OPINION
This is an interlocutory appeal from an order denying a motion to compel arbitration. Appellee Pepsi-Cola Metropolitan Bottling Co. (“Metro”) sued appellants Cooper Industries, LLC, Cooper Industries, Ltd., Cooper US, Inc., and Cooper Industries, PLC (collectively, “Cooper”), seeking to enforce two agreements. Ap-pellee Whitman Insurance Company Ltd. later joined-the suit as a plaintiff. Cooper filed a motion .to compel arbitration pursuant to the agreements. The trial court denied the motion after a hearing without making, findings of fact or conclusions of law.
On appeal, Cooper argues the trial court erred because the agreements require arbitration and appellees did not show that Cooper waived its right to arbitrate. We agree that the trial court erred in denying Cooper’s motion to compel arbitration. We therefore reverse the trial court’s order, render judgment ordering arbitration of appellees’ claims against the Cooper defendants who are parties to this appeal,
This case concerns indemnification obligations regarding asbestos claims. Appel-lees’ second amended petition and Cooper’s motion to compel arbitration provide the pertinent background of-the parties’ dispute.
IC Industries — Metro’s predecessor— acquired Abex Corporation and Pneumo Corporation, two companies that manufactured products containing asbestos. IC Industries sold its stock in both companies to PA Holdings under a Stock Purchase' Agreement' (“SPA”). Under the SPA, IC Industries agreed to indemnify PA Holdings against certain claims filed between August 29, 1988 and August 29, 1998, and PA Holdings agreed to indemnify IC Industries and its affiliates against claims filed after August 29, 1998. As explained below, a Cooper entity later guaranteed an indemnity of PA Holdings’ successor. The SPA provides that if any controversy or claim arising out of or relating to the agreement.has not been resolved within twenty-one days after notice is given, either party may initiate arbitration to resolve the dispute. ' -
PA Holdings subsequently became Pneumo Abex, LLC. IC Industries became appellee Metro through a merger and name change. Whitman’s predecessor was a captive insurance carrier affiliated with IC Industries, and Whitman is now a subsidiary of Metro.
Pneumo Abex eventually sold one of its product lines to Wagner Electronic Corporation through an Asset Purchase Agreement (“APA”). Under the APA, Wagner agreed to indemnify and hold Pneumo Abex harmless for any obligations Pneumo Abex owed to Metro and Whitman. Like the SPA, the APA contains an arbitration provision. In section 13.2(c), the APA provides that any dispute arising in connection with the, agreement and not settled by the parties within sixty days after notice is given “shall be finally settled by arbitration.. .The provision states that “[a]ny party may request a court to provide interim relief without waiving the agreement to arbitrate.”
Wagner’s then-parent company, Cooper Industries, LLC, guaranteed Wagner’s indemnification of Pneumo Abex under a Mutual Guaranty' agreement' signed in 1994, Section 6 of the Mutual Guaranty provides that any claim of dispute “arising in connection with” this agreement shall be resolved in accordance with sections 13.2(b) and (c) of the APA,' thus explicitly incorporating the arbitration provision of the APA.
Pneumo Abex filed a lawsuit in New York against various Cooper defendants, contending that Cooper Indhstries, LLC was mismanaging its assets and thus endangering the Mutual Guaranty. Metro and Whitman were not parties to that suit. In 2011, the Cooper defendants and Pneu-mo Abex reached a settlement .agreement, which the judge in the New York lawsuit approved. Under the settlement agreement, PCT International Holdings, Inc.— then-owner of Pneumo Abex — transferred its ownership interest to a trust. Cooper Industries’ indemnities were released and, in exchange, the trust received a cash payment and notes to be paid over 'five years.
In response to the 2011 settlement agreement, Metro filed this .lawsuit alleg
Citing the Federal Arbitration Act, Cooper filed a motion to compel arbitration under various agreements, including the SPA and the Mutual Guaranty. After an unreported hearing, the court denied the motion. This interlocutory appeal followed. See 9 U.S.C. § 16(a)(1)(B) (West 2009); Tex. Civ. Prac. & Rem.Code Ann. § 51.016 (West 2015).
