1 

In The

Court of Appeals

Ninth District of Texas at Beaumont

________________

NO. 09-23-00098-CV 

________________

FIDELITY AUTO GROUP, LLC, D/B/A BAYTOWN NISSAN, Appellant

V.

GRETCHEN HARGRODER, Appellee

________________________________________________________________________

On Appeal from the 58th District Court

Jefferson County, Texas

Trial Cause No. A-203,460

________________________________________________________________________

OPINION

Gretchen Hargroder (“Hargroder”) sued Fidelity Auto Group, LLC, d/b/a 

Baytown Nissan (“Baytown Nissan”) andNissan North America, Inc. after they sold 

her a “new” truck that she later learned was used and the previous owner had 

returned as defective. Baytown Nissan appealsthe trial court’s order denying its 
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Motion to Compel Arbitration.1 See Tex. Civ. Prac. & Rem. Code Ann. § 51.016 

(allowing interlocutory appeal from an order denying motion to compel arbitration). 

In one issue, Baytown Nissan complains the district court erred in denying its Motion 

to Compel Arbitration, because: 1) the parties have a valid and enforceable 

arbitration agreement; 2) Hargroder’s claims fall within the agreement’s broad 

scope; 3) the question of arbitrability or “waiver” is contractually assigned to the 

arbitrator not the courts; 4) Baytown Nissan’slitigation conduct did not waive its 

right to arbitrate; and 5) Texas public policy favors arbitration. For the reasons 

discussed below, we affirm the trial court’s Order denying arbitration. 

I. Background and Procedural Posture

In February 2018, Hargroder purchased a “new” 2017 Nissan Titan XD crew 

cab truck from Baytown Nissan. Baytown Nissan represented the truck was new and 

sold Hargroder the truck as such. The contract documents for the purchase of the 

vehicle contained an arbitration provision. The arbitration provision provided as 

follows:

ARBITRATION PROVISION

PLEASE REVIEW – IMPORTANT – AFFECTS YOUR LEGAL RIGHTS

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE 

BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY 

JURY TRIAL.

1Nissan North America, Inc. also appealed the trial court’s Order Denying the 

Motion to Compel Arbitration. It has since dismissed its appeal; therefore we limit 

our background and procedural discussion to Baytown Nissan. 
3

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT 

TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS

MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST US 

INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY

CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE 

GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER

RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE 

AVAILABLE IN ARBITRATION.

Any claim or dispute, whether in contract, tort, statute or otherwise (including the 

interpretation and scope of this Arbitration Provision, and the arbitrability of the 

claim or dispute), between you and us or our employees, agents, successors or 

assigns, which arises out of or relates to your credit application, purchase or 

condition of this vehicle, this contract or any resulting transaction or relationship

(including any such relationship with third parties who do not sign this contract) 

shall, at your or our election, be resolved by neutral, binding arbitration and not by 

a court action. If federal law provides that a claim or dispute is not subject to binding 

arbitration, this Arbitration Provision shall not apply to such claim or dispute. Any 

claim or dispute is to be arbitrated by a single arbitrator on an individual basis and 

not as a class action. You expressly waive any right you may have to arbitrate a class 

action. You may choose the American Arbitration Association, 1633 Broadway, 

10th Floor, New York, New York 10019 (www.adr.org), or any other organization 

to conduct the arbitration subject to our approval. You may get a copy of the rules 

of an arbitration organization by contacting the organization or visiting its website.

Arbitrators shall be attorneys or retired judges and shall be selected pursuant to the 

applicable rules. The arbitrator shall apply governing substantive law and the 

applicable statute of limitations. The arbitration hearing shall be conducted in the 

federal district in which you reside unless the Seller-Creditor is a party to the claim 

or dispute, in which case the hearing will be held in the federal district where this 

contract was executed. We will pay your filing, administration, service or case 

management fee and your arbitrator or hearing fee all up to a maximum of $5000, 

unless the law or the rules of the chosen arbitration organization require us to pay 

more. The amount we pay may be reimbursed in whole or in part by decision of the 

arbitrator if the arbitrator finds that any of your claims is frivolous under applicable 

law. Each party shall be responsible for its own attorney, expert and other fees, 

unless awarded by the arbitrator under applicable law. If the chosen arbitration 

organization’s rules conflict with this Arbitration Provision, then the provisions of 

this Arbitration Provision shall control. Any arbitration under this Arbitration 

Provision shall be governed by the Federal Arbitration Act (9 U.S. C. § 1 et. seq.) 
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and not by any state law concerning arbitration. Any award by the arbitrator shall be 

in writing and will be final and binding on all parties, subject to any limited right to 

appeal under the Federal Arbitration Act.

You and we retain the right to seek remedies in small claims court for disputes or 

claims within that court’s jurisdiction, unless such action is transferred, removed or 

appealed to a different court. Neither you nor we waive the right to arbitrate by using 

self-help remedies, such as repossession, or by filing an action to recoverthe vehicle,

to recover a deficiency balance, or for individual injunctive relief. Any court having 

jurisdiction may enter judgment on the arbitrator’s award. This Arbitration Provision 

shall survive any termination, payoff or transfer of this contract. If any part of this 

Arbitration provision, other than waivers of class action rights, is deemed or found 

to be unenforceable for any reason, the remainder shall remain enforceable. If a 

waiver of class action rights is deemed or found to be unenforceable for any reason 

in a case in which class action allegations have been made, the remainder of the 

Arbitration Provision shall be enforceable. 

Shortly after buying the vehicle, Hargroder learned that the truck had been

previously purchased and returned as defective when it dropped a large amount of 

engine fluid. When Hargroder learned this, she demanded that Baytown Nissan take 

the truck back and return her down payment with the vehicle she traded in. Baytown 

Nissan refused. 

