TEXAS SUPREME COURT FINDS NO WAIVER OF RIGHT TO ARBITRATE IN THIS CASE
In Re Fleetwood Homes of Texas, LP, No. 06-0943 (Tex. June 20, 2008)(per curiam)
(arbitration case, motion to compel arbitration, right to arbitrate not waived) (link to 4- page opinion in
Disposition: Finding that Gulf has failed to show that Fleetwood waived its
contractual right to arbitrate, the Texas Supreme Court conditionally grants
Fleetwood’s petition for writ of mandamus and directs the trial court to compel
IN RE FLEETWOOD HOMES OF TEXAS, L.P. AND FLEETWOOD ENTERPRISES, INC.; from Walker
County; 10th district (10-06-00312-CV, ___ SW3d ___, 10-25-06)
Pursuant t Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court
conditionally grants the petition for writ of mandamus. Per Curiam Opinion
Links: Other arbitration law decisions of the Texas Supreme Court | Houston Arbitration Case Law
Other Tex. 2008 Mandamus Decisions | Other 2008 Texas Supreme Court Opinions |
Other per curiam opinions from the Texas Supreme Court
Related Terms: contract of adhesion | one-sided | unconscionable | contrary to public policy |
boilerplate contract | consideration | mutuality of obligation | validity of and enforceability of arbitration
clauses | enforcing forum selection clause |
In Re Fleetwood Homes of Texas, LP, 257 S.W.3d 692 (Tex. 2008) (orig.
PER CURIAM [Note: links and identification of key terms - in blue - are not part of the
Parties that “conduct full discovery, file motions going to the merits, and seek arbitration only on
the eve of trial” waive any contractual right to arbitration. In re Vesta Ins. Group, Inc., 192 S.W.3d
759, 764 (Tex. 2006). The relators here did none of those, instead merely discussing a potential
trial setting and sending a set of written discovery the day before moving to compel arbitration.
The trial court held the relators waived arbitration, and a divided court of appeals denied
mandamus relief. ___ S.W.3d ___. We disagree, and thus conditionally grant it. See In re
Weekley, 180 S.W.3d 127, 130 (Tex. 2005) (“Mandamus relief is proper to enforce arbitration
agreements governed by the FAA.”).
Fleetwood Enterprises, Inc., manufactures mobile homes. In January 2005 it signed a dealer
agreement with Gulf Regional Services, Inc., an owner and developer of mobile home parks in
southeast Texas that also sells and leases mobile homes. The agreement included an
arbitration clause covering “any dispute, controversy or claim among the Parties.” In August
2005 Fleetwood cancelled the agreement on the ground that Gulf was planning to sell or use
mobile homes at a location other than that specified in the dealer agreement.
After Gulf filed suit in October 2005, Fleetwood filed an answer demanding arbitration, but did
not actually move to compel arbitration until July 2006. Gulf opposed the motion on two grounds:
express waiver and unconscionability.
“[A] party waives an arbitration clause by substantially invoking the judicial process to the other
party’s detriment or prejudice.” Perry Homes v. Cull, ___ S.W.3d ___, ___ (Tex. 2007). Waiver
is a legal question for the court based on the totality of the circumstances, and asks whether a
party has substantially invoked the judicial process to an opponent’s detriment, the latter term
meaning inherent unfairness caused by “a party’s attempt to have it both ways by switching
between litigation and arbitration to its own advantage.” Id. at __.
Gulf argues that Fleetwood expressly waived arbitration, pointing to several emails from
Fleetwood’s counsel regarding a proposed trial setting, culminating in the following:
I have reviewed the Setting Request and would ask that we try to get a setting in March . . . .
Given the documentation I received last week and the work we need to do as a result of those
documents, Fleetwood is not going to be in a position to try this case in December. If you are
agreeable to this, we could sign an agreed Setting Request, otherwise, I will have to oppose the
request after you submit it and request a later setting.
We need not decide whether Gulf is correct that express waiver is governed by different rules
than those that govern implied waiver, as we disagree that this rises to the level of an express
waiver. Nothing in this communication expressly waives arbitration or revokes the arbitration
demand Fleetwood included in every answer it filed.
Instead, the question here is whether Fleetwood impliedly waived arbitration by failing to pursue
its arbitration demand for eight months while discussing a trial setting and allowing limited
discovery. We have already answered that question “No.” In EZ Pawn Corp. v. Mancias, we held
a party had not waived arbitration by filing an answer, discussing a docket-control order,
sending written discovery, noticing a deposition, and agreeing to postpone a trial setting. 934 S.
W.2d 87, 90 (Tex. 1996). Gulf points out correctly that the movant in EZ Pawn had not yet
“discovered” the arbitration clause until after these actions had already taken place. Id. at 89.
But our opinion was based on the nonmovant’s failure to show any prejudice, id. at 90, a
requirement we recently reaffirmed. See Perry Homes, __ S.W.3d at __.
As in EZ Pawn, the evidence here is legally insufficient to support a finding of prejudice. Gulf
does not explain how it possibly could have been prejudiced by exchanging emails about a trial
setting. Moreover, while these communications are a factor to be considered in the totality-of-
the-circumstances, they are not the only factors. See id. at ___. Here, Fleetwood took no
depositions, although it noticed one deposition before cancelling it. It served one set of
written discovery the day before it moved to compel arbitration. It filed no dispositive motions,
nor did it wait until the eve of trial to move to compel. Taken together, these actions are not
enough to overcome the presumption against waiver. See In re Vesta Ins. Group, Inc., 192 S.W.
3d 759, 763 (Tex. 2006); In re Bruce Terminix, 988 S.W.2d 702, 704 (Tex. 1998).
Gulf also argues the arbitration clause is substantively unconscionable, citing two reasons.
First, it asserts that arbitration limits its right to discovery. But limited discovery is one of
arbitration’s “most distinctive features.” Perry Homes, ___ S.W.3d at ___; see also Preston v.
Ferrer, ___ U.S. ___, ___ (2008) (“A prime objective of an agreement to arbitrate is to achieve
streamlined proceedings and expeditious results.”). Gulf’s argument that “streamlined”
discovery makes arbitration unconscionable would nullify almost all arbitration agreements. We
hold that arbitration’s limits on discovery for both parties does not make it unconscionable. See
In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006) (“The test for substantive
unconscionability is whether, given the parties’ general commercial background and the
commercial needs of the particular trade or case, the clause involved is so one-sided that it is
unconscionable under the circumstances existing when the parties made the contract.” (internal
quotation marks omitted)).
Second, Gulf asserts the agreement here is unconscionable because it allows the prevailing
party to recover attorney’s fees. It is true that absent a contractual agreement like this, Texas
law allows attorney’s fees only for a prevailing plaintiff. See Tex. Civ. Prac. & Rem. Code §
38.001–.002. But allowing both parties to recover fees hardly makes an agreement “one-
sided”; such agreements, common in commercial contexts, surely make them less so.
Because Gulf has failed to show that Fleetwood waived its contractual right to arbitration, we
conditionally grant Fleetwood’s petition for writ of mandamus and direct the trial court to compel
arbitration. We are confident that the trial court will promptly comply, and our writ will issue only if
it does not.
OPINION DELIVERED: June 20, 2008
 Gulf deposed three Fleetwood representatives, but does not explain how it was prejudiced in being
allowed to do so. See Perry Homes, ___ S.W.3d at ___ (“[A] party who requests lots of discovery is not
prejudiced by getting it and taking it to arbitration in the same way [as] a party who produces lots of
discovery . . . .”) (emphasis in original).