The Houston [14th] Court of Appeals has affirmed a trial court order denying an energy company’s motion to vacate an arbitration award in favor of its former law firm.
EQT Corporation, EQT Production Company, and EQT Energy, LLC v. Baker Botts, LLP and Scott Looper (No. 14-25-00677-CV; August 4, 2026) arose from a dispute between a client and its attorney. EQT routinely retained an outside counsel to help draft and negotiate gas-gathering agreements for all EQT subsidiaries. The company instructed its counsel, Baker Botts, that such agreements must be fair and neutral to the subs and contain standardized terms. Baker Botts reported to EQT at the corporate level, and if there was disagreement between the subs involved in specific negotiations, EQT made the final decision. The problem arose with a natural gas pipeline project in Virginia in 2017. EQT retained Scott Looper of Baker Botts as sole outside counsel to negotiate a deal fair to EQT and Equitrans. The agreement was concluded in February 2018, and EQT subsequently spun off Equitrans the following November.
Shortly after the Equitrans agreement was executed, EQT and Baker Botts executed an omnibus engagement letter. The letter contained an arbitration provision calling for arbitration of “any claim or dispute arising out of or in connection with” Baker Botts’ services under AAA rules. When construction of the Equitrans pipeline got delayed, EQT notified Equitrans that it would terminate the pipeline development agreement. Equitrans demanded payment of a $6 million reservation fee. Eventually, the parties arbitrated the dispute in 2021. The arbitrators denied all claims. EQT Production and EQT Energy then filed suit against Baker Botts in Harris County district court, alleging legal malpractice, breach of fiduciary duty, and gross negligence related to the negotiation and drafting of the pipeline development agreement, resulting in the loss of the arbitration proceeding. Baker Botts responded by adding EQT Corp. as an indispensable party and filing motions in abatement and to compel arbitration. EQT initiated the arbitration, and the arbitration panel rejected EQT’s claims. EQT moved to vacate the arbitration award, while Baker Botts moved to confirm it. The trial court denied the motion to vacate, confirmed the award, and signed a final judgment in favor of Baker Botts. EQT appealed.
In an opinion by Justice Bridges, the court of appeals affirmed. EQT argued that (1) the trial court erred when it compelled EQT Production and EQT Energy, non-signatories to the arbitration agreement, to arbitration, and (2) it likewise erred when it added EQT Corp. as an indispensable party. First, the court rejected the non-signatory argument. The engagement letter, as the court pointed out, expressly applied to EQT Corp. and its subsidiaries and collectively defined them as “EQT” or “you.” That included EQT Production and ETQ Energy. The court easily concluded that the engagement letter’s arbitration provision bound non-signatories EQT Production and EQT Energy.
Turning to the joinder of EQT Corp. to the lawsuit, the court observed that “[t]he trial court has broad discretion in deciding matters of joinder of parties under Rule 39 of the Texas Rules of Civil Procedure” (citations omitted). That discretion can be abused if the trial court “acts in an unreasonable and arbitrary manner or without reference to any guiding rules or principles.” In this case, nobody disputed that Baker Botts provided services to EQT Corp. and its subsidiaries in connection with the pipeline development agreement. When a dispute arose, EQT Corp. participated fully in the unsuccessful arbitration proceeding. Consequently, the court reasoned, “the trial court could have reasonably concluded that [the EQT entities] were at a substantial risk of incurring double, multiple, or otherwise inconsistent obligations rising out of their representation of [those entities] in the [pipeline negotiations] unless EQT Corporation was joined as an indispensable party.” The court thus sided with the trial court and held that it didn’t abuse its discretion.
Finally, the court held that the trial court didn’t err by declining to vacate the arbitration award “because the Engagement Letter could not be retroactively applied to [EQT’s] prior malpractice.” EQT argued that its retroactivity argument “challenges the scope of the arbitration, which the arbitration agreement clearly and unmistakably delegated to the arbitrators.” Citing TotalEnergies, the court observed that SCOTX [has] determined that an agreement to arbitrate disputes in accordance with rules, such as the AAA Commercial Arbitration Rules, providing that an arbitrator shall have the power to determine arbitrability, clearly and unmistakably demonstrates the parties’ intent to delegate arbitrability issues to the arbitrator.” These issues include the validity, scope, or enforceability of the arbitration agreement, so the court held that the agreement at issue delegated the scope question to the arbitrators. Additionally, EQT’s retroactivity argument didn’t fly because SCOTX has recently ruled that “challenges to the temporal application of an arbitration agreement concern the scope of the agreement, not the agreement’s existence.” The trial court didn’t err on this question, either.
