DRAFT 2 Brief on the merits - Supreme Court of Texas

No.11-0100
IN THE SUPREME COURT OF TEXAS
AUSTIN, TEXAS
IN RE: HCBECK, LTD.
From The 116 th District Court
Dallas County, Texas
From the Fifth Court of Appeals
Dallas, Texas
M&Z BRANDT ENGINEERING CO.’S
BRIEF ON THE MERITS
Fred D. Wilshusen
Texas Bar No. 21665590
fwilshusen@tfandw.com
Misty H. Gutierrez
Texas Bar No. 24053616
mgutierrez@tfandw.com
THOMAS, FELDMAN &
WILSHUSEN, LLP
9400 N. Central Expressway,
Suite 900
Dallas, Texas 75231
Telephone: (214) 369-3008
Facsimile: (214) 369-8393
ATTORNEYS FOR REAL
PARTY IN INTEREST M&Z
BRANDT ENGINEERING CO.

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................. i
TABLE OF AUTHORITIES .......................................................................................................... ii
JOINDER AND ADOPTION OF PETITION AND BRIEF ON THE MERITS .......................... 1
STATEMENT OF THE CASE....................................................................................................... 1
ISSUES PRESENTED ................................................................................................................... 2
1. When a plaintiff’s claims are compelled to arbitration and the plaintiff does nothing
to initiate arbitration proceedings for more than four years after the trial court orders
arbitration, has there been a default in arbitration under Section 3 of the Federal
Arbitration Act? .................................................................................................................. 2
2. When a plaintiff has defaulted in arbitration, does a trial court violate the Federal
Arbitration Act by granting the defaulting plaintiff’s request to return to arbitration?...... 2
STATEMENT OF FACTS ............................................................................................................. 2
ARGUMENT.................................................................................................................................. 3
A. Heritage Waived Its Right to Arbitrate Because It Unreasonably Delayed in Filing a Demand for
Arbitration After the Trial Court Ordered the Parties to Arbitrate....................................................... 3
1. Heritage’s Inaction Constitutes Default........................................................................................ 4
2. This Question Cannot Be Decided By The Arbitrator When Arbitration was Never Initiated .... 6
3. A Four-Year Delay in Initiating Arbitration is Prejudicial Per Se................................................ 8
4. Heritage Had a Duty to Diligently Pursue Its Claims by Initiating Arbitration Proceedings Within
a Reasonable Time ......................................................................................................................... 10
5. The Purpose of Arbitration is Frustrated By a Four-Year Delay in Initiating Arbitration After
Arbitration Was Compelled ........................................................................................................... 12
B. Brandt was Prejudiced by Heritage's Delay.................................................................................... 13
C. Heritage's Claims Must be Dismissed Because They Were Abandoned ........................................ 15
D. Mandamus is Appropriate Because the Trial Court had a Duty to Require Heritage to Prosecute its
Suit With Diligence......................................................................................................................... 16
Prayer ............................................................................................................................................ 17
Certification .................................................................................................................................. 18
i

!"#$#!
TABLE OF AUTHORITIES
3V, Inc v. JTS Enterprises, Inc., 40 S.W.3d 533, 540 (Tex. App.—Houston 2000, no pet.) "##$!#%$!
#&!
EZ Pawn"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""&!
Futurewei Techs. Inc. v. E. Oliver Capital Group, LLC, No. 4:09CV455, 2011 U.S. Dist. LEXIS
39080 at *4 (E.D.T.X. [Sherman Div.] April 11, 2011)(mem. op.) """"""""""""""""""""""""""""""""""""""""""" '$!%$!(!
Futurewei Techs. Inc. v. E. Oliver Capital Group, LLC, No. 4:09CV455, 2011 U.S. Dist. LEXIS
53826 (E.D.T.X. [Sherman Div.] May 19, 2011)(mem. op.)""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""'!
Garcia v. Mason Contract Products, LLC, No. 08-23103-Civ-Torres, 2010 U.S. Dist. 92869
(S.D.F.L., August 18, 2010)""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""($!)!
Glass v. Kidder Peabody & Co., Inc"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""")!
Howsam v. Dean Witter Reynolds, 537 U.S. 79, 84-86 (2002)"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""(!
Id!%!
In re Bruce Terminix Co., 988 S.W.2d 702, 705-706 (Tex. 1998) """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""*!
Legg, Mason & Co. v. Mackall & Coe, Inc., 351 F. Supp. 1367, 1372 (D.D.C. 1972) """""""""""""""""""##!
Lessard v. Velsicol, No. 13-00-00113-CV, 2009 Tex. App. LEXIS 2811 (Tex. App.—Corpus
Christi, April 23, 2009, pet. denied)"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""#%!
Lowe v. United States Shoe Corp., 849 S.W.2d 888, 891 (Tex. App.—Houston [14th Dist.] 1993,
writ denied)"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""#%!
Mamlin v. Susan Thoman, Inc., 490 S.W.2d 634 (Tex. Civ. App.—Dallas 1973, no writ) """""""""($!*!
Miller v. AAACON Auto Transport, Inc., 545 F.2d 1019, 1020 (5 th Cir. 1977)""""""""""""""""""""""""""""""""%$!(!
Owens-Corning Fiberglas Corp. v. United States, 419 F2d 439, 455 (Ct. Cl. 1969)"""""""""""""""""""""""#'!
Perry Homes v. Cull, 258 S.W.3d 580, 597 (Tex. 2008) """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""($!#+$!#,!
Preston v. Ferrer, 552 U.S. 346, 128 S. Ct. 978, 169 L. Ed. 2d 917 (2008)"""""""""""""""""""""""""""""""""#,!
Prudential Securities Inc. v. Marshall""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""%$!&!
Radiator Specialty Co. v. Cannon Mills, Inc., 97 F.2d 318, 319 (4th Cir. 1938)"""""""""""""""""""""""""""""""#,!
REA Express v. Missouri Pac. R.R., 447 S.W.2d 721, 727 (Tex. Civ. App.—Houston [14th Dist.]
1969, writ ref’d n.r.e.) """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""##!
Sabine Sungas, Ltd. v. Port of Port Arthur Navigation District of Jefferson County, Texas, NO.
09-09-00331-CV, 2011 Tex. App. LEXIS 228 (Tex. App.—Beaumont, January 13, 2011, no
pet. h.)"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""#&!
Solis v. Int’l Bank of Commerce, No. 13-06-699-CV, 2009 Tex. App. LEXIS 458, *4 (Tex.
App.—Corpus Christi January 22, 2009, no pet.)"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""##$!#&!
Spain v. Houston Oilers, Inc., 593 S.W.2d 746, 748 (Tex. Civ. App.—Houston [14 th Dist.] 1979,
no writ)"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""&$!*!
Sucrest Corporation v. Chimo Shipping Limited, 236 F. Supp. 229, (D.C.N.Y. 1964)"""""""""""""""""""##!
Tyco Int’l (U.S.) Ltd. v. Swartz (In re Tyco Int’l Ltd. Sec. Litig.), 422 F.3d 41, 47 n.5 (5 th Cir.
2005) """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""#+!
Youngs v. Haugh, No. 4:08-CV-528-Y, 2009 U.S. Dist. LEXIS 21853, at *9 (N.D.T.X. March
18, 2009)""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" ($!#+!
ii

