Reversed and Rendered in Part, Reversed and Remanded in Part, and
Opinion filed December 31, 2015.




                                       In The

                     Fourteenth Court of Appeals

                               NO. 14-14-00787-CV

SARITA GARG, SMITH & GARG, LLC AND GARG & ASSOCIATES, PC,
                        Appellants
                                          V.

                            TUAN M. PHAM, Appellee

                    On Appeal from the 215th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2008-43381

                                  OPINION


      Appellants Sarita Garg, Smith & Garg, LLC, and Garg & Associates, PC
(the Garg Parties) challenge the trial court’s interlocutory order denying their
motion to compel arbitration. After the Garg Parties filed their notice of appeal, we
ordered the parties to address whether we have jurisdiction over this appeal of the
trial court’s interlocutory order. In four issues, the Garg Parties contend that (1) we
have jurisdiction over the appeal; (2) all of appellee Tuan Minh Pham’s claims are
covered by the arbitration clause and it is enforceable against Pham; (3) the Garg
Parties did not waive their right to arbitration; and (4) the arbitration clause is not
unconscionable.1 We reverse the trial court’s order, render judgment ordering
arbitration of Pham’s claims against the Garg Parties, and remand for proceedings
consistent with this opinion.2

                                          Background

       Pham was an attorney at the law firm Smith & Garg, LLC where Sarita Garg
and Brian Smith are (or were) partners. Sarita Garg is also a shareholder of Garg &
Associates, PC.3 Pham alleges in January 2008, Sarita Garg and Brian Smith, as
partners of Smith & Garg, LLC and Smith & Garg, PC, entered into a
compensation agreement with Pham. In accordance with that agreement, Pham was
to become a partner and receive as compensation a portion of fees acquired from
hours billed by associate attorneys and a percentage of the revenues of Smith &
Garg, LLC and Smith & Garg, PC.4 Pham alleges he was not compensated as
agreed by the parties.

       In March 2008, Pham and Smith & Garg, LLC entered into a Partnership
Agreement. The Partnership Agreement required Pham to invest a total of
       1
         The Garg Parties initially filed an appellate brief addressing only jurisdiction and
waiver. They then supplemented their brief, with our leave, to assert that the arbitration clause is
not unconscionable and covers Pham’s claims.
       2
         Not all the parties to this case are parties to the appeal. Kevin Cloves also has claims
pending against the Garg Parties, but the motion to compel arbitration was not directed toward
his claims.
       3
          It is unclear from the record who the members of Garg & Associates, PC are. Pham
alleges that Garg & Associates, PC “wrongfully exercised dominion or control over physical and
intellectual property of [Smith & Garg, LLC] and [Garg & Associates, PC] to the exclusion of
and inconsistent with Pham’s rights.”
       4
       Pham also alleges he was given a percentage interest in a d/b/a of Smith & Garg, LLC
named Blue Sand Design.

                                                 2
and unfair competition, conversion, promissory estoppel, quantum meruit, and civil
conspiracy.

      In May 2014, after trial had been continued several times by request of the
parties, the trial court set a trial date for February 2015. The Garg Parties filed a
“Motion to Compel Mediation and Arbitration and Stay All Claims of Tuan Minh
Pham” in June 2014. Pham filed a response the morning of the hearing on the
motion. The Garg Parties failed to appear, and the trial court denied the motion.

      The Garg Parties subsequently filed a “Motion for Reconsideration of
Motion to Compel Mediation and Arbitration and Stay All Claims of Tuan M.
Pham.” They argued that the motion should be reconsidered based on the merits,
not because of their failure to appear. They also argued that even if their counsel
had appeared at the hearing, they would not have had time to review and reply to
the response Pham filed the morning of the hearing.

      The trial court granted the motion for reconsideration and agreed to
reconsider the motion to compel arbitration by submission. The court again denied
the motion. The Garg Parties filed their notice of interlocutory appeal on
September 30, 2014.

                                    Discussion

      In four issues, the Garg Parties argue that we have jurisdiction over the
appeal and complain that the trial court denied their motion to compel arbitration.
The Garg Parties assert that they established the existence of a valid arbitration
agreement, Pham’s claims fall within the scope of that agreement, they did not
waive their right to arbitration, and the arbitration agreement is not
unconscionable.



                                         4
and unfair competition, conversion, promissory estoppel, quantum meruit, and civil
conspiracy.

      In May 2014, after trial had been continued several times by request of the
parties, the trial court set a trial date for February 2015. The Garg Parties filed a
“Motion to Compel Mediation and Arbitration and Stay All Claims of Tuan Minh
Pham” in June 2014. Pham filed a response the morning of the hearing on the
motion. The Garg Parties failed to appear, and the trial court denied the motion.

      The Garg Parties subsequently filed a “Motion for Reconsideration of
Motion to Compel Mediation and Arbitration and Stay All Claims of Tuan M.
Pham.” They argued that the motion should be reconsidered based on the merits,
not because of their failure to appear. They also argued that even if their counsel
had appeared at the hearing, they would not have had time to review and reply to
the response Pham filed the morning of the hearing.

      The trial court granted the motion for reconsideration and agreed to
reconsider the motion to compel arbitration by submission. The court again denied
the motion. The Garg Parties filed their notice of interlocutory appeal on
September 30, 2014.

                                    Discussion

      In four issues, the Garg Parties argue that we have jurisdiction over the
appeal and complain that the trial court denied their motion to compel arbitration.
The Garg Parties assert that they established the existence of a valid arbitration
agreement, Pham’s claims fall within the scope of that agreement, they did not
waive their right to arbitration, and the arbitration agreement is not
unconscionable.



                                         4
      I.     Jurisdiction

      In their first issue, the Garg Parties assert that we have jurisdiction over this
appeal because they filed a timely notice of appeal. The trial court denied the Garg
Parties’ motion to compel arbitration on August 1, 2014, but subsequently granted
their motion to reconsider. The trial court again denied the motion to compel
arbitration on August 25. We ordered the parties to address whether the Garg
Parties were required to appeal the trial court’s first order denying the motion to
compel arbitration within the time allowed to perfect an interlocutory appeal or
whether they could appeal the trial court’s second order denying the motion to
compel.

      An appeal from an interlocutory order denying a motion to compel
arbitration is accelerated. Tex. R. App. P. 28.1(a). A notice of accelerated appeal
must be filed within 20 days after the judgment or order is signed unless an
extension is granted. Tex. R. App. P. 26.1(b), 26.3. The time for filing a notice of
appeal is jurisdictional, and absent a timely filed notice of appeal or an extension
request, we must dismiss the appeal. Hydro Mgmt. Sys., LLC v. Jalin, Ltd., No. 04-
09-00813-CV, 2010 WL 1817813, at *1 (Tex. App.—San Antonio May 5, 2010,
no pet.) (mem. op.) (citing Verburgt v. Dorner, 959 S.W.2d 615, 617 (Tex. 1997)).

