Per Group, LP v. Dava Oncology, LP, No. 05-08-01582-CV (Tex.App.- Dallas Aug. 19, 2009)
File: 081582F - From documents transmitted: 08/19/2009
Reverse and Remand; Opinion Filed August 19, 2009.
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-08-01582-CV
............................
PER GROUP, L.P., MEDICAL MEDIA HOLDINGS, LLC,
AND TIBA ONCOLOGY, L.P., Appellants
V.
DAVA ONCOLOGY, L.P. AND VINAY JAIN, M.D., Appellees
In Re PER GROUP, L.P., MEDICAL MEDIA HOLDINGS, LLC,
AND TIBA ONCOLOGY, L.P.
.............................................................
Appeal and Original Proceeding from the 193rd Judicial District Court
Dallas County, Texas
Trial Court Cause No. 08-12671-L
.............................................................
OPINION
Before Justices Morris, Richter, and Lang-Miers
Opinion By Justice Lang-Miers
This is an interlocutory appeal and petition for writ of
mandamus from the trial court's orders denying a motion to compel
arbitration and enjoining appellants from arbitrating certain claims
against appellees.
We consolidated the two proceedings. See In re Valero Energy Corp.,
968 S.W.2d 916, 916-17 (Tex. 1998) (orig. proceeding) (per
curiam). We reverse the trial court's order denying appellants' motion
to compel arbitration, vacate the temporary injunction, and remand to
the trial court for further proceedings.
We dismiss the petition for writ of mandamus.
Background
Vinay Jain, M.D. founded Physicians' Education Resource, L.P.
and Cancer Information Group, L.P. In July 2005, Medical Media Holdings,
LLC acquired the assets of Dr. Jain's businesses. In connection with the
acquisitions, Dr. Jain became a member of Medical Media Holdings. See
Footnote 1 He also executed an Employment Agreement with Medical Media
Holdings and its wholly-owned subsidiary PER Media, now known as PER
Group, L.P. The Employment Agreement contained noncompete restrictive
covenants.
In December 2006, Dr. Jain founded Dava Oncology. Appellants
believed Dr. Jain's association with Dava Oncology could be mutually
beneficial and agreed to a limited “carve-out” of the restrictive
covenants to allow Dr. Jain to pursue certain business endeavors through
Dava Oncology. The parties accomplished this by terminating Dr. Jain's
employment relationship with appellants and hiring him as a consultant.
They memorialized this new relationship in the Consulting & Separation
Agreement (the Consulting Agreement). The Consulting Agreement
terminated the Employment Agreement and contained a noncompete
restrictive covenant and the “carve-out” to that covenant. About three
months after executing the Consulting Agreement, the parties agreed to
terminate the consulting relationship. They executed a Termination
Agreement, which terminated the Consulting Agreement.
After Dr. Jain's relationship with appellants was terminated, a
dispute arose over whether Dr. Jain had violated the terms of the
noncompete restrictive covenant in the Consulting Agreement. Dr. Jain
and Dava Oncology filed a lawsuit against Medical Media Holdings, PER
Group, and Tiba Oncology, L.P., a subsidiary of Medical Media Holdings,
seeking a declaratory judgment that appellees are not in breach of the
Consulting Agreement, but that Medical Media Holdings, PER Group, and
Tiba Oncology are. Four days after the lawsuit was filed, Medical Media
Holdings filed a demand for arbitration against Dr. Jain. Dr. Jain and
Dava Oncology moved to stay the arbitration. The trial court granted
appellees' motion to stay arbitration and enjoined Medical Media
Holdings from arbitrating any disputes with Dr. Jain. A few days later,
Medical Media Holdings and PER Group filed a second demand for
arbitration against Dr. Jain and his “Business Entities I-X” seeking
relief under all the various agreements executed by the parties.
Although Medical Media Holdings did not seek relief against Dr. Jain
individually in the second demand for arbitration, it expressly reserved
its right to do so. Appellants also filed a motion to compel arbitration
of Dr. Jain's and Dava Oncology's claims alleged in the lawsuit.
