Rotary Drillrigs International, S.A. DE C.V. v. Control Flow, Inc. (No. 14-23-00648-CV; August 13, 2024) arose from a contract dispute. Rotary Drillrigs sued Control Flow for negligence and breach of contract, alleging that it had not received more than $1.6 million in ordered items that it had paid for. Control Flow counterclaimed for breach of contract and declaratory judgment, arguing that Rotary Drillrigs had not paid for what Control Flow constructed pursuant to a purchase order. The trial court granted Control Flow’s motion for summary judgment. As to Control Flow’s counterclaims, the parties reached a Rule 11 agreement under which they agreed to arbitrate the counterclaims as required by the arbitration provision in their contract. Although this provision required the parties to arbitrate if damages exceeded $250,000 before a panel of three arbitrators, the Rule 11 agreement only specified a single arbitrator regardless of the amount of damages. Rotary Drillrigs moved to compel arbitration with two additional arbitrators. Control Flow objected based on the Rule 11 agreement. The trial court sided with Control Flow and ordered the case to arbitration before the single arbitrator named in the agreement. The order further stayed AAA arbitration proceedings commenced by Rotary Drillrigs. Rotary Drillrigs sought interlocutory relief.
In an opinion by Justice Spain, the court of appeals affirmed. Under Texas law, parties are free to modify, revoke, or replace a written arbitration agreement by later agreement, including an oral agreement made in court or by a Rule 11 agreement (citations omitted). Turning to the parties’ agreement in this case, the text clearly provided that their dispute be submitted to a single arbitrator regardless of the amount of damages. In the hearing informing the trial court of the agreement, moreover, the parties discussed scheduling the arbitration to fit the arbitrator’s availability but said nothing about any others. The trial court thus did not abuse its discretion by ordering the parties to carry out the arbitration in accordance with the Rule 11 agreement.
TCJL Intern Hannah Greer provided research for this article.
