Fifteenth Court of Appeals Decision – September 29, 2026

No. 15-25-00244-CV Karl Drusch and TrueAero, LLC v. Stratton Borchers (Business Court Division 8b – No. 25-BC08B-0021)

No. 15-26-00087-CV Karl Drusch and TrueAero LLC v. Stratton Borchers (Business Court Division 1A – No. 24-BC01A-0014)

[Brister, Author, with Field and Farris)

Arbitration.

Background.

Stratton Borchers was terminated as President of TrueAero, LLC, a subsidiary of TrueAero Group, LLC, which is majority-owned by Karl Drusch. He sued Drusch and the affiliates in the Business Court’s First Division, alleging various employment-related claims. That court compelled arbitration of the employment claims under a clause in the holding company’s Operating Agreement which called for American Arbitration Association arbitration, and abated the remainder of the case. During the arbitration, the holding company declared Borchers in default on a 2021 Promissory Note and Security Agreement and sold his 975 pledged membership units to Drusch for $100,000. Borchers tendered all but $5,000 in demanded attorneys’ fees, a charge he contended neither the Note nor the Security Agreement authorized. Borchers then filed a second suit, this time in the Eighth Division of the Business Court. That court denied Drusch’s motions to dismiss and to compel arbitration, and it granted a temporary injunction barring further transfer of the units. Meanwhile, the First Division clarified that its arbitration order covered only Operating Agreement claims, and it stayed the arbitration pending appellate review of the Eighth Division’s rulings. Drusch filed interlocutory appeals from each division’s order. (This is just a thumb-nail description of the facts, as the procedural and factual histories are more complicated.)

Issues:

1. Did the Eighth Division err in denying dismissal for lack of subject-matter jurisdiction (amount-in-controversy and substantive grounds)?
2. Did the Eighth Division err in refusing to compel arbitration of the second suit?
3. Did the Eighth Division abuse its discretion by granting a temporary injunction?
4. Did the First Division err by limiting the scope of the arbitration and then staying it?

Discussion.

1. Jurisdiction. The Eighth Division did not err in denying the motion to dismiss. A plaintiff’s pleaded amount controls unless the defendant alleges sham pleading or can “readily establish” that the amount-in-controversy is insufficient. Bland ISD v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). Drusch’s expert valued the units at $0, but the record undercut that opinion. The holding company had accepted the units as collateral for a $93,600 loan, Drusch paid $100,000 for them, and the company’s annual gross receipts were in the range of $40 to $60 million a year. By invoking the First Division’s jurisdiction to compel arbitration, Drusch implicitly agreed the dispute reached the statutory amount in controversy, and by conceding that the Eighth Division dispute would cancel Borcher’s first suit, he implicitly agreed that the same amount was in controversy. Thus he did not “readily establish” that the pleaded amount was plainly false. Further, subject-matter jurisdiction was established under Sec. 25A.004(b)(2) because Borchers’ suit sought return of his membership or ownership interests.
2. Arbitration. The Eighth Division erred by failing to compel arbitration. While a court decides whether an arbitration agreement exists, the scope can be delegated to the arbitrator. An agreement for an AAA arbitration incorporates the AAA rules and so delegates arbitrability exclusively to the arbitrator. TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694 (Tex. 2023). That case also held that arbitration clause need not appear in every related contract. The merger clause in the parties’ Security Agreement did not extinguish the arbitration agreement, unlike the express language in Transcor Astra Group S.A. v. Petrobas America Inc., 650 S.W.3d 462 (Tex. 2022). Whether the Security Agreement claim falls within the Operating Agreement’s arbitration clause is a scope question for the arbitrator. The venue clause granting exclusive jurisdiction to Texas courts is not inconsistent with arbitration.
3. The Temporary Injunction. The Eighth Division did not err in granting the injunction. The attorneys’ fees question went to probable right of recovery. Under the American Rule, the Security Agreement’s “expenses” clause was not plain enough to authorize fees, and this supports the likelihood of Borcher’s probable success on the merits. On irreparable injury, the court accepted that money damages could compensate Borcher for the loss of the units, but it still found irreparable harm because the repossession could be used to defeat Borcher’s standing in arbitration; Drusch, on the other hand, showed no injury from the injunction. The temporary injunction also protected the arbitrator’s jurisdiction under Tex. Civ. Prac. & Rem. Code Sec 171.086.
4. The First Division Stay. The First Division erred in staying the arbitration. A court may stay arbitration only upon a showing that no agreement to arbitrate exists – Tex. Civ. Prac. & Rem. Code Sec. 171.023(a) – and the scope of the agreement was delegated to the arbitrator. Litigation of overlapping issues must be stayed in favor of arbitration, not the reverse. In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 195-96 (Tex. 2007).
5. Disposition. In No. 15-25-00224, the court reversed the denial of arbitration, affirmed the  temporary injunction, and remanded for an order compelling arbitration, subject to the Texas Supreme Court’s stay of trial proceedings. In No. 15-26-00087, the court reversed the stay and remanded with instruction to resume the arbitration.
6. The court also suggests that some of the problems which resulted from two separate  cases before two different divisions of the Business Court “may be addressed in future Business Court cases by consolidating related cases, reassignment by the court’s administrative presiding judge, or exchanging benches.”