Tuesday, September 8, 2009

Was the right to arbitate waived? - Hardly

Dallas Court of Appeals has no trouble applying the "totality of the circumstances" test in concluding that arbitration was not waived where the motion to compel was filed almost instantly, along with other steps taken to avoid litigation, such as a plea in abatement, and an answer conditioned on resolution of the arbitration issue. Per Group, LP v. Dava Oncology, LP, No. 05-08-01582-CV (Tex.App.- Dallas Aug 19, 2009) FROM THE OPINION: C. Did appellants waive their right to arbitration? Appellees contend that appellants waived their right tocompel arbitration by substantially invoking the judicial process and byrequesting a stay of litigation pending arbitration of PER Group'sclaims against Dr. Jain. We disagree. 1. Substantial invocation of judicial process Whether a party has waived its right to arbitrate is a questionof law that we review de novo based on the “totality of thecircumstances.” Perry Homes v. Cull, 258 S.W.3d 580, 591 (Tex. 2008), cert. denied, 129 S. Ct. 952 (2009); Trammell, 246 S.W.3d at 820. Public policy favors arbitration and there is a strong presumption againstfinding that a party has waived its right to arbitration. Perry Homes,258 S.W.3d at 589-90. As a result, the burden to prove waiver is a heavyone. Id.; EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996) (percuriam). Any doubts regarding waiver are resolved in favor ofarbitration. In re Bruce Terminex Co., 988 S.W.2d 702, 705 (Tex. 1998)(orig. proceeding) (per curiam). Factors we consider under the totality-of-the-circumstancestest include whether the movant was the plaintiff or the defendant, how long the movant waited before seeking arbitration, how much pretrial activity related to the merits rather than arbitrability or jurisdiction, how much time and expense has been incurred in litigation,whether the movant sought or opposed arbitration earlier in the case,whether the movant filed affirmative claims or dispositive motions,whether discovery would be useful in arbitration, and whether the movantsought judgment on the merits. Perry Homes, 258 S.W.3d at 591-92; In reVesta Ins. Group, Inc., 192 S.W.3d at 763. Appellants/movants are the defendants below. They filed a demand for arbitration four days after appellees filed their lawsuit. And they filed a motion to compel arbitration and stay proceedings pending arbitration before their answer was due. When they filed their answer,they filed a plea in abatement and conditional answer subject to their motion to compel arbitration. And they did not assert affirmative defenses or counterclaims, but, instead, reserved their right to do so. The hearings in the trial court related to the arbitrability of the claims, not the claims' merits. And the record does not contain any indication that the parties engaged in pretrial discovery, other than asingle reference to a motion to quash a deposition filed by movants. Based on the totality of the circumstances, we conclude thatappellants did not substantially invoke the trial process and, therefore, did not waive their right to arbitrate appellees' claims. [...] Conclusion We sustain appellants' issues. We reverse the trial court'sorder denying appellants' motion to compel arbitration, vacate the trial court's order enjoining appellants from arbitrating appellees' claims,and remand to the trial court for further proceedings. We dismiss the petition for writ of mandamus. ELIZABETHLANG-MIERS JUSTICE

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