Texas Insurance Law Newsbrief - November 20, 2023
YOU WANT THE CONTRACT BENEFITS? THEN COMPLY WITH THE CONTRACT CONDITIONS, INCLUDING ARBITRATION
The Beaumont Court of Appeals applied the Texas Supreme Court’s recent holding in Lennar Homes of Texas Land & Construction, Ltd. V. Whitely, by requiring a new-construction home’s second owners to comply with the first owners’ arbitration clause.
In the present case, Lennar Homes of Texas v. Cockerman and Cockerham, 2023 WL 7852058 (Tex. App.—Beaumont), Benjamin and Kimberly Cockerman bought a two-year-old house in Montgomery County, Texas from the home’s original inhabitants, the Widermans. When the Widermans built and purchased the house, they signed an arbitration agreement as part of the purchase documents, in which they agreed that any dispute shall first be submitted to mediation and if not settled in mediation, then brought to binding arbitration, and not by or in a court of law. Three years after the Cockermans moved in, they alleged that construction defects in the home had caused inappropriate moisture and humidity that created significant mold. They accordingly sued Lennar (which had acquired the original builder) in Montgomery County district court for Deceptive Trade Practices, breach of implied warranties of habitability and workmanship, and negligence construction methods.
Lennar filed a motion to compel arbitration, seeking to enforce the arbitration clause the Widermans had signed. The district court denied Lennar’s motion without specifying its reasons for doing so, and Lennar appealed to the court of appeals in Beaumont.
The Widermans argued that they did not sign the arbitration clause and so were not bound by it. The Beaumont court of appeals sided with Lennar. It concluded that Whitley was directly on point, that the Cockermans were seeking to enforce a direct benefit of the Widermans’ contract, and so the Cockermans should be estopped from making the argument that they did not sign the arbitration clause.
“SNAP REMOVAL” REVERSED BY PLAINTIFF’S UN-SNAP
A Houston Federal District Court allowed the plaintiff to voluntarily dismiss her federal lawsuit and proceed with a new lawsuit in state court without the defendants’ ability to remove.
In Sandy Thompson v. Phillips 66 and Cavern Solutions, 2023 WL 7414567 (S.D. Tex) Sandy Thompon filed a lawsuit in Texas state court on behalf of her deceased husband, Shannon, who died while working in a Phillips 66 and Cavern-owned oil field. Sandy filed suit against Phillips 66 while she was a New Mexico Resident (and shortly after moved to Texas) and before Cavern was served, Phillips “snap-removed” the case to Texas federal court.
After Ms. Thompson moved to Texas, she filed a new state court suit in Texas for her own loss of consortium claim, rather than on behalf of her deceased husband, and moved to voluntarily dismiss without prejudice the federal suit on her husband’s behalf. She admitted her intent to assert her deceased husband’s claims in the new state court case if the federal court dismissal was granted. Phillips 66 argued that the Court should not allow the dismissal because it would be prejudiced by the dismissal and this would allow forum-shopping for Ms. Thompson, and prejudice it. The Court acknowledged this would allow a form of forum shopping, but stated that every Plaintiff’s original choice of forum is a form of forum-shopping, as are snap removals. The Court also held that Phillips 66 would not be prejudiced by a dismissal here, noting that only three months had passed between removal and the motion to dismiss, no dispositive motions had been filed, and only initial disclosures had been exchanged. In light of that, the Court granted the plaintiff’s voluntary dismissal.