In March 2019, Hargroder sued Baytown Nissan, Nissan North America, and 

two individuals who worked for Baytown Nissan. Hargroder pleaded causes of 

action for negligence, gross negligence, intentional violations of the Texas 

Deceptive Trade Practices Act (DTPA), fraud, fraudulent misrepresentation, 

negligent misrepresentation, breach of fiduciary duty, breach of warranties, 

manufacturing defects, and breach of contract. 
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Baytown Nissan first answeredwith a general denial, subject to its motion to 

transfer venue. Its amended answer raised multiple affirmative defenses, sought 

costs and fees, and demanded a jury. The parties also conducted merits-based written 

discovery, which included Baytown Nissan responding to Hargroder’s multiple 

requests and propounding written discovery requests on Hargroder. Baytown Nissan 

also deposed Hargroder and the former employee who sold the truck to Hargroder. 

In September 2022, the parties filed a Joint Motion for Continuance and Entry of 

Docket Control Order, which requested that the matter be moved from its October 

2022 trial setting and set for trial in June 2023. The trial court signed the parties’

Agreed Amended Docket Control Order and set the case on its “try or dismiss” 

docket in June 2023. 

Baytown Nissan moved to compel arbitration in March 2023, almost four 

years after Hargroder filed suit, shortly after the trial court granted Hargroder’s 

Motion to Compel the production of certain documents, and three months before the 

scheduled trial setting. In their Motion to Compel Arbitration, Baytown Nissan 

argued a valid arbitration agreement existed and noted the delegation clause that 

providesthe parties to arbitrate “[a]ny claim or dispute, whether in contract, tort, 

statute or otherwise (including the interpretation and scope of this Arbitration 

Provision and the arbitrability of the dispute).” Baytown Nissan also argued that the 

AAA commercial rules say that the arbitrator rather than the court determines issues 
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of arbitrability. Finally, it argued that Hargroder’s claims are within the broad scope 

of the agreement and attached multiple exhibits to its Motion, including the contract 

documents containing the arbitration provision and the AAA Rules for Commercial 

Arbitration. 

Hargroder filed a Response to Baytown Nissan’s Motion to Compel 

Arbitration and supported her Response with evidence. Hargroder argued that

Baytown Nissan waived and relinquished its right to arbitrate via its litigation 

activities, and that given a recent decision by the Supreme Court of the United States, 

there is no longer a prejudice requirement. Even so, she argued she expended time 

and over $3,500 that she would not have had if Baytown Nissan timely demanded 

arbitration, and she noted the discovery dispute required her to file a Motion to 

Compel. 

BaytownNissan filed a Reply to Hargroder’s Response and disputed that they 

did not waive the right to enforce the arbitration agreement by their litigation 

conduct. Baytown Nissan also argued that the Federal Arbitration Act governed the 

dispute and whether the dispute was arbitrable. It contended that Hargroder had the 

burden to raise an affirmative defense to the provision’s enforcement and that the

“question of waiver is one of arbitrability the parties have committed to the arbitrator 

by adopting the AAA rules.” It also asserted that even if the Court rather than the 

arbitrator had the authority to decide the waiver issue, Hargroder failed to prove that 
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Baytown Nissan had waived its right to enforce the parties’ arbitration agreement.

Finally, it asserted that it never invoked the litigation process to Hargroder’s 

detriment, and she failed to show she was prejudiced by Baytown Nissan’s delay in 

invoking arbitration. 

The trial court denied Baytown Nissan’s Motion to Compel Arbitration, and 

Baytown Nissan timely appealed. After the appeal was perfected but before its 

submission, Appellee Hargroder requested that a supplemental clerk’s record be 

filed under Texas Rules of Appellate Procedure 34.5(c) and 34.5(b)(4), and on July 

13, 2023, the supplemental clerk’s record was filed in this Court. The contents of the 

supplemental clerk’s record includesthe Appellee’s brief filed in the court of appeals 

with the documents contained in the brief’s appendix. These documents were 1) the 

letter requesting the supplemental clerk’s record dated May 2023, 2) an attorney’s 

affidavit dated May 2023 authenticating various documents, 3) Baytown Nissan’s 

discovery responses, and 4) emails between counsel regarding schedulingmediation, 

discovery disputes, substituting counsel, and the arbitration provision. These 

documents were filed in the trial court after it ruled on the Motion to Compel 

Arbitration. Appellant Baytown Nissan objected to the supplemental clerk’s record. 

It argued that the documents in the supplemental clerk’srecord were all filed as part 

of Hargroder’s appellate brief, after the trial court’s March 2023 ruling on the 

Motion to Compel Arbitration. Baytown Nissan complained that the documents 
8

were not before the trial court when it ruled, so they should not be considered by this 

Court. We have carried a ruling on that objection with the appeal. 

II. Supplemental Clerk’s Record

We first address Appellant Baytown Nissan’s objection to the supplemental 

clerk’s record. “If a relevant item has been omitted from the clerk’s record, the trial 

court, the appellate court, or any party may by letter direct the trial court clerk to 

prepare, certify, and file in the appellate court a supplement containing the omitted 

item.” Tex. R. App. P. 34.5(c)(1). If a supplemental clerk’s record is filed, it becomes 

part of the appellate record. Id. 34.5(c)(3). Here, the documents contained in the 

supplemental record were not filed in the trial court until after the appeal was 

perfected and the parties filed their appellate briefs.

Simply because a supplemental clerk’s record is filed, does not mean the 

documents contained in the supplemental record are relevant for our decision on the

merits of the case. See Roventini v. Ocular Sciences, Inc., 111 S.W.3d 719, 726 (Tex. 

