Court Opinion

ID: 9908706
Source: CourtListenerOpinion
Date Created: 2023-12-11 17:10:11.444877+00
Date Added: 2024-06-11T12:49:26.957722
License: Public Domain

Opinion issued December 7, 2023

                                      In The

                               Court of Appeals
                                     For The

                          First District of Texas
                             ————————————
                              NO. 01-23-00314-CV
                            ———————————
                GRGP, INC. AND ROSALIND NG, Appellants
                                        V.
     BLACK FOREST HOLDINGS, INC., 5711 BISSONNET, LP, 5713
             BISSONET, LP, AND AVI RON, Appellees

                    On Appeal from the 11th District Court
                            Harris County, Texas
                      Trial Court Case No. 2017-78562

                          MEMORANDUM OPINION

      Appellants GRGP, Inc. and Rosalind Ng (collectively, GRGP) appeal from

the trial court’s order denying their motion to compel arbitration in the suit filed

against them by appellees Black Forest Holdings, Inc., 5711 Bissonnet, LP, 5713

Bissonnet, LP, and Avi Ron (collectively, Black Forest). In two issues, GRGP
contends that the trial court erred in failing to (1) compel arbitration because Black

Forest did not show that GRGP’s conduct was inconsistent with the right to compel

arbitration or that it prejudiced Black Forest as required to find waiver, and (2) allow

GRGP to take back their purported waiver. We affirm.

                                      Background

      GRGP and Black Forest Holdings are the General Partners of two limited

partnerships: 5711 Bissonnet, LP and 5713 Bissonnet, LP (the Partnerships). GRGP

and Black Forest formed the Partnerships as property management entities for the

purpose of purchasing, renting, and selling real property in and around Harris

County, Texas.

       GRGP and Black Forest each have a 0.5% interest in the Partnerships. Avi

Ron, Black Forest’s President, and Rosalind Ng, GRGP’s President, also own an

interest as limited partners.

      In November 2017, Black Forest sued GRGP, Ng, and Joshua Wohlstein,

Ng’s husband,1 asserting claims for breach of contract, breach of fiduciary duty,

conspiracy, and aiding and abetting. Black Forest alleged that GRGP denied it access

to the corporate books and records, despite repeated requests, and excluded Ron

from business operations and decision making, in violation of the terms of the

1
      Wolstein is not a party to this appeal.

                                                2
Limited Partnership Agreements (the Agreements). Black Forest sought a temporary

injunction barring GRGP from managing or conducting business on behalf of the

Partnerships and appointment of a receiver.2

      GRGP answered asserting a general denial and several affirmative defenses.

It further asserted that it was entitled to indemnification pursuant to the terms of the

Agreements. GRGP amended its answer.

      In July 2018, GRGP filed a pleading entitled “Plea to the Jurisdiction and

Motion for Summary Judgment” challenging (1) the trial court’s subject matter

jurisdiction, (2) Ron’s standing to bring claims relating to the Partnerships, and (3)

Black Forest’s standing to bring claims on behalf of the Partnerships. Black Forest

filed a response and motion for continuance.

      In October 2018, GRGP counterclaimed asserting that Black Forest breached

the Agreements, and it sought damages, declaratory relief, and enforcement of the

Agreements’ indemnity provisions. GRGP amended its counterclaims and filed its

third amended answer to Black Forest’s first amended petition.

2
      In 2012, GRGP sued Black Forest asserting claims for breach of fiduciary duty and
      breach of contract and sought an accounting, specific performance, and declaratory
      relief. GRGP alleged that Black Forest unilaterally entered into contracts for
      property management services with two companies owned by Ron in violation of
      the terms of the partnership agreements. After the parties entered a Rule 11
      agreement to settle the case, they jointly moved to dismiss the lawsuit in March
      2013.
                                           3
       In January 2020, GRGP filed a second motion for summary judgment on

Black Forest’s breach of contract claim. It argued that the parties had entered into

an agreement under which Black Forest had expressly delegated its general partner

authority to GRGP, and that GRGP thereafter moved to dissolve the receivership.