      The Garg Parties’ counsel failed to appear at the first hearing on the motion
to compel arbitration, which was denied. The Garg Parties then filed their motion
to reconsider the denial, asserting that counsel’s failure to appear was inadvertent
and that Pham did not file a timely response. The trial court granted the motion for
reconsideration and ordered that the motion to compel arbitration would be “re-
heard by submission” on August 25, 2014. The trial court again denied the motion
to compel arbitration on that date.

      The Garg Parties assert that we have jurisdiction over their appeal because
                                          5
they filed a timely notice of appeal of the trial court’s second order denying their
motion to compel arbitration.7 Pham argues that we lack jurisdiction over this
appeal because the deadline for the Garg Parties to file their notice of appeal ran
from the trial court’s initial order signed on August 1 denying the Garg Parties’
motion to compel arbitration. Pham cites several cases in which the trial court
denied a motion to reconsider its denial of a motion to compel arbitration. See
Nazareth Hall Nursing Ctr. v. Castro, 374 S.W.3d 590, 594 (Tex. App.—El Paso
2012, no pet.); Hydro Mgmt. Sys., 2010 WL 1817813, at *1-2; Nabors Well Servs.
Co. v. Aviles, No. 06–10–00018–CV, 2010 WL 2680087, at *1-2 (Tex. App.—
Texarkana July 7, 2010, no pet.) (mem. op.). Two of these cases stand for the
proposition that filing a motion to reconsider does not extend the time for
perfecting an appeal of a trial court’s interlocutory order denying a motion to
compel arbitration. Hydro Mgmt. Sys., 2010 WL 1817813, at *1 (“Hydro’s motion
for reconsideration did not extend the time for perfecting an appeal of the trial
court’s interlocutory order [denying motion to compel arbitration].”); Nabors Well
Servs. Co., 2010 WL 2680087, at *2 (holding that an amended motion to compel
arbitration was equivalent to a motion to reconsider the trial court’s earlier order
denying a motion to compel arbitration and thus did “not extend the appellate
timetable”). The third case stands for the proposition that an interlocutory order
denying a motion to reconsider the trial court’s earlier order denying a motion to
compel arbitration is not appealable. Nazareth Hall Nursing Ctr., 374 S.W.3d at
594.


       7
          The parties do not dispute that the Garg Parties’ notice of appeal would have been
timely if the time to perfect the appeal ran from the date the trial court denied the motion to
compel arbitration for the second time. The twentieth day after the trial court signed the second
order was September 15, 2014, but we granted a 15-day extension of time to file the notice,
making it due September 30. The Garg Parties filed their notice of interlocutory appeal on that
day.

                                               6
      We agree that the trial court’s denial of a motion for reconsideration would
not extend the appellate timetable and that the trial court’s order on a motion for
reconsideration is not appealable. However, the Garg Parties are not appealing the
trial court’s order on the motion for reconsideration. They are appealing the trial
court’s second order denying the motion to compel arbitration, which the trial court
signed after granting the Garg Parties’ motion for reconsideration. Pham has cited
no case law—and we have found none—that would prevent the Garg Parties from
appealing the second denial of their motion to compel arbitration. Likewise, we
have found no case law addressing whether the grant of a motion for
reconsideration extends the appellate timetable on a motion to compel arbitration.

      We find the supreme court’s analysis regarding motions to reconsider orders
granting motions for new trial to be instructive. A trial court has the authority and
responsibility to review any pretrial order upon proper motion. In re Baylor Med.
Ctr. at Garland, 280 S.W.3d 227, 231 (Tex. 2008). When a trial court grants a
motion for new trial, the case stands on the court’s docket as if no trial had
occurred. Id. at 230-31. If, however, the trial court reconsiders and withdraws its
order granting a new trial, the prior judgment is reinstated, and the appellate
deadlines run from the later order granting reinstatement rather than the earlier
order granting the new trial. Id. at 231. In other words, a trial court sets aside the
judgment with a new trial order. See id. If the trial court later reconsiders its order
on the motion for new trial and reinstates the judgment, the appellate deadlines run
from the order reinstating judgment rather than the date of the original judgment so
that the parties are able to perfect an appeal. See id.

      Here, the trial court denied the Garg Parties’ motion to compel but
subsequently granted the Garg Parties’ motion for reconsideration of the earlier
order. The trial court explicitly agreed to “re-hear” the motion to compel, which is

                                            7
similar to granting a motion for new trial. As discussed, the effect of granting a
new trial is to set aside the original judgment. See id. We conclude that in agreeing
to rehear the motion to reconsider, the trial court similarly set aside the original
order denying the motion to compel. The trial court again denied the motion to
compel, which is similar to reconsidering a motion for new trial, denying it, and
reinstating the original judgment. Accordingly, the appellate timetable began to run
from the date the trial court again denied the motion to compel arbitration rather
than the date of the original order. See id.; see also Enright v. Goodman
Distribution, Inc., 330 S.W.3d 392, 395 n.2 (Tex. App.—Houston [14th Dist.]
2010, no pet.) (acknowledging that an order granting reconsideration of an order
granting motion for new trial caused “appellate timetable [to begin] anew”). We
thus conclude that the Garg Parties’ notice of appeal was filed timely and we have
jurisdiction over this appeal.

       We sustain the Garg Parties’ first issue.

       II.    Challenges to Trial Court’s Denial of Motion to Compel
              Arbitration
       We now turn to the merits of the appeal to determine whether the trial court
erred in denying the Garg Parties’ motion to compel arbitration. The arbitration
clause does not specifically invoke either the Federal Arbitration Act (FAA) or the
Texas Arbitration Act (TAA). Pham asserts on appeal that the FAA controls, and
the Garg Parties have not challenged this assertion.8 However, the facts of this case

       8
         Pham asserts that interlocutory appeals subject to the FAA are authorized by section
51.016 of the Texas Civil Practice and Remedies Code, thus indicating that the FAA applies
here. Because the Garg Parties do not challenge this assertion, we will review the issues under
the FAA. See Mega Builders, Inc. v. Paramount Stores, Inc., No. 14–14–00744–CV, 2015 WL
3429060, at *2 n.1 (Tex. App.—Houston [14th Dist.] May 28, 2015, no pet.) (mem. op.) (“Mega
Builders alleges that the [Texas General Arbitration Act (TGAA)] governs, and Paramount does
not challenge this assertion; therefore, we will review Mega Builders’s issues under the
TGAA.”).

