Pejman Dargahi Kamran Dargahi And Yekk Construction Services, LLC D/B/A Lakeway Custom Homes and Renovation v. Dhiraj Handa and Ritu Handa

• Court: Court of Appeals of Texas
• Decided: November 8, 2017
• Docket: 03-17-00386-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-17-00386-CV

Pejman Dargahi; Kamran Dargahi; and Yekk Construction Services, LLC d/b/a Lakeway Custom Homes and Renovation, Appellants

v.

Dhiraj Handa and Ritu Handa, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT NO. D-1-GN-16-001279, HONORABLE AMY CLARK MEACHUM, JUDGE PRESIDING

MEMORANDUM OPINION

In this interlocutory appeal we must determine whether the trial court properly

denied a motion to compel arbitration. See Tex. Civ. Prac. & Rem. Code § 171.098 (providing for

interlocutory appeal of orders denying motions to compel arbitration). In their motion, appellants

Pejman Dargahi, Kamran Dargahi, and Yekk Construction Services, LLC d/b/a Lakeway Custom

Homes and Renovation (Yekk) cited an arbitration clause that appears in a construction contract

between Yekk and appellees Dhiraj Handa and Ritu Handa (the Handas) and contended that the

clause covers all of the claims asserted by the Handas in their lawsuit against appellants. In their

response to appellants’ motion to compel, the Handas asserted that appellants Pejman and Kamran1

may not enforce the arbitration agreement because they are not parties to it and that all appellants

1 Because appellants and brothers Pejman Dargahi and Kamran Dargahi share the same surname, we will refer to them by their first names for convenience and to avoid confusion. waived their right to enforce the clause by engaging in litigation. We will reverse the trial court’s

order denying appellants’ motion to compel arbitration and render judgment granting the motion

and staying the proceedings.

BACKGROUND

The record shows that the Handas entered into a contract with appellant Lakeway

Custom Homes and Renovation (Yekk’s d/b/a) for the construction of a house on appellees’ real

property. The contract price was $1.46 million. After a dispute arose over payments and the parties

attempted mediation, the Handas filed a lawsuit against Yekk, Pejman, and Kamran. Their lawsuit

alleged that Pejman, who signed the contract on behalf of Yekk, represented to them that he and

his brother, Kamran, were “partners” in the construction company.

The Handas’ petition further alleged that after they had paid appellants about 95%

of the contract price, appellants demanded further payments exceeding the contract price and ceased

further work on the house when the Handas refused to pay the additional amount. The lawsuit

alleged that appellants failed to pay subcontractors despite falsely representing that they had been

paid, fraudulently diverted trust-fund payments made by the Handas to appellants’ own use, and

negligently performed the construction work. Their lawsuit sought damages for claims of breach

of contract, breach of fiduciary duty, fraud, unjust enrichment, money had and received, theft,

negligence, and violations of the DTPA.

Several months after answering the Handas’ lawsuit and after some discovery had

been conducted, which will be outlined in more detail below, appellants filed a motion to compel

arbitration and stay the proceedings, citing the following clause in the parties’ contract:

2 If a dispute arises between Lakeway Custom Homes and Renovation and [the Handas], which cannot be resolved in good faith through informal discussions, the parties agree to submit the dispute to mediation before resorting to any litigation other than a suit to seek injunctive relief. If mediation is required, the parties shall jointly agree upon a mediator acceptable to both parties. If a dispute cannot be resolved through mediation, both parties agree to submit the dispute to binding arbitration supervised by the American Arbitration Association (AAA) . . . .

In response to the motion to compel, the Handas argued that (a) all three appellants—Yekk, Pejman,

and Kamran—waived arbitration by “substantially invoking the judicial process” and (b) Pejman

and Kamran were not parties to the arbitration agreement and, therefore, had no right to compel

arbitration. After a hearing, the trial court denied the motion to compel, which decision we review

on appeal.