Analysis
On appeal, Cooper argues that the trial court erred in denying the motion to compel arbitration because (1) Metro’s and Whitman’s claims are Subject to arbitration under the SPA and the Mutual Guaranty, and (2) Cooper has not waived the right to arbitrate as to either Metro or Whitman. We address each issue in turn.
When the Federal Arbitration Act governs an arbitration clause, a Texas trial court conducts a summary proceeding under Texas procedural rules, to. make.the gateway determination of arbitrability, and it applies Texas substantive law regarding whether a litigant must arbitrate.
I. Cooper established that, appellees’ claims fall within the scope of valid arbitration agreements that Cooper can invoke.
Cooper’s first issue asks whether the trial court erred in refustog to' compel arbitration because appellees’ claims are founded on "two'contracts that contain mandatory arbitration provisions. Arbitration cannot be ordered to the absence of an agreement to arbitrate. Freis v. Canales,
A. Cooper may compel arbitration against Metro under the SPA.
Cooper argues that Metro’s claims are subject to arbitration under the SPA, which contains a broad clause requiring arbitration of any controversy or claim arising out of or relating to the agreement. The parties to the SPA are Pneumo Abex and a company that later became known as Metro. Metro is thus a signatory to.the agreement, but Cooper is not. Appellees Metro and Whitman respond that Cooper cannot compel arbitration , as a non-signatory. Whether a non-signatory can compel arbitration questions the existence of a valid arbitration agreement, between the parties and therefore is a gateway matter for the court to decide. See In re Weekley Homes, L.P.,
The supreme court has recognized that “[a] person who has agreed to arbitrate disputes with one party may in some cases be. required to arbitrate related disputes with others.” Meyer v. WMCO-GP, LLC,
Tortious interference claims do not fall comfortably within either category. In re Vesta,
Cooper contends that it may enforce the arbitration clause .under the supreme court’s opinion in Meyer. Appellees argue that Meyer is distinguishable because the non-signatories, in that ease were, not strangers to the agreement,, as they, contend Cooper is here.
In Meyer, Ford Motor Company’s agreement with one of its dealers provided Ford with an assignable right of first-refusal to acquire the dealer’s business if the dealer decided to sell.
If [the dealer] properly terminated the [agreement with WMCO], based on Ford’s'exercise of its right of first refusal, then there' would be no claim for tortious interference; no need to decide whether Ford validly exercised the right of first refusal, and no need to decide whether Meyer and Ford conspired to violate statutes protecting dealers from certain actions by manufacturers.
Id. at 307. The court also considered it important that WMCO’s damages “cannot be calculated without reference to the [agreement].” Id. The court thus. held that .Meyer and Ford, although nonsigna-tories to.the agreement between WMCO and the dealer, could compel arbitration under the agreement’s arbitration clause. Id. at 308.
Similarly, appellees’ tortious interference claims against Cooper in their second amended petition depend on the existence of the SPA and Cooper’s guaranty of Pneumo Abex’s performance thereunder. See Smith v. Kenda Capital, LLC,
Relying on our decision in Brewer & Pritchard, P.C. v. AMKO Resources International, LLC,
Unlike in Brewer & Pritchard, Cooper guaranteed the performance of one of the agreement’s signatories, Pneumo Abex, in 1994 — long before the allegedly tortious 2011 transactions made the basis of this suit. Moreover, Brewer & Pritchard did not involve a .non-signatory defendant seeking to compel arbitration with a signatory plaintiff (as our inquiry under the SPA does), nor did it address whether the plaintiffs right to recover and its damages depended on the existence of the agreement containing the arbitration clause. Metro’s tortious interference claims do depend on the existence of the SPA, so Meyer supports arbitration of those claims as explained above. Other courts agree that a guarantor or surety óf a party’s obligation under a contract containing an arbitration- clause may invoke or be bound by that clause in a suit regarding the obligation.