STATUTES
9 U.S.C. § 3................................................................................................................................. 5, 8
OTHER AUTHORITIES
AMERICAN ARBITRATION ASSOCIATION, AAA ARBITRATION ROADMAP: A GUIDE TO AAA
ARBITRATION ............................................................................................................................ 13
Keisha Rutledge, Subcontractors Building Recognition on the Job, Tampa Bay Bus. J. (Mar. 12,
2001) ......................................................................................................................................... 14
RULES
TEX. R. CIV. P. 190........................................................................................................................ 12
TEX. R. CIV. P. 196.2..................................................................................................................... 12
TEX. R. CIV. P. 197.2..................................................................................................................... 12
TEX. R. CIV. P. 198.2..................................................................................................................... 12
TEX. R. CIV. P. 329b...................................................................................................................... 12
TEX. R. APP. P. 35.1 ...................................................................................................................... 12
TEX. R. APP. P. 37 ......................................................................................................................... 12
TEX. R. APP. P. 38.6 ...................................................................................................................... 12
TEX. R. APP. P. 55.7 ...................................................................................................................... 12
TEX. R. CIV. P. 99(b) ..................................................................................................................... 12
TEX. R. APP. P. 33.2(e).................................................................................................................. 12
Tex. R. App. P. 9.7.......................................................................................................................... 1
TEX. R. CIV. P. 165a...................................................................................................................... 11
TEX. R. CIV. P. 165a(2) ................................................................................................................. 11
TEX. R. CIV. P. 21a........................................................................................................................ 12
TREATISES
Overton A. Currie, et al., Construction Subcontracting: A Legal Guide For Industry
Professionals § 1.1 (Smith, Currie & Hancock, ed., 1991)....................................................... 13
Philip L. Bruner and Patrick J. O’Connor, Jr., Bruner and O’Connor on Construction Law
(2002)........................................................................................................................................ 13
iii

TO THE HONORABLE SUPREME COURT OF TEXAS:
JOINDER AND ADOPTION OF PETITION AND BRIEF ON THE MERITS
Real Party in Interest M&Z Brandt Engineering Co. (“Brandt”) hereby joins in and
adopts by reference the Petition for Writ of Mandamus and accompanying appendix and
record filed by Relator HCBeck, Ltd. ("Beck") in this proceeding. Brandt further fully
adopts and incorporates herein Brandt’s Response to Petition for Writ of Mandamus and
Beck’s <strong>Brief</strong> on the Merits and their accompanying appendices. See Tex. R. App. P. 9.7
(allowing any party to join in or adopt by reference all or part of a brief, petition,
response, motion, or other document filed by another party in the same case). For the
reasons stated in the above-referenced documents and herein, the trial court abused its
discretion and exceeded its authority by improperly returning the case to arbitration.
STATEMENT OF THE CASE
When a plaintiff does not initiate arbitration proceedings for over four years after
being ordered to arbitrate, does a trial court violate the Federal Arbitration Act by
returning the case to arbitration at the defaulting plaintiff’s request?
Respondent:
Nature of the Case:
Honorable Bruce Priddy, Judge of the 116 th District Court,
Dallas County, Texas
Real Party in Interest, Heritage Hotels Rockport, LLC f/k/a
Heritage Hotels Rockport, LP (“Heritage”) sued Relator,
Beck, asserting construction defect claims. The claims were
compelled to arbitration. Heritage did not initiate arbitration.
Beck then filed the underlying declaratory judgment
proceeding wherein Beck named Real Party in Interest
Brandt, among others, as a defendant in the underlying
lawsuit. Brandt was a subcontractor to Beck for the
construction project at issue.
1

