Opinion issued May 15, 2014

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-13-00685-CV

———————————

TUSCAN BUILDERS, LP, Appellant

V.

1437 SH6 L.L.C. D/B/A SWEETWATER AESTHETIC SPA 

& WELLNESS CENTER, SHELENA C. LALJI, M.D., P.A. D/B/A 

DR. SHEL WELLNESS & MEDICAL SPA AND LALJI DENTAL, 

P.C. D/B/A LAKE POINTE DENTAL AND SPECIALTY, Appellees

On Appeal from the 151st District Court

Harris County, Texas

Trial Court Case No. 2012-33706

OPINION ON REHEARING

Appellant Tuscan Builders, LP has moved for rehearing and en banc 

consideration. We grant rehearing, withdraw our opinion and judgment of January
2

30, and issue the following in their stead. We dismiss as moot Tuscan’s motion for 

en banc consideration. Our disposition of the appeal remains unchanged.

In this construction dispute, a builder appeals the trial court’s order denying 

its motion to compel arbitration against the building’s owners. The builder 

contends that the trial court erred in finding that the builder had waived 

enforcement of an arbitration clause by invoking the judicial process and delaying 

its effort to compel arbitration for more than a year. Finding no error, we affirm.

Background

The contract dispute

The commercial building owners, 1437 SH6 L.L.C. d/b/a Sweetwater 

Aesthetic Spa & Wellness Center, Shelena C. Lalji, M.D., P.A. d/b/a Dr. Shel 

Wellness & Medical Spa, and Lalji Dental, P.C. d/b/a Lake Pointe Dental and 

Specialty (collectively, Sweetwater) sued Tuscan, the builder, for breach of 

warranty associated with alleged construction defects. Sweetwater had contracted 

with a construction design team, the Mirador Group, Inc., and an architect, Todd 

Blitzer, to design a building suitable for a dental office, a wellness clinic, and other 

health-related businesses. Sweetwater’s design services agreement with Mirador 

provides that venue for any suit “shall be in a Texas State District Court in Harris 

County, Texas.” The design agreement incorporates by reference specific 

provisions of the “Standard Form of Agreement between Owner and Architect 
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(AIA Document B141–1997),” but it expressly excludes “Sections 1.3.4, 

Mediation and 1.3.5, Arbitration.”

Sweetwater hired Tuscan to construct the building according to Mirador’s 

design specifications. Tuscan prepared the construction contract using AIA 

Document A101–1997, the “Standard Form of Agreement between Owner and 

Contractor where the basis of payment is a stipulated sum.” The parties’

construction contract incorporates by reference an industry form document—AIA 

Document A201–1997, the “General Conditions of the Contract for Construction”

[General Conditions]—but it does not attach a copy of that document. Like AIA 

Document B141–1997, incorporated into the design agreement, A201–1997 calls 

for mediation in the first instance, followed by arbitration. Unlike the design 

agreement, the construction contract does not exclude the AIA Document’s 

arbitration provisions that were incorporated by reference, but not attached to the 

contract. The pertinent sections of A201–1997 provide:

Claims not resolved by mediation shall be decided by arbitration 

which, unless the parties mutually agree otherwise, shall be in 

accordance with the Construction Industry Arbitration Rules of the 

American Arbitration Association currently in effect. The demand for 

arbitration shall be filed in writing with the other party to the Contract 

and with the American Arbitration Association, and a copy shall be 

filed with the Architect.

After it moved in, Sweetwater noticed water leaking into the building. It 

informed Mirador and Tuscan of the problem, and they attempted to repair the 
4

leaks. During a rainstorm in July 2010, however, significant water leaks appeared 

in the exterior walls and roof, causing substantial damage to the structure and 

interior walls. Sweetwater again sought to have Mirador and Tuscan repair the 

building, but Sweetwater was not satisfied with the results. 

Course of proceedings

In June 2012, Sweetwater sued Mirador, Tuscan, and Blitzer for negligence, 

breach of contract, and breaches of express and implied warranties, as well as 

statutory claims under the Texas Deceptive Trade Practices Act. Tuscan answered 

the suit on June 29. Tuscan denied Sweetwater’s allegations, raised several 

specific defenses, and made a verified denial; it did not mention arbitration in the 

filing. In November, Tuscan sued its five subcontractors, seeking indemnification 

under the indemnification provisions in each subcontractor agreement. Tuscan 

sued each subcontractor for negligence, breach of contract, and breach of warranty. 

