Wednesday, October 28, 2009

Arbitration of Wrongful Termination Claim Ordered: In Re Polymerica, LLC (Tex. Oct. 23, 2009)

TEXAS SUPREME COURT GRANTS EMPLOYER'S PETITION FOR MANDAMUS TO REQUIRE EMPLOYEE TO ARBITRATE HER WRONGFUL TERMINATION CLAIM In Re Polymerica, L.L.C., (Tex. Oct. 23, 2009) (orig. proceeding) Former employee required to arbitrate wrongful termination claim under arbitration agreement signed in connection with operating agreement of her employer with staffing company even though claim accrued after the operating agreement between the two companies had been terminated and the company against whom the wrongful discharge claims was asserted had not signed the dispute resolution plan containing the provision for binding arbitration. The court of appeals below had held that only claims accruing while operating agreement was in force were subject to mandatory arbitration.


In re Polymerica, LLC d/b/a Global Enterprises, Inc.



Polymerica, L.L.C. d/b/a Global Enterprises, Inc. (“Global”) seeks a writ of mandamus ordering the trial court to grant its motion to compel arbitration. Global, an El Paso-based manufacturer of plastics, hired Angelica Soltero in 1998. In 2002, Global contracted with dmDickason Staff Leasing Company (“Dickason”) to manage Global’s human resources department. Soltero signed a Dispute Resolution Plan, which “appl[ies] to any disputes between dmDickason/Global Enterprises and any applicant for employment, employee or former employee, including legal claims such as discrimination, wrongful discharge or harassment.” The Plan includes a four-step process for resolving disputes, the fourth of which requires binding arbitration under the Federal Arbitration Act. The Plan notes that it is “a condition of employment and of continued employment” and that “employment or continued employment after the effective date of this Plan constitutes consent by the Employee to be bound by this Plan.”

Subsequently, Global distributed an employee handbook and required Soltero and all other employees to acknowledge its receipt. The acknowledgment recites that the handbook “takes precedence over, supercedes, and revokes any previous memo, bulletin, policy or procedure issued prior to [July 6, 2003], by Global Enterprises on any subject discussed in the Handbook.” The handbook includes a section on arbitration, which provides, in pertinent part:

All disputes between you and dmDickason/Global shall be resolved exclusively through arbitration under the Federal Arbitration Act. All employees are required to sign a Dispute Resolution Plan Agreement, as a condition of employment, during their new employee orientation on the first day of employment.

dmDickason/Global’s Dispute Resolution Plan and Arbitration Agreement is intended to provide a method for solving problems that is fair, prompt and effective.

. .

Your decision to accept employment with Global, or to continue your current employment after the effective date of the Dispute Resolution Plan, will mean that you have agreed to, and are bound by the Plan. All disputes between you and dmDickason, and/or you and Global shall be resolved exclusively through arbitration under the Federal Arbitration Act, the American Arbitration Association’s National Rules for the Resolution of Employment Disputes, and dmDickason’s dispute resolution plan that is given to all employees during their initial employment orientation with dmDickason.

On December 31, 2005, Global ended its operating agreement with Dickason and resumed full management of its human resources department. Five days later, Global terminated Soltero.

Soltero sued Global under chapter 21 of the Texas Labor Code alleging wrongful termination based on her national origin as well as retaliation for reporting alleged sexual harassment. The trial court denied Global’s motion to compel arbitration. Global sought mandamus relief, which the court of appeals granted in part. 271 S.W.3d 442. The court of appeals held that Soltero’s claims arising before Global and Dickason ended their relationship must be arbitrated, but that those arising after Global and Dickason’s operating agreement ended should not. Id. at 449. Soltero then nonsuited any claim arising before January 1, 2006 and alleged that, because her termination occurred after the Global/Dickason agreement ended, none of her claims were subject to arbitration. The trial court agreed, concluding that “all of [Soltero’s] claims in this suit arise from the wrongful termination occurring after the operating agreement between Global and Dickason ended.” The trial court lifted the previously ordered stay and placed the case on the trial docket. Global asks us to order the trial court to compel arbitration as to all of Soltero’s claims and to stay the proceedings pending arbitration.

Soltero concedes that she signed the Dispute Resolution Plan and the 2003 Handbook, but she argues that the Handbook’s statement revoking prior versions nullifies the Dispute Resolution Plan. That Handbook provision, however, does not cover contracts like the Plan’s arbitration agreement. We also note that the Handbook and the Dispute Resolution Plan were intended to work in tandem. 227 S.W.3d at 448 (“We fail to see how the handbook nullifies the arbitration agreements; rather, it appears to reference them.”); see also J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). If the 2003 Handbook’s discussion of arbitration eliminated the Dispute Resolution Plan, the Handbook’s discussion of—and multiple references to—the Plan would be meaningless. See Davidson, 128 S.W.3d at 229.

Soltero also asserts that the Dispute Resolution Plan is illusory because the 2003 Handbook could be modified at any time. See id. at 230 n.2 (noting that “most courts . . . have held that, if a party retains the unilateral, unrestricted right to terminate the arbitration agreement, it is illusory”). But the Dispute Resolution Plan has its own termination provision, which requires notice to employees and applies prospectively only. Because Global cannot “avoid its promise to arbitrate by amending the provision or terminating it altogether,” In re Halliburton Co., 80 S.W.3d 566, 570 (Tex. 2002), the Dispute Resolution Plan is not illusory.

Next, Soltero contends that because only Dickason, not Global, was a party to the Dispute Resolution Plan, Global may not enforce the Plan’s terms. Global counters that even though it did not sign the Plan, it can enforce Dickason’s agreement with Soltero under the equitable theory of direct-benefits estoppel. We need not address direct-benefits estoppel, however, because both Global and Soltero were parties to the Plan. The Plan notes that it “will apply to any disputes between dmDickason/Global Enterprises and any applicant for employment, employee or former employee.” It also defines “covered dispute” as including any claim, demand, or controversy “between Employee and dmDickason and/or Global Enterprises.” Although the Plan is signed only by Soltero and Dickason, we have never held that the employer must sign the arbitration agreement before it may insist on arbitrating a dispute with its employee. “[N]either the FAA nor Texas law requires that arbitration clauses be signed, so long as they are written and agreed to by the parties.” In re AdvancePCS Health, L.P., 172 S.W.3d 603, 606 n.5 (Tex. 2005) (noting, however, that Texas Arbitration Act requires signatures for contracts of less than $50,000 or personal injury claims); see also In re Macy’s Tex., Inc., 291 S.W.3d 418, 418 (Tex. 2009) (per curiam) (observing that “[t]he FAA contains no requirements for the form or specificity of arbitration agreements except that they be in writing; it does not even require that they be signed”); Halliburton, 80 S.W.3d at 569 (holding arbitration clause was accepted by continued employment). And while the Plan provides that it covers disputes involving former employees of the “company,” defined as “dmDickason Staff Leasing Company, Inc. together with its subsidiaries, parent companies, affiliates, officers, directors, employees, agents, representatives, shareholders and assigns,” it also states that it applies to “any disputes between dmDickason/Global Enterprises and any . . . former employee.” See In re D. Wilson Construction Co., 196 S.W.3d 774, 782 (Tex. 2006) (observing that “we resolve doubts as to the scope of the agreements in favor of coverage”); In re FirstMerit Bank, 52 S.W.3d 749, 753 (noting that “courts must resolve any doubts about an arbitration agreement’s scope in favor of arbitration”).

