Preview
po
CAUSE NO. 2008-30994
MUSAB ZUBI IN THE DISTRICT COURT
Plaintiff
Vv. HARRIS COURTY: EE D
Loren Jackson
RANDALL DAVIS, District Clerk
GT LEACH CONSTRUCTION,
EMPIRE VP, L.P., and
MAR - 6 2009
PORTLAND CORPORATION
Defendants 2708 sup nICol
moe
PLAINTIFF’S RESPONSE TO DEFENDANTS’ MOTION TO ABATE AND
REFER TO ARBITRATION
TO THE HONORABLE JUDGE OF SAID COURT:
COMES NOW, MUSAB ZUBI, Plaintiff, and files this Response to Defendants’
Motion to Abate and Refer to Arbitration, and would respectfully show unto the Court
the following:
I
Background
1 This case stems from the purchase of a condominium unit by the Plaintiff
from the Defendants. The agreement to purchase the condominium unit was entered into
on May 20, 2005, and the closing occurred on January 24, 2007.
2 The purchase contract contained an “Arbitration/Limitation of Claims”
provision, in which in addition to setting forth an arbitration provision, detailed a time
period for which claims may be brought. Specifically, Section 19 states as follows:
“Any action, regardless of formy riging out of the transactions under this
a
Contract must be br me nL@Rewrd Ree thin two (2) years from the date
the cause of actionaceruetl “eC yx AS
i
See Purchase Contract, ihe ypage PB ® Ofpy of which is attached hereto as
Exhibit “A”.
—_—-
BY. eso
DEPUTY
3 Plaintiff filed suit on May 20, 2008 against the Defendants, well within the
two (2) year limitation period. A Docket Control Order was entered on September 4,
2008. Defendants were served with various discovery requests on or about April 9, 2009,
with responses due approximately in mid May 2009.
4 Defendants filed their Motion to Abate and Refer to Arbitration on April
30, 2009. Trial is currently scheduled for the June 1, 2009, docket.
IL.
Argument
5 Arbitration is favored by public policy. In re Bruce Terminix Co., 988
S.W.2d 702, 704 (Tex. 1998). The answer to most questions regarding arbitration flow
inexorably from the fact that arbitration is simply a matter of a contract between the
parties. Perry Homes y. Cull, 258 S.W.3d 580, 593 (Tex. 2008). Like any other contract
right, arbitration can be waived if the parties agree instead to resolve a dispute in court.
Id. Such waiver can be implied from a party’s conduct, although that conduct must be
unequivocal. Jd. In close cases, the strong presumption against waiver should govern.
Id.
6 Waiver of arbitration requires a showing of prejudice. Id, at 595.
Estoppel also requires a showing of prejudice. Jd. Questions of waiver are decided by
applying a totality-of-the-circumstances test on a case-by-case basis. See Id., at 590-91.
In cases of waiver by litigation conduct, the precise question is not so much when waiver
occurs as when apany ci ‘an noftdl take it back. Jd., at 595.
LOREN fJACKSON
7
In thisieases ie f Tae
sectiont ATANayiuich the Defendants rely upon in arguing for
arbitration, is the sane JEAN Gra ppretes ca limitations period for the Plaintiff to bring
suit, being two 2) pygars. The Plaintiff closed on the condominium unit on January 24,
——
DEPUTY
ae
2007, and filed suit on May 20, 2008, within the limitations period. The two year
limitations period arguably bars all claims by the Plaintiff after January 24, 2009.
8 This case has been on file with the court for almost a year. Not until after
the applicable limitations period expired did Defendants move for arbitration in this case.
