A company suing a holding business for allegedly breaching its contract will have to go through arbitration.
The Court of Appeals for the First District of Texas reversed an order that denied Gracepoint Holding Company, LLC’s motion to compel in FJR Sand, Inc.’s lawsuit against it. While the 270th District Court in Harris County denied Gracepoint’s motion, the appeals court’s Chief Justice Sherry Radack, and Justices Sarah Beth Landau and Richard Hightower reversed.
“Because FJR did not meet its heavy burden to show that Gracepoint impliedly waived its right to arbitrate under a valid arbitration agreement, we reverse the trial court’s denial of motion to compel arbitration and remand to the trial court,” the judges ruled according to the opinion.
Texas First District Court of Appeals Justice Richard Hightower
| txcourts.gov
FJR claimed that Gracepoint didn’t rightfully acknowledge the copy of the contract that included the arbitration agreement, in the motion to compel arbitration. Gracepoint, however, argues that it didn’t need to authenticate the contract because FJR had already conceded that it existed.
The judges sided with Gracepoint and stated that FJR did admit the contract existed in its first amended complaint. It even included a signed copy of the contract, which is the foundation of FJR’s entire lawsuit.
“We hold that FJR judicially admitted the existence of the ICA, including the arbitration agreement, and that Gracepoint was entitled to rely on the judicial admission in meeting its burden of proving the existence of a valid arbitration agreement,” the judges ruled.
FJR also argued that Gracepoint forfeited the arbitration agreement, but the judges disagreed with that as well. While Gracepoint filed its motion to compel nearly a year after FJR first sued, the delay isn’t enough to show that Gracepoint was waiving the arbitration clause altogether.
Instead, the judges pointed out that two weeks after FJR sued, Gracepoint filed an answer and said that FJR’s claims had to undergo arbitration. So it’s motion to compel 11 months later doesn’t mean that it was completing letting go of the arbitration clause.
The judges also noted that Gracepoint never filed a motion for summary judgment on whether FJR’s claims were valid. Instead, the motion was an argument that they weren’t timely.
Considering this, the judges determined that Gracepoint never forfeited the arbitration clause, and reversed the ruling that denied its motion to compel.