Black Forest responded that it had withdrawn its consent to GRGP’s control two

years earlier, and it requested sanctions on the grounds that GRGP had moved for

summary judgment on a delegation of authority it knew had been previously

revoked.

      In March 2021, Ng moved for final summary judgment on Black Forest’s

claims against her for breach of fiduciary duty, conspiracy, and declaratory relief.

Black Forest responded and moved for a continuance so that it could depose Ng. The

trial court granted a continuance.

      In April 2022, the trial court conducted an evidentiary hearing on Black

Forest’s renewed and supplemental motion for finding of spoliation and sanctions

against GRGP. Following the hearing, the trial court entered an order and findings

that GRGP had intentionally spoliated evidence by destroying a computer server

containing evidence relevant to key issues in the case. The trial court ordered GRGP

to pay Black Forest’s reasonable and necessary attorney’s fees and costs incurred as

a result of the spoliation, the receiver’s fees and costs, and the fees charged by the

receiver’s accountant. The trial court reserved ruling on a spoliation presumption

                                          4
and instruction until trial. The trial court later awarded $61,806.25 in attorney’s fees

to Ron as well as the fees incurred by the receiver and the receiver’s accountant that

were paid by the Partnerships.

      In January 2023, GRGP filed an opposed motion to compel arbitration

asserting that the parties had agreed that any disputes arising out of or relating to the

Agreements would be resolved through binding arbitration.3 Black Forest responded

arguing that GRGP had waived the right to arbitration, and it filed a cross-motion

for sanctions. The trial court denied GRGP’s motion to compel arbitration on April

17, 2023. This interlocutory appeal followed.

                     Standard of Review and Applicable Law

      We review an order denying a motion to compel arbitration for abuse of

discretion. Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). A trial

court abuses its discretion if it acts in an arbitrary or unreasonable manner or acts

3
      Section 15.9(a) of the Agreements provides:

      All disputes, differences or questions arising out of or relating to this
      Agreement (including, without limitation, those as to the validity,
      interpretation, breach, violation or termination hereof ) will, at the written
      request of any partner, be finally determined and settled pursuant to
      arbitration at Houston, Texas by three arbitrators, one arbitrator to be
      appointed by the partner requesting arbitration, one arbitrator to be appointed
      by the adverse party, and a neutral arbitrator to be appointed by the first two
      arbitrators. The neutral arbitrator will be an attorney and will act as chairman.
      Any such arbitration may be initiated by any partner by written notice
      (“Arbitration Notice”) to the other party specifying the subject of the
      requested arbitration and appointing such partner’s arbitrator for such
      arbitration.
                                             5
without reference to any guiding rules or principles. Cire v. Cummings, 134 S.W.3d

835, 838–39 (Tex. 2004) (quoting Downer v. Aquamarine Operators, Inc., 701

S.W.2d 238, 241–42 (Tex. 1985)). “We defer to the trial court’s factual

determinations if they are supported by evidence but review its legal determinations

de novo.” Henry, 551 S.W.3d at 115.

      A party seeking to compel arbitration must establish that (1) a valid arbitration

agreement exists and (2) the claims in dispute fall within the scope of the agreement.

In   re   Rubiola,   334    S.W.3d    220,     223   (Tex.   2011).    “If   the   party

seeking arbitration carries its initial burden, the burden then shifts to the party

resisting arbitration to present evidence on its defenses to the arbitration agreement.”

Williams Indus., Inc. v. Earth Dev. Sys. Corp., 110 S.W.3d 131, 134–35 (Tex.

App.—Houston [1st Dist.] 2003, no pet.) (quoting Mohamed v. Auto Nation USA

Corp., 89 S.W.3d 830, 835 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (citing In

re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999))).

                                       Waiver

      A party who opposes the enforcement of a valid arbitration agreement4 based

on the defense of waiver bears the burden of proving the defense. Royston, Rayzor,

Vickery & Williams, LLP v. Lopez, 467 S.W.3d 494, 499–500 (Tex. 2015); Pounds

4
      Black Forest does not challenge on appeal the existence of a valid arbitration
      agreement or assert that its claims against GRGP do not fall within its scope.

