Houston Court Refuses to Grant Mandamus Relief After Motion to Compel Arbitration is Denied

Houston’s First District Court of Appeals has denied a company’s petition for a writ of mandamus after it failed to file a timely interlocutory appeal following a request for arbitration.  In In re Santander Consumer USA, Inc., (Tex.App.-Houston [1 Dist.], February 21, 2013), Jan Bonner purchased boating equipment from Ron Hoover RV and Marine.  As part of the transaction, Bonner entered into a retail installment contract and security agreement that contained an arbitration clause.  Ron Hoover RV and Marine then assigned the agreement to GEMB Lending, Inc. (“GEMB”).  The assignment was also noted on the face of the purchase contract. Santander Consumer USA, Inc. (“Santander”) alleges that it later acquired the contract from GEMB.  After Santander attempted to collect money from Bonner under the contract, Bonner filed a lawsuit claiming that he was not liable to Santander under the contract and that Santander violated both the Texas Fair Debt Collection Practices Act and the Texas Deceptive Trade Practices Act.  Santander then filed a motion to compel arbitration pursuant to the Federal Arbitration Act (“FAA”) citing the arbitral provision included in the boating equipment purchase contract.

Bonner argued the company’s motion to compel arbitration should be denied because Santander failed to establish that it actually acquired the contract from GEMB. After the trial court denied Santander’s motion, the company filed a writ of mandamus with the First District Court of Appeals more than one month after the window during which an interlocutory appeal could be filed expired.

First, the appellate court stated a writ of mandamus “will issue only if the trial court clearly abused its discretion and, relevant here, the relator has no adequate remedy by appeal.”  Next, the court dismissed Santander’s contention that “the Texas Supreme Court has determined that mandamus is the appropriate remedy for the wrongful denial of a motion to compel arbitration under the FAA without the necessity of demonstrating the lack of an adequate appellate remedy on a case-specific basis.” The Houston court then pointed out that mandamus was appropriate in such cases until the Texas Legislature “closed the gap in appellate jurisdiction by enacting section 51.016 of the Civil Practice and Remedies Code, which authorizes interlocutory appeals under the FAA in suits filed after September 1, 2009.”

The court continued,

This case, however, is distinguishable from the cases in which parties challenging the denial of a motion to compel arbitration under the FAA were granted mandamus relief in the past because the statutory gap with respect to the availability of immediate appellate review no longer exists. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016. Thus, unlike the parties seeking relief before section 51.016’s enactment, Santander had an avenue for immediate appellate review of the trial court’s order denying its motion to compel arbitration under the FAA.

The appeals court also dismissed Santander’s claim that “a timely filed, accelerated appeal would not have afforded it a complete and adequate remedy.”  According to the First District,

Without briefing on the benefits and detriments of mandamus review, we conclude that it would be unnecessary and advisory to announce a bright-line rule that a party who fails to exercise its statutory remedy of interlocutory appeal has an adequate remedy in every circumstance. We therefore refuse to speculate on whether a remedy that in fact existed through interlocutory appeal, but was not exercised, is always “adequate.” Furthermore, it is unnecessary for us to decide whether practical or prudential concerns countenance ever permitting a party to proceed in an original proceeding or whether the balancing of such concerns would only create an impermissible end-run around the rules for filing interlocutory appeals.

Because Santander failed to establish it was entitled to mandamus relief, Houston’s First District Court of Appeals denied the company’s petition.