Case No. 05-1 8-00140-CV

IN TFIE COURT OF APPEALS FOR TFIE FIF'TH DISTRICT OF TEXAS

ARCHER WESTERN CONSTRUCTION,LLC

Appellant

SOUTH TEXAS INNOVATIONS, LLC

Appellee

On appeal from the 193'd Judicial District Court of Dallas County, Texas

Ihe Honorable Carl Ginsberg presiding

APPELLANTOS REPLY BRIEF

Paulo Flores

State Bar No. 07164447

pflores@pecklaw.com

Timothy D. Matheny

State Bar No. 24000258

tmatheny@pecklaw.com

Tracey L. Williams

State Bar No. 24031954

twilliams@pecklaw. com

PECKAR & ABRAMSON P.C.

8080 N. Central Expwy.,

Suite 1600, LB 65

Dallas, Texas 75206

214-523 -51 00 (telephone)

21 4-521 -l 406 (facsimile)

V

ACCEPTED

05-18-00140-CV

FIFTH COURT OF APPEALS

DALLAS, TEXAS

5/21/2018 12:48 PM

LISA MATZ

CLERK

 FILED IN 5th COURT OF APPEALS DALLAS, TEXAS 5/21/2018 12:48:06 PM LISA MATZ Clerk
IDENTITIES OF PARTIES AND COUNSEL

Parties

Archer Western Constructiono LLC

Appellant/Defendant/Cros s-Plaintiff/Cross-Defendant

South Texas Innovationso LLC

App e 1 I e e/ D e fen d antlC ro s s - P Iaintiff I Cro s s - D e fend ant

The Hanover Insurance Company

Interested Party

Counsel

Archer Western Construction, LLC

Trial and Appellate

Paulo Flores

State Bar No. 07164447

pflores@pecklaw.com

Timothy D. Matheny

State Bar No. 24000258

tmatheny @pecklaw.com

Tracey L. Williams

State Bar No. 24031954

twi I I i ams @p ecklaw. c om

PECKAR & ABRAMSON P.C.

8080 N. Central Expwy.,

Suite 1600, LB 65

Dallas, Texas 75206

(2t4) s23-sr00

1
South Texas Innovations, LLC and The Hanover Insurance Company

Trial and Appellate

Seth I. Rubinson

State Bar No. 24053908

srubinson@rubinsonlaw. com

RUBINSON LAW

1135 Heights Blvd.

Houston, Texas 77008

(832) 48s-48e9

fDamian W. Abreo - Mr. Abreo has withdrawn as counsel for STI and Hanover

State Bar No. 24006728

dabreo@jdkglaw.com

JOHNSON DELUCA KURISKY & GOULD

4 Houston Center

l22lLamar St., Suite 1000

Houston, Texas 770I0

(713) 6s2-2s2sl

Appellate only:

Nancy H. Elliott

State Bar No. 08701240

ne I I i ott@ zflaw ftrm. c om

ZABEL FREEMAN

1135 Heights Blvd.

Houston, Texas 77008

(7 t3) 802-ert7

1l
TABLE OF CONTENTS

IDENTITIES OF PARTIES AND COTINSEL

INDEX OF AUTHORITIES

REPLY

I Preliminary Matters .........,

A. Standard of Review

B. Appellee cannot use evidence in this appealthat was not

presented to the Trial Court, and all such evidence should

be disregarded by this Court.

il. Appellee cannot validly make arry argument that Archer

expressllz waived the arbitration clause

A. There is no evidence whatsoever of an express waiver

B. There is no waiver by Archer of its waiver argument

C. The "evidence" presented, allegedly in support of

Appellee's argument of express waiver clearly does not

rise to the level of express

II. Archer did not substantially invoke the judicial process so as to

impliedly waive the arbitration clause.

m. Appellee has not shown legal prejudice sufficient for a finding

of an implied waiver of the arbitration clause

ry Appellant hereby withdraws its Issue No. 1 - The trial court

erred (or, alternatively, abused its discretion) in denying Archer

Western's Motion to Stay the Proceeding and to Compel

Arbitration as the arbitration clause itself prohibits waiver..........

PRAYER

CERTIFICATE OF SERVICE .........

CERTIFICATE OF COMPLIANCE

... i

.iv

1

1

1

2

2

4

2

6

6

...16

. 18

. 18

.20

.20

111
INDEX OF AUTHORITIES

Cases

Apollo Theater Found., Inc. v. W. Int'l Syndication,

No. 02 CIV 10037,2004 U.S. Dist. LEXIS 11110 (S.D.N.Y. June

2r,2004)

BBX Operating, LLC v. Am, Flourite, Inc.,

No. 09-17-00245-CV, 2018 WL 651276 (Tex. App.- Beaumont

February l, 201 8, no pet.).............