Because the limitations period has expired, Plaintiff cannot now allege claims in
arbitration. Dismissing this case and ordering arbitration would cause Plaintiff to suffer
the ultimate prejudice, as his claims are barred by the limitations period in the purchase
contract. Prejudice has many meanings, but it can relate to the inherent unfairness, like a
party’s attempt to have it both ways by switching between litigation and arbitration to its
own advantage. See Id., at 597. *A party should not be allowed purposefully and
unjustifiably to manipulate the exercise of its arbitral rights simply to gain an unfair
tactical advantage over the opposing party. /d. The Defendants herein waited for the
limitations period to pass, and then requested arbitration of claims. This not only
prejudices Plaintiff, but allowing such conduct would set a precedent encouraging parties
to manipulate the judicial system by seeking arbitration after the statute of limitations
period has expired.
9 Defendants assert that other than recent discovery propounded by the
Plaintiff, no discovery or depositions have occurred which would support the waiver of
arbitration. But under the totality-of-the-circumstances test, discovery is not the only
measure of waiver. Id, at 596. One of the factors relevant in making a prejudice
determination is whether a pasty failed id x gagsert its right to arbitrate a dispute. In
DISTRICT CL r
re ADM Investor Services, IniA®57-S.W3d*817X881 (Tex.App.—Tyler 2008), citing
Republic Ins. Co. Paico Receivabld4
Lb 3 PHESLE, 346 (5th Cir. 2004). While the
B -
DEPUTY
mere failure to assert the right to demand arbitration does not alone translate into a
waiver of that right, this failure does bear on the question of prejudice, and may along
with other considerations, require a court to conclude waiver has occurred. Jd. In this
case, the Defendants failure to timely assert its right to arbitration creates the gravest of
prejudices upon the Plaintiff as Plaintiff's claims are now barred by the limitations
period, thus the right to arbitrate has been waived. See EZ Pawn Corporation v.
Gonzalez, 921 S.W.2d 320, 324 (Tex.App.—Corpus Christi, 1996, writ denied)(The court
found prejudice when the arbitration agreement stated claims had to be brought within
180 days after alleged cause of action accrued—suit was filed on August 31, 1994, and
Motion to Compel Arbitration and Plea in Abatement was filed on June 28, 1995—
detriment caused because claims by plaintiff were waived according to the arbitration
agreement.).
10. Although Defendants may not have substantially participated in discovery
in this case, by allowing the limitations period to expire during litigation, they have
enjoyed the benefits of untimely requesting arbitration. A party who enjoys substantial
direct benefits by gaining an advantage in the pretrial litigation process should be barred
from turning around and seeking arbitration with the spoils. Perry Homes, 258 S.W.3d at
593; citing Trammell Crow Co. No. 60 y. Harkinson, 944 S.W.2d 631, 636 (Tex. 1997).
As such, Defendants should be estopped from now seeking arbitration after the
limitations period has expired.
ll. Defendants’ motion go RE Seehigation after the limitations period has
QISTR! CLE
expired would impose the ultitinte’ prejudice ‘agaiNst She Plaintiff since he can no longer
prosecute his claims. Defers’ Vine Rtbaty 2elay in seeking arbitration places
BY. —~ memes
DEPUTY
Plaintiff in a peril less position, as his claims in arbitration could be dismissed because of
the limitations period. Further, allowing Defendants to compel arbitration under these
circumstances could set a standard by which parties could manipulate the judicial system
by strategically delaying the enforcement of arbitration clauses.
Hil.
Prayer
WHEREFORE, PREMISES CONSIDERED, Plaintiff prays that this Court deny
Defendants’ Motion to Abate and Refer to Arbitration and for all other and further relief
to which Plaintiff may be entitled to, whether in equity or in law.
Respectfully submitted,
SM RITICO & INEY, LLP
Jason L. Fowell
State Bag No. 24040925
5111 Center Street
Houston, Texas 77007
(713) 869-1155
(713) 869-8957 (Facsimile)
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the following document was forwarded to
the following counsel of record on this 6 day of May, 2009, pursuant to the Texas
Rules of Civil Procedure:
Jeffery B. Kaiser
1911 Bagby, Second Floor
Houston, Texas 77002
713-571-8000 “3 KSON
LER}
713-571-8002 (fax)>, LOBES!
