Reversed and Rendered in Part and Remanded, and Memorandum Opinion
filed May 22, 2014.




                                       In The

                     Fourteenth Court of Appeals

                               NO. 14-13-00649-CV

      GROUND FORCE CONSTRUCTION, LLC, GROUND FORCE
     MANAGEMENT, INC., AND GROUND FORCE HOLDINGS, LP,
                         Appellants

                                         V.
                     COASTLINE HOMES, LLC, Appellee

                     On Appeal from the 56th District Court
                           Galveston County, Texas
                      Trial Court Cause No. 12-CV-1849

               MEMORANDUM                          OPINION
      In this interlocutory appeal from the order denying their motion to compel
arbitration, appellants Ground Force Construction, LLC, Ground Force
Management, Inc., and Ground Force Holdings, LP (jointly referred to as Ground
Force) contend in a single issue that the trial court abused its discretion in denying
the motion because appellee Coastline Homes, LLC (Coastline) failed to establish
waiver of the right to arbitrate by substantially engaging in litigation. We conclude
Coastline failed to establish waiver as a matter of law. Accordingly, we reverse
the order, render judgment ordering arbitration of the underlying dispute, and
remand this case to the trial court for further proceedings consistent with this
opinion, including the grant of an appropriate stay.

                                          BACKGROUND

       Ground Force is in the business of fabricating and selling modular homes.
Pursuant to a contract containing a mandatory arbitration provision, Ground Force
sold several modular homes to a third party, Barefoot Construction, LLC
(Barefoot). Barefoot subsequently assigned the contract to Coastline. Barefoot
sued Ground Force alleging multiple claims, and the trial court ordered the parties
to arbitration pursuant to the contract. The arbitration panel ruled, in part, that
Barefoot lacked standing to pursue a claim for breach of contract based on its
assignment of the contract to Coastline.

       Coastline then brought the underlying suit for damages in August 2012,
alleging construction defects in the modular homes supplied by Ground Force. On
March 21, 2013, Ground Force moved for summary judgment alleging res judicata
based on the previous arbitration and also seeking to have the contract declared
void for illegality.1 The motion also included an alternative demand for arbitration.
On May 31, 2013, the trial court denied the motion for summary judgment. On
June 6, 2013, Ground Force moved to compel arbitration under the Texas
Arbitration Act (TAA), based on the arbitration clause contained in the contract
       1
           This interlocutory appeal is limited to review of the ruling on the motion to compel
arbitration, and we do not address Ground Force’s defense of illegality of contract. We note that
it is for an arbitrator, not a court, to decide a challenge to the validity of the contract as a whole,
as opposed to a challenge to the arbitration clause specifically. See In re Olshan Found. Repair
Co., 328 S.W.3d 883, 898 (Tex. 2010) (orig. proceeding); In re Labatt Food Serv., L.P., 279
S.W.3d 640, 649 (Tex. 2009) (orig. proceeding).


                                                  2
between Barefoot and Ground Force. Coastline responded with a written objection
that Ground Force had waived its right to arbitrate by substantially engaging in
litigation. A hearing was conducted on July 5, 2013. At the hearing, Coastline
argued only that Ground Force waived the right to arbitrate. The trial court denied
the motion to compel arbitration on July 5, 2013. Ground Force filed a notice of
interlocutory appeal on July 24, 2013.        See Tex. Civ. Prac. & Rem. Code §
171.098(a)(1).