Appellees again filed a motion to stay arbitration. The trial judge
denied appellants' motion to compel arbitration and granted the motion
to stay arbitration in part. The court denied the motion to stay
arbitration with respect to PER Group's claims against Dr. Jain arising
out of the Employment Agreement and also stayed the litigation pending
arbitration of those claims.
Appellants filed both an interlocutory appeal and a petition for
writ of mandamus from the trial court's orders denying their motion to
compel arbitration and enjoining them from arbitrating certain claims.
Jurisdiction
As a threshold matter, we address appellees' contention that we
lack jurisdiction to consider the interlocutory appeal and the petition
for writ of mandamus. We conclude that we have jurisdiction over both
proceedings.
A. Interlocutory appeal
Notice of an accelerated appeal must be filed within twenty days
after the judgment or order is signed unless the time for filing the
notice is extended. Tex. Rs. App. P. 26.1(b), 26.3. Appellees contend
that we do not have jurisdiction over the interlocutory appeal because
the notice of appeal from the trial court's order was untimely. We
disagree. Appellants filed a motion with the trial court
pursuant to civil procedure rule 306a arguing that they did not receive
notice and did not acquire actual knowledge of the October 21, 2008
order enjoining Medical Media Holdings from arbitrating claims against
Dr. Jain until December 2, 2008. See Tex. R. Civ. P. 306a(5). The trial
court held a hearing and found that appellants first received notice or
acquired actual knowledge of the October 21, 2008 order on December 2,
2008. See Tex. R. Civ. P. 306a(4). On December 16, 2008, appellants
filed a notice of accelerated appeal from the trial court's October 21,
2008 order. As a result, although the notice was filed more than twenty
days after the date the order was signed, the notice of accelerated
appeal was filed within twenty days of the date that appellants first
received notice or acquired actual knowledge of the October order. See
id.
Additionally, interlocutory appeal is the appropriate vehicle
for appealing the denial of a motion to compel arbitration under the
Texas Act. Tex. Civ. Prac. & Rem. Code Ann. § 171.098(a); TMI, Inc. v.
Brooks, 225 S.W.3d 783, 790 (Tex. App.-Houston [14th Dist.] 2007, pet.
denied). Consequently, we conclude that the notice of appeal was timely
and that we have jurisdiction over the interlocutory appeal.
B. Petition for writ of mandamus
Appellees also contend that we do not have jurisdiction over the
petition for writ of mandamus because the Consulting Agreement does not
contain an arbitration agreement. But whether or not a contract contains
an arbitration agreement does not impact our jurisdiction. Indeed, one
of the elements the party moving to compel arbitration must prove is
that the parties agreed to arbitrate. See Tex. Civ. Prac. & Rem. Code
Ann. § 171.021(a) (Vernon 2005); J.M. Davidson, Inc. v. Webster, 128
S.W.3d 223, 227 (Tex. 2003). And if the party opposing arbitration
denies the existence of an agreement to arbitrate, the question is
determined by the trial court as a matter of law. Tex. Civ. Prac. & Rem.
Code Ann. § 171.021(b) (Vernon 2005); J.M. Davidson, Inc., 128 S.W.3d at
227. If the trial court decides that question adversely to the party
moving to compel arbitration, the appropriate vehicle for challenging
the denial under the Federal Arbitration Act is a petition for writ of
mandamus. In re Poly-America, L.P., 262 S.W.3d 337, 345 (Tex. 2008)
(orig. proceeding).
Appellants moved to compel arbitration and to stay litigation
pursuant to the Federal Arbitration Act and, alternatively, the Texas
General Arbitration Act.
Under the Texas Act, a party may challenge an order denying
arbitration through interlocutory appeal. See Tex. Civ.
Prac. & Rem. Code Ann. § 171.098(a)(1) (Vernon 2005). In contrast, under
the Federal Act, a party may seek relief from denial of arbitration
solely through mandamus. In re Poly-America, L.P., 262 S.W.3d at 345.