                                           6
v. Rohe, 592 S.W.3d 549, 554 (Tex. App.—Houston [1st Dist.] 2019, no pet.).

Because the law favors arbitration, this burden is a heavy one. G.T. Leach Builders,

LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 512 (Tex. 2015); Pounds, 592 S.W.3d

at 554. A party may waive its right to arbitration either expressly or impliedly. G.T.

Leach, 458 S.W.3d at 511. Waiver of arbitration may be implied from a party’s

conduct, so long as the conduct is unequivocal. Courtright v. Allied Custom Homes,

Inc., 647 S.W.3d 504, 516 (Tex. App.—Houston [1st Dist.] 2022, pet. denied) (citing

Adams v. StaxxRing, Inc., 344 S.W.3d 641, 647 (Tex. App.—Dallas 2011, pet.

denied)).

      When, as here, implied waiver is at issue, the party seeking to establish the

waiver defense must show that (1) the party seeking arbitration substantially invoked

the judicial process in a manner inconsistent with the right to compel arbitration and

(2) this inconsistent conduct caused the nonmoving party to suffer detriment or

prejudice. G.T. Leach, 458 S.W.3d at 511–12 (citing Perry Homes v. Cull, 258

S.W.3d 580, 593–94 (Tex. 2008)). Whether a party waives its right to arbitration by

substantially invoking the judicial process depends on the totality of the

circumstances. See id. at 512; Perry Homes, 258 S.W.3d at 590. We decide the issue

on a case-by-case basis taking into consideration a multitude of non-exclusive

factors, including:

      • how long the movant waited before moving to compel arbitration;

                                          7
      • the reasons for the movant’s delay;

      • whether and when, during the period of delay, the movant knew of
        the arbitration agreement;

      • how much discovery the movant conducted before moving to
        compel arbitration, and whether that discovery related to the merits;

      • whether the discovery would be unavailable or useful in arbitration;

      • whether the movant asked the court to dispose of claims on the
        merits;

      • whether the movant asserted affirmative claims for relief in court;

      • the extent of the movant’s engagement in pretrial matters related to
        the merits (rather than to arbitrability or jurisdiction);

      • the time and expense the parties committed to the litigation;

      • whether activity in court would be duplicated in arbitration; and

      • when the case is set to be tried.

G.T. Leach, 458 S.W.3d at 512 (citing Perry Homes, 258 S.W.3d at 590–92). In

general, no single factor is dispositive. RSL Funding, LLC v. Pippins, 499 S.W.3d

423, 430 (Tex. 2016). Nor must all or most of these factors be present to support

waiver. See Perry Homes, 258 S.W.3d at 591. Courts look to the specifics of each

case. Henry, 551 S.W.3d at 116.

      The party asserting waiver of arbitration must also prove that it suffered unfair

prejudice because of the opposing party’s litigation conduct. See G.T. Leach, 458

S.W.3d at 515. Such inherent unfairness may be manifested “in terms of delay,

                                            8
expense, or damage to a party’s legal position that occurs when the party’s opponent

forces it to litigate an issue and later seeks to arbitrate that same issue.” Perry Homes,

258 S.W.3d at 597 (quotation omitted). “Detriment or prejudice, in this context,

refers to an ‘inherent unfairness caused by a party’s attempt to have it both ways by

switching between litigation and arbitration to its own advantage.’” G.T. Leach, 458

S.W.3d at 515 (quoting In re Citigroup Global Mkts., Inc., 258 S.W.3d 623, 625

(Tex. 2008) (per curiam)) (internal quotation omitted); see Kennedy Hodges, L.L.P.

v. Gobellan, 433 S.W.3d 542, 545 (Tex. 2014) (per curiam). “[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.” Perry

Homes, 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)). The nonmovant must show the fact of prejudice, but not its

extent. Id. at 599.

                                      Discussion

      In its first issue, GRGP contends that the trial court erred in failing to compel

arbitration because Black Forest did not show that GRGP’s conduct was inconsistent

with the right to compel arbitration, or that its conduct prejudiced Black Forest.