                                   JURISDICTION

      Before reaching the merits of Ground Force’s argument, we must address
Coastline’s contention that we lack jurisdiction to consider this appeal because
Ground Force’s notice of appeal was late. Coastline argues that the trial court
actually denied arbitration in its May 31 order denying the motion for summary
judgment. Coastline further contends the June 6 motion to compel arbitration was
effectively a motion to reconsider the denial of arbitration. Coastline asserts that
Ground Force’s notice of appeal filed July 24 is untimely to appeal the May 31
order because a motion to reconsider does not extend the appellate timetable for
interlocutory appeals. See In re K.A.F., 160 S.W.3d 923, 927 (Tex. 2005) (holding
deadline for filing notice of appeal in accelerated appeal is twenty days after order
is signed and filing motion for new trial, motion to modify judgment, motion to
reinstate, or request for findings of fact and conclusions of law will not extend that
deadline); see also Tex. R. App. P. 26.1(b) (stating notice of appeal in accelerated
appeal “must be filed within 20 days after the judgment or order is signed”).
Coastline also asserts that a ruling on a motion to reconsider is not an appealable
interlocutory order. See Digges v. Knowledge Alliance, Inc., 176 S.W.3d 463, 464
(Tex. App.—Houston [1st Dist.] 2004, no pet.) (holding order on motion to
reconsider denial of special appearance is not independently appealable).


                                          3
      Ground Force responds that we have jurisdiction over this appeal. Ground
Force argues that the trial court did not rule on its arbitration demand until the trial
court signed an order on July 5 denying Ground Force’s motion to compel
arbitration. Ground Force asserts its notice of appeal, filed within 20 days of July
5, is therefore timely.

      Interlocutory orders may be appealed only if permitted by statute and only to
the extent jurisdiction is conferred by statute. Jack B. Anglin Co., Inc. v. Tipps,
842 S.W.2d 266, 272 (Tex. 1992) (orig. proceeding). We strictly construe statutes
authorizing interlocutory appeals because they are a narrow exception to the
general rule that interlocutory orders are not immediately appealable.            CMH
Homes v. Perez, 340 S.W.3d 444, 447–48 (Tex. 2011).

      Section 171.098(a) of the Civil Practice and Remedies Code, which grants
the courts of appeals jurisdiction over appeals of certain interlocutory orders in
arbitration proceedings, provides:

      (a) A party may appeal a judgment or decree entered under this
      chapter or an order:
      (1) denying an application to compel arbitration made under Section
      171.021;
      (2) granting an application to stay arbitration made under Section
      171.023;
      (3) confirming or denying confirmation of an award;
      (4) modifying or correcting an award; or
      (5) vacating an award without directing a rehearing.

Tex. Civ. Prac. & Rem. Code § 171.098(a).

      Section 171.098(a)(1) requires, as a predicate to our interlocutory appellate
jurisdiction, the filing of “an application to compel arbitration made under Section
171.021” and an order denying that application. Tex. Civ. Prac. & Rem. Code §


                                           4
171.098. To prevail under Section 171.021, such a motion must show that an
agreement to arbitrate exists and applies to the parties’ dispute, and that the
opposing party has refused to arbitrate.        Tex. Civ. Prac. & Rem. Code §
171.021(a). Section 171.021 similarly requires an “application of a party” for the
court to order arbitration. Id.

      In Atlas Gulf-Coast, Inc. v. Stanford, 299 S.W.3d 356 (Tex. App.—Houston
[14th Dist.] 2009, no pet.), we held section 171.098(a)(1) of the TAA, permitting
an interlocutory appeal from the denial of arbitration, requires that the appellant
must have first filed a motion to compel arbitration. Id. at 359. No such motion
was filed in Atlas Gulf-Coast. Instead, the trial court had signed an order setting
aside an earlier agreed order to arbitrate. This Court dismissed an attempted
interlocutory appeal of the set-aside order, reasoning that “allow[ing] interlocutory
jurisdiction over any decision that had the effect of stopping arbitration . . . is
clearly broader than the statute’s mandate . . . .” Id.; see also Walker Sand, Inc. v.
Baytown Asphalt Materials, Ltd., 95 S.W.3d 511, 515–16 (Tex. App.—Houston
[1st Dist.] 2002, no pet.) (finding no interlocutory jurisdiction over order refusing
to stay litigation until arbitration was complete because the order did not deny a
motion or application to compel arbitration). Strictly construing section 171.098,
we conclude that before a party may appeal an interlocutory order denying
arbitration, the party must first have filed an application or motion to compel
arbitration.

