In today’s order list, the Texas Supreme Court issued two decisions in mandamus cases and accepted a third mandamus petition for oral argument this fall.
Both of today’s mandamus cases were decided under Rule 52.8(c) without hearing oral argument, both were per curiam opinions, and both resulted in the mandamus relief sought: (( Both were also “submarine docket” cases, with In re Fleetwood Homes fully briefed on the merits for a little more than sixteen months and In re Lyon Financial Services fully briefed for just over six. ))
In re Fleetwood Homes of Texas, L.P., No. 06‑0943 (per curiam), from the Tenth Court of Appeals
This is another case applying Perry Homes. The Court today held that a home builder had not waived the arbitration clause in a contract merely by engaging in early pretrial proceedings. The pivotal passage:
Instead, the question here is whether Fleetwood impliedly waived arbitration by failing to pursue its arbitration demand for eight months while discussing a trial setting and allowing limited discovery. We have already answered that question “No.” In EZ Pawn Corp. v. Mancias, we held a party had not waived arbitration by filing an answer, discussing a docket-control order, sending written discovery, noticing a deposition, and agreeing to postpone a trial setting. 934 S.W.2d 87, 90 (Tex. 1996). Gulf points out correctly that the movant in EZ Pawn had not yet “discovered” the arbitration clause until after these actions had already taken place. Id. at 89. But our opinion was based on the nonmovant’s failure to show any prejudice, id. at 90, a requirement we recently reaffirmed. See Perry Homes
Along the way, the Court also spoke to whether an arbitration agreement was unconscionable because it contained a fee-shifting clause that would allow a prevailing defendant (not merely a prevailing plaintiff) to recover attorneys fees. The Court framed the question of unconscionability as whether a clause makes an agreement too “one-sided”; it then held that a fee-shifting provision that extends both parties the chance to recover fees “surely make [these agreements] less so.”
In re Lyon Fin. Servs., Inc., No. 07‑0486 (per curiam), from the Thirteen Court of Appeals
This mandamus petition asked the Texas Supreme Court to enforce a particular forum-selection clause, and the Court ultimately held that mandamus relief was appropriate.
What was interesting about this clause was that it was literally one-sided: It bound McAllen North Imaging, Inc. (“MNI”) to bring suit only in Pennsylvania, while Lyon remained free (at its discretion) bring suit elsewhere. (( A two-sided forum-selection clause reduces the importance of the “race to the courthouse” by forcing both sides to go to the same courthouse and providing certainty about which state’s procedural laws will apply; this clause gives one side the right to choose a favorable forum while forcing the other into a pre-selected forum. )) It appears this was important to Lyon (the lender in these agreements) because Pennsylvania does not permit a corporation to assert usury. MNI argued that forcing it to sue in Pennsylvania could deprive it of a claim.
The Court walked through the factors it had set out in In re AIU and concluded that this clause was enforceable. Along the way, the Court rejected MNI’s arguments that the clause was overreaching or unfair (Hernandez is the president of MNI):
In Hernandez’s affidavit, he claimed that he was not able to obtain any legal advice, he does not have formal business school training, he was unaware of the “contract provision when [he] signed it,” and that “the documents” were presented to him on a “take-it-or-leave-it” basis. But a bargain is not negated because one party may have been in a more advantageous bargaining position. Rather, we consider whether a contract results in unfair surprise or oppression. The forum-selection clause in the Restructuring Agreement was in all capital letters and was similar to the clause in the Master Agreement. Additionally, parties to a contract have an obligation to protect themselves by reading what they sign and, absent a showing of fraud, cannot excuse themselves from the consequences of failing to meet that obligation. Hernandez’s statements do not evidence overreaching or trickery by Lyon. They show a transaction where Lyon offered to do business on a specified basis and MNI accepted. [citations omitted]
Set for argument this fall
This is a case about medical-malpractice discovery. Here, the patient sued some physicians but did not sue another. The question is whether the defendant physicians can get information about the patient’s medical condition by merely asking the other doctors (“ex parte” is the language used here) or whether they must follow a more formal process that lets the courts decide which information might be relevant and which might still be shielded by physician-patient privilege (such as information about entirely unrelated conditions).
The trial court issued an order prohibiting these “ex parte” communications, and the court of appeals held that it was within its discretion in doing so.