Petrohawk Energy Corporation v. Overwatch Enterprises, LLC

CourtCourt of Appeals of Texas
DecidedMay 31, 2016
Docket04-16-00282-CV
StatusPublished

This text of Petrohawk Energy Corporation v. Overwatch Enterprises, LLC (Petrohawk Energy Corporation v. Overwatch Enterprises, LLC) 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
Petrohawk Energy Corporation v. Overwatch Enterprises, LLC, (Tex. Ct. App. 2016).

Opinion

ACCEPTED 04-16-00282-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 5/31/2016 7:06:35 PM KEITH HOTTLE CLERK

04-16-00282-CV ________________________________________________________________________ IN THE COURT OF APPEALS FILED IN FOURTH JUDICIAL DISTRICT 4th COURT OF APPEALS SAN ANTONIO, TEXAS SAN ANTONIO, TEXAS 5/31/2016 7:06:35 PM ________________________________________________________________________ KEITH E. HOTTLE Clerk Petrohawk Energy Corporation,

Defendant-Appellant,

v.

Overwatch Enterprises, LLC,

Plaintiff–Appellee. ________________________________________________________________________

ON INTERLOCUTORY APPEAL FROM THE 36th JUDICIAL DISTRICT COURT, MCMULLEN COUNTY, TEXAS, CAUSE NO: M-14-0051-CV-A ________________________________________________________________________

APPELLANT’S EMERGENCY MOTION FOR STAY PENDING APPELLATE REVIEW OF ORDER DENYING MOTION TO COMPEL ARBITRATION ________________________________________________________________________

This is an accelerated interlocutory appeal of an order denying a motion to compel

arbitration.1 Appellant Petrohawk Energy Corporation (“Petrohawk”) filed the motion to

compel arbitration on March 4, 2016. 2 On April 27, 2016, the motion to compel

1 Petrohawk submits in support of this Motion a sworn Appendix containing documents relevant to the Court’s determination of the issue presented here. A copy of the trial court’s order denying the motion to compel arbitration is provided in the Appendix at Tab A. The timely-filed notice of appeal, dated May 3, 2016, is attached at Tab B. 2 The motion, without its exhibits, is attached at Appendix Tab C. The Clerk’s Record and Reporter’s Record became available to Petrohawk on May 26, 2016, though as delivered they are incomplete in some respects. The Clerk’s Record in its present form is cited herein as CR ___ and the Reporter’s record as RR ___. The motion to compel arbitration, entitled Defendants’ Motion to Compel Arbitration and Stay Proceedings, appears with its exhibits at CR 111. arbitration was heard before the Honorable Joel B. Johnson, visiting judge. At the

hearing, counsel for Appellee Overwatch Enterprises, LLC (“Overwatch”) explicitly

argued that Judge Johnson should deny Petrohawk’s motion because Petrohawk would be

allowed to appeal:

If they want to check your decision, they have a right to go and check that decision on appeal . . . If they want to check your decision, they can. We can’t. We get sent off to arbitration, somebody in Houston, one man, will get to make a decision on this.3

Judge Johnson denied the motion to compel arbitration, on grounds of waiver, at the

conclusion of the hearing.4 Trial is set for July 18, 2016, just seven weeks away.5 After

attempting to confer with Overwatch’s counsel—who had stated to the court at the

hearing that he was “not necessarily opposed to a continuation of the jury trial,”6 but

ultimately did not agree to any continuation—Petrohawk on May 6, 2016, filed a motion

asking the trial court to stay proceedings and continue the trial while Petrohawk pursued

this appeal with respect to arbitration.7 That motion to stay and continue was denied by

Judge Patrick Flanigan in an order signed May 25, 2016, which stated that “if

Interlocutory Appeal is permitted in the case, the Court of Appeals may consider

Defendant’s Motion for Stay.”8

3 Transcript, Appendix Tab D at 33:13–14, 34:3–5. 4 See id. at 34:14–19. 5 CR 107. 6 See Transcript, Appendix Tab D at 36:12–14. Counsel may have been referring to a continuance for a fixed time, as opposed to a continuance for the duration of the appeal. 7 See Appendix Tab E. 8 See Appendix Tab F. Petrohawk does not appeal this order of May 25, 2016.