DISCUSSION

In a single issue, appellants contend that the trial court erred in denying their motion

to compel arbitration and abate further trial-court proceedings because (a) the Handas’ claims fall

within the broad scope of the parties’ arbitration agreement, which covers not only Yekk but also

its agents and representatives, Pejman and Kamran; and (b) appellants did not waive their right to

enforce the agreement. We review a trial court’s denial of a motion to compel arbitration for abuse

of discretion, deferring to the trial court’s factual determinations if supported by the evidence, and

reviewing the court’s legal determinations de novo. SEB, Inc. v. Campbell, No. 03-10-00375-CV,

2011 WL 749292, at *2 (Tex. App.—Austin Mar. 2, 2011, no pet.) (mem. op.) (citing Trammell v.

Galaxy Ranch Sch., L.P., 246 S.W.3d 815, 820 (Tex. App.—Dallas 2008, no pet.)). Whether the

3 parties agreed to be bound to an arbitration agreement is a contract-formation question that we

review de novo. Oak Crest Manor Nursing Home, LLC v. Barba, No. 03-16-00514-CV, 2016 WL

7046844, at *2 (Tex. App.—Austin Dec. 1, 2016, no pet.) (mem. op.).

A party seeking to compel arbitration must establish the existence of a valid,

enforceable arbitration agreement and that the asserted claims fall within the agreement’s scope.

In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999), abrogated in part on other

grounds by In re Halliburton, 80 S.W.3d 566 (Tex. 2002). Once the existence of an arbitration

agreement has been established, a presumption attaches favoring arbitration. SEB, 2011 WL 749292,

at *2. The burden then shifts to the opposing party to present evidence that the agreement was

procured in an unconscionable manner or induced or procured by fraud or duress; that the other

party has waived its right to compel arbitration; or that the dispute falls outside the scope of the

agreement. In re Oakwood Mobile Homes, 987 S.W.2d at 573. In determining whether the original

claims fall within the scope of the arbitration agreement, we focus on the factual allegations of the

complaint, rather than the legal causes of action asserted. In re FirstMerit Bank, 52 S.W.3d 749, 754

(Tex. 2001). We consider whether the facts alleged are intertwined with the contract containing the

arbitration clause. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 271 (Tex. 1992). To be within the

scope of an arbitration provision, the allegations need only be factually intertwined with arbitrable

claims or otherwise touch upon the subject matter of the agreement containing the arbitration

provision. In re BP Am. Prod. Co., 97 S.W.3d 366, 370 (Tex. App.—Houston [14th Dist.] 2003,

orig. proceeding). Furthermore, Texas law favors the joint resolution of multiple claims to prevent

multiple determinations of the same matter. Jack B. Anglin, 842 S.W.2d at 271.

4 The Handas did not argue to the trial court that the dispute between the parties does

not fall within the broad scope of the arbitration provision or that the provision is not enforceable

generally. Rather, they argued that the individual defendants—Pejman and Kamran—may not

compel arbitration because they are not parties to the agreement to arbitrate (i.e., only Yekk is) and

that, in any event, all of the defendants waived their rights to enforce the provision by “substantially

invoking the judicial process” through their discovery and other pre-trial conduct for a period of nine

months. We will address each argument in turn.

The individual defendants

On the day of the hearing on appellants’ motion to compel, the Handas filed a

response to the motion in which they contended that Pejman and Kamran are not parties to the

arbitration agreement and, therefore, may not enforce it. See G.T. Leach Builders, LLC v. Sapphire

V.P., LP, 458 S.W.3d 502, 524 (Tex. 2015) (“As a general rule, an arbitration clause cannot be

invoked by a non-party to the arbitration contract.” (internal quotation marks omitted)). Specifically,

the Handas argued that the arbitration clause recites that disputes between “Lakeway Custom Homes

and Renovation [Yekk]” and the Handas must be arbitrated but that there is no mention of Pejman

or Kamran in the clause. In other words, the Handas contend that, while they agreed to arbitrate any

disputes between themselves and Yekk, they did not agree to arbitrate disputes between themselves

and Pejman or Kamran.

However, Texas courts recognize that when a principal is bound by the terms of a

valid arbitration agreement, its agents, employees, and representatives are also covered by the

agreement, even if those agents did not sign the agreement. SEB, 2011 WL 749292, at *4 (citing

5 In re Merrill Lynch Tr. Co., 123 S.W.3d 549, 555 (Tex. App.—San Antonio 2003, orig. proceeding);

McMillan v. Computer Translation Sys. & Support, Inc., 66 S.W.3d 477, 481 (Tex. App.—Dallas

2001, orig. proceeding)); see also In re Vesta Ins. Grp., Inc., 192 S.W.3d 759, 762 (Tex. 2006)

