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My Three Sons, Ltd. v. Midway/Parker Medical Center, L.P.

Court of Appeals of Texas, Fifth District, Dallas

May 31, 2017


          On Appeal from the 380th Judicial District Court Collin County, Texas Trial Court Cause No. 380-00398-2013

          Before Justices Francis, Fillmore, and Stoddart



         We deny appellants' motion for rehearing. On the Court's own motion, we withdraw our opinion of March 9, 2017 and vacate the judgment of that date. This is now the opinion of the Court.

         Christopher Riegel and various entities affiliated with him--My Three Sons, Ltd., My Three Sons Management, LLC, Prestonwood OB/GYN Associates, P.A., Christopher Riegel, M.D., P.A.--appeal the trial court's dismissal of their lawsuit against appellees for failing to comply with an order compelling arbitration of the dispute. In five issues, appellants complain the trial court erred in compelling arbitration, dismissing the case, failing to reinstate the case or grant appellants' motion for new trial, and failing to make findings of fact and conclusions of law with respect to the motion to reinstate. For reasons set out below, we conclude all issues are without merit and affirm the trial court's order of dismissal.

         Riegel is an obstetrician/gynecologist in Plano. In June 2005, he purchased, through an affiliated entity, a medical office condominium from Midway/Parker Medical Center, L.P. Riegel claims that after moving in, brown sewer water infested with E. Coli leaked from above into the medical office, and on one occasion, dripped onto a patient. He also asserts that on at least two other occasions, the water pipes froze and burst, causing flood damage to the office.

         On January 30, 2013, appellants sued appellees Midway/Parker Medical Center, L.P., Kinsman Ventures, LLC, Manhattan Construction Company, TD Industries, Inc., Southstar Fire Protection Company, CMA Management Company, and Midway Medical Center Owners Association, Inc., alleging one or more of them were responsible for water pipes bursting and the resulting flooding and/or contamination of the medical office. Appellants alleged that faulty design, installation, construction, maintenance, remediation, clean-up, and/or insulation of the plumbing and fire protections systems in the building and other acts or omissions of appellees "caused the formation, infestation, transmission, migration, and proliferation of mold, bacteria, and other environmental or biological hazardous material and/or conditions . . . inside the building and the Property, including, but not limited to, 'brown water' containing fecal bacteria." Appellants brought claims for negligence, premises liability, breach of contract/breach of warranty, breach of implied warranties, breach of covenant of quiet possession and enjoyment, trespass, nuisance, Deceptive Trade Practices Act violations, fraud, and negligent misrepresentation. Appellants also sought attorney's fees and punitive damages.

         Two months later, appellee Manhattan Construction, the general contractor on the medical building construction project, filed a motion to stay litigation and compel arbitration.

          The motion argued appellants should be compelled to arbitrate their claims against Manhattan because appellants alleged third-party beneficiary status under the contract on which they were suing Manhattan, and the contract contained an arbitration clause. Appellants did not file a response to the motion. On July 11, 2013, the trial court signed an order granting the motion and ordering appellants "be compelled to arbitrate their claims against Manhattan in accordance with the terms of the subject Contract." The order also abated the case until the conclusion of the arbitration proceedings.

         Nineteen months later, on February 9, 2015, appellee Southstar filed a motion to dismiss for failure to initiate arbitration. The motion asserted appellants had "ignored" the trial court's order compelling arbitration and had caused "unjustifiable delay and injustice" to Southstar and the other defendants. The motion asserted the trial court had an inherent right to dismiss the suit for failure to prosecute with diligence. Over the next month, each of the appellees joined Southstar's motion. In late March, a hearing was set for May 18.

         A week before the hearing, appellants filed an objection to the dismissal, asserting Riegel had been "devoting an inordinate amount of his time dealing with his own health issues, raising his three sons after his wife inexplicably left him and his sons, and being the sole caretaker of his father who has advanced Parkinson's, " and appellants' counsel "did not want to interject any more stress" on Riegel in 2014 because of these issues. Appellants further asserted they did not intend to "abandon" their claims. Three days before the hearing, appellants separately filed Riegel's affidavit in support of their objections to the motion to dismiss. Appellants also filed a notice of filing a request for mediation with the American Arbitration Association[1] and a notice of filing a demand with AAA.

          At the dismissal hearing, the trial court sustained appellees' objections to Riegel's affidavit and struck the affidavit. The trial court also took judicial notice of its own files and the contents of the file in Riegel's divorce. Riegel did not appear at the hearing, and the only witness was Riegel's counsel, who testified he had known Riegel since 1974 and knew his family intimately. Counsel then briefly testified to some of the matters contained in the affidavit, including that Riegel had been unable to "comply with his obligations under his fee agreement" due to "economic duress" as a result of his divorce. On cross-examination, however, he said he did not know whether two of Riegel's sons were in college, one in Austin and the other in Louisiana, although he had "no reason" to believe they were not. He also was unable to answer specific questions about Riegel's finances or other litigation matters. After hearing argument of counsel, the trial court granted the motions to dismiss. In a later signed order, the trial court dismissed all of appellants' claims against all defendants without prejudice.

         Appellants timely filed a combined verified motion to reinstate and motion for new trial. In the motion, appellants cite the following as reasons for the delay in complying with the trial court's order: Riegel's divorce, his wife's bankruptcy filed during the divorce, Riegel's caretaking duties of his father, Riegel's own health, an interlocutory appeal by one of the appellees in this case, and the financial consequences of a "contentious divorce and his wife's bankruptcy." The trial court held an evidentiary hearing on the motion; Riegel was the sole witness. Additionally, the trial court took judicial notice "as to what's contained in the filings in this case" but not "for any assertions of truth therein, " the divorce case, and the bankruptcy case. After hearing the evidence, the trial court took the motion under advisement but did not rule, and the motion was consequently overruled by operation of law. Appellants requested findings of fact and conclusions of law, but none were made. This appeal ensued.

          In their first issue, appellants contend the trial court erred by compelling them to arbitrate their claims against Manhattan because they are not parties, signatories, or third-party ...

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