No service; no motion to vacate an arbitration award.

Craig moved to vacate an arbitration award: “Thus, under [Tex. Civ. Prac. & Rem. Code] section 171.094, she was required to arrange for service of process on appellees upon filing the motion. Craig did not arrange for service of process until she filed her supplemental motion to vacate on September 1, 2016, more than five months after the arbitration panel entered its award. Because she did not serve notice of her motion to vacate within [FAA] Section 12’s three-month limitations period, the service was untimely and the trial court was required to dismiss her motion as untimely.” The Fifth Court declined to apply any equitable tolling doctrine, and rejected an earlier emailing of the motion as inadequate under the TAA’s procedural requirements. Craig v. Southwest Securities, No. 05-16-01378-CV (Dec. 18, 2017) (mem. op.)

No arbitration agreement, no arbitration.

In FC Background LLC v. Fritze, the Fifth Court affirmed the trial court’s conclusion that a merger clause extinguished an arbitration clause in an earlier agreement between the parties. Distinguishing other cases on the general topic, the Court observed that those opinions involved a “subsequent agreement with the merger clause [that] expressly provided for the continued enforceability of prior agreements.” Here, however, the clause “does not contain the limiting language, ‘with respect to the subject matter hereof,’ and thenon-compete agreement incorporates by reference only the December 28 employment agreement but not the employment application that has the arbitration clause sought to be enforced. The merger clause here expressly supersedes any previous written or oral agreements between [the parties] relating to employment.” No. 05-17-00277-CV (Nov. 16, 2017) (mem. op.) (emphasis in original).

Adequate notice of arbitration, delivered.

A challenge to AAA’s notice of hearing was rejected, and the award confirmed, in Heriage v. BNSF Logistics: “The record shows the AAA sent notice of the May 4th arbitration hearing to appellants on two occasions via both electronic and certified mail––one was approximately two months before the hearing; the other six days before the hearing. The written notices were sent to the physical address listed in the agreement, and the electronic notices were sent to an email address that Herriage admitted he conducted business from in the past but that he no longer bothered to check and had never closed.” 05-16-01232-CV (Nov. 17, 2017) (mem. op.)

No English fluency? No arbitration defense.

In an uncommon but fundamental challenge to an arbitration agreement, the plaintiff relied upon his inability to understand English. The Fifth Court rejected this challenge under general principles of contract formation:

“It is unusual that MiCocina translated the Mutual Agreement to Arbitrate, summary plan description, and handbook into Spanish, but not the one-page Acknowledgment form. However, on this record, there is no evidence of a fraudulent misrepresentation or trickery that would relieve Balderas of the consequences of failing to read or have read to him a document he voluntarily signed. In light of the obligation an illiterate party has to have a document read to them before they sign it and the lack of evidence of a fraudulent misrepresentation or trickery, we conclude Balderas is bound by his signature on the Acknowledgment. Accordingly, Balderas failed to prove procedural unconscionability and fraudulent inducement.”

MiCocina v. Balderas, No. 05-16-01507-CV (Oct. 27, 2017) (mem. op.) (citations omitted; distinguishing Delfingen US-Texas, LP v. Valenzuela, 407 S.W.3d 791
(Tex. App.—El Paso 2013, no pet.)).T

But it said “final” —

At issue in Galaxy Builers, Ltd. v. Globus Management Group was a trial court order denying enforcemement of an arbitrator’s subpoena. While the order said that it was final, section 171.098 of the Texas Arbitration Act does not list it as an appealable category of arbitration-related ruling; thus, the appeal was dismissed for lack of jurisdiction. No. 05-17-00831-CV (Oct. 2, 2017) (mem. op.)

No waiver of arbitration right

Among other holdings related to the arbitrability of a dispute between a business and a former employee, the Fifth Court rejected an argument that the defendant business had waived its right to invoke arbitration: “In short, many factors weigh against a waiver finding: (i) Tantrum is the defendant, not the plaintiff, (ii) Tantrum’s delay in seeking arbitration was not extreme, and Carson has not shown an improper reason for the delay, (iii) Tantrum did not seek a merits disposition of Carson’s claims, and it did not conduct an inordinate amount of discovery, (iv) Tantrum’s counterclaims are arguably compulsory counterclaims, (v) Carson did not show that the parties have spent an inordinate amount of time or money litigating this case, and (vi) Carson did not show that the discovery Tantrum conducted would have been unavailable in arbitration or would not be useful in the arbitration.” Tantrum Street LLC v. Carson, No. 05-16-01096-CV (July 24, 2017).


Arbitrability, Arbitrability!

The arbitration clause in Employee Solutions v. Wilkerson said, in part, that it applied to “. . . any and all claims challenging the existence, validity or enforceability of this [agreement] (in whole or in part) or challenging the applicability of this [agreement] to a particular dispute or claim.” To get around this broad language, the party opposing arbitration contended that it did not reach a “purely procedural” matter – the alleged failure to serve a written demand for arbitration on him and file it with the arbitral authority within the statute of limitations for negligence. The Fifth Court disagreed, noting the parties’ dispute as to whether this matter was a condition precedent to arbitration, which brought it squarely within the above language. No. 05-16-00283-CV (May 10, 2017) (mem. op.)

Arbitration — what is “this Agreement”?

dumbledore-memeHeath’s employment agreement incorporated a confidentiality agreement, which in turn required arbitration of “any controversy, dispute or claim arising out of or in any way related to or involving the interpretation, performance or breach of this Agreement . . .” The Fifth Court noted that phrases such as “any controversy” are viewed, by federal and state courts, as “broad arbitration clauses capable of expansive reach.” It rejected the argument that the term “this Agreement” referred only to the confidentiality agreement, even though that agreement had a merger clause, because the arbitration clause refers to both claims “arising out of” and “in any way related to” the agreement. The Court also noted that the employment and confidentiality agreement were executed at the same time, and that its holding would apply fully to Heath’s tort claims as well. Advocare GP LLC v. Heath, No. 05-16-0049-CV (Jan. 5, 2017) (mem. op.)

Contract not proved up; arbitration not required.

brasher_smithsonian_obvIn Heritage Numismatic Auctions v. Stiel, a dispute about the the sale of rare coins, the Fifth Court affirmed the denial of a motion to compel arbitration, finding that the relevant documents were not adequately proved up by the sponsoring affidavit. The witness “did not testify that the documents in Exhibit F were ‘true and correct’ copies of the contracts or otherwise state that they were the originals or exact duplicates of the originals.” While the affidavit began with the phrase, “The facts contained herein are true and correct,” the Court held that “[t]he trial court could interpret this statement as asserting the factual averments in the affidavit were true and correct but not asserting the documents in Exhibit F were the originals or exact duplicates of the originals as required by Rule 902(10)(B)(2).” Finally, from a general description of the documents as “the various Terms and Conditions . . . ,” the Court held that “[t]he trial court could have concluded that [the witness’s] statement did not constitute testimony that the documents in Exhibit F were the originals or exact copies of the contracts.” No. 05-16-00299-CV (Dec. 16, 2016) (mem. op.)

No mandamus of order compelling arbitration

th8In its order denying a mandamus petition in the case of In re: Adelphi Group, the Fifth Court reminds: “Although parties may expend time and money if they are ordered to arbitration improperly, delay and expense—standing alone—will not render the final appeal inadequate. Further, mandamus as a remedy for review of orders compelling arbitration should be limited to the comparatively rare cases where the legislature has through statute expressed a public policy that overrides the public policy favoring arbitration.” No. 05-16-01060-CV (Sept. 22, 2016) (mem. op.)