The court of appeals held that Global could not enforce the arbitration agreements “for those claims arising from the alleged wrongful termination occurring after the operating agreement between Global and Dickason ended.” 271 S.W.3d at 449.

The court relied on In re Neutral Posture, Inc., 135 S.W.3d 725, 730 (Tex. App.—Houston [1st Dist.] 2003, no pet.), to explain why claims post-dating the operating agreement must be tried rather than arbitrated, but we find Neutral Posture to be distinguishable. The arbitration agreement there included a condition stating that the parties must resolve disputes via arbitration only during a set five-year period, and the claim at issue was filed after the expiration of that period. Id. There is no such time limitation in the Dispute Resolution Plan, nor is there a condition that the Global and Dickason relationship must be in existence for either to enforce the Plan. Soltero’s agreement to arbitrate survives the dissolution of that relationship, and the Dispute Resolution Plan explicitly covers former employees like Soltero.

The court of appeals also noted that Global’s former human resources manager, Valerie Scott, “was unaware of any arbitration agreement after the termination of Global’s relationship with Dickason,” and “[s]he agreed that from January 2006 until July 2007, when Global created a new arbitration agreement, there was no arbitration agreement in effect.” 271 S.W.3d at 446-47. But Scott’s testimony is ambiguous on this point. She testified that she “never even thought about [whether the 2002 agreement]” was still in effect after the relationship between Global and Dickason ended. When asked whether Global employees were covered by an arbitration agreement in 2006, she answered that “[t]here was not an arbitration agreement that we — that was created by Global Enterprises” and that she was unaware of any other arbitration agreement that might have applied to Global’s employees. Even if Scott had testified that no arbitration agreement was in effect, her statements could not alter the effect of the unambiguous agreement. See In re Dillard’s Dep’t Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (noting that “[t]he objective intent as expressed in the agreement controls the construction of an unambiguous contract, not a party’s after-the-fact conduct”); Davidson, 128 S.W.3d at 229 (“In construing this agreement, we first determine whether it is possible to enforce the contract as written, without resort to parol evidence.”).

Soltero’s promise to arbitrate includes her claims against Global. Mandamus relief is appropriate when a party is forced to trial despite an enforceable agreement to arbitrate. In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 462 (Tex. 2008).

Accordingly, without hearing oral argument, TEX. R. APP. P. 52.8(c), we conditionally grant Global’s petition for writ of mandamus and direct the trial court to compel arbitration as to all of Soltero’s claims and stay the proceedings pending arbitration. We are confident the trial court will comply, and our writ will issue only if it does not.

Opinion Delivered: October 23, 2009

In Re Polymerica, LLC, No. 08-1064 (Tex. Oct. 23, 2009)(per curiam) (arbitration mandamus granted in employment dispute) (terminated employee required to arbitrate wrongful termination claim against her employer even though arb agreement was with staffing company whose relationship with employer had been terminated prior to employee's claim) IN RE POLYMERICA, LLC D/B/A GLOBAL ENTERPRISES, INC.; from El Paso County; 8th district (08-08-00070-CV, 271 SW3d 442, 11-25-08) stay order of February 24, 2009 lifted Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus. Per Curiam Opinion View Electronic Briefs in IN RE POLYAMERICA, LLC D/B/A GLOBAL ENTERPRISES, INC. OTHER BLOG ENTRIES ON IN RE POLYMERICA, LLC (Tex. Sup. Ct. 2009): Supreme Court of Texas Compels Arbitration of Discrimination and Retaliation Claims By Russell Cawyer (Texas Employment Law Update) Texas Supreme Court Compels Arbitration of Employment Discrimination Claims By Victoria VanBuren (Disputing)

Monday, October 26, 2009

Ratification by Acceptance of Benefits Held to Bar Challenge to Enforceability of Post-Injury Agreement to Arbitrate

