Tall v. Vanderhoef

FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
ENTERED
4/21/2025

2025 Tex. Bus. 15

The Business Court of Texas
Eighth Division

JAIME TALL, individually, and JAIME §
TALL, derivatively on behalf of DIRECT §
CARE SOURCE, LLC, §
§
Plaintiffs, §
§
v. §
§ Cause No. 25-BC08A-0002
§
§
SCOTT VANDERHOEF, DIRECT CARE §
SOURCE, LLC, and HEAVEN AT HOME, §
INC., §
§
Defendants. §

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MEMORANDUM OPINION
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[¶ 1] On April 2, 2025, the Court issued an order disposing of two motions filed on

February 17, 2025 and heard on March 14, 2025: (1) the Motion to Stay Proceedings

Pending Arbitration (“Motion to Stay”) filed by Defendants, Scott Vanderhoef

(“Vanderhoef”), Direct Care Source, LLC (“DCS”), and Heaven at Home, Inc. (“HHI”);

and (2) the 91a Motion to Dismiss (“Rule 91a Motion”) filed by Vanderhoef. In the order

granting in part and denying in part the Rule 91a Motion and granting the Motion to Stay,
the Court stated its written opinion explaining its ruling would be forthcoming. This is the

Court’s opinion.

BACKGROUND

[¶ 2] Vanderhoef expelled Plaintiff Jaime Tall (“Tall”) from DCS, the LLC they

founded and formed to complement HHI, an affiliated business that Vanderhoef owned and

that employed Tall pursuant to an employment agreement signed by DCS, HHI, and her.

Since its inception in June 2016, DCS has been managed solely by Vanderhoef, who owns

70 percent of it. Tall owned the remaining 30 percent of DCS until her expulsion in May

2024 pursuant to DCS’s company agreement (“the FARCA”) adopted in November 2023.

Article 15 of the FARCA provides, in pertinent part, that unresolved disputes about a

member’s expulsion are to be submitted “to binding arbitration under rules of the American

Arbitration Association and pursuant to Texas law[.]”

[¶ 3] Instead of arbitrating her expulsion as required by the FARCA, Tall sued

Defendants asserting numerous individual and derivative causes of action sounding in

contract and tort. In response, DCS counterclaimed; DCS and Vanderhoef initiated

arbitration proceedings concerning Tall’s expulsion; Vanderhoef moved to dismiss some of

the individual and derivative claims; and all Defendants moved to stay proceedings.

[¶ 4] Tall subsequently filed a second amended petition, the live pleading in this

case, and the pleading before the Court at the hearing on the two motions. In this petition

containing three exhibits—the aforementioned employment agreement and the FARCA and

its consent—Tall brings eight counts encompassing individual and derivative claims based

MEMORANDUM OPINION, PAGE 2
primarily on her status as a member of DCS. 1 Count 1 incorporates individual and derivative

breach of contract claims against DCS and HHI; Count 2 embraces individual and

derivative breach of fiduciary duty claims against Vanderhoef; Counts 3 and 4 embody

individual and derivative fraud claims against Vanderhoef; Counts 5 and 6 involve

individual and derivative Texas Theft Liability Act (“TTLA”) claims against Defendants;

and Counts 7 and 8 seek declaratory judgment and injunctive relief, individually and

derivatively.

RULE 91a MOTION

[¶ 5] Defendants argue that the Court should exercise its discretion to decide the

Rule 91a Motion before, or concurrently, with the Motion to Stay. 2 In so arguing,

Defendants maintain that judicial economy weighs in favor of dismissing the claims

identified in the motion at this stage because they are “baseless on their face” and “do not

necessarily depend on the resolution of [Tall’s expulsion].” The specific claims sought to

be dismissed by Vanderhoef are the: (1) “breach of contract claim regarding the

Employment Agreement[;]” (2) “individual claim under the [TTLA][;]” (3) “individual

breach of fiduciary duty claim[;]” and (4) “individual and derivative fraud claims[.]”

Vanderhoef contends that these claims have no basis in law.

1
The only claim not based on Tall’s status as a member of DCS is her individual breach of contract
claim against DCS and HHI based on her status as an employee.