JB. Cooper may compel arbitration against Whitman and Metro under the Mutual Guaranty despite its termination.
Cooper also argues that both Whitman’s and Metro’s claims are ‘independently subject to arbitration under the 1994 Mutual Guaranty‘agreement, which broadly requires arbitration of any dispute arising in connection with the agreement'. The parties to the Mutual Guaranty are Pneurno Abex and Cooper Industries, LLC. Thus, appellees Whitman and Metro are not parties to the Mutual Guaranty. Nevertheless, direct-benefits estoppel can also require non-signatory plaintiffs to arbitrate if they seek to derive a direct benefit from a contract containing an arbitration clause. See In re Kellogg,
In their second amended petition, appel-lees seek to enforce Cooper’s obligations under the Mutual Guaranty. They allege that Cooper’s acts of tortious interference in connection with the 2011 settlement (and its agreement with the other defendants to interfere) were undertaken with a specific intent to cap its guaranty obligation, and that Cooper engaged in fraudulent transfers (and conspired to do so) when it obtained a release of its guaranty obligation in exchange for certain payments to the trust. The remedies appel-lees seek include an injunction obligating Cooper to fund any shortfall in the trust set up to pay the indemnity Cooper had guaranteed, or alternatively damages in the amount of the shortfall. In short, appellees are claiming the benefit of the Mutual Guaranty, so they are estopped from avoiding the burden of its arbitration clause. See In re Kellogg,
Appellees respond that arbitration can no longer be compelled under the Mutual Guaranty because Cooper, Pneurno Abex, and others terminated that agreement following the 2011 settlement. They point to
Effective as of the Closing, and- notwithstanding any provision of the Mutual Guaranty to the contrary, the Mutual Guaranty shall be fully, finally and irrevocably terminated and of no further force or effect, and no Party nor any other Person shall have any further obligation or liability under the . Mutual Guaranty from and after Closing.
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Each Party hereby irrevocably consents and agrees that any dispute regarding this Agreement shall be brought only to the exclusive jurisdiction of the federal or state courts located in New York County, New York....
We disagree with appellees that this language cuts off the estoppel effect of the Mutual Guaranty’s arbitration clause.
In general, as our sister court has held, an “arbitration agreement contained within a contract survives the termination or repudiation of the contract as a whole.” Cleveland Constr. Inc. v. Levco Constr. Inc.,
Appellees urge us. instead to follow TransCore Holdings, Inc. v. Rayner,
This ease differs from TransCore in two critical respects. First, the backward-looking release language in the TransCore termination agreement is absent here. This termination agreement, which was entered into effective April 5, 2011, only eliminates any “further obligation” to arbitrate Under the Mutual Guaranty “from and after” termination. The provision agreeing to bring disputes regarding the termination agreement only to New York courts does not address the handling of disputes under the Mutual ' Guaranty.
Second, the termination agreement in TmmCore was between the parties to the original agreement: one party seeking to compel arbitration under the original agreement, and another party arguing that the termination agreement ended its obligation to arbitrate. Here, appellees, are not parties to the . termination agreement. Instead, appellees are third parties trying to revive the obligations of the original agreement. The logical force.of the doctrine of direct-benefits estoppel — -which was not at issue in TmmCore —supports requiring appellees to arbitrate their claims.
Appellees’ claims against Cooper hinge on the existence of the Mutual Guaranty, and the gist of their case is to undo its termination. If Cooper “properly terminated the” Mutual Guaranty, then “there would be no claim for tortious interference” or fraudulent transfer and no need to determine whether Cooper “conspired” with the other defendants to do so. Meyer,
We hold that the termination of the Mutual Guaranty agreement between Cooper and Pneumo.Abex did not abrogate Cooper’s ability to compel arbitration of appellees’ claims under that agreement. In addition, as explained above, Cooper may compel arbitration of Metro’s claims under the SPA.. Accordingly, we sustain Cooper’s first issue and hold that the trial court erred to the extent it denied Cooper's motion to compel arbitration on the ground that appellees’ claims do not fall within the scope of valid arbitration agreements that Cooper can invoke.
