Well, it took a couple weeks, but the Texas Supreme Court has reverted to its pre-Perry Homes stance on the circumstances in which a party may or may not waive its right to compel arbitration. On Friday, while we were otherwise indisposed and unable to blog, the Texas Supreme Court found that a party’s decision to remove a case to federal court (and then agree to a remand back to state court) did not “substantially invoke the judicial process” and thus did not waive that party’s right to later invoke an arbitration clause. The per curiam opinion adds little to what, before Perry Homes, we would have said was the clearly established position of a Supreme Court that had never, to our knowledge, stepped in to find waiver. The opinion is in fact quite similar to the Bank One opinion we blogged about last February. In both cases, the Supreme Court overruled trial courts and courts of appeals that had found that something other than sheer quantity of activity can be a gauge of substantial invocation of the litigation process. In both Bank One and Friday’s Citigroup case, in other words, it was the nature of the party’s action that had caused waiver, not the sheer bulk of action that had taken place; in Bank One, it was a motion for new trial, while in Citigroup it was a removal, both actions that specifically invoked a court’s jurisdiction. For the second time now, the Supreme Court has sent a clear signal that it frankly does not care what type of activity a putative waivor takes when considering whether that activity invokes the judicial process. In other words, according to the Court, requesting a court to assume jurisdiction over the case somehow does not “invoke the judicial process”. The only factor that the Supreme Court has considered in these cases is the question of how many depositions had been taken, how many motions had been filed and how close to trial were the parties when the motion to compel arbitration is filed. In re: Citigroup, ___ S.W.3d ___ (Tex. 2008) (Cause No. 06-0886). Technorati Tags: arbitration, ADR, Texas Supreme Court, law

I picked the wrong week to go on vacation. While I was on an airplane coming back from France, the Texas Supreme Court issued its long-awaited opinion in the Perry Homes Case. The Texas legal blogosphere has already been all over it, and the Supreme Court of Texas Blog has posted a nice recap of the commentary. At the risk of coming to the party late, we’ll still offer some comments on Friday’s opinion. Robert and Jane Cull bought a house from Perry Homes that was apparently a lemon. According to the majority opinion, the Culls filed lawsuits against Parry Homes and a couple third-party warranty providers who requested, but apparently did not insist on, arbitration. After discovery had been completed at the district court level, indeed some four days prior to the beginning of trial in the case, the Culls invoked the arbitration clause and successfully moved to have the trial abated in favor of arbitration. The defendants objected on the basis that the Culls had waived their right to arbitrate. About a year later, the Culls won their arbitration. The Defendants in the case sought vacatur of the award on the basis that the Culls had waived their right to invoke the arbitration clause by waiting until the eve of trial to attempt to do so. The trial court and the Court of Appeals sided with the Culls, finding that no waiver had occurred. A majority of the Texas Supreme Court disagreed. One cannot really fault the court of appeals and the trial court for finding no waiver. On numerous occasions in the past, we have blogged about the extremely onerous standard that Texas Courts, particularly the Supreme Court, have applied when considering whether or not a party has waived its right to arbitrate. In this case, however, after noting that it has never found waiver before so it was a bit unclear as to what factors might support such a finding, the Court lays out an admittedly fact-specific framework for arbitration waiver analysis in Texas. In this case, the Culls had initially filed a 79-page objection to arbitration, complaining that the American Arbitration Association was “incompetent” and “biased”. Next, they conducted extensive discovery and filed five motions to compel. Finally, after 14 months of discovery, they moved to compel arbitration on the eve of trial. Even given the high burden set out by previous Texas Supreme Court opinions on this issue, these facts certainly seem to support waiver, if such a thing exists in Texas. So, one would think this would have been a fairly ho-hum opinion, noteworthy only in that it is the first Texas Supreme Court opinion that does not come down in favor of arbitration since we’ve been following closely. However, the case has gotten a tremendous amount of press, and criticism from those who one would normally expect to applaud an opinion finding waiver in this context, because the winner, Perry Homes, is a big supporter of many of the justices on the Court. In other words, say the critics, the first time this Texas Supreme Court ever wrote a word opposing an arbitration, it did so to erase a large judgment against a major financial backer. Whether or not that is a valid political criticism is beyond the scope of this blog. However, we do note that the facts in this case support waiver, and that the case is a landmark one if only because it is an outlier. It is possible, in Texas, to waive one’s right to arbitrate, after all. Perry Homes v. Cull, ___ S.W.3d ___ (Tex. 2008), Cause No. 05-0882. PS: we will address issues raised by the dissents and by other bloggers when time allows. In the meantime, I need to wade through the piles of emails and mail that accumulated while I was out. Technorati Tags: arbitration, ADR, Texas Supreme Court, law

Karl and I just got the following email from sometime contributor

Today, the Texas Supreme Court handed down nineteen (19) opinions. None of them, however, has anything to do with arbitration. One of them, though, resolved an issue which has divided the courts of appeals and with which we had to grapple not too long ago. Since we have not been blogging much lately (we’ve been working a lot), we thought we’d mention it. As of today, Rule 202 no longer allows the pre-lawsuit deposition of a physician to investigate a potential health care liability claim. In 2003, the Texas Legislature re-codified the law governing medical malpractice litigation and added a number of new provisions intended to make such claims more difficult to pursue. One of them, Section 74.351 of the Civil Practice & Remedies Code, precludes depositions in these cases until after the Plaintiff has satisfied his or her expert report requirement. Since the expert report requirement is not triggered until the lawsuit is filed, and since the whole point of Rule 202 depositions is that they take place pre-suit, no Rule 202 deposition of a physician will take place, in the real world, after the expert report has been submitted. Health care providers, therefore, have argued since 2003 that Rule 202 depositions are not available in claims against them. Of course, Chapter 74 applies to health care liability claims. Since there is no lawsuit when Rule 202 depositions are requested, some lawyers (us included) and some courts of appeals have argued that Chapter 74’s requirements simply do not apply in the Rule 202 context; they have not yet been triggered. Not so, according to the Supreme Court. Chapter 74 uses the term “cause of action” generally, writes Justice Brister. One’s cause of action arises before the lawsuit is filed, so no lawsuit need be filed for Chapter 74 to apply. All that is required is that the injury have taken place. In re: Jack Jordan, M.D., ___ S.W.3d ___ (Tex. 2008) (Cause No. 06-0369). Technorati Tags: litigation, Texas Supreme Court, law