Sweetwater later amended its petition to include its own claims against the 

subcontractors. The subcontractors answered, and several demanded a jury trial. 

In addition to pursuing written discovery, the subcontractors also sought to inspect 

the Sweetwater property, pursuant to Texas Rule of Civil Procedure 196.7. Tuscan 

participated with the third-party defendants in the inspection. 

The trial court’s docket control order called for the discovery period to end 

in March 2013 and trial to commence in April 2013. In January 2013, Tuscan 
5

joined Sweetwater in filing an agreed motion for continuance. The joint motion 

requested the continuance for the “opportunity to conduct discovery and identify 

the relevant issues.” Tuscan did not mention arbitration. The trial court granted 

the motion and extended the discovery, motion, and pleading deadlines. It set trial 

to commence on September 16, 2013. 

On June 6, 2013, Tuscan, the other defendants, and the third-party

defendants moved to extend the mediation deadline complaining that, before 

mediating the dispute, they required additional information concerning the various 

components of Sweetwater’s alleged damages, responses to additional 

interrogatories, answers to requests for admissions they had propounded, and the 

depositions of Sweetwater’s corporate representatives and management agents, 

which, the motion represented, were scheduled for July 2 and 8. 

By July 14, the expert witnesses had been designated and the expert 

designation deadlines for all parties had passed; approximately one month 

remained of the discovery period. The parties had completed their paper 

discovery. On that date, Tuscan invoked the arbitration provision incorporated by 

reference into the construction contract and included with its motion an unsigned 

copy of the General Conditions form containing that provision.

The trial court held an evidentiary hearing on Tuscan’s motion to compel 

arbitration and denied the motion on August 1. 
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Discussion

Tuscan challenges the trial court’s ruling, contending that it erred in denying 

Tuscan’s motion to compel arbitration because the evidence does not establish that 

Tuscan had waived its contractual right to arbitrate by substantially invoking the 

judicial process.

1

 

Applicable Law and Standard of Review

Waiver is the intentional relinquishment of a known right or intentional 

conduct inconsistent with claiming that right. Jernigan v. Langley, 111 S.W.3d 

153, 156 (Tex. 2003); Interconex, Inc. v. Ugarov, 224 S.W.3d 523, 533 (Tex. 

App.—Houston [1st Dist.] 2007, no pet.). “[A] party waives an arbitration clause 

by substantially invoking the judicial process to the other party’s detriment or 

prejudice.” Perry Homes v. Cull, 258 S.W.3d 580, 589–90 (Tex. 2008) (footnote 

omitted). A party substantially invokes the judicial process if it takes specific and 

deliberate actions that are inconsistent with the right to arbitrate or if it actively 

tries, but fails to achieve, a satisfactory result through litigation before turning to 

arbitration. In re Christus Spohn Health Sys. Corp., 231 S.W.3d 475, 478–79 

(Tex. App.—Corpus Christi 2007, orig. proceeding); see In re Vesta Ins. Grp., Inc., 

 1 Tuscan also contends on appeal that it established the validity of the arbitration 

agreement. The trial court raised questions concerning the validity during the 

evidentiary hearing, but it but did not base its ruling on any specific ground. For

purposes of this appeal, we assume that a valid arbitration agreement exists 

between Tuscan and Sweetwater.
7

192 S.W.3d 759, 763 (Tex. 2006) (orig. proceeding). Prejudice refers to the 

inherent unfairness caused by “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.

Whether a party has participated in the litigation process and thus waived the 

right to arbitrate is a question of law for the court. Id. at 587. We apply a strong 

presumption against waiver of arbitration and resolve any doubt on the issue in 

favor of arbitration. Id. at 584; see In re Bruce Terminix Co., 988 S.W.2d 702, 705 

(Tex. 1998).