II. Cooper did not expressly waive its right to arbitrate appellees’ claims.
Once the arbitration movant establishes a valid arbitration agreement that encompasses the claims at issue, a trial court has no discretion to deny the motion to compel arbitration unless the opposing party proves a defense to arbitration such as waiver. J.M. Davidson, Inc. v. Webster,
A party can waive a contractual right to arbitrate either expressly or by‘ implication. Sedillo v. Campbell,
Express waiver arises when a party affirmatively indicates that it wishes to resolve the case in the judicial forum rather than in arbitration. See Okorafor v. Uncle Sam & Assocs., Inc.,
Moving to dismiss in favor of exclusive jurisdiction in another court is equivalent, for present purposes, to moving to transfer, venue or filing a notice of removal to another court. The Supreme Court of Texas and many other courts have held that such actions do not waive a right to arbitrate. E.g., Richmont Holdings, Inc. v. Superior Recharge Sys., L.L.C.,
In Richmont Holdings, Superior and Richmont signed an asset purchase agreement with an arbitration clause, and Superior’s part-owner, Blake, signed a related employment agreement with Richmont that contained a Dallas County forum selection clause.
The supreme court held that the motion should have been granted because Rich-mont had not waived arbitration. Id. The court explained that “[m]erely filing suit does not waive arbitration, even when the movant, as in this case, files a second, separate suit in another county based in párt on a contract at issue in' the first action. Nor, we think, does moving to transfer venue. The motion does not address the merits of the case.” Id. (citations omitted).
Thus, Richmont went far beyond asserting — as Cooper did here — that another forum was the only correct place to decide the parties’ disputes. Richmont actually filed a second suit in the other forum, yet the supreme court held that act did not waive Richmont’s ability to compel arbitration in the original suit. Richmont there-' fore supports the cohclusion that Cooper did not waive its right to arbitration.
.. Similarly, in In re Citigroup Global Markets, the supreme court held that Citigroup did not waive arbitration despite its previous attempts to transfer the case to a
Appellees urge that Citigroup is distinguishable because in that case, the party seeking to compel arbitration expressly reserved the right to request arbitration early on. See id. But the court in Citigroup did not hold that a party must expressly reserve its right to arbitrate before seeking to transfer a case. Rather, Citigroup simply noted that the party “never opposed arbitration.” Id. The same is true here: Cooper never opposed arbitration before filing its motion to compel. Accordingly, we hold the trial court erred to the extent it denied the motion to compel arbitration on the ground that Cooper expressly waived its right to arbitrate.
III.. Cooper did not waive its right to arbitrate by implication.
A party waives an arbitration clause by implication when it substantially invokes the judicial process to the other party’s detriment or prejudice. Perry Homes,
Waiver must be decided on a case-by-caSe basis, and we' look to ’the totality of the circumstances. Id. at 592. The party’s conduct must be unequivocally inconsistent with claiming a known right to arbitration. See Van Indep. Sch. Dist. v. McCarty,
• whether; the party who pursued .arbitration was the plaintiff or the defendant; . ; . -
• how long the party who pursued arbitration delayed before seeking arbitration;
■ • when the party who pursued arbitration léarried' of the arbitration clause’s existence;
• how much of the pretrial activity related to the merits, rather than to arbitrability- or jurisdiction;
• .how much time and expense has been incurred in litigation;
• whether the party who pursued arbitration sought or opposed arbitration earlier in the case;
• whether the party who pursued arbitration filed affirmative claims or dis-positive motions;
• how much discovery has been con- . ducted and who_ initiated the discovery;
• . whether the discovery -sought would be useful in arbitration; ,
• what discovery would be unavailable in arbitration;
« whether activity in court would be duplicated in arbitration;
• when the case was to be tried; and
• whether the party who pursued arbitration sought judgment on the merits.
