Cooper Industries, LLC v. Pepsi-Cola Metropolitan Bottling Co.

475 S.W.3d 436, 2015 Tex. App. LEXIS 8882, 2015 WL 5025812
CourtCourt of Appeals of Texas
DecidedAugust 25, 2015
DocketNO. 14-14-00562-CV
StatusPublished
Cited by31 cases

This text of 475 S.W.3d 436 (Cooper Industries, LLC v. Pepsi-Cola Metropolitan Bottling Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cooper Industries, LLC v. Pepsi-Cola Metropolitan Bottling Co., 475 S.W.3d 436, 2015 Tex. App. LEXIS 8882, 2015 WL 5025812 (Tex. Ct. App. 2015).

Opinion

OPINION

J. Brett Busby, Justice

This is an interlocutory appeal from an order denying a motion to compel arbitration. Appellee Pepsi-Cola Metropolitan Bottling Co. (“Metro”) sued appellants Cooper Industries, LLC, Cooper Industries, Ltd., Cooper US, Inc., and Cooper Industries, PLC (collectively, “Cooper”), seeking to enforce two agreements. Ap-pellee Whitman Insurance Company Ltd. later joined-the suit as a plaintiff. Cooper filed a motion .to compel arbitration pursuant to the agreements. The trial court denied the motion after a hearing without making, findings of fact or conclusions of law.

On appeal, Cooper argues the trial court erred because the agreements require arbitration and appellees did not show that Cooper waived its right to arbitrate. We agree that the trial court erred in denying Cooper’s motion to compel arbitration. We therefore reverse the trial court’s order, render judgment ordering arbitration of appellees’ claims against the Cooper defendants who are parties to this appeal,1 and remand this case to the trial court for further proceedings consistent with this opinion, including the grant of an appropriate stay.

[440]*440Background

This case concerns indemnification obligations regarding asbestos claims. Appel-lees’ second amended petition and Cooper’s motion to compel arbitration provide the pertinent background of-the parties’ dispute.2 We begin by discussing the various transactions that resulted in the current alignment of the parties because they are relevant to our disposition of the case.

IC Industries — Metro’s predecessor— acquired Abex Corporation and Pneumo Corporation, two companies that manufactured products containing asbestos. IC Industries sold its stock in both companies to PA Holdings under a Stock Purchase' Agreement' (“SPA”). Under the SPA, IC Industries agreed to indemnify PA Holdings against certain claims filed between August 29, 1988 and August 29, 1998, and PA Holdings agreed to indemnify IC Industries and its affiliates against claims filed after August 29, 1998. As explained below, a Cooper entity later guaranteed an indemnity of PA Holdings’ successor. The SPA provides that if any controversy or claim arising out of or relating to the agreement.has not been resolved within twenty-one days after notice is given, either party may initiate arbitration to resolve the dispute. ' -

PA Holdings subsequently became Pneumo Abex, LLC. IC Industries became appellee Metro through a merger and name change. Whitman’s predecessor was a captive insurance carrier affiliated with IC Industries, and Whitman is now a subsidiary of Metro.

Pneumo Abex eventually sold one of its product lines to Wagner Electronic Corporation through an Asset Purchase Agreement (“APA”). Under the APA, Wagner agreed to indemnify and hold Pneumo Abex harmless for any obligations Pneumo Abex owed to Metro and Whitman. Like the SPA, the APA contains an arbitration provision. In section 13.2(c), the APA provides that any dispute arising in connection with the, agreement and not settled by the parties within sixty days after notice is given “shall be finally settled by arbitration.. .The provision states that “[a]ny party may request a court to provide interim relief without waiving the agreement to arbitrate.”

Wagner’s then-parent company, Cooper Industries, LLC, guaranteed Wagner’s indemnification of Pneumo Abex under a Mutual Guaranty' agreement' signed in 1994, Section 6 of the Mutual Guaranty provides that any claim of dispute “arising in connection with” this agreement shall be resolved in accordance with sections 13.2(b) and (c) of the APA,' thus explicitly incorporating the arbitration provision of the APA.

Pneumo Abex filed a lawsuit in New York against various Cooper defendants, contending that Cooper Indhstries, LLC was mismanaging its assets and thus endangering the Mutual Guaranty. Metro and Whitman were not parties to that suit. In 2011, the Cooper defendants and Pneu-mo Abex reached a settlement .agreement, which the judge in the New York lawsuit approved. Under the settlement agreement, PCT International Holdings, Inc.— then-owner of Pneumo Abex — transferred its ownership interest to a trust. Cooper Industries’ indemnities were released and, in exchange, the trust received a cash payment and notes to be paid over 'five years.

In response to the 2011 settlement agreement, Metro filed this .lawsuit alleg[441]*441ing various causes of action, among them tortious interference with contractual relations, conspiracy to commit tortious interference, fraudulent transfers, and conspiracy to commit fraudulent transfers.3 The suit named several defendants, including the Cooper appellants.4 Whitman later joined the suit as a plaintiff, claiming that as successor to an affiliate of IC Industries, it is entitled to indemnification from Pneumo Abex under the SPA. Metro and Whitman alleged that the settlement agreement was the end result of collusive efforts by the defendants that left Pneumo Abex and the trust with a finite amount of assets. In particular,'Metro and Whitman alleged that the defendants “conspired to buy their way out of uncapped guaranty obligations” and made Pneumo Abex’s performance of its indemnity obligations to Metro and Whitman more “burdensome, difficult, and expensive, if not impossible.”

Citing the Federal Arbitration Act, Cooper filed a motion to compel arbitration under various agreements, including the SPA and the Mutual Guaranty. After an unreported hearing, the court denied the motion. This interlocutory appeal followed. See 9 U.S.C. § 16(a)(1)(B) (West 2009); Tex. Civ. Prac. & Rem.Code Ann. § 51.016 (West 2015).

Analysis

On appeal, Cooper argues that the trial court erred in denying the motion to compel arbitration because (1) Metro’s and Whitman’s claims are Subject to arbitration under the SPA and the Mutual Guaranty, and (2) Cooper has not waived the right to arbitrate as to either Metro or Whitman. We address each issue in turn.

When the Federal Arbitration Act governs an arbitration clause, a Texas trial court conducts a summary proceeding under Texas procedural rules, to. make.the gateway determination of arbitrability, and it applies Texas substantive law regarding whether a litigant must arbitrate.5 See In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex.2005) (orig. proceeding). Because the; trial court did not sign written findings or conclusions, we-may uphold the court’s order on any theory supported by the evidence, and we imply, all factual find-[442]*442togs supported by the record that are nee-' essary to the order. In re W.E.R., 669. S.W.2d 716, 717 (Tex.1984) (per curiam); Rush v. Barrios, 56 S.W,3d 88, 96 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). We defer to:the trial court’s factual determinations that are supported by sufficient evidence, but we review the trial court’s legal determinations de novo. In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex.2009).

I. Cooper established that, appellees’ claims fall within the scope of valid arbitration agreements that Cooper can invoke.

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Cite This Page — Counsel Stack

Bluebook (online)
475 S.W.3d 436, 2015 Tex. App. LEXIS 8882, 2015 WL 5025812, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cooper-industries-llc-v-pepsi-cola-metropolitan-bottling-co-texapp-2015.