In Re F.C. Holdings, Inc.
2011 Tex. App. LEXIS 7107
| Tex. App. | 2011Background
- Reavis, the real party in interest, had an employment contract with the First National Bank of Crockett containing an arbitration clause; F.C. Holdings later acquired the bank.
- Reavis filed suit in Feb. 2010 against F.C. Holdings and related entities, asserting breach of contract, fraud, and related claims.
- The record shows multiple Rule 11 agreements in 2010 that modified discovery/arbitration procedures and scheduled mediation.
- F.C. Holdings produced 341 pages of documents on Nov. 17, 2010, but without proper organization or categorization under Rule 196.3.
- The trial court ordered F.C. Holdings to organize/label the production and sanctioned it for discovery conduct; a mandamus petition was filed seeking immediate arbitration/stay.
- The court denied the mandamus, holding the court did not abuse its discretion in deferring ruling on arbitration pending resolution of discovery/sanctions and enforcing Rule 11 obligations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the court abuse its discretion by deferring arbitration ruling after Rule 11 agreements? | F.C. Holdings contends immediate arbitration and stay were required. | Reavis argues deferral allowed orderly discovery before arbitration. | No abuse; deferral consistent with enforceable Rule 11 obligations. |
| Did the court properly enforce Rule 196.3 procedure for discovery production? | F.C. Holdings violated 196.3 by poorly organizing/labeling production. | Reavis relied on Rule 196.3 as a basis to compel discovery before arbitration. | Court properly required compliance with Rule 196.3 as a condition precedent to arbitration. |
| Did modification via Rule 11 agreements permit prearbitration discovery? | F.C. Holdings argues Rule 11 permitted immediate scrutiny/arbitration. | Discovery was permissible but had to comply with procedural rules. | Modification allowed but subject to Rule 196.3 compliance; not binding to bypass procedures. |
| Did §171.025(a) Stay mandate foreclose considering discovery/motion? | Stay compelled proceeding pending arbitration. | Stay could be delayed by Rule 11 proceedings and noncompliance. | Statutory stay did not compel immediate arbitration here due to pending compliance issues. |
Key Cases Cited
- In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379 (Tex. 2005) (mandamus standard; abuse of discretion)
- In re CSX Corp., 124 S.W.3d 149 (Tex. 2003) (abuse of discretion standard; arbitral procedures)
- Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (Tex. 1985) (guiding rules for appellate review of trial court discretion)
- Fortis Benefits v. Cantu, 234 S.W.3d 642 (Tex. 2007) (trial court's ministerial duty to enforce Rule 11 agreements)
- In re Houston Pipe Line Co., 311 S.W.3d 449 (Tex. 2009) (prearbitration discovery context; distinction when Rule modifications exist)
- In re MHI P'ship, Ltd., 7 S.W.3d 918 (Tex. App.—Houston [1st Dist.] 1999) (deferral of ruling on arbitration until after discovery)