in Re: Readyone Industries, Inc.
400 S.W.3d 164
Tex. App.2013Background
- Flores sued ReadyOne for negligence and sought discovery while ReadyOne asserted a valid arbitration agreement barred the claims.
- ReadyOne moved for a protective order to abate discovery until arbitrability was addressed; Flores moved to compel limited discovery on existence/validity of the arbitration agreement.
- ReadyOne attached an affidavit and exhibits (MAA, SPD, receipt and arbitration acknowledgment) as records of business activity supporting enforceability of arbitration.
- Flores sought deposition of ReadyOne’s authorized representative regarding the arbitration agreement’s scope/validity but did not attach affidavits for his defenses.
- Trial court granted limited discovery (one-hour deposition) before ruling on arbitration; ReadyOne sought mandamus prohibiting pre-arbitration discovery.
- This Court conditionally grants mandamus, directing vacatur of the discovery order if the trial court does not comply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pre-arbitration discovery was improperly ordered | Flores | ReadyOne | Yes; trial court abused discretion |
| Whether Flores showed a colorable basis for fraudulent inducement | Flores | ReadyOne | No; insufficient evidence or basis for the defense |
| Whether the arbitration was illusory due to unilateral modification rights | Flores | ReadyOne | No; Halliburton savings clause valid; not illusory |
| Whether SPD incorporation rendered the MAA illusory | Flores | ReadyOne | No; SPD not incorporated by reference; no illusory effect |
| Whether Flores has adequate remedy by appeal | Flores | ReadyOne | No; discovery order burdened and harassed, not curable by appeal; mandamus appropriate |
Key Cases Cited
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (burden of proving a defense to arbitration; pre-arbitration discovery requires colorable basis)
- In re Halliburton Co., 80 S.W.3d 570 (Tex. 2002) (savings clause guards against illusory arbitration agreements)
- Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001) (fraud elements for fraudulent inducement in contract context)
- Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768 (Tex. 2009) (elements of fraud and contract validity in arbitration context)
- In re Houston Pipe Line Co., 311 S.W.3d 449 (Tex. 2009) (pre-arbitration discovery limited to scope of arbitrability)