In re Bruce Terminix Co.,

988 S.W.2d702 (Tex. 1998)......

Cent. Educ. Agency v. Burke,

711 S.W.2d7 (Tex. 1986)....

Ellman v. J.C. Gen. Contractors,

419 S.W.3d 516 (Tex. App. - El Paso 2013, no pet.)

In re Fleetwood Homes of Tex.,

257 S.W.3d 692 (Tex. 2008)......

Garcia v. Huerta,

340 S.W.3d864 (Tex.App.-San Antonio 2011, pet. denied)......

Greystar, LLC v. Adams,

426 S.W.3d 861 (Tex. App. - Dallas 2014, no pet)

Henry v. Cash Biz, LP,

No. 16-0854,2018 WL 1022838,2018 Tex. LEXIS 164, _S.W.3d

_ 

(Tex. F eb. 23, 20 1 8)......

Hogg v. Lynch, Chappell & Alsup, P.C.,

480 S.W.3d767 (Tex. App. - El Paso 2015, no pet.)

Page(s)

a

J

3,14

4

5

G.T. Leach Builders, LLC v. Sapphire V.P., L.P.,

458 S.W.3d 502 (Tex. 2015)...... 4,8,10, 11

.15, 16

....4, l0

......3

.2

4

1V
Okorafor v. (Jncle Sam & Assocs.,

295 S.W.3d27 (Tex. App. - Houston [1st Dist.], no pet.). .............3,15

Perry Homes v. Cull,

2s8 S.W.3d 580 (Tex. 2008).......... r,3, 4,7 , ll, 13, 16

Prof'l Advantage Sofnuare Solutions, Inc. v. West Gulf Mar. Ass'n Inc,,

No. 01-15-01006-CV, 2016 WL 2586690 (Tex. App.- Houston [1st

Dist.l May 5,2016, no pet.)

Triton Container Int'1, Ltd. v. Baltic Shipping Co,,

Civil Action No. 95-0427 CIW 95-2229,1995 WL 729329,1995

U.S. Dist. LEXIS 18213 (E.D.La. Dec.7,1995), affd,95 F.3d 54

(5th Cir.1996)......

Tuscan Builders, LP v. 1437 SH6 L.L.C.,

438 S.W.3d7I7 (Tex. App. - Houston [1st Dist.] 2014, no pet.)....

In re Vesta Ins. Group, Inc.,

192 S.W.3 d759 (Tex.2006) (p"t curiam)

Wisennant v. Arnett,

339 S.W.3d920 (Tex. App. - Dallas 2011, no pet.)

Other Authorities

Tex. R. App. 38.1

.........3

I4

14

10

5

5

V
REPLY

I. Pnnr-rnananv MarrERS:

A. SraNoann or Rnvrnw

"A reviewing court should defer to a trial court's factual findings if they are

supported by the evidence, but ultimately the question whether a waiver has

occurred is a question of law, which an appellate court reviews de novo."l

Under a proper abuse-of-discretion review, waiver is a question of law

for the court, and we do not defer to the trial court on questions of

law. We do defer to a trial court's factual findings if they are

supported by evidence, but there was no factual dispute here . . . This

leaves only the conclusion whether such conduct constitutes

prejudice, a legal question we cannot simply abandon to the trial

court.2

In the case before this Court, there were no findings of fact by the trial court

whatsoever. In fact, the sum total of the trial court's Order, with respect to the

Motion to Compel Arbitration, was: "ON THIS DAY came to be heard Archer

Western's Motion to Compel Arbitration. Having taken the matter under

advisement, the Court herby DENIES the Motion to Compel Arbitration." As

such, there are no trial court findings of fact for this Court to consider, and it

reviews the trial court's action de novo, as a matter of law, for abuse of discretion.

t Hoggv. Lynch, Chappell & Alsup, P.C.,480 S.W.3d 767,780 (Tex. App. - El Paso

2015, no pet.)

t Perry Homes v. Cull,258 S.W.3d 580, 598 (Tex. 2008).

1
B. Appnr-r,nE cANNor usn EVIDENCE IN THIS AppBAL THAT wAs Nor

IRESENTED To tnn TRr,ql, Counr, AND ALL sucH EvTDENCE sHouLD

BE DTSREGARDED BY THrs Counr.

The evidence submitted by South Texas Innovations, LLC ("Appellee") for

its argument of waiver consisted of the 15 exhibits to Appellee's Response and

Opposition to Archer Western Construction's Motion to Stay and Compel

Arbitration ("Response"), and the testimony at hearing of Damien Abreo and Gary

Haymond, as found in the Reporter's Record. All other evidence presented to this

Court by Appellee, including the Supplemental Clerk's Record submitted by

Appellee to this Court on April 18, 2018, with the exception of those parts

duplicative of the Response exhibits, should be disregarded and not considered by

this Court. Any items not presented to the trial court will not be considered by a

court of appeals in its scope of review of the trial court's action.3

il. Appnr,r,nn cANNor vALIDLy MAKE ANy ARGUMENT THAT ARcrrnn

EXPRESSLY WAIVED THB ARBITRATION CLAUSE.