Respondent’s Action:
Proceedings in the
Court of Appeals:
Heritage responded to Beck’s declaratory judgment action by
urging the trial court to return the parties’ dispute to
arbitration. (R. Tab 1). Respondent granted Heritage’s
motion and ordered the case to arbitration. (Beck Petition
Apx. Tab 1).
Beck filed a petition for writ of mandamus in the Fifth Court
of Appeals on January 5, 2011 (Cause No. 05-11-0005-CV).
The petition was considered by Justices Bridges, Richter and
Murphy. Beck’s petition was denied on January 14, 2011.
(Beck Petition Apx. Tab 2).
ISSUES PRESENTED
1. When a plaintiff’s claims are compelled to arbitration and the plaintiff does
nothing to initiate arbitration proceedings for more than four years after the
trial court orders arbitration, has there been a default in arbitration under
Section 3 of the Federal Arbitration Act?
2. When a plaintiff has defaulted in arbitration, does a trial court violate the
Federal Arbitration Act by granting the defaulting plaintiff’s request to
return to arbitration?
STATEMENT OF FACTS
Heritage sued Beck in June 2005 alleging defective construction of a hotel in
Rockport, Texas (the “Project”). (R. Tab 2). Beck moved to compel arbitration of
Heritage’s claims. The trial court granted Beck’s motion and stayed the pending lawsuit
in February 2006. (R. Tab 3, p. 265-66). In January 2007, the trial court dismissed the
case and administratively closed its file. (R. Tab 1, p. 6; R. Tab 3, p. 275-77.) In March
2010, Beck filed the underlying declaratory judgment action seeking declarations that (i)
Heritage’s failure to initiate arbitration proceedings forfeited its right to arbitrate its
2

claims, and (ii) Heritage’s claims were barred by limitations. (R. Tab 4).
Beck was a general contractor and Brandt was one of Beck’s subcontractors who
participated in the construction of the Project. Beck named Brandt and other
subcontractors as defendants in the underlying declaratory judgment action. Beck has
also attempted to join Brandt and other subcontractors to the arbitration that is now
proceeding simultaneously.
In April 2010, over four years after the trial court first compelled arbitration,
Heritage finally filed a demand for arbitration with the American Arbitration Association
(“AAA”). (R. Tab 3, p. 245) Heritage also responded to Beck’s request for declaratory
relief by asking the trial court to return the case to arbitration. (R. Tab 1). The trial court
granted Heritage’s request, stayed the declaratory judgment action, and ordered the
parties’ dispute back to arbitration. (Beck Petition Apx. Tab 1). The Fifth Court of
Appeals denied Beck’s request for Mandamus relief from the trial court’s order. (Beck
Petition Apx. Tab 2).
ARGUMENT
A. Heritage Waived Its Right to Arbitrate Because It Unreasonably
Delayed in Filing a Demand for Arbitration After the Trial Court
Ordered the Parties to Arbitrate
Heritage mistakenly tries to equate this case with cases holding that there is no
waiver of arbitration based merely on the invocation of judicial process. Indeed, there are
numerous cases discussing whether arbitration is waived based on how extensively a
party has relied on the court system before moving to compel arbitration. But this case is
3

not about the invocation of judicial process before moving to compel arbitration—it is
about a complete failure to initiate arbitration after a court has ordered the parties to
arbitrate. The cases Heritage relies upon are not on point.
A party can forfeit its right to arbitrate through either action or inaction. Futurewei
Techs. Inc. v. E. Oliver Capital Group, LLC, No. 4:09CV455, 2011 U.S. Dist. LEXIS
39080 at *4 (E.D.T.X. [Sherman Div.] April 11, 2011)(mem. op.). Cases discussing
waiver based upon the invocation of judicial processes pertain to forfeiture of the rights
to arbitrate caused by action. Conversely, the present matter pertains to forfeiture of the
right to arbitrate caused by inaction.
Heritage did not forfeit its right to arbitrate because of its actions. It forfeited its
right to arbitrate by doing nothing for four years.
1. Heritage’s Inaction Constitutes Default
The United States District Court for the Eastern District of Texas (Sherman
Division) recently considered a matter similar to the one presented herein.
See
Futurewei, 2011 U.S. Dist. LEXIS 39080. After the defendants, who had initially moved
to compel arbitration, refused to arbitrate, the court found that “dilatory conduct by
Defendants constitutes a default in proceeding with the arbitration and warrants vacating
the order staying the case and referring the matter to arbitration.” Id. at *6. The court
vacated its order referring the case to arbitration and ultimately granted default judgments
against the defendants. Id. at *8 and Futurewei Techs. Inc. v. E. Oliver Capital Group,
LLC, No. 4:09CV455, 2011 U.S. Dist. LEXIS 53826 (E.D.T.X. [Sherman Div.] May 19,
2011)(mem. op.). Because the defendants in Futurewei defaulted in arbitration under 9
4