(per curiam) (“When contracting parties agree to arbitrate all disputes ‘under or with respect to’ a

contract . . . they generally intend to include disputes about their agents’ actions.”). “The scope of

an arbitration agreement may be extended to claims against agents of the principal bound by the

agreement when all the agents’ allegedly wrongful acts relate to their behavior as agents of the

principal, and those acts were within the scope of the claims covered by the arbitration provisions

for which the principal would be liable.” SEB, 2011 WL 749292, at *4 (citing McMillan, 66 S.W.3d

at 481); see also In re Vesta, 192 S.W.3d at 762. Parties to an arbitration agreement may not

evade arbitration through artful pleading, such as by naming individual agents of the party to the

arbitration clause and suing them in their individual capacity. In re Merrill Lynch Tr. Co. FSB,

235 S.W.3d 185, 188 (Tex. 2007).

There are good reasons for this doctrine. First, corporate entities may act only through

human agents. See Holloway v. Skinner, 898 S.W.2d 793, 795 (Tex. 1995). Any actionable conduct

on the part of Yekk was necessarily committed by one or more of its human agents. Here, while

appellant Yekk entered into an agreement with the Handas to construct a house and arbitrate any

disputes, the actions associated with the various aspects of that house building necessarily and

foreseeably fell on Yekk’s human agents. See In re Vesta, 192 S.W.3d at 762 (“If arbitration clauses

only apply to contractual signatories, then [the parties’] intent [to arbitrate] can only be accomplished

by having every officer and agent (and every affiliate and its officers and agents) either sign the

6 contract or be listed as a third-party beneficiary. This would not place such clauses on an equal

footing with all other parts of a corporate contract.”). Secondly, courts have recognized that extending

the scope of an arbitration provision to an agent of the party who agreed to arbitration furthers the

policy favoring arbitration and the parties’ intent to provide a single forum for resolving disputes

arising under an agreement. SEB, 2011 WL 749292, at *4; see McMillan, 66 S.W.3d at 481 (citing

Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1121 (3rd Cir. 1993)).

Here, despite the Handas’ contentions that neither brother established his “agency” for

Yekk, the evidence with respect to Pejman—in the form of the construction contract itself—establishes

that he was acting as a representative of Yekk: his signature appears above his printed name and the

printed name of “Lakeway Custom Homes and Renovation” (Yekk’s d/b/a).2 Accordingly, under

the rule outlined in In re Vesta and SEB, the Handas’ disputes against Pejman fall within the scope

of the arbitration clause and must be arbitrated, to the extent that their disputes against Yekk must

be. See In re Vesta, 192 S.W.3d at 762; SEB, 2011 WL 749292, at *4. We therefore need only

consider whether the scope of the clause also covers the Handas’ claims against Kamran, who did

not sign the contract and whom the Handas contend on appeal did not otherwise conclusively

establish his “agency” for Yekk.3

2 Additional evidence submitted by Pejman with his motion to compel arbitration further establishes his “agency” for Yekk: (a) his affidavit stating that he was a “member and manager” of Yekk at the time he signed the contract and (b) the LLC’s formation documents listing him as its initial member. See also Tex. Bus. Orgs. Code §§ 101.251, .254. 3 Besides his signature not appearing on the contract, Kamran’s affidavit does not aver that he is or was a member or officer of the LLC, nor does his name appear in the LLC’s formation documents. While the jurat of Kamran’s affidavit purports to indicate his agency, a jurat is not a part of an affidavit. See Coberly v. State, 640 S.W.2d 428, 431 (Tex. App.—Fort Worth 1982, pet. ref’d) (citing Alexander v. State, 57 S.W.2d 157 (Tex. 1933)).

7 Even though the Handas’ pleadings pointedly name Kamran as a defendant for all

their causes of action (e.g., fraud, violation of the Trust Fund Act, and negligence) except breach of

contract (naming only Yekk and Pejman as defendants for that cause), the substance of their

pleadings reveals that the Handas have, nonetheless, sued him based on the contract and that their

claims against him are “factually intertwined” with and fall within the scope of their claims against

Yekk. See Jack B. Anglin, 842 S.W.2d at 271. Their pleadings’ substance reveals that Kamran’s

potential liability arises from his conduct as a representative of Yekk: they allege that Kamran

and his brother (a) negligently constructed the home (a task they undertook due to the contract),

