A company hired a contracting group to construct a commercial building, which in turn subcontracted with another company and supplier. The subcontractor failed to pay the supplier for the materials and the supplier filed a lawsuit against the hiring company to enforce a mechanic’s lien. The hiring company filed third party claims against the contracting group, including breach of contract and breach of statutory duties allegedly arising from failing to defend and indemnify the hiring company against the supplier’s claims. The hiring company filed a separate lawsuit in another court. The first court consolidated both claims. The court partially denied the contracting group’s motion to compel arbitration, compelling all claims to arbitration except the statutory defense and indemnification claims. The court also announced it would not stay proceedings and the parties were to arbitrate the claims before the trial. The contracting group appealed.
In MSF Contr. Grp., LLC v. John Hickman, LLC & Serv. Steel Warehouse co., LP, No. 05-23-00591-CV, 2024 WL 1477408, 2024 Tex. App. LEXIS 2420 (Tex. App.—Dallas Apr. 5, 2024, no pet. h.) (unpublished opinion), the court reversed the trial court’s order denying the contracting group’s motion to compel the statutory defense and indemnity claims to arbitration and affirmed the rest of the decision. The court first addressed the hiring company’s assertion that the contracting group failed to establish appellate jurisdiction. The contracting group had filed a notice of appeal, and the servicing company filed its appellee’s brief, establishing appellate jurisdiction in the court. The court then discussed whether the trial court erred in refusing to compel arbitration for the statutory defense and indemnity claims. The arbitration agreement between the parties was broad in scope, resulting in a presumption of arbitrability. The hiring company contended that because its claims arise out of the property code, it may assert those claims in court rather than in arbitration, using direct benefits estoppel as support. The court, however, decided that “because both the hiring company and contracting group are parties to the arbitration agreement, direct benefits estoppel does not apply.” Finally, the court emphasized that the arbitration provision was broad and therefore any question or dispute arising between the parties and relating to the contract had to be arbitrated.
By: The Editors