BEAUMONT - Unless the Texas Supreme Court steps in, the equity partners at Provost Umphrey have succeeded in forcing former colleague Paul ‘Chip’ Ferguson Jr. into arbitration under their terms.
On March 3 the Ninth Court of Appeals denied Ferguson’s writ for mandamus and motion for temporary relief, finding that a trial court did not abuse its discretion in compelling arbitration under a partnership agreement instead of a settlement agreement.
A total of three lawsuits have been filed in the unfolding drama between Ferguson and PU – all of which center around a settlement agreement Ferguson negotiated with firm founder Walter Umphrey before officially resigning on Aug. 3, 2015.
Ferguson filed the first and third suits while PU filed the second. The cases were punted around the Jefferson County courthouse until an outside judge was summoned.
PU equity partners Walter Umphrey, Bryan Blevins, Edward Fisher, Joe Fisher, D’Juana Parks, James Payne and David Wilson are all parties to the litigation
Court records show PU sought to force Ferguson into arbitration in accordance with a 2012 partnership agreement he signed, while Ferguson sought to have the trial court compel arbitration under the settlement agreement.
PU claims their former partner took advantage of Umphrey and his ailing mental condition, asserting his mental capacity began to decline in 2014 and that he lacked the capacity to contract, let alone negotiate, Ferguson’s side agreement.
On Dec. 18 the visiting judge granted PU’s motion to compel arbitration under the partnership agreement, court records show.
On appeal, Ferguson argued the trial court abused its discretion in finding the arbitrator selection clause in the settlement agreement unconscionable and compelling arbitration pursuant to the partnership agreement because the order ignores Texas’ long-standing policy supporting the ability of parties to contract freely.
According to the PU partners, Ferguson claims he is entitled to:
• Fees up to eight times his equity share at the time of his withdraw;
• No liability to the firm for existing expenses;
• The sole, unassailable right to claim ownership of client files;
• The right to unethically prohibit the firm from communicating with its clients;
• 20 percent of the annual equity partner bonus for the next 10 years;
• 20 percent of life insurance proceeds for which Sheila Umphrey is the beneficiary related to the death of Walter Umphrey, whenever that may be; and
• The right to arbitrate any challenges to his one-sided agreement in an arbitration forum where he can select two of the three arbitrators, arbitrators that need not be neutral.
Ferguson, on the other hand, has contended in court documents that Umphrey was still the managing partner of PU at the time the settlement agreement was executed.
PU is represented in part by Fields Alexander of the Houston law firm Beck Redden.
Attorney Ricky Raven of the Houston law firm Reed Smith represents Ferguson in the trial court proceedings.
Appeals case No. 09-16-00054-CV