitration agreement. We conclude that the non-signatories to the arbitration agreement are bound to arbitrate the survival action claims because the signatory agreed to arbitrate his claims against Saw Pipes. We also conclude, however, that the non-signatories’ wrongful-death claims are not bound by the arbitration agreement because those claims are personal to the non-signatories and they did not agree to arbitrate the claims. We grant the petition for writ of mandamus for the survival action and deny the petition for writ of mandamus for the wrongful-death claims. * * * Conclusion By denying the motion to compel arbitration in the October 11, 2007 order, the trial court abused its discretion with regard to the survival claim and did not abuse its discretion with regard to the wrongful-death claims. Accordingly, we grant the petition for writ of mandamus for Yvonne’s survival claim and deny the petition for writ of mandamus for the wrongful-death claims of Yvonne and the children. We lift the stay that we issued when the petition was filed. We are confident that the trial court will act promptly in accord with this opinion, and our writ will issue only if it does not. Elsa Alcala Justice

No Waiver: In Re CitiGroup Global Markets, Inc. (Tex. May 16, 2008)

Texas Supreme Court rejects arbitration waiver theory in suit brought by customers Contrary to its recent decision vacating an arbitration award in favor of homeowners in a residential construction dispute (in which it held consumers had waived arbitration by conducting extensive discovery), the Texas Supreme Court finds no waiver of contractual right to arbitrate in case in which corporate defendant had litigated in several forums, but had reserved right to move for arbitration in suit brought by investors, which it did on remand to state court. In Re CitiGroup Global Markets, Inc., No. 06-0886 (Tex. 2008) (per curiam) (arbitration compelled, no express or implied waiver of contractual right to arbitrate found) Also see --> Other per curiam decisions Texas Arbitration Case Law - Decisions ═════════════════════════════════════ In Re Citigroup Global Markets, Inc. (Tex. May 16, 2008) ═════════════════════════════════════ PER CURIAM Parties that “conduct full discovery, file motions going to the merits, and seek arbitration only on the eve of trial” waive any contractual right to arbitration. In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 764 (Tex. 2006). The relator here did none of those, but instead spent seven months removing the case to various federal courts before finally filing an answer in state court with a contemporaneous motion to compel arbitration. The courts below held the relator’s transfer efforts waived arbitration. 202 S.W.3d 477. We disagree, and thus conditionally grant mandamus relief. See In re Weekley, 180 S.W.3d 127, 130 (Tex. 2005) (“Mandamus relief is proper to enforce arbitration agreements governed by the FAA.”). Robert and Natalie Nickell had investment accounts with Citigroup Global Markets, Inc. (formerly known as Salomon Smith Barney, Inc.), and signed agreements to arbitrate any disputes “concerning or arising from” their accounts. The Nickells allegedly lost more than $4 million after they invested in WorldCom Inc. based on research reports by a Citigroup analyst. The Nickells sued Citigroup, which immediately removed the case to federal court on the ground that it related to WorldCom’s bankruptcy proceedings. In federal court, the Nickells moved to remand and Citigroup moved to transfer the case to a federal multidistrict litigation (“MDL”) court in New York managing similar WorldCom-related suits against Citigroup. Citigroup moved to stay proceedings in the federal court pending the MDL panel’s decision, specifically reserving its defense “that Plaintiffs arbitrate, not litigate, their claims.” The MDL panel conditionally transferred the case to the MDL court. The Nickells asked the panel to vacate the order, which the panel denied before transferring the case. Once in the MDL court, a stay order excused Citigroup from filing an answer or pleading any defenses. Undeterred by past failures, the Nickells filed another motion for remand in the MDL court. Undeterred by past successes, Citigroup gave up the jurisdictional battle and agreed to a remand of the case back to state court. In all, the parties spent about seven months shuttling between the federal forums managing WorldCom cases. Back in state court, Citigroup simultaneously filed an original answer and a motion to compel arbitration. The trial court denied the motion, and the court of appeals denied mandamus relief on the ground that Citigroup expressly waived arbitration by statements reflecting an intent to litigate the dispute. 