Senter Investments, L.L.C. v. Veerjee
Senter Investments, L.L.C. v. Veerjee
Opinion of the Court
OPINION
Opinion By
This is an accelerated, interlocutory appeal from a temporary injunction prohibiting the sale of property that is alleged to be subject to a right of first offer in a lease agreement. Before the trial court granted the temporary injunction, it compelled the parties to arbitration pursuant to an arbitration provision in the lease agreement and the motion of one of the parties. For the reasons set forth herein, we conclude the temporary injunction is not void. We further conclude that the remaining issues asserted seek an advisory opinion from this Court and that appellants — and perhaps all parties — have delayed resolving the merits of their dispute through the arbitration as part of that effort. We af
Background
Appellees Amirali and Asmita Veerjee and Al-Waahid, Inc. (the “Veerjees”) leased commercial property from appellant Senter Investments, L.L.C.
The Veerjees contend that Senter breached the lease by entering into a contract to sell the property to a third party without recognizing the Veerjees’ right of first offer. They filed suit seeking a declaratory judgment, damages for breach of contract and fraud, and a temporary injunction to prevent the sale of the property to a third party. Senter moved to compel arbitration and to abate the trial proceedings.
Several days later, after the temporary injunction hearing, the trial court signed an order granting the temporary injunction and the motion to abate. The temporary injunction order enjoins Senter from, inter alia, selling the property to anyone other than the Veerjees. The order abates the trial and all proceedings other than enforcement of the injunction pending completion of the arbitration proceedings. The order contains a blank for setting the case for trial on the merits, but the blank is not filled in. See Tex.R. Civ. P. 683 (requiring all temporary injunctions to include an order setting the case for trial on the merits).
Senter filed this interlocutory appeal from the temporary injunction. See Tex. Civ. PraC. & Rem.Code Ann. § 51.014(a)(4) (West 2008). In five issues, it contends: (1) the trial court abused its discretion by disturbing the status quo; (2) the trial court enforced part of the lease, the arbitration provision, but ignored the exclusive remedy provision by granting a temporary injunction; (3) the trial court’s temporary injunction “necessarily prejudges a part of the lease which is subject to the arbitration proceeding”; (4) the temporary injunction does not adequately explain why the Veerjees have no adequate remedy at law, especially in light of the exclusive remedy provision; and (5) the temporary injunction is void because it does not include a trial setting.
APPLICABLE LAW
The merits of the underlying controversy are not presented in a tempo
Further, parties may not delay resolution of the merits of their dispute to await the outcome of an interlocutory appeal of a temporary injunction. See id. at 366-67; see also, Barnett v. Griego, 337 S.W.3d 384, 387 (Tex.App.-Dallas 2011, no pet.) (“Such a practice delays the ultimate resolution of the merits of the parties’ dispute and wastes judicial resources.”). Except for a brief period during which the interlocutory appeal statute stayed trial during all interlocutory appeals,
An additional consideration in this case is the parties’ agreement to arbitrate. Both the Federal Arbitration Act (FAA) and the Texas Arbitration Act (TAA) encourage enforcement of valid agreements to arbitrate disputes.
When a case is compelled to arbitration in Texas state courts, the case is typically-stayed pending arbitration rather than dismissed, as it would be in federal court. See CMH Homes v. Perez, 340 S.W.3d 444, 450 n. 4 (Tex. 2011). Thus, after granting a motion to compel arbitration,
a stay is generally the only appropriate order for a state court with jurisdiction of all issues. Indeed, the Texas Arbitration Act states that “[a]n order compelling arbitration must include a stay” of the underlying litigation. During arbitration, a court order may be needed to replace an arbitrator, compel attendance of witnesses, or direct arbitrators to proceed promptly; after arbitration, a court order is needed to confirm, modify, or vacate the arbitration award. Consequently, dismissal would usually be inappropriate because the trial court cannot dispose of all claims and all parties until arbitration is completed.
