San Antonio Eye Center, P.A. D/B/A Harris Optical South Texas Total Eye Care, P.A. Albert Castillo And Sanford Roberts II, M.D. v. Vision Associates of South Texas P.A. D/B/A South Texas Eye Institute And Lisa Marten, M.D.

Citation: Not availableDocket: 04-22-00078-CV

Court: Court of Appeals of Texas; August 31, 2022; Texas; State Appellate Court

Original Court Document: View Document

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In an interlocutory appeal, the Fourth Court of Appeals in San Antonio, Texas, addressed a dispute regarding the applicability of an arbitration agreement to the claims of appellees Vision Associates of South Texas P.A. and Dr. Lisa Marten against appellants San Antonio Eye Center, P.A., South Texas Total Eye Care, P.A., and Albert Castillo. The trial court had determined that the claims fell under the arbitration agreement but found that the appellants waived their right to compel arbitration. The Court reversed this decision and remanded the case for further proceedings.

The background involves appellant South Texas Total Eye Care, P.A. (STTEC) managing a network of optical healthcare providers under an Independent Physician Participation (IPP) Agreement initiated in 2013. This agreement included a confidentiality clause and an arbitration provision requiring disputes to be resolved through binding arbitration. Appellees allege that Castillo improperly accessed and used their patient list, violating the confidentiality clause. Additional claims include allegations against Dr. Sanford Roberts II, who allegedly obstructed the sharing of referral information post-retirement of SAEC's founder and misused STTEC to divert patient referrals to SAEC. The IPP Agreement was terminated by STTEC in December 2019. Furthermore, there was an earlier partnership between SAEC and VAST to operate IDOK Optical, involving a separate IDOK Agreement for leasing space to sell eyewear.

The IDOK Agreement is claimed by appellees to have established a partnership that granted both SAEC and VAST rights to review partnership records and conferred management authority to SAEC. Appellees allege that SAEC did not fulfill its accounting obligations under this agreement, prompting their demand for an accounting. The IDOK Agreement was terminated in December 2019, and appellees filed their original petition on November 2, 2020. Their allegations fall into two categories: 

1. Claims regarding patient referrals, asserting that appellants: 
   - Breached the IPP Contract,
   - Fraudulently induced appellees into the IPP Contract and misappropriated referrals,
   - Made negligent misrepresentations,
   - Tortiously interfered with business relationships,
   - Breached fiduciary duties by diverting patient referrals.

2. Claims for a complete accounting related to STTEC and SAEC under various agreements.

The parties agreed on a scheduling order for trial on May 2, 2022, and exchanged discovery materials. On January 5, 2022, appellants filed a motion to compel arbitration based on the IPP Agreement and the WellMed Agreement, which involved WellMed Networks, Inc., STTEC, and later appellees. Appellees opposed this motion on January 27, 2022, leading to a hearing on January 28, 2022. The trial court ultimately denied the motion to compel arbitration, ruling that while the matter was subject to arbitration, appellants waived their right to compel arbitration due to extensive litigation and an impending trial date. Appellants appealed this denial, and appellees cross-appealed the court's finding of arbitrability. 

To compel arbitration, a party must demonstrate the existence of a valid arbitration agreement and that the claims fall within its scope. A presumption favoring arbitration exists once the first element is met, and doubts regarding the scope are resolved in favor of arbitration. The evaluation of whether claims are covered by an arbitration agreement is a legal question reviewed de novo. The court also reviews waiver defenses based on litigation conduct de novo, considering the overall circumstances on a case-by-case basis without deferring to the trial court.

Appellants seeking to compel arbitration must demonstrate the existence of a valid arbitration agreement and that the disputed claims fall within its scope. In this case, three agreements were considered, but two were quickly dismissed: the WellMed Agreement lacked an executed copy to establish arbitration rights, and the IDOK Agreement does not contain an arbitration provision. Consequently, appellants could not compel arbitration for disputes related to the IDOK Agreement.

Only the IPP Agreement remained relevant, and appellants proved its existence by submitting an executed copy, which includes an express arbitration clause requiring arbitration for claims related to the agreement. As a result, a strong presumption favoring arbitration arises, with any doubts regarding the agreement's scope resolved in favor of arbitration.

Two categories of claims from appellees' pleadings were identified: claims related to patient referrals and accounting claims under various agreements. The arbitration clause in the IPP Agreement, deemed broad, governs the referral relationship between STTEC and appellees, encompassing claims related to patient referrals. The court overruled appellees' arguments against this interpretation, affirming that the broad arbitration clause applies to all disputes, and rejected claims of waiver by appellants for failing to provide a detailed factual analysis, as the court conducted a de novo review based on the pleadings submitted.

Appellants must demonstrate that the facts supporting appellees' claims under the IDOK Agreement are closely related to the arbitration agreement in question. Claims must either arise solely from the contract or be referenced by it to fall under the arbitration clause. The IDOK Agreement pertains to a partnership for retail eyewear sales and leasing, but the accounting claim does not appear to relate to the IPP Agreement, allowing it to stand independently. Consequently, appellees’ accounting claims are not eligible for arbitration under the IPP Agreement.

Regarding the waiver of the right to arbitrate, appellees argue that appellants waived this right both expressly and impliedly. The claim of express waiver is based on appellants signing a docket control order with a trial setting; however, this does not constitute an express waiver as there is no language in the order that disclaims the right to arbitrate. Actions taken, such as requesting a new trial date, do not demonstrate express waiver either.

On the implied waiver argument, appellees contend that appellants invoked the litigation process significantly. While substantial invocation of judicial processes can lead to waiver, there exists a strong presumption against such waiver. The determination of waiver is approached on a case-by-case basis, considering the totality of circumstances, with a tendency to favor maintaining arbitration rights in close cases.

Implying waiver of arbitration rights requires clear evidence that the party seeking enforcement intended to waive those rights, as established in EZ Pawn Corp. v. Mancias. Key factors to consider include the duration of delay in seeking arbitration, the nature of pretrial activities, who initiated discovery, and the amount of discovery conducted related to the case's merits versus arbitrability. Appellees bear the burden of proof regarding waiver and argue that appellants significantly engaged in litigation by initiating and responding to written discovery, producing over 40,000 documents, and participating in discovery conferences and court proceedings.

Specifically, appellants initiated discovery with a request for disclosure in their answer and exchanged discovery requests with appellees throughout 2020 and 2021. Despite the substantial volume of documents produced, appellees failed to provide context for this figure, making it difficult to assess its significance in relation to the case. There was no indication that the exchanged documents were unusable in arbitration or that duplicative efforts would occur. The case was initiated by appellees on November 2, 2020, and there was over thirteen months between appellants’ answer and their motion to compel arbitration. While this delay is acknowledged, it is deemed minimal in weight due to the limited activity in moving the case forward during that time.

Appellants did not file counterclaims against appellees nor pursue a merits-based disposition, as emphasized by the Texas case Richmont Holdings, Inc. v. Superior Recharge Systems, which highlights the importance of whether a party sought a merits disposition. The parties also did not attempt to depose any witnesses, despite at least three being available among the named parties. After considering the overall circumstances and the appellees' burden to demonstrate implied waiver, it was concluded that appellants did not significantly engage in the litigation process. Consequently, the issue of prejudice was deemed unnecessary to address. The appellants successfully established their right under the IPP Agreement to compel arbitration for claims related to patient referrals and certain accounting claims, but not for the accounting claim under the IDOK Agreement. Since the appellants did not substantially invoke the litigation process, they did not waive their right to arbitrate. The trial court's judgment is therefore reversed, and the case is remanded for further proceedings in line with this opinion.