2
Pursuant to a 2011 legislative directive, the Texas Supreme Court adopted Texas Rule of Civil
Procedure 91a. TEX. GOV’T CODE ANN. § 22.004(g). Under Rule 91a.3, a trial court must rule on a Rule 91a
motion to dismiss within the 45-day statutory deadline. Reaves v. City of Corpus Christi, 518 S.W.3d 594,
601 (Tex. App.—Corpus Christi 2017, no pet.) (concluding that use of the word “must” in Rule 91a.3 creates
a mandatory duty); TEX. R. CIV. P. 91a.3(c) (mandating that motion “must be” granted or denied within 45
days after it is filed).
MEMORANDUM OPINION, PAGE 3
[¶ 6] Under Rule 91a, a party may “move to dismiss a cause of action on the grounds

that it has no basis in law….” TEX. R. CIV. P. 91a.1. “A cause of action has no basis in law

if the allegations, taken as true, together with inferences reasonably drawn from them, do

not entitle the claimant to the relief sought.” Id. Put simply, a party is entitled to dismissal

under Rule 91a if, after applying the fair-notice pleading standard, the challenged claim is

foreclosed as a matter of law because the claim is not legally cognizable or is negated, under

settled law, by the alleged facts. In re Shire PLC, 633 S.W.3d 1, 19, 25 n.19 (Tex. App.—

Texarkana 2021, no pet.). In determining whether dismissal is appropriate, a trial court

“may not consider evidence...and must decide the motion based solely on the pleading of

the cause of action, together with any pleading exhibits permitted by Rule 59.” TEX. R. CIV.

P. 91a.6.

[¶ 7] At the outset, the Court notes that all of the challenged claims—breach of

contract claim, breach of fiduciary duty claim, fraud claim, and TTLA claim—are legally

cognizable under Texas law. Thus, to prevail, Vanderhoef must establish that the

challenged claims are negated, under settled law, by the alleged facts.

Individual Breach of Contract Claim

[¶ 8] Because Tall amended her pleadings and abandoned her claim that Vanderhoef

breached the employment agreement, the claim is no longer subject to dismissal under Rule

91a. As such, Vanderhoef is not entitled to dismissal of this claim under Rule 91a. 3

3
Vanderhoef’s Rule 91a Motion targets Tall’s first amended petition. But Tall filed a second amended
petition revising the challenged causes of action more than three days before the date of the hearing, and
Vanderhoef chose to stand on his existing motion instead of withdrawing or amending it. See TEX. R. CIV. P.
91a.5(a)-(c). Consequently, the Court applies the factual allegations contained in the live pleading—the
MEMORANDUM OPINION, PAGE 4
Individual TTLA Claim

[¶ 9] To recover under the TTLA, Tall must plead that: (1) she had a possessory right

to property; (2) Defendants unlawfully appropriated property in violation of certain

sections of the penal code; and (3) she sustained damages as a result of the theft. TEX. CIV.

PRAC. & REM. CODE ANN. §§ 134.002, 134.003, 134.005; TEX. PENAL CODE ANN. §§ 31.03,

31.06.

[¶ 10] In Count 5 of her second amended petition, Tall alleges that, pursuant to

Sections 31.03 and 31.06 of the Texas Penal Code, Defendants violated the TTLA by

misappropriating, rather than paying to her, “the funds and resources due to [her] as a 30%

Member of [DCS] with the right to said distributions, appropriate tax allocations, and cash

resources allocable to [her] as profits.” Defendants misappropriated Tall’s property,

according to her, “by falsifying expenses, filing false tax returns, providing false

information to [DCS’s] accountant, withholding distributions from [her], transferring cash

and/or profits to other entities in which [Vanderhoef] had a financial interest that belonged

to [her], and failing to properly allocate profits and tax distributions for [her] thereby

depriving [her] of her property.” As a result of the Defendants’ theft, Tall maintains that

she has suffered damages.

[¶ 11] Vanderhoef argues that Tall’s individual TTLA claim against him has no basis

in law because she has no ownership interest in DCS’s property, i.e., its funds. See Super

Starr Int’l, LLC v. Fresh Tex Produce, LLC, 531 S.W.3d 829, 846 (Tex. App.—Corpus

second amended petition—to the existing motion. Parker v. Ohio Dev., LLC, No. No. 04-23-00069-CV, 2024
WL 1864756, at *3 (Tex. App.—San Antonio Apr. 30, 2024, no pet.) (mem. op.).
MEMORANDUM OPINION, PAGE 5
Christi 2017, no pet.) (recognizing that, pursuant to Section 101.106(b) of the Texas

Business Organizations Code, a member of a limited liability company does not have an

interest in any specific property of the company). Vanderhoef’s argument hinges on his

assertion that Tall’s individual TTLA claim is nothing more than an allegation that he

misappropriated funds belonging to DCS, not to her. But at this stage of proceedings, Tall’s

allegations, together with inferences reasonably drawn from them, must be taken as true—

and they do not negate her individual TTLA claim.