Appellants pursue both appeal and mandamus in this Court.
The Consulting Agreement does not state whether the Federal Act
or the Texas Act applies to this suit. The Federal Act generally governs
arbitration provisions in contracts involving interstate commerce. See 9
U.S.C. § 2 (2009); see also In re Morgan Stanley & Co., Inc., No.
07-0665, 2009 WL 1901635, at *1 (Tex. Jul. 3, 2009). “Interstate
commerce” includes all contracts “relating to” interstate commerce. In
re FirstMerit Bank, N.A., 52 S.W.3d 749, 754 (Tex. 2001) (orig.
proceeding). Appellees argue that the Consulting Agreement does not
evidence a transaction involving interstate commerce. We disagree.
The Consulting Agreement was executed by a Texas resident (Dr.
Jain), a Delaware corporation (Medical Media Holdings), and a Delaware
limited partnership (PER Group); notice under the contract was to be
given to Dr. Jain in Texas and to PER Group and Medical Media Holdings
in Rhode Island; and arbitration was required to take place in Chicago,
Illinois. Additionally, the record establishes that PER Group and Dr.
Jain provided services pursuant to the Consulting Agreement to “clients
throughout the United States” and contemplated “holding meetings on both
a nationwide and worldwide scope.” We conclude that the Consulting
Agreement involves interstate commerce. See In re L & L Kempwood
Assocs., L.P., 9 S.W.3d 125, 127 (Tex. 1999) (orig. proceeding) (per
curiam).
The Federal Act, however, does not preempt the Texas Act simply
because the contract involves interstate commerce. In re D. Wilson
Constr. Co., 196 S.W.3d 774, 778-79 (Tex. 2006) (orig. proceeding). The
Consulting Agreement states that it “is governed by, and will be
enforced under and construed in accordance with, the internal laws of
the State of Texas . . . .” The Texas Supreme Court has interpreted
similar language as invoking both federal and state law. Id. And when
both acts apply, the Federal Act will preempt the Texas Act only if the
Texas Act is inconsistent with the Federal Act or affects the
enforceability of the contract. Id. Because the parties do not assert
that the Texas Act or state law would subvert the enforcement of the
Consulting Agreement, we conclude that we have jurisdiction under both
laws. And, because the Federal Act does not preempt the Texas Act, we
will apply the Texas Act to our analysis. Id.
Issues Presented
Appellants assert that the trial court abused its discretion by
(i) refusing to compel Dr. Jain and Dava Oncology to arbitrate their
claims; (ii) precluding Medical Media Holdings from asserting any claims
in arbitration against Dr. Jain and precluding PER Group from asserting
any claims in arbitration against Dr. Jain other than those arising
under the Employment Agreement; and (iii) enjoining Medical Media
Holdings from asserting any claims in arbitration against Dr. Jain.
Standard of Review
As we have noted, a party attempting to compel arbitration must
establish that the parties agreed to arbitrate and that the dispute
falls within the scope of the arbitration agreement. See Tex. Civ. Prac.
& Rem. Code Ann. § 171.021(a); J.M. Davidson, Inc., 128 S.W.3d at 227.
If the party opposing arbitration denies the existence of an agreement
to arbitrate, the question is determined by the court as a matter of
law. Tex. Civ. Prac. & Rem. Code Ann. § 171.021(b); J.M. Davidson, Inc.,
128 S.W.3d at 227. We review the trial court's legal determinations de
novo and its factual determinations under a “no evidence” standard.
Trammel v. Galaxy Ranch School, L.P. (In re Trammel), 246 S.W.3d 815,
820 (Tex. App.-Dallas 2008, no pet.). In reviewing the trial court's
factual determinations, we must credit favorable evidence if a
reasonable fact-finder could and disregard contrary evidence unless a
reasonable fact-finder could not. Id. (citing Kroger Tex. Ltd. v.