HN
5ysisu
ue
zee a ason L. Fowvel
BY.
wae
Preview
po CAUSE NO. 2008-30994 MUSAB ZUBI IN THE DISTRICT COURT Plaintiff Vv. HARRIS COURTY: EE D Loren Jackson RANDALL DAVIS, District Clerk GT LEACH CONSTRUCTION, EMPIRE VP, L.P., and MAR - 6 2009 PORTLAND CORPORATION Defendants 2708 sup nICol moe PLAINTIFF’S RESPONSE TO DEFENDANTS’ MOTION TO ABATE AND REFER TO ARBITRATION TO THE HONORABLE JUDGE OF SAID COURT: COMES NOW, MUSAB ZUBI, Plaintiff, and files this Response to Defendants’ Motion to Abate and Refer to Arbitration, and would respectfully show unto the Court the following: I Background 1 This case stems from the purchase of a condominium unit by the Plaintiff from the Defendants. The agreement to purchase the condominium unit was entered into on May 20, 2005, and the closing occurred on January 24, 2007. 2 The purchase contract contained an “Arbitration/Limitation of Claims” provision, in which in addition to setting forth an arbitration provision, detailed a time period for which claims may be brought. Specifically, Section 19 states as follows: “Any action, regardless of formy riging out of the transactions under this a Contract must be br me nL@Rewrd Ree thin two (2) years from the date the cause of actionaceruetl “eC yx AS i See Purchase Contract, ihe ypage PB ® Ofpy of which is attached hereto as Exhibit “A”. —_—- BY. eso DEPUTY 3 Plaintiff filed suit on May 20, 2008 against the Defendants, well within the two (2) year limitation period. A Docket Control Order was entered on September 4, 2008. Defendants were served with various discovery requests on or about April 9, 2009, with responses due approximately in mid May 2009. 4 Defendants filed their Motion to Abate and Refer to Arbitration on April 30, 2009. Trial is currently scheduled for the June 1, 2009, docket. IL. Argument 5 Arbitration is favored by public policy. In re Bruce Terminix Co., 988 S.W.2d 702, 704 (Tex. 1998). The answer to most questions regarding arbitration flow inexorably from the fact that arbitration is simply a matter of a contract between the parties. Perry Homes y. Cull, 258 S.W.3d 580, 593 (Tex. 2008). Like any other contract right, arbitration can be waived if the parties agree instead to resolve a dispute in court. Id. Such waiver can be implied from a party’s conduct, although that conduct must be unequivocal. Jd. In close cases, the strong presumption against waiver should govern. Id. 6 Waiver of arbitration requires a showing of prejudice. Id, at 595. Estoppel also requires a showing of prejudice. Jd. Questions of waiver are decided by applying a totality-of-the-circumstances test on a case-by-case basis. See Id., at 590-91. In cases of waiver by litigation conduct, the precise question is not so much when waiver occurs as when apany ci ‘an noftdl take it back. Jd., at 595. LOREN fJACKSON 7 In thisieases ie f Tae sectiont ATANayiuich the Defendants rely upon in arguing for arbitration, is the sane JEAN Gra ppretes ca limitations period for the Plaintiff to bring suit, being two 2) pygars. The Plaintiff closed on the condominium unit on January 24, —— DEPUTY ae 2007, and filed suit on May 20, 2008, within the limitations period. The two year limitations period arguably bars all claims by the Plaintiff after January 24, 2009. 8 This case has been on file with the court for almost a year. Not until after the applicable limitations period expired did Defendants move for arbitration in this case. Because the limitations period has expired, Plaintiff cannot now allege claims in arbitration. Dismissing this case and ordering arbitration would cause Plaintiff to suffer the ultimate prejudice, as his claims are barred by the limitations period in the purchase contract. Prejudice has many meanings, but it can relate to the inherent unfairness, like a party’s attempt to have it both ways by switching between litigation and arbitration to its own advantage. See Id., at 597. *A party should not be allowed purposefully and unjustifiably to manipulate the exercise of its arbitral rights simply to gain an unfair tactical advantage over the opposing party. /d. The Defendants herein waited for the limitations period to pass, and then requested arbitration of claims. This not only prejudices Plaintiff, but allowing such conduct would set a precedent encouraging parties to manipulate the judicial system by seeking arbitration after the statute of limitations period has expired. 