Penn Virginia Oil & Gas GP, LLC and Penn Virginia Oil & Gas L.P. v. Alfredo De La Garza, Individually and as Next Friend for I. D. L. G. and K. D. L. G., Minors, and John Paul Adame, Individually and A/N/F for C.A.A., J.P.A., Jr., and J.N.A.

Court of Appeals of Texas·Decided December 28, 2015·No. 01-15-00867-CV·Published

Opinion

ACCEPTED 01-15-00867-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 12/28/2015 9:11:19 PM CHRISTOPHER PRINE CLERK

NO. 01-15-00867-CV

FILED IN FIRST COURT OF APPEALS 1st COURT OF APPEALS HOUSTON, TEXAS HOUSTON, TEXAS 12/28/2015 9:11:19 PM CHRISTOPHER A. PRINE

Clerk

PENN VIRGINIA OIL & GAS GP, L.L.C. & PENN VIRGINIA OIL AND GAS, L.P., Appellants.

FILED IN V. 1st COURT OF APPEALS HOUSTON, TEXAS ALFREDO 12/28/2015 DE LA GARZA, INDIVIDUALLY AND AS NEXT FRIEND FOR 9:11:19 XXXXXX PM CHRISTOPHER XX XX XXXXX AND XXXXXXXX XX XX XXXXX, MINORS A. PRINE Clerk &

JOHN PAUL ADAME, INDIVIDUALLY AND AS NEXT FRIEND OF XXXXXXXXX XXXXXX XXXXX, XXXX XXXX XXXXX XXX, AND XXXX XXXXXXXX XXXXX, MINORS, Appellees.

On Appeal from the 215th Judicial District Court, Harris County, Texas Cause No. 2014-42519

APPELLEES’ RESPONSE TO APPELLANTS’ MOTION TO STAY UNDERLYING TRIAL COURT LITIGATION

TO THE HONORABLE JUSTICES OF THE FIRST COURT OF APPEALS:

NOW COMES Appellee John Paul Adame, individually and as next friend for

XXXXXXXXX XXXXXX XXXXX, XXXX XXXX XXXXX XXX, AND XXXX

XXXXXXXX XXXXX, minors, and files this Appellees’ Response to Appellants, Penn Virginia

Oil & Gas GP, LLC and Penn Virginia Oil & Gas L.P.’s Motion to Stay Underlying Trial Court

Litigation, and in support thereof would respectfully show the Court the following:

Introduction & Summary of Response

1. The trial court signed an order denying appellants’ Motion to Compel Arbitration and to

Abate as to claims filed by Appellee John Paul Adame, individually and as next friend for his

minor children, on September 11, 2015. A copy of this order is attached as Exhibit “A”.

On October 12, 2015, the trial court signed an order denying appellants’ Motion for

Reconsideration of the trial court’s order denying appellants’ Motion to Compel Arbitration.

A copy of this order is attached as Exhibit “B”. This arbitration ruling is now pending

before the Court.

2. The trial court granted appellants’ motion to compel arbitration and to abate as to Intervenor

Ernesto Gonzalez, Jr. in the underlying lawsuit. This order was signed on November 24,

2015 and provided that Mr. Gonzalez’s claims would be abated. A copy of this order is

attached as Exhibit “C”. Intervenor Ernesto Gonzalez, Jr. has filed a Motion for

Reconsideration of Order Granting Motion to Compel Arbitration. This motion is set for

hearing on January 15, 2016. A copy of this motion is attached as Exhibit “D”.

3. On December 8, 2015, appellants filed a motion to abate the De La Garza and Adame

appellees’ claims pending the Gonzalez arbitration.

4. The underlying litigation should not be stayed as to the De La Garza or Adame appellees.

The general rule provides that a stay will only be ordered when arbitration or a motion for

arbitration is granted by the trial court. While there are circumstances where parallel

litigation will be stayed as to a party not subject to arbitration, appellants have failed to meet

their burden to mandate a stay in this case. Appellants have failed to show that continuing the

underlying litigation as to the De La Garza and Adame appellees would in any way waste

judicial time or resources, create potentially damaging consequences to the Gonzalez arbitration or interfere with the Court of Appeal’s jurisdiction or the subject matter of this

appeal.