Suberu, 216 S.W.3d 788, 793 (Tex. 2006) and City of Keller v. Wilson,
168 S.W.3d 802, 807 (Tex. 2005)). However, when the facts relevant to
the arbitration issue are not disputed, we are presented only with
issues of law and we review the trial court's order de novo. Trammell,
246 S.W.3d at 820. When parties agree to arbitrate and the agreement
encompasses the claims asserted, the trial court must compel arbitration
and stay litigation pending arbitration. See Tex. Civ. Prac. & Rem. Code
Ann. § 171.021(b); Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 305 (Tex.
2006).
Arbitration Agreement
In their first and second issues, appellants argue that the
trial court erred by refusing to compel Dr. Jain and Dava Oncology to
arbitrate their claims and by precluding appellants from arbitrating
certain claims.
A. Is there a valid arbitration agreement?
Appellants argue that Dr. Jain agreed to arbitrate all disputes
arising out of their various agreements. In their motion to stay
arbitration, Dr. Jain and Dava Oncology argued that the Consulting
Agreement did not contain an arbitration agreement. The trial court
apparently agreed with appellees and denied appellants' motion to compel
arbitration, stating “the only document that I concluded that Dr. Jain
had signed and agreed to the Arbitration Agreement was the Employment
Agreement, as opposed to some of these acquisition and consulting.”
The Consulting Agreement was executed by Medical Media Holdings, PER
Group, and Dr. Jain. It states that the parties will “continue to be
bound” by the arbitration provision found in section 15 of the
Employment Agreement:
CONSULTING & SEPARATION AGREEMENT
. . . .
1. Termination of Employment Agreement. The parties hereby agree that
all of the Company's and Dr. Jain's respective obligations under the
Employment Agreement shall terminate as of the Effective Date; provided,
however, that the Company and Dr. Jain shall, as applicable, continue to
be bound by Sections 11, 12, 13 and 15 of the Employment Agreement. . .
.
. . . .
12. Miscellaneous.
. . . .
g. Entire Agreement. This Agreement, together with the LLC
Agreement and Sections 11, 12, 13 and 15 of the Employment Agreement,
set forth the entire understanding among the parties and supersede any
prior agreements or understandings, express or implied, pertaining to
the terms of Dr. Jain's employment and consulting relationships with the
[PER Group] and the [PER Group] Affiliates and the termination thereof.
. . . .
Section 15 of the Employment Agreement states: 15.Arbitration. Any
controversy, dispute or claim arising out of or in connection with or
relating to this Agreement, or the breach, termination or validity
hereof (any such controversy, dispute or claim being referred to as a
“Dispute”) shall be finally settled by arbitration conducted
expeditiously in accordance with the Commercial Arbitration rules then
in force (the “AAA Rules”) of the American Arbitration Association (the
“AAA”) . . . .
When a contract incorporates by reference a provision from
another document, that provision becomes a part of the contract into
which it was incorporated. See In re Bank One, N.A., 216 S.W.3d 825, 826
(Tex. 2007) (orig. proceeding) (per curiam); In re D. Wilson Constr.
Co., 196 S.W.3d at 781; Meridien Hotels, Inc. v. LHO Fin. P'ship I,
L.P., 255 S.W.3d 807, 827 (Tex. App.-Dallas 2008, no pet.). In the
Consulting Agreement, Dr. Jain agreed to “continue to be bound” by, and
that “the entire agreement” included, the arbitration provision in the
Employment Agreement.
Appellees argue on appeal that “PER Group and Dr. Jain merely
recalled a separate agreement to Section 15 of the distinct Employment
Agreement. By this, they certainly did not 'incorporate' Section 15 into
the Consulting Agreement, much less agree to the arbitrability of
Consulting Agreement claims.” They also argue that, even if the
Consulting Agreement incorporated an arbitration provision, that
provision applied only to disputes arising under the Employment
Agreement, not “the separate Consulting Agreement.” We cannot agree.
