in Re Amarillo II Enterprises, LLC D/B/A Amarillo Center for Skilled Care Creative Solutions in Healthcare, Inc. Paula Flores And Todd Gudgell, Relators ( 2017 )

In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-17-00005-CV
IN RE AMARILLO II ENTERPRISES, LLC
D/B/A AMARILLO CENTER FOR SKILLED CARE,
CREATIVE SOLUTIONS IN HEALTHCARE, INC.,
PAULA FLORES, AND TODD GUDGELL, RELATORS
OPINION ON ORIGINAL PROCEEDING FOR WRIT OF MANDAMUS
February 3, 2017
MEMORANDUM OPINION
Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.
Relators, Amarillo II Enterprises, LLC d/b/a Amarillo Center for Skilled Care
(ACSC), Creative Solutions in Healthcare, Inc., Paula Flores, and Todd Gudgell
(collectively referred to as Amarillo) petition this court for a writ of mandamus directing
the Honorable Judge John B. Board to withdraw his December 20, 2016 Order 1)
granting the Second Amended Verified Petition to Investigate a Potential Claim or Suit
(“petition”) filed by Thomas Sames, M.D., and 2) denying its motion to stay pending
arbitration. We conditionally grant the petition.
Background
Via the petition, Sames requested permission to conduct discovery of potential
claims under Texas Rule of Civil Procedure 202.1. Included in those from whom he
sought discovery was Amarillo. The potential claims related to gender discrimination,
defamation, breach of contract, and tortious interference with contract. They apparently
arose from or pertain to 1) the termination of a contract between Plum Creek Healthcare
and NWTX AMG Physician Network, PLLC under which Sames was assigned to Plum
Creek, 2) the termination of his contract with Amarillo II Enterprises, LLC, and 3)
purportedly false allegations of sexual improprieties involving and or instigated by Paula
Flores (a nurse with ACSC) and others.
Amarillo responded by moving the trial court to stay acting upon Sames’ request.
It believed itself entitled to that relief because of an arbitration provision in the contract it
executed with him. Under that contract, Sames agreed to act as Amarillo’s medical
director. Furthermore, it contained a provision stating that “[a]ny dispute or controversy
arising under, out of or in connection with, or in relation to this Agreement, or any
amendment hereof, or the breach hereof shall be determined and settled by arbitration
in accordance with the rules of the American Arbitration Association and applying the
laws of the State of Texas.”
Both the petition and motion to stay came for hearing. The motion to stay was
heard first since its disposition may have rendered moot the need to address the Rule
202.1 pleading. Amarillo and Sames presented argument through their respective legal
counsel. The trial court did not rule on whether to grant the stay. Instead, it heard the
petition and took both matters under advisement pending review of applicable authority.
Thereafter, it granted the petition and denied the stay. The reason given for denying the
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stay appeared in its written order. It did not pertain to any substantive analysis of the
motion. Rather, it said:
Because the only proceeding before the Court is a rule 202
petition, the Court lacks jurisdiction to grant the Motion to
Stay and compel arbitration. See Patton Boggs LLP v.
Moseley, 394 S.W.3d 565, 572 (Tex. App. 2011) (citing In re
Southwest Sec., Inc., No. 05-99-01836-CV, 2000 WL
770117, at *2 (Tex.App.-Dallas, June 14, 2000, orig.
proceeding.) (not designated for publication).1
Amarillo followed that order with the petition for writ of mandamus now before us.
Authority
Mandamus is an extraordinary remedy granted only when a relator shows that
the trial court clearly abused its discretion and that no adequate appellate remedy
exists. In re H.E.B. Grocery Co., L.P., 492 S.W.3d 300, 302 (Tex. 2016) (orig.
proceeding) (per curiam); In re Lloyd, No. 07-16-00340-CV, 2016 Tex. App. LEXIS
10489, at *3 (Tex. App.—Amarillo September 26, 2016, orig. proceeding) (mem. op.). A
relator bears the burden of proving these two requirements. In re Lloyd, 2016 Tex. App.
