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A Texas Appellate Court held that a party did not waive its right to arbitrate in spite of moving for dismissal and conducting discovery in a court proceeding.
In LJA Engineering and Surveying, Inc. v. Richfield Investment Corp., No. 09-06-348 CV, 09-06-398 CV, 2006 WL 3626929 (Tex. App.-Beaumont Dec 14, 2006), Richfield hired LJA to do engineering work for residential development of property. The contract between the parties contained an arbitration agreement. Richfield brought suit for various claims. LJA moved to compel arbitration. Richfield did not dispute that a valid arbitration agreement existed; but argued that the judicial process was substantially invoked.
The Court disregarded Richfield's argument that LJA waived arbitration by conducting "extensive discovery… [consisting of] 88 requests for production, set of interrogatories, request for disclosure, and depositions by written questions of two potential witnesses." The responses given by Richfield contained information that would have been available in arbitration. "There [was] no showing of prejudice to Richfield with regard to the limited discovery that was conducted."
The Court further disregarded Richfield's claim that it was prejudiced by LJA's motion to dismiss with prejudice. In considering prejudice, the court focused on whether a party has used "'the judicial process to gain access to information that would not have been discoverable in arbitration.'" In re Nasr, 50 S.W.3d 23, 27 (Tex. App. Beaumont 2001). LJA would have filed an identical motion to dismiss in an arbitration proceeding. Richfield would have had to prepare a response to the motion at that time. Thus, no prejudice to Richfield was shown.
The Court dismissed the "accompanying interlocutory appeal for lack of jurisdiction." It conditionally granted LJA's petition for writ of mandamus and ordered the trial court to compel arbitration.
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