POST-INJURY WAIVER OF RIGHT TO LITIGATE IN FAVOR OF RESOLUTION BY ARBITRATION ENFORCED BY MANDAMUS. Argument that post-injury arbitration agreement was unenforceable as invalid precluded by worker's acceptance and retention of benefits in the form of continuing payment of wages by employer. In Re Weeks Marine, Inc. (Tex.App.- Houston [14th Dist.] Oct. 8, 2009) MEMORANDUM OPINION OF THE 14TH COURT OF APPEALS On July 1, 2009, relator Weeks Marine, Inc., filed a petition for writ of mandamus in this Court. See Tex. Gov’t Code Ann. §22.221 (Vernon 2004); see also Tex. R. App. P. 52. In the petition, Weeks Marine requests that we compel the respondent, the Honorable Steven Kirkland, presiding judge of the 215th District Court of Harris, to vacate his March 30, 2009 order denying its motion to abate and stay the proceedings and compel arbitration. We conditionally grant the petition. Background On April 29, 2006, Jose Jimenez was injured while working on a dredging vessel for his employer, Weeks Marine. On May 8, 2006, several days after Jimenez had surgery for his injuries, Weeks Marine sent him a Claims Arbitration Agreement (the “Agreement”) in which he agreed to arbitrate any claims arising from his injury in exchange for Weeks Marine’s agreement to pay him advanced wages, which would be applied toward any recovery Jimenez might have against Weeks Marine.[1] Jimenez signed the Agreement the next day. On June 29, 2006, Jimenez filed the underlying lawsuit against Weeks Marine alleging that his injuries were caused by Weeks Marine’s negligence and the unseaworthiness of the vessel. Weeks Marine formally requested that Jimenez submit his claims to arbitration pursuant to the Agreement. When Jimenez refused to do so, Weeks Marine moved to compel arbitration. The trial court denied Weeks Marine’s motion to compel arbitration. Weeks Marine then sought mandamus relief in this court. See In re Weeks Marine, Inc., 242 S.W.3d 849 (Tex. App.—Houston [14th Dist.] 2007, orig. proceeding [mand. denied]). We rejected Jimenez’s arguments that (1) the Agreement is not subject to the Federal Arbitration Act (“FAA”)[2] because post-injury agreements between a seaman and his employer are invalid under Section 5 of the Federal Employers’ Liability Act; (2) the Agreement does not meet the standards applied in Garret v. Moore-McCormack Co., 317 U.S. 239 (1942), to agreements that diminish a seaman’s substantive right; (3) and the Agreement is substantively unconscionable. Id. at 857–60. With respect to Jimenez’s defense of procedural unconscionability, we concluded that the trial court was required to hold an evidentiary hearing because the parties had submitted conflicting affidavits. Id. at 862–63 (citing Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992) (orig. proceeding)). We granted the petition in part, but did not direct the trial court to enter an order compelling arbitration while disputed fact issues remained regarding procedural unconscionability. Id. at 863. Weeks Marine filed a petition for writ of mandamus in the Texas Supreme Court, which was denied on October 10, 2008. On January 27, 2009, Weeks Marine filed its first amended motion to compel arbitration and motion for an evidentiary hearing. On March 13, 2009, the trial court conducted an evidentiary hearing and, on March 30, 2009, denied Weeks Marine’s first amended motion to compel arbitration. Jimenez and Weeks Marine each filed proposed findings of fact and conclusions of law. On May 20, 2009, the trial court signed its findings of fact and conclusions of law, concluding that the Agreement is invalid because it is procedurally unconscionable and Weeks Marine procured it by use of duress. On May 27, 2009, Weeks Marine filed an amended request for additional findings of fact and conclusions of law, which the trial court denied. Standard of Review In the prior mandamus proceeding, this court determined that the arbitration agreement is subject to the FAA. See In re Weeks Marine, 242 S.W.3d at 853. Mandamus is the appropriate vehicle to seek relief from a trial court order denying a motion to compel arbitration under the FAA. In re Bank One, N.A., 216 S.W.3d 825, 826 (Tex. 2007) (orig. proceeding) (per curiam).[3] To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court clearly abused its discretion and it has no adequate remedy by appeal. In re Team Rocket, L.P., 256 S.W.3d 257, 259 (Tex. 2008) (orig. proceeding). [...] The party seeking to compel arbitration under the FAA must establish that (1) a valid arbitration agreement exists, and (2) the claims at issue fall within the scope of the agreement. In re Dillard Dep't Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding) (per curiam). Jimenez does not dispute that he signed the Agreement or that his claims are subject to the Agreement, but, instead, challenges its validity. An agreement to arbitrate is valid under the FAA if its meets the requirements of the general contract law of the appropriate state. In re Poly-Am., L.P., 262 S.W.3d 337, 347 (Tex. 2008) (orig. proceeding). In determining the validity of an agreement to arbitrate under the FAA, courts must first apply state law governing contract formation. Id. As with any other contract, agreements to arbitrate are valid unless grounds exist at law or in equity for revocation of the agreement. Id. at 348. Whether a valid arbitration agreement exists is a legal question subject to de novo review. In re D. Wilson Constr. Co., 196 S.W.3d at 781. Because the law favors arbitration, the burden of proving a defense to arbitration is on the party opposing arbitration. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001 (orig. proceeding). Ratification Weeks Marine asserts Jimenez ratified the Agreement and, therefore, any defenses to the creation of the Agreement are irrelevant.[4] In light of the trial court’s finding that the Agreement is procedurally unconscionable, Jimenez argues that Weeks Marine must establish he later developed an intent to contract. Ratification is the adoption or confirmation by a person, with knowledge of all material facts, of a prior act which did not legally bind that person and which that person had the right to repudiate. Facciolla v. Linbeck Constr. Corp., 968 S.W.2d 435, 440 (Tex. App.—Texarkana 1998, no pet.); Enserch Corp. v. Rebich, 925 S.W.2d 75, 84 (Tex. App.—Tyler 1996, writ dism’d). Ratification may be express or implied from a course of conduct. Isaacs v. Bishop, 249 S.W.3d 100, 110 n.9 (Tex. App.—Texarkana 2008, pet. denied); Zieben v. Platt, 786 S.W.2d 797, 802 (Tex. App.—Houston [14th Dist.] 1990, no writ). Any act inconsistent with an intent to avoid a contract has the effect of ratifying the contract. Isaacs, 249 S.W.3d at 110 n.9.Once a party ratifies a contract, it may not later withdraw its ratification and seek to avoid the contract. Mo. Pac. R.R. Co. v. Lely Dev. Corp., 86 S.W.3d 787, 792 (Tex. App.—Austin 2002, pet. dism’d). The relevant inquiry focuses on the actions - taken by the party seeking to avoid the contract once that party became fully aware of the subject prior act which did not legally bind the party. Harris v. Archer, 134 S.W.3d 411, 427 (Tex. App.—Amarillo 2004, pet. denied). A party cannot avoid an agreement by claiming there was no intent to ratify after that party has accepted the benefits of the agreement. See Oram v. Gen. Am. Oil Co. of Tex., 513 S.W.2d 533, 534 (Tex. 1974) (per curiam) (“Whatever her mental reservations have been, her acceptance of the payments are inconsistent with the intention to avoid the lease. . . . The effect is to waive or abandon any right of rescission or of attack upon the initial invalidity, if any, of the lease."). Whether a party has ratified a contract may be determined as a matter of law if the evidence is not controverted or is incontrovertible. Mo. Pac. R.R. Co., 86 S.W.3d at 792. Although some cases have stated ratification must be “intentional,” that intent may be inferred from the acceptance of benefits under the agreement after having full knowledge of the act that would make the agreement voidable. Williams v. City of Midland, 932 S.W.2d 679, 685 (Tex. App.—El Paso 1996, no pet.) (stating that intentional ratification may be shown by party’s acceptance of benefits under agreement, after becoming fully aware of fraud); Motel Enters., Inc. v. Nobani, 784 S.W.2d 545, 547 (Tex. App.—Houston [1st Dist.] 1990, no writ) (op. on reh’g) (stating that intent to give validity to former transaction may be inferred from existing facts and circumstances such as retaining benefits of invalid contract with full knowledge of facts that make contract invalid). The “intention” of giving validity to an earlier act is susceptible to misinterpretation and misapplication—as is shown by Jimenez’s position. Old Republic Ins. Co. v. Fuller, 919 S.W.2d 726, 728 n.1 (Tex. App.—Texarkana 1996, writ denied). “A party’s intent is indeed important in determining the question of ratification, but not because the party must possess intent to ratify. Rather, the party must perform a voluntary, intentional act which is inconsistent with an intention of avoiding the prior agreement.” Id. Therefore, Weeks Marine is required to demonstrate only that Jimenez performed an intentional act that was inconsistent with any intention to avoid the Agreement. Weeks Marine contends that Jimenez ratified the Agreement by accepting the benefits of the Agreement, i.e., the payment of the advanced wages. The trial court found that relator had received approximately $20,000 from Weeks Marine under the Agreement. Jimenez signed the Agreement on May 9, 2006, and started receiving the wage payments soon thereafter. While still receiving payments, Jimenez hired an attorney and, on June 29, 2006, filed the underlying lawsuit against Weeks Marine. On September 21, 2006, Weeks Marine requested that Jimenez submit his claims to arbitration pursuant to the Agreement, but, on September 25, he refused to do so. On October 3, 2006, Weeks Marine filed its motion to compel arbitration. It is not disputed that Jimenez continued to receive and accept advanced wage payments until they were exhausted on October 28, 2006, under the terms of the Agreement, or that he did not return any of those payments, even after he had hired an attorney and after Weeks Marine had formally requested arbitration. Even if the Agreement were unenforceable due to procedural unconscionability or duress, Jimenez ratified it by accepting and retaining the benefits of the Agreement. See In re Border Steel, Inc., 229 S.W.3d 825, 835 (Tex. App.—El Paso 2007, orig. proceeding [mand. denied]) (“[A]ssuming for a moment that the Agreement [to arbitrate] were unenforceable, Juarez ratified it by accepting and retaining benefits under the Plan following his injury.”); In re Leadership Ford, Inc., No. 05-99-00618-CV, 1999 WL 424303, at *4 (Tex. App.—Dallas June 25, 1999, orig. proceeding) (not designated for publication) (holding employee ratified his agreement to be bound by plan and its arbitration requirements when he accepted plan’s benefits after his injury and did not return such benefits after he knew his employer intended to enforce plan’s arbitration requirements).[5] Having accepted the advanced wage payments after becoming aware that the Agreement is allegedly invalid due to procedural unconscionability or duress, Jimenez cannot now avoid the Agreement on those grounds. See Harris, 134 S.W.3d at 427 (stating that party, who has been fraudulently induced to enter into voidable agreement engages in conduct that recognizes agreement as binding after it has become aware of fraud, ratifies agreement and waives any right to assert fraud as basis to avoid agreement). Jimenez further contends that Weeks Marine must also show that the circumstances surrounding the later contract formation were not unconscionable. Jimenez’s attorney filed the underlying lawsuit against Weeks Marine on Jimenez’s behalf less than two months after Jimenez signed the Agreement. Because Jimenez continued to accept wage payments after he was represented by an attorney, it cannot be said that the circumstances surrounding the subsequent ratification of the Agreement were unconscionable. We sustain this issue. Conclusion We hold that the trial court abused its discretion in denying Weeks Marine’s motion to compel arbitration.[6] Accordingly, we conditionally grant the petition for writ of mandamus and direct the trial court to vacate its March 30, 2009 order and compel arbitration of Jimenez’s claims. The writ will issue only if the trial court fails to act in accordance with this opinion.We lift the stay issued on July 2, 2009. /s/ John S. Anderson CASE DETAILS AND LINKS: In Re Weeks Marine, Inc. (Tex.App.- Houston [14th Dist.] Oct. 8, 2009)(Anderson)(ratification of agreement to arbitrate by acceptance of benefits; post-injury waiver of right to litigate) (arbitration compelled by mandamus) Decision: MOTION OR WRIT GRANTED: Opinion by Justice Anderson Panel composition: Before Justices Anderson, Guzman and Boyce Appellate cause no: 14-09-00580-CV Case style: In Re: Weeks Marine, Inc . Appeal from 215th District Court of Harris County Trial Court Judge: Steven Kirkland Also see prior blog post on 2007 mandamus case referenced in the opinion: In Re Weeks Marine, Inc. (Tex.App.- Houston [14th Dist.] Dec. 19, 2007)(Seymore) (arbitration mandamus)