Baty v. Bowen, Miclette & Britt, Inc.,
The quantum of litigation conduct that constitutes “substantial” invocation of the litigation process depends on the context. See Perry Homes,
“Even substantially invoking the judicial process does not waive a party’s arbitration rights unless the opposing party proves that it suffered prejudice as a result.” In re Bruce Terminix Co.,
To support their position that Cooper substantially invoked the judicial process; appellees assert that Cooper “inexplicably delayed” moving to compel arbitration until- May 2014, twenty-eight months after it was sued.- Appellees further contend that Cooper participated in extensive discovery related to the merits. They point out that Cooper sought admissions that Metro is “seeking to void and/or avoid the transfers incident to the -creations of the [trust]” and that-Pneumo Abex did “not owe a duty to [Metro] to ensure that it obtained consideration that was at least equal to the value” of Cooper’s obligations. Appellees argue that those requests relate directly to their claims of fraudulent transfer-and tor-tious interference.
They also point to Cooper’s request for the production of “all documents and communications that show what amount would have constituted ‘equivalent value’ with respect to the settlement of the New York Lawsuit” and “all documents (if any) in which Whitman Insurance Company ... is identified; as an entity and/or a party that is entitled to indemnification ... pursuant to the terms of the SPA.” Appellees declare that they have produced more than 21,000 documents, and argue that Cooper is trying to have it both ways by moving to compel arbitration only after receiving extensive discovery responses. The affidavit of appellees’ counsel states that,.“[t]o date, [appellees’] attorneys and staff have spent over 9,000 hours working on the lawsuit and incurred approximately $3,500,000 in fees, and $94,000 .in other costs.” Appel-lees also argue that Cooper substantially invoked the judicial process by moving for a continuance and agreeing to an extension of discovery.
' We disagree with appellees’ position that Cooper substantially invoked the judicial process. In holding that substantial invocation had occurred in Perry Homes, the
The facts here are different from those in Perry Homes and more analogous to In re Vesta, in which the supreme court held that arbitration had not been waived;
Like the parties moving to compel arbitration in Vesta, Cooper did. not oppose arbitration at any time during the case. In. addition, although the parties had engaged in some merits discovery, this case was not on the eve of trial when Cooper filed its motion to compel arbitration in May 2014 — approximately four months after Whitman joined the case as a plaintiff.
Appellees cite Tuscan Builders, LP v. 1437 SH6 L.L.C.,
, This -case is distinguishable from Tuscan Builders,'' The party seeking to compel arbitration in Tuscan Builders filed a third-party action- and conducted a building inspection that likely would not have been- available in arbitration. Id. at 723. The court concluded that the motion to compel arbitration was “more consistent with a late-game tactical decision than an intent to preserve the right to arbitrate.” Id. at 722. In this case, by contrast, Cooper did not file counterclaims, and appel-lees do not contend that any merits discovery obtained would not have been available in arbitration. . Appellees also “do[ ] not allege that the discovery already conducted would not be useful in arbitration.” In re Vesta,
Cooper is in court because appellees sued it, and Cooper did not seek disposition on the merits. See G.T. Leach Builders, LLC v. Sapphire V.P., LP,
Having concluded that under the totality of the circumstances, Cooper did not substantially invoke the judicial process, we need not address whether appellees suffered prejudice. We sustain Cooper’s second and third issues and hold the trial court erred to the extent it ruled that Cooper waived its right to arbitration of appellees’ claims.
Conclusion
For these reasons, the trial court erred in denying the Cooper appellants’ motion
Notes
. Although Cooper Holdings, Ltd. joined appellants in the motion to compel arbitration, the trial court did not rule on the motion with respect to Cooper Holdings, Ltd. The notice of appeal does not list Cooper Holdings, Ltd. as an appellant. Accordingly, Cooper Holdings, Ltd. is not an appellant in this case. We therefore do -not address whether it was entitled -to arbitration of Metro's and Whitman’s claims.
