The Case:
G.T. leach Builders, LLC v. Sapphire V.P., L.P., 2013 Tex. App. LEXIS 6456 (Tex. App.-Corpus Christi May 23, 2013, pet. granted).
The Brief Facts:
The facts and procedural history of this case are long, but the following are relevant for our purposes. Sapphire, V.P., L.P. (“Sapphire”) was in the process of constructing a condominium complex on South Padre Island when Hurricane Dolly struck and damaged the complex. G.T. Leach Builders, LLC (“GTL”) was the general contractor for the project.
Sapphire sued GTL for damages after the statute of limitations expired. GTL moved to compel arbitration pursuant to the contract between GTL and Sapphire. The contract provided that claims had to be submitted to arbitration before the statute of limitations expired.
GTL argued that, since it had been sued after expiration of the statute of limitations, it should still be allowed to compel arbitration. The trial court denied GTL’s motion to compel arbitration.
The Corpus Christi Court of Appeals Affirmed:
The Court of Appeals first observed that there was no doubt that there was a valid arbitration agreement and that Sapphire’s claims against GTL were within the scope of that agreement. The problem, however, was the arbitration agreement’s language. That language was clear that no claims could be arbitrated after expiration of the statute of limitations. Importantly, there was no exception in that language for situations in which a party was sued after expiration of the statute of limitations. The Court of Appeals affirmed the trial court’s decision.
What to Take Away:
Start with the plain language of the arbitration agreement language and apply it to your case. If there are express limitations on bringing claims in arbitration, know the exceptions. If there are no exceptions, be proactive in seeking to overcome the limitations. This includes initiating arbitration before the expiration of statute of limitations when you see litigation on the horizon.