Id. (quoting In re Gulf Exploration, L.L.C., 289 S.W.3d 836, 840-41 (Tex. 2009) (citations omitted)); see also Tex. Civ. Prac. & Rem.Code Ann. § 171.021(c). Among the orders a trial court has jurisdiction to render before or during an arbitration proceeding is an injunction in support of the arbitration. See Tex. Civ. Prac. & Rem.Code Ann. § 171.086(a)(3), (b)(2) (allowing trial court to grant injunctions before or during arbitration proceedings and to enforce such orders); Menna v. Romero, 48 S.W.3d 247, 251 (Tex.App.-San Antonio 2001, pet. dism’d w.o.j.) (affirming temporary injunction, but reversing trial court’s denial of motion to compel arbitration).
IS THE TEMPORARY INJUNCTION VOID?
We address Senter’s fifth issue first because it asserts the temporary injunction is void because it does not contain an order setting the case for trial on the merits. Rule 683 requires every order granting a temporary injunction to include such an order. Tex.R. Civ. P. 683; see Qwest Commc’ns Corp. v. AT & T Corp., 24 S.W.3d 334, 337 (Tex. 2000); InterFirst Bank San Felipe, N.A. v. Paz Const. Co., 715 S.W.2d 640, 641 (Tex. 1986) (per curiam). However, because this case involves a temporary injunction pending arbitration, we must also consider the application of the TAA. See Jack B. Anglin Co., 842 S.W.2d at 268-69.
Once Senter decided to invoke the arbitration provision and the trial court compelled arbitration, the trial proceedings were governed by the TAA as well as the rules of civil procedure. Under the TAA, the trial court was required to stay the trial proceedings pending arbitration, subject to its jurisdiction to grant orders under section 171.086, including an injunction. See Tex. Civ. Prac. & Rem.Code Ann. §§ 171.021(c), 171.086; CMH Homes, 340 S.W.3d at 450 n. 4.
The specific provisions of the TAA in this circumstance control over the rules of civil procedure;
We overrule Senter’s fifth issue.
REMAINING ISSUES
The remaining issues comprise yet another improper — and unnecessary — interlocutory appeal of a temporary injunction.
A. Advisory Opinion on the Merits
Here, the agreed method of resolving the merits of this case is through binding arbitration. At oral argument, we inquired about the status of that arbitration. Counsel for Senter stated his client had made the “strategic decision” not to commence the arbitration proceeding while this appeal was pending. Counsel for the Veerjees agreed that no arbitration has been filed, but pointed out that Senter had the sole right to invoke arbitration under the lease.
Senter argues on appeal that the trial court abused its discretion by ignoring the unambiguous exclusive remedy provision in the lease and that the temporary injunction is contrary to that provision. Senter also contends the temporary injunction “prejudged a part of the contract by holding that the Veerjees had no adequate remedy at law.” Both these issues go to the merits of the dispute. For example, Senter claims the lease agreement should be interpreted as a matter of law and that the “damages as exclusive remedy” clause precludes injunctive relief grounded on the inadequacy of the Veerjees’ remedy at law.
Senter contends it made a strategic decision not to pursue the arbitration pending this appeal because the trial court prejudged the lease and, as it asserted during oral argument, it is entitled to a “clean slate” before the arbitrator. But Senter isn’t seeking a clean slate. It seeks a decision on the merits that the Veerjees are limited to a money-damage remedy under the terms of the lease, thus marking the slate in its favor. Presumably, Senter would seek to use such an advisory opinion from this Court to its advantage in a strategically-timed arbitration proceeding.
Moreover, any opinion by this Court as to the merits of the parties’ arguments concerning the lease agreement would be advisory because such a ruling would not bind the parties.
B. Delay of Arbitration Proceedings
Despite their agreement and the trial court’s order compelling arbitration, neither party has initiated the arbitration proceeding. Our decisions clearly indicate that an interlocutory appeal is no reason
Arbitration is an efficient, cost-effective, and speedy means of resolving disputes. See Olshan Foundation Repair Co., 328 S.W.3d at 893. Had the parties proceeded with arbitration pursuant to their agreement and as compelled by the trial court, they would have conserved valuable judicial resources and obtained a speedier resolution of their dispute. See Iranian Muslim Org., 615 S.W.2d at 209. For the parties to delay their chosen method of dispute resolution pending resolution of an interlocutory appeal only adds to the delay and expense they sought to avoid when they first agreed to arbitration. Judicial economy dictates that we not reward such efforts. See Dallas/Fort Worth Int’l Airport Bd., 335 S.W.3d at 367.