Mandamus to Compel Arbitration Denied in the Absence of Underlying Agreement to Arbitrate

In Re GeoMet, Inc. (Tex.App.- Houston [14th Dist.] Oct. 22, 2009) MEMORANDUM OPINION OF THE FOURTEENTH COURT OF APPEALS On August 10, 2009, relator, GeoMet, Inc., filed a petition for writ of mandamus in this Court. See Tex. Gov’t Code Ann. §22.221 (Vernon 2004); see also Tex. R. App. P. 52. In the petition, relator asks this Court to compel the Honorable Mike Engelhart, presiding judge of the 151st District Court of Harris County, to set aside his May 18, 2009 order denying its motion to compel arbitration. Relator has not established that the claims of real party interest, El Paso E&P Company, L.P. f/k/a El Paso Production Company, are subject to an agreement to arbitrate. See In re Dillard Dep’t Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding) (per curiam). Therefore, relator has not established its entitlement to the extraordinary relief of a writ of mandamus. Accordingly, we deny relator’s petition for writ of mandamus. PER CURIAM Panel consists of Chief Justice Hedges and Justices Seymore and Sullivan. CASE DETAILS AND LINKS: In Re GeoMet, Inc. (Tex.App.- Houston [14th Dist.] Oct. 22, 2009)(per curiam)(arbitration mandamus denied, no agreement to arbitrate established) Disposition on appeal: MOTION OR WRIT DENIED in Per Curiam Opinion Panel members: Chief Justice Adele Hedges, Justices Charles Seymore and Kent Sullivan Appellate cause no: 14-09-00685-CV Style: In Re Gomet, Inc. Appeal from 151st District Court of Harris County (Houston) Trial Court Judge: Mike Engelhart

Sunday, October 25, 2009

Supreme Court Clarifies Recent Ruling on Pre-Arbitration Discovery

CAN ANY DISCOVERY BY DONE BEFORE ARBITRATION? Recent Holding Disapproving of Pre-Arbitration Discovery "Reiterated" Perhaps as a noble gesture to a former colleague (Craig Enoch), who is listed as one of eleven (11) attorneys for the real party in interest (O'Connor & Hewitt, Ltd.), the Texas Supreme Court last Friday issued a brief supplemental opinion on motion for re-hearing clarifying that all discovery is not necessarily precluded when a motion to compel arbitration is filed and pending. For undivinable reasons, the original mandamus opinion in IN RE HOUSTON PIPE LINE COMPANY, ET AL (Tex. 2009) is not even cited in the one-page follow-up opinion. See prior post: Pre-Arbitration Discovery Quashed by Texas High Court =============================== In re Houston Pipe Line Company, et al. =============================== Connor complains on rehearing that our opinion may be misinterpreted to foreclose all pre-arbitration discovery in the underlying case because we have vacated the underlying discovery order and directed the trial court to rule on the pending motion to compel arbitration. O'Connor submits that such an interpretation would conflict with the Court's recognition here that pre-arbitration discovery is permissible when a trial court needs additional information to make its determination regarding the scope of the arbitration provision or other issues of arbitrability. We reiterate that the discovery order below was overbroad and must be vacated, but that the trial court retains discretion to order limited discovery on issues of scope or arbitrability, if necessary. We further reiterate that motions to compel arbitration and any reasonable discovery should be resolved without delay. O'Connor's motion for rehearing is overruled. OPINION DELIVERED: October 23, 2009. REPRESENTATIVES FOR THIS PARTY: O'Connor & Hewitt, Ltd.
Mr. Thomas J. Sims
Mr. Timothy S. Perkins
Mr. James W. Cole
Mr. William F. Seerden
Mr. Ronald B. Walker
Mr. Gilberto Hinojosa
Mr. Craig T. Enoch
Ms. Melissa Prentice Lorber
Mr. Neel Alan Choudhury
Mr. Stanley B. Binion
Mr. Alex S. Valdes
LINKS FOR ORIGINAL OPINION ON PETITION FOR WRIT OF MANDAMUS AND RELATED CASE INFORMATION FOR In Re Houston Pipe Line Co., L.P. (Tex. 2009), No. 08-0800 (Tex. Jul. 3, 2009) (per curiam) (arbitration mandamus) (trial court ordered to rule on motion to compel arbitration, and to vacate pre-arbitration discovery orders determined by the supreme court to be overbroad) THE GIST: At issue in this proceeding is whether the trial court abused its discretion by permitting discovery on damage calculations and other potential defendants, instead of deciding the motion to compel arbitration. For the reasons below, we conclude the trial court should not have ordered pre-arbitration discovery, but rather should have decided the motion to compel arbitration. ... [W]e conditionally grant the writ and direct the trial court to vacate the discovery order and to rule on the motion to compel arbitration. IN RE HOUSTON PIPE LINE COMPANY, L.P., ET AL.; from Victoria County; 13th district (13-07-00299-CV & 13-07-00362-CV, [interlocutory appeal and mandamus petition] 269 SW3d 90, 08-26-08 Opinion of the Thirteenth Court of Appeals by Chief Justice Rogelio Valdez denying mandamus relief) stay order issued October 17, 2008, lifted Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Texas Supreme Court conditionally grants the petition for writ of mandamus. Get this Per Curiam Opinion [4 pages in pdf] E-Briefs in IN RE HOUSTON PIPE LINE CO., LP d/b/a HOUSTON PIPE LINE CO.