U.S.C. § 3, the court was not required to continue the stay of the judicial proceedings in
favor of arbitration. Futurewei, 2011 U.S. Dist. LEXIS 39080 at *4 and 6.
Likewise, the lower court in the present case should have vacated the stay because
Heritage defaulted. It is proper to vacate a stay when the progress of arbitration is
hindered because “conditions have so changed that it is no longer needed or is rendered
inequitable.” Miller v. AAACON Auto Transport, Inc., 545 F.2d 1019, 1020 (5 th Cir.
1977). It was not equitable to maintain the stay and require the parties to arbitrate after
Heritage slept on its rights for four years.
Furthermore, Heritage relies on cases in which there was a delay in moving to
compel arbitration. These cases are also distinguishable from the present matter. Here,
there was no delay in moving to compel arbitration. Heritage’s delay was in initiating
arbitration proceedings after a court ordered the parties to arbitrate.
Heritage relies heavily on Prudential Securities Inc. v. Marshall to support the
proposition that a party does not waive the right to arbitrate merely by delay. 909 S.W.2d
896, 899 (Tex. 1995). Heritage’s reliance on Prudential is misplaced.
First, Prudential involves waiver based upon invocation of judicial process. Id. at
898. As discussed above, the present matter does not involve a waiver based upon
invocation of the judicial process. Furthermore, in Prudential, the Court found that the
defendants “consistently and timely” sought to invoke their rights to arbitration. Id. at
898. Only 18 months passed from the time the cause of action accrued in April 1994 until
the Supreme Court delivered its opinion in November 1995. Id. Certainly any “delay” in
Prudential cannot be equated to the delays in this case, where Heritage failed to initiate
5

arbitration for 8 years after the cause of action accrued and for four years after the court
ordered the case to arbitration.
Moreover, during the alleged delay in Prudential, multiple motions were filed,
discovery was conducted and another party intervened. Id. There was no multi-year
period of inaction to justify a default based upon a party’s dilatory conduct, as there is
here. Prudential is not analogous to the present lawsuit.
Likewise, the cases that Heritage claims follow Prudential are inapplicable to the
present matter. The cases on which Heritage relies discuss waiver by a party’s action
(invocation of the judicial process) rather than default because of a party’s inaction.
Additionally, the EZ Pawn case relied upon by Heritage acknowledges Spain, in which a
three-year eight-month lapse between notice of claim and demand for arbitration was
found to be unreasonable, prejudicial per se and a waiver of arbitration. EZ Pawn Corp.
v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996), citing Spain v. Houston Oilers, Inc., 593
S.W.2d 746, 747 (Tex. Civ. App.—Houston [14 th Dist] 1979, no writ).
The cases cited by Heritage do not support its right to arbitrate. Heritage’s inaction
resulted in default. The only equitable remedy is to vacate the stay.
2. This Question Cannot Be Decided By The Arbitrator When
Arbitration was Never Initiated
Heritage next asserts that the question of whether it waived its arbitration rights is
for the arbitrator to decide, rather than the court. Yet courts have repeatedly held that the
trial court has the authority to vacate a stay or dismiss a lawsuit when the party seeking
relief fails to proceed with arbitration. Miller v. AAACON Auto Transport, Inc., 545 F.2d
6

1019, 1020 (5 th Cir. 1977). See also Mamlin v. Thomas, 490 S.W. 2d 634, 639 (Tex. Civ.
App.—Dallas 1973; Futurewei, 2011 U.S. Dist. LEXIS 39080; Youngs v. Haugh, No.
4:08-CV-528-Y, 2009 U.S. Dist. LEXIS 21853 (N.D.T.X. [Fort Worth Div.] March 18,
2009); Garcia v. Mason Contract Products, LLC, No. 08-23103-Civ-Torres, 2010 U.S.
Dist. 92869 (S.D.F.L., August 18, 2010).
Heritage argues that the arbitrator should decide this issue. However, Heritage did
not file its demand for arbitration until after Beck filed a declaratory judgment action
asking the court to lift the stay. How could the arbitrator possibly decide this issue if
arbitration was never initiated?
This is not a case where a demand for arbitration was filed and progress stalled after
the arbitrator had assumed jurisdiction. This case involves a wholesale failure to even
start the arbitration process. Consequently, the cases Heritage relies upon to support its
position that the arbitrator should decide all questions of delay are inapposite.
In Perry Homes v. Cull, this Court discussed the issue of waiver based upon
litigation conduct, and held that scenario was for the court to decide. 258 S.W.3d 580,
589 (Tex. 2008). This Court also explained in Perry Homes that Howsam v. Dean Witter
Reynolds was distinguishable because it involved the interpretation of a procedural rule
set by the arbitration association and therefore the arbitrator was in the best position to
interpret and apply the arbitration association’s rules. Id. at 588 citing Howsam v. Dean
Witter Reynolds, 537 U.S. 79, 84-86 (2002). Thus, neither Perry Homes nor Howsam
involved facts like the ones in this case.
7