202 S.W.3d at 483–84. The parties agree the Federal Arbitration Act applies. See 9 U.S.C. § 1 et seq. “[A] party waives an arbitration clause by substantially invoking the judicial process to the other party’s detriment.” Perry Homes v. Cull, ___ S.W.3d ___, ___ (Tex. 2007). Waiver is a legal question for the court based on the totality of the circumstances, and asks whether a party has substantially invoked the judicial process to an opponent’s detriment, the latter term meaning inherent unfairness caused by “a party’s attempt to have it both ways by switching between litigation and arbitration to its own advantage.” Id. at __. The court of appeals held that Citigroup expressly waived arbitration — not by its conduct transferring the case to the federal and MDL courts, but by statements in those motions suggesting it was doing so for the purposes of litigation, not arbitration. 202 S.W.3d at 484 (holding that “removal related conduct alone does not constitute waiver,” but placing reliance “primarily upon [Citigroup’s] written explanations for the removal and transfer.”). We need not decide whether the Nickells are correct that express waiver is governed by different rules than those that govern implied waiver, as we disagree that these statements rise to the level of an express waiver. Citigroup never opposed arbitration, nor did it expressly waive its arbitration rights. To the contrary, it reserved the right to request arbitration early on and so informed the Nickells. Its statements in various transfer pleadings about the case’s similarity to others already transferred, the potential savings in consolidated discovery, and the potential convenience of parties and witnesses in consolidated proceedings were required by statute to justify transfer to the MDL court. See 28 U.S.C. § 1407(a) (providing for MDL transfer of “civil actions involving one or more common questions of fact” if the transfer “will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions”). Moreover, its statements about how much discovery could be avoided by transfer to the MDL court reflect an effort to avoid litigation activity rather than duplicate it. See In re Serv. Corp. Int’l, 85 S.W.3d 171, 175 (Tex. 2002) (“Relators’ efforts in moving to dismiss and staying discovery were to avoid litigation, not participate in it.”). Additionally, we disagree with the Nickells that transfer to an MDL court is necessarily inconsistent with seeking arbitration. Arbitration is possible for consolidated actions as well as individual ones. See Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452–53 (2003). Courts can issue inconsistent orders on arbitration just as they can on discovery or other matters that MDL courts are designed to coordinate. Thus, Citigroup’s transfer to the MDL court does not indicate it had abandoned arbitration. Because Citigroup never expressly waived or objected to arbitration, the question here is whether it impliedly waived arbitration. Citigroup’s actions and statements in requesting transfer to the MDL court are certainly factors to be considered in the totality-of-the-circumstances test. See Perry Homes, ___ S.W.3d at ___. But they cannot be taken out of the context in which they were made or the remainder of Citigroup’s litigation conduct. There is no dispute that Citigroup’s actual litigation conduct (as opposed to statements of its intentions) was limited to jurisdictional transfers, not the merits. The Nickells concede Citigroup never sent or responded to any written discovery, conducted no depositions, filed no motions (or even an answer) relating to the merits before seeking arbitration, and engaged in no litigation conduct whatsoever other than transferring the case to the federal and MDL courts. In these circumstances, Citigroup’s statements about what discovery might be saved in the MDL court are simply not enough to show substantial invocation of the judicial process. Finally, the Nickells argue their contracts bind them to arbitration with Citigroup’s predecessors but not Citigroup. But each contract here specifically stated that its provisions “shall inure to the benefit of Smith Barney’s present organization, and any successor organization or assigns.” Citigroup established (and the Nickells do not dispute) that it is a successor organization to Smith Barney, and thus fell heir to the Nickells’ contracts and the arbitration clauses within them. Because the Nickells failed to show Citigroup waived its contractual right to arbitration, we conditionally grant Citigroup’s petition for writ of mandamus without hearing oral argument, see Tex. R. App. P. 52.8(c), and direct the trial court to compel arbitration. We are confident that the trial court will promptly comply, and our writ will issue only if it does not. OPINION DELIVERED: May 16, 2008 ============ Full case style: IN RE CITIGROUP GLOBAL MARKETS, INC. (F/K/A SALOMON SMITH BARNEY, INC.), CITIGROUP, INC., AND STACY OELSEN; from Dallas County; 5th district (05-05-01430-CV, 200 S.W.3d 742, 06-28-06) Without hearing oral argument, the Texas Supreme Court conditionally grants the petition for writ of mandamus. RELATED LINKS: 2008 Texas Supreme Court Opinions | Tex. 2008 arbitration decisions | Mandamus Decisions of the Tex. Sup. Ct.