Friday, October 2, 2009

Chambers v. O'Quinn Arbitration Dispute Sequel: Opinion on Remand from the Texas Supreme Court Issued

First Court of Appeals, in an opinion by retired Justice Tim Taft issued Oct 1, 2009, decides issues remanded to it by the Texas Supreme Court in former clients' suit against O'Quinn, and finds no waiver of the right to arbitrate had occurred. The court also addresses conflicting provisions in the underlying arbitration agreement as to the applicability of the FAA and the TAA (aka TGAA), and rejects the argument that the lawsuit was improperly dismissed for want of prosecution. Chambers v. O'Quinn (Tex.App.- Houston [1st Dist.] Oct. 1, 2009)(Taft) (arbitration of attorney-client disputes, right to arbitrate not waived, conflicting provisions re applicability of Texas General Arbitration Act (TGAA) and Federal Arbitration Act (FAA) in arbitration agreement) OPINION ON REMAND FROM THE TEXAS SUPREME COURT This suit was brought by former clients, Bob Chambers and 182 others (“appellants”), against John O’Quinn, John M. O’Quinn, P.C., and John M. O’Quinn D/B/A O’Quinn & Laminack (“appellees”), for legal malpractice. Appellants appeal from the trial court’s orders dismissing their suit for want of prosecution and overruling their motion for reinstatement and new trial. In two points of error, appellants argue that the trial court erred in: (1) compelling arbitration under the terms of a compulsory arbitration clause in the attorney-client contract executed between themselves and appellees, and (2) dismissing the case for want of prosecution. We affirm. Background On November 23, 1999, appellants sued appellees for legal malpractice in connection with appellants’ representation and settlement of their toxic tort claims. Appellees responded with a motion to compel arbitration under the terms of a compulsory arbitration clause contained in a contingency fee agreement executed between the parties. On April 14, 2000, the trial court granted appellees’ motion to compel arbitration. On December 20, 2001, appellants petitioned for writ of mandamus in this Court, complaining of the order compelling arbitration. We issued an opinion on January 7, 2002, denying appellants’ petition for writ of mandamus because it was unverified. See In re Chambers, No. 01-01-01216-CV, 2002 WL 24567 (Tex. App.—Houston [1st Dist.] Jan. 7, 2002, orig. proceeding) (not designated for publication). On January 10, 2002, appellants filed a petition for writ of mandamus in the Fourteenth Court of Appeals, asking that court to order the trial court to withdraw its order compelling arbitration. In re Chambers, cause number 14-02-00020-CV in the Fourteenth Court of Appeals. The Fourteenth Court of Appeals issued an opinion on February 7, 2002, denying appellants’ petition for writ of mandamus. On March 18, 2002, appellants filed another petition for writ of mandamus in the Texas Supreme Court, which was also denied. In re Chambers, cause number 02-0154 in the Texas Supreme Court. On January 15, 2004, the trial court signed an order decreeing that “unless a final arbitration hearing on [appellants’] claims has commenced before the American Arbitration Association on or before July 9, 2004, [appellants’] claims shall be DISMISSED FOR WANT OF PROSECUTION.” On July 21, 2004, the trial court signed an order dismissing appellants’ suit for want of prosecution because no final arbitration hearing had commenced by July 9, 2004. On August 5, 2004, appellants filed a motion for reinstatement or new trial. After a hearing on August 20, 2004, the trial court denied appellants’ motion for reinstatement or new trial. On September 22, 2004, appellants appealed. While the appeal was pending, the parties proceeded to arbitration, with the arbitrator ultimately ruling in the appellees’ favor. Appellees filed a motion for summary judgment in those proceedings. The arbitrator granted appellees’ summary-judgment motion and entered an award that appellants take nothing on their claims. Appellants filed a new lawsuit to vacate the arbitration award. Cause number 2005-17972 was originally filed in the 113th District Court, HarrisCounty, Texas, but was transferred to the 61st District Court, Harris County, Texas. The same trial court that had dismissed appellants’ suit for want of prosecution, the 61st District Court, held a hearing on appellants’ application for vacatur. The trial court signed a final judgment on June 10, 2005, denying appellants’ request to vacate the arbitration award and confirming the arbitration award. Appellants filed another appeal among the same parties in this Court from the trial court’s June 10 final judgment. Appellants’ second appeal is cause number 01-05-00635-CV. Appellants moved to consolidate their first appeal with their second appeal. In an order dated June 28,2005, we denied appellants’ request to consolidate the appeals. This Court issued two separate memorandum opinions (1) affirming the judgment of the trial court confirming the arbitration award, Chambers, 2006 Tex. App. LEXIS 9006, at *19, 2006 WL 2974318, at *6, and (2) dismissing the appeal of the order compelling arbitration on jurisdictional grounds, 2006 WL 2853893, at *2 (not designated for publication). In dismissing the appellants’ first appeal, we concluded that mandamus was the proper remedy to review the trial court’s order compelling arbitration. 2006 WL 2853893, at *2. We concluded further that because appellants had already sought and been refused mandamus relief by this Court and the Fourteenth Court of Appeals, we lacked appellate jurisdiction and were bound by these previous rulings denying mandamus. Id. at *2. The Texas Supreme Court granted appellants’ petition for review and reversed, remanding the case for us to conduct a “review on the merits.” Chambers v. O’Quinn, 242 S.W.3d 30, 32 (Tex. 2007). The mandate instructed that the case was being remanded “for further proceedings consistent with [the supreme court’s] opinion.” Id. We based our disposition on three holdings. See 2006 WL 2853893, at *2, 4. While not expressly addressing the last of our three holdings, the supreme court held that we had erred in concluding that we “lacked appellate jurisdiction,” and it reversed our judgment and remanded the case for us to review the appeal “on the merits.” Chambers, 242 S.W.3d 30 at 32. We thus construe the supreme court’s mandate as requiring this Court to consider, on remand, all of appellants’ challenges under their issues presented one and two. Standard of Review In determining whether to compel arbitration, the trial court must decide the following: (1) whether a valid, enforceable arbitration agreement exists, and (2) if so, whether the claims asserted fall within the scope of that agreement. Dallas Cardiology Assoc., P.A. v. Mallick, 978 S.W.2d 209, 212 (Tex. App.— Texarkana 1998, pet. denied). If the answers to both prongs are affirmative, the trial court has no discretion but to compel arbitration and stay its proceedings pending arbitration. Id. The party seeking arbitration has the initial burden to establish his right to the remedy under the first prong; that is, to establish that a valid arbitration agreement exists. Id. Once the existence of an arbitration agreement has been established, a presumption attaches favoring arbitration. Id. At this point, the burden shifts to the opposing party to establish some ground for the revocation of the arbitration agreement. Such grounds include fraud, waiver, unconscionability, or that the dispute falls outside the scope of the agreement. Id. The trial court must resolve any doubt about these issues in favor of arbitration. Id. Appellate courts use a “no evidence” standard for review of the trial court’s factual determinations. See Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 820 (Tex. App.