App.—Houston [1st Dist.] 2003, no pet.) (noting same in context of restricted 

appeal); see also Republic Services v. Rodriguez, No. 14-12-01054-CV, 2014 WL 

2936172, at *4 (Tex. App.—Houston [14th Dist.] June 26, 2014, no pet.) (declining 

to consider deposition excerpts that were not before the trial court when it ruled on 

summary judgment). “The rule has long been that evidence not before the trial court 

prior to final judgment may not be considered in a writ of error proceeding.” Gen.
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Elec. Co. v. Falcon Ridge Apartments, Joint Venture, 811 S.W.2d 942, 944 (Tex. 

1991) (citations omitted) (collecting cases); Adimora-Nweke v. Yarbrough, No. 14-

19-00426-CV, 2021 WL 1917832, at *3 (Tex. App.—Houston [14th Dist.] May 13, 

2021, pet. denied) (citation omitted) (noting that “[w]e do not consider evidence that 

was not before the trial court at the time it made its ruling in the case.”). “‘While the 

record may be supplemented under the appellate rules if something has been omitted, 

the supplementation rules cannot be used to create new evidence.’” Baylor Scott &

White, Hillcrest Med. Ctr. v. Weems, 575 S.W.3d 357, 366 (Tex. 2019) (quoting 

Whitehead v. State, 130 S.W.3d 866, 872 (Tex. Crim. App. 2004)) (other citation 

omitted). Since none of the documents in the supplemental clerk’s record were

before the trial court when it considered the Motion to Compel Arbitration, we do 

not consider the contents of the supplemental clerk’s record filed in this 

appeal.See Gen. Elec. Co., 811 S.W.2d at 944;Adimora-Nweke, 2021 WL 1917832, 

at *3; see also Rodriguez, 2014 WL 2936172, at *4; Roventini, 111 S.W.3d at 726.

III. Motion to Compel Arbitration

We now turn to Baytown Nissan’s claim that the trial court erred in denying 

its Motion to Compel Arbitration.

A. Standard of Review

“[A] party seeking to compel arbitration must establish the existence of a 

valid arbitration agreement and show that the disputed claims fall within the scope 
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of that agreement.”Wagner v. Apache Corp., 627 S.W.3d 277, 282 (Tex. 

2021)(citing In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005)). 

We review a trial court’s order denying a motion to compel arbitration for an abuse 

of discretion.Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). We defer to 

the trial court’s factual determinations if they are supported by evidence but review 

its legal determinations de novo.See id.; see also Aerotek, Inc. v. Boyd, 624 S.W.3d 

199, 204 (Tex. 2021)(noting deference to factual determinations if they are 

supported by evidence). Whether the disputed claims fall within the scope of a valid 

arbitration agreement is a question of law, which we review de novo. SeeHenry, 551 

S.W.3d at 115;In re Labatt Food Serv., L.P., 279 S.W.3d 640, 642–43 (Tex. 2009).

If the trial court finds that a valid arbitration agreement exists, the burden then shifts 

to the party opposing arbitration to raise an affirmative defense to enforcing 

arbitration. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003).

Whether a partywaived its right to arbitrate is also a question of law that we review 

de novo. Henry, 551 S.W.3d at 115; G.T. Leach Builders, LLC v. Sapphire V.P., LP, 

458 S.W.3d 502, 511 (Tex. 2015).

In its order denying Baytown Nissan’sMotion to Compel Arbitration, the trial 

court did not state why it refused to compel Baytown Nissan and Hargroder to 

arbitrate their dispute. The trial court did not issue findings of fact or conclusions of 

law, and no party requested them. Because this appeal proceeds without the benefit 
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of the trial court’s express findings, the trial court is presumed to have made all 

findings necessary to support its judgment. See Tex. R. Civ. P. 299.

B. General Arbitration Law Principles

We must first decide whether the parties made a valid and enforceable 

agreement to arbitrate. See G.T. Leach, 458 S.W.3d at 519 (citation omitted). We do 

so by looking to the parties’ intent as expressed in their written agreement. See id.

“Once the trial court concludes that the arbitration agreement encompasses the 

claims, and that the party opposing arbitration has failed to prove its defenses, the 

trial court has no discretion but to compel arbitration and stay its own proceedings.”

In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753–54 (Tex. 2001)(citations omitted); 

see also G.T. Leach, 458 S.W.3d at 519 (stating same). A valid arbitration agreement 

creates a strong presumption in favor of arbitration. RSL Funding, LLC v. Newsome, 

569 S.W.3d 116, 121 (Tex. 2018) (citingRachal v. Reitz, 403 S.W.3d 840, 850 (Tex. 

2013)). Texas and federal law require the enforcement of valid arbitration 

agreements. Id.; see also 9 U.S.C. § 2; Tex. Civ. Prac. & Rem. Code Ann. § 171.021.

Generally, courts consider an arbitration agreement’s terms to determine which 

issues must be arbitrated. See RSL Funding, 569 S.W.3d at 121; Forest Oil Corp. v. 

McAllen, 268 S.W.3d 51, 61 & n.37 (Tex. 2008) (stating same and discussing 

arbitration agreement that assigned “scope determination” to arbitrator rather than 

court). That said, since parties “have the right to contract as they see fit, they may 
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agree to arbitral delegation clauses that send gateway issues such as arbitrability to 

the arbitrator.” RSL Funding, 569 S.W.3d at 121 (citing Rent-A-Ctr., West, Inc. v. 

Jackson, 561 U.S. 63, 68–70 (2010); Forest Oil Corp., 268 S.W.3d at 61 n.38).

C. There is a valid arbitration provision containing a delegation of issues to the 

arbitrator, but it does not delegate the question of waiver by litigation conduct.