      In its argument that the trial court actually denied arbitration in the May 31
summary judgment order, Coastline asserts that the trial court’s summary judgment
order is ambiguous because it did not expressly rule on the alternative arbitration
request. See Palermo v. McCorkle, 838 S.W.2d 887, 890 (Tex. App.—Houston
[14th Dist.] 1992, orig. proceeding) (construing order granting new trial); Harper


                                          5
v. Welchem, Inc., 799 S.W.2d 492, 495 (Tex. App.—Houston [14th Dist.] 1990, no
writ) (construing order on alternative motion for summary judgment, dismissal, or
abatement). The order did not address arbitration or contain a Mother Hubbard
clause or other statement denying all relief.2 The order, in its entirety, stated,
“Defendant’s Motion for Summary Judgment is Denied.”

       Coastline argues that we should interpret this ambiguous order in light of the
motion and conclude the court also denied arbitration when it denied Ground
Force’s motion for summary judgment. See Lone Star Cement Corp. v. Fair, 467
S.W.2d 402, 405–06 (Tex. 1971) (construing dismissal order); see also Lal v.
Harris Meth. Fort Worth, 230 S.W.3d 468, 474 (Tex. App.—Fort Worth 2007, no
pet.) (considering the record in construing a scheduling order). But the motion
argued that “should this Court find that a fact issue exists which precludes
summary judgment . . . , this Court should ORDER the parties to arbitration” as it
had in the previous case in which Barefoot sued Ground Force. In light of this
language, the trial court’s denial of summary judgment does not suggest that it
ruled on the alternative request for arbitration.

       Given the rule that we strictly construe statutes authorizing interlocutory
appeals, as well as the specific cases cited above that interpret the statutory
requirements for an interlocutory appeal in the arbitration context, we decline to
interpret an order denying summary judgment that does not mention arbitration to
meet those requirements. Rather, we hold there must be an order denying a motion
to compel arbitration before an interlocutory appeal is permitted, and it is
insufficient for an order to merely have the effect of denying arbitration. See Atlas
Gulf-Coast, 299 S.W.3d at 359–60. Ground Force could not bring an interlocutory

       2
        A “Mother Hubbard” clause typically recites, “All other relief not specifically granted is
denied.” See, e.g., Harris Cnty. Flood Control Dist. v. Adam, 66 S.W.3d 265, 266 (Tex. 2001).


                                                6
appeal until after the trial court signed an order denying its motion to compel
arbitration on July 5, 19 days before Ground Force’s notice of appeal was filed.
Ground Force’s notice of appeal is therefore timely. See Tex. R. App. P. 26.1(b)
(requiring notice of accelerated appeal to be filed within 20 days after the
interlocutory order is signed). Accordingly, we have jurisdiction over this appeal.

                                           ANALYSIS

      In its sole issue, Ground Force asks whether the trial court erred in denying
its motion to compel arbitration based on the written arbitration agreement when
Coastline failed to present any evidence to support its defense of waiver.

      Ground Force executed a contract with Barefoot for the sale of several
modular homes. Barefoot subsequently assigned that contract to Coastline. With
its motion to compel arbitration, Ground Force provided a copy of the contract,
which states that binding arbitration is the sole remedy for any dispute arising
under the contract after the date of the agreement.3 See Tex. Civ. Prac. & Rem.
Code §§ 171.001(a)(2), 171.021(a). Coastline does not dispute the existence of the
arbitration agreement in the contract between Barefoot and Ground Force, nor does
Coastline question that this dispute falls within the scope of the agreement.
Coastline also does not dispute that the arbitration clause applies to it as an
assignee of the contract. See Cotton Commercial USA, Inc. v. Clear Creek I.S.D.,

      3
          The contract contains the following provision:
      ARBITRATION
      5. Any disputes, which may arise between Builder and GroundForce
      Construction, LLC arising under this or any other policy or procedure of
      GroundForce Construction, LLC, or related to its breach, or any liability to a third
      party arising from a Product, shall be finally resolved by arbitration. The decision
      of the arbitrator shall be final and binding and shall constitute the exclusive
      remedy for damages for any alleged breach of this Agreement. Judgment upon the
      award rendered by the arbitrator may be entered in any state or federal court of
      competent jurisdiction.