—San Antonio 1996, no writ). Under that standard, we consider only the evidence that supports the fact finding, while disregarding the evidence to the contrary. Hearthshire Braeswood Plaza Ltd. P’ship v. Bill Kelly Co., 849 S.W.2d 380, 384 (Tex. App.—Houston [14th Dist.] 1993, writ denied). If there is any evidence of probative force to support the finding, the trial court’s finding must be upheld. See id. However, when the trial court decides a matter involving both factual determinations and legal conclusions, we employ the abuse of discretion standard to review. See Pony Express Courier Corp., 921 S.W.2d at 820. Under the abuse of discretion standard, we defer to the trial court’s factual determinations while reviewing legal conclusions de novo. Id. Pure legal conclusions or matters not involving extrinsic evidence, are subject to de novo review under the abuse of discretion standard. See id. at 820 n. 2; see also Fridl v. Cook, 908 S.W.2d 507, 511 (Tex. App.—El Paso 1995, writ dism’d w.o.j.). Order Compelling Arbitration Appellants argue in their first point of error that the trial court erred by granting appellees’ motion to compel arbitration because the compulsory arbitration clause in each agreement was void. Each contract, executed between O’Quinn and each individual appellant, contained the following language: X. ARBITRATION 10. Any and all disputes, controversies, claims or demands arising out of or relating to this Agreement or any provision hereof, the providing of services by Attorneys to Client, or in any way relating to the relationship between Attorneys and Client, whether in contract, tort or otherwise, at law or in equity, for damages or any other relief, shall be resolved by binding arbitration pursuant to the Federal Arbitration Act in accordance with the Commercial Arbitration Rules then in effect with the American Arbitration Association. Any such arbitration proceeding shall be conducted in Harris County, Texas. This arbitration provision shall be enforceable in either federal or state court in Harris County, Texas pursuant to the substantive federal laws established by the Federal Arbitration Act. Any party to any award rendered in such arbitration proceeding may seek a judgment upon the award and that judgment may be entered by any federal or state court in Harris County, Texas having jurisdiction. The contracts also contained the following heading in capital letters at the top of the first page, “This contract is subject to arbitration under the Texas general arbitration statute.” A. “Personal Injury” A written agreement to arbitrate is valid and enforceable if an arbitration agreement exists and the claim asserted is within the scope of the agreement. Tex. Civ. Prac. & Rem. Code § 171.001 (Vernon 2005). However, an exception exists for personal injury claims which requires that each party to a claim, on the advice of counsel, agree to arbitration in writing. Tex. Civ. Prac. & Rem. Code Ann. § 170.002(a)(3),(c)(1) (Vernon 2005). The agreement must be signed by each party and each party’s attorney. Id. § 170.002(c)(2). Appellants urge that the instant suit is akin to a personal injury claim and that the execution of a written agreement to arbitrate should have been subject to the safeguards in section 170.002(a)(3). Appellants assert that, unlike ordinary commercial contractual relationships, the fiduciary nature of the attorney-client relationship dictates against an attorney’s ability to impose an arbitration condition on a client. In the instant case, appellants sued O’Quinn for breach of fiduciary duties and legal malpractice. Our sister courts are split on the issue of whether a legal malpractice suit is a claim for personal injury. See Taylor v. Wilson, 180 S.W.3d 627, 630 (Tex. App.—Houston [14th Dist.] 2005, pet. denied). The majority of courts have held that legal malpractice claims are not claims for personal injury. Id. (holding legal malpractice claim is not claim for personal injury); Miller v. Brewer, 118 S.W.3d 896, 899 (Tex. App.— Amarillo 2003, no pet.) (same); In re Hartigan, 107 S.W.3d 684, 690 (Tex. App.—San Antonio 2003, pet. denied) (same). But see In re Godt, 28 S.W.3d 732, 739 (Tex. App.—Corpus Christi 2000, no pet.) (holding legal malpractice claim falls within personal injury exception and is included within scope of Texas Arbitration Act). Appellants request that we hold that in a legal malpractice case the test for deciding whether section 171.002 applies is whether the underlying case involves personal injury. We decline to do so. Instead, we adopt the reasoning of Fourteenth Court of Appeals in Taylor, upholding the majority view that legal malpractice claims are not claims for personal injury, and, therefore, arbitration agreements are enforceable in the context of a legal malpractice suit. See Taylor, 180 S.W.3d at 630 (holding legal malpractice claim is not claim for personal injury). The Taylor court examined the legislative history of the personal injury provision in the Texas Arbitration Act and found “no room for doubt in the legislature’s intent to restrict the meaning of the personal injury exception of the Texas Arbitration Act to physical personal injury.” Id. at 631. The court also noted that the plaintiff’s underlying claim was for economic losses rather than personal injury. Id. at 630. In the instant case, although appellants’ underlying claim was for personal injury, appellants’ malpractice claim is not, by virtue of this fact, transformed into a claim for personal injury. Rather, appellants’ legal malpractice claim remains a claim of economic injury. Thus, appellants’ malpractice claim is not excluded from arbitration. B. Failure to disclose material facts, seek advice of counsel Appellants also assert that the arbitration provisions are unenforceable because the O’Quinn firm failed to disclose the arbitration agreement and failed to adequately explain material facts and issues relating to arbitration. Additionally, appellants claim that none of them were advised to seek, or did seek, independent counsel with respect to arbitration and that public policy dictates that such safeguards be implemented with respect to compulsory arbitration agreements executed within an attorney-client relationship. Id. In support of their argument, appellants rely on the dissenting opinion of Chief Justice Phil Hardberger in Henry v. Gonzalez, 18 S.W.3d 684 (Tex.—San Antonio 2000, pet. dism’d). In Henry, former clients brought suit against their former attorneys alleging legal malpractice and breach of fiduciary duty, amongst other claims. Henry, 18 S.W.3d at 687. The clients also sought a declaratory judgment that an arbitration clause in the contract they executed with their former attorney was unenforceable and void. Id. The court determined that a valid arbitration agreement existed, and rejected the clients’ arguments that they were fraudulently induced to sign the contract. Id. at 692. In his dissent, Hardberger reasoned that the “fundamental fiduciary nature of the attorney-client relationship dictates against an attorney’s ability to impose an arbitration condition on a client.” Id. at 693. Hardberger opined, “Clients are often in vulnerable positions, requiring them to bestow a large amount of trust in their attorneys . . . Applying general contractual principles to an arbitration provision in the attorney-client context ignores the practical reality that in most instances the attorney and his or her client are not engaged in an arm’s length transaction during their initial negotiations.” Id. Hardberger concluded that attorneys generally have a greater advantage over their clients in an arbitration setting. Id. Appellants argue, as did Hardberger, that emerging national trends require attorneys to observe and satisfy safeguard requirements in order to