(b) misused funds (provided to them pursuant to the contract), and (c) failed to meet contractual

obligations and common-law and statutory duties (that flow from the existence of the contract). The

Handas have further pleaded that the Dargahi brothers are “trustees” of the progress payments

made to them, see Tex. Prop. Code § 162.002 (“A contractor, subcontractor, or owner or an officer,

director, or agent of a contractor, subcontractor, or owner, who receives trust funds or who has

control or direction of trust funds, is a trustee of the trust funds.”), and that they “are the ones

responsible for the construction work.” They have pleaded that Pejman represented to them that

Kamran is his “business partner.” Dhiraj Handa averred in his affidavit that he “hired Pejman

Dargahi and Kamran Darghai (‘the Builders’) for construction of a single family residence.” The

Handas’ pleadings name no other agents or representatives of Yekk except for Pejman and Kamran,

and all of their alleged interactions with the construction company occurred through the two brothers.

Based on the Handas’ own pleadings, there can be no reasonable contention that the Handas engaged

in interactions with Kamran and allegedly suffered thereby except in his capacity as a representative

of Yekk.

8 Despite the form of their pleadings, all of the Handas’ claims against both Pejman

and Kamran “arise[] from and must be determined by reference to the parties’ contract rather than

general obligations imposed by law.” In re U.S. Home Corp., 236 S.W.3d 761, 765 (Tex. 2007)

(citing In re Weekley Homes, L.P., 180 S.W.3d 127, 131–32 (Tex. 2005) and In re Vesta, 192 S.W.3d

at 762). While the Handas attempt to craft their claims against Kamran as arising solely under the

common law or specific statutes, their factual allegations indicate that his allegedly actionable

conduct occurred in the context of formation or performance of the construction contract, and

those non-contractual claims are “predicated on the existence of the construction contract.”

Courtland Bldg. Co., Inc. v. Jalal Family P’ship, Ltd., 403 S.W.3d 265, 273 (Tex. App.—Houston

[14th Dist.] 2012, no pet.). The Handa’s claims against the Dargahi brothers do not merely “relate

to” the construction contract but, rather, seek to “derive a direct benefit” from the contract by suing

thereunder. See G.T. Leach Builders, 458 S.W.3d at 527–28 (holding that under principles of

equitable estoppel, when party sues based on contract, it subjects itself to contract’s terms, including

arbitration clause, even against non-signatories). By their claims, the Handas are seeking direct

benefits under the contract while simultaneously seeking to avoid its arbitration provision. Under

the principles of equitable estoppel,4 a 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

4 The Handas contend on appeal that the Dargahis have waived the theories of equitable estoppel and agency because they did not raise them at the trial court. While the Dargahis did not assert the theories in their motion to compel arbitration, they did respond to the Handas’ arguments based on the theories at the hearing on the motion, and both parties identified relevant case law at the hearing, which we deem was sufficient to put the trial court on notice of the legal issues and theories before it. Accordingly, we conclude that the Dargahis did not waive their arguments about agency and equitable estoppel.

9 contains an arbitration provision, but, on the other hand, deny arbitration’s applicability because the

defendant is a non-signatory.” Id. at 527 (quoting Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 305

(Tex. 2006)).

By filing this lawsuit, which in substance is based on the construction contract, the

Handas subjected themselves to the contract’s terms, including its arbitration clause. See In re

FirstMerit Bank, 52 S.W.3d at 755. The Handas may not avoid the arbitration clause by claiming

that either of the Dargahi brothers are not “agents” of Yekk, when their own pleadings complain

of conduct by the brothers that occurred in connection with the formation or performance of the

construction contract. Moreover, if the Handas were required to arbitrate their disputes against

Yekk but litigate their disputes against one or both Dargahi brothers in court, it would thwart the

policy favoring arbitration and the parties’ intent to provide a single forum for resolving disputes

arising under their contract. See SEB, 2011 WL 749292, at *4. The Handas’ claims against both

Pejman and Kamran are in substance claims against Yekk, and the alleged actionable conduct of the

Dargahi brothers occurred in connection with their performance under the contract as representatives

of Yekk. Accordingly, to the extent that the Handas’ disputes with Yekk are subject to arbitration,

so are their disputes with Pejman and Kamran.