                                                7
387 S.W. 3d 99, 104, n.4 (Tex. App.—Houston [14th Dist.] 2012, no pet.) (noting
non-signatory who sues based upon a contract is bound by that contract’s
arbitration provisions, citing In re FirstMerit Bank, N.A., 52 S.W.3d 749, 755–56
(Tex. 2001) (orig. proceeding)). Thus, the only issue before us is whether Ground
Force waived its right to compel arbitration.

I.    Applicable law and standard of review

      Once the arbitration movant establishes a valid arbitration agreement that
encompasses the claims at issue, a trial court has no discretion to deny the motion
to compel arbitration unless the opposing party proves a defense to arbitration.
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); In re FirstMerit
Bank, N.A., 52 S.W.3d at 753–54. The trial court conducts a summary proceeding
to make the gateway determination of arbitrability. See In re Weekley Homes,
L.P., 180 S.W.3d 127, 130 (Tex. 2005) (orig. proceeding). When reviewing a
denial of a motion to compel arbitration, if the court’s factual findings are in
dispute, we review the court’s denial of the motion to compel under a legal
sufficiency or “no evidence” standard of review. J.M. Davidson, Inc., 128 S.W.3d
at 227. We defer to the trial court’s factual determinations that are supported by
evidence, but we review the trial court’s legal determinations de novo. In re
Labatt Food Serv., L.P., 279 S.W.3d at 643.

      A party waives a right to arbitration by substantially invoking the judicial
process to the other party’s detriment or prejudice. Perry Homes v. Cull, 258
S.W.3d 580, 589–90 (Tex. 2008). Prejudice within the context of waiver of an
arbitration clause relates to the inherent unfairness resulting from a party’s attempt
to have it both ways by switching between litigation and arbitration to its own
advantage. Id. at 597. Thus, prejudice can be shown by delay, expense, or damage
to a party’s legal position that occurs when the party’s opponent forces it to litigate


                                          8
an issue and later seeks to arbitrate that same issue. Id.

      Because public policy favors arbitration, there is a strong presumption
against waiver of the right to arbitrate. In re Bruce Terminix Co., 988 S.W.2d 702,
704 (Tex. 1998) (orig. proceeding). Due to this strong presumption against waiver,
the burden to establish prejudice is a heavy one. See Perry Homes, 258 S.W.3d at
590. Whether a party has waived arbitration by litigation conduct is a question of
law, which we review de novo. Id. at 598. The standard for determining waiver of
the right to arbitration is the same under both the Texas General Arbitration Act
and the Federal Arbitration Act. Sedillo v. Campbell, 5 S.W.3d 824, 826 (Tex.
App.—Houston [14th Dist.] 1999, no pet.) (appeal and orig. proceeding).

      Waiver of arbitration must be decided on a case-by-case basis, based upon
an examination of the totality of the circumstances. Perry Homes, 258 S.W.3d at
591. In making this determination, courts consider a wide variety of factors,
including:

      • whether the party who pursued arbitration was the plaintiff or the
        defendant;
      • how long the party who pursued arbitration delayed before seeking
        arbitration;
      • when the party who pursued arbitration learned of the arbitration
        clause’s existence;
      • how much the pretrial activity related to the merits rather than
        arbitrability or jurisdiction;
      • how much time and expense has been incurred in litigation;
      • whether the party who pursued arbitration sought or opposed
        arbitration earlier in the case;
      • whether the party who pursued arbitration filed affirmative claims
        or dispositive motions;
      • how much discovery has been conducted and who initiated the
        discovery;


                                           9
      • whether the discovery sought would be useful in arbitration;
      • what discovery would be unavailable in arbitration;
      • whether activity in court would be duplicated in arbitration;
      • when the case was to be tried; and
      • whether the party who pursued arbitration sought judgment on the
        merits.