. Appellees filed a third amended petition after Cooper had filed its motion to compel arbitration.
. Appellees pled additional causes of action later abandoned; therefore, we need not analyze them.
. Metro originally brought this action against Cooper Industries, LLC, Cooper Industries Ltd., Cooper Holdings, Ltd., Cooper US, Inc., Cooper Industries, PLC, M & F Worldwide Corp., MAFCO Worldwide Corp., MAFCO Consolidated Group, LLC, PCT International Holdings, Inc., and the Pneumo Abex Asbestos Claims Settlement Trust. The third amended petition also names Meg Intermediate Holdings Inc. as a defendant.,
. The APA states that it is governed by Delaware law, but the parties do not discuss Delaware law. The SPA contains a clause stating that the "law of the State of New York shall govern the parties’ dispute.” In appellees’ response to Cooper's motion to compel arbitration, they argued that New York law governs the arbitration provision in the SPA. On appeal, however, appellees assert that we need not address the question whether Texas or New’York law applies because Cooper is not entitled to compel arbitration under either state's laws. Cooper, for its part, contends that Texas law is entirely consistent with New York law, and that it is entitled to arbitration under the law of both states.
Texas, courts may presume that another state’s law is the same as Texas law absent proof or argument to the contrary. Coca-Cola Co. v. Harmar Bottling Co.,
. In a portion of the Meyer opinion, the supreme court also noted allegations of substantially. interdependent and concerted misconduct.
. Alternatively, appellees allege that Cooper’s actions rendered Pneumo Abex’s performance of its obligations to Metro under the SPA ' more difficult, if not impossible.
. No. 14-13001.13-Cy,
. See, e.g., Choctaw Generation L.P. v. Am. Home Assur. Co.,
. Because we conclude that Whitman is bound to arbitrate its claims under the 1994 Mutual Guaranty, as discussed below, we do not address whether Cooper could compel Whitman to arbitrate under the SPA. We also note that the parties have not separately addressed whether Cooper could compel Metro to arbitrate its claims of fraudulent transfer and conspiracy to commit fraudulent transfer. We likewise need not address that Issue under the SPA given our conclusion below that Metro is bound to arbitrate those claims under the Mutual Guaranty.
. see also Butchers, Food Handlers & Allied Workers Union, Local 174 v. Hebrew Nat’l Kosher Foods, Inc.,
. See Valero Energy Corp. v. Teco Pipeline Co., 2 S.W.3d 576, 587 (Tex.App.-Houston [14th Dist.] 1999, no pet.).
. see also In re Bruce Terminix Co.,
. As noted above, whether a party has waived an arbitration right is a question of law that this Court reviews de novo. See Perry Homes,
. see also G.T. Leach Builders, LLC v. Sapphire V.P., LP,
. Although appellees'point to evidence (summarized above) that substantial merits discovery had occurred, the record also contains indications that the situation was not like that in Perry Homes, in which most discovery had been completed. According to a filing by appellees in February 2014, no "meaningful merits discovery” had yet been received from Cooper given the litigation over jurisdictional issues. In April 2014, appellees moved to modify the docket control order, stating that the parties-had been "prevented from being able to engage in meaningful, document discovery on the merits until recently,” and that "no fact-witness depositions have been taken on the merits as of this date.”
.Metro filed its original petition on' December 30, 2011. On October 31, 2012, Metro filed an unopposed motion to mo.dify the scheduling order and Trequest for Rule 166 Conference.' Metro asserted that the "parties have been engaged in extensive settlement negotiations in an effort to .resolve this case. Because the parties’ efforts have been focused on resolving the matter short of litigating the issue, the parties request an extension' and modification of this Court's docket control order.” ■ • '