Black Forest responds that GRGP substantially invoked the judicial process in a

manner inconsistent with the right to compel arbitration by (1) litigating for five and

a half years without seeking arbitration; (2) filing counterclaims and defenses based

                                            9
on the Agreements; (3) filing three motions for summary judgment; (4) completing

the entire discovery process; and (5) moving to compel arbitration only after the trial

court found it had intentionally spoliated evidence. Black Forest argues that it would

be prejudiced if forced to arbitrate.

A.    Substantial Invocation of Judicial Process

      In examining whether GRGP substantially invoked the judicial process in a

manner inconsistent with the right to arbitrate, we consider the factors enunciated in

G.T. Leach.

      1.      Delay

      Black Forest filed suit against GRGP on November 22, 2017, and GRGP did

not move to compel arbitration until February 28, 2023—more than five years after

suit was filed. Courts have found waiver based on significantly shorter periods of

delay. See, e.g., Perry Homes, 258 S.W.3d at 596 (finding waiver where party

delayed request for arbitration fourteen months after filing suit); 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 party’s six-month delay before

requesting arbitration supported finding of waiver).

      While delay, standing alone, does not constitute substantial invocation of the

judicial process, see G.T. Leach, 458 S.W.3d at 515, the record shows more than

mere delay in this case. GRGP has offered no explanation for the delay. Nor does

                                          10
the record suggest a justifiable reason for the decision to wait so long to seek

arbitration. GRGP was aware of the Agreements’ arbitration clause from the outset

as it was a party to the Agreements, and the Agreements have been cited in, and

attached as exhibits to, numerous pleadings and filings, including GRGP’s own

counterclaims and summary judgment motions. However, rather than pursuing

arbitration, GRGP chose to file defenses and counterclaims and engage in significant

discovery and motion practice for more than five years, after all pretrial deadlines

had expired and the trial court found intentional spoliation, before seeking to compel

arbitration. See BBX Operating, LLC v. Am. Fluorite, Inc., No. 09-17-00245-CV,

2018 WL 651276, at *6 (Tex. App.—Beaumont Nov. 16, 2017, no pet.) (mem. op.)

(“[A] party who is aware of an arbitration clause, yet only files a 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.”); Prof’l

Advantage Software Sols., Inc. v. W. Gulf Mar. Ass’n, No. 01-15-01006-CV, 2016

WL 2586690, at *4 (Tex. App.—Houston [1st Dist.] May 5, 2016, no pet.) (mem.

op.) (noting party is presumed to know contents of agreement it signs).

      We find GRGP’s delay in moving to compel arbitration supports a finding of

waiver.

                                          11
       2.     Discovery

       The record shows that GRGP served forty-two requests for production, thirty-

nine requests for admission, fourteen interrogatories, and two deposition notices

with subpoena duces tecum to third parties. GRGP conducted this discovery before

the end of the discovery period on September 18, 2020 and well before it moved for

arbitration on February 28, 2023. See Perry Homes, 258 S.W.3d at 596 (“[T]he

record is nevertheless clear that most of the discovery in the case had already been

completed before the Culls requested arbitration. The rule that one cannot wait until

‘the eve of trial’ to request arbitration is not limited to the evening before trial; it is

a rule of proportion that is implicated here.”); Adams, 344 S.W.3d at 649 (concluding

that discovery was substantially completed where defendant initiated and conducted

discovery, filed repeated motions for protection, and moved to compel arbitration

only after discovery deadline had passed).

       We find GRGP’s discovery supports a finding of waiver.

       3.     Affirmative Relief and Pretrial Matters

       The record reflects that GRGP sought affirmative relief against Black Forest

in the trial court. It asserted amended counterclaims based on the Agreements and

sought numerous declaratory judgments regarding the parties’ rights and obligations

under them, including enforcement of the Agreements’ indemnity provisions. See

Hogg v. Lynch, Chappell & Alsup, P.C., 480 S.W.3d 767, 785–86, 790–91 (Tex.