A. There is no evidence whatsoever of an express waiver

There was never any evidence of express waiver presented by Appellee to

the Trial Court. (In fact, as addressed next, Appellee did not even raise the issue of

express waiver at the trial court level.) There could be no evidence of express

3 Greystar, LLC v. Adams,426 S.W.3d 861, 865 (Tex. App. - Dallas 2014, no pet.)("It is

well-established an appellate court may not consider matters outside the record, which includes

documents attached to a brief as an exhibit or an appendix that were not before the trial court.");

See also Hogg,480 S.W.3d at787, n. 10.

2
waiver, as none exists, as supported by one of Appellee's own cited cases. As

stated by Appellee in its Brief: "Express waiver arises when a party affirmatively

indicates that it wishes to resolve the case in the judicial forum, rather than through

arbitration."a A case relied on by Appellee in its Brief amplifies on this, and

makes clear that the word "express" means what it says - express:

Aparty makes an express waiver when it 'affirmatively indicates that

it wishes to resolve the case in the judicial forum, rather than through

arbitration.' Ohorafor v. (Jncle Sam & Assocs., lnc.,295 S.W.3d 27,

39 (Tex.App.-Houston [1st Dist.] 2009, pet. denied); see Triton

Container Int'L, Ltd. v. Baltic Shipping Co., CIY.A. 95-0427, 1995

WL 729329, at *3 (E.D.La. Dec. 8, 1995), aff d, 95 F.3d 54 (5th

Cir.I996) (party's communication to opposing counsel expressly

stating that it intended to settle the case and did not intend to seek

arbitration, was an express waiver of the right to arbitrate); Garcia v.

Huerta, 340 S.W.3d 864, 867 (Tex.App.-San Antonio 2011, pet.

denied) (court found express waiver where party affirmatively stated

in settlement agreement that it was waiving its right to enforce an

arbitration agreement). 5

As the cases cited in Hogg make clear - for express waiver to occur, there has to be

an express statement affirmatively stating something to the effect of "I waive

arbitration." Just for reference, in Perry Homes v. Cull, the only Texas Supreme

a Appellee's Brief atpg.18, citing, Okorafor v. (Jncle Sam & Assocs.,295 S.W.3d 27,39

(Tex. App. - Houston ;1't Dist.1, no pet.); see also BBX Operating, LLC v. Am. Flourite, Inc.,

No.09-17-00245-CV,2018 WL 651276, at *15 (Tex. App. - Beaumont February 1,2018, no

pet.); and Apollo Theater Found., Inc. v. W. Int'l Syndication, No. 02 CIV 10037, 2004 U.S.

Dist. LEXIS 11110, at *8 (S.D.N.Y. June2I,2004).

t Hogg,480 S.W.3d at78l.

a

J
Court case finding a waiver of an arbitration clause,6 even a 79 page objection to

arbitration was not found to be an express waiver of the arbitration clause; the

Texas Supreme Court still underwent the implied waiver analysis: "But under the

totality-of-the-circumstances test, discovery is not the only measure of waiver

Here, when the warranty defendants initially moved to compel arbitration, the

Culls filed a 79-page response opposing it . In our case, there was no

evidence of express waiver argued or submitted by Appellee to the trial court, nor

could there be - no such evidence exists.

B. There is no waiver by Archer of its waiver argument

Appellee argues, at page 20 of its Brief, "Archer Western has waived any

complaint about its express waiver of arbitration by failing to raise it in the trial

court and its brief." Not only does this argument have no merit whatsoever,

Appellee never argued express waiver to the trial court, either in its Response or in

its oral argument to the trial court. Nowhere in Appellee's Response, nor in its

argument to the Court, does Appellee ever refer to, or invoke, express waiver. A11

u In Hurry v. Cash Biz, LP,2018 WL 1022838,2018 Tex. LEXIS 164, -S.W.3d -, 

(Tex.

Feb.23,2018), a case cited in Appellee's Response, the Texas Supreme Court noted, "We have

declined to conclude that the right to arbitrate was waived in all but the most unequivocal of

circumstances." The Texas Supreme Court then cites to its Perry Homes opinion where it did

find a waiver; and then to G.T. Leach Builders, LLC,458 S.W.3d at 5l2,In re Fleetwood Homes

of Tex., 257 S.W.3d 692,694 (Tex. 2008), and In re Bruce Terminix Co.,988 S.W.2d 702,703-

04 (Tex. 1998), as cases in which it did not find waiver. The Texas Supreme Court could have

equally said that only one case exists in which it concluded that the right to arbitrate was waived.

