Professional Advantage Software Solutions, Inc. v. West Gulf Maritime Asociation Inc.
01-15-01006-CV
| Tex. App. | Dec 11, 2015Background
- WGMA sued in 2012 over a failed payroll/HR/ERP implementation involving BMI (Interdyn), Professional Advantage (ProFad), and other vendors; disputes focused on PAM module overtime calculations and project omissions.
- ProFad was retained to customize/deliver PAM; WGMA signed SOW, FDSs, and accepted delivery; multiple change orders were executed during the project.
- Over ~3 years the parties litigated extensively: repeated trial settings, voluminous discovery (tens of thousands of pages), multiple depositions, mediation, and five summary-judgment motions by ProFad (denied by the trial court).
- On the eve of trial, ProFad moved to compel arbitration and stay proceedings; the trial court denied that motion, finding ProFad waived arbitration.
- WGMA (appellee) filed a response opposing ProFad’s emergency request for temporary relief, arguing waiver, prejudice, and that no stay is appropriate absent an arbitration order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ProFad waived the right to arbitrate | WGMA: ProFad substantially invoked the courts (extensive discovery, dispositive motions, depositions, mediation, change orders) and sought arbitration only on the eve of trial, so it waived arbitration | ProFad: (asserted in filings) entitlement to compel arbitration under the arbitration clause; sought stay pending appeal | Trial court found waiver; appellee urges appellate court to deny emergency relief because waiver and prejudice support denying arbitration and stay |
| Whether appellee showed prejudice sufficient to support waiver | WGMA: yes — delay, expense (large productions, deposition costs), and compromise of litigation positions (responding to summary judgments) amount to inherent unfairness | ProFad: likely argued prejudice absent or insufficient (not detailed here) | Appellee argues record shows substantial prejudice; trial court denied arbitration on waiver grounds |
| Whether a stay of proceedings is required pending appeal of denial to compel arbitration | WGMA: no — under Tex. Civ. Prac. & Rem. Code §171.0259(a) a stay is only required where an order compelling arbitration was made; trial court discretion supports no stay | ProFad: sought temporary relief/stay while appealing denial of arbitration | Held: trial court declined stay; appellee asks appellate court to deny emergency relief and allow trial to proceed |
| Merits defenses asserted by ProFad in summary-judgment motions (economic loss rule, warranty/limitation clauses, failure to notify/cure) | WGMA: asserts contract and tort claims tied to project failures and damages | ProFad: moved for summary judgment asserting (a) economic-loss rule bars tort claims, (b) DTPA exclusion for projects > $500,000, (c) limited express warranty (30 days) and disclaimer/limitation of liability (caps damages at software price), and (d) lack of notice/opportunity to cure for UCC warranty claims | ProFad’s summary-judgment motions were extensively briefed; the trial court denied ProFad’s attempts to compel arbitration and (earlier) denied some summary judgment motions; appellee contends the record supports denial of arbitration and that ProFad’s appellate prospects are weak |
Key Cases Cited
- In re Vesta Ins. Group, Inc., 192 S.W.3d 759 (Tex. 2006) (allowing full discovery and merits litigation before seeking arbitration can constitute waiver)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (reaffirming Vesta; waiver and prejudice analysis under FAA/Texas law)
- Republic Ins. Co. v. PAICO Receivables, LLC, 383 F.3d 341 (5th Cir. 2004) (prejudice in arbitration-waiver context defined as inherent unfairness from delay and expense)
- Frye v. Paine, Webber, Jackson & Curtis, Inc., 877 F.2d 396 (5th Cir. 1989) (attorney fees and defense costs relevant to prejudice in waiver analysis)
- Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494 (5th Cir. 1986) (delay and litigation activity may support waiver)
- Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156 (5th Cir. 1986) (prejudice from having to respond to substantive motions supports waiver)
- LAN/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234 (Tex. 2014) (economic-loss rule principles reaffirmed)
- Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986) (economic-loss rule: contract remedies for purely economic loss)