Source: http://texas-opinions.com/08-Perry-Homes-v-Cull-Tex-2008-Supreme-Courts-Opinion-by-Scott-Brister-arbitration-award-to-consumers-thrown-out.html
Timestamp: 2019-04-23 16:08:18+00:00

Document:
Perry Homes v. Cull, No. 05-0882 (Tex. May 2, 2008) (Opinion by Scott A.
Justice O’Neill filed a concurring opinion.
Justice Willett filed an opinion concurring in part and dissenting in part.
finally only four days before the trial setting they changed their minds and decided they would prefer to arbitrate after all.
Having gotten what they wanted from the litigation process, they could not switch to arbitration at the last minute like this.
case to the trial court for a prompt trial.
arbitrator agreed upon by the parties.
pressed for a ruling. At the same time, the Culls’ attorneys began seeking extensive discovery from all of the Defendants.
After most of the discovery was completed and the case was set for trial, the Culls changed their minds about litigating.
there when the lawsuit was filed.
further, I am going to grant the motion to abate the case for arbitration.
mandamus in the court of appeals and this Court, both of which were denied without opinion within a few days.
be set aside because the Culls waived their right to arbitration.
II. When Should Orders Compelling Arbitration Be Reviewed?
comment on the merits, they do not foreclose our review.
awaiting a final judgment to appeal.
[providing for orders compelling arbitration] . . . .
would frustrate this federal law.
review of the former and deferential review only of the latter.
III. Do Courts or Arbitrators Decide Waiver?
arbitrability.’” For several reasons, we disagree that this single sentence changed the federal arbitration landscape.
 its reference to waiver must be read in that context.
arbitration clause rather than the whole contract, consistency suggests it is an issue for the courts.
and Eighth Circuits. Legal commentators appear to agree. So do we.
IV. When Is the Litigation Process Substantially Invoked?
$ seeking initial discovery, taking four depositions, and moving for dismissal based on standing.
of these three are met? And how much is “full discovery”?
$ when the case was to be tried.
$ whether the movant sought judgment on the merits.
court to make any judicial decisions on the merits of their case.” While this is surely a factor, it is not the only one.
Waiver involves substantial invocation of the judicial process, not just judgment on the merits.
to consider, it does not alone justify a finding of waiver or change the basic nature of the totality-of-the-circumstances test.
context; three or four depositions may be all the discovery needed in one case, but purely preliminary in another.
Moreover, this test is quite similar to one we have long recognized and recently applied to arbitration — estoppel.
resolve a dispute in court. Such waiver can be implied from a party’s conduct, although that conduct must be unequivocal.
 And in close cases, the “strong presumption against waiver” should govern.
V. Is a Showing of Prejudice Required?
impose a waiver rule for arbitration contracts that does not apply to all others.
prejudice is an element of the normal contract rules.
Thus, we agree with the courts below that waiver of arbitration requires a showing of prejudice.
VI. Was Arbitration Waived Here?
A. Did the Culls Waive Arbitration?
It remains only to apply these rules to this case.
There is simply no question on this record that the Culls conducted extensive discovery about every aspect of the merits.
requested arbitration. They justified their change of heart on the basis that they wanted to avoid the delays of an appeal.
decide only then that they were in a hurry.
later seeks to arbitrate that same issue.
case under another. They delayed disposition by switching to arbitration when trial was imminent and arbitration was not.
that constitutes prejudice under federal and state law.
process. If the litigation conduct here is not enough, it is hard to imagine what would be.
would allow trial judges to send any case to arbitration no matter what has occurred in court.
conclusion whether such conduct constitutes prejudice, a legal question we cannot simply abandon to the trial court.
arbitrators have almost unbridled discretion regarding discovery, so no one can predict what they might do in advance.
the dissents would have merely showed how much it cost.
its position has been compromised, i.e., prejudiced.
discovery outside the stricter discovery limits in arbitration.
Defendants have failed to show prejudice here.
C. Did the Warranty Companies Waive Arbitration?
Finally, the Culls argue the warranty companies cannot object to arbitration for two reasons.
— whether they asserted that right early (as did the warranty companies) or late (as did the Culls).
to question their authority to speak for the warranty companies, they should have done so by sworn motion.
court for a prompt trial.
 See L. H. Lacy Co. v. City of Lubbock, 559 S.W.2d 348, 351 (Tex. 1977).
(5th Cir. 1986); In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 764 (Tex. 2006).
Corp. v. Mancias, 934 S.W.2d 87, 89–90 (Tex. 1996).
agreeable to the [warranty administrator] and you . . . .
this Court on April 26, and was denied 13 days later.
 Chambers v. O’Quinn, 242 S.W.3d 30, 32 (Tex. 2007).
 In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004); Walker v. Packer, 827 S.W.2d 833, 840 (Tex.
Corp. v. Guidry, 327 S.W.2d 406, 408 (Tex. 1959) (invalidating portion of award regarding nonarbitrable issues); Fortune v.
Killebrew, 23 S.W. 976, 978 (Tex. 1893) (same).
