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Texas: Settlement Agreements, Arbitration, Indemnification, and Summary Judgment

The Tenth Court of Appeals (Waco), in Capstone Building Corp. v. IES Commercial, Inc., reversed the trial court's summary judgment in favor of IES. This case is a severed part of a broader dispute relating to a housing complex at Sam Houston State University.* Capstone was the general contractor, and IES was the mechanical/HVAC/electrical subcontractor. Capstone and IES entered into a settlement agreement after IES filed a petition for arbitration alleging a payment dispute. The settlement agreement included a payment amount, a warranty that the sub's subs had been paid, and that IES would indemnify Capstone from claims brought by subs or suppliers. Capstone released claims relating to HVAC warranty claims. Several years later, SHSU sued ACC alleging construction defects, including alleged HVAC defects, according to the opinion. IES filed for summary judgment on Capstone's claims against it, and the trial court granted the motion for summary judgment. The Court of Appeals rejected IES' argument that the s ...

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Texas: Arbitration Agreement was not Unconscionable

In Bonded Builders Home Warranty Association of Texas, Inc. v. Smith, the Fifth District Court of Appeals (Dallas) reversed the trial court's denial of a motion to compel arbitration. In objecting to the motion to arbitrate, Smith asserted that the arbitration clause inserted in a warranty was unconscionable because "(1) it requires Plaintiffs to ask an arbitrator to award damages against a company that is sending business to the arbitration company; (2) the rules that govern the arbitration are unknown until a pre-approved arbitration company is selected;...and (3) to date, Plaintiffs are unable to access the pre-approved companies or their rules." The Fifth District Court of Appeals outlines the standard of review in denying a motion to compel arbitration, the legal standards applicable to a motion to compel arbitration, and Texas law relating to the substantive or procedural unconscionablilty of an arbitration agreement. Unconscionablilty in Texas "is not satisfied by speculation but by specific proof in ...

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Second Circuit: NFL Commissioner Properly Exercised Discretion when Arbitrating under CBA

In a 2-1 decision, the U.S. Second Circuit Court of Appeals held that NFL Commissioner Roger Goodell, serving as arbitrator, properly exercised his broad discretion under a collective bargaining agreement and his procedural rulings were properly grounded in the CBA, reversing the decision of the U.S. District Court for the Southern District of New York.

The Court of Appeals analyzes the award under the Labor Management Relations Act, and according to the Court "These standards do not require perfection in arbitration awards. Rather, they dictate that even if an arbitrator makes mistakes of fact or law, we may not disturb an award so long as he acted within the bounds of his bargained-for authority."

The appellate court's decision is here.

Texas: Court Abused Discretion in Ordering Mediation when Parties Agreed to Arbitrate

In In Re Frank A. Smith Sales, Inc. d/b/a Frank Smith Toyota, the Thirteenth District Court of Appeals held that mandamus was appropriate when a trial court ordered parties to mediation instead of ordering them to arbitration. In this employment-related matter, the employee handbook contained a dispute resolution procedure that included "binding arbitration of any legal dispute" between the employee and the employer. After the employee was terminated, she filed suit alleging discrimination, retaliation, and defamation. The employer filed a motion requesting arbitration and while that motion was set and heard, the district court did not rule on it. Instead, the district court ordered the parties to mediation. The Thirteenth District Court of Appeals held that the district court abused its discretion when it did not rule on the motion to compel arbitration for over a year and ordered the parties to mediation instead of ruling on the motion to compel arbitration. The Court of Appeals ordered to trial court to ...

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Fifth Circuit: Authority to Execute Arbitration Agreement

The Fifth Circuit Court of Appeals consolidated two cases that asked similar questions: what level of authority does one need under Mississippi law to execute an arbitration agreement. Both cases involved arbitration agreements relating to nursing homes.

The cases are: Gross v. GGNSC Southaven, LLC and Cotton v. GGNSC Batesville, LLC. In both instances, the trial court denied the nursing homes' motions to compel, reasoning that Mississippi law required an executed power of attorney, or some other "formal legal device" to bind a nursing home resident to confer authority on another to sign an arbitration agreement.

Making an "Erie guess," the Fifth Circuit Court of Appeals remanded the matters back to the district court for a factual finding of whether the son had the express authority to act on his mother's behalf, including executing an arbitration agreement on her behalf.

Thanks to Ronnie Hornberger for bringing these matters to our attention.