7 Pnrry Homes,258 S.W.3d at596.

4
of Appellee's argument, both in its Response,t as well as in its argument to the trial

court,e addressed the concept of implied waiver, specifically: (1) substantial

invocation of the judicial process; and (2) prejudice to Appellee. As Appellee

states in its own Response, "It is well established that 'fi]ssues not expressly

presented to the trial court may not be considered on appeal as grounds for

reversalf.1r,10 11 is Appellee who has never argued express waiver.

It is clear from the Reporter's Record that all the trial court judge considered

was implied waiver. The judge himself stated: "I think we're just talking about

invocational process." 1 1

In any event, Appellant is appealing the trial court's one sentence denial of

its Motion to Compel Arbitration. There is no reason to, nor is Appellant obligated

to, separate out and address different subsets of waiver.

8 In fact, a word search reveals the word "express" does not appear in STI's Response.

e All references by Mr. Rubinson in the Reporter's Record are to "substantial invocation"

and "prejudice;" he never even uses the word "express," much less does he argue an express

waiver, or present any evidence whatsoever of an express waiver. Mr. Rubinson mentions

substantial invocation of the judicial process at RR pg. 7,line 16; pg. 8, line s 3-4; p9.9, lines 5-

6and16;pg.27,line25;andpg.29,line5. Heonlymentions"prejudice"once,atRRpg.29,

Iine 7, but at least he mentions it and clearly intended to put on evidence of prejudice (although it

was clear insufficient). And, as stated above, "express waiver" is never even mentioned.

r0 Respotrre atpg.35, (citing Cent. Educ. Agencyv. Burke,711 S.W.2d 7,8 (Tex. 1986);

see also Whisennant v. Arnett,339 S.W.3d 920,926 (Tex. App. - Dallas 2011, no pet.); and Tex.

R. App. 38.1.

r1 RR atpg.15, lines l2-I4. (It is clear from RR at pg. 7, lines 10-16 that the trial judge

used "invocational" as shorthand for "substantial invocation of the judicial process.")

5
The ooevidence" presented, allegedly in support of Appelleeos

argument of express waiver clearly does not rise to the level of

express waiver:

If somehow this Court still believes that there is any issue in this case

regarding express waiver; this is the sum total of Appellee's "evidence," as argued

in its Brief to this Court, of express waiver:

Certainly. I had initiated two separate lawsuits on behalf of South

Texas Innovations. One lawsuit was against Lennar MultiFamily

Communities, which is the entity developing the projects that forms

the basis of this suit. The other was against Archer Western

Construction, the general contractor.

In both cases, opposing counsel filed motions to compel arbitration,

motions to stay. We had a discussion, and in the course of that

discussion, it was agreed -- and please allow me to use that word in

the loose sense, not a Rule 11 or a formal contract -- but it was agreed

between us that I would nonsuit the arbitration. And there's a number

of reasons for that. I would then move to consolidate the case against

Archer into the pending litigation brought by Beaird. And the

statement was, we won't move this to arbitration as long as we can get

everything resolved in the context of one lawsuit. Does that answer

your question?12

It is self-evident - this is not an express waiver of an arbitration clause

C.

il. AncTTnn DID NoT SUBSTANTIALLY INVOKE THE JUDICIAL PRoCESS So AS TO

IMPLIEDLY WAIVE THE ARBITRATION CLAUSE.

Appellant agrees with Appellee that the applicable standard for this Court to

consider is the "Totality of the Circumstances Test" announced by the Texas

t'RR Il-12 - testimony by Appellee's former counsel, Damian Abreo, to the trial courl.

6
Supreme Court in Peruy Homes v. Cull.t3 This has been thoroughly briefed by the

Parties, but a few points in reply to Appellee's Brief:

Appellee's statement at page 28 of its Response, that "Archer purposely

delayed in seeking arbitration until after the trial court denied its motion for

continuance and shortly before the trial setting" is absolutely inaccurate. The

trigger here, which is conveniently ignored by Appellee, was the mediation date.

On January 9,2018, mediation was held on Beaird's claims, pursuant to order of

the trial court, and all of Beaird's claims were settled, leaving only the claims

between Archer Western and STI for adjudication. Therefore, on January 22,

2018, Archer Western filed its Motion to Stay the Proceeding and to Compel

Arbitratiotrto 1th. "Motion to Compel Arbitration") that is the subject of this

appeal. Subsequently, on February 27, 2018, the trial court signed the Agreed

Order to Dismiss Certain Claims and Parties with Prejudice. 15 This was the point

in the life of this lawsuit when all that existed were claims subject to the arbitration

clause. This is consistent, for example, with why pleadings, etc. filed after the

consolidation did not have a statement saying they were subject to the Motion to

Arbitrate.

t3 Pnrry Homes,258 S.W.3d at59I-592.

to CR at pages 244 - 256.

t5 CSR at pages 40 - 43.