enforce an arbitration agreement inserted into an attorney-client contingent fee contract. Id. We decline to extend Justice Hardberger’s reasoning to this case. Whether to impose conditions upon the enforceability of arbitration provisions between attorney and client is a matter for the legislature, not the courts. As previously noted, the legislature has imposed certain conditions with respect to personal injury claims, requiring that agreements to arbitrate such claims be in writing and entered into on the advice of counsel. Tex. Civ. Prac. & Rem. Code Ann. § 171.002(c) (Vernon 2005). The legislature’s failure to impose such conditions on attorney-client contracts, while expressly recognizing them in other contexts, indicates that the legislature did not intend to impose such conditions. See Fireman’s Fund County Mut. Ins. Co. v. Hidi, 13 S.W.3d 767, 769 (Tex. 2000) (holding “[w]hen the Legislature has employed a term in one section of a statute and excluded it in another, we presume that the Legislature had a reason for excluding it.”) C. Waiver of Right to Jury Trial Appellants also argue that the agreement impermissibly waives their right to a jury trial. The San Antonio Court of Appeals previously rejected this argument in Gonzalez. There, the court stated that “well established caselaw favors mandatory arbitration and holds that arbitration does not deny parties their right to a jury trial, as a matter of law.” Gonzalez, 18 S.W.3d 684, 691 (citing Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 268 (Tex. 1992)). Moreover, a difference exists between a jury trial waiver and an agreement to arbitrate disputes. Arbitration is an agreement to resolve disputes out of court in the first instance, not an agreement to waive a particular constitutional right available within the judicial process. D. Wilson Const. Co., Inc. v. McAllen Indep. Sch. Dist., 848 S.W.2d 226, 231 (Tex. App.—Corpus Christi 1992, writ dism’d w.o.j.). When a party contractually agrees to arbitrate a dispute, it waives its rights to recourse in the courts. Id. Because arbitration does not deny parties their right to a jury trial as a matter of law, we reject appellants’ argument. D. The Federal Arbitration Act Appellants next assert that appellees are not entitled to arbitration because federal, rather than Texas law, controls under the terms of the contract. Texas law holds that the Federal Arbitration Act is not applicable to an attorney-client contract that does not relate to interstate commerce. In re Godt, 28 S.W.3d at 737. Thus, appellants argue it is upon O’Quinn as the promoter of arbitration to prove that this agreement involves interstate commerce. Specifically, appellants state that the agreement “does not contain any language providing that Texas law may govern the arbitration agreement or that arbitration shall be enforceable under the Texas Arbitration Act.” Provision 10 of the contract states that “any and all disputes . . . arising out of or relating to this Agreement . . . shall be resolved by binding arbitration pursuant to the Federal Arbitration Act[.]” The contract also provides, “This arbitration provision shall be enforceable in either federal or state court in Harris County, Texas pursuant to the substantive federal laws established by the Federal Arbitration Act.” Appellees acknowledge that the contract references the Federal Arbitration Act, but they suggest that these references to federal law must be harmonized with the notice at the top of the first page of the contract, which states in capital letters, “This contract is subject to arbitration under the Texas general arbitration statute.” The San Antonio Court of Appeals was confronted with a similar set of facts in Henry. Henry, 18 S.W. 3d at 688. There, provision 10 of the attorney-client contract stated that the “Agreement shall be construed under and in accordance with the laws of the State of Texas . . . .” Id. However, provision 11 provided that all disputes “shall be resolved by binding arbitration pursuant to the Federal Arbitration Act . . . .” Id. The contract also contained a clause that appeared in all capital letters above the signature lines stating, “This contract is subject to arbitration under the Texas General Arbitration Statute.” Id. Thus, the contract in Henry was internally inconsistent as to whether the FAA or the TAA governed. Id. In concluding the dispute was governed by the TAA, the court referred to basic principles of contract interpretation. Id. In interpreting a contract, courts examine the entire agreement in an effort to harmonize and give effect to all provisions of the contract so that none will be meaningless. Id. (citing Bush v. Brunswick Corp., 783 S.W.2d 724, 728 (Tex. App.—Fort Worth 1989, writ denied)). If the provisions of the contract appear to conflict, they should be harmonized, if possible, to reflect the intentions of the parties. Id. (citing Ogden v. Dickinson State Bank, 662 S.W.2d 330, 332 (Tex. 1983); Bush, 783 S.W.2d at 728). Courts cannot strike down any portion of a contract unless there is an irreconcilable conflict. Id. (citing Ogden, 662 S.W.2d at 332). After applying the above-referenced principles and determining that the two provisions in the contract were in irreconcilable conflict, the Henry court held that the TAA controlled the dispute. Id. The court noted that, although the contract stated that the FAA controlled, performance of the contract did not relate to interstate commerce and that the FAA is implicated in transactions relating to interstate commerce. Id. (citing Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996)). Therefore, the court struck down the provision relating to the FAA and concluded that the dispute was governed by the TAA. Id. The court reached its conclusion, in part, because the contract’s prominent bold type stated that any arbitration would be governed by the TAA, all parties involved in the suit were Texas residents, the contract was signed in Texas, the contract was to be performed in Texas only, and the dispute did not relate in any way to interstate commerce. Id. Similarly, the contract in the instant case (1) does not relate to interstate commerce, and (2) was executed between Texas residents in Texas, to be performed in Texas. Therefore, we hold that the TAA controls this dispute. See also In re Godt, 28 S.W.3d at 737 (holding that, where there existed a similar conflict, the TAA controlled where there was no evidence demonstrating that attorney-client agreement related to interstate commerce.) E. Texas Disciplinary Rule of Conduct 1.08(g) Appellants next argue that O’Quinn attempted to limit his liability in violation of Rule 1.08(g) of the Texas Disciplinary Rules of Professional Conduct. See Tex. R. Disciplinary P. 1.08(g), reprinted in Tex. Gov’ t. Code Ann., tit. 2, subtit. G (Vernon 2005). Rule 1.08(g) expressly forbids an attorney from entering into an agreement with a client that prospectively limits the attorney’s liability to the client unless (1) the agreement is permitted by law and (2) the client is independently represented in making the agreement. Keck, Mahin & Cate v. Nat’l Union Fire Ins. Co., 20 S.W.3d 692, 699 (Tex. 2000). Appellants claim that O’Quinn has, through arbitration, sought to limit appellee’s liability to appellants for the precise claims asserted in this litigation. Furthermore, by asking for separate arbitration in its motions, the O’Quinn Firm clearly sought to burden, and did burden, appellants with “arbitration costs” that made arbitration financially prohibitive. Arbitration is a means of dispute resolution and does not constitute a limitation on a party’s liability. See McGuire, Cornwell & Blakey v. Grider, 765 F.Supp. 1048, 1051 (D. Col. 1991) (holding that attorney arbitration clauses “do not prospectively limit lawyer liability to the client. Rather, they merely shift determination of the malpractice claim to a different forum.”) As appellees correctly note, appellants asserted in arbitration the identical causes of action they assert in the instant litigation and sought the same categories and amounts of damages. Thus, appellee’s liability is not limited as a practical matter. Moreover, the San Antonio Court of Appeals has held that a similar arbitration clause did not violate Disciplinary Rule 1.08(g), noting “the arbitration clause merely prescribes the procedure for resolving any disputes between attorney and client.” In re Hartigan, 107 S.W.3d 684, 689 (Tex. App.