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. | Sep 15, 2015Background
- Appellant Alan B. Rich represented Santa Fe Insurance (and affiliates) in litigation against Lincoln General; the parties had a written legal services agreement containing an arbitration clause covering fee disputes and matters related to the Lincoln General litigation.
- Santa Fe became insolvent; Cantillo & Bennett, LLP was appointed Special Deputy Receiver and sued Rich seeking recovery/disgorgement of fees paid to Rich and asserting various causes of action (including breach of fiduciary duty seeking fee forfeiture).
- Rich moved to compel arbitration under the agreement; the trial court denied the motion and Rich appealed.
- At the hearing below the arbitration agreement was submitted in pleadings, discussed, and the receiver repeatedly acknowledged its existence; the receiver later argued on appeal that the agreement was never formally introduced into evidence.
- Rich contends (1) the receiver’s claims are essentially fee disputes covered by the arbitration clause, (2) the Insurance Code’s arbitration-savings provision binds the receiver to insurer arbitration agreements, and (3) intertwined factual allegations require arbitration of the whole dispute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration agreement was properly before the trial court | Receiver: the agreement was not formally introduced into evidence; appellate objection not waived | Rich: agreement was in pleadings, affidavit, hearing brief, and admitted at hearing; objection waived | Waiver: appellate evidentiary complaint rejected — agreement was before the court and debated at hearing |
| Whether receiver's claims are subject to arbitration because they involve attorney fees | Receiver: claims are statutory/tort and not a fee dispute | Rich: petition seeks return of fees paid by Santa Fe; fee-dispute interpretation covers claims | The court should compel arbitration because at least some claims are fee disputes and arbitration clauses should be enforced unless clearly inapplicable |
| Whether intertwined facts requiring arbitration of entire suit | Receiver: some causes of action fall outside arbitration scope; receiver is a distinct actor/capacity | Rich: breach-of-fiduciary/fee forfeiture claims (client-based) are intertwined with other claims, so whole case arbitrable | Intertwining principle applies: when arbitrable claims and facts are intertwined, entire action is subject to arbitration |
| Whether Insurance Code prevents enforcement of insurer arbitration clauses against a receiver | Receiver: as special litigant/receiver, capacity matters and arbitration may be limited | Rich: §443.005(e) preserves contractual arbitration rights against receiver; Legislature did not limit by capacity in the savings clause | Arbitration savings clause applies broadly; receiver is bound by otherwise-valid arbitration provisions |
Key Cases Cited
- City of Houston v. Bates, 406 S.W.3d 539 (Tex. 2013) (statutory language given plain meaning; omission in similar statutes is significant)
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (third party seeking benefits of contract may be bound by its arbitration clause)
- Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266 (Tex. 1992) (arbitrable claims can require arbitration of related claims under certain circumstances)
- Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896 (Tex. 1995) (arbitration clauses should be construed to cover disputes unless clearly inapplicable)
- In re Sun Communications, Inc., 86 S.W.3d 313 (Tex. App. — Austin 2002) (claims intertwined with arbitrable matters can be stayed or compelled to arbitration)