LEXIS 10489, at *3. So too must the relator show that 1) the trial court had a legal duty
to perform, 2) performance was demanded of the court, and 3) it refused. Id.
Next, our Supreme Court has said that “[a]n improper order under Rule 202 may
be set aside by mandamus.” In re Wolfe, 341 S.W.3d 932, 933 (Tex. 2011). In so
stating, the court also observed that pre-suit discovery under Rule 202 is not an end to
itself. Id. Rather, it exists in aid of an anticipated suit and is ancillary to it. Id. It then
added that Rule 202 restricts discovery in depositions to “‘the same as if the anticipated
suit or potential claim had been filed.’” Id. (quoting TEX. R. CIV. P. 202.5). This is so to
1
Despite the statement in the trial court’s ruling about compelling arbitration, that particular relief
was not sought via the motion to stay filed by Amarillo. So, it is not before us.
3
prevent “an end-run around discovery limitations that would govern the anticipated suit.”
Id. Thus, “a party ‘cannot obtain by Rule 202 what it would be denied in the anticipated
action.’” In re Depinho, 59 Tex. Sup. J. 917, 2016 Tex. LEXIS 385, at *5 (May 20, 2016)
(per curiam) (quoting In re Wolfe, 341 S.W.3d at 933).
The latter statement was of particular importance in Depinho, since the Supreme
Court was there dealing with whether Rule 202 discovery could occur if the trial court
lacked jurisdiction over the potential or anticipated suit. To permit it in such a situation
“would untether pre-suit discovery from the suit it purports to be in aid of[,]” said the
court. Id. at *6; see In re City of Dallas, 501 S.W.3d 71, 74 n.2 (Tex. 2016) (stating the
same). Furthermore, it granted Depinho’s petition for writ of mandamus to avoid an
order permitting Rule 202 discovery and did so because the anticipated suit would have
had to be dismissed for want of jurisdiction due to its lack of ripeness. In re Depinho,
2016 Tex. LEXIS 385, at *10-11. In closing, the court reiterated that the respondent
(Bornmann) “‘cannot obtain by Rule 202 what [he] would be denied in the anticipated
action.’” Id. (quoting In re Wolfe, supra).
Application of Authority
No one can legitimately deny that Texas law favors the resolution of disputes
through arbitration. G.T. Leach Builders, L.L.C. v. Sapphire V.P., L.P., 458 S.W.3d 502,
508 (Tex. 2015) (so stating). Indeed, if the parties agreed to that means of resolution,
then “courts must honor the agreement by referring the disputes to arbitration,” unless
the right was waived in some manner. Id. This directive is quite telling here when
coupled with what the Supreme Court said in Wolfe and Depinho.
Again, both Wolfe and Depinho tell us that one cannot get through Rule 202 that
which would be denied him in the anticipated action. Nor can Rule 202 be used to
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obtain discovery pertaining to a potential claim over which the trial court would lack
jurisdiction, according to Depinho. Following the reasoning of and policy underlying
these opinions, it would be logical to infer that if the trial court is barred from
adjudicating the anticipated suit, it cannot permit pre-suit discovery on claims underlying
that suit. And, this leads us to the conclusion we reach today. If the trial court is
precluded from trying the anticipated suit due to the existence of an enforceable
arbitration provision (a proposition supported by G.T. Leach), it may not permit pre-suit
discovery on the claims to be raised in that suit and encompassed within the arbitration
clause.
Moreover, this very court has recognized that the rules of the American
Arbitration Association (the body to which any arbitral claim must be referred) do not
necessarily authorize the same discovery permitted by the Texas Rules of Civil
Procedure. See Zars v. Brownlow, No. 07-07-00303-CV, 2013 Tex. App. LEXIS 7990,
at *16-17 (Tex. App.—Amarillo June 28, 2013, no pet.) (mem. op.) (stating that
“[d]iscovery such as authorized by our rules of civil procedure is not available under the
rules of the American Arbitration Association, the dispute resolution service to which the
parties expressly agreed to submit their disputes”). So, it may also be true that Sames
seeks discovery that could be unavailable to him in arbitration, and attempts the
proverbial end-run thought improper by our Supreme Court in Wolfe and Depinho.
