Branch Law Firm L.L.P. v. Osborn

532 S.W.3d 1

The BRANCH LAW FIRM L.L.P. and Turner Branch, Appellants

v.W. Shane OSBORN, Appellee

NO. 14–14–00892–CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed February 4, 2016

Rehearing Denied April 7, 2016

Elizabeth Rivers, Ronald G Franklin, Thomas C. Wright, Wanda Fowler, Tamara Danielle Stiner Toomer, Houston, TX, for Appellants.

Corey J. Seel, Ernest W. Boyd Jr., Christopher Grimm, Houston, TX, for Appellee.

Panel consists of Chief Justice Frost, and Justices Donovan and Brown.

Marc. W. Brown, Justice

Once again, this court considers whether the trial court abused its discretion in denying a motion in which appellants—the Branch Law Firm L.L.P. and Turner Branch—sought to compel appellee W. Shane Osborn to arbitrate his claims. The Branch Parties relied upon an arbitration clause in a settlement agreement among a pharmaceutical company, participating claimants, and participating law firms. In a previous appeal, where the trial court had not reviewed the entirety of the agreement, we affirmed the court's order denying the motion, without prejudice to the movants' ability to be heard on the merits of a subsequent motion to compel. Branch Law Firm, L.L.P. v. Osborn, 447 S.W.3d 390, 391 (Tex.App.—Houston [14th Dist.] 2014, no pet.). This time, having the entire agreement, we conclude that a valid arbitration agreement exists which binds Osborn and that Osborn's claims fall within the scope of the agreement. We also conclude that Osborn has failed to meet his burden to establish a defense to enforcing arbitration. Therefore, we reverse and remand. We also deny Osborn's motion to dismiss.

I. FACTUAL AND PROCEDURAL BACKGROUND

In August 2010, W. Shane Osborn began working as an associate for the Branch Law Firm L.L.P., a Texas limited liability partnership located in Houston, Texas (the "Texas Law Firm"), with an initial annual salary of $50,000. In October 2011, Osborn received a raise in annual salary to $100,000. According to Osborn, his bonus structure consisted of 10% of attorney's fees in any case he worked on, plus another 15% if he originated the case, as well as at least 5% of the total fees collected from the Plaintiff Steering Committee allocation for the hours billed in the Avandia multidistrict litigation (Avandia MDL). Osborn was terminated on May 7, 2012. According to Osborn, he did extensive work on the Avandia cases that required frequent travel to work in Albuquerque, New Mexico. In addition to working on the Avandia MDL, Osborn worked on a mass tort case involving hip implants, and one individual lawsuit.

In June 2012, Osborn filed suit against the Texas Law Firm and Turner Branch (collectively, the "Branch Parties"). Turner Branch is a partner in the Texas Law Firm and a principal, officer, and major stockholder in the Branch Law Firm in New Mexico (the "New Mexico Law Firm"). Osborn alleged breach of contract based upon the Branch Parties' refusal to pay him the 10% and 5% bonuses, as well as the Branch Parties' alleged failure to pay him for working May 1 through May 7, 2012. Osborn also asserted a fraud claim based on the Branch Parties' alleged material misrepresentation of the 10% bonus. The Branch Parties filed counterclaims against Osborn for breach of fiduciary duty, fraud, unjust enrichment, conversion, and theft, alleging his fraudulent use of a firm credit card for personal charges.

In September 2012, Osborn filed a motion to compel the Branch Parties to file answers to his interrogatories, specifically with regard to the amount of attorney's fees received in cases Osborn worked on, including the Avandia cases. The parties took opposite positions as to whether the amount of attorney's fees to be paid under a Master Settlement Agreement (the "MSA") should remain confidential. In December 2010, the MSA was signed by attorneys on behalf of GlaxoSmithKline LLC ("GSK") and signed by Turner Branch of the New Mexico Law Firm, "On Behalf Of The Participating Claimants And The Participating Law Firms." In April 2013, the trial court granted the motion to compel and ordered the Branch Parties to provide Osborn with the amount of attorney's fees, as well as the settlement amount, as contained in the MSA.

Osborn amended his suit to add Turner W. Branch, P.A., a New Mexico professional association located in Albuquerque, New Mexico, as a defendant. In his amended petition, Osborn added claims for quantum meruit, promissory estoppel, fraudulent inducement, abuse of process, and malicious prosecution. By this time, Osborn and the Branch Parties had filed various motions for summary judgment.

