A short mandamus opinion from the Dallas Court of Appeals highlights a limit on the ability of courts to interfere with arbitration. In this case, the trial court stayed the arbitration and ordered the relator to dismiss it because the parties did not have an agreement to arbitrate. But the Texas Arbitration Act only authorizes a court to stay arbitration, not to order that it be dismissed. The Court of Appeals therefore directed the trial court to vacate the dismissal order, but leaving the stay in place while the litigation apparently moves forward in the trial court.

In re Seven Hills Commercial, LLC, No. 05-13-01340-CV

In 1977, Bullough married Hundley because she told him she was pregnant with his child – Dale Jr. – who was born the following year.  In 2004, the parties divorced after a two-day trial, and the trial court made a division of the parties’ marital estate.  More than six years later, Bullough learned that Dale Jr. was not his biological son through DNA testing.  A few months later, the Will Slip 2011 Trust was created for the benefit of Bullough and the children of Dale Jr.  Bullough then assigned his claims against Hundley to the Trust, and seventeen days later, the Trust filed suit.

The essence of the Trust’s claims was that Hundley deceived Bullough into marrying her by lying about the paternity of Dale Jr., and continued to lie throughout the marriage.  As damages, the Trust sought the value of the support Bullough provided Hundley during more than 20 years of marriage, the value of the assets Hundley received as part of the divorce, and the parties’ art collection.  The trial court found that the 2004 final divorce decree barred the Trust’s claims and granted Hundley’s motion to dismiss and motion for summary judgment.  The Court of Appeals affirmed, holding that because the Trust’s claims arise out of facts that could have been litigated in the divorce, they were barred by res judicata.

Hevey v. Hundley

Plaintiff Shabaz Din was born in Pakistan, where he became a doctor and specialized in ophthalmology. After emigrating to the United States in the 1990s, Din took a job training medical assistants with ATI Career Training Center. When the position of Medical Assistants Program Director came open, Din applied for it. ATI chose to go with a doctor of osteopathy instead. That doctor was soon replaced by a different candidate with only a vocational degree, followed by yet another new hire who had not graudated from college. Din filed a complaint with the EEOC, and ATI fired him shortly thereafter. Din sued for national origin discrimination and retaliation, and the jury awarded him damages for back pay, emotional pain and suffering, and punitives.

The Court of Appeals took up several issues in its determination of the case. First, it dismissed Din’s cause of action for retaliation because he had not raised that issue in the underlying administrative proceeding as required by Chapter 21 of the Texas Labor Code (formerly, the Texas Commission on Human Rights Act). As to the damages, the Court held that there was no evidence that Din had suffered any compensible emotional pain and suffering due to the failure to promote, and it therefore vacated that portion of the judgment. The Court did find that there was evidence of back-pay damages, but nowhere near enough to sustain the jury’s award of $83,000, leading to a remand for additional proceedings on both liability and damages for the back-pay issue. Finally, the Court of Appeals reviewed the evidence supporting the jury’s finding of malice or reckless indifference and found it was legally insufficient to support an award of punitive damages. Although there was evidence that the ATI manager had intended to cause Dim “some harm” in denying his promotion, that evidence did not show an intent to cause “substantial injury or harm” because the promotion would have resulted in only a small raise in Dim’s hourly salary.

ATI Enters., Inc. v. Din, No. 05-11-01522-CV

The parties entered an operating agreement, which contained a forum selection clause that required them to submit to jurisdiction in Oregon. CKH initiated litigation related to the operating agreement in Texas. The trial court granted appellees motion to dismiss on venue finding that CHK agreed to venue in Oregon, and CKH appealed.

The Court of Appeals affirmed for three reasons. First, the Court found that appellees did not waive the court’s jurisdiction to rule on its motion to dismiss based on a forum selection clause simply because the trial court denied their special appearance. Second, the Court held that whether CKH’s claims are subject to arbitration is irrelevant to the forum selection clause. The operating agreement requires parties to submit to jurisdiction in Oregon “provided such claim is not required to be arbitrated.” CKH initiated a lawsuit rather than filing arbitration; the Court found such “action” to be controlled by the forum selection clause. Further, the parties agreed to arbitration in Oregon, which makes it clear that the parties envisioned all claims–whether brought before a court or an arbitration panel–be filed in Oregon. Third, the Court held that a non-signatory was entitled to rely on and enforce the forum selection clause because the claims against the non-signatory are substantially interdependent on the claims against the signatory.

CKH Family LP v. MGD-CCP Acquisition

Several landowners entered into an easement agreement with the City of Celina so the City could build a sewer to a local high school.  Among other things, the City agreed to replace the top soil along the easement after the sewer was installed.  When the original top soil was not replaced, the landowners sued for inverse condemnation.  The Court of Appeals found that the agreement’s top soil provision was not intended to act as a condition subsequent.  Because the takings claim was based on the landowners assertion that breach of a condition subsequent voided the easement, the Court found that the trial court erred in denying the City’s plea to the jurisdiction.

City of Celina v. Dickerson

The Court of Appeals has once again ruled that a contractual waiver prevents a guarantor from invoking its statutory right to offset if the foreclosed property was sold for less than its fair market value. This is the seventh time the Court has made that ruling in a little over a year, dating back to August 2012 in the case of Interstate 35/Chisam Road, L.P. v. Moayedi, and as recently as August 2013 in Compass Bank v. Manchester Platinum Mgmt. In this particular instance, the parties actually stipulated that the two homes at issue had fair market values in excess of the amounts owed under the promissory notes, even though they were sold for $582,623.07 less than those stipulated values. The Court further held that the broad waiver of “any statute or limitations or other defenses affecting [the guarantor’s] liability hereunder” was sufficiently specific to include a waiver of the offset defense provided by section 53.001 of the Texas Property Code. The Court therefore reversed the trial court and rendered judgment for the deficiency in favor of the lender.

Given the importance of this recurring issue to borrowers, lenders, and guarantors, it would not be surprising to see the Texas Supreme Court weigh in. The petition for review in the Moayedi case has proceeded to briefing on the merits.

Compass Bank v. Goodman, No. 05-13-00447-CV

The pace of opinions from the Court of Appeals has slowed down during the fall, but there is still news from the Texas Supreme Court. This morning, that court granted the petition for review in Farmer’s Insurance Exchange v. Greene. In August 2012, the Dallas Court of Appeals sided with the insurer in holding that a homeowner’s damages were barred by a vacancy clause in the insurance contract, which excluded liability for damages that occurred more than 60 days after the residence became vacant. The Court of Appeals rejected the insured’s claim that the exclusion did not apply because the vacancy of the home did not contribute to the fire that destroyed it. Oral argument at the Supreme Court is set for December 4, and you can find the parties’ briefs at the link below.

Greene v. Farmer’s Ins. Exch., No. 12-0867

The Court of Appeals has once again ruled that it is without jurisdiction to consider a permissive interlocutory appeal. In this instance, the developers of White Bluff Resort at Lake Whitney are in a dispute with their property owners over the assessment of fees for the property owners’ association. The parties filed cross-motions for partial summary judgment, and the trial court ruled in favor of the property owners. The parties then agreed to an interlocutory appeal of the ruling, which the trial court also authorized. The developers argued that the appeal presented “controlling questions” of law, but the Court of Appeals disagreed because the summary judgment ruling did not specify the basis for the trial court’s decision. Without a substantive ruling from the trial court, the Court of Appeals could not conclude that the appeal presented any controlling questions, and the Court was therefore without jurisdiction to hear the interlocutory appeal.

Double Diamond Delaware, Inc. v. Walkinshaw, No. 05-13-00893-CV