Irrespective of which reason is applicable (that is, the trial court cannot litigate the
anticipated suit or the discovery cannot be obtained in the anticipated suit), the effect of
the arbitration clause at bar had to be addressed by the trial court in deciding whether to
stay action on the Rule 202 proceeding. Indeed, the matter effectively lies at the heart
of whether Rule 202 discovery may be permitted. And, to the extent that the district
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court had jurisdiction to consider the Rule 202 request, we see nothing that would
deprive it of the authority to assess whether an arbitration clause mandates the stay of a
Rule 202 action pending arbitration.
It may well be the appellate court in Patton Boggs LLP v. Moseley, 394 S.W.3d
565 (Tex. App.—Dallas 2011, no pet.), held that a trial court lacked jurisdiction to grant
a motion to compel arbitration via a Rule 202 proceeding. Id. at 572.2 Yet, the authority
it cited as support for the proposition, i.e., In re S.W. Sec., Inc., No. 05-99-01836-CV,
2000 Tex. App. LEXIS 3898, 2000 WL 770117, at *2 (Tex. App.—Dallas, June 14,
2000, orig. proceeding), did not so hold. Rather, it said that “we agree with the trial
court that it had no jurisdiction to grant the motion to compel arbitration absent an
agreement between the parties.” Id. at *5-6 (emphasis added). It then found that the
parties had actually agreed to submit the dispute to arbitration and, therefore “waived
their judicial remedies.” Id. And, that led it to hold that the “trial court erred in not
staying all proceedings until after the parties participated in the agreed to binding
arbitration.” Id.
We find one other deficiency in Patton. It said nothing of the Supreme Court’s
decision and reasoning in In re Wolfe, despite Wolfe having been issued six months
before Patton. The intermediate appellate court did not address how discovery under
Rule 202 could occur if that same discovery was unavailable due to the presence of an
arbitration provision. This omission may be because that specific argument was not
made by the parties. Yet, because of the omission and the actual holding in Southwest
Security, we find Patton unpersuasive authority on the issues before us, and those
2
Even though the issue of whether a stay should have been granted was also raised, that matter
was not expressly addressed.
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issues are whether a Rule 202 proceeding should be stayed pending arbitration and
whether a trial court has jurisdiction to determine whether an arbitration clause
mandates the stay of a Rule 202 proceeding.
Because the trial court concluded that it lacked jurisdiction to stay consideration
of the Rule 202.1 petition, it erred. So too did it err in concluding that it lacked
jurisdiction to compel arbitration, since that matter was not ripe for consideration.3
Thus, we conditionally grant the petition for writ of mandamus. The trial court is ordered
to 1) vacate its December 20, 2016 order (and all subsequent orders) granting Sames
discovery under Texas Rule of Civil Procedure 202.1 et seq, and 2) determine whether
the parties executed an enforceable arbitration clause encompassing the issues to be
asserted in the anticipated suit of Sames as explained in his live Rule 202 pleading.
See G.T. Leach Builders, L.L.C., 458 S.W.3d at 519 (stating that the court’s role is first
to decide whether the parties made a valid and presently enforceable agreement to
arbitrate and, if so, whether the disputes fall within its scope).4 The trial court is directed
to file with the clerk of this court a certified copy of its order complying with this opinion
within 30 days of this opinion. Should the trial court fail to do so, the writ will issue.
Should the trial court need additional time to comply, such must be requested within 30
days of this opinion.
Brian Quinn
Chief Justice
3
Again, Amarillo did not ask the trial court to order the parties to arbitrate.
4
We direct the trial court to undertake this task in the first instance. It has not determined the
substantive matter of whether the arbitration clause at bar requires the Rule 202 proceeding to be stayed
pending arbitration; it simply held that it lacked jurisdiction to make that determination. Consequently, we
cannot say whether or not the trial court abused its discretion in denying a stay.
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