By referring to the arbitration provision of a separate document and
agreeing to “continue to be bound” by it in the new agreement, and
including the arbitration provision in the “entire agreement” of the
parties, the arbitration provision became a part of the Consulting
Agreement. See In re Bank One, 216 S.W.3d at 826; Meridien Hotels,
Inc., 255 S.W.3d at 827.
We conclude that the trial court erred when it concluded that
the Consulting Agreement did not contain an agreement to arbitrate.
B. Scope of the arbitration agreement
Having determined that the arbitration agreement is valid, we
now consider whether that agreement encompasses the claims asserted
below.
Appellants argue that the arbitration agreement requires that
the scope of the agreement is to be determined by the arbitrator. They
correctly note that the arbitration agreement states that arbitration
will be conducted pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. They further argue that Rule R-7 of
those rules states that the “arbitrator shall have the power to rule on
his or her own jurisdiction, including any objection with respect to the
existence, scope or validity of the arbitration agreement.” Although the
motion to compel refers to the AAA rules as an attached exhibit to the
motion, the exhibit number does not contain those rules and there is
nothing to indicate that the rules were offered into evidence below. As
a result, we conclude that the trial court was required to determine the
scope of the arbitration agreement. See J.M. Davidson, 128 S.W.3d at
227. We review de novo a trial court's determination of the scope of an
arbitration agreement. See Forest Oil Corp. v. McAllen, 268 S.W.3d 51,
56 (Tex. 2008).
1. Appellees claims against appellants
In determining the scope of the arbitration agreement, we focus
on the petition's factual allegations rather than the legal causes of
action asserted. In re FirstMerit Bank, N.A., 52 S.W.3d at 754 (decided
under Federal Act).
The Consulting Agreement requires arbitration of “[a]ny
controversy, dispute or claim arising out of or in connection with or
relating to this Agreement, or the breach, termination or validity
hereof . . . .” Citing the noncompete provision of the Consulting
Agreement, Dr. Jain and Dava Oncology's first amended petition asserts
[Appellants] expressly and affirmatively agreed that Dr. Jain could
start, own, and operate any business involved in the research,
development, investigation, treatment, marketing or sale of
pharmaceutical drugs -- including, specifically, cancer drugs. . . .
After the Consulting Agreement was executed, Dr. Jain became involved
with Dava Oncology, L.P., a clinical research organization . . .
dedicated to helping pharmaceutical companies with vital research and
development of cancer-fighting drugs.
[Appellants] have launched and continued strategic hostile attacks,
frivolously and illogically claiming that, notwithstanding the plain
terms of the Consulting Agreement that expressly allow him to
participate in the research, development, and/or marketing of cancer
drugs and to otherwise work with pharmaceutical companies - he is
somehow not allowed to participate in the research, development, and/or
marketing of cancer drugs or to otherwise work with pharmaceutical
companies.
[Appellants] had actual knowledge of Dr. Jain's actions and Dava's
business for many months prior to making any complaint. . . .
Defendants' actions in violation of the Consulting Agreement are
unfortunately delaying Dava's ability to assist pharmaceutical companies
in the development of cancer drugs . . . [Appellants] must be stopped so
that Dava can continue in its vital and noble mission - unburdened by
[Appellants]' anticompetitive breaches and activity.
Dr. Jain does not dispute and, in fact, agrees that these
allegations arise out of or relate to the Consulting Agreement.
Consequently, we conclude that Dr. Jain, as a signatory to the
Consulting Agreement containing the arbitration clause, may be
compelled to arbitrate his claims against appellants.
We further conclude that appellants may compel Dava Oncology to
arbitrate its claims against them. The Texas Supreme Court has held
that a nonsignatory that sues based on a contract subjects itself to the
contract's terms, including an agreement to arbitrate. In re Labatt Food
Serv., L.P., 279 S.W.3d 640, 643-44 (Tex. 2009) (orig. proceeding)
(applying state procedural and substantive law to arbitration agreement
under Federal Act). When a nonsignatory seeks to derive a direct benefit
from a contract containing an arbitration clause, the nonsignatory is
bound by the arbitration provision. See id. (citations omitted); In re
Vesta Ins. Group, Inc., 192 S.W.3d 759, 761-62 (Tex. 2006) (orig.
proceeding) (per curiam). The Texas Supreme Court has also said that
tortious interference claims between a signatory to an arbitration
agreement and agents or affiliates of a signatory arise more out of the
contract than general law. In re Vesta Ins. Group, Inc., 192 S.W.3d at
762.