Valley Gas Co., 109 S.W.3d 750, 756 (Tex. 2003); Walker v. Packer, 827 S.W.2d 833, 842 n.9 (Tex. 1992).
orders denying motion to compel arbitration).
Procedure § 3914.17 (2d ed. 1992).
dismisses the underlying litigation so it is final rather than interlocutory. See Green Tree Fin. Corp.-Ala., 531 U.S. at 87 n.
Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 310-11 (5th Cir. 2003)).
 See 9 U.S.C. § 10(a).
but there is no such indication in this contract.
 Preston v. Ferrer, ___ U.S. ___, ___ (2008) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S.
Lambert, Inc., 791 F.2d 1156, 1159 (5th Cir. 1986).
196 S.W.3d 774, 783 (Tex. 2006) (same); In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 764 (Tex. 2006) (same); In re Serv.
(same); Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995).
 See, e.g., Creative Solutions Group, Inc. v. Pentzer Corp., 252 F.3d 28, 32–34 (1st Cir. 2001); Doctor’s Assocs., Inc. v.
Distajo, 66 F.3d 438, 456 (2d Cir. 1995); Wood v. Prudential Ins. Co. of Am., 207 F.3d 674, 680 (3d Cir. 2000); Am.
Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 96 (4th Cir. 1996); Subway Equip. Leasing Corp. v.
Nat’l Found. for Cancer Research v. A.G. Edwards & Sons, Inc., 821 F.2d 772, 777–78 (D.C. Cir. 1987).
 537 U.S. 79, 84 (2002) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).
clause by filing suit elsewhere was for arbitrator); Pro Tech Indus., Inc. v. URS Corp., 377 F.3d 868, 871–72 (8th Cir.
law rights was for arbitrator).
 See Howsam, 537 U.S. at 81–82.
 Tristar Fin. Ins. Agency, Inc. v. Equicredit Corp. of Am., 97 F. App’x 462, 464 (5th Cir. 2004).
 See Marie v. Allied Home Mortgage Corp., 402 F.3d 1, 13 (1st Cir. 2005).
validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.”).
hands” that went to contract as a whole rather than arbitration clause was question for arbitrators).
Inc. v. Grove Eur. Ltd., 325 F.3d 54, 61–63 (1st Cir. 2003).
 Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207, 217–21 (3d Cir. 2007).
 Republic Ins. Co. v. PAICO Receivables, LLC, 383 F.3d 341, 344–47 (5th Cir. 2004); Tristar Fin. Ins. Agency, Inc. v.
Equicredit Corp. of Am., 97 F. App’x 462, 464 (5th Cir. 2004).
Occidental Life Ins. Co., 328 F.3d 462, 463–66 (8th Cir. 2003).
Circuit, Round II, 37 Tex. Tech L. Rev. 531, 542 (2005).
Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 574 (Tex. 1999); In re Bruce Terminix Co., 988 S.W.2d 702, 704 (Tex.
 In re D. Wilson Constr. Co., 196 S.W.3d at 783.
 In re Vesta Ins. Group, Inc., 192 S.W.3d at 764.
 In re Bank One, N.A., 216 S.W.3d at 827.
 In re Serv. Corp. Int’l, 85 S.W.3d at 174–75.
 Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898–99 (Tex. 1995).
 In re Bruce Terminix Co., 988 S.W.2d at 704.
 EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996).
Found. for Cancer Research v. A.G. Edwards & Sons, Inc., 821 F.2d 772, 774 (D.C. Cir. 1987); Tenneco Resins, Inc. v.
Davy Int’l, AG, 770 F.2d 416, 420 (5th Cir. 1985).
 Grumhaus, 223 F.3d at 650; see also Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 391 (7th Cir.
Smith, Inc., 39 F.3d 1482, 1489 (10th Cir. 1994); Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 926 (3d Cir. 1992).
380 F.3d 200, 206 (4th Cir. 2004).
 PAICO, 383 F.3d at 346; Kelly v. Golden, 352 F.3d 344, 349 (8th Cir. 2003); Hoxworth, 980 F.2d at 926; Gilmore v.
Co., 767 F.2d 1140, 1150–51 (5th Cir. 1985).
Hoxworth, 980 F.2d at 927.
 Hoxworth, 980 F.2d at 927; Com-Tech Assocs. v. Computer Assocs. Int’l, Inc., 938 F.2d 1574, 1577 (2d Cir. 1991); E.
Benefit of Lichter, 252 F.2d 658, 662 (5th Cir. 1958).
 In re Citigroup, 376 F.3d at 26; Metz, 39 F.3d at 1489.
 In re Citigroup, 376 F.3d at 26; Kelly, 352 F.3d at 349; Metz, 39 F.3d at 1489.
 Kelly, 352 F.3d at 349; Metz, 39 F.3d at 1489.
delay alone sufficient to establish waiver); Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 391 (7th Cir.
1995) (finding removal to federal court alone sufficient to establish waiver).
existence of arbitration agreement for almost a year).
 In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 763 (Tex. 2006).
 Id.; In re Bruce Terminix Co., 988 S.W.2d 702, 704 (Tex. 1998).
