LJA Engineering & Surveying, Inc. v. Richfield Investment Corp.

211 S.W.3d 443, 2006 Tex. App. LEXIS 10624, 2006 WL 3626929
CourtCourt of Appeals of Texas
DecidedDecember 14, 2006
Docket09-06-348 CV, 09-06-398 CV
StatusPublished
Cited by8 cases

This text of 211 S.W.3d 443 (LJA Engineering & Surveying, Inc. v. Richfield Investment Corp.) 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
LJA Engineering & Surveying, Inc. v. Richfield Investment Corp., 211 S.W.3d 443, 2006 Tex. App. LEXIS 10624, 2006 WL 3626929 (Tex. Ct. App. 2006).

Opinions

OPINION

CHARLES KREGER, Justice.

LJA Engineering and Surveying, Inc. (“LJA”) seeks relief from the denial of its motion to compel arbitration and stay of litigation in this original proceeding. Real Party In Interest, Richfield Investment Corporation (“Richfield”), filed suit on January 30, 2006, against LJA for breach of contract, professional negligence, and negligent misrepresentation.1 LJA’s original answer contained a general denial and asserted affirmative defenses, one of which indicated that all of Richfield’s claims were subject to binding arbitration under both the Federal Arbitration Act (“FAA”) and the Texas A’bitration Act as the contracts upon which Richfield relies for relief contain enforceable arbitration clauses. See 9 U.S.C.A. §§ 1-16 (West 1999 & Supp. 2006); Tex. Civ. PRAC. & Rem.Code Ann. §§ 171.001-.098 (Vernon 2005). Subsequently, LJA filed a formal motion to compel arbitration with Richfield and a request for a stay of the litigation. Richfield filed a written response. Respondent denied LJA’s motion to compel. LJA’s two issues ask: “Is LJA Engineering and Surveying, Inc. without an adequate remedy at law?” and “Did Respondent abuse his discretion in denying LJA Engineering and Surveying, Inc.’s Motion to Compel Arbitration?” Answering both questions in the affirmative, we conditionally grant the petition for writ of mandamus. As we find the Federal Arbitration Act applicable to the arbitration agreements between LJA and Richfield, we dismiss the accompanying interlocutory appeal for lack of jurisdiction.

Richfield does not contest the fact that its claims against LJA are indeed subject to the arbitration clauses included within the contracts between the two when Rich-field hired LJA to do some engineering work related to Richfield’s ownership of certain real property for residential development. Richfield’s only response to LJA’s motion to compel is that LJA has waived its right to arbitrate by substantially invoking the judicial process, to Richfield’s detriment, prior to pursuing its arbitration claim. Richfield argues that waiver occurred when LJA “asserted affirmative claims, conducted extensive discovery, asked for a trial setting, and filed a case-ending motion to dismiss with prejudice.” With regard to waiver, however, Richfield fails to place the circumstances in their proper factual and legal contexts.

“There is a strong presumption against waiver under the FAA.” In re D. Wilson Const Co., 196 S.W.3d 774, 783 (Tex.2006)(citing In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 763 (Tex.2006)(per curiam)); In re Serv. Corp. Int'l, 85 S.W.3d 171, 174 (Tex.2002); In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 574 (Tex.1999); Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898 (Tex.1995). Whether a party’s conduct waives its contractual right to arbitrate is a question of law. In re Oakwood, 987 S.W.2d at 574; In re Nasr, 50 S.W.3d 23, 27 (Tex.App.Beaumont 2001, no pet.). ‘We should re[446]*446solve any doubts about waiver in favor of arbitration.” In re Oakwood, 987 S.W.2d at 574; In re Nasr, 50 S.W.3d at 27. Furthermore, a party’s right to arbitration is not waived by invoking the judicial process in the absence of a showing of prejudice by the opposing party. See In re Bruce Terminix Co., 988 S.W.2d 702, 704 (Tex.1998); Prudential Sec., 909 S.W.2d at 899.

Richfield strongly points to the fact that LJA filed a motion to dismiss Rich-field’s claims with prejudice because of an insufficient expert affidavit provided by Richfield. See Tex. Civ. Prac. & Rem.Code Ann. § 150.002 (Vernon Supp.2006). Specifically, Richfield argues: “This was a ease-dispositive motion: if the trial court had granted it, Richfield’s claims against LJA would have been dismissed forever. There would have been no arbitration if LJA had been successful. In filing this motion, LJA substantially invoked the judicial process.” It should be noted that section 150.002 provides a trial court with discretion as to whether a dismissal will be with or without prejudice. See id. § 150.002(d). More importantly, however, is the fact that in In re Service Corporation International, the Texas Supreme Court found no waiver by defendants seeking arbitration who moved to dismiss claims of certain class-action plaintiffs, reasoning “[rjelators’ efforts in moving to dismiss and staying discovery were to avoid litigation, not participate in it.” In re Serv. Corp. Int% 85 S.W.3d at 175. We find this rationale applicable here.

The record indicates that LJA’s motion to dismiss was filed May 9, 2006, less than four months after Richfield filed suit. Respondent denied this motion on June 30, 2006. Richfield contends that it was prejudiced by having to prepare and file a response to the motion to dismiss, asserting “[t]his work will not benefit Richfield to any extent in any arbitration proceeding.” Yet, later in its brief, Richfield points to the fact, if permitted to arbitrate, LJA stated that it would file an identical motion to dismiss with the arbitrator pursuant to the provisions contained in section 150.002, which permit such a motion in an arbitration proceeding. See id. § 150.002(a).

As we noted in Nasr:

The type of “prejudice” the courts seem to focus on is when a party uses the judicial process to gain access to information that would not have been discoverable in arbitration. The rule here is that “when only a minimal amount of discovery has been conducted, which may also be useful for the purpose of arbitration, the court should not ordinarily infer waiver based upon prejudice.”

In re Nasr, 50 S.W.3d at 27 (quoting In re Bruce Terminix, 988 S.W.2d at 704) (other citations omitted). Richfield has not indicated how its response to LJA’s motion to dismiss would be of no use to it if a similar motion to dismiss was filed during arbitration. Thus, prejudice is not shown.

Richfield further attempts to raise prejudice here by arguing “[i]f LJA had timely pursued its arbitration demand without first attempting to obtain a ruling on the merits ..., Richfield would not have incurred this expense and delay.” Richfield fails to appreciate the fact that as the party to the arbitration agreements who is making the claim, it was Richfield’s burden to initiate the arbitration process, not LJA’s. See In re Nasr, 50 S.W.3d at 27; In re Oakwood, 987 S.W.2d at 574 (Absent an agreement to the contrary, by agreeing to arbitrate and abide by American Arbitration Association rules, the parties place the burden of initiating arbitration on the [447]*447claimant). Therefore, as to LJA’s motion to dismiss under section 150.002, we find no prejudice to Richfield has been established.

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211 S.W.3d 443, 2006 Tex. App. LEXIS 10624, 2006 WL 3626929, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lja-engineering-surveying-inc-v-richfield-investment-corp-texapp-2006.