Glass v. Kidder Peabody & Co., Inc. is also distinguishable. In Kidder Peabody the
parties had already filed a demand for arbitration, selected a panel of arbitrators, and set
the date and location for the arbitration before Kidder asked the court to dismiss—a mere
two weeks before the arbitration was set to begin and in response to an adverse ruling
from the arbitrator. 114 F.3d 446, 448 (4 th
Cir. 1997). Thus, in Kidder Peabody,
arbitration had commenced and an arbitration panel was selected to which the parties
could present their complaints. That is not the case before this Court, where Heritage
never filed an arbitration demand. There was no arbitrator appointed who could decide
this issue. This case was left hanging in purgatory—not in court and not in arbitration.
The only way Beck could achieve final resolution was to return to court.
Moreover, Heritage’s reasoning contravenes the express wording of the statute. The
trial court is obligated to stay the lawsuit pending arbitration “providing the applicant for
the stay is not in default in proceeding with such arbitration.” 9 U.S.C. § 3. Thus, the trial
court is not obligated to stay the lawsuit when, as here, there has been a default in
proceeding with arbitration. See Garcia, 2010 U.S. Dist. LEXIS 92869 at *3-4 (holding
that when a defendant is in default “the FAA no longer compels us to dismiss or stay this
case for arbitration.”)
Applying Heritage’s reasoning, it could delay indefinitely in pursuing arbitration
and the court could never lift the stay or dismiss the lawsuit regardless of the passage of
time. This is nonsensical. The only way this issue could be decided was by the court.
3. A Four-Year Delay in Initiating Arbitration is Prejudicial Per Se
Heritage’s four-year delay in filing a demand for arbitration with the AAA is
8

excessive, unreasonable, and prejudicial to Beck and Brandt. Therefore Heritage waived
its right to arbitration.
An unreasonable delay in moving to compel arbitration is
prejudicial per se. Spain v. Houston Oilers, Inc., 593 S.W.2d 746, 748 (Tex. Civ. App.—
Houston [14 th Dist.] 1979, no writ). If a delay is excessive, a party waives its right to
arbitration. Id. at 747. The Spain court found that a three-year, eight-month lapse between
the date the defendant received notice of the plaintiff’s claim and the date the defendant
moved to compel arbitration was “an unreasonable delay and prejudicial per se.” Id.
Although Spain specifically addresses a prejudicial lapse between the time the defendant
received notice of the suit and the time the defendant moved to compel arbitration, the
effect is the same as delaying arbitration for an excessive period of time after the trial
court has ordered arbitration—the excessive delay prejudices the other parties. Further,
delays in initiating arbitration after the court orders arbitration have also been found to
waive a party’s right to arbitration. See Mamlin v. Susan Thoman, Inc., 490 S.W.2d 634
(Tex. Civ. App.—Dallas 1973, no writ).
Heritage’s delay was even greater than the three years and eight months held to be
“prejudicial per se” by the Spain court. Heritage waited more than four years after the
trial court compelled arbitration, almost five-years after Heritage initially filed suit, and
eight years after it had notice of the claim to file a demand for arbitration with the AAA.
And once the trial court compelled the parties to arbitration, it was Heritage’s duty, as the
party seeking affirmative relief, to initiate the arbitration proceedings. In re Bruce
Terminix Co., 988 S.W.2d 702, 705-706 (Tex. 1998). Instead, Heritage slept on its rights
for four years, allowing evidence to grow stale, before unilaterally deciding that it was
9

once again ready to proceed.
Heritage’s four-year delay in initiating arbitration was excessive, manipulative,
and prejudicial. “[A] party should not be allowed purposefully and unjustifiably to
manipulate the exercise of its arbital rights simply to gain an unfair tactical advantage
over the opposing party.” Perry Homes v. Cull, 258 S.W.3d 580, 597 (Tex. 2008) and
Youngs v. Haugh, No. 4:08-CV-528-Y, 2009 U.S. Dist. LEXIS 21853, at *9 (N.D.T.X.
March 18, 2009)(both quoting Tyco Int’l (U.S.) Ltd. v. Swartz (In re Tyco Int’l Ltd. Sec.
Litig.), 422 F.3d 41, 47 n.5 (5 th Cir. 2005)). While Heritage has had eight years to
evaluate its claims, preserve evidence, and keep track of witnesses, Brandt has suddenly
been brought into this dispute over a Project that it worked on nearly a decade ago.
Brandt has had no access to the Project and no reason to evaluate the condition of the
Project when no claims were pending against it.
Heritage's delay in initiating arbitration proceedings is prejudicial per se and
amounts to default under the FAA. Because of its default, Heritage cannot now compel
another party to participate in arbitration. See Youngs, 2009 U.S. Dist. LEXIS at *11.
4. Heritage Had a Duty to Diligently Pursue Its Claims by
Initiating Arbitration Proceedings Within a Reasonable Time
Heritage essentially asserts that it has absolute control over the progress of the
proceedings—that it maintains control over when to file suit and when to file a demand
for arbitration, despite a court order compelling arbitration. Heritage’s argument relies on
the fact that no deadline was included in the trial court’s order staying the lawsuit and
compelling arbitration. (R. pp. 297-98). Thus, Heritage reasons, there was simply no time
10