For a waiver to have occurred, the appellant “must, at the very least, [have] 

engage[d] in some overt act in court that evince[d] a desire to resolve the [same] 

arbitrable dispute through litigation rather than arbitration.” Haddock v. Quinn, 

287 S.W.3d 158, 177 (Tex. App.—Fort Worth 2009, pet. denied). In assessing 

whether Tuscan waived its right to arbitrate, we consider whether Tuscan’s 

conduct in the litigation portrays the kind of “aggressive litigation strategy” that 

substantially invokes the litigation process. See Okorafor v. Uncle Sam & Assocs., 

295 S.W.3d 27, 40 (Tex. App.—Houston [1st Dist.] 2009, pet. denied); see also In 

re Christus Spohn Health Sys. Corp., 231 S.W.3d at 479 (explaining that actions 

inconsistent with right to arbitrate may include “some combination of filing an 

answer, setting up a counterclaim, pursuing extensive discovery, moving for a 
8

continuance, and failing to timely request arbitration”) (citing Cent. Nat’l Ins. Co. 

of Omaha v. Lerner, 856 S.W.2d 492, 494 (Tex. App.—Houston [1st Dist.] 1993, 

orig. proceeding)). In determining whether a party waived an arbitration clause, 

the courts can consider, among other factors: (1) whether the movant for arbitration 

was the plaintiff (who chose to file in court) or the defendant (who merely 

responded), (2) when the movant learned of the arbitration clause and how long the 

movant delayed before seeking arbitration, (3) the amount of the movant’s pretrial 

activity related to the merits rather than arbitrability or jurisdiction, (4) the amount 

of discovery conducted, and (5) whether the movant sought judgment on the 

merits. See Perry Homes, 258 S.W.3d at 591–92; In re Hawthorne Townhomes, 

L.P., 282 S.W.3d 131, 141 (Tex. App.—Dallas 2009, no pet.). We analyze 

whether waiver occurred based on the totality of the circumstances presented in 

each case. See In re Citigroup Global Mkts., Inc., 258 S.W.3d 623, 625 (Tex. 

2008); Okorafor, 295 S.W.3d at 38; Interconex, Inc., 224 S.W.3d at 533. 

The Perry Homes Factors

Tuscan began as a defendant in the suit. Early in the litigation, however, 

Tuscan also became a third-party plaintiff by suing its subcontractors. Although a 

party invokes the judicial process when it sues in court, the filing of a third-party 

action, standing alone, may not be enough to constitute waiver of an agreement to 

arbitrate. In D.R. Horton-Tex., Ltd. v. Drogseth, for example, the Fort Worth 
9

Court of Appeals held that the defendant did not waive its right to arbitrate by 

filing a third-party action because the defendant concurrently had moved in the 

trial court to abate the case and submit it to binding arbitration. No. 02–12–

00435–CV, 2013 WL 3377121, at *5–6 (Tex. App.—Fort Worth July 3, 2013, no 

pet.) (mem. op.). In its motion to compel arbitration filed six weeks later, the 

defendant explained that it had filed the third-party petition before the hearing on 

its motion to compel to preserve its claims against the third-party defendants and 

did not intend a waiver of right to arbitration. Id. at *5. In contrast to the movant 

in D.R. Horton, Tuscan did not accompany its answer or its third-party claims with 

any notice of an intent to pursue arbitration, nor did Tuscan seek an abatement of 

the case pending resolution of its claim to arbitration.

Based on the record, the trial court reasonably could have found that Tuscan 

knew of the arbitration clause before it answered Sweetwater’s suit, but that it did 

not reveal the existence of the arbitration agreement to Sweetwater until after 

Tuscan had sued third parties and the parties had conducted a property inspection 

and completed written discovery, including expert designations.

2

 The ownercontractor agreement, prepared by Tuscan for Sweetwater’s execution, 

 2 On rehearing, Tuscan contends that we should disregard counsel’s statements 

concerning the status of discovery in the proceedings because they are not 

evidence, only argument. Tuscan, however, waived any complaint about their 

evidentiary value by failing to object in the trial court. See Banda v. Garcia, 955 

S.W.2d 270, 272 (Tex. 1997).
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incorporates a construction industry form that incorporates by reference another 

clause, contained in the General Conditions form, that allows for arbitration. 

