In Re Service Corp. International
355 S.W.3d 655
Tex.2011Background
- Arbitration clause governed by FAA; contract required mutual agreement to appoint an arbitrator or AAA could appoint on request.
- Parties failed to agree on an arbitrator; trial court appointed one without allowing AAA appointment.
- Sernas sued SCI for misrepresentation and maintenance of the cemetery; SCI asserted arbitration right.
- An agreed arbitrator was later disqualified for conflict; Sernas moved to appoint via AAA.
- SCI argued the contract required AAA appointment and that the trial court erred by appointing; trial court denied rehearing.
- Seven-month delay from SCI's motion to compel arbitration to arbitral appointment; court concluded delay did not constitute a lapse under §5; mandamus granted to vacate appointment and require AAA process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused §5 FAA appointment rules | SCI contends contract requires AAA appointment. | Sernas argue lapse/waiver allowed court appointment. | Yes; court abused discretion; mandamus conditionally granted. |
| Whether contract contemplated AAA as the appointing method when mutual agreement fails | Contract requires AAA appointment if parties cannot agree. | Sernas contend no need for AAA. | Contract requires AAA appointment when agreement fails. |
| Whether a one-month delay after impasse constituted a lapse | Delay amounted to lapse justifying appointment. | One-month delay does not constitute lapse or fail-to-avail. | One-month halt does not itself constitute lapse; not a basis to appoint. |
| Whether ambiguity in contract justified mechanical breakdown in selection | Ambiguity leads to breakdown in selection process. | Contract unambiguous; AAA not required unless impasse. | Contract not ambiguous; AAA appointment required if no mutual agreement. |
Key Cases Cited
- In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex.2004) (abuse of discretion standard for mandamus; no adequate remedy by appeal)
- In re La. Pac. Corp., 972 S.W.2d 63 (Tex.1998) (FAA §5 requires following contract method for arbitrator selection)
- Pacific Reinsurance Mgt. Corp. v. Ohio Reins. Corp., 814 F.2d 1324 (9th Cir.1987) (impasse can justify appointment after stagnation in selection)
- In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404 (Tex.2011) (reasonableness of delay measured from impasse point)
- CMH Homes v. Perez, 340 S.W.3d 444 (Tex.2011) (FAA §5; trial court must follow contract method)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Supreme Court) (presumption favoring arbitration under FAA)
- Volt Info. Scis. v. Bd. of Trs., 489 U.S. 468 (1989) (enforcement of arbitration contracts; arbitration terms respected)