I picked the wrong week to go on vacation. While I was on an airplane coming back from France, the Texas Supreme Court issued its long-awaited opinion in the Perry Homes Case. The Texas legal blogosphere has already been all over it, and the Supreme Court of Texas Blog has posted a nice recap of the commentary. At the risk of coming to the party late, we’ll still offer some comments on Friday’s opinion. Robert and Jane Cull bought a house from Perry Homes that was apparently a lemon. According to the majority opinion, the Culls filed lawsuits against Parry Homes and a couple third-party warranty providers who requested, but apparently did not insist on, arbitration. After discovery had been completed at the district court level, indeed some four days prior to the beginning of trial in the case, the Culls invoked the arbitration clause and successfully moved to have the trial abated in favor of arbitration. The defendants objected on the basis that the Culls had waived their right to arbitrate. About a year later, the Culls won their arbitration. The Defendants in the case sought vacatur of the award on the basis that the Culls had waived their right to invoke the arbitration clause by waiting until the eve of trial to attempt to do so. The trial court and the Court of Appeals sided with the Culls, finding that no waiver had occurred. A majority of the Texas Supreme Court disagreed. One cannot really fault the court of appeals and the trial court for finding no waiver. On numerous occasions in the past, we have blogged about the extremely onerous standard that Texas Courts, particularly the Supreme Court, have applied when considering whether or not a party has waived its right to arbitrate. In this case, however, after noting that it has never found waiver before so it was a bit unclear as to what factors might support such a finding, the Court lays out an admittedly fact-specific framework for arbitration waiver analysis in Texas. In this case, the Culls had initially filed a 79-page objection to arbitration, complaining that the American Arbitration Association was “incompetent” and “biased”. Next, they conducted extensive discovery and filed five motions to compel. Finally, after 14 months of discovery, they moved to compel arbitration on the eve of trial. Even given the high burden set out by previous Texas Supreme Court opinions on this issue, these facts certainly seem to support waiver, if such a thing exists in Texas. So, one would think this would have been a fairly ho-hum opinion, noteworthy only in that it is the first Texas Supreme Court opinion that does not come down in favor of arbitration since we’ve been following closely. However, the case has gotten a tremendous amount of press, and criticism from those who one would normally expect to applaud an opinion finding waiver in this context, because the winner, Perry Homes, is a big supporter of many of the justices on the Court. In other words, say the critics, the first time this Texas Supreme Court ever wrote a word opposing an arbitration, it did so to erase a large judgment against a major financial backer. Whether or not that is a valid political criticism is beyond the scope of this blog. However, we do note that the facts in this case support waiver, and that the case is a landmark one if only because it is an outlier. It is possible, in Texas, to waive one’s right to arbitrate, after all. Perry Homes v. Cull, ___ S.W.3d ___ (Tex. 2008), Cause No. 05-0882. PS: we will address issues raised by the dissents and by other bloggers when time allows. In the meantime, I need to wade through the piles of emails and mail that accumulated while I was out. Technorati Tags: arbitration, ADR, Texas Supreme Court, law
Continue reading...Karl and I just got the following email from sometime contributor
Continue reading...Today, the Texas Supreme Court handed down nineteen (19) opinions. None of them, however, has anything to do with arbitration. One of them, though, resolved an issue which has divided the courts of appeals and with which we had to grapple not too long ago. Since we have not been blogging much lately (we’ve been working a lot), we thought we’d mention it. As of today, Rule 202 no longer allows the pre-lawsuit deposition of a physician to investigate a potential health care liability claim. In 2003, the Texas Legislature re-codified the law governing medical malpractice litigation and added a number of new provisions intended to make such claims more difficult to pursue. One of them, Section 74.351 of the Civil Practice & Remedies Code, precludes depositions in these cases until after the Plaintiff has satisfied his or her expert report requirement. Since the expert report requirement is not triggered until the lawsuit is filed, and since the whole point of Rule 202 depositions is that they take place pre-suit, no Rule 202 deposition of a physician will take place, in the real world, after the expert report has been submitted. Health care providers, therefore, have argued since 2003 that Rule 202 depositions are not available in claims against them. Of course, Chapter 74 applies to health care liability claims. Since there is no lawsuit when Rule 202 depositions are requested, some lawyers (us included) and some courts of appeals have argued that Chapter 74’s requirements simply do not apply in the Rule 202 context; they have not yet been triggered. Not so, according to the Supreme Court. Chapter 74 uses the term “cause of action” generally, writes Justice Brister. One’s cause of action arises before the lawsuit is filed, so no lawsuit need be filed for Chapter 74 to apply. All that is required is that the injury have taken place. In re: Jack Jordan, M.D., ___ S.W.3d ___ (Tex. 2008) (Cause No. 06-0369). Technorati Tags: litigation, Texas Supreme Court, law
Continue reading...Almost three years ago, we started monitoring the rapidly developing law of arbitration by way of a CLE paper Karl presented to a State Bar seminar in Dallas. That paper was called Standards of Review as Applied to Arbitral Decisions, and at its conclusion we advised seminar attendees and other readers that even though arbitral awards were for most intents and purposes not appealable, nothing prevented parties, in the Fifth Circuit anyway, from crafting their own standards of review and grounds for appeal of arbitral awards. Since arbitration is a creature of contract, the argument went, parties should be able to contract for an appeal. Yesterday, in Hall Street v. Mattel (link is to .pdf file), the United States Supreme Court slammed the door on that option, rendering our prior paper dangerously wrong in the event anyone finds a copy on the internet or at a law library and refers to it. As of today, the Federal Arbitration Act provides the exclusive standards a court may employ when deciding whether to confirm an arbitral award or vacate it. Our paper, in the non-dangerously wrong sections, explains those standards. Interestingly, the Court does not on the face of the opinion preclude the continued use of the manifest disregard standard for reviewing arbitral awards that federal courts have employed under the FAA. This standard, of course, is not found in the FAA, so Hall Street’s logic probably ought to eviscerate it as well, but the Court specifically does not do so. Instead, the opinion muses that manifest disregard may simply be a shorthand method of referring to explicit statutory grounds for vacatur in the aggregate. In any event, it is a question of trees falling in an abandoned forest (to abuse a metaphor), since manifest disregard is almost never actually found, in the Fifth Circuit anyway. Finally, the other interesting point about the Hall Street opinion is its exclusive applicability to FAA cases. The Court makes a point to note that its rule does not apply to state laws governing the review of arbitral awards. That being the case, in a pure Texas Arbitration Act case one can argue that Hall Street does not apply. This may well become another entry on the short list of important reasons a lawyer needs to consider whether she wants the TAA or the FAA to apply to the consideration of an arbitral award. Hall Street Associates v. Mattel, Inc., ___ U.S. ___ (2008) (Cause No. 06-989) Technorati Tags: arbitration, ADR, law, Supreme Court
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.