475 S.W.3d 436
Tex. App.2015Background
- Metro (successor to IC Industries) and Whitman sued Cooper entities after a 2011 settlement allegedly cap-and-release[d] Cooper’s guaranty of Pneumo Abex’s indemnity obligations related to asbestos claims.
- The underlying Stock Purchase Agreement (SPA) required Pneumo Abex to indemnify Metro; an Asset Purchase Agreement (APA) contained an arbitration clause; Cooper (as parent/guarantor) executed a 1994 Mutual Guaranty that incorporated the APA arbitration clause.
- Metro and Whitman allege tortious interference, fraudulent transfers, and related claims tied to the restructuring/settlement that reduced funds available to satisfy indemnity obligations.
- Cooper moved to compel arbitration under the SPA and the Mutual Guaranty; the trial court denied the motion without written findings; Cooper appealed interlocutorily.
- The appellate court evaluated (a) whether appellees’ claims fall within arbitration agreements Cooper can invoke (despite Cooper being a non-signatory to some agreements) and (b) whether Cooper waived the right to arbitrate (expressly or impliedly).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope under SPA — can non-signatory Cooper compel arbitration of Metro’s tortious-interference claims? | Metro: Cooper is a stranger/non-signatory and cannot compel arbitration. | Cooper: Metro’s claims depend on the SPA (which Cooper effectively guaranteed), so direct-benefits estoppel binds Metro to arbitrate. | Held: Cooper may compel Metro to arbitrate under direct-benefits estoppel because Metro’s claims and damages depend on the SPA that Cooper guaranteed. |
| Scope under Mutual Guaranty — do Metro/Whitman have to arbitrate despite termination? | Appellees: termination and termination-agreement forum clause eliminated arbitration obligations. | Cooper: Mutual Guaranty’s arbitration clause survives termination for disputes "arising in connection with" the agreement; appellees seek benefits of the guaranty and are estopped. | Held: Termination did not abrogate arbitration for disputes arising from pre-termination conduct; appellees are estopped from avoiding arbitration. |
| Express waiver — did Cooper expressly waive arbitration by seeking New York jurisdiction/venue relief? | Appellees: Cooper sought dismissal/transfer to New York, evidencing choice of judicial forum. | Cooper: Seeking dismissal/transfer or asserting another forum does not equal waiver of arbitration. | Held: No express waiver; motions to dismiss/transfer do not waive arbitration rights. |
| Implied waiver — did Cooper substantially invoke the judicial process (delay, discovery) so as to waive arbitration? | Appellees: Cooper delayed 28 months, participated in discovery, and incurred appellees’ heavy costs — prejudice results. | Cooper: It never opposed arbitration earlier, much pretrial activity involved settlement/jurisdiction/mediation, and the case was not at trial eve; no substantial invocation or shown prejudice. | Held: No implied waiver under totality of circumstances; Cooper did not substantially invoke litigation nor is there sufficient proof of prejudice. |
Key Cases Cited
- Meyer v. WMCO-GP, LLC, 211 S.W.3d 302 (Tex. 2006) (direct-benefits estoppel can bind signatory plaintiffs to arbitrate claims against non-signatories when claims depend on the contract)
- In re Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005) (Federal Arbitration Act gateway determination procedure; Texas law on arbitrability)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (standard for implied waiver by substantial invocation of judicial process)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (once valid arbitration agreement covers claims, court has no discretion to deny enforcement absent a defense such as waiver)
- In re Vesta Ins. Group, Inc., 192 S.W.3d 759 (Tex. 2006) (distinguishing contract-based claims from general-law claims for arbitration estoppel analysis)
- In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (scope inquiry and non-signatory estoppel theories)
- Richmont Holdings, Inc. v. Superior Recharge Sys., L.L.C., 455 S.W.3d 573 (Tex. 2015) (motions to transfer or filing suit in another forum do not necessarily waive arbitration)