The “General Conditions” form containing the arbitration clause declares 

that, “The Contract Documents consist of the Agreement between Owner and 

Contractor . . ., Conditions of the Contract (General, Supplementary, and other 

Conditions), Drawings, Specifications, Addenda issued prior to execution of the 

Contract, other documents listed in the Agreement and Modifications issued after 

execution of the Contract.” It further provides that “[t]he Contract Documents 

shall be signed by Owner and Contractor.” Tuscan, however, did not provide a 

signed copy of the form with its motion, nor did it deny Sweetwater’s assertion that 

it had no actual knowledge or notice of the form’s contents until it received 

Tuscan’s motion to compel. 

If Tuscan’s failure to attach the industry form to the construction contract 

did not render the arbitration provision invalid, the record, at a minimum, 

demonstrates that Tuscan understood the reference to its own industry form and 

was aware that it contained an arbitration provision, yet did not enlighten 

Sweetwater that its claims were subject to arbitration until Tuscan moved to 

compel arbitration more than a year after filing third party actions and proceeding 

with discovery. 
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Sweetwater’s contract with Mirador expressly excludes any obligation to 

arbitrate and requires litigation in Harris County district court. As a result, 

Tuscan’s belated invocation of the arbitration clause to conduct arbitration would 

delay the resolution of the dispute between Tuscan and Mirador, and would make 

for an inefficient, piecemeal adjudication, to the expense of Sweetwater, who has 

prepared its case against the defendants in a single forum. Had Tuscan promptly 

moved for arbitration, Sweetwater and the other defendants would have been 

entitled to a stay of proceedings pending arbitration; instead, the parties engaged in 

considerable time and expense on the road to a court trial. These circumstances 

make the timing of Tuscan’s motion to compel more consistent with a late-game 

tactical decision than an intent to preserve the right to arbitrate.

Tuscan joined in motions that prolonged the discovery period and postponed 

the trial date and mediation deadline to allow the parties to pursue additional 

discovery on the merits. By the time Tuscan moved to compel arbitration—more 

than a year after Sweetwater filed suit—the parties had completed written 

discovery, designated their experts for trial, and physically inspected the building, 

and the trial setting was less than a month away. The need for further merits 

discovery served as the basis for the parties’ successful requests for both the trial 

continuance and the extension of the mediation deadline. In opposing Tuscan’s 
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motion to compel arbitration, Sweetwater pointed out that Tuscan would not have 

been likely to obtain a building inspection in an arbitral forum. 

Tuscan responds that its own discovery activities were limited to written 

discovery. Tuscan’s litigation strategy, however, enhanced its discovery efforts. 

By suing its subcontractor-indemnitors, Tuscan benefited from the discovery 

sought by these additional parties, who are aligned with it against Sweetwater. For 

example, Tuscan availed itself of the opportunity, made possible by the 

subcontractors’ discovery request, to inspect the building. By bringing the 

subcontractors into the suit, Tuscan accomplished indirectly what it did not do 

directly. The record supports the trial court’s conclusion that these tactics, taken 

together, were inconsistent with any intent to arbitrate these claims, and caused 

some prejudice to Sweetwater.

The purpose of the presumption against finding a waiver of contractual 

arbitration is to preserve the purpose of the parties’ agreement to obtain a speedy 

and inexpensive final disposition of the disputed matter. See Porter & Clements, 

L.L.P. v. Stone, 935 S.W.2d 217, 221 (Tex. App.—Houston [1st Dist.] 1996, no 

pet.). Tuscan’s year-long delay in invoking or even mentioning the arbitration 

clause gave Tuscan litigation advantages it would not have had in an arbitration 

proceeding. We hold that the trial court properly denied Tuscan’s motion to 
13

compel arbitration because Tuscan had substantially invoked the judicial process, 

to Sweetwater’s prejudice. 

Conclusion

We hold that the trial court did not err in denying Tuscan’s motion to

compel arbitration. We therefore affirm the trial court’s order and remand the 

cause for further proceedings.

Jane Bland

Justice 

Panel consists of Chief Justice Radack and Justices Bland and Huddle.