                                              8
and the issues on appeal are subject to the same analysis under either statute. See
Saxa Inc. v. DFD Architecture Inc., 213 S.W.3d 224, 229 n.4 (Tex. App.—Dallas
2010, pet. denied) (“The issue of arbitrability is subject to a virtually identical
analysis under either the FAA or the TAA.” (citing ODL Servs., Inc. v.
ConocoPhillips Co., 264 S.W.3d 399, 418 (Tex. App.—Houston [1st Dist.] 2008,
no pet.))); 950 Corbindale, L.P. v. Kotts Capital Holdings Ltd. P’ship, 316 S.W.3d
191, 195 n.2 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (“Whether a case is
governed by the FAA or the TAA, many of the underlying substantive principles
are the same.” (citing In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex.
2001))).

      A party moving to compel arbitration must establish the existence of a valid
arbitration agreement and that the claims asserted fall within the scope of that
agreement. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). If a
relevant party did not sign the document in which the arbitration agreement is
found, addressing the first prong includes analyzing whether the nonsignatory is
bound by or can enforce the arbitration agreement. See In re Rubiola, 334 S.W.3d
220, 223–24 (Tex. 2011). If the movant establishes that the claims asserted fall
within the scope of a valid arbitration agreement, the burden then shifts to the party
opposing arbitration to establish a defense to the arbitration agreement.
McReynolds v. Elston, 222 S.W.3d 731, 739 (Tex. App.—Houston [14th Dist.]
2007, no pet.). If the trial court concludes the movant has met its burden and the
party opposing arbitration has failed to prove its defenses, the trial court has no
discretion but to compel arbitration. Id.

      In reviewing a denial of a motion to compel arbitration, we review factual
findings under a legal sufficiency or “no evidence” standard and legal conclusions
de novo. Id. When only the legal interpretation of the arbitration clause is at issue,

                                            9
we review the trial court’s ruling de novo. Id. The parties do not dispute the
existence of the arbitration clause; instead, they disagree over the scope and
enforceability of the clause. Pham raises two defenses to arbitration—waiver and
unconscionability.

                 A. Scope and Enforceability of Arbitration Clause

       In its fourth issue, the Garg Parties contend that all of Pham’s claims fall
under the purview of the arbitration clause.9 Pham contends that many of his
claims fall outside the scope of the arbitration clause and that Garg and Associates,
PC cannot enforce the arbitration clause because the professional corporation is not
a signatory to the Partnership Agreement.10

       Claims within Scope of Arbitration Clause. A determination of the scope
of an unambiguous arbitration clause is a matter of contract interpretation and a
question of law for the trial court subject to de novo review. In re Guggenheim
Corp. Funding, LLC, 380 S.W.3d 879, 886 (Tex. App.—Houston [14th Dist.]
2012, no pet.). We interpret arbitration clauses under traditional contract
principles. J.M. Davidson, Inc., 128 S.W.3d at 229. We interpret unambiguous
contracts as a matter of law. Id. Our primary concern is to ascertain the true
intentions of the parties as expressed in the instrument. Id. But any doubts
regarding the scope of the arbitration agreement are resolved in favor of
arbitration. See FirstMerit Bank, 52 S.W.3d at 753 (stating that a presumption
exists favoring agreements to arbitrate under the FAA and courts must resolve any
doubts about an arbitration agreement’s scope in favor of arbitration); Emerald
Tex., Inc. v. Peel, 920 S.W.2d 398, 402 (Tex. App.—Houston [1st Dist.] 1996, no

       9
           We discuss the issues out of order for organizational purposes.
       10
           A fair reading of Pham’s brief encompasses a challenge to the enforceability of the
arbitration agreement by the PC as a nonsignatory, discussed below.

                                                 10
pet.) (“Texas law favors arbitration; thus, doubts regarding the scope of an
arbitration agreement are resolved in favor of arbitration.”). A court should not
deny arbitration unless the court can say with positive assurance that an arbitration
clause is not susceptible of an interpretation that would cover the claims at issue.
See Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995).

      To determine whether a claim falls within the scope of an arbitration clause,
we must “focus on the factual allegations of the complaint, rather than the legal
causes of action asserted.” In re Rubiola, 334 S.W.3d at 225; FD Frontier Drilling
(Cyprus), Ltd. v. Didmon, 438 S.W.3d 688, 695 (Tex. App.—Houston [1st Dist.]
2014, pet. denied). We apply a common-sense examination of the underlying
claims to determine if they come within the scope of the arbitration clause.
Guggenheim Corp. Funding, 380 S.W.3d at 887 (citing In re Lisa Laser USA, Inc.,
310 S.W.3d 880, 884 (Tex. 2010) (orig. proceeding) (per curiam)). A party may
not attempt to avoid an arbitration clause through artful pleading. Id.

      Pham asserts that his causes of action for common law fraud, breach of
fiduciary duty, gross negligence, misrepresentation, promissory estoppel, quantum
meruit, conversion, misappropriation, unfair competition, and civil conspiracy do
not relate entirely to the Partnership Agreement but instead relate in part to an
earlier oral compensation agreement and thus fall outside the scope of the
arbitration clause. Pham alleges in his live petition that the parties attended a
meeting in January 2008 during which an oral “compensation plan contract . . . was
implemented and the job title of ‘Partner’ was given to” Pham. Under this alleged
oral compensation agreement, Pham was not given a membership interest in Smith
& Garg, LLC or a shareholder interest in Smith & Garg, PC, but was to be
compensated with a percentage of the fees billed by associate attorneys and a
percentage of gross revenues. Pham also alleges that he and Smith & Garg, LLC

                                          11
entered into the Partnership Agreement in March 2008. The Partnership Agreement
also addresses the investment Pham made into Smith & Garg, LLC, the
compensation to be paid to Pham as a partner in Smith & Garg, LLC, and Pham’s
responsibilities and other rights as a partner.

      The arbitration clause in the Partnership Agreement expressly encompasses
any “dispute with regard to [the Partnership] Agreement or any issues related to the
Partnership, business, or any logically related entity or business associated with
Smith and Garg, [LLC,] Brian Smith, Sarita Garg, or Stephen Pham.” The phrase
“related to” is very broad. Schwarz v. Pully, No. 05-14-00615-CV, 2015 WL
4607423, at *3 (Tex. App.—Dallas Aug. 3, 2015, no pet.) (mem. op.) (concluding
that claims arising out of a separate oral employment agreement related to written
partnership agreement with broad arbitration clause). Issues “relate to” a
partnership if they have a significant relationship with the partnership or touch
partnership matters. See id. (citing Kirby Highland Lakes Surgery Ctr., L.L.P. v.
Kirby, 183 S.W.3d 891, 898 (Tex. App.—Austin 2006, no pet.)). Because the
arbitration clause is so broad, if the facts alleged “touch matters,” have a
“significant relationship” to, are “inextricably enmeshed” with, or are “factually
intertwined” with partnership business or any other logically related entity or
business associated with Smith and Garg, LLC, Brian Smith, Sarita Garg, or
Stephen Pham, the claim is arbitrable. See Cotton Commercial USA, Inc. v. Clear
Creek ISD, 387 S.W.3d 99, 108 (Tex. App.—Houston [14th Dist.] 2012, no pet.);
see also Didmon, 438 S.W.3d at 695. But if the facts alleged in support of the
claim stand alone and are completely independent of these matters, and the claim
could be maintained without reference to them, the claim is not subject to
arbitration. Cotton Commercial USA, 387 S.W.3d at 108; Didmon, 438 S.W.3d at
695-96.