Arizona: Mediation Confidentiality and Attorney Malpractice

In Grubaugh v. Bolomo from the Arizona Court of Appeals, a client brought a legal malpractice case against her attorney for allegedly "substandard legal advice given...during a family court mediation." The Arizona Court of Appeals held that any communications "between or among [the client] and her attorney, or the mediator, as a part of the mediation processed are privileged" under state law. Because the privilege was not waived, the communications are neither discoverable nor admissible.

The Arizona mediation statute is located here. The Arizona Court of Appeals held that the statute did not provide as an exception to mediation confidentiality  attorney-client communications.  The Court also provided a summary of the public policy behind the mediation privilege  and the rights that the former husband had to mediation-related confidentiality, in addition to the now former wife.

Thanks to Ronnie Hornberger for bringing this case to our attention. 

Texas: Trial court erred in failing to enforce arbitration agreement in non-subscriber negligence suit

In Lucchese Boot Co. v. Licon, the El Paso Court of Appeals held that the trial court erred when it denied Lucchese's motion to compel arbitration. According to the court's opinion, Licon suffered work-related injuries and filed a non-subscriber negligence suit against Lucchese, his employer. Lucchese attempted to compel arbitration under the terms of its Area Brands Texas Injury Benefit Plan, and that motion was granted. The El Paso Court of Appeals struck down two other orders compelling arbitration against other Lucchese employees under the same plan because that plan was illusory (because the employer retained an unilateral right to terminate the agreement at any time). Licon moved for reconsideration of the trial court's order and that order was vacated. Lucchese then sought to compel arbitration under its Problem Resolution Program. The trial court denied Lucchese's motion to compel arbitration. The El Paso Court of Appeals reversed the trial court's judgment and remanded the matter for further proc ...

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Texas: Rule 11 agreement was enforceable, but fact issues of performance preclude summary judgment

In MKM Engineers, Inc. v. Guzder, the Fourteenth Court of Appeals held that a Rule 11 agreement entered into by the parties was enforceable, but there were issues of fact preventing summary judgment on a breach of contract claim. The Court's 24-page opinion outlines a complex factual and procedural history. The parties attended a mediation and settlement conferences that resulted in a Rule 11 agreement with future duties, such as a side-letter, the drafting and execution of a "final settlement agreement" with mutual releases and payment of the settlement amount. The Court held that the Rule 11 agreement was enforceable, despite one of the party's challenge that the agreement did not contain all of the material terms. The Court noted that Texas law allows courts to enforce "settlement agreements that contemplate additional documentation or leave open certain terms for future negotiation." According to the Court:   The critical issue for determining enforceability when the parties agree that some term ...

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Blog: Eleventh Circuit lacks jurisdiction over arbitration order, but confirms order for award

Jeanne M. Kohler at Carlton Fields recently wrote about a decision by the Eleventh Circuit Court of Appeals where the court held that it lacked jurisdiction over an appeal of an order compelling arbitration because no notice of appeal was filed within 30 days of the order, even though the district court's order stayed the litigation and did not dismiss it. The finality of the order compelling arbitration was not implicated. The Eleventh Circuit Court of Appeals reviewed a separate order in the same case. The challenge to the second order concerned whether the arbitrator exceeded his authority. The Eleventh Circuit Court of Appeals held that the review of an arbitration award is limited to whether it is irrational, fails to draw its essence from the collective bargaining agreement, or exceeds the scope of the arbitrator's authority. According to the court, even if a court disagreed with the arbitrator's interpretation of the agreement, the arbitrator's interpretation did not impermissibly amend or ...

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Texas: Trial court erred in granting summary judgment to void a mediated settlement agreement

The Thirteenth Court of Appeals, in Flores v. Medline Industries, Inc., held that the trial court erred when it granted a motion for summary judgment to void a mediated settlement agreement. The parties--Flores and Medline Industries, Inc.--attended a mediation after a motion for summary judgment was filed. The trial court had ruled on the MSJ, but the parties were not aware of the ruling at the time of the mediation. The parties resolved the case at mediation, resulting in a mediated settlement agreement. Afterwards, Medline filed a MSJ seeking to void the mediated settlement agreement on the grounds of mutual or unilateral mistake which was granted. In reversing the trial court's summary judgment, the Thirteenth Court of Appeals analyzed whether conclusive evidence was presented on the issue of mistake. Medline's position was that it would not have attended the mediation, or would have settled for a smaller amount, if it knew of the summary judgment. The court of appeals held that Medline "failed to concl ...

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