IT TAKES A LOT—A WHOLE LOT—OF LITIGATING TO WAIVE ARBITRATION

Richmont Holdings, Inc. v. Superior Recharge Systems, LLC
Supreme Court of Texas, No. 13-0907 (December 19, 2014)
Per Curiam (Opinion)
How high is the hurdle for finding a party has waived a contractual right to arbitration by “substantially invoking the judicial process”? Pretty darn high, according to the Texas Supreme Court. Superior Recharge and its part-owner Blake sued Richmont and several affiliates and principals, alleging fraud and breach of contract arising out of an asset purchase agreement that contained an arbitration clause. Nineteen months later, Richmont filed a motion to compel arbitration, which the trial court denied. In the interim, Richmont had filed a separate lawsuit against Blake (which was abated), moved to transfer venue of Superior Recharge’s suit, sent requests for disclosures, and refused to respond to discovery requests (for which it was sanctioned). Citing eleven other cases between 1995 and 2014 in which it had determined arbitration had not been waived, including Perry Homes v. Cull, the Supreme Court reached the same conclusion in this case. Although the Court found Richmont’s explanation for the 19-month delay “implausible,” it held that neither the delay nor the defendant’s litigation conduct waived its right to compel arbitration. So, the Court reversed the lower courts’ waiver findings and remanded to the trial court.

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