Disputing would like to thank Don Philbin for alerting us to the recent publication of Fulbright & Jaworski, LLP’s 2011 International Arbitration Report, Issue 1. According to the firm’s website, Issue 1 topics include: Section 1782 Update The State of Necessity Defense in Investor-State Arbitration The Compatibility of EU Law with Bilateral Investment Treaties between EU States New Arbitration Law Passed in Hong Kong A complimentary copy of the publication may be downloaded here. Hard copies may be requested by email. Technorati Tags: law, ADR, arbitration
Continue reading...Yesterday, the Texas Senate passed a bill which seeks to establish a Texas Institute of Health Care Quality and Efficiency. Senate Bill 8 was authored by State Senator Jane Nelson and filed on February 16, 2011. The bill was referred to the Senate Committee on Health and Human Services the next day and a public hearing was held on March 29th. SB 8 seeks “to improve health care quality, accountability, and cost containment in this state by encouraging health care provider collaboration, effective health care delivery models, and coordination of health care services.” The full text of the bill is available here. A companion bill, SB 7, was also passed Tuesday. It relates “to strategies for and improvements in quality of health care provided through and care management in the child health plan and medical assistance programs designed to achieve healthy outcomes and efficiency.” The bills will now move to the Texas House of Representatives. You may monitor these and other bills as they move through the Texas Legislature here. The last day of the regular Texas legislative session will be Monday, May 30, 2011. Disputing previously discussed SB 8 here and here. Technorati Tags: Healthcare, Texas Legislation
Continue reading...The Texarkana Court of Appeals has upheld a mediation settlement agreement (“MSA”) in a divorce proceeding where the mediator was called upon to resolve a factual dispute concerning the scope of the mediation. In In re Allen, No. 06-10-00085-CV (Tex. App. – Texarkana, March 30, 2011), Daphne and James Allen entered into a mediation settlement agreement during divorce proceedings which resulted in the division of a large piece of property that included the marital residence. Attached to the MSA was “Exhibit B,” a map of the property that was color coded to show exactly which property interests would go to each party and the path of an access easement. The MSA stated the parties agreed it was “binding on the parties,” “and not subject to revocation, repudiation or withdrawal of consent.” The MSA also appointed a mediator who would act “as sole arbiter of any disagreement with regard to the drafting and intent” of the final MSA. After final execution of the MSA, a dispute arose which involved a portion of fifty-nine acres not specifically designated by Exhibit B as the property of either party. The mediator resolved the dispute by awarding a portion of the unassigned property to each party based on the language in the agreement which stated she would have sole authority to resolve any disagreement regarding the final MSA. James Allen challenged the resulting division. During a hearing, the trial court took testimony regarding the dispute and determined that “the parties agreements included arbitration by [the mediator] to be binding, therefore, pursuant to Texas Family Code Section 6.601(b) the court will enter an order reflecting the arbiter’s award.” James Allen appealed. The Texarkana Court of Appeals first held that although binding arbitration was not ordered in the case, the parties agreed to be bound by the MSA. According to the court, under the Texas Family Code Daphne Allen was entitled to a judgment based on the mediator’s resolution of the disputed property and the scope of the MSA was the only remaining issue. Both parties agreed the fifty-nine unassigned acres at issue were discussed at the mediation but the final MSA and Exhibit B failed to clearly indicate any agreement as to those acres. While James Allen testified that he expressed concerns regarding the division of the property to his attorney because the color coding was not visible on a faxed copy of Exhibit B he received during the mediation, and he even marked his claim on an additional map, he signed the final MSA which included Exhibit B. According to the Court of Appeals, this bound him to the agreement and to the resolution of any disputes by the mediator. The court further held the mediator’s resolution of the dispute was properly within the MSA because the fifty-nine acres were discussed at the mediation, and it was the mediator’s understanding that the parties wished to divide all of the property, including the fifty-nine acres, and the parties intended to follow certain boundary lines when they divided the property. Because the mediator was called upon to resolve a factual dispute concerning the scope of the mediation and no arbitration occurred, the Texarkana Court of Appeals affirmed the trial court’s judgment which enforced the MSA and the mediator’s related division of the unassigned property. Technorati Tags: ADR, law, Mediation