In support of its sole issue, Baytown Nissan contends that the plain language 

of the arbitration agreement was evidence that the delegation clause which included 

determining by arbitration issues including “the scope of the Arbitration Provision” 

and “arbitrability” rather than by court action. They also contend that they agreed

the arbitration would be conducted under the AAA Commercial Rules, which 

constituted clear and unmistakable evidence that they intended for the arbitrator to 

determine its own jurisdiction, including waiver by litigation conduct. Hargroder 

does not dispute the existence of the arbitration agreement or the delegation clause

generally but asserts that the issue of waiver by litigation conduct is not included in 

the arbitrability issues delegated to the arbitrator. In essence, we are asked to 

determinewhether the delegation clause that delegated “arbitrability” and “scope of 

the agreement” determinationsto the arbitrator also encompassed a delegation of 

whether there has been a waiver by litigation conduct. 

Courts generally enforce delegation clauses when the delegation is “clear and 

unmistakable.” Jetall Companies, Inc. v. Sonder USA Inc., No. 01-21-00378-CV, 

2022 WL 17684340, at *7 (Tex. App.—Houston [1st Dist.] Dec. 15, 2022, no pet.) 
13

(mem. op.) (citation omitted);see also Perry Homes v. Cull, 258 S.W.3d 580, 588

(Tex. 2008)(“Although the federal courts do not defer to arbitrators when waiver is 

a question of litigation conduct, they consistently do so when waiver concerns 

limitations periods . . . .”). “Whether parties have agreed to arbitrate a dispute is a 

‘gateway matter ordinarily committed to the trial court,’ but parties can ‘agree to 

arbitrate arbitrability.’” Jetall, 2022 WL 17684340, at *7 (quoting Jody James 

Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 631 (Tex. 2018)) (other citation 

omitted);see RSL Funding, 569 S.W.3d at 120 (“[A] contractual agreement to 

submit the arbitrability question to an arbitrator is valid and must be treated like any 

other arbitral agreement.”). Certain threshold questions of arbitrability may be 

delegated to the arbitrator if the parties’ agreement does so by “‘clear and 

unmistakable evidence.’” See Jetall, 2022 WL 17684340, at *7 (quoting Henry 

Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524, 530 (2019)).

Whether a party waived its right to arbitration by its litigation conduct is 

generally a question for the courts to decide. See G.T. Leach, 458 S.W.3d at 520;

Perry Homes, 258 S.W.3d at 588. This is 

because (1) “[c]ontracting parties would expect the court to decide 

whether one party’s conduct before the court waived the right to 

arbitrate,” (2) it is a “gateway” matter regarding “whether the parties 

have submitted a particular dispute to arbitration,” and (3) “courts 

decide defenses relating solely to the arbitration clause.” 
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G.T. Leach, 458 S.W.3d at 520 (quoting Perry Homes, 258 S.W.3d at 588–

89). There is a recognized distinction between questions of “substantive 

arbitrability” that courts decide and “procedural arbitrability” which arbitrators 

decide. Id. (citing BG Group, PLC v. Republic of Arg., 572 U.S. 25, 34–36 

(2014); Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 81 (2002)). In 

addressing these distinctions, “courts should defer to arbitrators to resolve the issue 

of waiver when ‘waiver concerns limitations periods or waiver of particular claims 

or defenses,’ but [the court[]should decide issues of waiver by litigation conduct.” 

Id. at 521 (quoting Perry Homes, 258 S.W.3d at 588).

The Supreme Court of Texas has stated that when the issue involves conduct 

in court, “the court is obviously in a better position to decide whether [the conduct] 

amounts to waiver[,]” and parties “would expect the court to decide whether one 

party’s conduct before the court waived the right to arbitrate.” See Perry Homes, 258 

S.W.3d at 588 (quotingTristar Fin. Ins. Agency, Inc. v. Equicredit Corp. of Am., 97 

F. App’x 462, 464 (5th Cir. 2004)); Jetall, 2022 WL 17684340, at *11 n.4

(explaining same).The Houston First Court of Appeals and multiple federal courts 

have expressly decided whether delegation clauses included waiver by litigation 

conduct. See Jetall, 2022 WL 17684340, at *11 n.4 (concluding where neither the 

arbitration provision nor the delegation clause specifically mentioned who decided 

waiver by litigation conduct, the parties did not “clearly and unmistakably delegate 
15

this issue of substantive arbitrability to the arbitrator”); Vine v. PLS Fin. Servs., Inc., 

689 F. App’x 800, 803–04 (5th Cir. 2017) (concluding there was no “clear and 

unmistakable evidence” the parties intended to arbitrate litigation-conduct waiver

where agreement did “not explicitly mention litigation-conduct waiver”); Qazi v. 

Stage Stores, Inc., No. 4:18-CV-0780, 2020 WL 1321538, at *5 (S.D. Tex. Mar. 17, 

2020) (mem. op. and order)(concluding the delegation clause did not contain “clear 

and unmistakable evidence” of parties’ intent to arbitrate litigation-conduct waiver 

where it never mentioned litigation-conduct waiver); Tellez v. Madrigal, 292 

F.Supp.3d 749, 756–57 (W.D. Tex. 2017)(same). They have uniformly determined 

that where a delegation clause generally refers arbitrability decisions to the arbitrator 

but does not mention litigation-conduct waiver, the issue of litigation-conduct 

waiver remains one for the court to decide. See Jetall, 2022 WL 17684340, at *7; 

Vine, 689 F. App’x at 803–04; Qazi, 2020 WL 1321538, at *5; Tellez, 292 F.Supp.3d 

at 756–57. We find their reasoning persuasive.

