Small v. SPECIALTY CONTRACTORS, INC.

310 S.W.3d 639, 2010 Tex. App. LEXIS 2867, 2010 WL 1582231
CourtCourt of Appeals of Texas
DecidedApril 21, 2010
Docket05-08-01701-CV
StatusPublished
Cited by19 cases

This text of 310 S.W.3d 639 (Small v. SPECIALTY CONTRACTORS, INC.) 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
Small v. SPECIALTY CONTRACTORS, INC., 310 S.W.3d 639, 2010 Tex. App. LEXIS 2867, 2010 WL 1582231 (Tex. Ct. App. 2010).

Opinion

OPINION

Opinion By Justice MURPHY.

This is an appeal from an order compelling arbitration in a shareholder dispute. After compelling all pending disputes to arbitration, the trial court signed an order dismissing the litigation without prejudice. In his first issue, appellant Donald B. Small contends three of the appellees, Specialty Contractors, Inc., Billy Don Elliott, and Leland T. Skinner (collectively, “Specialty defendants”) waived any right to arbitrate by substantially invoking the judicial process. In his second issue, Small argues his non-suit of appellees LDD, L.P. and ESS Management, LLC (collectively, “ESS defendants”) prevents the Specialty defendants from relying on the arbitrability of Small’s claims against the ESS defendants to compel arbitration of their claims. We affirm the trial court’s order.

BACKGROUND

Small, Elliott, and Skinner are the sole shareholders in Specialty, a closely-held Texas corporation. Each owns a minority share and was an officer of Specialty. Small was also an employee. LDD is a limited partnership in which ESS is the general partner and Small, Elliott, and Skinner are limited partners. Elliott and Skinner terminated Small’s employment with Specialty on August 8, 2007 and sought to remove him as an officer. Two days later, on August 10, Small filed suit against the Specialty defendants claiming breach of fiduciary duty, minority shareholder oppression, and civil conspiracy, and seeking an accounting and a declaratory judgment of the rights and status of each shareholder and related partnerships. On September 4, 2007, Elliott and Skinner answered, raising affirmative defenses and special exceptions, seeking rule 13 sanctions, asserting a counterclaim for attorney’s fees, and serving a request for disclosure. Small asserts in his appellate brief that Specialty also answered the same date, with a request for disclosure and counterclaim for attorney’s fees. No filing is contained in the record, however.

Small also asserts that he served discovery immediately after the Specialty defendants answered the lawsuit, and that they responded on October 22, 2007. A month later, the parties attempted to settle through mediation, but the mediation was unsuccessful. According to Small, each of the Specialty defendants served a first set of interrogatories and request for production in January 2008, to which Small responded on February 25, 2008.

A week later, on March 4, 2008, Small amended his petition, adding a claim for *642 breach of contract and adding LDD and ESS as defendants. Small did not request issuance of citations for the ESS defendants and there is no record they were ever formally served.

On April 30, 2008, the Specialty defendants filed a traditional motion for summary judgment, claiming the shareholder agreement was dispositive of the rights and obligations between Specialty and Small. The motion also included no evidence points as to Small’s original claims. The trial court denied the motion in its entirety by order dated June 11, 2008.

On July 18, 2008, the Specialty defendants filed a motion to compel arbitration and verified motion to abate, relying on the arbitration provision in their shareholders’ agreement. Two months later, on September 19, 2008, Small filed his response, claiming the Specialty defendants had substantially invoked the judicial process and therefore had waived any right to compel arbitration. On September 22, 2008, the Specialty defendants filed a supplement to their motion based on the arbitration clause contained in the LDD limited partnership agreement. Prior to any hearing on the Specialty defendants’ motion, the ESS defendants filed their own motion to compel arbitration and, subject thereto, original answer, counterclaim, and request for disclosure. The counterclaim was based on a request for costs and attorney’s fees under the declaratory judgment act.

Small did not respond to the ESS defendants’ motion; instead, on October 17, 2008, he filed a notice of partial non-suit without prejudice as to the ESS defendants. Three days later, on October 20, 2008, the trial court granted both motions to compel arbitration. Small filed a motion for reconsideration, asking in the alternative for a dismissal of the entire case to allow for appeal. By order dated December 9, 2008, the trial court granted the alternative request and signed an “Order Dismissing the Case Without Prejudice in Favor of Arbitration.” This appeal followed.

DISCUSSION

Jurisdiction

We first address our jurisdiction to hear the appeal. The parties agree that had the trial court stayed the litigation pending arbitration, no interlocutory appeal would lie. See Tex. Civ. Prac. & Rem. Code §§ 51.014(a) (Vernon 2008) (listing appealable interlocutory orders); 171.098 (Vernon 2005) (authorizing interlocutory appeal only from orders denying application to compel arbitration and orders granting application to stay arbitration). Courts may review an order compelling arbitration if the order also dismisses the entire case and is therefore a final, rather than interlocutory, order. In re Gulf Exploration,, LLC, 289 S.W.3d 836, 840 (Tex.2009) (orig.proceeding) (quoting Perry Homes v. Cull, 258 S.W.3d 580, 586 n. 13 (Tex.2008) (citing Green Tree Fin. Corp.Ala., 531 U.S. 79, 87 n. 2, 121 S.Ct. 513 (2000); Childers v. Advanced Found. Repair, L.P., 193 S.W.3d 897, 898 (Tex.2006) (per curiam)), cert. denied, — U.S. -, 129 S.Ct. 952, 173 L.Ed.2d 116 (2009)). Appellees contest our ability to review the arbitration order in this case, however.

Appellees first argue that the Texas Supreme Court in In re Gulf Exploration disapproved dismissal of a case, rather than staying it pending the outcome of arbitration. See In re Gulf Exploration, 289 S.W.3d at 841 (because court order may be necessary to replace arbitrator, compel attendance of witnesses, direct arbitrators to proceed promptly, and to confirm, modify, or vacate arbitration award, “dismissal would usually be inappropri *643 ate”). Yet appellees have not cross-appealed based on a claim the trial court erred in dismissing, rather than staying the case. See Tex.R.App. P. 25.1(c) (without filing notice of appeal, party may not obtain more favorable relief than obtained at trial court). Accordingly, appellees are precluded from raising this complaint on appeal.

Appellees also argue, citing Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), that because the trial court dismissed the case without prejudice, the order is not final and appealable. Citing In re Gulf Exploration,

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Bluebook (online)
310 S.W.3d 639, 2010 Tex. App. LEXIS 2867, 2010 WL 1582231, Counsel Stack Legal Research, https://law.counselstack.com/opinion/small-v-specialty-contractors-inc-texapp-2010.