Alan B. Rich D/B/A Law Office of Alan B. Rich v. Cantilo & Bennett, L.L.P., Special Deputy Receiver of Santa Fe Auto Insurance Company, Inc.
03-15-00408-CV
| Tex. App. | Aug 6, 2015Background
- Appellant Alan B. Rich (attorney) and Santa Fe Auto Insurance Co. entered a written engagement letter (Aug. 6, 2008) for defense of the Lincoln General litigation; the letter contains an express arbitration clause for fee/payment disputes.
- Cantilo & Bennett, L.L.P. is the Special Deputy Receiver (SDR) for Santa Fe and brought suit in Travis County alleging Rich received improper fee payments from Santa Fe and seeking disgorgement and related relief.
- Rich moved to compel arbitration under the Federal Arbitration Act and the Texas Arbitration Act; the trial court denied the motion and Rich appealed interlocutorily.
- Central legal question: whether the SDR, stepping into Santa Fe’s shoes under Texas Insurance Code §443.154(m), is bound by the arbitration clause and whether the SDR’s claims fall within its scope.
- SDR advanced multiple defenses: lack of party status, claims outside the engagement scope (e.g., refiling of Lincoln General), waiver/prejudice, capacity-based exceptions under receivership principles, and public-policy arguments.
Issues
| Issue | Plaintiff's Argument (SDR) | Defendant's Argument (Rich) | Held (trial court ruling being appealed) |
|---|---|---|---|
| Whether a valid arbitration agreement exists between Rich and Santa Fe | SDR argued it was not bound as the receiver and thus not a party to the arbitration agreement | Rich argued the signed engagement letter contains an unambiguous arbitration clause and the SDR stands in Santa Fe’s shoes under the Insurance Code | Trial court denied motion to compel arbitration (order appealed) |
| Whether the SDR’s claims fall within the arbitration clause’s scope | SDR contended some fees/claims (e.g., after dismissal/refiling or involving affiliates) fall outside the specified engagement and thus outside arbitration | Rich argued the petition seeks recovery of payments by Santa Fe related to the Lincoln General litigation and thus squarely falls within “any dispute regarding payment” in the engagement letter | Trial court found claims not arbitrable (basis not explained) |
| Whether Rich waived arbitration or caused prejudice by participating in litigation | SDR alleged waiver and asserted jury-trial rights that arbitration would impair | Rich maintained he preserved arbitration (answer demanded arbitration), and SDR offered no evidence of substantial invocation or prejudice | Trial court nevertheless denied the motion (issue on appeal) |
| Whether receivership / capacity doctrines or public-policy exceptions prevent enforcement of arbitration | SDR argued that acting on behalf of creditors/policyholders or acting in a particular capacity removes arbitration obligations | Rich pointed to Insurance Code §443.005(e) (savings for arbitration rights) and statutory language that receivers succeed to insurer’s rights, arguing no statutory carve-out based on capacity | Trial court denied compel order; Rich appeals asserting statutory text preserves arbitration rights and SDR’s capacity argument fails as a matter of law |
Key Cases Cited
- In re Rubiola, 334 S.W.3d 220 (Tex. 2011) (arbitrability legal standard and review)
- In re D. Wilson Constr. Co., 196 S.W.3d 774 (Tex. 2006) (de novo review for existence of arbitration agreement)
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (Eight‑Corners rule: compare contract to petition to determine scope)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (burden on party opposing arbitration to prove affirmative defenses)
- Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896 (Tex. 1995) (presumption favoring arbitration; resolve doubts in favor of arbitrability)
- El Paso Elec. Co. v. Tex. Dept. of Ins., 937 S.W.2d 432 (Tex. 1996) (receiver succeeds to insurer’s legal and equitable interests)
- Lincoln General Ins. Co. v. U.S. Auto Ins. Servs., Inc., 892 F. Supp. 2d 787 (N.D. Tex. 2012) (context for the underlying Lincoln General litigation)
- Lincoln General Ins. Co. v. U.S. Auto Ins. Servs., Inc., 787 F.3d 716 (5th Cir. 2015) (appellate decision addressing related litigation issues)