The Texas Supreme Court Affirms The Enforcement of an Arbitration Clause After a Jury Awards Almost $600,000 In Damages and Attorneys’ Fees

On June 26, 2020, the Texas Supreme Court held that a party does not waive its right to appeal from a final judgment by choosing not to pursue an interlocutory appeal from an order denying a motion to compel arbitration. Bonsmara Nat. Beef Co., LLC v. Hart of Tex. Cattle Feeders, LLC, No. 19-0263, 2020 WL 3476770 (Tex. June 26, 2020).

In Bonsmara, a company entered into a cattle-feeding agreement that contained an arbitration clause. Id. at *2. After Bonsmara shipped over 12,500 cattle to Hart, the parties’ relationship broke down and Bonsmara sued Hart and its owners for breach of contract, negligence, civil conspiracy, unjust enrichment, and other tort claims. Id.  Hart moved to dismiss and compel arbitration. Id.

The trial court denied the motion to compel arbitration, and instead of filing an interlocutory appeal, Hart sought mandamus relief to compel arbitration. Id. at *2-3. The court of appeals denied mandamus relief, explaining the opportunity to pursue an interlocutory appeal granted an adequate remedy that Hart failed to pursue. Id. at *3.

The parties ultimately went to trial and a jury rendered judgment for Bonsmara. Id. Hart appealed, arguing the trial court erred by failing to compel arbitration. Id. The appellate court agreed, holding the arbitration agreement was enforceable. Id. The Texas Supreme Court held the court of appeals had jurisdiction to review the order denying the motion to compel arbitration, even after a final judgment, because the order denying arbitration merged into the final judgment, which then gave the court of appeals jurisdiction to consider the challenge to the trial court’s order denying arbitration. Id. at *8-9. Hart did not lose its right to challenge the trial court’s order denying arbitration by not pursuing an interlocutory appeal of that order before trial. Id. at *9.  Thus, even though a jury already ruled on the merits and a final judgment had been rendered, the appellate court properly ordered the parties to arbitration. Id. at *12.

Following Bonsmara, parties should take ensure that an arbitration clause does not foreclose trial, and obtain early rulings on this issue to avoid any additional time and expense litigating a case that may need to be resolved through arbitration.