Valerus Compression Services, LP and Valerus Services Company, LLC v. William Austin

417 S.W.3d 202, 2013 WL 6124816, 2013 Tex. App. LEXIS 14236
CourtCourt of Appeals of Texas
DecidedNovember 21, 2013
Docket01-13-00266-CV, 01-13-00507-CV
StatusPublished
Cited by15 cases

This text of 417 S.W.3d 202 (Valerus Compression Services, LP and Valerus Services Company, LLC v. William Austin) 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
Valerus Compression Services, LP and Valerus Services Company, LLC v. William Austin, 417 S.W.3d 202, 2013 WL 6124816, 2013 Tex. App. LEXIS 14236 (Tex. Ct. App. 2013).

Opinion

OPINION

REBECA HUDDLE, Justice.

The underlying dispute concerns the propriety of the forced redemption of William Austin’s partnership interests in Vale-ras Compression Services, L.P. by Valeras Compression Services, L.P. and Valeras Services Company, LLC (collectively “Val-eras”). In two interlocutory appeals, Vale-ras challenges the trial court’s orders (1) denying Valeras’s motion to compel arbitration of Austin’s claims and (2) granting Austin’s motion to stay the parallel arbitration proceeding brought by Valeras. See Tex. Crv. Prac. & Rem.Code Ann. § 171.098(a) (West 2011). 1 We conclude that the trial court erred by denying Vale-ras’s motion to compel arbitration and granting Austin’s motion to stay arbitration and, accordingly, we reverse and remand.

Background

Valeras hired William Austin to serve as its CFO in 2009. Shortly thereafter, in connection with a recapitalization, Austin purchased partnership interests in Valeras Compression Services, LP. The partnership interests were governed by a Partnership Agreement. The Partnership Agreement requires that all disputes “arising out of or in connection with this Agreement” be resolved by arbitration.

In April 2010, the parties executed a Separation Agreement and General Release of Claims (“Separation Agreement”) reflecting the termination of Austin’s employment with Valeras. The Separation Agreement provided, among other things, that Valeras would provide Austin severance payments and continued health coverage under specified terms. The Separation Agreement also addressed Austin’s partnership interests. It states, in Section 4, in relevant part:

Executive’s Rights Regarding Employee Partnership Interests. The Parties acknowledge and agree that the termination of Executive’s employment entitled Executive to certain benefits pursuant to Section 5.8 of the Employment Agreement. Accordingly, Executive shall have the right to retain all or any part of Executive’s Partnership Interests (as defined in the Partnership Agreement), without any forced redemption by the Partnership or its designees under the Partnership Agreement; provided, however, that Executive may, within six (6) months and one day following the Separation Date, request that the Partnership exercise its unilateral *206 right under the Partnership Agreement to redeem or purchase all or any part of Executive’s Employee Partnership Interests (as defined in the Partnership Agreement) for the price set forth in Section 13.02(a) of the Partnership Agreement; provided further, however, that the Partnership shall not be required to comply with any such request and shall retain discretion as to whether to exercise such right upon Executive’s request. As used herein the term “Partnership Agreement” has the same meaning as contained in the Employment Agreement.

The Separation Agreement contains another provision that fixes venue and incorporates a fee-shifting agreement. In relevant part, it states:

Venue for any action that may be brought by any Party involving the enforcement of this Agreement or any rights, duties or obligations under this Agreement shall be brought exclusively in the state or federal courts (as applicable) sitting in Houston, Texas. Executive consents and waives any objection to personal jurisdiction and venue in those courts for any such action. The Parties acknowledge and agree that Sections 4.7(b) and 4.7(c) of the Employment Agreement are hereby incorporated in this Agreement by reference such that if Executive shall obtain any money judgment or otherwise prevail with respect to any arbitration or litigation brought by Executive or the Company to enforce or interpret any provision in this Agreement, the Company, to the fullest extent permitted by applicable law, shall reimburse Executive for all of Executive’s reasonable legal fees and expenses incurred in such arbitration or litigation.

The Separation Agreement also contained the following merger clause:

This Agreement contains the entire agreement of the Parties with respect to the subject matter hereof, this Agreement supersedes all prior and contemporaneous agreements and understandings, oral or written, between the Parties hereto concerning the subject matter hereof. This Agreement may be amended, waived or terminated only by a written instrument executed by all Parties hereto.

In December 2011, Austin began working as an Executive Vice President and CFO of Exterran Energy Corporation. Valerus notified Austin that his employment violated the non-competition provision in the Partnership Agreement, permitting Valerus to forcibly redeem Austin’s partnership interests, and Vale-rus redeemed the partnership interests based on the formula set forth in section 13.02 of the Partnership Agreement. In response, on November 6, 2012, Austin sued Valerus in state district court in Houston, seeking a declaratory judgment that (1) the Separation Agreement remains in full force and effect; (2) Austin is not in breach of the Separation Agreement or the Partnership Agreement; (3) Austin is entitled to retain ownership of his partnership interests; (4) Valerus must reissue Austin’s Certificates 288-B and 225-C; and (5) Valerus must return the certificates to Austin in accordance with the Separation Agreement. Austin also alleged Valerus had converted his partnership interests and breached the Separation Agreement. He sought specific performance, the return of the certificates evidencing his ownership in Valerus Compression Services, LP.

On December 3, 2012, Valerus moved to compel arbitration and abate the trial *207 court proceedings, arguing that the arbitration provision in the Partnership Agreement requires Austin to arbitrate his claims. On the same day, Valerus also initiated an arbitration proceeding with the American Arbitration Association (“AAA”), requesting declaratory relief under the Partnership Agreement. Valerus requested a declaration that (1) Austin was a “Breaching Party” and that an Expulsion Event occurred under the Partnership Agreement, (2) Valerus had the unilateral option under Section 18.01(c) of the Partnership Agreement to redeem Austin’s partnership interests for the amount set forth in Section 13.02(a)(ii) of the Partnership Agreement, (3) the total redemption price of Austin’s vested partnership interests under Section 13.01(c) is $10,697.67, and (4) the restrictions on competition under Section 8.03(f) of the Partnership Agreement are reasonable and enforceable under Texas law.

Austin opposed the motion to compel arbitration, contending that the venue and merger provisions in the Separation Agreement operate to revoke or extinguish the arbitration provision in the Partnership Agreement with respect to the subject matter of the suit: the forcible redemption of his partnership- interests. The trial court denied Valerus’s motion on March 8, 2013, and Valerus appealed.

On March 7, 2013, the day before the trial court signed the order denying the motion to compel arbitration, and three months after Valerus initiated the arbitration proceeding, Austin filed an emergency motion to stay the arbitration. The trial court granted the emergency motion pending further briefing.

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Cite This Page — Counsel Stack

Bluebook (online)
417 S.W.3d 202, 2013 WL 6124816, 2013 Tex. App. LEXIS 14236, Counsel Stack Legal Research, https://law.counselstack.com/opinion/valerus-compression-services-lp-and-valerus-services-company-llc-v-texapp-2013.