7
With respect to the counterclaim referenced by Appellee in its Brief, at page

25: (l) As cases cited in Appellee's own Brief state: "the filing of defensive

pleadings, including mandatory or compulsive counterclaims, made in response to

a party's pleadings, do not necessarily waive arbitration."16 (2) As pointed out in

Appellant's Brief, the trial court granted the relief requested by Appellant - it put a

stop to the serial lien filing engaged in by Appellee that was interfering with

funding for the construction project.lT This is clearly not a case in which Appellant

sought judicial relief that was denied and then sought to switch to a different forum

- arbitration. (3) Appellee, surely, cannot engage in wrongful conduct that is

subsequently restrained by the trial court,l8 and use Appellant's protective and

defensive response as a basis for claiming waiver.

With respect to Appellee's argument that Appellant sought extensive meritsbased discovery from STI, this is simply not borne out by the record. The

discovery listed at page 27 of Appellee's Response was largely defensive and

related to Beaird Drilling's claims, as detailed at pages 28 and 29 of Appellant's

'u Hogg,480 S.W.3d at784 (Tex. App. - El Paso 2015, no pet.) (citing G.T. Leach

Builders,458 S.W.3d at 512-13).

tt To the extent the Court considers the supplemental record filed by Appellee, the

Temporary Restraining Order entered by the trial court on December 4,2077 and the Agreed

Temporary Injunction Order entered by the trial court on December 14,2017 are part of such

record - 2nd Supp. CR217-19 and228-89 (none of which were presented to the trial court, in the

Response or at hearing).

r8 To the extent the Court considers the supplemental record, see 2nd Supp. CF*2I7-I9

and228-89.

8
Brief. The legal standards are addressed in Appellant's Brief, as well as further

addressed below using Appellee's own cases.

Although not hugely material, Appellee's timing calculation - a delay of 5-

l12 months - is actually inaccurate. Appellee calculates its timing from the date it

filed suit, JuIy 7,2017 . The proper calculation should be when Appellant appeared

in this case - August 28,2017.te Appellant filed its Motion to Compel Arbitration

on January 22,201820 - less than five months after answering and appearing in this

suit.2r Acknowledging that length of delay standing alone is not dispositive, only

one of the cases cited by both Parties to this Court even contemplates such a short

time peri od - Hogg v. Lynch, Chappett & Alsup.2' Ar detailed below, Hogg had

extreme facts - Ms. Hogg perjured herself to the trial court and moved to abate for

arbitration on the eve of suffering death penalty type sanctions from the trial court.

As noted, even in Hogg:

LCA contends that it was prejudiced by Ms. Hogg's delay in seeking

arbitration, pointing out that Ms. Hogg had been aware of the

existence of the arbitration clause from the outset of litigation, yet

waited to file her motion to compel arbitration three months after the

parties began discovery, and less than four months before the trial

te csR atpg.12.

20 CR at pages 244 - 256.

" Snn, e.g., RR atpg. 13, lines 19-25; and pg. 14, lines 1-16. Of course, even that is

irrelevant - the Motion to Compel Arbitration was filed within two weeks of the triggering event

- the mediation, and was actually filed even before the dismissal of the Beaird Drilling claims.

" Hogg,480 S.W.3d 767.

9
setting. We do not, however, find that this approximate three-month

delay, standing alone, prejudiced LCA's case. In fact, various courts

have found that much longer delays are not sufficient to cause

prejudice to the opposing party's case. See, e.g., In re Fleetwood

Homes of Tex., L.P.,257 S.W.3d 692, 694 (Tex.2008) (per curiam)

(eight-month delay);In re Vesta Ins. Group, Inc., 192 S.W.3d 759,

763 (Tex.2006) (per curiam) (two-year delay).z3

As covered thoroughly in Appellant's Brief, typically the delays addressed by the

Courts are far in excess of five months, almost always over a year, and often in

excess ofa year and a half.

Finally, as to this issue, a survey of the Courts of Appeal cases cited by

Appellee in its Brief where a finding of waiver was found or sustained, actually

push toward a finding by this Court that under the Totality of the Circumstances

Test there has clearly not been a substantial invocation of the judicial process by

Appellant, nor a sufficient showing of prejudice to Appellee, such as to overcome

the heavy burden to show an implied waiver of the arbitration clause. We start

with the incredibly thorough Hogg opinion, which has already been cited heavily

in this Reply.