[¶ 12] Tall is alleging that Vanderhoef stole her property, i.e., the distributions and

profits she should have received as a member of DCS but for Vanderhoef’s malfeasance.

Under Texas law, a membership interest in an LLC is the property of a member, and a

member of an LLC has an interest in its share of profits and its right to receive distribution

by virtue of its membership interest. TEX. BUS. ORGS. CODE ANN. §§ 101.106(a), 101.201-

.208 (“Subchapter E. Allocations and Distributions”); Sohani v. Sunesara, 546 S.W.3d

393, 404 (Tex. App.—Houston [1st Dist.] 2018, no pet.) (“A membership interest in a

limited liability company is personal property, and this interest includes a ‘member’s share

of profits and losses or similar items and the right to receive distributions.’” (citing TEX.

BUS. ORGS. CODE ANN. §§ 101.106(a), 1.002(54) (defining “membership interest”))).

Indeed, the definition of “membership interest” in the FARCA acknowledges the personal

property nature of distributions and allocations: “a Member’s membership interest in the

Company and its corresponding rights including, without limitation, rights to distributions

(liquidating or otherwise), allocations, and information….” That distributions are

MEMORANDUM OPINION, PAGE 6
discretionary under the FARCA does not negate the nature of the interest in said

distributions.

[¶ 13] Vanderhoef has failed to establish that Tall’s individual TTLA claim against

him is legally baseless under Rule 91a.1.

Individual and Derivative Fraud Claims

[¶ 14] To recover for fraud, individually and derivatively, Tall must plead that: (1)

Vanderhoef made a material misrepresentation; (2) that was false; (3) when the

representation was made, Vanderhoef knew it was false or made it recklessly as a positive

assertion without any knowledge of its truth; (4) Vanderhoef made the representation with

the intent that Tall and DCS should act upon it; (5) Tall and DCS actually and justifiably

relied on the representation; and (6) Tall and DCS thereby suffered injury. See JPMorgan

Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 653 (Tex. 2018).

[¶ 15] In Counts 3 and 4 of her second amended petition, Tall brings individual and

derivative fraud claims. She alleges that Vanderhoef made multiple representations to her

and DCS “in both the FARCA and verbally that he was managing the finances of [DCS],

keeping accurate books and records according [to]…standard accounting princip[les],

allocating income and expenses in accordance with IRS rules, managing company resources

for the benefit of [DCS] and its Members, and otherwise performing his duties as CEO in a

professional and legal manner.” According to Tall, Vanderhoef made these material

misrepresentations knowing they were false, and she and DCS “justifiably relied upon

Vanderhoef’s misrepresentations and trusted that [he] was acting in accordance with his

obligations under the FARCA and in conforma[n]ce with state and federal law.” As a result

MEMORANDUM OPINION, PAGE 7
of the Vanderhoef’s misrepresentations, Tall maintains that she and DCS have been

damaged.

[¶ 16] Vanderhoef contends that Tall’s individual and derivative fraud claims have

no basis in law because they are barred by the economic loss rule. The “economic loss rule

generally precludes recovery in tort for economic losses resulting from a party’s failure to

perform under a contract when harm consists only of the economic loss of a contractual

expectancy.” Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718

(Tex. 2014) (per curiam). In invoking the economic loss rule, Vanderhoef is asserting that

Tall did not suffer any independent tort damages because her fraud claims are based, not

on a breach of an independent tort duty, but on a breach of his contractual obligations under

the FARCA. Vanderhoef, thus, urges dismissal of Tall’s fraud claims on the theory that

they arise entirely from his alleged non-performance of the FARCA, and not from any

alleged misrepresentations extrinsic to the FARCA itself.