                                           12
       Pham alleges that he was not compensated in accordance with the
Partnership Agreement and the Garg Parties failed to provide him an accounting of
his investment or access to company records, failed to provide him with decision-
making authority in Smith & Garg, LLC and Smith & Garg, PC, and improperly
terminated their business relationship with him. The Garg Parties’ duty to
compensate Pham and provide Pham with accountings, access to company records,
and decision-making authority are all addressed in the Partnership Agreement.11 In
addition, the oral compensation agreement that Pham alleges the parties agreed to
before signing the Partnership Agreement relates to the partnership because, as
alleged by Pham, he became a partner pursuant to that contract.

       We shall determine whether Pham’s causes of action for common law fraud,
breach of fiduciary duty, gross negligence, misrepresentation, promissory estoppel,
quantum meruit, conversion, misappropriation, unfair competition, and civil
conspiracy involving the oral compensation agreement are “issues related to the
Partnership, business, or any logically related entity or business associated with
Smith and Garg, [LLC,] Brian Smith, Sarita Garg, or Stephen Pham” by examining
the following allegations, in relevant part, with regard to each claim:

            • Common law fraud. The Garg Parties fraudulently induced Pham to
              enter into the oral compensation agreement.

            • Breach of fiduciary duty. The Garg Parties owed Pham fiduciary
              duties as “business partners with Pham” and breached those duties by
              using funds taken from Smith & Garg, PC to pay for expenses
              incurred by Smith & Garg, LLC, using firm resources to pay for
              vehicles, livestock, and personal expenses, and failing to account to
              Pham.

       11
            The Partnership Agreement includes the following provision: “Pham shall jointly,
along with Brian Smith and Sarita Garg, share in all decision making, financial obligations,
liabilities, and windfalls to the extent it effects [sic] the entities stated in this Agreement, to
which Pham has an interest.”

                                                13
            • Negligent       misrepresentation.     The    Garg Parties made
              misrepresentations to induce Pham to enter into “transactions
              described hereinabove.” We presume the referenced transactions
              relate to the Partnership Agreement and the oral compensation
              agreement because purported breaches of these agreements and
              related torts form the basis for Pham’s claims.12

            • Promissory Estoppel and Quantum Meruit. The Garg Parties made
              promises to Pham “in the course of their relationship and within the
              partnership agreements” and Pham provided services to the Garg
              Parties in exchange for interests in Smith & Garg, LLC and Smith &
              Garg, PC.

            • Conversion. The Garg Parties wrongfully exercised dominion and
              control over physical and intellectual property of Smith & Garg, LLC
              and Smith & Garg, PC to the exclusion of and inconsistent with
              Pham’s rights as a partner.

            • Misappropriation and Unfair Competition. The Garg Parties used
              the professional likeness of Pham connected with legal articles and
              blogs on the Garg Parties’ websites to increase their internet presence
              to Pham’s detriment, thus unfairly competing with Pham’s new law
              firm.

            • Civil Conspiracy. The Garg Parties defrauded Pham of his benefits
              under the oral employment agreement.
       Pham alleges he became a partner of Garg & Smith, LLC and Garg & Smith,
PC under the oral compensation agreement. All of the above allegations deal with
a dispute over partnership resources, responsibilities, and liability. Garg & Smith,
PC is an “entity or business” that is “logically related to” Garg & Smith, LLC.
Accordingly, we conclude Pham’s claims all relate “to the Partnership, business, or
any logically related entity or business associated with Smith and Garg, [LLC,]
Brian Smith, Sarita Garg, or Stephen Pham” and are arbitrable under the plain

       12
          On appeal, Pham contends he has claims for gross negligence and misrepresentation.
His live petition has a claim for negligent misrepresentation but no separate claim for gross
negligence.

                                             14
language of the arbitration clause. See Schwartz, 2015 WL 4607423, at *4; see also
McGehee v. Bowman, 339 S.W.3d 820, 825 (Tex. App.—Dallas 2011, no pet.).

       Arbitration Clause Enforceable by Nonsignatory. Pham further contends
that one of the appellants, Garg & Associates, PC, cannot compel arbitration
because it is not a signatory to the Partnership Agreement.13 As a general rule, an
arbitration clause cannot be invoked by a nonparty to the arbitration contract. G.T.
Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 524 (Tex. 2015);
Parker v. Schlumberger Tech. Corp., No. 01-14-01018-CV, 2015 WL 5460401, at
*6 (Tex. App.—Houston [1st Dist.] Sept. 17, 2015, no. pet. h.). The policy
favoring arbitration is strong, but it alone does not authorize a nonparty to invoke
arbitration. G.T. Leach Builders, 458 S.W.3d at 524; Parker, 2015 WL 5460401, at
*6. In some circumstances, however, a nonsignatory may be permitted to enforce
an arbitration agreement. Parker, 2015 WL 5460401, at *6 (citing In re Kellogg
Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005) (listing six recognized
theories that may bind nonsignatories: “(1) incorporation by reference;
(2) assumption; (3) agency; (4) alter ego; (5) equitable estoppel; and (6) third-party
beneficiary”) and G.T. Leach Builders, 458 S.W.3d at 524). Ultimately, we must
determine the intent of the parties as expressed in the terms of the agreement by
applying ordinary principles of state contract law to determine whether
nonsignatory Garg & Associates, PC may compel arbitration. See G.T. Leach
Builders, 458 S.W.3d at 524.