CONCLUSION
We overrule Senter’s fifth issue and affirm the trial court’s temporary injunction as against the argument that it is void because it did not include an order setting the case for trial. We decline to reach the remaining issues.
. Appellant Ronald H. Dalton is a principal in Senter Investments, L.L.C.
. In their response to the motion, the Veerjees requested interim orders pending the arbitration, but cited the section of the civil practice and remedies code applicable to international arbitrations. See Tex Civ. Prac. & Rem.Code Ann. § 172.175 (West 2011) (authorizing district court to issue interim orders before or during international arbitrations). However, section 171.086 grants a trial court similar powers with regard to general arbitrations. That section authorizes a trial court, before, during, or after an arbitration proceeding, to "restrain or enjoin: (A) the destruction of all or an essential part of the subject matter of the controversy.” Tex. Civ. Prac. & Rem.Code Ann. § 171.086(a)(3)(A), (b)(1) (West 2011).
. In 1997, the legislature amended the interlocutory appeal statute to stay the commencement of trial pending resolution of the interlocutory appeal. Act of May 27, 1997, 75th Leg., R.S., ch. 1296, § 1, 1997 Tex. Gen. laws 4936, 4937. In 2001, the legislature excluded temporary injunction appeals from the automatic stay. Act of May 17, 2001, 77th Leg., R.S., ch. 1389, § 1, 2001 Tex. Gen. Laws 3575, 3575 (current version at Tex Civ. Prac. & Rem.Code Ann. § 51.014(b) (West 2008)).
. The supreme court has long encouraged parties and trial courts to move forward with trial on the merits to resolve any burden from a temporary injunction. See Sw. Weather Research, Inc. v. Jones, 160 Tex. 104, 327 S.W.2d 417, 422 (Tex. 1959) (“Generally the most expeditious way of obviating the hardship and discomforture [sic] of an unfavorable preliminary order is to try the case on its merits and thus secure a hearing wherein the case may be fully developed and the courts, both trial and appellate, may render judgments finally disposing of controversies.”). More recently, the supreme court said, "We are here constrained to observe that this case should have been tried on the merits in the trial court long before now.” Iranian Muslim Org. v. City of San Antonio, 615 S.W.2d 202, 208-09 (Tex. 1981) (noting that if the case had proceeded to trial, "[n]ot only would judicial resources have been conserved, but equally importantly, the parties would have obtained the speedier resolution of their dispute”).
. At argument, Senter asserted the FAA applies to the lease agreement. The lease agreement does not specify that the FAA applies to the arbitration provision and die transaction does not appear to involve commerce between the states. However, the FAA and TAA are not mutually exclusive. See In re D. Wilson Const. Co., 196 S.W.3d 774, 779 (Tex. 2006) (orig. proceeding) (FAA preempts only contrary state law). Even where the FAA applies to substantive issues, we apply Texas law to procedural issues in arbitration proceedings. See Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 99-100 (Tex. 2011) (noting that the "Supreme Court concluded that the FAA's purposes and objectives are not defeated by conducting arbitration under state-law procedures different from those provided by the federal statute”); Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 268-69 (Tex. 1992); Alim v. KBR (Kellogg, Brown & Root)-Halliburton, 331 S.W.3d 178, 181 (Tex.App.-Dallas 2011, no pet.). Because the issues before us involve procedural matters, we need not decide whether the FAA applies or whether it preempts contrary Texas law.