Key points from Hogg follow:

As noted above, "the filing of defensive pleadings, including

mandatory or compulsive counterclaims, made in response to a party's

pleadings, do not necessarily waive arbitration."2a

23 Id. at7gl.

2a Id. at 784 (citing G.T. Leach Builders,458 S.W.3d at 512-13)

a

10
a "Ms. Hogg correctly points out that there are multiple cases in which

the parties engaged in far more extensive discovery for far longer

periods of time, yet the courts in those cases found that arbitration had

not been waived. In fact, the Supreme Court recently chronicled

several of its holdings in which it declined to find a waiver despite

rather extensive and prolonged discovery periods ranging from six to

nineteen months."25

o "Although how long a party has engaged in pretrial activities is one

factor to be considered in determining whether arbitration has been

waived, a court should not look simply to the number of days between

the initiation of litigation and the request for arbitration; instead, the

court should consider how extensive the discovery was in the context

of the facts of a particular case."26

o "Ms. Hogg's own attorney admitted in his sworn affidavit that at least

half of the discovery conducted went to the question of the

enforceability of the contingent fee agreement, which clearly went to

the merits of this ease."21

o "While we cannot conclude that the parties in this case conducted 'full

discovery,' we are able to conclude that the parties had conducted a

substantial amount of discovery with regard to this single-issue case,

and were likely nearing the end of the discovery proceedings when

Ms. Hogg filed her motion to compel arbitration. Once again,

however, this does not end our analysis, as the next factor is perhaps

the most important factor in our determination whether Ms. Hogg

substantially invoked the judicial process [--] Ms. Hogg Willingly

Engaged in Litigation Until She Faced an Adverse Ruling."28

2s Id. at788 (citing G.T. Leach Builders,458 S.W.3d at 514-15).

'6 Id.lcitingCitizens Nat'l Bank 271 S.W.3d at 355 (citing Percy Homes,258 S.W.3d at

590, 593)).

" Id. at7B9.

'8 Id.

11
a In readingHogg, it is crystal clearthis was the crux of the case - the

reason why both the trial court and the El Paso Court of Appeals

found a waiver of the arbitration clause. In the interest of brevity, the

facts will be summarized here, but they can be found at page 777 of

the Hogg opinion. In summary, Ms. Hogg responded to a Request for

Production that no recordings between her and the Defendant (the

party opposing arbitration) existed; she so testified under oath to the

trial judge in a motion to compel hearing; however, she had (probably

accidentally) sent an email to Defendant stating: "Hey do not mention

that i recorded every meeting with those attys in midland. Idk if its

legal. And u def dont want them knowing i recorded mediation! My

new attys will deal with it please dont even tell ur dad! No one needs

to know! Love u dont worry! Focus on u sweet baby girl. Say ur

prayers. It wil all come out in the end. I only appear to be stupid son! I

love yall! George is watching over us! Hugs! Thank you, DGHogg.u2e

Probably not surprisingly, when on the eve of being sanctioned Ms.

Hogg filed a Motion to Abate for Arbitration, such Motion was

denied, and the denial was affirmed by the El Paso Court of Appeals.

o It is clear from the Hogg opinion that the overarching basis for the

Court's holding was the inescapable conclusion that Ms. Hogg was

trying to avoid soon to be placed sanctions. "In the present case, Ms.

Hogg was willing to participate in the discovery process and to litigate

the discovery battle with LCA in a judicial forum only up until the

point that she received an adverse ruling from the district court and

was faced with the possibility of having the court impose casecrippling sanctions." 30 "[T]here can be no doubt that her strategy in

attempting to switch forums at this critical juncture was her only hope

2e Id. at777. (Ms. Hogg's son's name was Scott Lee Whitley; the attorney, who was with

the Defendant law firm, was named Scott Ryburn; it appears Ms. Hogg meant to send her son

Scott, not to the Scott that worked for her opponent.)

30 Id. at7go.

T2
o

a

of getting a 'second bite at the apple' on the issue of the parties'

discovery dispute." 3I

The Hogg Court then came back to this theme, as quoted below, to

find prejudice. But first, pertinent to our case, the El Paso Court of

Appeals found there was insufficient evidence presented of prejudice

with respect to costs incurred. Just as in this case, the evidence of

costs in Hogg was very general and generic. "However, as set forth

above, in the present case, not only did LCA fail to provide any

evidence of the costs it incurred in responding to Ms. Hogg's

discovery requests, it failed to provide any evidence from which we

could conclude that the discovery requested by Ms. Hogg was

"substantial" or that LCA provided her with 'extensive' documents in

response to her requests."32 "Therefore, based on the record before

us, we are unable to conclude that LCA would suffer any significant

financial detriment if the parties' dispute was submitted to

arbitration."33

However: "In determining whether prejudice has resulted in 'cases of

waiver by litigation conduct, the precise question is not so much when

waiver occurs as when a party can no longer take it back.' Perry

Homes,258 S.W.3d at 595. In the present case, we conclude that the

point at which Ms. Hogg could not 'take it back' occurred when, after

willingly participating in litigation over the discovery dispute, she

suffered an adverse ruling from the trial court, and was faced with the

nearcertainty of having a sanctions order entered against her. Ms.

