Nabors Drilling USA, LP v. Eder Pena, Individually, Maria Enriqueta Pena, Individually, and as Next Friend of Esmeralda and Edna Pena, Minors
385 S.W.3d 103
Tex. App.2012Background
- Nabors Drilling USA, LP sought to compel arbitration in a wrongful death/survival action brought by the Pena family.
- The dispute resolution program (DRP) administered arbitration under the FAA; state contract-law principles govern the formation of the arbitration agreement.
- Pena family challenged the agreement as illusory due to Nabors’ unilateral amendment/termination rights without a proper Halliburton savings clause.
- Pena argued the savings clause covers known or accrued claims, preventing retroactive changes.
- The court held the DRP’s savings clause is sufficiently protective and the arbitration agreement is not illusory, thus enforceable, and remanded to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Nabors’ arbitration agreement illusory due to amendment/termination rights? | Pena contends the savings clause is inadequate, allowing retroactive changes. | Nabors argues the savings clause ensures prospective applicability and limits changes. | No; not illusory; protections exist and contract is enforceable. |
| Does Halliburton-style savings clause apply to Nabors’ DRP? | Savings clause must cover accrued/known claims to avoid illusory promise. | Savings clause applies prospectively to disputes initiated, preventing illusory effects. | Not illusory; prospective effect suffices. |
| Does the arbitration agreement cover Pena’s claims and require arbitration? | Agreement may not cover wrongful death/survival claims. | Agreement covers the claims raised in the action. | Yes; valid agreement covers the Pena claims and should be enforced. |
| What is the proper remedy after showing a valid arbitration agreement? | Trial court abuse for not compelling arbitration. | Arbitration merits may depend on proof of scope and validity. | Reverse and remand to compel arbitration and stay proceedings. |
Key Cases Cited
- In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002) (savings clause precluding retroactive effect preserves arbitration)
- In re Palm Harbor Homes, Inc., 195 S.W.3d 672 (Tex. 2006) (formation of arbitration under state contract-law principles; not illusory)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (review de novo; burden shifts if valid arbitration exists)
- In re 24R, Inc., 324 S.W.3d 564 (Tex. 2010) (illusory promises require mutuality of obligation)
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (presumption in favor of arbitration; court must compel if valid)
- In re Polymerica, LLC, 296 S.W.3d 74 (Tex. 2009) (savings clause with prospective effect supports enforceability)
- In re Odyssey Healthcare, Inc., 310 S.W.3d 419 (Tex. 2010) (amendment/termination not retroactive to affect pre-existing claims)
- Champion Technologies, Inc., 222 S.W.3d 127 (Tex. App.—Eastland 2006) (savings clause and prospective changes uphold arbitration)
- Kellogg Brown & Root, 80 S.W.3d 611 (Tex. App.—Houston [1st Dist.] 2002) (substantially similar language; not illusory)
- Nabors Drilling USA, LP v. Carpenter, 198 S.W.3d 240 (Tex. App.—San Antonio 2006) (arbitration provision not illusory under similar terms)
- AdvancePCS Health L.P., 172 S.W.3d 603 (Tex. 2005) (savings clause protects obligations that arise pre-termination)