Despite the ability to delegate certain matters of gateway arbitrability, courts 

have explained that “where arbitration agreements divest courts of power, courts 

have still been able to determine ‘whether legal constraints external to the parties’ 

agreement foreclosed the arbitration of those claims.” Qazi, 2020 WL 1321538, at 

*5 (quotingWebb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996)). Other

courts have determined parties may delegate the issue of waiver by litigation conduct 
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to the arbitrator, but the arbitration agreement’s delegation clause “must contain 

clear and unmistakable evidence ‘of the parties’ intent to arbitrate this issue 

specifically.” Jetall, 2022 WL 17684340, at *11 n.4. (quoting Qazi, 2020 WL 

1321538, at *5). Since waiver by litigation conduct is one presumptively for the 

courts, if the parties desire to overcome this presumption and delegate it, they must 

do so by clear and express language. See id.; Qazi, 2020 WL 1321538, at *5. If the 

arbitration agreement omits any mention of waiver, the issue has not been clearly 

and unmistakably delegated to the arbitrator.See Qazi, 2020 WL 1321538, at *5.

The delegation clause before us does not mention litigation waiver at all, and 

conspicuously absent is language that would overcome the presumption that the 

court will decide whether a party has waived its right to enforce the arbitration 

provision by its litigation conduct. See id.

We turn briefly to the parties’ discussion of the AAA rules mentioned in the 

arbitration provision. The Supreme Court of Texas recently held that “as a general 

rule, an agreement to arbitrate in accordance with the AAA or similar rules 

constitutes a clear and unmistakable agreement that the arbitrator must decide 

whether the parties’ disputes must be resolved through arbitration.” TotalEnergies 

E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694, 708 (Tex. 2023). Still,

the express language of the parties’ agreement did not adopt the AAA Commercial 

Rules or require that they be used. Here, the arbitration provision only says the 
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parties “may choose” the AAA or “any other organization” subject to Baytown 

Nissan’s approval. The arbitration provision also instructs that if the “chosen 

arbitration organization’s rules” conflict with the Arbitration Agreement, then the 

Arbitration Agreement controls. The agreement’slanguage providesthat AAA rules 

were merely one option, so we reject Baytown Nissan’s argument the AAA rules 

require the litigation waiver issue to be submitted to the arbitrator.

For the reasons outlined above, we conclude that the question about whether 

Baytown Nissan waived the right to compel arbitration by virtue of its litigation 

conduct is an issue for the trial court to decide. Neither the arbitration agreement nor 

the delegation clause mention waiver by litigation conduct, and there is no “clear 

and unmistakable evidence” overcoming the presumption the court will decide that 

issue. See Jetall, 2022 WL 17684340, at *7; Vine, 689 F. App’x at 803–04; Qazi, 

2020 WL 1321538, at *5; Tellez, 292 F.Supp.3d at 756–57; see also G.T. Leach, 458 

S.W.3d at 520 (explaining why courts decide issue of waiver by litigation conduct); 

Perry Homes, 258 S.W.3d at 588–89 (same). 

D. Hargroder established the affirmative defense of waiver by litigation 

conduct.

We now turn to whether Hargroder met her burden to establish the affirmative 

defense of waiver by litigation conduct. The parties do not dispute that the arbitration 

agreement signed by Hargroder and Baytown Nissan is valid, so “‘the burden shifts 

to the party opposing arbitration to raise an affirmative defense to enforcing 
18

arbitration.’” Bonsmara Nat. Beef Co. v. Hart of Tex. Cattle Feeders, LLC, 603 

S.W.3d 385, 397–98 (Tex. 2020) (quoting J.M. Davidson, Inc., 128 S.W.3d at 227).

“Waiver is ‘an intentional relinquishment of a known right or intentional conduct 

inconsistent with claiming that right.’”Conn Appliances, Inc. v. Puente, No. 09-18-

00326-CV, 2020 WL 4680283, at *4 (Tex. App.—Beaumont Aug. 13, 2020, no pet.) 

(mem. op.) (quoting Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 

(Tex. 1987)). The reasoning behind a waiver finding lies in the “inherent unfairness 

caused by ‘a party’s attempt to have it both ways by switching between litigation 

and arbitration . . . .’” In re Citigroup Glob. Mkts., Inc., 258 S.W.3d 623, 625 (Tex. 

2008)(orig. proceeding) (quotingPerry Homes, 258 S.W.3d at 597); see also 

Puente, 2020 WL 4680283, at *4. 

Historically, waiver by litigation as an affirmative defense required the party 

opposing arbitration to show both: 1) the party seeking arbitration substantially 

invoked the litigation process; and 2) it prejudiced the party opposing arbitration. 

See Bonsmara Nat. Beef Co., 603 S.W.3d at 395 (citation omitted); Perry Homes, 

258 S.W.3d at 589–90, 593; BBX Operating, LLC v. Am. Fluorite, Inc., No. 09-17-

00245-CV, 2018 WL 651276, at *6 (Tex. App.—Beaumont Feb. 1, 2018, no pet.) 

(mem. op.); see also Rivas v. Molina, No. 08-23-00102-CV, 2024 WL 647656, at *3 

& n.3 (Tex. App.—El Paso Feb. 15, 2024, no pet. h.) (mem. op.). “When courts 

consider allegations of such a waiver, ‘[t]here is a strong presumption’ against it 
19

under the FAA.” RSL Funding v. Pippins, 499 S.W.3d 423, 430 (Tex. 2016) (quoting 

In re D. Wilson Constr. Co., 196 S.W.3d 774, 783 (Tex. 2006)). The presumption 

applies in close cases. Perry Homes, 258 S.W.3d at 593.Courts look at the totality 

of the circumstances and decide this issue on a case-by-case basis. See Pippins, 499 

S.W.3d at 430; Perry Homes, 258 S.W.3d at 591; BBX Operating, 2018 WL 651276, 

at *6. The factors employed include: 1) how long the party moving to compel 

arbitration waited to do so; 2) the reasons for the delay; 3) whether and when the 

movant knew of the arbitration agreement during the delay; 4) how much discovery 

was conducted before moving to compel arbitration and whether discovery related 

the merits; 5) whether the movant requested disposition on the merits; 6) whether 

the movant asserted affirmative claims for relief in the trial court; 7) the extent of 

the movant’s “engagement in pretrial matters” concerning the merits versus

arbitrability or jurisdiction; 8) amount of time and expense the parties committed to 

litigation; 9) whether the discovery conducted would be unavailable or useful in 

arbitration; 10) whether activity would be duplicated in arbitration; and 11) when 

the case was to be tried. G.T. Leach, 458 S.W.3d at 512 (citing Perry Homes, 258 

S.W.3d at 590–91); see also Pippins, 499 S.W.3d at 430 (citations omitted). Merely 

taking part in litigation is insufficient unless a party substantially invokes the judicial 

process to its opponent’s detriment. See In re Vesta Ins. Grp., Inc., 192 S.W.3d 759, 
20

763 (Tex. 2006) (orig. proceeding) (citation omitted). Likewise, delay alone 

generally will not establish waiver. Id.