                                            12
App.—El Paso 2015, no pet.) (concluding evidence showing party sought

affirmative relief by filing claim for declaratory judgment and seeking constructive

trust on disputed monies was significant factor in determining whether defendant

had substantially invoked judicial process). GRGP also filed three motions for

summary judgment during the course of the litigation. In July 2018, GRGP filed a

pleading entitled “Plea to the Jurisdiction and Motion for Summary Judgment”

challenging the trial court’s subject matter jurisdiction, Ron’s standing to bring

claims relating to the Partnerships, and Black Forest’s standing to bring claims on

behalf of the Partnerships. In January 2020, GRGP moved for summary judgment

on Black Forest’s breach of contract claim and, in March 2021, Ng moved for final

summary judgment on Black Forest’s claims against her for breach of fiduciary duty,

conspiracy, and declaratory relief. The fact that the trial court did not rule on the

summary judgment motions is not dispositive. See Perry Homes, 258 S.W.3d at 592

(“Waiver involves substantial invocation of the judicial process, not just judgment

on the merits.”); see also Hogg, 480 S.W.3d at 790 (“Contrary to Ms. Hogg’s

argument, we do not believe it is necessary for a trial court to have entered a final

judgment against the moving party before a waiver will be found.”).

      GRGP also participated in pretrial matters related to the merits of their claims.

As discussed above, GRGP filed numerous pleadings—original and amended

answers, original and amended counterclaims, and three summary judgment

                                          13
motions—as well as participated in evidentiary hearings and conducted significant

discovery.

      We further note that GRGP did not move to compel arbitration until after the

trial court entered rulings adverse to GRGP. On July 26, 2022, the trial court entered

an order and findings that GRGP had intentionally spoliated evidence by destroying

a computer server containing evidence relevant to key issues in the case. The trial

court reserved ruling on a spoliation presumption and instruction until trial, leaving

open the possibility of further adverse rulings. The trial court later awarded

$61,806.25 in attorney’s fees to Ron as well as the fees and costs incurred by the

receiver and the receiver’s accountant that were paid by the Partnerships as a result

of the spoliation. See Courtright, 647 S.W.3d at 521 (concluding that evidence

showing defendants did not move to compel arbitration until after trial court entered

rulings adverse to them, including granting motion for partial summary judgment in

favor of plaintiffs, and five months before the parties’ agreed trial setting supported

finding of waiver); Haddock v. Quinn, 287 S.W.3d 158, 180 (Tex. App.—Fort

Worth 2009, pet. denied) (“Indeed, failing to seek arbitration until after proceeding

in litigation to an adverse result is the clearest form of inconsistent litigation conduct

and is inevitably found to constitute substantial invocation of the litigation process

resulting in waiver.”).

                                           14
      The record thus demonstrates that GRGP sought affirmative relief and

participated in pretrial matters, supporting a finding of waiver.

      4.     Time and Money Spent in Litigation

      In support of its response to GRGP’s motion to compel arbitration, Black

Forest attached the affidavit of its counsel, Andrew K. Meade. Meade attested that

his firm had spent a total of 873.10 hours working on the matter and that Black Forest

had incurred $279,613.00 in fees to date. See Adams, 344 S.W.3d at 651 (considering

evidence showing that plaintiffs had incurred $110,000 in legal fees, which included

$21,000 in fees solely for purpose of responding to defendant’s discovery requests

and motions, in determining that defendant had waived his right to compel

arbitration). This evidence supports a finding of waiver.

      5.     Duplication of Litigation Activity and Trial Setting

      We also consider whether the activity in court would be duplicated in

arbitration and whether and when the case had been set for trial. See G.T. Leach, 458

S.W.3d at 512. Here, all pretrial deadlines had passed by the time GRGP moved to

compel arbitration. Therefore, any activity in an arbitration proceeding would

necessarily be duplicative of the activity that was previously conducted in litigation.

