Supreme Court Denies Review of Ayala case

More than a year ago now, guest blogger Rick Freeman wrote about an arbitration decision out of San Antonio where a trial court refused to compel arbitration on the basis that the high cost of arbitration made the agreement to arbitrate unconscionable. This morning, the Texas Supreme Court denied the petition for review in that case, leaving the San Antonio opinion good law, for now at least.

What does this mean for state of cost-based unconscionability challenges to arbitral agreements? Probably not all that much, actually. As we mentioned in August, the Texas Supreme Court has already heard oral argument in the Johnny Luna case, out of Houston, which addressed the same issue. Texas arbitration practitioners should continue their vigil, waiting for the last shoe to drop, as it were; the denial of the Ayala petition for review does not mean that we won’t get a Texas Supreme Court pronouncement on this issue.

Special thanks, by the way, to Austin lawyer Rick Leeper for pointing this out to me this morning. I gave a speech on this issue today at the Page Keeton Civil Litigation conference put on by the UT law school. I mentioned that some of us were nervously waiting for the Johnny Luna opinion, and Rick pointed out, during the speech, that this very morning the Court had ruled on the “other” case on this issue. The internet really is incredible; Rick had obviously already found out about an hour’s-old decision which did not involve an opinion while attending and paying attention to a seminar and thus was able to point out that the law was evolving on my speech topic even as I gave the speech. For those interested, I will post the speech to the web page as soon as possible. Readers of the blog may find part of it familiar.

Olshan Foundation Repair v. Ayala, 180 S.W.3d 212 (Tex. App. – San Antonio 2005, pet. denied).

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