9 Defendants assert that other than recent discovery propounded by the Plaintiff, no discovery or depositions have occurred which would support the waiver of arbitration. But under the totality-of-the-circumstances test, discovery is not the only measure of waiver. Id, at 596. One of the factors relevant in making a prejudice determination is whether a pasty failed id x gagsert its right to arbitrate a dispute. In DISTRICT CL r re ADM Investor Services, IniA®57-S.W3d*817X881 (Tex.App.—Tyler 2008), citing Republic Ins. Co. Paico Receivabld4 Lb 3 PHESLE, 346 (5th Cir. 2004). While the B - DEPUTY mere failure to assert the right to demand arbitration does not alone translate into a waiver of that right, this failure does bear on the question of prejudice, and may along with other considerations, require a court to conclude waiver has occurred. Jd. In this case, the Defendants failure to timely assert its right to arbitration creates the gravest of prejudices upon the Plaintiff as Plaintiff's claims are now barred by the limitations period, thus the right to arbitrate has been waived. See EZ Pawn Corporation v. Gonzalez, 921 S.W.2d 320, 324 (Tex.App.—Corpus Christi, 1996, writ denied)(The court found prejudice when the arbitration agreement stated claims had to be brought within 180 days after alleged cause of action accrued—suit was filed on August 31, 1994, and Motion to Compel Arbitration and Plea in Abatement was filed on June 28, 1995— detriment caused because claims by plaintiff were waived according to the arbitration agreement.). 10. Although Defendants may not have substantially participated in discovery in this case, by allowing the limitations period to expire during litigation, they have enjoyed the benefits of untimely requesting arbitration. A party who enjoys substantial direct benefits by gaining an advantage in the pretrial litigation process should be barred from turning around and seeking arbitration with the spoils. Perry Homes, 258 S.W.3d at 593; citing Trammell Crow Co. No. 60 y. Harkinson, 944 S.W.2d 631, 636 (Tex. 1997). As such, Defendants should be estopped from now seeking arbitration after the limitations period has expired. ll. Defendants’ motion go RE Seehigation after the limitations period has QISTR! CLE expired would impose the ultitinte’ prejudice ‘agaiNst She Plaintiff since he can no longer prosecute his claims. Defers’ Vine Rtbaty 2elay in seeking arbitration places BY. —~ memes DEPUTY Plaintiff in a peril less position, as his claims in arbitration could be dismissed because of the limitations period. Further, allowing Defendants to compel arbitration under these circumstances could set a standard by which parties could manipulate the judicial system by strategically delaying the enforcement of arbitration clauses. Hil. Prayer WHEREFORE, PREMISES CONSIDERED, Plaintiff prays that this Court deny Defendants’ Motion to Abate and Refer to Arbitration and for all other and further relief to which Plaintiff may be entitled to, whether in equity or in law. Respectfully submitted, SM RITICO & INEY, LLP Jason L. Fowell State Bag No. 24040925 5111 Center Street Houston, Texas 77007 (713) 869-1155 (713) 869-8957 (Facsimile) CERTIFICATE OF SERVICE I certify that a true and correct copy of the following document was forwarded to the following counsel of record on this 6 day of May, 2009, pursuant to the Texas Rules of Civil Procedure: Jeffery B. Kaiser 1911 Bagby, Second Floor Houston, Texas 77002 713-571-8000 “3 KSON LER} 713-571-8002 (fax)>, LOBES! HN 5ysisu ue zee a ason L. Fowvel BY. wae