SCOTX Reconsiders its Own 2004 Decision Regarding Arbitrability
On Friday, the Supreme Court of Texas overruled its 2004 decision in In re Wood on the issue of arbitrability. In Robinson v. Home Owners Management Enterprises, Inc., No. 18-0504 (Tex. 2019), a couple, the Robinsons, purchased a new home that included a warranty which was administered by Home Owners Management Enterprises, Inc. (“HOME”). The home-warranty and its addendum included a mandatory binding arbitration provision. This provision was silent regarding whether the courts or an arbitrator must decide issues related to arbitrability and whether class arbitration was permitted.
Later, the couple filed a breach of warranty claim against HOME and other defendants. HOME filed a motion to compel the dispute to arbitration based on the terms of the home-warranty. The trial court granted HOME’s motion and ordered the case to arbitration. Prior to arbitration, however, the Robinsons sought to amend their case to include unrelated class-action claims. HOME objected to the amendment and asked the arbitrator to strike the collective action claims. Instead, the arbitrator bifurcated the proceedings.