Following a continuance in January 2023, trial of the case was set for October 16,

2023, after more than five years of active litigation. The trial court did not issue a

new docket control order, and, as noted above, all discovery and dispositive motion

                                          15
deadlines had passed. See Adams, 344 S.W.3d at 649 (noting that defendant moved

to compel arbitration only after discovery deadline had passed and most discovery

had been completed in finding waiver of right to compel arbitration) (citing Perry

Homes, 258 S.W.3d at 596 (“[T]he record is nevertheless clear that most of the

discovery in the case had already been completed before the Culls requested

arbitration. The rule that one cannot wait until ‘the eve of trial’ to request arbitration

is not limited to the evening before trial; it is a rule of proportion that is implicated

here.”)).

      After considering the totality of the circumstances, we conclude that GRGP

substantially invoked the judicial process in a manner inconsistent with the right to

arbitrate and waived arbitration. See Hogg, 480 S.W.3d at 790 (holding arbitration

waived when party participated in litigation “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 case-crippling sanctions”); Okorafor v. Uncle Sam & Assocs., Inc.,

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

defendant substantially invoked judicial process because she pursued aggressive

litigation strategy through amended pleadings that sought affirmative relief and

abruptly switched to arbitration strategy when facing looming deadline to respond

to discovery requests); In re Christus Spohn Health Sys. Corp., 231 S.W.3d 475, 479

(Tex. App.—Corpus Christi–Edinburg 2007, orig. proceeding) (explaining that

                                           16
actions inconsistent with right to arbitrate may include “some combination of filing

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

continuance, and failing to timely request arbitration”).

B.    Prejudice

      Having determined that GRGP substantially invoked the judicial process, we

next consider whether Black Forest established that it was unfairly prejudiced as a

result of GRGP’s conduct.5 See G.T. Leach Builders, 458 S.W.3d at 515; Perry

Homes, 258 S.W.3d at 595. “Detriment or prejudice, in this context, refers to an

‘inherent unfairness caused by a party’s attempt to have it both ways by switching

between litigation and arbitration to its own advantage.’” G.T. Leach, 458 S.W.3d at

515 (quoting In re Citigroup Global Mkts., 258 S.W.3d at 625); Kennedy Hodges,

433 S.W.3d at 545. Such inherent unfairness may be manifested “in terms of delay,

expense, or damage to a party’s legal position that occurs when the party’s opponent

forces it to litigate an issue and later seeks to arbitrate that same issue.” Perry Homes,

258 S.W.3d at 597.

5
      The United States Supreme Court recently rejected any requirement of proof of
      prejudice as an “arbitration-specific” federal procedural rule in cases brought in
      federal court. See Morgan v. Sundance, Inc., 596 U.S. 411, 416–19 (2022).
      Regardless of whether that ruling governs our analysis here, see Momentum Project
      Controls, LLC v. Booflies to Beefras LLC, No. 14-22-00712-CV, 2023 WL
      4196584, at *5 n.5 (Tex. App.—Houston [14th Dist.] Jun. 27, 2023, pet. filed)
      (describing issue as “unsettled” question), we nevertheless determine that Black
      Forest suffered prejudice as a result of GRGP’s conduct, as set forth below.

                                           17
      As discussed above, Black Forest presented evidence that it had incurred

$279,613.00 in attorney’s fees in the course of the litigation by the time GRGP

moved to compel arbitration. See Christus Spohn, 231 S.W.3d at 482 (concluding

party had made clear showing of prejudice where, among other things, counsel

testified by affidavit that client had incurred $60,000 to $70,000 in expenses to

develop matter for trial and more than $350,000 in attorney’s fees). In addition to

the added expense that litigation imposed on Black Forest, the record also shows

prejudice to Black Forest because GRGP actively participated in litigation, suffered

an adverse ruling when the trial court found it intentionally spoliated evidence, and

is now seeking to switch to a new tribunal presumably in an attempt to undo the

effects of the adverse ruling. As this Court noted in Pounds v. Rohe, 592 S.W.3d 549

(Tex. App.—Houston [1st Dist.] 2019, no pet.), prejudice is shown when a party

attempts to have it both ways by switching between litigation and arbitration after

the results of the litigation prove unsatisfactory.