       Pham, the plaintiff below, is a signatory to the Partnership Agreement. A
claimant cannot seek to hold a nonsignatory liable for duties imposed by an
agreement that contains an arbitration clause, but then deny arbitration’s

       13
            The partners of Garg & Smith, PC, signed the Partnership Agreement, but the PC itself
did not.

                                                15
applicability because the defendant is a nonsignatory. Parker, 2015 WL 5460401,
at *6 (citing Meyer v. WMCO–GP, LLC, 211 S.W.3d 302, 306 (Tex. 2006)). In that
connection, under principles of equitable estoppel, a claimant who sues based on a
contract subjects himself or herself to the contract’s terms, including the arbitration
clause. G.T. Leach Builders, 458 S.W.3d at 527. For a nonsignatory to be able to
enforce an arbitration clause based on equitable estoppel, the claim must not only
relate to the agreement containing the arbitration clause, but the claimant must also
seek to derive a direct benefit—that is, a benefit that stems directly from that
agreement. Id.; see also Parker, 2015 WL 5460401, at *6; Cooper Indus., LLC v.
Pepsi-Cola Metro. Bottling Co., No. 14-14-00562-CV, 2015 WL 5025812, at *4
(Tex. App.—Houston [14th Dist.] Aug. 25, 2015, no. pet.). The claim must depend
on the existence of the contract and be unable to stand independently without the
contract. G.T. Leach Builders, 458 S.W.3d at 527-28. The alleged liability must
arise solely from the contract or must be determined by reference to it. Id. at 528.
Alternatively, if the nonsignatory defendant is an affiliate of a signatory, then the
signatory plaintiff can be compelled to arbitrate its claims against the affiliate.
Cooper Indus., 2015 WL 5025812, at *4.

      In examining whether Garg & Associates, PC may invoke the Partnership
Agreement’s arbitration clause, we again note that Pham’s claims all relate “to the
Partnership, business, or any logically related entity or business associated with
Smith and Garg, [LLC,] Brian Smith, Sarita Garg, or Stephen Pham” and are
arbitrable under the plain language of the arbitration clause. Moreover, Pham seeks
damages for breaches of the Partnership Agreement and related torts from all of the
appellants. Although Pham contends that his claims depend in part on an earlier
oral compensation agreement, he seeks compensation under both that agreement



                                          16
and the Partnership Agreement.14 The parties entered into the Partnership
Agreement after the alleged oral employment agreement, and the Partnership
Agreement also addresses Pham’s entitlement to compensation and other rights
and responsibilities as a partner. Thus, Garg & Associates, PC’s liability cannot be
determined without reference to the Partnership Agreement. See Parker, 2015 WL
5460401, at *7; see also Cooper Indus., 2015 WL 5025812, at *5 (citing Smith v.
Kenda Capital, LLC, 451 S.W.3d 453, 460 (Tex. App.—Houston [14th Dist.]
2014, no pet.) (“[D]irect benefits estoppel analysis focuses on whether a contract
containing the clause at issue also includes other terms on which the signatory
plaintiff must rely to prosecute its claims.”)).

       Because (1) Pham was a signatory to the Partnership Agreement; (2) Pham
agreed to arbitrate “any issues related to the Partnership, business, or any logically
related entity or business associated with Smith and Garg, [LLC,] Brian Smith,
Sarita Garg, or Stephen Pham,” which includes Garg & Associates, PC; and
(3) Garg & Associates, PC’s liability cannot be determined without reference to the
Partnership Agreement, we hold the doctrine of equitable estoppel applies. See
Parker, 2015 WL 5460401, at *7 (citing Meyer, 211 S.W.3d at 306–07 (applying
doctrine of equitable estoppel to motion to compel arbitration by parties who were
not signatories to arbitration agreement), Pers. Sec. & Safety Sys. Inc. v. Motorola
Inc., 297 F.3d 388, 394-95 (5th Cir. 2002) (holding arbitration clause in one
agreement that is “essential” to an “overall transaction” presumptively applies to
“other contemporaneously executed agreements that are part of the same

       14
          These facts differ from those that the supreme court addressed in G.T. Leach Builders,
458 S.W.3d at 509–10. In that case, the court concluded that subcontractors who were not
signatories to a general contractor’s construction contract could not compel arbitration because
the claims against them did not require enforcement of the general contract and could stand alone
under the subcontract. Id. at 527–29. The court noted that the plaintiff’s claims in that case
derived solely from “separate alleged agreement[s].” Id. at 529.

                                               17
transaction”), and Kirby, 183 S.W.3d at 900-01 (same)). Accordingly, Garg &
Associates, PC, is entitled to compel arbitration if Pham has not established any
defenses to arbitration.

      We sustain the Garg Parties’ fourth issue.

             B. No Waiver of Arbitration Rights

      In their second issue, the Garg Parties contend that they did not waive their
right to arbitration. Pham argues to the contrary that the Garg Parties substantially
invoked the judicial process and thus impliedly waived their right to arbitration.
Arbitration is strongly favored under both federal and state law. Prudential Sec.,
909 S.W.2d at 898. A party waives a right to arbitration by substantially invoking
the judicial process to the other party’s detriment or prejudice. Baty v. Bowen,
Miclette & Britt, Inc., 423 S.W.3d 427, 433 (Tex. App.—Houston [14th Dist.]
2013, pet. denied). A party substantially invokes the judicial process through
conduct inconsistent with a claimed right to compel arbitration. G.T. Leach
Builders, 458 S.W.3d at 511-12 (citing Perry Homes v. Cull, 258 S.W.3d 580,
593–94 (Tex. 2008)). The party asserting waiver has the burden to prove
substantial invocation of the judicial process and prejudice. Id.

      A party can substantially invoke the judicial process when it participates in
full discovery, files motions going to the merits, and waits until the eve of trial to
seek arbitration. In re Fleetwood Homes of Tex., L.P., 257 S.W.3d 692, 693 (Tex.
2008) (citing In re Vesta Ins. Group, 192 S.W.3d 759, 764 (Tex. 2006)). But the
strong presumption against waiver of arbitration renders this hurdle a high bar.
Kennedy Hodges, L.L.P. v. Gobellan, 433 S.W.3d 542, 545 (Tex. 2014). In close
cases, the strong presumption against waiver should govern. Cooper Indus., 2015
WL 5025812, at *10 (citing Perry Homes, 258 S.W.3d at 593).


                                          18
entered into the Partnership Agreement in March 2008. The Partnership Agreement
also addresses the investment Pham made into Smith & Garg, LLC, the
compensation to be paid to Pham as a partner in Smith & Garg, LLC, and Pham’s
responsibilities and other rights as a partner.

