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A lesson in when not to ask for arbitration

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Every now and then, okay, more often than that, a judge will face off with an attorney who makes a request so absurd that the robed one must be thinking, "Are you @%&!ing kidding me?"

A couple of weeks ago the First District Court of Appeals released Tuscan Builders LP v. Sweetwater Aesthetic Spa & Wellness Center.

The underlying facts are that the Sweetwater parties--a group of health-related businesses--hired Tuscan as a contractor to build them a building. After the Sweetwater parties moved in, the building leaked.

The Sweetwater parties had Tuscan come out a few times to fix leaks, but Tuscan never got it right and in June 2012 they sued the contractor.

Next, Tuscan filed its Answer. That November, Tuscan also filed a lawsuit against its own subcontractors.

The subcontractors answered and demanded a jury trial.

Discovery commenced. Tuscan, along with the third-party defendant subcontractors, inspected the leaky building.

The trial court set the trial to begin in April 2013. But in January Tuscan joined Sweetwater in a continuance motion to conduct more discovery, and the court granted continuance. Trial was set for Sept. 16, 2013.

Here's where this case gets ridiculous. On July 14, 2013, Tuscan invoked an arbitration provision in the construction contract.

There were a bucket load of problems with this, as First District Judge Jane Bland dryly listed when she went into her Patient-Parent-Lectures-Brat mode, (she wrote as she sharpened the hickory switch)

First, Tuscan's arbitration provision was "by reference," meaning the contract referred to a document that had the actual arbitration language but was NOT ATTACHED to the contract.

Second, Tuscan NEVER mentioned arbitration in its Answer, or when it sued its subcontractors, or when it sought continuance for discovery.

The trial court, no surprise here, denied the motion for arbitration, ruling Tuscan had waived the right, assuming it EVER HAD a valid right to it by contract in the first place. After all, Sweetwater's contract with the construction design team "expressly excludes any obligation to arbitrate and requires litigation in Harris County district court," Bland said.

I'll admit that I didn't bother to read the appellant brief filed by Tuscan's attorney, Patrick Mulry of Gerstle, Minissale & Snelson of Dallas, but I'm betting he was fighting with a paper sword.

Bland swung at Tuscan with Haddock v Quinn (2009), and said, "In assessing whether Tuscan waived its right to arbitrate, we consider whether Tuscan's conduct in the litigation portrays the kind of 'aggressive litigation strategy' that substantially invokes the litigation process."

She noted how, while Tuscan started as a defendant, Tuscan became a third-party plaintiff and benefitted from discovery. For all the world, Tuscan appeared intent on going to trial.

"The parties engaged in considerable time and expense on the road to a court trial. These circumstance make the timing of Tuscan's motion to compel more consistent with a late-game tactical decision than an intent to preserve the right to arbitrate," Bland wrote.

"Tuscan's year-long delay in invoking or even mentioning the arbitration clause gave Tuscan litigation advantages it would not have had in an arbitration proceeding."

The First District tribunal affirmed the lower court.



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