Turner W. Branch, P.A. has filed a special appearance and is not a party to this appeal. The Branch Law Firm (the New Mexico Law Firm) is a registered trademark of Turner W. Branch, P.A.¹ Osborn alleged that the Texas Law Firm and the New Mexico Law Firm are the alter egos of Turner Branch, and that "there is such a unity of interest" among the defendants that holding only one of them responsible would be unjust. Osborn also alleged that Turner Branch, the Texas Law Firm, and the New Mexico Law Firm were jointly and severally liable based on several common law principles, including "principal/agent liability, partnership liability, joint enterprise liability, [and] single business enterprise."

In June 2013, the Branch Parties filed a motion to compel arbitration and stay proceedings based upon the MSA. They attached a "redacted copy of portions of the MSA relevant to this motion." Osborn filed a motion to compel compliance with the court's April 2013 order because the defendants still had not provided the amount of attorney's fees and amount of settlement contained in the MSA, and specifically had redacted the settlement amount in the copy of the MSA they had provided. The trial court held a hearing on the parties' motions. The trial court signed an order that the Branch Parties had to provide Osborn with the amount of attorney's fees and amount of settlement as contained in the MSA by the end of business that day and signed an order denying the Branch Parties' motion to compel arbitration and stay proceedings.

The Branch Parties appealed the denial of their motion to compel arbitration. In a majority opinion, we affirmed without prejudice to the Branch Parties' filing another motion where they failed to submit the entirety of the MSA to the trial court.

Branch Law Firm, 447 S.W.3d at 398–99.²

The Branch Parties filed a second motion to compel arbitration. The Branch Parties attached the entire MSA to their second motion, but did not attach any exhibits to the MSA. The Branch Parties argued that the MSA is a valid agreement to arbitrate and that Osborn's claims fall within the scope of the broad arbitration clause. While they acknowledged Osborn did not sign the MSA, they argued that he otherwise is bound to its terms under ordinary contract and agency law. They further contended that Osborn's claims against the Branch Parties were factually intertwined with the MSA such that all his claims must be arbitrated.

On September 25, 2014, Osborn filed his objection to the lack of exhibits and his response. The trial court held a hearing on September 26, 2014. The record reveals uncertainty about whether the exhibits actually had been created, but that the Branch Parties were attempting to get any additional documents authenticated so they could provide them to the trial court. The trial court indicated that the Branch Parties were not "disqualified" from filing another motion to compel: "I'm frankly telling you, go ahead and file a third motion because I know we're going to do this; but, yeah, I'm denying this one." The trial court on September 26 signed an order denying the Branch Parties' second motion to compel arbitration.

The Branch Parties filed a third motion to compel arbitration on October 10, 2014. This motion attached the entire MSA, as well as its exhibits. The third motion included a section arguing that the Branch Parties had not waived their right to seek arbitration. Osborn argued that in spite of the additional exhibits, the Branch Parties' third motion to compel arbitration was actually a motion for the court to reconsider the denial of their second motion. Osborn further objected to the affidavit accompanying the MSA and its exhibits, which was executed by GSK's counsel, arguing that it was insufficient as a business records affidavit. The trial court held a hearing on October 24, 2014. The trial court declined to treat the Branch Parties' third motion to compel arbitration as a motion for reconsideration and, on October 24, signed an order denying the Branch Parties' third motion.

On October 28, 2014, Osborn filed a motion to vacate/motion to reconsider, requesting that the trial court vacate its October 24, 2014 order because a motion to compel arbitration is appealable while a motion for reconsideration is not. On October 29, 2014, the Branch Parties filed their notice of appeal from the trial court's October 24, 2014 order. On November 14, 2014, the trial court held a hearing, found that the Branch Parties' third motion to compel arbitration was a motion for reconsideration, and signed an order vacating its October 24 order. That same day, the Branch Parties filed a motion for the trial court to vacate its November 14, 2014 order.

Also that same day, the Branch Parties filed a motion for temporary relief in this court—requesting a stay of proceedings in the trial court, aside from their pending motion to vacate. Osborn responded that the appeal should be dismissed for want of jurisdiction. The Branch Parties responded to Osborn's motion to dismiss and moved this court to vacate the trial court's November 14, 2014 order. On December 8, 2014, the trial court denied the Branch Parties' motion to vacate. On December 16, 2014, this court vacated the November 14 order pursuant to Texas Rule of Appellate Procedure 29.5, which had the effect of reinstating the October 24, 2014 order. We stayed...