      When a movant already has unsuccessfully sought a resolution on the
      merits, prejudice inheres in an attempt to start over in a different forum
      before a new decisionmaker. Pounds and Black are engaged in a type
      of unfair forum-shopping that, if condoned, would allow them to have
      it both ways—litigating on the merits first and then insisting on
      arbitration after the results of the litigation proved unsatisfactory.
      Compelling arbitration at this point in the proceedings would allow
      Pounds and Black to undo the trial court’s adverse summary-judgment
      ruling and deprive Rohe of this favorable result. Damage to a party’s
      legal position of this sort suffices to show detriment or prejudice in the
      context of waiver of the right to arbitrate.

                                           18
Id. at 558.

      In sum, GRGP moved for arbitration more than five years after Black Forest

filed suit, after GRGP engaged in extensive discovery and motion practice, and after

the trial court entered an adverse ruling that GRGP intentionally spoliated evidence,

awarded attorney’s fees and costs to Black Forest incurred as a result of the

spoliation, and explicitly reserved ruling on a spoliation presumption and instruction

until trial. See Courtright, 647 S.W.3d at 524 (finding defendants’ conduct resulted

in substantial prejudice to plaintiffs and therefore supported finding of waiver where

record showed trial court granted plaintiffs’ motion for partial summary judgment,

entered adverse finding that one defendant’s actions were “illegal, oppressive, or

fraudulent,” and one plaintiff’s motion for partial summary judgment remained

pending). Reviewing the record before us, we conclude that GRGP’s conduct

resulted in substantial prejudice to Black Forest. See Kennedy Hodges, 433 S.W.3d

at 545 (stating prejudice is “inherent unfairness in terms of delay, expense, or

damage to a party’s legal position that occurs when the party’s opponent forces it to

litigate an issue and later seeks to arbitrate that same issue”). The trial court did not

abuse its discretion in denying GRGP’s motion to compel arbitration. We overrule

GRGP’s first issue.

                                           19
C.    “Take Back” of Waiver

      In its second issue, GRGP contends that even if the evidence supports a

finding of waiver, the trial court erred in not following the Texas Supreme Court’s

guidance in Perry Homes by allowing it to “take back” any waiver. This is so, it

argues, because it moved to compel arbitration nearly nine months before trial.

GRGP’s argument is unavailing.

      In Perry Homes, the Texas Supreme Court addressed the defendants’

argument that it should reconsider requiring a showing of prejudice to find waiver

by litigation conduct and instead apply the ordinary waiver rules governing contracts

which require only “intentional relinquishment of a known right” without a

requirement of prejudice. See Perry Homes, 258 S.W.3d at 594. After noting that its

own precedent and that of a majority of federal circuits courts requiring a showing

of prejudice, the Court declined the defendants’ invitation to reconsider the

requirement. See id. Instead, it held that it would continue to require a showing of

prejudice because waiver in the arbitration context is analogous to estoppel:

      Under Texas law, waiver may not include a prejudice requirement, but
      estoppel does. 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. As noted above, Texas estoppel law does not allow
      a party to withdraw a representation once the other party takes “action
      or forbearance of a definite and substantial character.” Using precisely
      the same terms, the Restatement does not allow a party to withdraw an
      option contract when the offeree has taken substantial action based upon
      it. In these contexts, prejudice is an element of the normal contract rules.

                                          20
         Thus, we agree with the courts below that waiver of arbitration requires
         a showing of prejudice.

Id. at 595. The “take it back” language upon which GRGP relies is not a rule

allowing a party to undo a completed waiver. Rather, it is an explanation as to why

arbitration waiver includes a prejudice requirement. Because the trial court did not

err in not permitting GRGP to take back its waiver, we overrule GRGP’s second

issue.

                                      Conclusion

         We affirm the trial court’s order denying GRGP’s motion to compel

arbitration.

                                                      Amparo Monique Guerra
                                                      Justice

Panel consists of Justices Goodman, Rivas-Molloy, and Guerra.

                                           21