Baty v. Bowen, 423 S.W.3d 427, 433 (Tex. App.—Houston [14th Dist.] 2013, pet.
denied) (citing Perry Homes, 258 S.W.3d at 591–92).

II.   The trial court abused its discretion when it denied Ground Force’s
      motion to compel arbitration without proof of prejudice.
      In its response in opposition to Ground Force’s motion to compel arbitration,
Coastline alleged that Ground Force substantially invoked the litigation process to
Coastline’s detriment by filing a counterclaim and moving for summary judgment
on the merits of the case. Coastline also alleged that Ground Force’s delay in
requesting arbitration results in waiver.

      To establish that Ground Force’s conduct resulted in a waiver of the right to
arbitrate, Coastline bore the heavy burden to establish that this conduct both (1)
substantially invoked the judicial process in a manner inconsistent with an intent to
rely on the arbitration provision, and (2) was prejudicial to Coastline. See EZ
Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996) (orig. proceeding) (per
curiam) (explaining that waiver will not be found unless both elements of the test
are met).

      Coastline asserts that a party who files pleadings for affirmative relief and
then moves for summary judgment on the merits has substantially invoked the
judicial process. Coastline argues Ground Force sought a “complete victory” on its
defenses of res judicata, standing, and illegality of contract, while alternatively
requesting arbitration. Coastline asserts Ground Force is “gaming” the system and

                                            10
seeking a “second bite at the apple,” comparing this case to the inherent unfairness
cited in Perry Homes, 258 S.W.3d at 597. Coastline recognizes, however, that
Perry Homes requires a totality-of-the-circumstances test to determine waiver. See
258 S.W.3d at 591.

      To support its contention that Ground Force’s motion for summary judgment
waived its right to arbitrate, Coastline cites In re Bruce Terminix Co., 988 S.W.2d
702 (Tex. 1998). The supreme court found no waiver in Bruce Terminix, noting
“this is not a case in which a party who has tried and failed to obtain a satisfactory
result in court then turns to arbitration.” Id. at 704. A motion for summary
judgment was not at issue in Bruce Terminix. The court refused to infer prejudice
where only minimal discovery had been conducted.             Id. at 705–06.    Bruce
Terminix thus does not support Coastline’s assertion that moving for summary
judgment on the merits waives the right to arbitrate.

      Ground Force responds that this case is similar to In re Vesta Insurance
Group, Inc., 192 S.W.3d 759 (Tex. 2006), in which the supreme court granted
mandamus relief to enforce an arbitration agreement, holding the arbitration
opponent had not overcome the strong presumption against waiver. Id. at 764.
The court rejected waiver because the defendants’ dispositive motion was based on
lack of standing rather than on the merits. Id. Thus, to weigh in favor of waiver, a
dispositive motion must go to the merits of the case. See In re Citigroup Global
Mkts., Inc., 258 S.W.3d 623, 625 (Tex. 2008) (“Parties that ‘conduct full
discovery, file motions going to the merits, and seek arbitration only on the eve of
trial’ waive any contractual right to arbitration.”) (quoting In re Vesta Ins. Group,
192 S.W.3d at 764); In re Bison Bldg. Materials, Ltd., Nos. 01-07-00003-CV, 01-
07-00029-CV, 2008 WL 2548568, at *15 (Tex. App.—Houston [1st Dist.] Jun. 26,
2008, no pet.) (mem. op.) (appeal and orig. proceeding) (“The type of dispositive


                                         11
motion contemplated by the Perry Homes factors is a motion that seeks judgment
on the merits.”).

      Here, Ground Force’s motion for summary judgment was based on the
defensive theories of res judicata in a previous arbitration and illegality of contract;
Ground Force did not seek summary judgment on the merits of Coastline’s
contract claims.    Moreover, Ground Force’s filing of a motion for summary
judgment on a defensive theory is insufficient, standing alone, to establish waiver.
See In re Bison Bldg. Materials, Ltd., 2008 WL 2548568, at *15 (recognizing that
seeking relief in a dispositive motion is merely one factor in waiver analysis and
holding summary judgment motion on a defensive theory did not establish waiver).