[¶ 17] Under Texas law, the economic loss rule does not bar recovery for post-

contract fraud—the type of fraud alleged by Tall, according to her response to the

motion 4—when that alleged fraud is not derived from a preexisting obligation covered by

contract. See, e.g., Kajima Int’l, Inc. v. Formosa Plastics Corp., USA, 15 S.W.3d 289, 292-

4
Tall’s response to the Rule 91a Motion was untimely filed on March 9, 2025. Because the date of
the hearing was March 14, 2025, Tall’s response was due by March 7, 2025. See TEX. R. CIV. P. 91a.4
(mandating that response be filed no later than seven days before the date of the hearing). But there is no
prohibition in considering the legal arguments in Tall’s response in deciding the motion, especially since she
re-urged these arguments at the hearing on the motion. See Bethel v. Quilling, Selander, Lownds, Winslett &
Moser, P.C., 595 S.W.3d 651, 655-56 (Tex. 2020) (noting that, in deciding a Rule 91a motion, a court may
consider at least the substance of the Rule 91a motion and arguments at the hearing). Furthermore,
Defendants have not asserted that they were prejudiced by Tall’s untimely response; indeed, they filed a reply
to her response. Finally, and more importantly, the Court would not have ruled on the Rule 91a Motion
differently even if Tall’s response had been timely.
MEMORANDUM OPINION, PAGE 8
93 (Tex. App.—Corpus Christi 2000, pet. denied) (holding that trial court abused its

discretion in submitting a fraud question precluding consideration of alleged post-contract

fraud because there was some evidence that defendant made a promise without intending

to perform); Lake v. Cravens, 488 S.W.3d 867, 900 (Tex. App—Ft. Worth 2016, no pet.)

(remarking that it had “no qualms about Kajima” and recognizing that Texas law permits

a party to recover damages for post-contract fraud under certain circumstances). Tall has

alleged that, in defrauding her, Vanderhoef made verbal material misrepresentations

extrinsic from the FARCA, i.e., that he was complying with his legal obligations under

federal and state law, on which she and DCS justifiably relied to their detriment. Taken as

true, these allegations, together with inferences reasonably drawn from them, are sufficient

to plead fraud not entirely derived from a preexisting obligation covered by contract.

[¶ 18] Vanderhoef insists to the contrary. He contends that “Tall solely relies upon

[his] contractual duties under the [FARCA] restated as ‘representations[,]’” to sustain her

fraud claims. In support of his contention, Vanderhoef asserts that the duties he is alleged

to have breached and that constitute the basis for Tall’s fraud and breach of contract claims

against him are rooted in express provisions of the FARCA identified by Tall in her

pleading. While it is true that Tall did identify express provisions of the FARCA that

Vanderhoef allegedly breached, she did so in Count 1 of her first amended petition. This

count was a global breach of contract claim against Vanderhoef. But this count was

amended in Tall’s second amended petition, the live pleading in this case and the pleading

before the Court at the hearing on the two motions. In her second amended petition, Tall

does not bring a breach of contract claim against Vanderhoef and does not allege that he

MEMORANDUM OPINION, PAGE 9
violated specific contractual obligations. As amended, Count 1 alleges that DCS and HHI—

not Vanderhoef—breached those specific contractual obligations. Thus, contrary to

Vanderhoef’s assertion, the facts as alleged by Tall do not prove that her fraud claims are

entirely based on her allegations that he failed to fulfill his contractual obligations under

the FARCA and that they are nothing more than her breach of contract claims repackaged.

[¶ 19] Vanderhoef has failed to establish that the economic loss rule renders Tall’s

individual and derivative fraud claims legally baseless under Rule 91a.1.

Individual Breach of Fiduciary Claim

[¶ 20] To recover for breach of fiduciary duty, Tall must plead: (1) the existence of

a fiduciary relationship between Vanderhoef and her; (2) a breach of a fiduciary duty arising

from that relationship; (3) causation; and (4) damages. First United Pentecostal Church of

Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex. 2017).

[¶ 21] In Count 2 of her second amended petition, Tall brings individual and

derivative breach of fiduciary claims. Tall alleges that Vanderhoef, as DCS’s sole manager

and CEO, “had a fiduciary duty to refrain from self dealing, fraudulent conduct,

embezzlement, falsification of [DCS’s] financial records, falsification of federal and state

tax returns and reports, and transfer of [DCS’s] funds to other entities in which [she] had

no financial interest.” Vanderhoef breached his fiduciary duty, according to Tall, “by

falsifying expenses, filing false tax returns, providing false information to [DCS’s]

accountant, withholding distributions from Members, transferring cash and/or profits to

other entities in which [he] had a financial interest but with no legitimate business purpose

of [DCS], and failing to properly allocate profits and tax distributions for [DCS] and other

MEMORANDUM OPINION, PAGE 10
Members.” As a result of Vanderhoef’s breach of his fiduciary duty, Tall maintains that she

and DCS were damaged.