 See In re Bruce Terminix Co., 988 S.W.2d at 704.
party showing: (1) an agreement to arbitrate; and (2) the opposing party’s refusal to arbitrate.”).
 In re D. Wilson Constr. Co., 196 S.W.3d 774, 783 (Tex. 2006); accord, United Computer Sys., Inc. v. AT&T Corp., 298 F.
3d 756, 764 (9th Cir. 2002).
totality-of-the-circumstances test in determining whether party “otherwise arranged” to dispose of hazardous waste).
each case . . . .”).
 Kulko v. Superior Court of Cal., 436 U.S. 84, 92 (1978) (quoting Estin v. Estin, 334 U.S. 541, 545 (1948)).
 See, e.g., Tex. R. Civ. P. 190.2(c)(2) (limiting parties in Level 1 cases to six hours of depositions).
398 S.W.2d 93, 96 (Tex. 1965); Restatement (Second) of Contracts § 90 (1979).
 First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995).
S.W.3d 466, 471 (Tex. 2004); Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003); Equitable Life Assurance Soc’y of U.
S. v. Ellis, 152 S.W. 625, 628 (Tex. 1913).
 In re D. Wilson Constr. Co., 196 S.W.3d 774, 783 (Tex. 2006); EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex.
 In re Bruce Terminix Co., 988 S.W.2d 702, 704 (Tex. 1998).
934 S.W.2d at 89; Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898–99 (Tex. 1995).
 See In re Gen. Elec. Capital Corp., 203 S.W.3d 314, 316 (Tex. 2006); Sun Exploration & Prod. Co. v. Benton, 728 S.W.
2d 35, 37 (Tex. 1987); Bocanegra v. Aetna Life Ins. Co., 605 S.W.2d 848, 851 (Tex. 1980); Mass. Bonding & Ins. Co. v.
 Mass. Bonding & Ins. Co. v. Orkin Exterminating Co., 416 S.W.2d 396, 401 (Tex. 1967).
 See Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 686–87 (1996); Allied-Bruce Terminix Cos. v. Dobson, 513 U.
deciding whether the moving party has taken action inconsistent with the agreement to arbitrate”).
(suggesting Supreme Court sometimes looks to federal law and sometimes law chosen by parties); Wash. Mut. Fin.
“is often an uncertain question”).
524 (Tex. 1983); “Moore” Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936 (Tex. 1972); Wheeler v. White, 398 S.
W.2d 93, 96 (Tex. 1965); Restatement (Second) of Contracts § 90 (1979).
action or forbearance is binding as an option contract to the extent necessary to avoid injustice.”).
volumes of discovery exhibits filed after the arbitration award.
unconscionable arbitration fee would render clause unenforceable).
before criminal trial waived his right to arbitration); Gilmore v. Shearson/American Exp. Inc., 811 F.2d 108, 112 (2d Cir.
1987) (holding party’s withdrawal of its prior motion to compel arbitration constituted express waiver of that right).
months after filing and 4 months before trial).
that occurs when the party’s opponent forces it to litigate an issue and later seeks to arbitrate that same issue.”).
 In re Tyco, 422 F.3d at 46 n.5.
666 (Tex. 1977) (holding insurer waived contractual right to consent to settlement by denying liability under policy).
1925 was to make arbitration agreements as enforceable as other contracts, but not more so.”).
 W. Wendell Hall, Standards of Review in Texas, 38 St. Mary’s L.J. 43, 67 (2006).
reasonable and necessary attorney’s fees as are equitable and just.” (emphasis added)).
 See Tex. R. Evid. 801–806.
19, 21 (Tex. 1998) (declaratory fee award).
 In re Serv. Corp. Int’l, 85 S.W.3d 171, 174 (Tex. 2002); In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 574 (Tex.
1999); In re Bruce Terminix Co., 988 S.W.2d 702, 703–04 (Tex. 1998).
Inc., 286 F.3d 1309, 1316 (11th Cir. 2002); Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th Cir. 1999).
484; accord, Ivax Corp., 286 F.3d at 1316; Subway Equip., 169 F.3d at 326.
97, at 284 (“[A] trial court abuses its discretion [if the court] . . . fails to properly apply the law to the undisputed facts . . . .”).
interpreted it to allow recovery of all the fees.”).
attorney’s fees incurred in seeking dismissal of such litigation. (emphasis added).
those of the American Arbitration Association”); cf. Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156, 1160 (5th Cir.
74 Harv. L. Rev. 940, 943 (1961) (noting expense of discovery as inconsistent with desire to arbitrate).
done, time spent, or costs incurred that would not have been done or incurred in anticipation of an arbitration hearing.”).
 Tex. Civ. Prac. & Rem. Code § 171.021(b); see Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992).
 In re Vesta Ins. Group, Inc., 192 S.W.3d 759 (Tex. 2006).
arbitration, but withdrew that objection before the hearing on the motion.
 The defendants in Vesta had stipulated that all discovery obtained so far could be used in arbitration.
 See Tex. R. Civ. P. 12.

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