“Generally, no one factor, by itself, is dispositive.” Pippins, 499 S.W.3d at 

430. We recognize that waiver by litigation conduct is a high hurdle, and the party 

opposing a valid arbitration agreement based on waiver bears the burden of proving 

that defense. SeeRoyston, Rayzor, Vickery & Williams, LLP v. Lopez, 467 S.W.3d 

494, 499–500 (Tex. 2015); G.T. Leach, 458 S.W.3d at 512; In re Bruce Terminix, 

988 S.W.2d 702, 705 (Tex. 1998) (citation omitted)(noting “heavy burden of proof” 

required to show waiver of arbitration rights).

1. Substantial Invocation of the Litigation Process

We examine the totality of the factorsto determine whether BaytownNissan 

substantially invoked the litigation process. See G.T. Leach, 458 S.W.3d at 512; 

Perry Homes, 258 S.W.3d at 590–92; BBX Operating, 2018 WL 651276, at *6.

Baytown Nissan did not just wait months or even a few years to move to 

compel arbitration—it waited four years and failed to explain this delay other than 

new counsel noticed there was an arbitration agreement. Baytown Nissan drafted the 

arbitration agreement, and we presume a party who can read a contract containing 

an arbitration agreement and signs it, knows its contents. See EZ Pawn Corp. v. 

Mancias, 934 S.W.2d 87, 90 (Tex. 1996); see also BBX Operating, 2018 WL 

651276, at *6 (“[A] party who is aware of an arbitration clause, yet only files a 
21

motion to compel arbitration after having engaged in discovery and filed pleadings 

with the trial court, and after having received an adverse ruling from a trial court, 

has substantially invoked the litigation process and thereby waived its right to 

arbitrate.”). Courts have found waiver based on shorter periods of delay coupled 

with other factors. See, e.g., Perry Homes, 258 S.W.3d at 596 (finding waiver where 

party delayed request for arbitration fourteen months after suing);Buzbee v. Terry 

& Thweatt, P.C., No. 01-23-00123-CV, 2023 WL 7311212, at *5 (Tex. App.—

Houston [1st Dist.] Nov. 7, 2023, no pet.) (mem. op.) (delay of two years coupled 

with other factors supported finding of waiver); F.T. James Constr., Inc. v. Hotel 

Sancho Panza, LLC, 657 S.W.3d 623, 632 (Tex. App.—El Paso 2022, no pet.) 

(concluding twelve-month delay considered with other factors weighed in favor of 

waiver); Menger v. Menger, No. 01-19-00921-CV, 2021 WL 2654137, at *5 (Tex. 

App.—Houston [1st Dist.] June 29, 2021, no pet.) (mem. op.)(finding six-month 

delay before requesting arbitration supported finding of waiver). This case was also 

three months from a trial setting. See Perry Homes, 258 S.W.3d at 596. We look at 

these factors proportionally and compare waiting four years after litigation began to 

compel arbitration to the three months before the trial setting. See id. at 596 n.92 

(citing In re Vesta Ins. Grp., 192 S.W.3d at 764); F.T. James Constr., Inc., 657 

S.W.3d at 632 (comparing months between initiation of lawsuit and motion to 
22

compel arbitration with months remaining before trial date). This factor weighs in 

favor of waiver.

Next, we examine the activity and discovery in this case. “Generally, merely 

responding to discovery requests is insufficient to constitute a substantial invocation 

of the judicial process.” BBX Operating, 2018 WL 651276, at *7 (citing In re Bruce 

Terminix, 988 S.W.2d at 704). Yet the record here shows Baytown Nissan also 

propounded two sets of requests for production, two sets of interrogatories, and 

request for disclosure to Hargroder, all of which went to the merits of the claims, 

which weighs against Baytown Nissan and in favor of waiver.2 See G.T. Leach, 458 

S.W.3d at 512–14 (considering how much discovery movant conducted before 

seeking arbitration and whether it went to the merits); Perry Homes, 258 S.W.3d at 

595–96 (explaining discovery went to “about every aspect of the merits”). Also, 

Baytown Nissan deposed Hargroder and the salesperson who sold the vehicle to her, 

and their discovery addressed the merits, which weighs against Baytown Nissan and 

in favor of waiver. See id. Only after the trial court adversely ruled against Baytown 

Nissan by granting Hargroder’s Motion to Compel the production of documents 

significant to her claims did the defendant move to compel arbitration. See BBX 

2The record reveals that Baytown Nissan’s First Set of Request for Production 

to Hargroder contained thirty-six requests and the Second Set of Request for 

Production contained eleven requests.Likewise, the combined sets of interrogatories 

Baytown Nissan propounded to Hargroder contained twenty-two requests.
23

Operating, 2018 WL 651276, at *6; see also GRGP, Inc. v. Black Forest Holdings, 

Inc., No. 01-23-00314-CV, 2023 WL 8459522, at *6 (Tex. App.—Houston [1st 

Dist.] Dec. 7, 2023, no pet.) (mem. op.) (noting that party did not move to compel 

arbitration until the trial court adversely ruled against it, including finding that it 

intentionally spoliated evidence). These facts weigh against Baytown Nissan and 

favor waiver.

