A trial court’s order denying a motion from the Sam Houston Electric Cooperative (SHEC) to compel arbitration in a putative class action lawsuit has been reversed by the Ninth Court of Appeals.

The suit was filed in early 2016 by Joe Don Berry, who was not a member of the cooperative himself, but the son of one. His father, Lester Berry, had been a SHEC member for nearly 25 years at the time of his death at the end of November 2015. 

“Berry's suit initially asserted wrongful death and survival causes of action, alleging that Lester Berry, who was elderly, in poor health, and required an oxygen concentrator, died after the cooperative terminated electricity service to his home due to an unpaid electric bill,” Justice Charles Kreger recaps in the decision. “Berry later amended his pleadings to add [additional] defendants and to assert several putative class action claims relating to SHEC's management of its finances. . . . Citing the arbitration clause contained in its Bylaws, SHEC filed a motion to compel arbitration of the putative class claims only and to stay the proceedings as to those claims pending arbitration.”

Berry, et al.  opposed the motion to compel, arguing on various grounds that the arbitration clause was not valid. The justices noted, however, that appellees did not challenge the validity of “the underlying contract in this matter; to the contrary, they steadfastly rely upon the asserted validity of the 2012 Bylaws as a contract that they seek to enforce against SHEC.”

Kreger and his fellow justices concluded that “the doctrine of direct benefits estoppel prevents [appellees] from selectively enforcing the provisions of the 2012 Bylaws that benefit them while simultaneously attacking the provision they do not like.”

This whole legal battle might have been averted if those caring for the very ill Lester Berry had made sure that his routine bills such as electricity service got paid in a timely manner.

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