Waiver

The Handas’ response also argued that all appellants waived arbitration by

“substantially invoking” the judicial process. Courts will find that a party has waived a right to

enforce an arbitration agreement by taking part in litigation only if the party has substantially

invoked the judicial process to the opposing party’s detriment. Id. at *5 (citing In re Bank One, N.A.,

10 216 S.W.3d 825, 827 (Tex. 2007) (per curiam)); see also Perry Homes v. Cull, 258 S.W.3d 580, 587

(Tex. 2008). Whether a party has waived arbitration by litigation conduct is a question of law,

which we review de novo. Perry Homes, 258 S.W.3d at 587. A strong presumption against

waiver exists, and any doubts are resolved in favor of arbitration. See In re D. Wilson Constr. Co.,

196 S.W.3d 774, 783 (Tex. 2006). “Due to the strong presumption against waiver of arbitration,

this hurdle is a high one.” Perry Homes, 258 S.W.3d at 587.

Implying waiver from a party’s actions is appropriate only if the facts demonstrate

that the party seeking to enforce arbitration intended to waive its arbitration right. See EZ Pawn

Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996). While waiver may be implied from a party’s

conduct, that conduct must be unequivocal. Perry Homes, 258 S.W.3d at 593. Additionally, to

successfully prove waiver of an arbitration agreement, a party alleging waiver must demonstrate

prejudice resulting from the movant’s conduct, which refers to the “inherent unfairness in terms of

delay, expense, or damage to a party’s legal position that occurs when the party’s opponent forces

it to litigate an issue and later seeks to arbitrate that same issue.” Id. at 597 (quoting Republic Ins.

Co. v. PAICO Receivables, LLC, 383 F.3d 341, 346 (5th Cir. 2004)).

Waiver is decided on a case-by-case basis by assessing the totality of the

circumstances. Perry Homes, 258 S.W.3d at 591. Key factors include: (a) whether the movant was

plaintiff or defendant, (b) how long the movant delayed before seeking arbitration, (c) whether the

movant knew of the arbitration clause all along, (d) how much pretrial activity related to the merits

rather than arbitrability or jurisdiction, (e) how much time and expense has been incurred in

litigation, (f) whether the movant sought or opposed arbitration earlier in the case, (g) whether the

movant filed affirmative claims or dispositive motions, (h) what discovery would be unavailable

11 in arbitration, (i) whether activity in court would be duplicated in arbitration, (j) when the case was

to be tried, and (k) how much discovery has been conducted and who initiated it. Id. at 591–92;

see also Richmont Holdings, Inc. v. Superior Recharge Sys., L.L.C., 455 S.W.3d 573, 575 (Tex.

2014) (per curiam); Kennedy Hodges, L.L.P. v. Gobellan, 433 S.W.3d 542, 545 (Tex. 2014).

The circumstances here that are relevant to the above factors are the following:

• 9 months elapsed between the time that the Handas filed their lawsuit and the time appellants filed their motion to compel arbitration;

• appellants were the defendants below;

• the Handas served on appellants one set of requests for production (RFP);

• the Handas hired an inspector who prepared an “expert report” detailing his findings about the allegedly defective work performed by appellants;

• the Handas filed a motion to compel appellants to respond to their RFP, to which appellants ultimately responded;

• the parties entered into a Rule 11 agreement concerning the Handas’ motion to compel discovery, avoiding a hearing on the matter;

• the Handas filed a partial motion for summary judgment (on liability) six days before appellants filed their motion to compel arbitration;

• appellants knew of the arbitration clause at least as early as when they obtained new counsel, about three months before filing their motion to compel arbitration;

• appellants did not indicate any reason for their delay in moving to compel arbitration;

• appellants did not notice or take any depositions, and no depositions were taken by any party; and

• 6 days before they filed their motion to compel arbitration, appellants issued a subpoena to a third party (the Handas’ lender for the house-construction

12 project) seeking the production of records related to the loan or real property at issue.

We conclude that the factors weighing in favor of waiver—the unexplained 9-month

delay, appellants’ issuance of the subpoena to the Handas’ lender, the Handas’ filing of a motion

for partial summary judgment and the timing of appellants’ motion to compel arbitration shortly

thereafter, and the Handas’ conducting of minimal discovery—do not constitute substantial invocation

of the judicial process by appellants. Other than appellants’ subpoena of the Handas’ lender, the

rest of the fairly minimal discovery was conducted by the Handas, who benefitted from their own

invocation of the judicial process. See SEB, 2011 WL 749292, at *6 (noting that party who requests

and obtains discovery is not prejudiced by getting it and taking it to arbitration to same degree as

party who produces significant discovery outside stricter discovery limits of arbitration). These and

the other pre-trial costs incurred by the Handas were “largely self-inflicted,” see id. at *7, as appellants

did not seek discovery from them or file dispositive motions or other pleadings requiring responses.