Hargroder acknowledges that the discovery that was the subject of the motion 

to compel could be useful in arbitration, which would weigh against waiver. See 

Perry Homes, 258 S.W.3d at 592; In re Bruce Terminix, 988 S.W.2d at 704. On

balance and considering all the circumstances, as we must, the fact that discovery 

could be useful in arbitration does not outweigh the other factors that Baytown 

Nissan actively participated in the discovery processfor years, only sought meritsbased discovery, propounded multiple sets of requests, and deposed key witnesses. 

We agree with Baytown Nissan that propounding discovery alone and delay 

alone are not enough to find that it substantially invoked the litigation process, but 

here the totality-of-the-circumstances weighs in favor of waiver. It is the combined 

force of 1) Baytown Nissan’s unexplained delay of four years, 2) the length of that 

delay compared with the months to the trial date, 3) the presumption that it knew its 

contract forms contained an arbitration provision and was aware of the provision 

from the outset, 4) that it propounded multiple sets of merits-based discovery, 5) that 
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it deposed key witnesses, and 6) that it only sought to compel arbitration after the 

trial court adversely ruled against it on a Motion to Compel and required it to produce 

documents significant to Hargroder’s claimsthat points us to our decision. See id. at 

596–97; BBX Operating, 2018 WL 651276, at *6. Based on the totality of the 

circumstances, we conclude the trial court did not abuse its discretion in denying the 

request for arbitration because Baytown Nissan substantially invoked the judicial 

process in a manner inconsistent with the right to arbitrate. See Perry Homes, 258 

S.W.3d at 596; BBX Operating, 2018 WL 651276, at *6.

2. Prejudice3

“In the context of waiver of the right to arbitrate, prejudice generally focuses 

on the inherent unfairness caused by a party’s attempt to have it both ways by 

switching between litigation and arbitration to its own advantage.” Momentum 

Project Controls, LLC v. Booflies to Beefras LLC, No. 14-22-00712-CV, 2023 WL 

4196584, at *5 (Tex. App.—Houston [14th Dist.] June 27, 2023, pet. denied) (mem. 

op.) (citing G.T. Leach, 458 S.W.3d at 515;Perry Homes, 258 S.W.3d at 597).

3Recently, the United States Supreme Court held a federal court cannot 

“condition a waiver of the right to arbitrate on a showing of prejudice.” Morgan v. 

Sundance, Inc., 596 U.S. 411, 417 (2022). The plaintiff argues Morgan dispensed 

with the prejudice requirement in a waiver by litigation conduct analysis in cases 

under the Federal Arbitration Act. See id. The Texas Supreme Court has not spoken 

on the prejudice prong since Morgan. Nevertheless, because the record before us 

shows both substantial invocation of the litigation process and prejudice, we find it 

unnecessary to decide that issue.
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Relevant to the prejudice issue are considerations of delay, expense, or damage to 

another party’s legal position.See id.; see also Kennedy Hodges, L.L.P. v. Gobellan, 

433 S.W.3d 542, 545 (Tex. 2014);Perry Homes, 258 S.W.3d at 597. Two critical 

factors in determining whether a party was prejudiced by the opposing party’s delay 

in asserting arbitration are (1) expenses incurred by the party during the delay; and 

(2) the effect on the parties’ legal positions, including whether the party moving for 

arbitration would gain an unfair advantage by switching forums from litigation to 

arbitration. Momentum Project Controls, LLC, 2023 WL 4196584, at *5 

(citing Perry Homes, 258 S.W.3d at 597). 

Baytown Nissan argues that Hargroder failed to present any evidence of 

prejudice. The court in Perry Homes explained that a nonmovant need only prove 

substantial invocation of the judicial process that caused prejudice, not precisely how 

much it cost. 258 S.W.3d at 599–600. “A party opposing arbitration is not always 

required to prove the cost of the extensive discovery in order to prove prejudice.” 

Ellman v. JC Gen. Contractors, 419 S.W.3d 516, 522 (Tex. App.—El Paso 2013, no 

pet.) (citing Perry Homes, 258 S.W.3d at 599–600); see also Green v. Velocity Invs., 

LLC, No. 05-20-00795-CV, 2022 WL 3655232, at *6 (Tex. App.—Dallas Aug. 25, 

2022, no pet.) (mem. op.) (citations omitted). Thus, even without specific evidence 

of discovery costs or attorneys’ fees, Hargroder “may demonstrate prejudice on the 
26

face of the record.”Archimedes, Inc. v. Russell, No. 01-21-00222-CV, 2022 WL 

2024851, at *4 (Tex. App.—Houston [1st Dist.] June 7, 2022, no pet.) (mem. op.).

“Cost is only one dimension of prejudice.”Green, 2022 WL 3655232, at *6. 

