Court Opinion

ID: 4067468
Source: CourtListenerOpinion
Date Created: 2016-09-29 23:20:19.502465+00
Date Added: 2024-06-11T14:34:07.697652
License: Public Domain

ACCEPTED
                                                                              01-15-00640-CV
                                                                   FIRST COURT OF APPEALS
                                                                           HOUSTON, TEXAS
                                                                          9/3/2015 2:42:24 PM
                                                                        CHRISTOPHER PRINE
                                                                                       CLERK

                      Cause No. 01-15-00640-CV

                                                             FILED IN
                       IN THE COURT OF APPEALS        1st COURT OF APPEALS
                    FOR THE FIRST DISTRICT OF TEXAS       HOUSTON, TEXAS
                                                      9/3/2015 2:42:24 PM
                             AT HOUSTON
                                                      CHRISTOPHER A. PRINE
                                                              Clerk

                GREYSTONE MULTI-FAMILY BUILDERS, INC.,
                                                 Appellant,
                                  V.

                           TES ELECTRIC LP,
                                                 Appellee.

      APPELLANT GREYSTONE MULTI-FAMILY BUILDERS, INC.’S
MOTION TO STAY TRIAL PROCEEDINGS PENDING INTERLOCUTORY APPEAL

RICHARD B. PHILLIPS, JR.                 J. MICHAEL BELL
State Bar No. 24032833                   State Bar No. 02079200
THOMPSON & KNIGHT LLP                    Megan H. Schmid
One Arts Plaza                           State Bar No. 24074383
1722 Routh Street                        THOMPSON & KNIGHT LLP
Suite 1500                               333 Clay Street
Dallas, Texas 75201                      Suite 3300
Phone: 214-969-1700                      Houston, Texas 77002
Fax: 214-969-1751                        Phone: 713-654-8111
rich.phillips@tklaw.com                  Fax: 713-654-1871
                                         michael.bell@tklaw.com
                                         megan.schmid@tklaw.com

                     COUNSEL FOR APPELLANT
               GREYSTONE MULTI-FAMILY BUILDERS, INC.
TO THE HONORABLE COURT OF APPEALS:

      Under Texas Rule of Appellate Procedure 29.3, Appellant Greystone

Multi-Family Builders, Inc. d/b/a GMFB, Inc. respectfully requests that

this Court stay the trial court proceedings during the pendency of

Greystone’s interlocutory appeal of the trial court’s refusal to compel

arbitration. Greystone moved for a stay in the trial court, the but trial court

denied the motion. .

      Rule 29.3 gives this Court jurisdiction to stay trial court proceedings

“to preserve the parties’ rights until disposition of the appeal.” TEX. R. APP.

P. 29.3. Greystone requests the stay to ensure that issues that should be

arbitrated are not the subject of duplicative litigation during the

interlocutory appeal. Without a stay, Greystone will have to litigate this

case while waiting for this Court to decide whether the case should instead

be sent to arbitration. Such a result would completely defeat the purpose of

arbitration. Moreoever, there would be no harm to Appellee TES Electric if

the litigation is stayed because the appeal is set on an accelerated basis

under the Texas Rules of Appellate Procedure.

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                            PAGE 1
                               BACKGROUND

      This case arises out of a dispute between a subcontractor and a

general contractor in connection with a multi-family construction project at

807 S. Post Oak Lane, Houston, Texas. Appellee TES Electric, LP, as the

subcontractor, and Greystone, as the contractor, are parties to a subcontract

agreement, dated October 18, 2012, which governs the parties’ rights,

duties, and relationship with one another. Pursuant to the subcontract,

TES was to provide the electrical services for the project. After

      TES filed suit against Greystone, Greystone moved to compel

arbitration under Article 10 of the subcontract. (CR 17-85.) Greystone also

filed a Motion for Protective Order asking for protection from discovery

pending the resolution of the motion to compel arbitration. (CR 86-107.)

      The trial court denied the motion to compel arbitration (CR 155), and

Greystone has appealed that denial. (CR 158-59.)

      Greystone also asked the trial court to stay all proceedings pending

resolution of the appeal. But the trial court denied that motion as well.

(See Ex. A.) Greystone seeks a stay from this Court because a continuation

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                          PAGE 2
of the discovery and proceedings in the trial court would frustrate the very

purpose of the appeal.

                         ARGUMENT & AUTHORITIES

      An interlocutory appeal from a denial of a motion to compel

arbitration is permitted pursuant to Section 51.016 of the Texas Civil

Practice and Remedies Code. Section 51.016 expressly permits an

interlocutory appeal “under the same circumstances that an appeal from a

federal district court’s order or decision would be permitted by 9 U.S.C.

Section 16.” Tex. Civ. Prac. & Rem. Code § 51.016. Section 16(a)(1)(C) of

the FAA expressly authorizes an appeal from an order “denying an

application . . . to compel arbitration . . . .” 9 U.S.C. § 16(a)(1)(C). Further,

Section 16(a)(1)(A) permits an appeal from any order refusing a stay of any

action under Section 3 of the FAA. 9 U.S.C. § 16(a)(1)(A).

      Greystone asked the trial court for a stay—and now seeks a stay in

this Court—to minimize the potential losses from unnecessary duplication

of proceedings and to avoid the risk of inconsistent rulings. Texas Rule of

Appellate Procedure Rule 29.3 provides this Court with the authority to

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                              PAGE 3
issue temporary orders to preserve the parties’ rights during the pendency

of the interlocutory appeal. TEX. R. APP. P. 29.3.