[¶ 22] Tall does not identify in her second amended petition the legal basis for the

fiduciary duty Vanderhoef allegedly owed her. As a general rule, a plaintiff must establish

the existence of a duty. Humble Sand & Gravel, Inc. v. Gomez, 146 S.W.3d 170, 182 (Tex.

2004). Fiduciary duties can exist by virtue of common law, statute, or contract. Whether a

fiduciary duty exists is a question of law. Meyer v. Cathey, 167 S.W.3d 327, 330 (Tex.

2005).

[¶ 23] Vanderhoef argues that Tall’s individual breach of fiduciary claim against

him has no legal basis because he did not owe her a fiduciary duty for two reasons: (1)

formal fiduciary duties do not exist between LLC members; and (2) the FARCA eliminated

all fiduciary duties he may have owed her.

[¶ 24] Under Texas common law, members of an LLC do not owe broad formal

fiduciary duties to each other, as Vanderhoef correctly points out. See Bertucci v. Watkins,

No. 23-0329, 2025 WL 807355, at *6 (Tex. Mar. 14, 2025) (“And members of limited-

liability companies likewise do not owe formal fiduciary duties to fellow members simply

because of their relationship as co-members”). 5 Although Tall concedes that there are no

broad formal fiduciary duties between LLC members, she correctly counters that an

5
One court has recognized a narrow formal fiduciary duty in a special circumstance. In Allen v. Devon
Energy Holdings, L.L.C., 367 S.W.3d 355 (Tex. App.—Houston [1st Dist.] 2012, pet. granted, judgm’t
vacated w.r.m.), the court held that an LLC’s majority member and sole member-manager owes to an LLC’s
minority member a formal fiduciary duty when a contemplated purchase or redemption of the minority
member’s interest would result in an increased ownership interest for the majority owner and sole manager.
367 S.W.3d at 395-96. This special circumstance does not exist here, and Tall has not alleged in her live
pleading that it does.
MEMORANDUM OPINION, PAGE 11
informal fiduciary relationship can exist among members of an LLC based on specific facts.

As recently reiterated by the Texas Supreme Court, an informal fiduciary duty can arise

from personal relationships of special trust and confidence. Pitts v. Rivas, No. 23-0427,

2025 WL 568114, at *7 (Tex. Feb. 21, 2025). In the context of a business relationship, for

an informal fiduciary duty to arise from a special relationship of trust and confidence, the

special relationship must have existed before, and apart from, the agreement made the basis

of the suit. Id. Tall has not alleged in her live pleading the existence of a special relationship

of trust and confidence between Vanderhoef and her that existed before, and apart from,

the agreements made the basis of the suit: the employment agreement and the FARCA.

[¶ 25] The Texas Business Organizations Code (“BOC”) is silent as to the duties

owed by members of an LLC, although it intimates that fiduciary duties may be

contractually created—or eliminated—in the LLC’s governing documents. See TEX. BUS.

ORGS. CODE ANN. § 101.401 (permitting an LLC’s company agreement to “expand or

restrict any duties, including fiduciary duties, and related liabilities that a member,

manager, officer, or other person has to the company or to a member or manager of the

company[]”). Tall did not allege in her live pleading that Vanderhoef owes her a fiduciary

duty under the BOC, the FARCA, or some other statute or agreement.

[¶ 26] Vanderhoef contends that, as permitted by Section 101.401, the FARCA

eliminated all fiduciary duties he may have owed Tall. The FARCA addresses the extent to

which duties and liabilities between and among members and managers may be modified.

In pertinent part, Section 6.02 of the FARCA provides that:

MEMORANDUM OPINION, PAGE 12
Furthermore, no special relationship shall exist between any Manager and the
Members, and no Member or Manager shall have any duty to any Member,
whether fiduciary or otherwise, except as expressly set forth herein (or in
other written agreements). No Member, Manager, or Officer shall be liable to
the Company or to any other Member for any loss or damage sustained by the
Company or to any Member, unless the loss or damage shall have been the
result of gross negligence, fraud or intentional misconduct by the Member,
Manager, or Officer in question.