Hogg's last-ditch effort to save her case from the impending sanctions

order, by seeking a new forum in which she could potentially

relitigate that issue, simply came too late." 34

3t Id. x79r.

32 Id. at 793.

33 Id.

34 Id. at796.

I3
These "unique facts" are obviously extreme; the facts before this Court in no

way approach the unique facts in Hogg

Below, is a brief statement of why the remaining Courts of Appeal cases

cited by Appellee actually support Appellant's position in this appeal (in reverse

date order):

BBX Operating, LLC v. Americqn Flourite, Inc., No. 09-17-00245-

CY,2018 WL 651276 (Tex. App. - Beaumont February 1,2018, no

pet.) - The basis for denial of the motion to compel arbitration was

invocation of relief by movant and that relief was denied by the trial

court, and then movant moved to compel arbitration. "BBX then

received an adverse ruling when the trial court denied BBX's motion

to enforce the Rule 11 Agreement. Only after receiving this adverse

ruling did BBX file its demand for arbitration." BBX Operating at *8.

Prof'l Advantage Sofnuare Solutions, Inc. v. West Grlf Mar. Ass'n

1nc., No. 01-15-01006-CV, 2016 WL 2586690 (Tex. App. - Houston

[lst Dist.] May 5, 2016, no pet.) - Particularly egregious facts -

Almost three year delay in filing motion, and three attempted

summary judgment motions engaged in by movant, all denied by the

trial court, after which movant moved to compel arbitration.

o

o

o

a

"Therefore, because we find that Ms. Hogg purposefully and

unjustifiably manipulated the exercise of her arbitral rights to her own

advantage and to LCA's prejudice, we conclude that, based on these

unique facfs, Ms. Hogg waived her right to arbitration." 35

Tuscan Builders, LP v. 1437 SH6 L.L.C.,438 S.W.3d 717 (Tex. App.

- Houston [1't Dist.] 2014, no pet.) - One year delay in filing motion,

during which not only did movant engage in substantial discovery,

movant also joined third parties, and then benefitted from their

substantial discovery.

3t Id. le phasis added)

t4
a

a

Ellman v. JC Gen. Contractors,4l9 S. W. 3d 516 (Tex. App. - El

Paso 2013, no pet.) - Three year delay in filing motion and movant

admitted, in court pleadings, to have conducted "extensive discovery."

Ellman at 519.

Okorafor v. Uncle Sam & Associates, lnc.,295 S.W.3d 27 (Tex. App.

- Houston [1" Dist.] 2009, pet. denied) - 21 month delay in filing

motion and motion was filed after movant had received respondent's

discovery, but before movant had provided discovery responses and

documents to respondent. The trial court even abated the hearing on

the motion to compel arbitration to allow movant to respond to the

discovery, and movant failed to properly do so, at which point the trial

court denied the motion. "Armed with discovery provided by Uncle

Sam and facing a looming deadline to produce discovery requested by

Uncle Sam, the Okorafors tried to have it both ways and moved to

compel arbitration." Okorafor at 40. As to prejudice: "Because the

Okorafors had not complied coffespondingly with Uncle Sam's

requested discovery, Uncle Sam would be essentially handicapped by

having to arbitrate without benefit of any discovery responses from

the Okorafors, including potentially deemed admissions." Id. at 4I.

The trial court even deferred on ruling on the Okorafors' motion to

arbitrate and gave them a week's extension to answer discovery, and,

at a subsequent hearing the trial court determined, "the responses

provided within that week were incomplete, missing, inadequate, and

thus 'deficient."' Id. The Houston Court of Appeals agreed with the

trial court that, "To compel Uncle Sam to arbitrate, thus hampered by

a lack of knowledge of the Okorafors' case, would result in an 'unfair

advantage' to the Okorafors." Id.

These Courts of Appeal cases provided by Appellee further push toward the

inescapable conclusion that Appellant did not impliedly waive the arbitration

clause by substantially invoking the litigation process to the extremely high degree

required.

15
ilI. AppnT,T.nB HAS NoT SHowN LBGAL PREJUDICE SUFFICIENT F.oR A FINDING

OF AN IMPLIED WAIVER OF THE ARBITRATION CLAUSE.

The sum total of Appellee's evidence of prejudice is that Appellee has

incurred attorney's fees between $101,000 and $104, 000 "on the Archer Western

litigation," plus Mr. Rubinson's January 2018 invoice.36 Incidentally, as can be

seen at RR. 20, lines 16 - 22, Appellee argues that this does not include the costs of

it taking depositions of Appellant's personnel a few weeks prior to the hearing,

which it claims should be added. Courts are clear - costs incurred by a non-movant

to obtain discovery cannot and should not be considered in the prejudice analysis.