      Indeed, Texas appellate courts routinely grant stays of trial

proceedings while reviewing an order denying a motion to compel

arbitration. See e.g., In re Scott, 100 S.W.3d 575, 578 (Tex. App.—Fort Worth

2003, orig. proceeding) (“We stayed the trial court’s discovery order

pending the outcome of this original proceeding.”); see also Rao v. American

Arbitration Association, No. 05-13-00462-CV, 2014 WL 3513258, at *1 (Tex.

App.—Dallas July 15, 2014, no pet. h.) (discussing the court’s granting of an

emergency motion to stay proceedings in the trial court, pending

interlocutory appeal, in the underlying case); Slaymaker v. Ballow, No. 12-

02-00381-CV, 2003 WL 21356034, at *1 (Tex. App.—Tyler June 11, 2003, no

pet.) (staying the trial court proceedings pending the appeal of an order

denying a motion to stay litigation and compel arbitration).

      Moreover, the Texas Supreme Court has even held that it can be an

abuse of discretion to refuse to stay litigation against two defendants while

a plaintiff’s claims against a third defendant are arbitrated. See In re Merrill

Lynch & Co., Inc., 315 S.W.3d 888, 889 (Tex. 2010).

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                             PAGE 4
      To allow the trial court proceedings to proceed pending an appeal of

the denial of the motion to compel arbitration would frustrate the intent of

arbitration agreement and would force Greystone to incur costs and

burdens that sought to avoid by contracting for arbitration.

      TES has already served Greystone with its “First Set of Integrated

Discovery,” which included 48 separate requests for production and 11

separate interrogatories, all of which deal with topics concerning or related

to the merits of the underlying controversy in this case.

      Without a stay of the litigation pending appeal, Greystone will incur

significant and unnecessary expense if forced to respond to TES’s discovery

requests before the arbitration issue is resolved on appeal. One of “the

main benefits of arbitration lie in expedited and less expensive disposition

of a dispute . . . .” Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269 (Tex.

1992). Allowing Appellee to conduct discovery before this Court has ruled

on the arbitration issue would force the parties to litigate their dispute in

the trial court even though it may ultimately be determined by this Court

that the claims should be arbitrated. See, e.g., In re Champion Tech., Inc., 173
S.W.3d 595, 599 (Tex. App.—Eastland 2005, orig. proceeding) (holding that

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                               PAGE 5
a trial court may not defer ruling on an arbitration issue until after all

discovery is completed because doing so forces the parties to litigate their

dispute in trial court even though it may be ultimately determined that the

claims in whole or in part are subject to arbitration) (citing In re MHI

Partnership, Ltd., 7 S.W.3d 918, 923 (Tex. App.—Houston [1st Dist.] 1999,

orig. proceeding)).   If Greystone is forced to litigate and this Court

ultimately determines that the dispute should be arbitrated, then the trial

court’s and the parties’ time and resources will have been wasted. A stay

of the trial court’s proceedings would serve to promote the interest of

justice and avoid wasting valuable resources.

     Moreover, TES will not be prejudiced by a stay.          Appeals from

interlocutory orders, such as this one, are accelerated, with shorter

deadlines for filing the record and the parties’ briefs. See TEX. R. APP. P.

26.1(b), 28.1, 35.1(b), 38.6(a). Additionally, the court of appeals must give

precedence to interlocutory appeals. TEX. R. APP. P. 40.1(b). And because

this appeal involves a discrete legal issue, Appellant anticipates that this

Court may be able to rule expeditiously. Therefore, a reasonable delay so

that this Court can conduct a meaningful review of the trial court’s decision

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                          PAGE 6
will not cause any prejudice to TES, particularly in light of the burden that

would otherwise be imposed on Greystone.

                               CONCLUSION

      WHEREFORE, Appellant Greystone Multi-Family Builders, Inc.

respectfully requests that this Court stay the trial court proceedings during

the pendency of the interlocutory appeal. Appellant further requests

general relief.

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                          PAGE 7
                               Respectfully submitted,

                               THOMPSON & KNIGHT LLP

                               BY: /S/ Richard B. Phillips, Jr.
                                        Richard B. Phillips, Jr.
                                        State Bar No. 24032833
                                        rich.phillips@tklaw.com

                                    One Arts Plaza
                                    1722 Routh Street, Suite 1500
                                    Dallas, Texas 75201
                                    Phone: (214) 969-1700
                                    Fax: (214) 969-1751

                                        J. Michael Bell
                                        State Bar No. 02079200
                                        michael.bell@tklaw.com
                                        Megan H. Schmid
                                        State Bar No. 24074383
                                        megan.schmid@tklaw.com

                                    333 Clay Street, Suite 3300
                                    Houston, Texas 77002
                                    Phone: 713-654-8111
                                    Fax: 713-654-1871

                                    COUNSEL FOR APPELLANT
                                    GREYSTONE MULTI-FAMILY
                                    BUILDERS, INC.

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                        PAGE 8
                        CERTIFICATE OF CONFERENCE

     On September 3, 2015, I discussed this motion with Darren A. Braun,
counsel for Appellee TES Electric, LP. Mr. Braun stated that Appellee is
opposed to the requested stay.

                                   /s/ Megan H. Schmid
                                        Megan H. Schmid

                         CERTIFICATE OF SERVICE

     On this 3rd day of September, 2015, a true and correct copy of the
foregoing motion to stay litigation pending interlocutory appeal has been
served on the following counsel for Appellee by electronic service:

Ashish Mahendru
Darren A. Braun
Mahendru, P.C.
639 Heights Boulevard
Houston, Texas 77007

                                   /s/ Richard B. Phillips, Jr.
                                       Richard B. Phillips, Jr.

APPELLANT’S MOTION TO STAY TRIAL PROCEEDINGS
PENDING INTERLOCUTORY APPEAL                                       PAGE 9