By incorporating this provision in the FARCA, Tall and Vanderhoef chose to contractually

eliminate fiduciary duties between them and liability for losses or damages sustained by

them, except for those arising from gross negligence, fraud, or intentional misconduct.

There is no exception for any disclaimed special relationships, including any fiduciary

duties.

[¶ 27] Under Texas law, courts must honor the contractual terms that parties use to

define the scope of their obligations and agreements, including those that restrict fiduciary

duties that might otherwise exist. Primexx Energy Operating Fund, LP v. Primexx Energy

Corp., 2025 Tex. Bus 9, at ¶¶ 66-68, 2025 WL 758641, at *9 (Mar. 10, 2025); Stephens v.

Three Finger Black Shale P’ship, 580 S.W.3d 687, 717 (Tex. App.—Eastland 2019, pet.

denied); Strebel v. Wimberly, 371 S.W.3d 267, 284 (Tex. App.—Houston [1st Dist.] 2012,

pet. denied); see TEX. BUS. ORGS. CODE ANN. § 152.002(b)(2). This is especially true when

the contractual limitation arises from an arms-length business transaction between

sophisticated businesspeople. Primexx, 2025 Tex. Bus 9, at ¶68, 2025 WL 758641, at *9;

Stephens, 580 S.W.3d at 717; Strebel, 371 S.W.3d at 284. This principle adheres to Texas’s

longstanding public policy of freedom of contract. El Paso Field Servs., L.P. v. MasTec N.

Am., Inc., 389 S.W.3d 802, 811–12 (Tex. 2012).

MEMORANDUM OPINION, PAGE 13
[¶ 28] Thus, even if the Court assumes, for purposes of argument, that Tall’s second

amended petition sufficiently alleged facts to support her claim that a fiduciary duty existed

between Vanderhoef and her, the FARCA expressly disclaimed any fiduciary duty that

might have existed between them.

[¶ 29] Vanderhoef has established that Tall’s individual breach of fiduciary duty

claim against him is legally baseless under Rule 91a.1.

Attorney’s Fees and Costs

[¶ 30] Tall and Vanderhoef each seek an award of attorney’s fees and costs pursuant

to Rule 91a.7. This rule provides that, except in situations not applicable here, a court “may

award the prevailing party on the motion all costs and reasonable and necessary attorney

fees incurred with respect to the challenged cause of action in the trial court….” TEX. R.

CIV. P. 91a.7 (emphasis added). The award of attorney’s fees and costs is discretionary, not

mandatory, in this case. Accordingly, the Court has exercised its discretion not to award

fees and costs to either Tall or Vanderhoef.

MOTION TO STAY

[¶ 31] In their Motion to Stay, Defendants seek to toll all deadlines and to stay all

proceedings, except for deciding the Rule 91a Motion, while the dispute over Tall’s

expulsion is arbitrated as required by the FARCA. Defendants contend that a stay is

necessary because arbitration will resolve issues material to this lawsuit and render much

of it unnecessary and futile. According to Defendants, once Tall’s expulsion is confirmed

in arbitration, she will lose standing, and this Court will lose jurisdiction over her

derivative claims. See Dunster Live, LLC v. LoneStar Logos Mgmt. Co., LLC, No. 03-22-

MEMORANDUM OPINION, PAGE 14
00014-CV, 2024 WL 291403, at *5-6 (Tex. App.—Austin Jan. 26, 2024, no pet.) (mem.

op.) (holding that former member of an LLC lacked standing to bring its derivative suit). In

her response, Tall opposes a stay. Advancing the premise that Defendants are actually

seeking to litigate all her claims in arbitration, Tall contends that Defendants waived their

right to arbitration and that they should be enjoined from proceeding with their arbitration

request.

[¶ 32] A trial court may stay a case while an issue material to the case is first

resolved in arbitration in exercising its inherent discretionary authority to control and

manage its docket in the interest of comity, convenience, and prevention of inconsistent

rulings. See Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 n.23

(1983); Landis v. N. Am. Co., 299 U.S. 248, 254 (1936); Chicago Bridge & Iron Co. (Del.)

v. Delman, No. 09-14-00468-CV, 2015 WL 1849669, at *3 (Tex. App.—Beaumont Apr.

23, 2015, no pet.) (mem. op.). Tolling all deadlines and staying all proceedings, except for

ruling on the Rule 91a Motion, is appropriate here while the dispute over Tall’s expulsion

is arbitrated because her status as a member of DCS is an issue material to this case.