Family Code trumps CPRC provision permitting interlocutory appeal of order confirming arbitration award

Houston Court of Appeals rules that prohibition of temporary order appeals in family cases extends to order confirming an arbitration award arising from an agreement to mediate/arbitrate temporary orders issues in a pending divorce case involving children. Finding it lacks jurisdiction, the appellate court declines to reach the merits and dismisses the attempted interlocutory appeal. O P I N I O N This is an attempted appeal from an interlocutory order signed October 31, 2007, confirming an arbitration award on temporary orders entered in a pending divorce and suit affecting the parent-child relationship (SAPCR). Because we lack jurisdiction over this interlocutory appeal, we dismiss. Texas strongly encourages alternative dispute resolution, particularly in family law matters. See Tex. Civ. Prac. & Rem. Code Ann. ' 154.002 (Vernon 2005).[1] The Family Code expressly permits binding arbitration in divorce and SAPCR cases. See Tex. Fam. Code Ann. '' 6.601, 153.0071 (Vernon 2005 & Supp. 2007).[2] The parties agreed to mediate before Judge Maryellen Hicks and reached an agreed binding mediated settlement agreement (MSA) as to temporary orders pending conclusion of the divorce. The agreement provided that if any dispute arose as to the entry of the temporary orders, the dispute would be resolved in binding arbitration before Judge Hicks. Specifically, the MSA provided as follows: Said Arbitrator may decide what constitutes substantial compliance with all terms, and any omitted terms, of this Agreement that were discussed and agreed upon in the mediation. Maryellen W. Hicks may make disposing decisions concerning the language of this Order and submit the draft approved by her to the Court for signature and entry. Appellant was ordered to pay certain fees, including attorney's fees, as part of the MSA, and the parties returned to arbitration when a dispute arose over compliance with these orders. It is from the confirmation of the arbitration award ordering compliance with the temporary orders that this appeal arises.[3] Generally, appeals may be taken only from final judgments. Lehmann v. Har‑Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). Interlocutory orders may be appealed only when expressly permitted by statute. Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 352 (Tex. 2001); Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992) (orig. proceeding ). Texas courts strictly construe statutes authorizing interlocutory appeals. America Online, Inc. v. Williams, 958 S.W.2d 268, 271 (Tex. App.CHouston [14th Dist.] 1997, no writ). The Texas Family Code specifically precludes the interlocutory appeal of temporary orders, except those appointing a receiver. See Tex. Fam. Code Ann. ' 6.507 (Vernon 2006); see also Tex. Fam. Code Ann. ' 105.001(e) (Vernon 2006) (stating temporary orders in suits affecting the parent‑child relationship are not subject to interlocutory appeal). Because it appeared to this court that appellant is attempting to appeal temporary orders, which the Family Code expressly prohibits, notification was transmitted to the parties of this court's intention to dismiss the appeal for want of jurisdiction unless appellant filed a response demonstrating grounds for continuing the appeal. See Tex. R. App. P. 42.3(a). Appellant filed a response to our notice, asserting that the appeal is permitted by Section 171.098 of the Texas Civil Practice & Remedies Code, which provides for an appeal of an order confirming an arbitration award. See Tex. Civ. Prac. & Rem. Code Ann. ' 171.098(a) (Vernon 2005). Section 311.026 of the Texas Government Code provides that when two statutes are in conflict with each other, the specific statute "prevails as an exception to the general" statute. Tex. Gov't Code Ann. ' 311.026(b) (Vernon 2005). Applying this principle, Texas courts of appeals have held that the specific Family Code provision limiting temporary order appeals controls over the general statute in the Civil Practice and Remedies Code permitting interlocutory appeals from temporary injunctions. See, e.g., Marley v. Marley, No. 01-05-00992-CV, 2006 WL 3094325, at *2 (Tex. App.