423 S.W.3d 427
Tex. App.2013Background
- Baty, a minority shareholder and employee, was terminated for cause under the Employment Agreement.
- Shareholders’ Agreement contains an arbitration clause; Ledger Agreement and other documents lack an arbitration clause.
- Bowen Parties moved to compel arbitation eight months after answer; discovery occurred in the interim.
- Baty asked the court to vacate the award for waiver and argued the claims were outside the arbitration scope.
- Arbitrator ruled on several claims; trial court confirmed the award in full, with severance for non-arbitrated claims.
- On appeal, issues center on waiver of arbitration and scope of the arbitration provision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver preservation for arbitration by Bowen Parties’ claims | Baty: waiver occurred; seek to vacate | Bowen: no waiver; sought arbitration timely | No preservation; waiver not proven; court overruns issue |
| Whether Remaining Claims fall within arbitration scope | Remaining claims arise under Shareholders’ Agreement | Claims outside or outside the arbitration clause | Remaining Claims within scope; arbitration proper |
| Bowen Parties’ waiver by substantially invoking judicial process | Bowen substantially invoked judicial process prejudicially | Not substantial; strong presumption against waiver | Did not substantially invoke judicial process; waiver not shown |
Key Cases Cited
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (strong presumption against waiver in close cases; burden hard to satisfy)
- In re H&R Block Financial Advisors, Inc., 262 S.W.3d 896 (Tex. 2008) (waiver analysis for arbitration rights; court determines waiver)
- Tenneco Resins, Inc. v. Davy Int’l, AG, 770 F.2d 416 (5th Cir. 1985) (waiver factors; case-by-case balancing)
- Osornia v. Amerimex Motors & Controls, Inc., 367 S.W.3d 707 (Tex. App.—Houston [14th Dist.] 2012) (broad arbitration scope and applicability of clause)
- Tracer Research Corp. v. National Environmental Services Company, 42 F.3d 1292 (9th Cir. 1994) (discussion of contract-wide arbitration clauses)
- Syntax, Inc. v. Hall, 899 S.W.2d 189 (Tex. 1995) (interpretation of scope; arbitration favored for ambiguous clauses)
- Nicolas v. KNR, Inc., 565 F.3d 904 (5th Cir. 2009) (substantial invocation of judicial process; applicability limited)
- EZ Pawn Corp. v. Mancias, 934 S.W.2d 87 (Tex. App.—Houston [1st Dist.] 1996) (no waiver by engaging in pretrial discovery)