[¶ 33] Tall’s status as a member of DCS undergirds the majority of her claims

against Defendants and is inextricably interwoven with the issues in her lawsuit. Tall

complains of acts committed against DCS and her as DCS’s minority member by

Vanderhoef as DCS’s majority member and sole manager. Tall’s individual and derivate

claims sounding in contract and tort are based, in essence, on the same factual allegation:

as majority member and sole manager of DCS exercising exclusive control over its finances,

Vanderhoef defrauded DCS and her and stole from them distributions and funds due to

MEMORANDUM OPINION, PAGE 15
them by diverting money to HHI and falsifying DCS’s tax returns and records. Because of

these common questions of fact, staying proceedings while Tall’s status as a member of

DCS is arbitrated would promote judicial efficiency and avoid the risk of inconsistent

adjudications and the potential waste of judicial resources. Allowing concurrent

proceedings, parallel or otherwise, in two fora would undermine these purposes, especially

because Tall insists in her response that “[t]he issues raised by … Defendants [Vanderhoef

and DCS in their arbitration demand] are the exact same issues pending before this Court.”6

As Defendants point out, “[i]t would be highly inefficient, and contrary to the intent of the

parties’ arbitration agreement, to allow [Tall’s] claims to proceed, only for the derivative

claims to be mooted mid-case by a decision in the pending arbitration.”

[¶ 34] Tall argues that staying proceedings is inappropriate because Defendants, in

allegedly seeking to arbitrate all her claims, have substantially invoked the judicial process

to the point of prejudicing her and, thus, have impliedly waived their right to proceed in

arbitration. In support of her arguments, Tall relies on Perry Homes v. Cull, 258 S.W.3d

580 (Tex. 2008). Tall’s reliance on Perry Homes is misplaced.

[¶ 35] In Perry Homes, the Texas Supreme Court employed a totality-of-the-

circumstances test 7 to hold that the plaintiffs waived the right to arbitrate by substantially

6
Although Tall so insists, she reiterated at the hearing that she is not challenging the binding
arbitration agreement or its applicability to her expulsion. Indeed, she has filed an answer in the arbitration
proceeding.

7
In determining whether a party impliedly waived its right to arbitrate under the totality-of-the-
circumstances test, a court considers non-exclusive factors such as: (1) how much discovery has been
conducted, who initiated it, and whether it relates to the merits; (2) how much time and expense has been
incurred in litigation; and (3) the proximity in time between a trial setting and the filing of the motion seeking
arbitration. Id. at 590-92 (internal citations and footnotes omitted).
MEMORANDUM OPINION, PAGE 16
invoking the judicial process to the defendants’ detriment. Id. at 595-96. In so holding, the

Supreme Court noted that the plaintiffs had spurned the defendants’ requests for

arbitration and participated in extensive discovery, including hundreds of requests for

production and interrogatories, only to then request arbitration fourteen months after filing

suit and four days before the scheduled trial date. Id. In other words, by purposefully

delaying arbitration while performing extensive discovery, the plaintiffs had substantially

invoked the judicial process and prejudiced the defendants. Here, in contrast, Defendants

engaged in the following limited activities, none involving extensive discovery or an

eleventh-hour arbitration demand, in a three-month span before seeking arbitration: after

Tall filed suit in December 2024, DCS and Vanderhoef filed their answers, which includes

DCS’s counterclaims against Tall, in January and February 2025, respectively;

Defendants removed the suit to this Court with Tall’s permission in January 2025;

Vanderhoef and DCS filed their arbitration demand in February 2025; and Vanderhoef filed

his motion to dismiss in February 2025. Considering the totality of the circumstances,

Defendants’ conduct does not equate to substantial invocation of the judicial process. See,

e.g., G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 511–15 (Tex. 2015)

(holding plaintiffs did not waive arbitration by asserting counterclaims; seeking change of

venue; filing motions to designate responsible third parties, for continuance, and to quash

depositions; designating experts; and waiting six months to move for arbitration).

MEMORANDUM OPINION, PAGE 17
CONCLUSION

[¶ 36] For these reasons, the Court signed its April 2, 2025 order granting in part

and denying in part the Rule 91a Motion and granting the Motion to Stay.

JERRY D. BULLARD
Judge of the Texas Business Court,
Eighth Division

SIGNED ON: April 21, 2025

MEMORANDUM OPINION, PAGE 18