- Houston [1st Dist.] 2006, pet. denied) (mem. op.) (holding section 51.014(4) of the Civil Practice and Remedies Code permitting appeals from temporary injunctions did not control over prohibition in section 6.502 of interlocutory appeals from temporary orders in divorce proceedings); Cook v. Cook, 886 S.W.2d 838, 839 (Tex. App.- Waco 1994, no writ) (rejecting argument that section 51.014(4) allowed an interlocutory appeal from temporary orders issued under Family Code section 3.58, the identical former version of section 6.502). Because sections 6.507 and 105.001(e) of the Family Code apply specifically to divorce and SAPCR proceedings, they prevail over the application of the general arbitration statute, section 171.098 of the Civil Practice and Remedies Code. Appellant also asserts that the Family Code prohibition on appeals from temporary orders does not apply because the order being appealed is not an order entered under Title 1, Subchapter F of the Family Code, governing Temporary Orders, but is instead under Subchapter G, providing for alternative dispute resolution, including arbitration. This argument ignores the fact that the arbitration in this case concerned temporary orders entered during the pendency of the divorce. We hold that the trial court's order confirming a binding arbitration order entered during the pendency of a divorce and SAPCR proceeding may not be challenged by interlocutory appeal. Therefore, we lack jurisdiction over this appeal. Accordingly, the appeal is ordered dismissed. PER CURIAM Judgment rendered and Opinion filed May 15, 2008. Panel consists of Chief Justice Hedges and Justices Fowler and Boyce. [1] "It is the policy of this state to encourage the peaceable resolution of disputes, with special consideration given to disputes involving the parent‑child relationship, including the mediation of issues involving conservatorship, possession and support of children, and the early settlement of pending litigation through voluntary settlement procedures." Tex. Civ. Prac. & Rem. Code Ann. ' 154.002 (Vernon 2005). [2] "On written agreement of the parties, the court may refer a suit for dissolution of a marriage to arbitration. The agreement must state whether the arbitration is binding or nonbinding." Tex. Fam. Code Ann. ' 6.601 (Vernon 2005); see also Tex. Fam. Code Ann. ' 153.0071 (Vernon Supp. 2007) (same for a SAPCR). [3] "If the parties agree to binding arbitration, the court shall render an order reflecting the arbitrator's award.)." Tex. Fam. Code Ann. ' 6.601(b) (Vernon 2005). "If the parties agree to binding arbitration, the court shall render an order reflecting the arbitrator's award unless the court determines at a non-jury hearing that the award is not in the best interest of the child." Tex. Fam. Code Ann. ' 153.0071(b) (Vernon Supp. 2007) Mason v. Mason, No. 14-07-00991-CV (Tex.App.- Houston [14th Dist.] May 15, 2008)(per curiam) (family court mediation and arbitration, no interlocutory appeal of order on motion to confirm arbitration award in suit affecting the parent-child relationship, divorce case) Full case style: Jason S. Mason v. Patricia A. Mason Appeal from 308th District Court of Harris County Trial Court Judge: Judge Georgia Dempster