Case Information
*0 FILED IN 1st COURT OF APPEALS HOUSTON, TEXAS 12/3/2015 4:40:55 PM CHRISTOPHER A. PRINE Clerk *1 ACCEPTED 01-15-00842-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 12/3/2015 4:40:55 PM CHRISTOPHER PRINE CLERK N o . 01 - 15 - 00842 - C V
I N T H E F I R S T C OU R T O F A PP E A L S HOU S T ON , TE XA S
GUA M I NDU S T R I A L S E R V I C E S , I N C ., A pp e ll a n t , V.
D R E SS E R - R A N D C O M P A N Y , A pp ee O n a pp ea l fr o m t h e 61 t J ud i c i a l D i s t r i c t C ou r t o f H a rr i s C oun t y , T x a s T r i a l c ou r t ca e no . 2015 - 01910 A PP ELLEE ’ S S U R - R E P L Y I N O PP O S I T I ON T O A PP ELL AN T ’ S M O T I ON F O R S T AY O F A RB I T A T I ON AND O D E R C O M P ELL I NG A RB I T R A T I ON K y l C . ee b
S t B r N o . 24091604 n B . H rr s B r N o . 02 00 947 0 P o H d g LL P k ee @ po d g . m l rr @ po g . m 10 00 M n ee 36th1 F r on x 77 00 2 pho : ( 71 3 ) 22 6 - 66 25 F ac il : 713 ) 226 - pp ee ss r- nd p ny *2 T O T E HONO R A B LE F I R S T C OU R T O F A PP E A L S :
A pp e ll ee D r e ss e r- R a nd C o m p a ny ( “ D r e ss e r- R a nd ” ) f il e s this S u r- R e p l y in O ppo s iti on to A pp e ll a n t ’ s M o ti on f o r S t a y o f T r i a l C ou r t O r d e r C o m p e lli ng
A r b it r a ti on a nd Stay o f A r b it r a ti on a nd r e qu e s t to vo i d or v aca t e t h e o r d e r
c o m p e lli ng a r b it r a ti on , a nd w ou l d r e s p ec t f u ll y s ho w t h e C ou r t as f o ll o w s :
P r e li m i n a r y S t a t e m e n t 1. T h e S h i py a r d ’ s r e p l y m e r e l y r e - h a s h e s t h e s a m e a r gu m e n t s a nd r e f e r e n ce s t h e s a m e a u t ho r it y r e li e d upon in its m o ti on . T h e S h i py a r d s u mm a r il y
c on c l ud e s t h a t an o r d e r c o m p e lli ng a r b it r a ti on r e s o l v e s t h e ca s e on t h e m e r it s , yet
f a il s to e xp l a i n ho w an o r d e r c o m p e lli ng a r b it r a ti on a d j ud i ca t e s a ny o f D r e ss e r -
R a nd ’ s ca u s e s o f ac ti on the S h i py a r d ’ s c l a i m s , o r a ny o f its d e f e n s e s . A lt hough
D r e ss e r - R a nd ’ s r e s pon s e a dd r e ss e s m o s t o f t h e S h i py a r d ’ s a r gu m e n t s in t h e r e p l ,
D r e ss e r - R a nd f il e s t h i s b r i e f s r - r e p l y p r i m a r il y to a dd r e ss the S h i py a r d ’ s
a e g a ti on h a t D r e ss e r - R a nd h a s f a il e d to a dv i s e h e c ou r t o f c on t r o lli ng f e d e r a l
ca e a ho r it y c on r a r y to the ca e a w it c it e d in its r e s pon s e . R e p y at 3). F o the
r ea on s b e o w h e h i py a r d ’ s c on e n ti o n is m e r itl e ss . . D r ss r- a nd ’ s f e r e n ce To f e d e r a l D ec i i on s ec ogn i z i ng T h a t m p lli ng r b it r a ti on I s N t A D ec i on on h M r it s D s N t
M c h r ac r ze F d r l a w . py d ss h t ss r- d h s s ho w on cea d a p lit f l ho it y in it f ce to d p lli ng it ti on as non
dispositive under federal law. The Shipyard’s claim, however, is intended to do
nothing more than distract this Court from the issue before it—whether an order
compelling arbitration is tantamount to a “trial in the trial court” under the
statutory stay provision in section 51.014(b). See TEX. Civ. PRAC. & REM. CODE
§51.014(b).