y which it was required to initiate arbitration proceedings.
Heritage’s reasoning defies logic. As the Corpus Christi Court of Appeals aptly
stated, “it is folly to believe that the trial court intended the abatement to be infinite in
duration.” Solis v. Int’l Bank of Commerce, No. 13-06-699-CV, 2009 Tex. App. LEXIS
458, *4 (Tex. App.—Corpus Christi January 22, 2009, no pet.). Inherent within an order
to arbitrate is the idea that arbitration will be completed “within a reasonable time.” 3V,
Inc v. JTS Enterprises, Inc., 40 S.W.3d 533, 540 (Tex. App.—Houston [14th Dist] 2000,
no pet.). The purpose of staying the lawsuit pending arbitration is to ensure, among other
things, “that the arbitration proceedings are conducted within a reasonable period of
time.” Legg, Mason & Co. v. Mackall & Coe, Inc., 351 F. Supp. 1367, 1372 (D.D.C.
1972). Courts regularly dismiss cases for want of prosecution when there has been
minimal activity in the case. There is no inherent obligation for the court to set a
deadline for proceeding with a case as a condition precedent for dismissal. See TEX. R.
CIV. P. 165a. In fact, TEX. R. CIV. P. 165a(2) expressly provides that a case no disposed
of within the time standards promulgated by the Supreme Court of Texas may be placed
on the dismissal docket.
Moreover, “dilatory conduct or delay, in the face of a known duty to act,
constitutes a waiver where such conduct is inconsistent with an intention to rely upon
arbitration.” REA Express v. Missouri Pac. R.R., 447 S.W.2d 721, 727 (Tex. Civ. App.—
Houston [14th Dist.] 1969, writ ref’d n.r.e.)(citing Sucrest Corporation v. Chimo
Shipping Limited, 236 F. Supp. 229, (D.C.N.Y. 1964)). The trial court’s order compelling
arbitration imposed a duty on Heritage to initiate arbitration within a reasonable time.
11

Heritage’s four-year delay in initiating arbitration was patently unreasonable and
flagrantly inconsistent with any intention to rely upon arbitration. Accordingly, Heritage
waived its right to enforce arbitration.
5. The Purpose of Arbitration is Frustrated By a Four-Year Delay
in Initiating Arbitration After Arbitration Was Compelled
There are a rare few instances where a party is allowed four years to take action.
Once a lawsuit is initiated, the Texas Rules of Civil Procedure impose deadlines based
upon days or months, not years. See e.g., TEX. R. CIV. P. 21a, 99(b), 190, 194.3, 196.2,
197.2, 198.2, and 329b; See also, TEX. R. APP. P. 33.2(e), 35.1, 37, 38.6 and 55.7. An
order staying a lawsuit and compelling arbitration is not a license to indefinitely postpone
the proceedings. Rather, the purpose of arbitration is to “expedite and facilitate the
settlement of disputes and avoid the delay caused by litigation.” Radiator Specialty Co. v.
Cannon Mills, Inc., 97 F.2d 318, 319 (4th Cir. 1938), see also Perry Homes, 258 S.W.3d
at p. 599, n.108 (quoting Preston v. Ferrer, 552 U.S. 346, 128 S. Ct. 978, 169 L. Ed. 2d
917 (2008) ("A prime objective of an agreement to arbitrate is to achieve streamlined
proceedings and expeditious results.")). Arbitration should not be used to create
additional delays. Cannan Mills, 97 F.2d at 319. Thus, “the party seeking to enforce
arbitration can do so only when not guilty of dilatoriness or delay.” Id.
Had Heritage promptly filed a demand for arbitration, the arbitration proceedings
would have likely been completed years ago. Half of all cases filed with the American
Arbitration Association (“AAA”) valued from $500,000 to $999,999 1 conclude with an
1 The Demand for Arbitration that was eventually filed by Heritage values the case at $900,000. (R. Tab 3, p. 245.)
12

award within 356 days. AMERICAN ARBITRATION ASSOCIATION, AAA ARBITRATION
ROADMAP: A GUIDE TO AAA ARBITRATION, p. 11 (2005). (Brandt Response Apx. Tab
1.) Seventy-five per cent of cases in the same value range reach an award within 455
days. Id. Thus, if Heritage had initiated arbitration in February 2006, when the trial court
originally ordered arbitration, this case likely would have been resolved between
February and May 2007. Yet Heritage did not even attempt to initiate arbitration
proceedings until June 2010, over three years later.
Heritage regarded arbitration not as a fast and efficient means to an end, but as a
delay mechanism to prejudice the other parties. By its own dilatoriness, Heritage forfeited
its right to enforce arbitration.
B. Brandt was Prejudiced by Heritage's Delay
Heritage’s indefinite delay in initiating of arbitration unfairly prejudices
subcontractors, like Brandt, by forcing them to endure the risk of suits over construction
issues for an indeterminate period of time.
It is subcontractors who are actually building America. Subcontractors are
performing most of the work on construction projects. Indeed, they are the hub of
construction activity. OVERTON A. CURRIE, ET AL., CONSTRUCTION SUBCONTRACTING:
A LEGAL GUIDE FOR INDUSTRY PROFESSIONALS § 1.1 (Smith, Currie & Hancock, ed.,
1991). The construction industry in America evolved from the master builder process to
its current form. PHILIP L. BRUNER AND PATRICK J. O’CONNOR, JR., BRUNER AND
O’CONNOR ON CONSTRUCTION LAW § 1:1, at 12 – 14 (2002).
13