      In any event, “substantially invoking the judicial process does not waive a
party’s arbitration rights unless the opposing party proves that it suffered prejudice
as a result.” In re Bruce Terminix, 988 S.W.2d at 704. Ground Force contends
Coastline failed to support the prejudice element of its waiver defense with any
evidence. See In re Vesta Ins. Group, Inc., 192 S.W.3d at 763 (holding arbitration
opponent failed to provide proof of prejudice to overcome strong presumption
against waiver); Williams Indus. v. Earth Dev. Sys. Corp., 110 S.W.3d 131, 141
(Tex. App.—Houston [1st Dist.] 2003, no pet.) (holding trial court erred in denying
arbitration where opponent failed to carry evidentiary burden to show prejudice).

      Actual prejudice in the context of waiver of arbitration by litigation conduct
can be shown by damage to a party’s legal position or by the opponent’s incurring
costs and fees due to the movant’s actions or delay. Williams Indus., 110 S.W.3d
at 135. Damage to a party’s legal position can occur when the movant obtains
access to information through litigation that is not discoverable in arbitration. See
id.   Thus, to establish prejudice, Coastline, as the arbitration opponent, was
required to show how Ground Force’s delay, the fees and costs Coastline incurred,


                                          12
the volume of discovery, or the information that Ground Force obtained in
discovery had prejudiced it. See id. at 139. Coastline failed to do so.

      The hearing on the motion to compel arbitration consisted only of argument
of counsel. Coastline provided no evidence regarding the volume of discovery or
how discovery had prejudiced it. See In re Vesta Ins. Group, 192 S.W.3d at 763
(rejecting waiver because no prejudice from allegedly “extensive discovery” was
shown where the party opposing arbitration failed to present evidence detailing the
discovery conducted). Our record contains no copies of discovery requests or
responses, and they were not introduced into evidence at the hearing. Knowing the
amount and content of discovery is important in determining prejudice because
“when only a minimal amount of discovery has been conducted, which may also
be useful for the purpose of arbitration, the court should not ordinarily infer waiver
based upon prejudice.” In re Bruce Terminix, 988 S.W.2d at 704. The record
contains only Coastline’s designation of experts filed June 2, 2013, naming its
attorney and one engineer. The motion to compel arbitration was filed four days
later. At the hearing on the motion to compel arbitration, Coastline’s counsel
conceded no depositions had yet been taken.

      Nor is there evidence to establish that anything revealed in discovery would
not have been produced in arbitration. In addition, Coastline did not produce
evidence of its attorney’s fees or other expenses, much less explain what portion of
these expenses were attributable to Ground Force’s actions or were for matters that
could not be used in arbitration. See Associated Glass, Ltd. v. Eye Ten Oaks Invs.,
Ltd., 147 S.W.3d 507, 514 (Tex. App.—San Antonio 2004, no pet.) (appeal and
orig. proceeding) (finding prejudice was not shown where party urging waiver of
arbitration did not submit evidence of increased expense).

      Coastline contends Ground Force’s delay from the time suit was filed on


                                         13
August 23, 2012, until it moved to compel arbitration on June 6, 2013, results in
waiver. Delay alone is insufficient to establish waiver, however. See In re Vesta
Ins. Group, 192 S.W.3d at 763 (finding no waiver despite litigating for two years
where arbitration opponent did not establish prejudice).

       As support for its argument that Ground Force waited too long to move for
arbitration, Coastline cites Perry Homes, in which arbitration was ordered four
days before the case was set for trial, resulting in the court’s statement that “[t]he
rule that one cannot wait until the ‘eve of trial’ to request arbitration is not limited
to the evening before trial; it is a rule of proportion that is implicated here.” 258
S.W.3d at 596. In this case, according to the trial court’s docket control order, trial
was scheduled to commence the week of November 4, 2013, almost five months
after Ground Force moved to compel arbitration. Ground Force did not wait until
the eve of trial to request arbitration.