Despite the fact that this case involves the interpretation of a Texas statute, Dresser-Rand’s response briefly referenced federal authority recognizing that
federal magistrates cannot make rulings on dispositive motions, although they are
authorized to compel arbitration, federal courts have decided that a motion to
compel arbitration is a non-dispositive motion in part based on the fact that
compelling arbitration is not among the motions enumerated as having dispositive
effect in 2$ U.S.C. §636(b)(1)(A). See PowerShare, Inc. v. Syntel, Inc., 597 F.3d
10, 14 (1st Cir. 2010); also see FED. R. Civ. P. 72 (magistrates may consider “a
pretrial matter not dispositive of a party’s claim or defense... “). Motions
considered to be dispositive under the federal statute include, for example, motions
for injunctive relief, motions for judgment on the pleadings, motions for summary
judgment, or motions to dismiss. Id. Thus, Dresser-Rand referenced this
analogous line of authority in response to the Shipyard’s claim that an order
compelling arbitration is a dispositive motion.
Not only have several federal district courts reached this conclusion, but the *4 First Circuit has found that a motion to stay litigation pending arbitration is non
dispositive because it “suspends” but does not eliminate the court’s authority over
the matter. See Syntel, Inc., 597 F.3d at 14. The district court still retains
jurisdiction to vacate, affirm or modify any arbitrator’s decision, and maintains the
authority to render a final judgment. Similarly, the Third Circuit has also
determined that motions to compel arbitration and stay trial proceedings are not
dispositive motions. See Virgin Islands Water & Power Auth. v. Gen. Elec. Int’l
Inc., 561 F. App’x 131, 133-34 (3d Cir. 2014); 91 C.J.S. United States Magistrates
§ 7 (2015) (recognizing that a motion to compel arbitration is a non-dispositive
motion); see also David Hittner, FEDERAL CivIL PROCEDURE BEFORE TRIAL, ch.
16-F(3)(d) (5th Cir. ed. 2015) (same).
Although the Shipyard references some contrary federal authority to attempt to diffuse the force of the federal law comparison, the Shipyard fails to apprise the
court that many of the district court opinions it cites were disapproved by circuit
courts or even other district courts. For example, the First Circuit in Syntel
declined to follow the decision in flannery v. Tn—State Div., 402 F. Supp. 2d $19,
$21 (E.D. Mich. 2005), on which the Shipyard so heavily relies. See Syntel, 597
F.3d at 14. Similarly, the Third Circuit in Virgin Islands Water & Power Auth.,
561 F. App’x at 133-34, reversed the district court decision that the Shipyard
references. See Reply at 3 n. 8, citing Virgin Islands Water & Power Auth. v. Gen.
Elec. Int’l, 2009 WL 1918238 (D. Vi. 2009); also see Vernon v. Qwest Commc’ns
Int’l, Inc., 857 F. Supp. 2d 1135, 1141 (D. Cob. 2012), aff’d, 925 F. Supp. 2d
1185 (D. Cob. 2013) (disapproving Coxcom, Inc. v. Egghead Telecom, Inc., 2009
WL 4016629, at l (N.D. Oki. 2009)). In reality, it is the Shipyard that
mischaracterizes the law. However, even if some limited contrary authority exists,
the reasoning of the cases finding that a motion to compel arbitration is non
dispositive is sound: it is not case-determinative because it is not a final resolution
of the merits and does not eliminate the court’s jurisdiction. See Syntel, 597 F.3d
at 14. While the Shipyard prefers to lead this Court into the weeds, these decisions
are persuasive here.