In the past, the master builder was responsible for both design and construction.
By the nineteenth century, the rising complexity of construction eventually led to design
professionals becoming responsible for the design aspect of the construction process. Id.
§ 1:2, at 14. General contractors, at that time, self-performed most of the actual
construction using their own forces. As the complexity of construction continued to
increase, it became cheaper and more effective for subcontractors to perform most of the
specialized work that was outside of the general contractor’s expertise. The increasing
involvement of the subcontracting industry in the construction process has evolved over a
long time, eventually to the current situation where subcontractors perform eighty to
ninety percent, and many times one hundred percent, of the construction work on
projects. See generally CURRIE, ET AL, supra n. 22, § 1.2, at 1; Owens-Corning Fiberglas
Corp. v. United States, 419 F2d 439, 455 (Ct. Cl. 1969) (maximizing subcontracting of
Government contracts is encouraged as a matter of national policy.)
Subcontractors, then, put much at risk when they agree to provide labor and
material to a project. Subcontractors provide most of the materials, skilled trade workers,
and payroll, and bear the primary responsibility of meeting scheduled completion
deadlines. KEISHA RUTLEDGE, SUBCONTRACTORS BUILDING RECOGNITION ON THE JOB,
TAMPA BAY BUS. J. (Mar. 12, 2001). 2 Subcontractors typically still have to pay their
material suppliers, workers, overhead, and other direct project costs.
Permitting an owner to file a lawsuit and then indefinitely stay the proceedings,
while taking no action to diligently pursue its claims, prejudices subcontractors by
2 Available at http://tampabay.bizjournals.com/tampabay/stories/2001/03/12/focus6.html.
14

forcing them to endure risk for an indeterminate period based on the owner’s whims.
Because of Heritage’s dilatory conduct, Brandt has been dragged into a lawsuit eight
years after it completed work on a project, and long after anyone would have been
justified to presume that Heritage abandoned its claims.
C. Heritage's Claims Must be Dismissed Because They Were Abandoned
“When an unreasonable delay in the prosecution of a case occurs, it is presumed
that the case has been abandoned.” 3V, 40 S.W.3d at 541. The court may consider, among
other things, periods of inactivity, reasons for the lack of attention, and the passage of
time in considering whether a delay was reasonable. Lessard v. Velsicol, No. 13-00-
00113-CV, 2009 Tex. App. LEXIS 2811 (Tex. App.—Corpus Christi, April 23, 2009,
pet. denied). Absent a sufficient explanation, the presumption of abandonment is
conclusive and the case will be dismissed. 3V, 40 S.W.3d at 541. A party to a lawsuit is
charged with notice that the lawsuit may be dismissed if there is no action in the case for
a long period of time. Lowe v. United States Shoe Corp., 849 S.W.2d 888, 891 (Tex.
App.—Houston [14th Dist.] 1993, writ denied).
The parties were justified to presume that Heritage abandoned its claims when it
failed to initiate arbitration years after the trial court ordered arbitration. Heritage was
charged with the knowledge that its case could be dismissed due to its failure to take
action. Further, Heritage has not offered any legitimate explanation for the multi-year
period of inactivity or its four-year delay in initiating arbitration. Consequently, the
presumption that Heritage abandoned its claims is conclusive and Heritage’s claims must
be dismissed, not ordered to arbitration a second time.
15

D. Mandamus is Appropriate Because the Trial Court had a Duty to
Require Heritage to Prosecute its Suit With Diligence
The “trial judge has a duty and obligation to maintain control of the docket and to
require parties to prosecute their suits with diligence.” Solis, 2009 Tex. App. LEXIS 458
at *4, citing 3V, Inc. v. JTS Enterprises, 40 S.W.3d 533. Diligent prosecution means
diligence in procuring final judgment and concluding the case. 3V, 40 S.W.3d at 541.
“This goal of bringing a case through trial and to its ultimate conclusion is evident from
the [S]upreme [C]ourt’s own time standards which declare that a civil jury case must be
disposed of within 18 months from the appearance date.” Id. Thus, the trial court was
vested with a duty to ensure that Heritage diligently prosecuted its case—whether in
court or in arbitration. Because Heritage waived its right to arbitration by failing to
diligently prosecute its case, the trial court should have dismissed Heritage’s claims that
were abandoned years earlier. 3V, 40 S.W.3d at 541; see also, Sabine Sungas, Ltd. v.
Port of Port Arthur Navigation District of Jefferson County, Texas, NO. 09-09-00331-
CV, 2011 Tex. App. LEXIS 228 (Tex. App.—Beaumont, January 13, 2011, no pet. h.)
(“A trial court may dismiss a party’s claims with prejudice when the trial court orders the
party to arbitrate its claims and the party seeking relief fails to do so.”)
The trial court violated its duty and abused its discretion when it returned the case
to arbitration despite Heritage’s failure to diligently prosecute its lawsuit. The only
adequate remedy at law is to vacate the trial court's order compelling arbitration and to
order the trial court to dismiss the case.
16