Dava Oncology, a nonsignatory to the Consulting Agreement,
alleges that appellants' “actions in violation of the Consulting
Agreement are unfortunately delaying Dava's ability to assist
pharmaceutical companies in the development of cancer drugs.” It alleged
that appellants' violation of the Consulting Agreement has prevented it
from pursuing its business endeavors, and it contends that appellants
have misinterpreted the carve-out of the noncompete clause in the
Consulting Agreement resulting in a delay in its ability to assist
pharmaceutical companies in the development of cancer drugs. Although
Dava Oncology's claim is asserted as one for tortious interference, we
conclude that Dava Oncology is bound to the arbitration agreement
because it seeks to derive a direct benefit from its interpretation of
the noncompete restrictive covenant in the Consulting Agreement. In re
Labatt Food Serv., L.P., 279 S.W.3d at 643-44; In re Vesta Ins. Group,
Inc., 192 S.W.3d at 761-62. As a result, we further conclude that
appellants may compel Dava Oncology to arbitrate its claims against
them. See In re Labatt Food Serv., L.P., 279 S.W.3d at 643-44; In re
Kellogg Brown & Root, 166 S.W.3d 732, 739 (Tex. 2005) (orig.
proceeding).
Next, Dr. Jain contends that his and Dava Oncology's claims
against Tiba Oncology are not subject to arbitration because Tiba
Oncology is not a signatory to the Consulting Agreement. However, when a
signatory's claims against a nonsignatory make reference to or rely on
the terms of a written agreement, the signatory's claims arise out of or
relate directly to the written agreement and arbitration is appropriate.
See Meyer, 211 S.W.3d at 305. The Texas Supreme Court has stated the
claimant cannot “have it both ways”: it cannot, on the one hand, seek to
hold the non-signatory liable pursuant to duties imposed by the
agreement, which contains an arbitration provision, but, on the other
hand, deny arbitration's applicability because the defendant is a
non-signatory.
Id. at 306 (quoting Grigson v. Creative Artists Agency, L.L.C., 210 F.3d
524, 527 (5th Cir.), cert. denied, 531 U.S. 1013 (2000)). The court
noted that Grigson is “a substantially correct statement of Texas law.”
Id. In this case, Dr. Jain, a signatory, sought to hold Tiba
Oncology, a nonsignatory, bound by his interpretation of the noncompete
restrictive covenant in the Consulting Agreement. We conclude,
therefore, that Dr. Jain and Dava Oncology cannot “have it both ways”
and that Tiba Oncology may compel Dr. Jain and Dava Oncology to
arbitrate their claims against it arising out of the Consulting
Agreement.
2. Medical Media Holdings' and PER Group's claims against
appellees
Appellants filed demands for arbitration in conjunction with
their motions to compel arbitration. After the trial court enjoined
Medical Media Holdings from arbitrating any disputes against Dr. Jain
arising out of any agreement with him, Medical Media Holdings filed a
revised demand for arbitration in which it reserved its right to compel
arbitration of claims against Dr. Jain. In the second amended demand for
arbitration, Medical Media Holdings and PER Group sought to arbitrate
claims arising out of the Consulting Agreement, Employment Agreement,
and other agreements relating to the acquisition of Dr. Jain's
businesses and the noncompete restrictive covenants. These claims sought
to determine the same issues raised in appellees' lawsuit: whether the
noncompete restrictive covenants have been violated. For the reasons
stated above, we conclude that the trial court erred by precluding
Medical Media Holdings and PER Group from arbitrating these claims.
We sustain appellants' first and second issues.
