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Click here for the full text of this decision FACTS:Settlement Capital Corp. contracted with Stewart A. Feldman & Associates to represent the company in obtaining court approval of the structured settlement payment rights the company bought. Kent Hanszen signed on behalf of the Feldman firm, and Matthew Bracy signed on behalf of SCC. The agreement discussed billing provisions and stated that disputes arising out of attorneys’ fees or costs would be submitted to the Houston Bar Association’s Fee Dispute Committee for binding resolution. All other disputes were to be submitted to a nationally recognized arbitration association. Stewart Feldman later set up a company in the same business as SCC, called Rapid Settlements. SCC sued Feldman, the Feldman firm Rapid Management Corp., and Rapid Settlements Corp. for using confidential information obtained from the firm’s representation of SCC to create a business in direct competition with SCC. SCC also alleged that Rapid Management Corp. was the general partner of Rapid Settlements Ltd., whose president was a firm employee, and that the business was surreptitiously operated out of the firm directed at SCC’s customers. SCC’s claims for breach of fiduciary duty, unfair competition and legal malpractice were joined by requests for a temporary restraining order, a temporary injunction and a permanent injunction. The trial court granted the TRO, preventing the Feldman firm and the defendants from removing SCC’s files and soliciting SCC’s clients. Three days before the hearing on the temporary injunction, Feldman moved to compel arbitration. The trial court denied the motion as to the requests for injunctive relief. The Feldman firm filed an appeal and for a writ of mandamus. The trial court stayed the temporary injunction hearing pending this court’s decision. HOLDING:Appeal dismissed; writ conditionally granted. The court first determines whether the Federal Arbitration Act or the Texas General Arbitration Act applies. If arbitration is wrongly withheld under the FAA, the remedy is for a writ of mandamus. A case under the TGAA, however, allows for an appeal. Federal courts have held that the FAA applies to a written arbitration provision that evidences a transaction involving commerce. The Texas Supreme Court has held that the FAA extends to any contract affecting commerce, as far as the commerce clause of the U.S. Constitution reaches. The court concludes that the legal services agreement between the Feldman firm and SCC involves interstate commerce, as SCC does business all over the country that involved extensive sharing of information with the Feldman firm about SCC’s business operations. The court holds that the FAA applies to the legal services agreement between SCC and the Feldman firm, therefore, an appeal is not appropriate. The court then turns to see if the Feldman firm is entitled to mandamus relief. Under FAA 3, an application for arbitration stays trial of the underlying action. In Merrill Lynch, Pierce, Fenner & Smith v. McCollum, 666 S.W.2d 604 (Tex.App. � Houston [14th Dist.] 1984, writ ref’d n.r.e.), this court held that a trial court cannot hold a temporary injunction hearing when arbitration has been invoked. Similarly, the courts in the 5th U.S. Circuit Court of Appeals, as well as the federal district courts in Texas, have held that a trial court has limited authority over a case subject to arbitration and may not hold a temporary injunction hearing when the parties’ agreement does not provide a mechanism for maintaining the status quo. The court finds that the injunctive relief SCC seeks would require the court to consider the merits of the underlying dispute, which would interfere with the arbitrator’s independent determination of the issues and frustrate the strong federal policy in favor of a speedy implementation of arbitration without delay and obstruction in the courts. OPINION:Fowler, J.; before Fowler, Edelman and Seymore, JJ. DISSENT:Edelman, J. “The majority holds that filing the motion was itself sufficient to invoke Feldman’s rights to compel arbitration and stay the proceedings. However, at the time Feldman filed its motion, Settlement Capital was under no obligation to arbitrate because Feldman had not submitted the dispute to an arbitration association and was not required to do so. Because no obligation to arbitrate existed at that time, Settlement Capital was not then in breach of any such obligation, and Feldman thus had no right to compel arbitration under section 4. “Similarly, in that Settlement Capital had not submitted the dispute to an arbitration association, it was within the trial court’s discretion to conclude that the matter was not yet referable to arbitration (or, alternatively, Settlement Capital was in default in proceeding with arbitration), such that the requisites had not been met to stay the proceedings under section 3. Moreover, because the plain meaning of the language of the agreement in these respects is unambiguous, there is nothing to construe in favor of arbitration. Therefore, the trial court did not abuse its discretion in denying the motion, and Feldman’s mandamus petition should be denied.”

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