In re Vantage Drilling Int'l

555 S.W.3d 629
CourtCourt of Appeals of Texas
DecidedJune 5, 2018
DocketNO. 01-17-00592-CV
StatusPublished
Cited by2 cases

This text of 555 S.W.3d 629 (In re Vantage Drilling Int'l) 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
In re Vantage Drilling Int'l, 555 S.W.3d 629 (Tex. Ct. App. 2018).

Opinions

Russell Lloyd, Justice *632Vantage Drilling International and its affiliates (collectively, "Vantage") petition for a writ of mandamus directing the trial court1 to vacate its order compelling arbitration of all claims currently asserted between them and Martinez Partners, LLP. Vantage asserts that the trial court clearly abused its discretion in compelling arbitration because (1) Martinez Partners waived arbitration and (2) a final appeal would be inadequate to review the alleged waiver. Because Vantage has not shown the inadequacy of a final appeal, we deny the petition.

Background

Martinez Partners, a law firm, represented Vantage in a Foreign Corrupt Practices Act investigation and related matters, but the engagement was terminated, and Vantage hired a new law firm. Vantage did not pay some of Martinez Partners' legal fees, so Martinez Partners sued Vantage on a sworn account. The parties' engagement agreements contain arbitration clauses.

Martinez Partners filed its suit in Harris County district court. Vantage answered and counterclaimed for breach of contract, breach of fiduciary duty, and money had and received. Vantage's counterclaims were partially based on an allegation of improper mark-ups. Martinez Partners had engaged a document-review vendor to assist in the representation. According to Vantage, Martinez Partners paid the vendor at fixed hourly rates for the vendor's attorney document reviewers and then passed those costs through to Vantage at higher hourly rates without disclosing to Vantage that the attorney document reviewers were not Martinez Partners employees.

The parties litigated for eleven months, including extensive document discovery into the lawsuit's merits. Nine months into the lawsuit, during a hearing on a discovery motion, Vantage's allegation that Martinez Partners failed to disclose that the document reviewers were not Martinez Partners employees was referred to. The trial court commented to Martinez Partners' counsel, "that will be real interesting at trial because in that case, I think you may have a problem.... That's going to be interesting if y'all try it, an interesting issue." Vantage soon thereafter filed a motion for partial summary judgment on its cause of action for breach of fiduciary duty.

In month eleven of the lawsuit, Martinez Partners filed a motion to compel arbitration. Vantage responded, arguing that Martinez Partners had waived arbitration either explicitly, in comments its attorney made to the trial court, or impliedly, by substantially invoking the litigation process instead of seeking to initiate arbitration. The engagement letters signed by both parties establish that the Federal Arbitration Act ("FAA") governs the arbitration clauses.

The trial court ordered the parties to arbitrate all claims asserted in the lawsuit and stayed the lawsuit pending the arbitration's outcome. Vantage petitioned for mandamus, and Martinez Partners responded.

Final Appeal is Adequate for Reviewing Vantage's Waiver Argument

Vantage contends that an appeal after a final judgment is inadequate to review its *633assertion that Martinez Partners waived arbitration. The dissent agrees with the position that arbitration was waived. However, we do not address the waiver argument because Vantage has an adequate remedy by appeal.

I. Standard of Review and Applicable Law

A. Mandamus standard and adequacy of final appeal

A petitioner must meet both prongs of a two-part test in order to be entitled to mandamus: "To be entitled to mandamus, a petitioner must show that the trial court clearly abused its discretion and that the relator has no adequate remedy by appeal." In re Gulf Expl., LLC , 289 S.W.3d 836, 842 (Tex. 2009) (orig. proceeding) (internal quotation omitted). Mandamus issues "to preserve important substantive and procedural rights from impairment or loss, [and] allow[s] the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments." See id. at 843 (first alteration in original; second added).

"In the context of orders compelling arbitration, even if a petitioner can meet the first requirement, mandamus is generally unavailable because it can rarely meet the second." Id. at 842. "There is no definitive list of when an appeal will be 'adequate,' as it depends on a careful balance of the case-specific benefits and detriments of delaying or interrupting a particular proceeding." Id. ; see also In re McAllen Med. Ctr., Inc. , 275 S.W.3d 458, 464 (Tex. 2008) (orig. proceeding) ("Whether a clear abuse of discretion can be adequately remedied by appeal depends on a careful analysis of costs and benefits of interlocutory review"). Neither the FAA nor the Texas General Arbitration Act ("TGAA") encourage immediate review of orders compelling arbitration. As a direct result, "any balancing must tilt strongly against mandamus review." In re Gulf Expl. , 289 S.W.3d at 842. "[T]he balance will generally tilt toward reviewing orders compelling arbitration only on final appeal." Id. at 843.

The required balancing tilts heavily against granting mandamus even if requiring the parties to wait for a final appeal results in wasted time and money: "Of course, if an order compelling arbitration is wrong, the parties may waste time and money in arbitration. But standing alone, delay and expense generally do not render a final appeal inadequate." Id. at 842.

If an order compelling arbitration is found to have been error, the attorneys' fees spent on the arbitration are generally recoverable because arbitration generally involves prosecuting contract claims: "[A]rbitration clauses are usually contractual and cover contractual claims.

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Bluebook (online)
555 S.W.3d 629, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-vantage-drilling-intl-texapp-2018.