If the movant uses an arbitration agreement to tactically switch from one forum to 

another, the nonmovant may show prejudice. See Perry Homes, 258 S.W.3d at 599–

600 (prejudice found where party manipulated litigation for one’s advantage and 

another’s detriment); Green, 2022 WL 3655232, at *6 (prejudice found given

thirteen-month delay and damage to legal position seeking arbitration on “eve of 

trial”); Archimedes, Inc., 2022 WL 2024851, at *5 (prejudice found by considering 

expenses, potential damage to opposing party’s legal position by switching to 

arbitration a month before trial after a nineteen-month delay); Ellman, 419 S.W.3d 

at 522 (finding prejudice where party initiated merits discovery and waited to 

demand arbitration until trial strategy was revealed through fact and expert witness 

lists). If a party seeks to compel arbitration following an adverse ruling in the trial 

court, the non-movant may be prejudiced by a change in its legal position. See Perry 

Homes, 258 S.W.3d at 597; Green, 2022 WL 3655232, at *6; Ellman, 419 S.W.3d 

at 522;see also Hogg v. Lynch, Chappell & Alsup, P.C., 480 S.W.3d 767, 791, 795 

(Tex. App.—El Paso 2015, no pet.). The unfairness results from a party’s attempt 

“to have it both ways by switching between litigation and arbitration to its own 

advantage[.]”Perry Homes, 258 S.W.3d at 597;see Hogg, 480 S.W.3d at 790–91. 
27

As the Court explained in Perry Homes, “‘a party should not be allowed 

purposefully and unjustifiably to manipulate the exercise of its arbitral rights simply 

to gain an unfair tactical advantage over the opposing party.’” 258 S.W.3d at 

597 (quoting In re Tyco Int’l Ltd. Sec. Litig., 422 F.3d 41, 46 n.5 (1st Cir. 2005)). 

Under those circumstances, the party opposing arbitration suffers harm to its legal 

position. Id.;see also Hogg, 480 S.W.3d at 791. The Hogg court found prejudice 

where Ms. Hogg did not move for arbitration until she lost a discovery dispute and 

was “faced with the near-certainty of having a sanctions order entered against 

her.”Hogg, 480 S.W.3d at 796. There was no pending sanctions order here, but

Baytown Nissan lost a discovery dispute that resulted in it having to produce 

documents significant to Hargroder’s claims.

This Court has recognized that generalized complaints about delay and 

expense are not enough without explanations and evidence. See In re Vesta Ins. Grp., 

192 S.W.3d at 763; In re Citgo Petroleum, 248 S.W.3d 769, 778 (Tex. App.—

Beaumont 2008, org. proceeding) (citations omitted). That said, the record before us 

establishes more than generalized complaints.Hargroder did not provide an affidavit 

in the trial court outlining her costs and expenses, but her Response to the Motion to 

Compel Arbitration explained that she spent over $3,500 related to litigation that she 

would not have incurred had Baytown Nissan timely demanded arbitration.

Hargroder also asserted that Baytown Nissan benefitted from the trial court 
28

discovery, that all the pretrial activity went to the case’s merits, and that 

“[s]ignificant time and expense” had already been incurred. She focused on the 

discovery process and pointed to the dispute that required her to file a Motion to 

Compel. Hargroder argued in her Response that “the undersigned has devoted 

dozens and dozens of hours to drafting pleadings, drafting discovery, responding to 

discovery, taking depositions, preparing a motion to compel, attending a motion to 

compel hearing,” among the other things involved in litigating the case. The 

evidence she attached to her Response included the trial court’s Order granting her 

Motion to Compel Discovery and the discovery requests that were the subject of the 

Motion to Compel. This evidence shows that the trial court ordered Baytown Nissan 

to produce documents responsive to Plaintiff’s Third Request for Production and 

that the trial court overruled all Baytown Nissan’s exceptions, except two. The only 

objections the trial court sustained limited the timeframe of documents responsive 

to Hargroder’s request to five years for two of her requests. 

The record showsthe parties conducted significant pretrial proceedings and 

discovery over the four years before the arbitration demand. It was only after the 

trial court ruled against Baytown Nissan on Hargroder’s motion to compel and 

required the company to produce documents significant to Hargroder’s claims that 

Baytown Nissan filed its motion to compel arbitration. The documents the trial court 

ordered produced included documents that went to the dealership’s knowledge that 
29

the truck was not new and employee personnel files. Less than a month after being 

ordered to produce the additional documents Baytown Nissan moved to compel 

arbitration, and it sought arbitration even though the case had been set and reset for 

trial. Even when Baytown Nissan filed its motion to compel arbitration, the motion

was filed just three months before the scheduled trial setting.

We conclude that the trial court could have concluded that Hargroder had been 

prejudiced by Baytown Nissan’s attempt to manipulate the litigation process to its 

advantage by demanding arbitration after an unexcused four-year delay, three 

months before a scheduled trial setting, and after the trial court granted Hargroder’s 

Motion to Compel. See Perry Homes, 258 S.W.3d at 597; Green, 2022 WL 3655232, 

at *6; Ellman, 419 S.W.3d at 522;Hogg, 480 S.W.3d at 791, 795;Archimedes, Inc., 

2022 WL 2024851, at *4–5. “Appellees were not required to detail the extent of 

prejudice, only that prejudice resulted.” BBX Operating, 2018 WL 651276, at *8 

(citing Perry Homes, 258 S.W.3d at 599).

On this record, we cannot say the trial court erred in concluding that Baytown 

Nissan waived its right to arbitrate by substantially invoking the judicial process to 

Hargroder’s detriment. The trial court could have reasonably concluded that 

Baytown Nissan’s “‘attempt to have it both ways by switching between litigation 

and arbitration to its own advantage’” resulted in “inherent unfairness” to Hargroder. 

See In re Fleetwood Homes of Tex., L.P., 257 S.W.3d 692, 694 (Tex. 2008) (orig. 
30

proceeding) (quoting Perry Homes, 258 S.W.3d at 597); BBX Operating, 2018 WL 

651276, at *8; Hogg, 480 S.W.3d at 791, 795;Archimedes, Inc., 2022 WL 2024851, 

at *4–5. 

We overrule Baytown Nissan’s sole issue.

IV. Conclusion

Having overruled Baytown Nissan’s sole issue, we affirm the trial court’s 

Order Denying Baytown Nissan’s Motion to Compel Arbitration.

AFFIRMED.

W. SCOTT GOLEMON 

Chief Justice

 

Submitted on February 29, 2024

Opinion Delivered March 14, 2024

Before Golemon, C.J., Johnson and Wright, JJ.