PRAYER
Real Party in Interest Brandt prays that the Court finds that Heritage has defaulted
on its right to arbitrate its claims, or otherwise pursue its claims, and asks the Court to
issue a writ of mandamus ordering the trial court to vacate its order improperly returning
the parties’ dispute to arbitration, to dismiss the lawsuit and granting all other relief to
which Brandt may be entitled.
Respectfully submitted,
THOMAS, FELDMAN & WILSHUSEN, L.L.P.
By:
/s/ Fred D. Wilshusen
FRED D. WILSHUSEN
State Bar No. 21665590
Misty H. Gutierrez
State Bar No. 24053616
9400 NCX Tower
9400 North Central Expressway
Suite 900
Dallas, Texas 75231-5027
Telephone: (214) 369-3008
Telecopier: (214) 369-8393
ATTORNEYS FOR REAL PARTY IN INTEREST
M&Z BRANDT ENGINEERING, CO.
17

CERTIFICATION
I have reviewed this <strong>Brief</strong> on the Merits and conclude that every factual statement is
supported by competent evidence in the appendix or record.
/s/ Misty H. Gutierrez
Misty H. Gutierrez
18

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing has
been served as indicated below in accordance with the Texas Rules of Appellate
Procedure, on this the 8th day of August, 2011.
/s/ Fred D. Wilshusen
Fred D. Wilshusen
Via CM/RRR #7010 2780 0002 8769 3901
Peter T. Martin
Andrew R. Stubblefield
MARTIN & MARTIN LAW, PC
3930 McKinney Avenue, Suite 161
Dallas, Texas 75204
214 528-0890 Telephone
214 528-5428 Facsimile
ATTORNEYS FOR RELATOR
HCBECK, LTD.
Via CM/RRR #7010 2780 0002 8769 3918
Robert B. Gilbreath
HAWKINS PARNELL
THACKSTON & YOUNG LLP
4514 Cole Avenue, Suite 500
Dallas, Texas 75205
214 780-5114 Telephone
214 780-5200 Facsimile
ATTORNEYS FOR RELATOR
HCBECK, LTD.
Via CM/RRR #7010 2780 0002 8769 3963
Gregory M. Weinstein
LANGLEY WEINSTEIN, LLP
901 Main Street, Suite 600
Dallas, Texas 75202
214 722-7160 Telephone
214 722-7151 Facsimile
ATTORNEYS FOR REAL PARTIES
IN INTEREST HERITAGE HOTELS
ROCKPORT, LLC F/K/A HERITAGE
HOTELS ROCKPORT, LP
Via CM/RRR #7010 2780 0002 8769 4038
Ted S. Byers
TED S. BYERS, PC
900 Jackson Street, Suite 750
Dallas, Texas 75202
214 761-5600 Telephone
214 761-5602 Facsimile
ATTORNEYS FOR REAL PARTY IN
INTEREST BONAHOOM & ASSOCIATES
Via CM/RRR #7010 2780 0002 8769 3970
Ronald W. Johnson
Todd Hewes
TOUCHSTONE, BERNAYS, JOHNSTON,
BEALL, SMITH & STOLLENWERCK, LLP
4040 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
214 741-1166 Telephone
214 741-7548 Facsimile
ATTORNEYS FOR REAL PARTY IN INTEREST
OAKMAN AIR CONDITIONING & HEATING
Via CM/RRR #7010 2780 0002 8769 3987
Michael J. Shipman
Jason M. Graham
FLETCHER, FARLEY, SHIPMAN
& SALINAS, LLP
8750 North Central Expressway
16th Floor
Dallas, Texas 75231
214 987-9600 Telephone
214 987-9866 Facsimile
ATTORNEYS FOR REAL PARTY IN
INTEREST L.H. LAND PAINTING
COMPANY
19

Via CM/RRR #7010 2780 0002 8769 3994
Michael Gerstle
GERSTLE, MINISSALE & SNELSON, LLP
5005 Greenville Avenue, Suite 200
Dallas, Texas 75206
214 368-6440 Telephone
214 363-9979 Facsimile
ATTORNEYS FOR REAL PARTY IN
INTEREST HAEBER ROOFING
Via CM/RRR #7010 2780 0002 8769 4014
George N. “Trey” Wilson, III
Heather H. Sauter
THOMPSON, COE, COUSINS & IRONS, LLP
Plaza of the Americas
700 North Pearl Street, 25th Floor
Dallas, Texas 75201
214 871-8200 Telephone
214 871-8209 Facsimile
ATTORNEYS FOR REAL PARTY IN
INTEREST HAEBER ROOFING
Via CM/RRR #7010 2780 0002 8769 3925
Hon. Bruce Priddy, Judge
116th District Court
George L. Allen, Sr. Courts Building
600 Commerce Street, Box 640
Dallas, Texas 75202
214 653-6015 Telephone
RESPONDENT
Via CM/RRR #7010 2780 0002 8769 4021
David W. Holman
THE HOLMAN LAW FIRM, PC
24 Greenway Plaza, Suite 2000
Houston, Texas 77046
713 400-4840 Telephone
713 400-4841 Facsimile
ATTORNEYS FOR REAL PARTIES IN
INTEREST HERITAGE HOTELS
ROCKPORT, LLC F/K/A HERITAGE
HOTELS ROCKPORT,
Via CM/RRR #7010 2780 0002 8769 4007
Samuel S. Allen
JACKSON WALKER, LLP
301 West Beauregard, Suite 200
San Angelo, Texas 76903
325 481-2558 Telephone
325 481-2571 Facsimile
ATTORNEYS FOR REAL PARTY IN
INTEREST AUTOMATIC FIRE
PROTECTION, INC.
20