. "[W]hen a rule of procedure conflicts with a statute, the statute prevails unless the rule has been passed subsequent to the statute and repeals the statute as provided by Texas Government Code § 22.004.” Jackson v. State Office of Admin. Hearings, 351 S.W.3d 290, 298-
The provisions at issue here were adopted as part of the TAA in 1965. See Act of May 29, 1965, 59th Leg., R.S., ch. 689, § 1, art. 235(G)(iii), (H)(ii), 1965 Tex. Gen. Laws 1593, 1597-98 (repealed, current version at Tex. Civ. Prac. & Rem.Code Ann. § 171.086(a)(3), (b)(2)). Rule 683 was amended in 1983 to require all temporary injunction orders to include a trial setting, but the TAA was not included in the list of statutes repealed by the adoption of the rule amendments. See Tex. . S.Ct. Order Adopting Rules of Civil Procedure, Dec. 5, 1983, § 6 Rule 683, § 8 (reprinted in 47 Tex. B.J. 166 (1984) (special pull-out section, pp. 43, 45)); see also Tex. Gov’t Code Ann. § 22.004(c) (supreme court to file a list of each general law that is repealed or modified in any way and list has same weight and effect as court decision); Jackson, 351 S.W.3d at 298-99.
. See Barnett v. Griego, 337 S.W.3d 384, 387 (Tex.App.-Dallas 2011, no pet.); Dallas/Fort Worth Int’l Airport Bd. v. Ass'n of Taxicab Operators, USA, 335 S.W.3d 361, 365-67 (Tex.App.-Dallas 2010, no pet.); Brar v. Sedey, 307 S.W.3d 916, 920 (Tex.App.-Dallas 2010, no pet.); Hiss v. Great N. Am. Co., 871 S.W.2d 218, 219 (Tex.App.-Dallas 1993, no writ); Hilb, Rogal & Hamilton Co. v. Wurzman, 861 S.W.2d 30, 35 (Tex.App.-Dallas 1993, no writ); Recon Exploration, Inc. v. Hodges, 798 S.W.2d 848, 853-54 (Tex.App.-Dallas 1990, no writ); McCullars v. Van Winkle-Hooker Co., 611 S.W.2d 453, 454-55 (Tex.Civ.App.-Dallas 1980, no writ); Reeder v. Intercont'l Plastics Mfg. Co., 581 S.W.2d 497, 499 (Tex.Civ.App.-Dallas 1979, no writ); Charter Medical Corp. v. Miller, 547 S.W.2d 77, 78-79 (Tex.Civ.App.-Dallas 1977, no writ); Town Plaza Fabrics, Inc. v. Monumental Prop. of Tex., Inc., 544 S.W.2d 775, 776 (Tex.Civ.App.-Dallas 1976, no writ); Irving Bank & Trust Co. v. Second Land Corp., 544 S.W.2d 684, 689 (Tex.Civ.App.-Dallas 1976, writ ref’d n.r.e.); Crawford Energy, Inc. v. Tex. Indus., Inc., 541 S.W.2d 463, 468 (Tex.Civ.App.-Dal-las 1976, no writ).
. Counsel for Senter represented at oral argument that because the trial court had compelled arbitration, either party could now initiate arbitration.
. The Veerjees argued in the trial court, among other things, that the exclusive remedy provision is unconscionable and unenforceable.
. See Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993) ("The distinctive feature of an advisory opinion is that it decides an abstract question of law without binding the parties.”).
. Senter’s argument that the lease is unambiguous and should be interpreted as a matter of law does not change the rule that the merits of the question of law are not presented in a temporary injunction proceeding. See Dallas/Fort Worth Int’l Airport Bd., 335 S.W.3d at 365-66. We would normally defer any consideration of the merits until a final disposition by the trial court, see id., but here the parties agreed to an alternative means of determining the merits-binding arbitration. The parties agreed that all issues regarding the landlord's alleged breach of the lease, including questions of law, are to be submitted to binding arbitration and Senter has chosen to enforce that arbitration agreement. Thus, it is even more perplexing why the parties have failed to take advantage of the expedited and less costly arbitration proceeding to reach the merits.
Reference
- Full Case Name
- SENTER INVESTMENTS, L.L.C. and Ronald H. Dalton v. Amirali & Asmita VEERJEE and Al-Waahid, Inc.
- Cited By
- 16 cases
- Status
- Published