The circumstances here are more similar to those in cases where courts have found

no waiver than to those in cases where courts have held that the movant’s litigation conduct has

surpassed the high hurdle required to overcome the presumption in favor of arbitration. Compare

Richmont Holdings, 455 S.W.3d at 576 (finding no waiver where movant plaintiff filed suit twice,

in different counties; filed motion to compel discovery and requesting discovery sanctions; and

provided unsatisfactory explanation for delay); In re Vesta, 192 S.W.3d at 763 (finding no waiver

where movant sent only standard requests for disclosure, noticed 4 depositions, sent one request for

production, and filed motion to compel 2 years after suit filed); EZ Pawn, 934 S.W.2d at 90 (finding

no waiver where movant participated in docket-control conference, sent requests for production

13 and interrogatories, noticed one deposition, entered into agreed order resetting trial date, and filed

motion to compel 10 months after suit filed); SEB, 2011 WL 749292, at *6 (finding no waiver where

movant defendant filed first and amended requests for disclosure, noticed 2 depositions that were

ultimately not taken, participated in depositions of plaintiff that were noticed by co-defendant, filed

no affirmative claims or dispositive motions, and filed motion to compel 45 months after lawsuit

filed), with Perry Homes, 258 S.W.3d at 596–97 (finding waiver where movant plaintiff conducted

extensive discovery about every aspect of case’s merits, initially filed 79-page objection to arbitration,

took ten depositions, filed five motions to compel and numerous requests for production, and moved

for arbitration 14 months after it filed suit); Tuscan Builders, LP v. 1437 SH6 L.L.C., 438 S.W.3d 717,

722–23 (Tex. App.—Houston [1st Dist.] 2014, pet. denied) (finding waiver where movant filed

third-party action by bringing its subcontractors into suit, joined in third-parties’ motions that

prolonged discovery period and postponed trial date, filed motion to compel 12 months after suit

filed and after written discovery had been completed and with trial setting less than one month

away, and obviously indirectly availed itself of its subcontractor-indemnitors’ discovery efforts);

PRSI Trading Co. LP v. Astra Oil Trading NV, No. 01-10-00517-CV, 2011 WL 3820817, at *3–4

(Tex. App.—Houston [1st Dist.] Aug. 25, 2011, pet. denied) (mem. op.) (finding waiver where

movant served requests for production and disclosure, served deposition notices, served letter

rogatory requiring third party from overseas to travel for deposition, filed motions to compel

discovery, served subpoenas and obtained document production from third parties, and filed

motion to compel 11 months after suit was filed and expressly conditioned on obtaining unfavorable

result on its motion for summary judgment regarding its affirmative defenses); In re Castro,

14 246 S.W.3d 756, 761–62 (Tex. App.—Eastland 2008, orig. proceeding) (finding waiver where

movant stated at hearing that it was waiving arbitration, requested extension to file dispositive

motions, served discovery requests on plaintiff and took its deposition, filed motion to compel

plaintiff to respond to movant’s requests for production and requests for disclosure, and filed

motion to compel arbitration 41 months after suit filed).

We conclude that the totality of circumstances does not evince an intention on the

part of appellants to waive their right to enforce the arbitration agreement. Additionally, the Handas

have not proven that they have suffered prejudice merely by attaching evidence of their legal

expenses to date, as the record shows that its pre-trial costs were largely self-inflicted, and they did

not present other evidence of prejudice. See In re Vesta, 192 S.W.3d at 763. Accordingly, we hold

that appellants did not waive their right to arbitrate their disputes with the Handas.

CONCLUSION

The trial court erred in denying appellants’ motion to compel arbitration and stay

the proceedings. Accordingly, we reverse the trial court’s order and render judgment granting the

motion to compel arbitration and stay the proceedings.

__________________________________________

David Puryear, Justice

Before Justices Puryear, Field, and Bourland

Reversed and Rendered

Filed: November 8, 2017