      The arbitration clause in the Partnership Agreement expressly encompasses
any “dispute with regard to [the Partnership] Agreement or any issues related to the
Partnership, business, or any logically related entity or business associated with
Smith and Garg, [LLC,] Brian Smith, Sarita Garg, or Stephen Pham.” The phrase
“related to” is very broad. Schwarz v. Pully, No. 05-14-00615-CV, 2015 WL
4607423, at *3 (Tex. App.—Dallas Aug. 3, 2015, no pet.) (mem. op.) (concluding
that claims arising out of a separate oral employment agreement related to written
partnership agreement with broad arbitration clause). Issues “relate to” a
partnership if they have a significant relationship with the partnership or touch
partnership matters. See id. (citing Kirby Highland Lakes Surgery Ctr., L.L.P. v.
Kirby, 183 S.W.3d 891, 898 (Tex. App.—Austin 2006, no pet.)). Because the
arbitration clause is so broad, if the facts alleged “touch matters,” have a
“significant relationship” to, are “inextricably enmeshed” with, or are “factually
intertwined” with partnership business or any other logically related entity or
business associated with Smith and Garg, LLC, Brian Smith, Sarita Garg, or
Stephen Pham, the claim is arbitrable. See Cotton Commercial USA, Inc. v. Clear
Creek ISD, 387 S.W.3d 99, 108 (Tex. App.—Houston [14th Dist.] 2012, no pet.);
see also Didmon, 438 S.W.3d at 695. But if the facts alleged in support of the
claim stand alone and are completely independent of these matters, and the claim
could be maintained without reference to them, the claim is not subject to
arbitration. Cotton Commercial USA, 387 S.W.3d at 108; Didmon, 438 S.W.3d at
695-96.


                                           12
summary judgment on the merit[s] to invoke the arbitration clause”; (2) they
participated in extensive discovery and other pretrial activity related to the merits
of the litigation; (3) the discovery will not be useful in arbitration; and (4) they
sought judgment on the merits. In considering the relevant factors, we note that the
Garg Parties did not elect to resolve their disputes with Pham in court; rather,
Pham brought claims against the Garg Parties in this lawsuit. See G.T. Leach
Builders, 458 S.W.3d at 512-13 (citing Perry Homes, 258 S.W.3d at 591 (noting
that one factor is whether party seeking arbitration was plaintiff who chose to file
suit or defendant responding to suit filed against it)).

       Knowledge of Arbitration Clause and Delay before Seeking Arbitration.
The parties do not dispute that the Garg Parties knew of the arbitration clause from
the onset of this litigation. Pham sued the Garg Parties in 2010, but Pham’s claims
against the Garg Parties were not consolidated into this lawsuit until 2012. Pham
did not present evidence of what transpired in the 2010 lawsuit other than his filing
a motion for default judgment against Smith & Garg, LLC and Garg & Associates,
PC, discussed below. Sarita Garg filed a special appearance in May 2014 alleging
she was never served with Pham’s petition in this lawsuit. On this record, it
appears that the trial court has not disposed of the special appearance.

       The Garg Parties filed their motion to compel arbitration in June 2014
subject to Sarita Garg’s special appearance. They argue that their delay in filing the
motion to compel was reasonable because Pham did not serve Smith & Garg, LLC
and Garg & Associates, PC until 2011 and never properly served Sarita Garg.16
The motion was filed seven months before the trial date, which Pham argues was

       16
           The appellate record is incomplete and does not include the returns of service. In her
special appearance, Sarita Garg argued that Pham never served her. Pham previously had served
the corporate defendants in 2011 in the 2010 lawsuit. Pham responded to the special appearance
that he served Sarita Garg in 2013, but she contends otherwise.

                                               20
“on the eve of trial.” We disagree.

       Delay alone does not establish waiver. In re Serv. Corp. Int’l, 85 S.W.3d
171, 174 (Tex. 2002). Although delay is relevant in a determination of whether a
party has substantially invoked the judicial process, the focus is on the amount of
pretrial activity and discovery related to the merits of the case during that time
period.17 See, e.g., In re Vesta Ins. Group, 192 S.W.3d at 763 (holding two year
delay and participation in discovery did not establish waiver); see also Cooper
Indus., 2015 WL 5025812, at *11 (holding 28 month “inexplicable delay” in
moving to compel arbitration and participation in discovery did not establish
waiver).

       In Perry Homes, the supreme court held that the movants waived their right
to arbitration because they participated in the lawsuit for 14 months, “changed their
minds and requested arbitration . . . shortly before the . . . trial setting,” and their
“change of heart . . . unquestionably delayed adjudication of the merits.” 258
S.W.3d at 596. In reaching its conclusion, the court acknowledged that waiting
until the eve of trial and moving for arbitration “very late in the trial process” can
result in waiver. Id. The court acknowledged that the rule that one cannot wait until
the eve of trial is not limited to the evening before trial: it is a rule of proportion
that may be implicated depending on how late the motion to compel arbitration is
filed in the litigation process. Id.

       As discussed more fully below, the motion to compel arbitration was not
filed late in the litigation process under these circumstances. Trial was scheduled to


       17
           Delay also may be a factor in whether the nonmovant has suffered prejudice. G.T.
Leach Builders, 458 S.W.3d at 515. But delay alone, even if it is substantial, is not enough to
show prejudice. Id. Waiver can be implied from a party’s unequivocal conduct, but not from
inaction. Id.

                                              21
commence seven months after the motion was filed.18 As discussed below, very
little litigation related to the merits of the case had occurred. Sarita Garg disputes
that she was served with process, and her special appearance is still pending. The
motion for default judgment is not related to the merits and became moot when the
corporate defendants answered the 2010 lawsuit. The only motion related to the
merits—a motion for summary judgment—was filed by Pham. These are not facts
showing that the motion to compel was filed late in the litigation process. See
Ground Force Const., LLC v. Coastline Homes, LLC, No. 14-13-00649-CV, 2014
WL 2158160, at *5-7 (Tex. App.—Houston [14th Dist.] May 22, 2014, no pet.)
(mem. op.) (holding movant did not wait until eve of trial to seek arbitration when
trial was five months away and nonmovant failed to meet “heavy burden” to
establish waiver because nonmovant did not show, among other things, amount of
discovery conducted or that movant engaged in litigation related to merits of
nonmovant’s claims).

       Pretrial Activity Related to Merits of Case. Our review of the record
shows that little pretrial activity related to the merits of the case was conducted
before the Garg Parties filed their motion to compel arbitration, and almost none of
it was conducted by the Garg Parties:

            • A former client filed this lawsuit in 2008, and Pham, Smith & Garg,
              LLC, and Sarita Garg, as defendants, filed a motion to compel the
              plaintiff’s claims to arbitration, which the trial court denied. The case

       18
            We acknowledge that several months before trial can be on the eve of trial for purposes
of compelling arbitration under certain circumstances, but there has to be a showing that the
delay in seeking arbitration required the nonmovant to incur additional expense in participating
in litigation and then arbitration. Cf. Com-Tech Assocs. v. Computer Assocs. Int’l, Inc., 938 F.2d
1574, 1577 (2d Cir. 1991) (holding four months before trial was “eve” when defendants did not
seek arbitration until eighteen months after filing answer and four months before trial); Citizens
Nat’l Bank v. Bryce, 271 S.W.3d 347, 357 (Tex. App.—Tyler 2008, no pet.) (holding eight
weeks before trial was “eve” when parties had already conducted full discovery and filed
motions going to the merits of the litigation).