B. The Legislative History of Section 51.014(b) Also Establishes That Pre-Trial Matters Do Not Equate To A “Trial.” Rather than resolving any substantive claims, the trial court’s order compelling arbitration merely requires the parties to litigate their dispute before a
panel of arbitrators in accordance with their contract. Without any direct authority,
however, the Shipyard contends that an order compelling arbitration is equivalent
to a “trial in the trial court” as that term is used in section 51.014(b). The
Legislative history of section 5 1.014(b), however, indicates otherwise.
The automatic stay provision included in section 51.014(b) was enacted in 1997 at the same time the Legislature enacted the provision allowing interlocutory
appeals of the granting or denial of a special appearance. See Acts of June 1997,
75 t h L e g ., S ., c h . 1296 , §1 , 1997 T e x . G e n . l a w s 4936 , 4937 , e ff . J un e 20 , 1997 . u r i ng t h e c on s i d e r a ti on o f t h e p r opo s e d r e v i s i on t o t h e s t a t u t e , oppon e n t s o f t h e
l e g i s l a ti on w e r e c on ce r n e d t h a t it w ou l d a ll o w d e f e nd a n t s ov e r w ho m j u r i s d i c ti on
w a s p r op e r “ t o d e l a y t h e ca s e w h il e t h a t i ss u e i s t a k e n up on a pp ea l . ” S ee H ou s e e s ea r c h O r g a n i za ti on , B ill A n a l y s i s , T e x . H . B . 453 , 75 t h L e g ., . S . ( 1997 )
( E xh i b it A , p . 3 ) . T o a ll e v i a t e c on ce r n s a bou t d e l a y s , t h e L e g i s l a t u r e e n ac t e d t h e
a u t o m a ti c s t a y p r ov i s i on , bu t li m it e d it t o on l y ac t u a l t r i a l s . A s t h e B ill A n a l y s i s
e xp l a i n s : B 453 w ou l d no t l e ng t h e n t h e t r i a l p r o ce ss o r b e a n unn ec e ss a r y
d e l a y i n t h e c o mm e n ce m e n t o f a s u it ... I n t e r l o c u t o r y a pp ea l s a r e u s u a ll y d ec i d e d qu i c k l y by a pp e ll a t e c ou r t s . A pp e a l s c on ce r n i ng j u r i s d i c ti on a l i ss u e s a r e a l m o s t a l w a y s d e t e r m i n e d on m o ti on s o r b r i e f s acc o m p a n i e d by a f f i d a v it s ; no t e s ti m ony i s u s u a ll y a ll o w e d . W h il e t r i a l m a y no t p r o cee d w h il e a n i n t e r l o c u t o r y a pp ea l i s p e nd i ng , t h e r e w ou l d b e i z o p r oh i b iti on i n t h e s t a t u t e a g a i n s t c on ti nu i ng d i s c ov e r y .
I d . ( e m ph a s i s a dd e d ) . T hu s , t h e e g i s a t u r e c ea r l y i n t e nd e d t o p r ec l ud e
unn ec ss a r y d a y s w h il e a j r i s d i c ti on a l a pp ea l i s p e nd i ng a nd a ll o w t h e ca s e t o
p r o ce d i n t h e t r i a l c ou r t .