Argument and Authorities

5. Tex. Civ. Prac. & Rem. Code § 171.021(c) provides that “An order compelling arbitration

must include a stay of proceeding subject to Section 171.025.” Tex. Civ. Prac. & Rem. Code

§ 171.025 states that :

(a) The court shall stay a proceeding that involves an issue subject to arbitration if an order for arbitration or an application for that order is made under this subchapter. (b) The stay applies only to the issue subject to arbitration if that issue is severable from the remainder of the proceeding. Tex. Civ. Prac. & Rem. Code Ann. § 171.025.

6. 9 U.S.C. § 3 provides that:

If any suit or proceeding be brought in any of the courts of the United States upon any

issue referable to arbitration under an agreement in writing for such arbitration, the court

in which such suit is pending, upon being satisfied that the issue involved in such suit or

proceeding is referable to arbitration under such an agreement, shall on application of one

of the parties stay the trial of the action until such arbitration has been had in accordance

with the terms of the agreement, providing the applicant for the stay is not in default in

proceeding with such arbitration.” 9 U.S.C.A. § 3.

In some circumstances, the courts have allowed for stays of underlying parallel litigation

brought by parties not subject to an arbitration agreement. In the case of In re Ghanem, 203

S.W.3d 896, 899 (Tex. App. 2006), the appellate court conditionally granted a writ of

mandamus as to a trial court’s order refusing to completely stay parallel litigation brought by

nonsignatory to an arbitration agreement. The Beaumont court focused on the potential harm

to the arbitration by allowing nonsignatories to arbitration agreements to proceed with litigation and noted the policy favoring arbitration. The court also looked to whether

proceeding with litigation would destroy the signatory’s right to a meaningful arbitration,

citing Waste Mgmt., Inc. v. Residuos Industriales Multiquim, S.A. de C.V., 372 F.3d 339, 343

(5th Cir.2004) (citing Adams v. Ga. Gulf Corp., 237 F.3d 538, 541 (5th Cir.2001)). The

court held that, “Additionally, the record indicates the three-factor test for invoking

the section 3 mandatory stay discussed in Waste Management, Inc. has been met, viz: (1)

similarity of operative facts; (2) inseparability of claims; and (3) effect of the litigation on the

arbitration. See Waste Mgmt., Inc., 372 F.3d at 344–45; 9 U.S.C.A. § 3.”

7. Appellants have not shown inseparability of claims between the Adame claims and Ernesto

Gonzalez, Jr.’s claims.

8. Appellants have failed to show any “potentially damaging consequences” to the Gonzalez

arbitration in allowing the De La Garza and Adame litigation to continue as is required in In

re Ghanem.

9. Appellants argue that it would be difficult for the parties to mediate meaningfully and

frustrate the resolution process absent a ruling from the Court of Appeals as to whether the

De La Garza and Adame litigation is subject to arbitration. There is no showing that

mediation would be more difficult or would “frustrate the resolution process” in this case.

Conclusion

10. Appellants have failed to meet their burden of proving that allowing the De La Garza and

Adame litigation to proceed would in any way affect, harm or adversely impact Ernesto

Gonzalez, Jr.’s arbitration. Appellants have failed to show any basis for a stay of the De La

Garza and Adame litigation.

Prayer

Wherefore, premises considered, appellees, John Paul Adame, XXXXXXXXX

XXXXXX XXXXX, XXXX XXXX XXXXX XXX, AND XXXX XXXXXXXX XXXXX,

minors, pray that this Court deny appellants’ motion to stay underlying trial court litigation and

for such other and further relief to which they may be entitled, whether in law or in equity.

Respectfully submitted,

THE GUTIERREZ LAW FIRM, INC.

By: /S/ J. JAVIER GUTIERREZ J. Javier Gutierrez State Bar No. 24045997 javier@gutierrezlawfirm.com Ana Laura Gutierrez State Bar No. 24069843 ana@gutierrezlawfirm.com 700 East Third Street Alice, Texas 78332 Telephone: (361) 664-7377 Facsimile: (361) 664-7245

Attorneys for Appellees John Paul Adame, Individually and as Next Friend of XXXXXXXXX XXXXXX XXXXX, XXXX XXXX XXXXX XXX and XXXX XXXXXXXX XXXXX

CERTIFICATE OF SERVICE

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