                                                22
               was abated pending appeal.

            • Pham sued the Garg Parties in the 2010 lawsuit.

            • This case was reinstated in May 2011. Trial was set for October 2011.
              Sarita Garg filed a motion for continuance of that trial date, which the
              trial court granted.19

            • In September 2011, Pham filed a motion for default judgment against
              Smith & Garg, LLC and Garg & Associates, PC in the 2010 lawsuit.
              Prior to the hearing on the motion, the corporate defendants answered
              suit.

            • The original plaintiff in this case nonsuited her claims in January
              2012. The trial court consolidated this lawsuit with the 2010 lawsuit in
              February 2012.

            • Several motions for continuance of trial dates were filed jointly by the
              parties after February 2012.

            • In May 2014, Sarita Garg filed a special appearance, arguing that she
              was never served with Pham’s petition in this lawsuit, and seeking
              reconsideration of the trial court’s order partially granting Pham’s
              motion to compel discovery responses.20

            • Also in May 2014, Pham filed a motion for summary judgment
              against Sarita Garg.

       For purposes of our analysis, we consider only pretrial activity that occurred
after Pham’s claims against the Garg Parties were consolidated into this lawsuit
and any evidence in the record regarding pretrial activity in the 2010 lawsuit. Pham
presented no evidence of any pretrial activity in the 2010 lawsuit other than the
motion for default judgment he filed against Smith & Garg, LLC and Garg &

       19
         There is no indication in the appellate record that Pham had any claims pending against
the Garg Parties in this lawsuit at that time.
       20
         Venue and jurisdictional motions do not constitute substantial invocation of the judicial
process because they do not relate to the merits of the case. Cooper Indus., 2015 WL 5025812, at
*11. There is no ruling on the special appearance in the appellate record.

                                               23
and the Partnership Agreement.14 The parties entered into the Partnership
Agreement after the alleged oral employment agreement, and the Partnership
Agreement also addresses Pham’s entitlement to compensation and other rights
and responsibilities as a partner. Thus, Garg & Associates, PC’s liability cannot be
determined without reference to the Partnership Agreement. See Parker, 2015 WL
5460401, at *7; see also Cooper Indus., 2015 WL 5025812, at *5 (citing Smith v.
Kenda Capital, LLC, 451 S.W.3d 453, 460 (Tex. App.—Houston [14th Dist.]
2014, no pet.) (“[D]irect benefits estoppel analysis focuses on whether a contract
containing the clause at issue also includes other terms on which the signatory
plaintiff must rely to prosecute its claims.”)).

       Because (1) Pham was a signatory to the Partnership Agreement; (2) Pham
agreed to arbitrate “any issues related to the Partnership, business, or any logically
related entity or business associated with Smith and Garg, [LLC,] Brian Smith,
Sarita Garg, or Stephen Pham,” which includes Garg & Associates, PC; and
(3) Garg & Associates, PC’s liability cannot be determined without reference to the
Partnership Agreement, we hold the doctrine of equitable estoppel applies. See
Parker, 2015 WL 5460401, at *7 (citing Meyer, 211 S.W.3d at 306–07 (applying
doctrine of equitable estoppel to motion to compel arbitration by parties who were
not signatories to arbitration agreement), Pers. Sec. & Safety Sys. Inc. v. Motorola
Inc., 297 F.3d 388, 394-95 (5th Cir. 2002) (holding arbitration clause in one
agreement that is “essential” to an “overall transaction” presumptively applies to
“other contemporaneously executed agreements that are part of the same

       14
          These facts differ from those that the supreme court addressed in G.T. Leach Builders,
458 S.W.3d at 509–10. In that case, the court concluded that subcontractors who were not
signatories to a general contractor’s construction contract could not compel arbitration because
the claims against them did not require enforcement of the general contract and could stand alone
under the subcontract. Id. at 527–29. The court noted that the plaintiff’s claims in that case
derived solely from “separate alleged agreement[s].” Id. at 529.

                                               17
requests for disclosure on Pham. Also in October 2013, Pham served interrogatory,
disclosure, admission, and production requests on Sarita Garg. Sarita Garg
responded to Pham’s discovery requests, and the Garg Parties moved to compel
Pham’s responses to their requests for disclosure in 2014.

       Neither responding to discovery nor propounding limited written discovery
waives arbitration. G.T. Leach Builders, 458 S.W.3d at 514. Form requests for
disclosure seek basic information about a lawsuit, and serving them does not waive
the right to arbitration. Id. The Garg Parties’ limited participation in discovery
weighs against a finding of substantial invocation of the judicial process. See, e.g.,
Vesta Ins. Group, 192 S.W.3d at 763 (holding serving “standard requests for
disclosure,” noticing four depositions, and serving a request for production did not
waive arbitration absent proof regarding extent of requests and whether they
addressed merits or arbitrability); In re Bruce Terminix Co., 988 S.W.2d 702, 704
(Tex. 1998) (holding that parties did not waive arbitration despite “propounding
one set of eighteen interrogatories and one set of nineteen requests for
production”); EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996) (holding
that propounding interrogatories and a request for production, noticing a single
deposition, and agreeing to a trial resetting did not amount to a waiver of
arbitration).

       Judgment on the Merits Not Sought. Pham argues that the Garg Parties
sought judgment on the merits by requesting a hearing on Pham’s motion for
summary judgment. We disagree. The Garg Parties merely sought a hearing and
opposed Pham’s motion. They did not file their own motion for summary judgment
seeking a determination on the merits of Pham’s claims. See Ground Force Const.,
2014 WL 2158160 at *6 (concluding defendant’s motion for summary judgment
on defensive theories did not seek judgment on the merits of plaintiff’s claims).

                                         25
       No Showing of Prejudice. Pham also has not met his burden to show that
he suffered prejudice as a result of the Garg Parties’ litigation conduct. Detriment
or prejudice, in this context, refers to an inherent unfairness caused by a party’s
attempt to have it both ways by switching between litigation and arbitration to its
own advantage. G.T. Leach Builders, 458 S.W.3d at 515. Prejudice may result
when a party seeking arbitration first sought to use the judicial process to gain
access to information that would not have been available in arbitration. Id.

       Pham argues that he suffered prejudice because the Garg Parties waited until
the eve of trial to file their motion to compel arbitration and Pham lost time and
financial resources in prosecuting his claims. As discussed above, delay also may
be a factor in whether the nonmovant has suffered prejudice. Id. But even
substantial delay will not show prejudice because waiver cannot be implied from a
party’s inaction. Id. As discussed above, the only pretrial activity related to the
merits of the litigation that caused Pham to incur lost time and expenses relates to
Pham’s own actions. Pham has failed to show how the Garg Parties’ delay in filing
the motion to compel prejudiced him.