"[A] party who requests lots of discovery is not prejudiced by getting it

Mr. Haymond did not attempt any segregation of fees whatsoever.

During cross-examination, Mr. Haymond admitted he could not provide any

more detail, including he could not even break down as to how much of the

amount was due to Beaird Drilling, the former Plaintiff in this suit, and how much

was due to Archer Western. Nor did he break down how much was due to

Appellee's affirmative actions against the other parties to the case.

Q. And as far as this lawsuit here today, how does that 101 to 104,000 break

down as between defending against Beaird's claims versus prosecuting and

defending the Archer Western claims?

'6 RR atpg.20, lines 7-22; andpg.2I,lines2I-25.

" Pnrry Homes,258 S.W.3d at 600 (emphasis in original). See also Ellman,4l9 S.W.3d

at 522 ("The discovery initiated by JC does not provide a basis for finding prejudice.").

16
A. So just like I said, it's the lawyers' bill per case, and I just added all the

ones that said Archer Western.

a. So you can't tell me how much of those fees are related to Beaird

specifically?

A. I didn't. I wasn't asked to provide that information

a. Okay. And would you agree with me Beaird Drilling has been very

aggressive in its prosecution of this case?

A. Not toward us.

Q. How about towards Archer Western?

A. Yeah, a lot of - - I saw a lot of paper flying to Archer.

a. And every deposition that Beaird has noticed in the case against Archer

Western, against the Lennar entities, against Mr. Allums, your attorneys

have attended those depositions, correct?

A. Damian attended the first few solely.

Q. You've always had an attorney present?

A. Yes, sir.38

As detailed atpages 31 - 37 of Appellant's Brief, this is simply insufficient

evidence to uphold a finding of prejudice sufficient to overcome the extremely

high burden of showing an implied waiver of an arbitration clause

38 RR aI" pg. 25,lines 1 I-25; and pg. 26,lines 1- 13

t1
IV Appnr,r,nNT HEREBy wrrHDRAws rrs Issun No. 1 - THn rRrAL couRT

ERRED (ono 

, ALTERNATTvELv, ABUSED ITS orscnnrron) rN DENvING

ARcnnn WnsrnnN's MotloN To Sra.v rnn PnocEEDING AND To Conmpr,

AnnTTn,tTIoN As THE ARBITRATIoN CLAUSE ITSELF PROHIBITS wAIvER.

The clause at issue states: "Subcontractor waives to the fullest extent

permitted by law any objection that they may now or may hereafter have to having

arbitration proceedings conducted in the state or United States territory in which

the Project is located, including any claim that it is an inconvenient forum for such

arbitration or court proceedings." Appellant's reading of this clause was that

"conducted in the state or United States territory in which the Project is located"

simply was part of the term "arbitration proceedings;" i.e., "arbitration proceedings

conducted in the state or United States territory in which the Project is located."

Appellant concedes Appellee's reading, that this is a waiver about objecting to

forum location, is a more logical reading of the clause, and hereby withdraws Issue

No. 1.

PRAYER

WHEREFORE, PREMISES CONSIDERED, Archer Westem Construction,

LLC hereby requests that this Court reverse the order of the Trial Court and render

an order staying the underlying proceedings and compelling arbitration between

the remaining parties to this case - Archer Westem, STI, and Hanover. Archer

Western Construction, LLC further prays for such other and further relief, at law

and in equity, to which it may show itselfjustly entitled

l8
Re spectfully submitted,

PECKAR & ABRAMSON, P.C.

By: /s/ Paulo Flores

Paulo Flores

State Bar No. 07164447

pflores@pecklaw.com

Timothy D. Matheny

State Bar No. 24000258

tmatheny@pecklaw.com

Tracey L. Williams

State Bar No. 24031954

twi I I i ams @p e cklaw. com

8080 N. Central Expressway

suite 1600, LB 65

Dallas, Texas 7 5206-1819

(214) 523 -5 1 00 Telephone

(21 4) 521 -4601 Facsimile

ATTORNEYS FOR APPELLANT

t9
CERTIFICATE OF SERVICE

I hereby certifl' that on this the 2l't day of May, 2018, a true and correct

copy of the above foregoing instrument was served upon all counsel of record in

accordance with the Texas Rules of Appellate Procedure.

/s/ Paulo Flores

Paulo Flores

CERTIFICATE OF COMPLIANCE

In compliance with Rule 9.4(iX3) of the Texas Rules of Appellate

Procedure, I hereby certifr that there are 5,138 words total in the foregoing

document, according to the Word count, excluding those words permitted to be

excluded by Rule 9.4(iX1) of the Texas Rules of Appellate Procedure.

/s/ Paulo Flores

Paulo Flores

20