Continue reading...The Dallas Appeals Court has refused to compel a non-signatory to a contract to arbitrate under the Federal Arbitration Act (“FAA”). In Carr v. Main Carr Development, LLC, No. 05-10-01346-CV, (Tex. App. – Dallas, 03/31/2011), Main Carr Development (“MCD”) was a limited liability corporation organized to engage in real estate development projects. An operating agreement which did not contain an arbitration clause authorized MCD to engage in a variety of endeavors including the lease and development of several Christian Brothers Automotive sites. The Operating Agreement was signed by MCD’s four individual members (the “Reed members”), and by Carr in the capacity of manager and trustee of two entities he controls. The Operating Agreement defines “the Company” as MCD and the manager as Main Christian Brothers Development (“MCBD”) or a successor entity and the Reed members. The agreement reflects that Carr is a director of MCD, and provides for the establishment and designation of eleven series LLC’s to own and lease the projects contemplated by the agreement, subject to Carr’s approval. Later, “Carr, Christian Brothers Automotive Corporation (“CBAC”), a Texas corporation, and MCBD, a Texas limited liability company, entered into a development agreement (the “Development Agreement”).” The development agreement contained an arbitration clause which provided, “[i]f the parties are unable to resolve any dispute . . . arising from or relating to this Agreement, then the parties hereto agree to submit the dispute to a single arbitrator administered by the American Arbitration Association.” MCD, however, was not a signatory to the development agreement. MCD subsequently filed suit against Carr for breach of fiduciary duty. Carr and CBAC initiated arbitration proceedings based on the language in the development agreement and “named MCD and MCBD as respondents.” Carr filed a motion to compel MCD to arbitration and a motion for abatement pending the outcome of arbitration. A trial court denied Carr’s motions and he filed an interlocutory appeal with the Dallas Court of Appeals. First, the Dallas Court stated that an interlocutory appeal was permissible because both parties agreed the FAA governed the arbitration agreement. Next, the court addressed each of Carr’s assertions that, “MCD must be compelled to arbitrate because it is an agent of MCBD, because it is a third-party beneficiary of the Development Agreement, and because it sought and obtained benefits from the Development Agreement and is therefore estopped from avoiding arbitration.” According to the court, Carr’s agency argument was not preserved for review and the court’s “determination is limited to whether MCD is bound by the arbitration agreement as a third-party beneficiary or under a theory of estoppel.” Carr asserted certain sections of the development agreement rendered MCD a third-party beneficiary and subject to arbitration. The court responded, We disagree with the interpretation Carr seeks to advance. On its face, section 7(c) relates only to the right to assert claims against CBAC or MCBD. No rights are conferred upon MCD. The section expressly precludes third-party beneficiary claims, and the carve out provision does not name MCD. In fact, the language in section 7(c) does not relate to the assertion of any claims other than those which might be asserted pursuant to section 3. Section 3 of the Development Agreement relates to an anticipated buy-sell or similar provision with respect to Carr’s interest in Joint Developments. “Joint Developments” are defined as projects developed jointly between MCBD and CBAC. MCD is neither expressly nor implicitly referenced in section 3. Thus, there is no reasonable basis to conclude either section 7(c) or section 3 pertain to MCD. The Dallas Court of Appeals next dismissed Carr’s argument that the two agreements were interrelated and the arbitration agreement in the development agreement was incorporated by reference into the operating agreement. Carr also alleged the strong public policy favoring arbitration required the court to compel arbitration. The Court disagreed, But as this Court previously noted, the presumption in favor of arbitration applies to the scope of an arbitration agreement; it does not apply to the existence of such an agreement or to the identity of the parties who may be bound to such an agreement. See Roe v. Ladymon, 318 S.W.3d 502,511 n.6 (Tex. App.-Dallas 2010, no pet.). Even the exceptionally strong policy favoring arbitration cannot justify requiring litigants to forego a judicial remedy when they have not agreed to do so. E.E.O.C. v. Waffle House, 534 U.S. 279, 293-94 (2002). Because MCD is not a third-party beneficiary to the Development Agreement, the trial court properly refused to compel MCD to arbitrate pursuant to the arbitration clause in this agreement. Next, the Appeals Court addressed Carr’s argument that MCD was estopped from avoiding arbitration because it relied on the development agreement when it filed suit against Carr for breach of fiduciary duty. The determination of whether a party seeks to benefit from a contract through its claim turns on the substance of the claim, not artful pleading. See Weekley, 180 S.W.3d at 131-32. The substance of the amended petition reflects that MCD does not seek to enforce the Development Agreement in conjunction with its breach of fiduciary duty claim. Its recovery is dependent upon whether it can prove Carr breached his fiduciary duties and caused damage to MCD, its Series, and its members. Carr’s assertion that there can be no breach of fiduciary duty claim if he can show he did not violate the Development Agreement is incorrect. The duties Carr owed as a director are distinct from his contractual obligations under the Development Agreement, and MCD need not prove a breach of the Development Agreement to recover on its independent tort claim. In reviewing MCD’s claims and the Development Agreement, we are not convinced that MCD “would have no claims had the agreement containing the arbitration provision not been signed.” See Anco Insurance Svcs. v. Romero, 27 S.W.3d 1, 6 (Tex. App.-San Antonio 2000, no pet.). The court also rejected “Carr’s contention that MCD is estopped to avoid arbitration because it sought and obtained benefits from the Development Agreement by means other than through […]
Continue reading...Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.
Disputing is published by Karl Bayer, a dispute resolution expert based in Austin, Texas. Articles published on Disputing aim to provide original insight and commentary around issues related to arbitration, mediation and the alternative dispute resolution industry.
To learn more about Karl and his team, or to schedule a mediation or arbitration with Karl’s live scheduling calendar, visit www.karlbayer.com.