2 Texas Rule of Appellate Procedure 29.3 allows this Court to “make any temporary

orders necessary to preserve the parties’ rights” while an interlocutory appeal is under

consideration. Petrohawk’s contractual right to arbitration will be irreparably damaged if

this case proceeds to trial in a court rather than adjudication by the American Arbitration

Association as called for in the contract at the center of Overwatch’s claims.9 Petrohawk

accordingly files this Motion requesting a stay of all trial court proceedings pursuant to

Rule 29.3.10

I. Background

Plaintiff Overwatch filed this case in McMullen County, Texas on October 20,

2014. Overwatch’s live pleading is the “Second Amended Original Petition” (herein

“SAP”) filed August 24, 2015. 11 The SAP revolves around a 2012 Master Service

Contract (“2012 MSC”)12 that Appellee Overwatch defines as “the Contract” at the outset

of the SAP:

OTG Services, LLC (hereafter “OTG”) had an ongoing contractual relationship with Defendant, PETROHAWK ENERGY CORPORATION, for the provision of security and gate guard services at various oil and gas well locations in South Texas. On or about February 9, 2012, Defendant and OTG Services, LLC entered into a “Master Service Contract” (sometimes referenced herein as “the Contract.”), which was assigned to Plaintiff [Overwatch].

9 See Part I, infra. 10 To be clear, Petrohawk has not appealed the denial of its May 6, 2016 motion for stay and continuance pending appeal in the trial court. That motion was directed to the trial court’s continuing ability to make orders related to the case. See Tex. R. App. P. 29.5. This Motion, before this Court, is directed to this Court’s discretion. 11 See Appendix Tab G; CR 69. 12 See Appendix Tab H (as filed with business records affidavit).

3 SAP (Tab G) ¶ 4. Overwatch seeks to recover amounts that it claims to be owed in

connection with the security and gate guard services it provided under the 2012 MSC.

Overwatch alleges that Petrohawk breached the 2012 MSC and “fail[ed] to perform” it,

and specifically that Petrohawk failed to pay for services under it, delayed payments, and

otherwise failed in its contractual duties. See Id. ¶ 17. Overwatch also alleges

misrepresentations (concerning outstanding invoices under the 2012 MSC) and breach of

an alleged oral agreement (which Plaintiff asserts established a “custom, practice, and

course of dealing” under the 2012 MSC). See id. at ¶¶ 5–6, 10. These allegations

concern and arise out of Overwatch’s provision of security and gate guard services as set

forth in the 2012 MSC. Prior to the SAP, filed August 24, 2015, Overwatch’s Petitions

did not rely specifically on the 2012 MSC, but instead asserted a vague “ongoing

contractual relationship.”13

Throughout 2015, the parties conducted some preliminary discovery, taking five

depositions and serving a small number of discovery requests in both directions.14 As of

August 25, 2015—the day after the SAP was filed—Overwatch stated in a discovery

response that “[f]ormal discovery has just begun.”15

Shortly thereafter, the case entered into a period of inactivity—no discovery, no

motions, no contested hearings—that continued for six months until Petrohawk moved to

compel arbitration on March 4, 2016. During this time, the parties jointly represented to

the Court that they needed additional time to mediate, and that further time and discovery

13 See Plaintiff’s First Amended Original Petition CR 37, at ¶ 4. 14 See also hearing transcript, Appendix Tab D, at 14:17–20 (discussing Petrohawk’s requests). 15 See Plaintiff’s Responses to Request for Disclosure, Appendix Tab I, at 9.

4 were necessary before the case could be adjudicated. On September 1, 2015 (eight days

after the SAP was filed), Plaintiff and Defendant filed a Joint Motion for Continuance.16

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Petrohawk Energy Corporation v. Overwatch Enterprises, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/petrohawk-energy-corporation-v-overwatch-enterprises-llc-texapp-2016.