       Perry Homes is the only case in which the supreme court has held that a
party waived arbitration by litigation conduct. 258 S.W.3d at 592. In holding that
Perry Homes established the prejudice element of waiver, the court relied on the
record before the trial court that showed that the plaintiffs: objected to arbitration
initially, then after 14 months of litigation changed their mind and moved to
compel arbitration; obtained extensive discovery on all aspects of the case under
one set of rules, then sought to arbitrate the case under another; delayed disposition
by switching to arbitration when trial was imminent; had the court order discovery,
and then limited their opponents’ rights to appellate review.             Id.    “Such
manipulation of litigation for one party’s advantage and another’s detriment is
precisely the kind of inherent unfairness that constitutes prejudice under federal
and state law.” Id.

       The prejudice shown in Perry Homes is not established here. There is no


                                           14
evidence of extensive discovery in this case. Ground Force did not initially object
to arbitration; it asserted its arbitration right in its motion for summary judgment,
demonstrating its intent not to waive the right. There is no showing that Ground
Force obtained access to information that it could not obtain in arbitration. The
delay in this case is much less significant than in Perry Homes; Ground Force
moved for arbitration slightly more than nine months after suit was filed, and
almost five months before the trial setting. More importantly, in contrast to Perry
Homes, there is little evidence of litigation conduct during the period of delay.
See, e.g., Walker v. J.C. Bradford & Co., 938 F.2d 575, 578 (5th Cir. 1991)
(finding no waiver despite 13-month delay where only minimal discovery had been
conducted); see also In re Bison Bldg. Materials, Ltd., 2008 WL 2548568, at *14
(finding no waiver where motion to compel arbitration was filed seven months
after suit was filed and four months before trial setting where discovery was
limited and no prejudice was shown).

      At the hearing on the motion to compel arbitration, Coastline’s counsel
argued generally that “these are houses that my clients have spent money on to get
fixed that they want to have resolved this year.” He argued the sale of the houses
went back to 2009 and 2010, and stated that “if we go to arbitration, it’s going to
go into 2014 and cost Ground Force and my clients tons and tons of money.”
These general statements were not supported with evidence. See Williams Indus.,
110 S.W.3d at 139 (stating payment of arbitration fees alone cannot constitute
prejudice absent a showing, for example, that what the arbitration opponent had
already expended in the suit equaled or exceeded arbitration fees). There is no
showing that Coastline has been damaged by the delay in seeking arbitration.

      This court has also rarely found waiver of arbitration by litigation conduct,
but we recently did so in a case involving “unique facts.” See RSL Funding, LLC


                                         15
v. Pippins, 424 S.W.3d 674, 685 (Tex. App.—Houston [14th Dist.] 2014, no. pet.).
In RSL Funding, prejudice was shown because during the period of delay, in
addition to the time and expense in filing pleadings that would have been
unnecessary had RSL moved for arbitration initially, the individual parties had not
received either their promised lump sum payments from RSL or their monthly
annuity payments from other parties, and they claimed severe financial distress as a
result. Id. at 686. There has been no evidence of financial hardship in this case.

      Thus, even if Ground Force had substantially invoked the judicial process,
Coastline did not carry its heavy burden to show that it was prejudiced by those
actions. Coastline has not overcome the strong presumption in favor of arbitration
by establishing the prejudice required to show waiver. Therefore, we hold that as a
matter of law, Ground Force did not waive its right to arbitration. We sustain
Ground Force’s sole issue.

                                   CONCLUSION

      We hold the trial court abused its discretion in denying Ground Force’s
motion to compel arbitration. Having sustained Ground Force’s sole issue, we
reverse the trial court’s order denying the motion to compel arbitration, render
judgment ordering arbitration of the underlying dispute, and remand this case to
the trial court for further proceedings consistent with this opinion, including the
grant of an appropriate stay. See Tex. Civ. Prac. & Rem. Code § 171.025(a).



                                              /s/   J. Brett Busby
                                                    Justice


Panel consists of Justices McCally, Busby, and Donovan.



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