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Gracepoint Holding Company, LLC v. FJR Sand, Inc.

Court of Appeals of Texas, First District

January 7, 2020

GRACEPOINT HOLDING COMPANY, LLC, Appellant
v.
FJR SAND, INC., Appellee

          On Appeal from the 270th District Court Harris County, Texas Trial Court Case No. 2018-23155

          Panel consists of Chief Justice Radack and Justices Landau and Hightower.

          MEMORANDUM OPINION

          RICHARD HIGHTOWER JUSTICE

         FJR, Inc. sued Gracepoint Holding Company, LLC for breaching the terms of a written contract between the parties. Based on an arbitration agreement in the contract, Gracepoint moved to compel arbitration of FJR's claims under the Federal Arbitration Act ("FAA").[1] FJR responded, asserting that Gracepoint had waived arbitration by substantially invoking the judicial process. The trial court denied Gracepoint's motion to compel arbitration.

         In one issue, Gracepoint appeals the trial court's order denying its motion.[2]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 the motion to compel arbitration and remand to the trial court.

         Background

         Gracepoint is a residential homebuilder. On July 12, 2012, Gracepoint and FJR signed an Independent Contractor Agreement ("ICA"). Under the ICA's terms, FJR agreed to provide grading services and materials to Gracepoint, and Gracepoint agreed to pay FJR for its services and materials.

The ICA also contains an arbitration agreement, requiring any claim, controversy, or dispute of any kind among the parties, now existing or arising in the future, whether relating to the interpretation of any provision of this agreement, the rights and obligations of the parties under this agreement, any other agreement relating to, or arising from, the business of Gracepoint or the Work, shall be submitted to binding arbitration under the Federal Arbitration Act, 9 U.S.C 1 et seq. The arbitration shall be conducted by the American Arbitration Association ("AAA").

          In January 2015, FJR filed suit against Gracepoint. FJR alleged that Gracepoint breached the ICA by failing to pay for $27, 138 worth of services provided to Gracepoint during the period of April 2010 to March 2014.

         Six months later, in September 2015, Gracepoint filed a motion to arbitrate FJR's claims pursuant to the ICA's arbitration agreement. FJR agreed to arbitrate its claims.

         The trial court signed an agreed order to arbitrate in October 2015. The court noted that FJR had agreed to arbitrate "as evidenced by the signature of [F]R's] counsel on this Agreed Order." The agreed order required the parties to "institute arbitration." The parties, however, never engaged in arbitration. In November 2017, two years after the agreed order was signed, FJR nonsuited its claims.

         In April 2018, FJR filed the instant suit, asserting the same causes of action against Gracepoint that it had asserted in its January 2015 petition in the first suit. As in the first action, FJR claimed that Gracepoint breached the ICA and owed it $27, 138 for services it had provided to Gracepoint. There was, however, a difference in FJR's factual allegations. In the earlier 2015 suit, FJR had alleged that it provided the services between April 2010 and March 2014. In the instant suit, FJR initially alleged that it provided the services between April 2010 and April 2014.

         Gracepoint answered the suit two weeks after suit was filed, generally denying FJR's claims, asserting the affirmative defense of limitations, and asserting that FJR's claims were subject to the ICA's binding arbitration agreement. To its answer, Gracepoint attached the affidavit of Randall Birdwell, its company representative. In the affidavit, Birdwell testified, "The ICA mandates arbitration as the avenue by which the parties will resolve any disputes." He specifically quoted the ICA's arbitration language. Birdwell concluded his affidavit by stating, "Gracepoint disputes that FJR is owed any additional money, but there is no question that this controversy arises from the contract, and therefore should be arbitrated."

         On June 20, 2018, two months after it answered the suit, Gracepoint filed a motion for summary judgment, asserting that FJR's claims were barred by limitations. Gracepoint pointed out that, in the original 2015 suit, FJR had alleged that it last provided services to Gracepoint in March 2014, but in the instant suit, it alleged that it had last provided services to Gracepoint in April 2014. Gracepoint claimed that FJR was attempting to avoid the four-year-statute of limitations by changing the date of when it last provided services to Gracepoint.

         One month later-on July 30, 2018-FJR filed its First Amended Petition. FJR changed the date that it last provided services to Gracepoint from April 2014 back to March 2014. FJR asserted a new factual allegation, claiming that Gracepoint had breached the ICA in May 2014 by failing to pay the full amount of FJR's invoices. FJR attached the ICA to its First Amended Petition and incorporated it by reference.

         That same day, FJR also responded to Gracepoint's motion for summary judgment. FJR asserted that its suit was not time-barred because its claims did not accrue until Gracepoint breached its contractual obligation in May 2014 by failing to pay the invoices in full. Gracepoint passed on submission of the motion, and the trial court never ruled on it.

         Gracepoint filed a motion to arbitrate in March 2019 and an amended motion to arbitrate in June 2019. Gracepoint relied on the arbitration agreement in the ICA, asserting that the parties had agreed to arbitrate disputes arising out of or relating to the ICA under the FAA. Gracepoint also pointed out that FJR had agreed to arbitrate its claims in the 2015 suit, which involved the same claims brought in the instant suit. Gracepoint attached the trial court's October 2015 agreed order from the earlier suit, which had ordered the parties to institute arbitration. Gracepoint averred that FJR "never instituted [the] arbitration proceeding," but instead nonsuited its claims two years after the agreed order, in November 2017, when the trial court set the case for dismissal for want of prosecution.

         FJR responded to the motion to compel arbitration, requesting denial of the motion for four reasons. First, FJR claimed that the FAA did not apply because the ICA "does not relate to interstate commerce." Second, "it would be inequitable to compel arbitration after the parties [had] engaged in substantial discovery." Third, Gracepoint had filed a motion for summary judgment, seeking relief on the merits. Finally, FJR claimed that Gracepoint "failed to take any affirmative steps to set up the arbitration [in the 2015 suit]" and that Gracepoint "refused to communicate with [F]R's counsel] when he attempted to ...


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