Texas Business Court Decision – November 12, 2026

No. 26-BC01B-0066  Zachary Pena, et al. v. Fermi Inc., et al. (First Division, Judge Stagner)

Arbitration.

Background. In April 2025, Zachary Pena and Ethan Summers signed Joinder Agreements making them parties to Fermi LLC’s Company Agreement and granting them Class B units subject to a clawback. Section 10.9 of the Company Agreement requires mediation and then JAMS arbitration in Dallas. In July 2025, Fermi announced an investigation into Plaintiffs’ conduct and two days later refunded the units’ original grant value. The Board ratified the reclamation in August. On September 30, 2025, Fermi LLC converted into Fermi Inc. Section 2(d) of the Plan of Conversion provides that the Company Agreement “shall terminate” and be “superseded in [its] entirety.” Section 4(a) provides that the corporation is the same business entity and keeps the LLC’s obligations. The new Certificate of Formation Section 11.1 makes the Business Court the exclusive forum for specified disputes “[u]nless the Corporation consents in writing to another forum.” After failed mediation, Plaintiffs sued Fermi for breach of contract and sued Fermi and Toby Neugebauer, its former chief executive, for conversion. Fermi moved to compel arbitration and stay this action.

Issues:

1. Who decides whether the arbitration agreement survived the conversion, and who decides its scope?
2. Did Plaintiffs agreed to arbitrate?
3. Did the Plan of Conversion extinguish the agreement as to pre-conversion disputes?
4. Does Sec. 11.1 of the Certificate of Formation, including through Plaintiffs’ later stock purchases, displace arbitration?
5. Does the argument that claims arise under the Joinders rather than the Company Agreement defeat arbitration?
6. Should the claim against non-signatory Neugebauer be stayed?

Discussion.

Gateway Questions. The court, not the arbitrator, decides whether the agreement survived. Baby Dolls Topless Saloons, Inc. v. Sotero, 642 S.W.3d 583 (Tex. 2022), is distinguishable because the plaintiffs there challenged only expiration. If Sec. 10.9 survived, its references to JAMS incorporated JAMS rules delegating arbitrability to the arbitrator.

Agreement to Arbitrate. The Joinder made Plaintiffs parties to the Company Agreement, so Section 10.9 binds them. The clawback’s survival language does not establish that the parties intended that arbitration agreement end with Plaintiffs’ membership.

Plan of Conversion. The Plan of Conversion did not extinguish the agreement to arbitrate disputes that had already arisen. Arbitration clauses “are hardy” and survive absent a later instrument that looks backward, such as a release or a forum choice for existing disputes. Section 2(d) operates prospectively and contains no release. Section 4(a) preserved Fermi’s existing obligations. Read together, these provisions describe a company that changed its form while keeping its obligations. Plaintiffs were not parties to the Plan, so it cannot reflect their intent to abandon arbitration.

Section 11.1. A forum clause decides which court hears a dispute, while an arbitration clause decides whether the court hears it all. Section 11.1 speaks only to the first question – where an action may brought, but it does not require the parties to litigate in a court a dispute they agreed to arbitrate. A clause conferring exclusive jurisdiction over any suit sensibly reaches only those disputes not subject to arbitration, such a a suit to compel arbitration or to enforce an award. Section 10.9 anticipates exactly that kind of proceeding; the two section work in sequence – arbitration resolves the merits, and the court handles whatever litigation may be required.

Scope. Whether the Joinder-based claims fall within Section 10.9 is delegated to the arbitrator. See TotalEnergies E&P USA, Inc. v. MP Gulf of Mex., LLC, 667 S.W. 3d 694 (Tex. 2023).

Defendant Neugebauer. The claim against him turns on the propriety of the reclamation, which the arbitrator will decide, so the claim against him is nor severable and must be stayed.

The motion to compel is granted, and the action is stayed in its entirety.