Saturday, July 26, 2008

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. L√≥pez, 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)

Friday, July 18, 2008

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

Tuesday, July 8, 2008

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.