Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg
G.T. LEACH BUILDERS, L.L.C. -RESIDENTIAL, G.T. LEACH CONSTRUCTION, L.P. AND GARY T. LEACH, Appellants,
SAPPHIRE CONDOMINIUMS ASSOCIATION, INC., Appellee.
appeal from the 138th District Court of Cameron County,
Justices Rodriguez, Contreras, and Longoria.
L. LONGORIA Justice.
G.T. Leach Builders, L.L.C.-Residential (G.T. Leach
Builders), G.T. Leach Construction, L.P., and Gary T. Leach
(collectively, G.T. Leach), appeal an order denying their
motion to compel arbitration of appellee Sapphire
Condominiums Association, Inc.'s lawsuit. We affirm.
V.P., L.P. (Sapphire V.P.) was a limited partnership in the
business of developing a luxury condominium complex on South
Padre Island called Sapphire Condominiums. At the beginning
of this project, Sapphire V.P. executed a general
construction contract (Contract) with appellant G.T. Leach
Builders to act as its general contractor. The Contract
contained a clause in which the parties agreed to submit to
binding arbitration "[a]ny [c]laim arising out of or
related to the Contract." The arbitration proceeding
would be subject to the provisions of the Texas Arbitration
Leach Builders and Sapphire V.P. agreed in section 13.2.1 of
the Contract that they bound "themselves, their
partners, successors, assigns[, ] and legal representatives
to the other party hereto and to [the] partners, successors,
assigns[, ] and legal representatives of such other party . .
. in respect to covenants, agreements[, ] and obligations in
the Contract Documents."
Creation of the Condominium
V.P. legally formed Sapphire Condominiums in November 2005 by
recording a Residential Declaration (Declaration) in the
official records of Cameron County. See Tex. Prop.
Code Ann. § 82.051(a) (West, Westlaw through Ch. 49,
2017 R.S.) (setting out the legal requirements of a
declaration creating a condominium under the Uniform
Condominium Act). The Declaration recited that Sapphire V.P.,
as the "Residential Declarant, " owned the entire
complex in fee simple but now subdivided it into fee-simple
estates. Each estate was composed of an individual residence
and an undivided interest in the common elements. Sapphire
V.P. continued to own each estate as the "Residence
Owner" under the Declaration until selling the estate to
a new owner. Sapphire V.P. retained several rights as the
Residential Declarant related to finishing construction of
the complex that we explain in detail below.
Declaration further recited that Sapphire V.P. created a
residence association, the Sapphire Condominiums Association
(Association), as a Texas nonprofit corporation. The
Association was composed of the owners of each individual
estate and would be responsible for various tasks related to
operating, preserving, and maintaining the condominium
complex. Section 82.102 of the Uniform Condominium Act also
conferred various powers on the Association unless
inconsistent with the Declaration. See generally id.
§ 82.102(a) (West, Westlaw through Ch. 49, 2017 R.S.)
(setting out the powers of a condominium unit owners'
the terms of the Declaration, Sapphire V.P. exercised a
period of "residential declarant control" over
Sapphire Condominiums beginning on the date the Declaration
was filed and ending either three years after the date the
first deed to an estate was recorded or 120 days after the
deeds to 75% of the residences had been recorded, whichever
date came earlier. During this period, Sapphire V.P.
possessed the right under the Declaration to appoint the
Association's board of directors.
Damage from Hurricane Dolly
construction was still ongoing, Hurricane Dolly caused
extensive damage to Sapphire Condominiums. Sapphire V.P.
filed suit against its insurance brokers alleging they
allowed its builder's risk policy to expire several days
before the storm and be replaced by a permanent policy.
Sapphire V.P. sought to recover millions of dollars in
damages from the storm that were allegedly uncovered by the
permanent policy but would have been covered under the
builder's risk policy. G.T. Leach Builders, L.L.C. v.
Sapphire, VP, LP, 456 S.W.3d 570, 574 (Tex. App.-Corpus
Christi 2013) aff'd in part, rev'd in part,
458 S.W.3d 502 (Tex. 2015) (G.T. Leach Builders I).
V.P. later added as defendants appellant G.T. Leach Builders,
two of its subcontractors, an engineering contractor, and one
of the engineering contractor's employees. Id.
Sapphire V.P. alleged that these defendants' negligence
and contractual breaches resulted in construction defects
which caused the complex to sustain water damage from the
storm leading to the uncovered losses. Id. G.T.
Leach Builders filed a motion to compel arbitration under the
arbitration clause in the Contract. The other defendants
filed similar motions even though none of them were
signatories to the Contract. Id. at 575. The trial
court denied all of the defendants' motions to compel.
defendants appealed to this Court. Sapphire V.P. did not
dispute an enforceable agreement to arbitrate existed but
raised the affirmative defenses of statute of limitations and
waiver. Id. at 577. This Court agreed that the
statute of limitations barred arbitration and did not reach
the waiver issue. Id. at 578-79. This Court rejected
the arguments of the non-signatory defendants that the
Contract gave them the right to compel arbitration or that
Sapphire V.P. was equitably estopped from denying
arbitration. Id. at 580-85. The Texas Supreme Court
reversed in part, rejecting both of Sapphire
affirmative defenses, and ordered it to arbitrate its claims
against G.T. Leach Builders. G.T. Leach Builders, LLC v.
Sapphire V.P., LP, 458 S.W.3d 502, 511-23 (Tex. 2015)
(G.T. Leach Builders II). The Court affirmed the
denial of the other defendants' motions to compel
arbitration. Id. at 523-32.