Over a dissent, the Houston [1st] Court of Appeals has held that a law firm did not waive its right to arbitration in a dispute with former clients although four years elapsed between its initial motion to compel and a renewal of the motion after the court of appeals had rejected its TCPA appeal.
Foley & Lardner LLP, Successor-in-Interest to Gardere Wynne Sewell, LLP, Timothy Spear, James G. Munisteri, and Sharon M. Beausoleil v. Stephen H. Dernick and David D. Dernick (No. 01-25-00109-CV; April 30, 2026) arose from an attorney-client dispute. In 2013, four minority shareholders hired Gardere (Foley). The engagement letter contained a mediation/arbitration provision. After four years of doing business, two of the clients sued the firm and three of its lawyers. In December 2021, Foley’s counsel sent Plaintiffs’ counsel a letter bringing his attention to the arbitration clause and asking whether the clients would agree to stay the litigation and proceed to arbitration. They didn’t, so Foley moved to compel arbitration and filed an answer. It didn’t set the motion for a hearing, however.
A few weeks later Foley filed a TCPA motion to dismiss that expressly reserved its arbitration right. Plaintiffs objected, but the trial court granted the motion to dismiss and awarded Foley fees and costs. Plaintiffs appealed. The Houston [1st] Court of Appeals reversed and remanded, but by that time, two years had passed. The trial court issued a new docket control order in late 2024. Shortly thereafter, Foley filed a notice of hearing and set the motion to compel for February 2027. The trial court denied the motion. Foley appealed.
In an opinion by Justice Gunn, the court of appeals reversed and remanded. The question was whether Foley waived its right to arbitration by substantially invoking the judicial process. The answer to the question is determined by the “totality of the circumstances,” including the length of and reasons for the delay, whether and when the movant knew of the arbitration agreement, how much merits or other discovery the movant conducted and whether it would be useful in the arbitration, whether the movant filed a dispositive motion on the merits or asserted affirmative claims for relief, and so forth (citations omitted).
Foley argued that it timely asserted its right to arbitrate, did not do any discovery or file affirmative claims for relief, didn’t invoke the TCPA’s automatic stay or interlocutory appeal, wait until trial’s eve to raise its right, or do anything else inconsistent with the intention to arbitrate. Plaintiffs contended that Foley didn’t ask for a hearing on its motion to compel arbitration and pursued TCPA dismissal and set that hearing instead. But did Foley “clearly” demonstrate an intent to waive arbitration, as the law requires? Given the high burden required to set aside an arbitration provision, the court determined that “[f]ew of the non-exclusive factors … militate in favor of finding waiver.”
The record showed no discovery, for example. The key factor, however, was the length of time that passed between the initial motion to compel and the renewal of the motion four years later. But Foley and the individual defendants went to great lengths to alert Plaintiffs about the arbitration clause and to reserve their right to arbitrate while pursuing the TCPA motion. Most importantly, Foley initially asked Plaintiffs to stay the litigation and proceed to arbitration, an offer Plaintiffs refused. “This deman squarely qualifies as seeking arbitration,” Justice Gunn wrote. “It was not an effort to have things both ways.” Additionally, asking for TCPA dismissal didn’t involve more than a “threshold testing of the merits,” only whether the TCPA could “foreclose a trial on the merits.” In other words, a TCPA motion to dismiss doesn’t “carry[] the same weight as a summary judgment motion or the equivalent.”
The court reversed the trial court and remanded with instructions to sign an appropriate order compelling arbitration and ordering a stay. Justice Rivas-Molloy dissented. She would have found that Foley’s decision not to set a hearing on its initial motion to compel arbitration and pursuing TCPA dismissal (plus attorney’s fees and sanctions) to the end constituted a substantial invocation of the judicial process inconsistent with the right to compel arbitration.
