Opinion
Nos. 14-09-00106-CV, 14-09-00234-CV
Opinion filed June 25, 2009.
On Appeal from the 189th District Court Harris County, Texas, Trial Court Cause No. 2008-57160.
Original Proceeding Writ of Mandamus.
Panel consists of Chief Justice HEDGES and Justices YATES and FROST.
MEMORANDUM OPINION
Appellant/Relator Jon Kahn has filed a notice of interlocutory appeal and a related petition for writ of mandamus challenging an order signed December 31, 2008, compelling arbitration and staying the litigation. The cases were consolidated by this court's order filed March 19, 2009. See In re Valero Energy Corp., 968 S.W.2d 916, 917 (Tex. 1998) (recommending consolidation of parallel mandamus and interlocutory appeal in arbitration cases so court may render decision disposing of both simultaneously). Appellee/Real Party Baker Nissan North, Inc. has moved to dismiss both cases for want of jurisdiction, asserting that these cases concern an order compelling arbitration under the Federal Arbitration Act ("FAA"), and appellant's only remedy is an appeal after final judgment. The trial court compelled arbitration and stayed this case pending arbitration. Therefore, there is no final judgment or basis for interlocutory appeal and the appeal should be dismissed. See In re Gulf Exploration, LLC, 52 Tex. S. Ct. J. 612, 2009 WL 1028049, at * 2-3 (Tex. Apr. 17, 2009).
Kahn sued Baker Nissan alleging fraud, misrepresentation, and Deceptive Trade Practices Act ("DTPA") violations concerning a vehicle he purchased. Kahn concedes this case is governed by the FAA. . He argues that this Court has jurisdiction over the petition for writ of mandamus, however. He asserts the arbitration clause is unenforceable and does not cover his claims.
Mandamus relief is generally unavailable for orders compelling arbitration. See In re Palacios, 221 S.W.3d 564, 565 (Tex. 2006). To be entitled to mandamus, a petitioner must show that the trial court clearly abused its discretion and that the relator has no adequate remedy by appeal. In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 462 (Tex. 2008); Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). The determination of when an appeal will be "adequate" depends on a careful balance of the case-specific benefits and detriments of delaying or interrupting a particular proceeding. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004). Because both the federal and state arbitration acts specifically exclude immediate review of orders compelling arbitration, the Texas Supreme Court held that any balancing must tilt strongly against mandamus review. In re Gulf Exploration, 2009 WL 1028049, at * 3.
In Green Tree Financial Corp. v. Randolph, the United States Supreme Court observed that the FAA "generally permits immediate appeal of orders hostile to arbitration . . . but bars appeal of interlocutory orders favorable to arbitration." 531 U.S. 79, 86, 121 S.Ct. 513 (2000). There can be no immediate appeal of an order compelling arbitration if it stays the underlying case, but there can be an appeal if the underlying case is dismissed. Id. at 86-87. The Fifth Circuit has suggested that mandamus review might be available if an applicant could show "clearly and indisputably that the district court did not have the discretion to stay the proceedings pending arbitration." Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 310-11 (5th Cir. 2003). The Texas Supreme Court has clarified that this "exception" applies not to the question whether an order compelling arbitration was correct, but to the question whether the case should have been dismissed rather than stayed. In re Gulf Exploration, LLC, 52 Tex. S. Ct. J. 612, 2009 WL 1028049, at * 2 (Tex. April 17, 2009).
If, on final appeal, an arbitration agreement is found to have been unenforceable, the parties have expended time and money unnecessarily. Standing alone, delay and expense do not render a final appeal inadequate. Gulf States, at * 3. Because Kahn has alleged contract and DTPA violations, if he is successful on final appeal, he may recover his fees and expenses, including those for arbitration. See id.
In rare cases, mandamus may be essential to preserve important substantive and procedural rights from impairment or loss and allow appellate courts to give guidance to the law that might otherwise prove elusive. See In re Poly-America, 262 S.W.3d 337, 352 (Tex. 2008) (reviewing order compelling arbitration and granting mandamus relief from a waiver of statutory remedies that threatened to undermine the legislative workers compensation system); but see Gulf States, at * 4 (recognizing loss of right to jury trial by order compelling arbitration does not warrant mandamus relief because a jury is waived in arbitration agreement).
In this case, as in Gulf States, there are no counterbalancing legislative mandates. See id. at * 4. In Gulf States, the Texas Supreme Court held that because there was no showing that a final appeal after arbitration was inadequate to address claims that the dispute was outside the scope of the arbitration agreement, the court of appeals erred in reviewing the order. Id. Kahn has likewise made no such showing here.
Kahn has not established that a final appeal is inadequate and he is entitled to mandamus relief. Accordingly, the interlocutory appeal is dismissed and the petition for writ of mandamus is denied.