3. Temporary injunction prohibiting arbitration
In their third issue, appellants argue that the trial court
erred by enjoining Medical Media Holdings from asserting any claims
against Dr. Jain in arbitration. Based on our disposition of issues one
and two, we agree that the trial court erred.
We sustain appellants' third issue.
C. Did appellants waive their right to arbitration?
Appellees contend that appellants waived their right to
compel arbitration by substantially invoking the judicial process and by
requesting a stay of litigation pending arbitration of PER Group's
claims against Dr. Jain. We disagree.
1.Substantial invocation of judicial process
Whether a party has waived its right to arbitrate is a question
of law that we review de novo based on the “totality of the
circumstances.” Perry Homes v. Cull, 258 S.W.3d 580, 591 (Tex. 2008),
cert. denied, 129 S. Ct. 952 (2009); Trammell, 246 S.W.3d at 820. Public
policy favors arbitration and there is a strong presumption against
finding that a party has waived its right to arbitration. Perry Homes,
258 S.W.3d at 589-90. As a result, the burden to prove waiver is a heavy
one. Id.; EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996) (per
curiam). Any doubts regarding waiver are resolved in favor of
arbitration. In re Bruce Terminex Co., 988 S.W.2d 702, 705 (Tex. 1998)
(orig. proceeding) (per curiam).
Factors we consider under the totality-of-the-circumstances
test include whether the movant was the plaintiff or the defendant, how
long the movant waited before seeking arbitration, how much pretrial
activity related to the merits rather than arbitrability or
jurisdiction, how much time and expense has been incurred in litigation,
whether the movant sought or opposed arbitration earlier in the case,
whether the movant filed affirmative claims or dispositive motions,
whether discovery would be useful in arbitration, and whether the movant
sought judgment on the merits. Perry Homes, 258 S.W.3d at 591-92; In re
Vesta Ins. Group, Inc., 192 S.W.3d at 763.
Appellants/movants are the defendants below. They filed a demand
for arbitration four days after appellees filed their lawsuit. And they
filed a motion to compel arbitration and stay proceedings pending
arbitration before their answer was due. When they filed their answer,
they filed a plea in abatement and conditional answer subject to their
motion to compel arbitration. And they did not assert affirmative
defenses or counterclaims, but, instead, reserved their right to do so.
The hearings in the trial court related to the arbitrability of the
claims, not the claims' merits. And the record does not contain any
indication that the parties engaged in pretrial discovery, other than a
single reference to a motion to quash a deposition filed by movants.
Based on the totality of the circumstances, we conclude that
appellants did not substantially invoke the trial process and,
therefore, did not waive their right to arbitrate appellees' claims.
2. Request for stay of litigation
Appellees further contend that appellants waived their right to
compel arbitration by requesting, and receiving, a stay of litigation
pending arbitration of PER Group's claims against Dr. Jain. We disagree.
Appellants reserved their rights to arbitrate all claims arising
out of all agreements in their motions to compel arbitration and demand
for arbitration. As a result, we conclude that appellants did not waive
their right to compel arbitration of their claims against appellees by
seeking and obtaining a stay of litigation pending arbitration of PER
Group's claims against Dr. Jain arising solely out of the Employment
Agreement. To the extent PER Group's claims against Dr. Jain arising out
of the Employment Agreement are subject to a pending arbitration
proceeding, we conclude that the trial court did not err by refusing to
compel arbitration of those claims. See Zuffa, LLC v. HDNet MMA 2008
LLC, 262 S.W.3d 446, 451 (Tex. App.-Dallas 2008, orig. proceeding).
Conclusion
We sustain appellants' issues. We reverse the trial court's
order denying appellants' motion to compel arbitration, vacate the trial
court's order enjoining appellants from arbitrating appellees' claims,
and remand to the trial court for further proceedings. We dismiss the
petition for writ of mandamus.
ELIZABETH LANG-MIERS
JUSTICE
-------------------
Footnote 1 Members shared in the governance and profits of the company.