Background: Parallel Litigation in Two Business Court Divisions

Stratton Borchers filed the first lawsuit in Business Court Division 1A (Collin County), alleging that Karl Drusch and affiliated businesses breached a Company Operating Agreement and Employment Agreement arising from his termination as President of one of the affiliates. The trial court compelled arbitration pursuant to an arbitration clause in the Operating Agreement and abated the suit. Because orders compelling arbitration are generally not appealable, Borchers did not appeal.

During the arbitration, Drusch repossessed certain membership units Borchers had pledged as collateral under a 2021 Promissory Note and Security Agreement used to purchase them. Borchers filed a second lawsuit in Business Court Division 8B (Tarrant County). Drusch moved to dismiss for lack of subject-matter jurisdiction and to compel arbitration. The Eighth Division denied Drusch's motions and granted a temporary injunction on November 25, 2025, barring Drusch from disposing of the contested units. Drusch filed an interlocutory appeal in December 2025.

Three months later, Borchers returned to the First Division with an emergency motion to stay a final hearing in the pending arbitration scheduled for March 30, 2026. The First Division amended its previous arbitration order to clarify that it applied only to claims arising under the Operating Agreement (which had an arbitration clause) and not to claims arising under the Security Agreement (which did not), but also stayed the arbitration in its entirety due to ongoing appellate review of the Eighth Division's orders in the related case. Drusch filed a second interlocutory appeal from that order on April 3, 2026.

The Delegation Question

The Fifteenth Court of Appeals framed the central issue through two recent Texas Supreme Court holdings: first, that an arbitration agreement does not have to be included in each of the contract documents it purports to cover, and second, that when parties have two contracts and one provides for AAA arbitration, whether a claim arises under one contract or the other is delegated exclusively to the arbitrator.

Applying these principles, the court held both trial divisions committed the same fundamental error—making scope determinations that the parties had contractually delegated to the AAA arbitrator. The court explained that the Eighth Division erred by failing to refer Borchers' second suit to the arbitrator to decide whether that suit was included within the arbitration agreement's scope. Similarly, the First Division erred by limiting the scope of the ongoing arbitration when the parties had delegated such decisions exclusively to the AAA.

Disposition and Implications

The court reversed the Eighth Division's denial of the motion to compel arbitration and remanded with instructions to compel arbitration and abate the proceedings. The court also reversed the First Division's order staying the arbitration and remanded with instructions to lift the stay. The opinion emphasized that when a valid arbitration agreement delegates gateway questions of arbitrability to the AAA, trial courts lack authority to parse which related contracts or claims fall within the arbitration's scope—that determination belongs exclusively to the arbitrator.

The decision addresses a novel procedural situation: interlocutory appeals from two divisions of a single unitary Business Court, in each of which the parties agreed a decision in one would dispose of the other. The court's resolution establishes clear guidance for Business Court divisions handling related disputes where delegation clauses commit arbitrability questions to arbitrators rather than courts.