—San Antonio 2003, no pet.). The same description aptly applies, and thus the same result obtains here. Consequently, we hold that the arbitration clause in the instant case does not limit the liability to which appellees would otherwise be exposed, and therefore it does not violate Disciplinary Rule 1.08(g). F. Waiver Appellants claim that appellees waived their right to arbitrate. In support of their argument, appellants cite Sedillo v. Campbell, 5 S.W.3d 824, 826 (Tex. App.—Houston [14th Dist.] 1999, no pet.), for the principle that a party may impliedly waive arbitration by “engaging in some combination of filing an answer, setting up a counterclaim, pursuing extensive discovery, moving for a continuance and failing to timely request arbitration.” Sedillo, 5 S.W.3d at 827. Stated differently, a court may find that a party has waived its right to arbitration if such party substantially invokes the judicial process to the opposing party’s detriment. Id. Appellants suggest that this case compares favorably with the defendant’s actions constituting waiver in Sedillo. Id. There, the defendant: (1) answered the subject lawsuit and immediately filed a bankruptcy petition that was dismissed “based on bad faith”; (2) “filed numerous pleadings and motions in the court below without first seeking arbitration”; (3) filed a Response to Motion for Summary Judgment; (4) filed a jury demand and paid the jury fee; and (5) did not file its motion to stay proceedings in favor of arbitration until eleven months after plaintiff filed suit. Id. at 826–27. In comparing O’Quinn’s actions with Sedillo’s, appellant notes that O’Quinn filed an answer in the trial court and sought, before attempting to invoke arbitration, both a Rule 11 Agreement extending the time for answering and a sixty-day abatement of appellant’s suit under the Deceptive Trade Practices Act. Moreover, O’Quinn did not file a motion to stay proceedings in favor of arbitration until six months after suit had been filed. Appellant notes further that O’Quinn filed a companion suit against appellants’ attorneys, took depositions, and sought abatement in the companion case. Because public policy favors arbitration, there is a strong presumption against waiver, and any doubt about whether a party waived contractual arbitration rights must be resolved in favor of arbitration. Id. at 826– 27; In re Oakwood Mobile Homes, 987 S.W.2d 571, 573–74 (Tex. 1999); Valero Energy Corp. v. Teco Pipeline Co., 2 S.W.3d 576, 590 (Tex. App.—Houston [14th Dist.] 1999, no pet.). After comparing Sedillo to O’Quinn’s actions in the instant case, we determine that no waiver occurred. A party invokes the judicial process only to the extent that it “litigates a specific claim it subsequently seeks to arbitrate.” Sedillo, 5 S.W. 3d at 827 (quoting Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 328 (5th Cir. 1999)). O’Quinn filed for arbitration within a reasonable time of answering appellants’ case and the fact that O’Quinn filed suit against appellants’ attorneys does not amount to litigation of this specific claim. Therefore, O’Quinn did not “substantially invoke” the judicial process, and the trial court did not abuse its discretion in holding that no waiver occurred. See In re Bruce Terminex Co., 988 S.W.2d 702, 705–06 (Tex. 1998) (holding no waiver even though party (1) did not file an application for arbitration within two years of suit being filed; (2) did not act to institute arbitration for more than 17 months after the trial court compelled arbitration; and (3) served discovery in the lawsuit that would not have been allowed in arbitration); see also Pennzoil Oil Co. v. Arnold Oil Co., 30 S.W.3d 494 (Tex. App.—San Antonio 2000, no pet.) (holding no waiver even though party, before requesting arbitration: (1) moved for change in venue; (2) served interrogatories and two sets of document requests; (3) participated in six depositions; (4) participated in docket control conference; (5) requested a jury; (6) requested an extension of trial date; (7) proposed protective order regarding discovery; (8) moved to compel discovery; and (9) moved for summary judgment). G. Texas Government Code section 82.065(a) Finally, appellants assert that the agreement, along with the arbitration clause, is void because it was not executed in conformance with section 82.065 of the Texas Government Code, which provides, “[a] contingent fee contract for legal services must be in writing and signed by the attorney and client.” Tex. Gov’ t Code Ann. § 82.065(a) (Vernon 2005). Appellants note that O’Quinn did not sign the agreements, although the clients did. Appellant’s argument that the contract is void due to the absence of O’Quinn’s signature is unavailing. In Enochs v. Brown, 872 S.W.2d 312, 318 (Tex. App.—Austin 1994, no writ), the Austin Court of Appeals examined the legal effect of a contingent fee agreement fully performed but not signed by the attorney. The court looked to the legislative purpose behind section 82.065 and determined that the statute was designed to prevent fraud. Id. The court determined that the statute accomplishes its purpose of guarding against fraud in contingent fee contracts and complies with the statute of frauds by requiring the party enforcing the contract to produce a written contract signed by the party to be charged. Id. We agree with the reasoning in Enochs. Consequently, because O’Quinn was the party enforcing the contingent fee agreement against appellants and because appellants, the clients, signed the agreements in the instant case, we hold that section 82.065(a)’s purpose has been fulfilled, and that the contract is not void. For all the aforementioned reasons, we hold that the trial court did not abuse its discretion in determining that a valid, enforceable arbitration agreement existed and that the claims asserted fell within the scope of that agreement. Mallick, 978 S.W.2d at 212. Thus, the trial court had no discretion but to compel arbitration. We overrule appellants’ first point of error. Dismissal for Want of Prosecution [This section omitted; see --> Hearing on Motion to Reinstate/Motion for New Trial may cure defect in notice or render it harmless error]

Conclusion We affirm the judgment of the trial court.


Chambers v. O'Quinn (Tex.App.- Houston [1st Dist.] Oct. 1, 2009)(Opinion on remand by Tim Taft) (arbitration of dispute arising from attorney-client relationship in mass tort litigation; right to enforce arbitration clause not waived; conflicting provisions concerning applicability of Texas General Arbitration Act (TGAA) and Federal Arbitration Act (FAA) in underlying arbitration agreement between attorney/law firm and clients)

Disposition by Court of Appeals: Affirm trial court order in favor of arbitration and dismissal of the lawsuit for want of prosecution

Opinion by Justice Tim Taft (retired)

Panel members: Justices Taft, Keyes and Hanks

Appellate cause number and link to docket: 01-04-01029-CV

Full case style: Bob Chambers, et al. v. John M. O'Quinn, individually dba O'Quinn & Laminack, and John M. O'Quinn, P. C.

Court below: 61st District Court of Harris County

Trial Court Judge: Hon. John Donovan