On appeal, the plaintiffs asserted that their claims fall within the scope of the arbitration agreement included in the HAHS bylaws.  According to the appeals court, however, the plaintiffs’ argument was irrelevant as their actions waived any right they may have had to engage in arbitration.  The court stated despite that both Texas and federal law favor arbitration and there is a strong presumption against any waiver of the right to engage in arbitration, a party’s conduct may demonstrate implied waiver.

Next, the First District discussed those behaviors such as filing suit that would not ordinarily demonstrate a party’s unequivocal waiver of his or her right to arbitrate.  Additionally, the court described behaviors such as filing a motion to compel arbitration on the eve of trial that would establish waiver.  After that, the appeals court stated it was required to determine whether the plaintiffs waived their right to arbitration based upon the totality of the circumstances.  According to Court of Appeals,

We reject Plaintiffs’ contention that requesting injunctive relief from the trial court was not a specific or deliberate act that was inconsistent with the right to arbitrate because injunctive relief is not permitted under the applicable rules of arbitration. Plaintiffs did not establish what rules would govern any arbitration. Moreover, the clause in the original bylaws under which Plaintiffs sought arbitration does not include any limit on the arbitrator’s authority. This Court has determined that arbitrators do not exceed their authority in awarding injunctive relief in the absence of any language in the arbitration clause specifically prohibiting the arbiters from granting such relief. See J.J. Gregory Gourmet Servs., Inc. v. Antone’s Import Co., 927 S.W.2d 31, 36 (Tex. App.—Houston [1st Dist.] 1995, no writ).

…

Weighing all these factors under the case-specific facts here, we conclude that the totality of the circumstances demonstrates an attempt by Plaintiffs to “have it both ways.” See In re Citigroup Global Mkts., 258 S.W.3d 623, 625 (Tex. 2008)(orig. proceeding)(quoting Perry Homes, 258 S.W.3d at 597). Such circumstances demonstrate that Plaintiffs had substantially invoked the litigation process before seeking to compel arbitration.

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