Texas Supreme Court to Hear Interlocutory Appeal of an Arbitral Order

On January 11th, the Supreme Court of Texas agreed to hear CMH Homes, Inc. et al. v. Perez, No. 10-0688. In the case, a dispute between a creditor and a purchaser of a mobile home arose. After both parties agreed their dispute was subject to arbitration under the Federal Arbitration Act, a trial court signed an order compelling arbitration and appointing an arbitrator over CMH Homes’ objections that such an appointment was premature. CMH Homes filed an interlocutory appeal to the arbitration order in the San Antonio Appeals Court pursuant to Section 51.016 of the Texas Civil Practice and Remedies Code. Section 51.016 is a recent addition to the Code and only became effective on September 1, 2009. It states:

Sec. 51.016. APPEAL ARISING UNDER FEDERAL ARBITRATION ACT. In a matter subject to the Federal Arbitration Act (9 U.S.C. Section 1 et seq.), a person may take an appeal or writ of error to the court of appeals from the judgment or interlocutory order of a district court, county court at law, or county court under the same circumstances that an appeal from a federal district court’s order or decision would be permitted by 9 U.S.C. Section 16.

On July 28, 2010, the San Antonio Appeals Court dismissed CMH Homes’ interlocutory appeal for lack of jurisdiction (No. 04-10-00259-CV) and CMH Homes filed a petition for review with the Supreme Court of Texas.

According to the Texas Supreme Court Journal, the questions presented by the parties are:

ISSUES PRESENTED by CMH Homes, Inc., et al.

1. When federal courts permit interlocutory appeal of an issue, do Texas courts of appeals have the same jurisdiction under the new statute allowing interlocutory appeals “under the same circumstances that an appeal . . . would be permitted by 9 U.S.C. Section 16” of the Federal Arbitration Act?

2. When a party alternatively requests mandamus relief, and all procedural rules governing petitions for mandamus have been met, can a Texas court of appeals refuse to grant relief unless a second parallel proceeding is filed?

ISSUES PRESENTED by Adam Perez

Issue One

A court of appeals does not have appellate jurisdiction under TEX. CIV. PRAC. & REM. CODE §51.016, which allows interlocutory appeal of arbitration orders to the extent permitted by 9 U.S.C. §16, because orders like the one at issue – appointing an arbitrator to resolve in impasse under §5 of the FAA – are not identified as one of the types of appeals permitted under the federal statute, and are therefore not immediately appealable unless combined with some other order from which an immediate appeal is permitted, such as a order of dismissal or orders denying arbitration.

Issue Two

CMH’s argument that a court of appeals should, for convenience, treat an appellate brief as though it were a mandamus petition, even though no instrument is filed to invoke the court of appeals’ original jurisdiction, was already rejected in Am. Std. v. Brownsville I.S.D. (In re D. Wilson Constr. Co.), 196 S.W.3d 774 (Tex. 2006).

Oral argument will be heard at 9 am on February 3, 2011. Disputing will be keeping an eye on this and other notable ADR cases currently up for review by the Supreme Court of Texas.

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