Legoland Discovery Centre (Dallas), LLC v. Superior Builders, LLC
531 S.W.3d 218
| Tex. App. | 2017Background
- Legoland hired Superior as general contractor; their contract contained an arbitration clause (AAA Construction Industry Rules), a Texas choice-of-law clause, and a venue clause favoring Tarrant County for actions other than lien foreclosures.
- Disputes arose: Legoland alleged defective work and damages; subcontractors filed lien notices against Legoland after nonpayment by Superior; Legoland stopped payments and terminated the contract after Superior failed to cure.
- Superior sued Legoland asserting breach of contract, Prompt Payment Act violations, quantum meruit, promissory estoppel, and sought a lien foreclosure; Legoland counterclaimed for breach, negligence, and breach of warranty and served routine disclosure requests.
- Superior amended to add subcontractors and surety; a scheduling order (trial set for Nov. 2016) was entered after an agreed motion; limited discovery occurred and Legoland resolved subcontractor claims by October 2016.
- Legoland moved to compel arbitration in October 2016; the trial court denied the motion, finding Legoland had waived arbitration by substantially invoking the judicial process (emphasizing Legoland’s assent to the scheduling order).
- On interlocutory appeal the Court of Appeals reviewed waiver de novo and reversed, holding Superior failed to meet the heavy burden to prove implied waiver and remanding with instructions to compel arbitration.
Issues
| Issue | Plaintiff's Argument (Superior) | Defendant's Argument (Legoland) | Held |
|---|---|---|---|
| Whether Legoland waived the arbitration clause by substantially invoking the judicial process | Legoland delayed 22 months before seeking arbitration, agreed to a scheduling order, participated in litigation and discovery, and caused expense to Superior — showing implied waiver and prejudice | Legoland, as defendant, engaged only in routine, minimal discovery, settled subcontractor liens (not subject to arbitration) before moving to arbitrate, and did not seek merits disposition — no substantial invocation or prejudice | The court held no implied waiver: Superior failed to meet the heavy burden; arbitration must be compelled |
Key Cases Cited
- G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502 (Tex. 2015) (enumerates factors for implied waiver and presumption favoring arbitration)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (waiver burden is high because law favors arbitration)
- RSL Funding, LLC v. Pippins, 499 S.W.3d 423 (Tex. 2016) (courts rarely find implied waiver from litigation conduct)
- Brand FX, LLC v. Rhine, 458 S.W.3d 195 (Tex. App.—Fort Worth 2015) (standard of review for arbitration motions and factual determinations)
- In re D. Wilson Constr. Co., 196 S.W.3d 774 (Tex. 2006) (discusses waiver and arbitration enforcement)
- In re L & L Kempwood Assocs., L.P., 9 S.W.3d 125 (Tex. 1999) (choice-of-law does not displace FAA absent express exclusion)
- Walker v. J.C. Bradford & Co., 938 F.2d 575 (5th Cir. 1991) (settlement efforts not inconsistent with a desire to arbitrate)
- Nicholas v. KBR, Inc., 565 F.3d 904 (5th Cir. 2009) (plaintiff’s forum-initiated conduct can more readily support finding of substantial invocation)