In the context of a slightly complicated procedural situation, the Texas Supreme Court made the following ruling earlier today: in a case where a court compels arbitration, the party resisting arbitration files a petition for mandamus challenging arbitration, the petition is denied, the party loses the arbitration, and the party resists confirmation of the award without success, in that case, the party is still able to challenge arbitrability in the final appeal of the judgment confirming the arbitral award. Assuming, of course, that the party did not waive its challenge to arbitrability (which it most certainly did not in this case). In other words, the fact that a court had already denied the petition for mandamus on the arbitrability issue did not deprive the Court of Appeals of jurisdiction over the subsequent appeal of the same issue. The case, by the way, is but the latest installment of the John O’Quinn arbitration against a group of his former clients. Chambers v. O’Quinn, ___ S.W.3d ___ (Tex. 2007) (Cause No. 06-1073). Technorati Tags: arbitration, Texas Supreme Court, law

The Texas Supreme Court issued a per curiam mandamus opinion compelling an arbitration this morning in a class action suit which alleges that a home builder built a bunch of houses without shower pans. The opinion is not long, but it quickly dispenses with a number of the common contractual arguments parties raise when seeking to avoid arbitration. In other words, it is a handy primer for this type of arbitrability challenge, offering a sort of cliff notes version of why these challenges are exceedingly difficult in Texas. Contracts of Adhesion: the Court first overrules the trial court decision that the arbitration contract, as a contract of adhesion, is unconscionable. In Texas, proving that a party will not contract with someone unless the contract contains an arbitration clause, in and of itself, is not an obstacle to arbitration. Procured By Fraud: printing the arbitration clause on the back of a form contract is not evidence that the arbitration clause was procured by fraud. In Texas, a party to a contract has some obligation to read all of it. Failure to read the back of a form is not evidence of fraud. Mutuality of Obligation: the Supreme Court re-states the now well-settled rule that a mutual obligation to arbitrate is its own consideration for an agreement to arbitrate. Cost as a Basis for Unconscionability: while evidence of high costs of arbitration remains a theoretical basis for challenging an arbitration clause, evidence of the AAA fee schedule, in and of itself, does not meet the burden. Mediation as condition precedent: this is a more interesting argument, given that many arbitration clauses contain this type of language, and the Third Court of Appeals’ recent opinion in the Pisces Foods case. Today, however, the Court was unpersuaded, given that mediation had since taken place. Since the argument, if accepted, would be a basis for postponing, rather than avoiding, the obligation to arbitrate, and since the mediation had already happened while the case was pending, the Court rejected the conditions precedent argument here. The Court did not address the point in great detail, however. In RE: U.S. Home Corp., ___ S.W.3d ___ (Tex. 2007) (Cause No. 03-1080). Technorati Tags: arbitration, ADR, Texas Supreme Court, law

We’ve blogged before, on numerous occasions, about McCarran-Ferguson Reverse Preemption of the Federal Arbitration Act. Specifically, we’ve blogged about the Kepka case out of Houston, whereby the Court held that Texas medical malpractice legislation, which holds that an agreement to arbitrate a med-mal case must be signed by both the plaintiff and the plaintiff’s attorney, was legislation to regulate the insurance industry, and as such the McCarran-Ferguson Act reverse-preempts the FAA, which would normally say that no such requirement is enforceable in an FAA case. The Texas Supreme Court, having requested briefing on the merits, had seemed like it was going to rule on a petition for mandamus which sought to over-rule Kepka. Given that Court’s recent history, we feared for the ongoing viability of McCarran-Ferguson preemption in the Texas medical malpractice arbitration context (we actually do fear for these things). Today, however, the Court granted a motion to dismiss the petition for writ of mandamus. We know nothing of the details of this, but we can say that Kepka lives to fight another day. Technorati Tags: arbitration, ADR, Texas Supreme Court, law

As the Texas Appellate Law blog has noted, the Texas Supreme Court was busy today, releasing “a slew of 13 opinions.” Many of them, on first blush, look interesting. None of them, however, talks about arbitration. Well, that’s not exactly true. One of the opinions came from a case “almost identical” to last week’s Merrill Lynch arbitration case. The quite short opinion simply states that this week’s Merrill Lynch case is decided just like last week’s was. Except, though, that this week’s Merrill Lynch case is slightly different from last week’s. In this case, the plaintiff initiated an arbitration proceeding against Merrill Lynch and the broker in his capacity as agent for Merrill Lynch. The plaintiff filed a separate lawsuit against the Merrill Lynch trust company, the entity with whom no arbitration clause existed, and the broker, this time in his capacity as agent for that company. The Court reaches the same result, but it seems to us that this slight variation in the facts highlights the point Justice Hecht made in his dissent in last week’s opinion. In Re: Merrill Lynch Trust Company, ___ S.W.3d ___ (Tex. 2007) (Cause No. 03-1059) Technorati Tags: arbitration, litigation, ADR, Texas Supreme Court, law