       Pham also argues that he has suffered prejudice because the Garg Parties
delayed in responding to his discovery requests and provided incomplete responses
and thus the discovery conducted will not be useful in arbitration.21 Whether
discovery would be useful in arbitration is relevant to whether the movant has
engaged in “manipulation of litigation [to its] advantage and another’s detriment.”
Perry Homes, 258 S.W.3d at 597. Our review of the record reveals that Pham
propounded discovery only to Sarita Garg. Pham argues that the responses do “not
provide any detail regarding how [Pham’s] financial investment was utilized and

       21
           The Garg Parties concede the discovery will not be useful in arbitration, but only
because it is not directed to the merits of Pham’s claims.

                                             26
distributed,” but he does not elaborate on how these responses establish that the
Garg Parties have manipulated the litigation process to their advantage and Pham’s
detriment. See id.

       Pham also does not elaborate on what information the responses provided.
Knowing the 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, we may not infer waiver based upon
prejudice. Ground Force Const., 2014 WL 2158160, at *7 (citing Bruce Terminix,
988 S.W.2d at 704). We acknowledge that Pham attached the discovery responses
as an exhibit to his response to the motion to compel arbitration. However, Pham
had the burden to show that he suffered unfair prejudice as a result of the Garg
Parties’ attempt to gain access to information through discovery that would not
have been available in arbitration. See G.T. Leach Builders, 458 S.W.3d at 515.
Moreover, Pham has not established that the Garg Parties served a single request
for production, interrogatory, or deposition notice in this case. See id. Pham
likewise has not presented evidence that anything revealed in discovery would not
have been produced in arbitration or presented evidence of attorneys’ fees or
expenses he incurred that were attributable to the Garg Parties’ participation in
discovery.22 See Ground Force Const., LLC, 2014 WL 2158160, at *7. On this
record, Pham has not shown how the Garg Parties manipulated the litigation
process to their advantage and Pham’s detriment. See Perry Homes, 258 S.W.3d at
597.
       22
          Our review of the responses reveals that they include information that likely would be
useful in arbitration. Sarita Garg provided tax returns from Smith & Garg, LLC and also
admitted that her partner Brian Smith had been using firm funds for personal expenses and she
locked Smith out of the bank accounts. She also stated that Pham’s $100,000 investment “went
towards paying Pham’s own payroll and startup and ongoing overhead costs for the Long Beach,
California office.” She further indicated that Pham’s employment was terminated for forming his
own firm.

                                              27
        Conclusion. Weighing the factors discussed above based on a totality of the
circumstances, we conclude that Pham has not met his burden of proving that the
Garg Parties substantially invoked the judicial process to the extent required to
demonstrate a waiver of their right to arbitration and their participation in the
litigation has not caused Pham the kind of prejudice necessary to clear the “high
hurdle” of waiver. See G.T. Leach Builders, 458 S.W.3d at 515. Accordingly, the
Garg Parties have not impliedly waived their right to demand arbitration in this
case.

        We sustain the Garg Parties’ second issue.

              C. No Evidence of Unconscionability Based on Cost of Arbitration

        Having concluded that there was no waiver of arbitration, we next consider
the Garg Parties’ third issue regarding whether the arbitration clause was
unconscionable. Pham argues the arbitration clause is substantively unconscionable
because of the cost of arbitration under the AAA.

        A court may not enforce an arbitration agreement if it finds the agreement
was unconscionable at the time it was made. Tex. Civ. Prac. & Rem. Code
§ 171.022. The test of substantive unconscionability is whether, given the parties’
general commercial background and the commercial needs of the particular trade
or case, the clause involved is so one-sided that it is unconscionable under the
circumstances existing when the parties made the contract. In re Palm Harbor
Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006) (citing In re FirstMerit Bank, NA.,
52 S.W.3d at 757). Federal and state courts have recognized the possibility that the
excessive costs of arbitration might, under certain circumstances, render an
arbitration agreement unconscionable. See Olshan Found. Repair Co. v Ayala, 180
S.W.3d 212, 215 (Tex. App.—San Antonio 2005, pet. denied) (citing Green Tree
Fin. Corp. v. Randolph, 531 U.S. 79, 91 (2000) and In re FirstMerit Bank, N.A., 52
                                         28
S.W.3d at 757)). However, given the strong policy favoring arbitration agreements,
the party opposing the arbitration must also prove the likelihood of incurring such
costs. Id. (citing FirstMerit Bank, N.A., 52 S.W.3d at 757). While neither state nor
federal courts have specified how detailed a showing must be of high arbitration
costs, both the United States and Texas Supreme Courts have held that “some
specific information of future costs is required.” FirstMerit Bank, N.A., 52 S.W.3d
at 756 (citing Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91 (2000)
(holding that the mere possibility or “risk” that a plaintiff might bear such costs
was too speculative)).

       Pham provided no cost amount, estimated or verified, below or on appeal, to
support his argument. Instead, he speculates that the cost of arbitration may be
excessive. Pham concedes that he cannot determine the cost of arbitration with the
AAA, but guesses that the parties may incur the expense of a forensic accountant
“making the cost of arbitration . . . exuberant [sic].”23 Pham also argues that the
Garg Parties knew the cost of arbitration when the parties executed the Partnership
Agreement and used the arbitration clause as part of an “elaborate scheme” to
defraud him. Pham presented no evidence in support of these assertions and thus
has not met his burden of providing some evidence of excessive costs of
arbitration. See id. at 757 (“Because the record contains no specific evidence that
the [plaintiffs] will actually be charged excessive arbitration fees, we conclude that
there is legally insufficient evidence that [they] would be denied access to
arbitration based on excessive costs.”).

       We sustain the Garg Parties’ third issue.


       23
         Pham attached a copy of the “AAA Arbitration Roadmap” as an exhibit to his response
to the motion to compel arbitration, but concedes that it does not provide “specific cost
estimates” or “information from which a reasonably close estimate can be calculated.”

                                            29
                                    Conclusion

      We conclude that we have jurisdiction over this appeal, Pham’s claims are
all within the scope of a valid arbitration clause, Garg & Associates, PC can
compel Pham to arbitration, the Garg Parties did not waive their right to
arbitration, and the arbitration agreement was not unconscionable due to the cost of
arbitration. Accordingly, we reverse the trial court’s order denying the Garg
Parties’ motion to compel arbitration, render judgment ordering arbitration of
Pham’s claims against the Garg Parties, and remand this case for proceedings
consistent with this opinion, including the grant of an appropriate stay. See Tex.
Civ. Prac. & Rem. Code § 171.025(a).




                                             /s/Martha Hill Jamison
                                                Justice



Panel consists of Chief Justice Frost and Justices Jamison and Busby.




                                        30
