in Re Houston Progressive Radiology Associates, PLLC, Rodolfo L. Garcia, and Brandon C. Stroh
474 S.W.3d 435
| Tex. App. | 2015Background
- Two doctors (Lee and Chauvin) owned HPRA via their professional associations (Lee P.A., Chauvin P.A.). They executed contemporaneous Membership Interest Transfer & General Release agreements and Physician Employment Agreements (effective May 1, 2013) when they transitioned from members to employees. The employment agreements contain broad arbitration clauses.
- HPRA later entered negotiations and ultimately sold to Radiology Partners in mid-2013. Lee P.A. and Chauvin P.A. sued HPRA, Garcia, and Stroh alleging fraud, breach of fiduciary duty, and related claims about the transfer/sale. Dr. Nguyen (an employee, not a member) also sued claiming HPRA breached his employment rights and committed fraud by not offering membership.
- Defendants moved to compel arbitration based on the arbitration clauses in Lee’s and Chauvin’s employment agreements; the trial court denied the motion. Defendants appealed and sought mandamus relief; the appeals court stayed trial-court proceedings.
- Key contract question: whether the transfer and employment agreements are part of the same transaction (to be construed together), whether nonsignatories (Lee P.A., Chauvin P.A.) are bound to arbitrate, and whether nonsignatory Dr. Nguyen must arbitrate or have his claims stayed pending arbitration.
- The Court of Appeals concluded the transfer and employment agreements were contemporaneous parts of the same transaction, the broad arbitration clauses cover the plaintiffs’ claims, and individual defendants (Garcia, Stroh) may enforce arbitration because plaintiffs’ claims are, in substance, against HPRA.
- The court nevertheless held Dr. Nguyen did not agree to arbitrate and so his claims cannot be compelled; but because his claims are factually intertwined and could undermine meaningful arbitration, the court ordered his litigation stayed pending arbitration of Lee P.A. and Chauvin P.A.’s claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether transfer and employment agreements should be construed together | Lee/Chauvin: separate agreements; employment agreements not essential; not signatories so not bound | Defendants: documents were contemporaneous, cross‑referenced, and part of the same transaction | Agreements are contemporaneous parts of one transaction and must be read together |
| Whether Lee P.A. and Chauvin P.A. must arbitrate claims under physicians’ employment arbitration clauses | Plaintiffs: not signatories to employment agreements; claims arise under Company/transfer agreement, not employment agreement | Defendants: broad arbitration clause covers "relating to, arising from, or connected" disputes; transfer and employment agreements incorporate each other | Arbitration clauses are broad and cover the plaintiffs’ claims; arbitration compelled |
| Whether individual doctors Garcia and Stroh (nonsignatories) can enforce arbitration | Plaintiffs: claims target individuals; not covered by employment agreements | Defendants: claims are in substance against HPRA; agency/alter‑ego/operational role makes clauses enforceable | Garcia and Stroh can invoke arbitration because claims are in substance against HPRA |
| Whether Dr. Nguyen (nonsignatory employee) must arbitrate or be stayed | Nguyen: never signed agreements or participated in transfers; his claims are distinct | Defendants: claims are interrelated and could undermine arbitration; common counsel/overlap justify arbitration or stay | Nguyen cannot be compelled to arbitrate (no agreement), but his claims are inseparable and may critically impact arbitration, so litigation is stayed pending arbitration |
Key Cases Cited
- In re D. Wilson Constr. Co., 196 S.W.3d 774 (Tex. 2006) (standard: arbitration clause scope and positive assurance test)
- Ellis v. Schlimmer, 337 S.W.3d 860 (Tex. 2011) (resolve doubts about arbitration scope in favor of arbitration)
- In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185 (Tex. 2007) (non‑signatory enforcement theories and agency basis to compel arbitration)
- Jones v. Kelley, 614 S.W.2d 95 (Tex. 1981) (separate contemporaneous instruments construed together)
- Pers. Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d 388 (5th Cir. 2002) (broad arbitration clause in essential agreement presumed to cover entire transaction)
- In re Devon Energy Corp., 332 S.W.3d 543 (Tex. App.—Houston [1st Dist.] 2009) (stay appropriate where litigation would critically impact arbitration)