T h e p a r ti s a g r ee d t o a r b it r a t e t h i r d i p t e i n o t on , T x a s , a nd t h e t r i a l ou r ’ s r d c m p lli ng r b it r a ti on i n no w a y i n vo k s a n i mm d i a t e t r i a l on t h e m it . h , h d m r y w s h e ca o p r cee d i n n r b it r ti on ti g . “ n i n t a b i s r r ec ov ; it i , , ea n s by w i h ec ov y ob . ” ho v . ook 350 . W . 3d 382 395 x . pp . —
Houston [14th Dist.] 2011, pet. denied) (Hedges, C.J., dissenting), quoting Gillrnan
v. Davidson, 934 S.W.2d 803, 805 (Tex. App.—Houston [1st Dist.J 1996, orig.
proceeding). The Legislature expressly intended for pre-trial matters to continue
while a jurisdictional appeal is pending. Dresser-Rand is entitled to pursue those
same measures in arbitration while this Court determines whether the trial court
has jurisdiction over any alleged non-arbitrable claims.
C. The Outcome of the Jurisdictional Appeal Will Not Affect The Trial Court’s Jurisdiction To Compel Arbitration.
The Shipyard does not deny that the trial court may exercise jurisdiction over it for the sole purpose of compelling arbitration. The Shipyard repeatedly
conceded in the trial court that it possessed jurisdiction to compel arbitration. See
CR 495, citing Int’l Energy Ventures Mgrnt., L.L.C. v. United Energy Grp., Ltd.,
800 F.3d 143, 152 (5th Cir. 2015) (“When a party agrees to arbitrate in a particular
state, via express or implicit consent, the district courts of the agreed upon state
may exercise personal jurisdiction over the parties for the limited purpose of
compelling arbitration.”); also see CR502-503 (citing federal opinions holding that
a party’s agreement to arbitrate in a particular state subjects the party to the
jurisdiction of the district courts in that state for the purpose of compelling
arbitration). Thus, the Shipyard’s challenge to arbitration proceeding under the
statutorily imposed trial stay is purely illusory to the extent that any Houston trial
court could compel arbitration in this case and has jurisdiction to do so.
Even if this Court was to reverse the denial of the Shipyard’s special appearance, it would not affect Dresser-Rand’s right to compel arbitration because
the Shipyard has already contractually consented to jurisdiction here for the
discrete purpose of arbitration. The issue of whether the parties must arbitrate their
dispute was not before the trial court at the time it granted the special appearance,
and Dresser-Rand is not precluded from raising it in the district court now. See
Nguyen v. Desai, 132 S.W.3d 115, 118 (Tex. App.—Houston [14th Dist.J 2004,
no pet.) (“[A]n order dismissing claims for lack of personal jurisdiction precludes
relitigation of the jurisdictional issues that were actually litigated and essential to
the dismissal ....“). Even so, the Shipyard repeatedly urged that the trial court had
jurisdiction over the Shipyard to compel arbitration.
The Shipyard clearly agreed to arbitration, and the trial court had the authority to consider Dresser-Rand’s motion to enforce that agreement and compel
arbitration. The trial court’s ruling will not preclude this Court from deciding the
Shipyard’s appeal, and will not moot the jurisdictional issues to be decided.
Dresser-Rand respectfully requests this Court to deny the Shipyard’s motion.
WHEREFORE, Appellee Dresser-Rand respectfully requests this Court to deny Appellant Guam Shipyard’s Motion for Stay of Trial Court Order Compelling
Arbitration and Stay of Arbitration and all relief requested therein, and for such
other and further relief to which it may show itself to be justly entitled to receive. *9 p ec f y ub m itt ,
PORTER HEDGES LL P Is! Kyle C. ee b By: K y C. ee b S B r No. 24091604 n B. H rr s B r No. 02009470 P H dg LL P k ee @ po dg . m rr @ po dg . m 1000 M n ee 361h F oo r x 7 7 00 2 phon : ( 713 ) 226 - 6625 F ac il : 713 ) 226 - 6225 tt pp lt ee ss r- nd p ny *10 C E R T I F I C A TE O F S E R V I C E P u r s u a n t to u l 6.3 a nd 9 . 5 b ) , (d), a nd (e) o f the T x a s u l s o f pp e ll a t e P r o ce du r , this is to ce r ti f y h t on h i 3 r d d a y o f D ece 2015 , a r e a nd
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