Kevin W. Matthews v. Nalco Company, LLC D/B/A Ecolab, Inc.

In the
Court of Appeals
Sixth Appellate District of Texas at Texarkana

No. 06-24-00061-CV

KEVIN W. MATTHEWS, Appellant

V.

NALCO COMPANY, LLC D/B/A ECOLAB, INC., Appellee

On Appeal from the 13th District Court
Navarro County, Texas
Trial Court No. D22-30319-CV

Before Stevens, C.J., van Cleef and Rambin, JJ.
Memorandum Opinion by Chief Justice Stevens
MEMORANDUM OPINION

Kevin W. Matthews sued his former employer, “Nalco Company, LLC d/b/a ECOLAB,

Inc. d/b/a Champion X L.L.C.,” for alleged employment discrimination and breach of an

arbitration agreement. In a prior opinion, we concluded that only ChampionX “was the intended

and proper defendant in this lawsuit.” Matthews v. Nalco Co., No. 06-23-00038-CV, 2023 WL

6773862, at *4 (Tex. App.—Texarkana Oct. 13, 2023, no pet.) (mem. op.). On appeal in this

case,1 Matthews argues that the trial court erred (1) by granting ChampionX’s motion to set aside

a default judgment, (2) by granting a motion to dismiss the case based on an arbitration

agreement and pending arbitration, (3) by failing to stay the case in lieu of arbitration, and (4) by

granting a protective order in favor of ChampionX.

We find no abuse of discretion in the trial court’s decision to set aside its default

judgment. We further find that the trial court properly decided that Matthews’s claims were

subject to an arbitration agreement and pending arbitration but that the trial court should have

stayed the case instead of dismissing it. Our holdings on these matters are dispositive of

Matthews’s remaining issue. As a result, we reverse the trial court’s dismissal and remand the

matter to the trial court for further proceedings consistent with this opinion, including the

issuance of a stay pending arbitration.

1
Originally appealed to the Tenth Court of Appeals, this case was transferred to this Court by the Texas Supreme
Court pursuant to its docket equalization efforts. See TEX. GOV’T CODE ANN. § 73.001 (Supp.). We follow the
precedent of the Tenth Court of Appeals in deciding the issues presented. See TEX. R. APP. P. 41.3.
2
I. Factual and Procedural Background

On June 13, 2022, ChampionX filed a Rule 91a motion to dismiss Matthews’s lawsuit on

grounds that Matthews admitted his employment discrimination claim was subject to arbitration

and because the arbitration was pending. On September 20, 2022, Matthews filed a “Motion for

Interlocutory Default Judgment” because no answer was on file. The trial court granted

ChampionX’s Rule 91a dismissal, but we decided that the Rule 91a motion was untimely filed,

reversed the trial court’s dismissal, and, on October 13, 2023, remanded the case to the trial court

for further proceedings. Id. at *4, 7.

On January 10, 2024, Matthews filed a renewed motion for interlocutory default

judgment, which the trial court granted on the following day without a hearing. In a motion to

set aside the default judgment, ChampionX argued that it had made a general appearance by

moving to dismiss Matthews’s lawsuit and was, therefore, entitled to proper notice prior to entry

of the default judgment. ChampionX also filed an answer and again argued that Matthews’s

claims should be dismissed because they were subject to a binding arbitration agreement. The

trial court granted ChampionX a protective order from discovery pending the hearing on its

motion to set aside the default judgment. After a hearing, the trial court set aside the “Renewed

Interlocutory Default Judgment.”

On April 25, 2024, ChampionX moved to dismiss Matthews’s claims because it was

“undisputed that . . . [the] claims f[e]ll within the scope of a valid arbitration agreement between

the parties” and that “an ongoing arbitration [was] currently pending before the American

Arbitration Association [(AAA)].”
3
In support of its motion, ChampionX attached a copy of a “Mediation and Arbitration

Agreement” signed by Matthews (the Agreement). The Agreement stated that “[n]either the

Company nor its present and former Associates may commence an action in court concerning a

Dispute covered by the Agreement.” The Agreement language defined the term “Associate” as

“any person who is or has been employed by the Company” and defined the term “Dispute” as

“any and all claims or controversies alleging violations of federal, state, local or common law

between an Associate and the Company (and vice versa) arising out of or in any way related to

the application for employment, employment or cessation of employment with the Company,”

including “employment discrimination . . . [or] retaliation” The Agreement contained clear

language stating, “All Disputes shall be finally and conclusively resolved by final and binding

arbitration before a neutral third party.” Further, the Agreement was governed by the “Federal

Arbitration Act, 9 U.S.C. § 1 et seq.,” and all disputes were to be conducted by the AAA “in

accordance with the AAA Employment Arbitration Rules.”

ChampionX’s dismissal motion also attached (1) Matthews’s request for arbitration for

the same employment discrimination claim and (2) correspondence showing that the arbitration

was pending with the AAA and that Judge Carlos Lopez was appointed to arbitrate the matter.

After reviewing the evidence, on April 26, the trial court granted ChampionX’s dismissal

motion and dismissed Matthews’s case without prejudice.

On May 13, Matthews attempted to file a supplemental petition claiming that

ChampionX had breached the Agreement even though his case had been dismissed. Matthews

then filed a motion for new trial, which was overruled by operation of law after a hearing.
4
II. The Trial Court Did Not Abuse Its Discretion by Setting Aside the Default
Judgment

In his first point of error, Matthews argues that the trial court erred by setting aside the

default judgment. The answer to that question depends on whether the trial court abused its

discretion in doing so. Dir., State Emps. Workers’ Comp. Div. v. Evans, 889 S.W.2d 266, 267

(Tex. 1994); see In re G.D.L., No. 10-23-00011-CV, 2023 WL 5624064, at *3 (Tex. App.—

Waco Aug. 30, 2023, no pet.) (mem. op.); Manning v. Johnson, 642 S.W.3d 871, 879 (Tex.

App.—Texarkana 2021, no pet.). “A trial court abuses its discretion when it acts without

reference to any guiding rules or principles.” Carpenter v. Cimarron Hydrocarbons Corp., 98

S.W.3d 682, 687 (Tex. 2002) (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238,

241–42 (Tex. 1985)).

“It is a basic tenet of jurisprudence that the law abhors a default.” Coniglio v. Woods,

693 S.W.3d 44, 54 (Tex. App.—Texarkana 2022, pet. denied) (quoting Hock v. Salaices, 982

S.W.2d 591, 593 (Tex. App.—San Antonio 1998, no pet.)). “The historical trend in default

judgment cases is toward the liberal granting of new trials.” Norton v. Martinez, 935 S.W.2d

898, 901 (Tex. App.—San Antonio 1996, no pet.) (citing Miller v. Miller, 903 S.W.2d 45, 47

(Tex. App.—Tyler 1995, no writ)).

“The prerequisites for granting a motion to set aside a trial court’s default judgment

equally apply to a no-answer and a post-answer default judgment.” Freeman v. Pevehouse, 79

S.W.3d 637, 640–41 (Tex. App.—Waco 2002, no pet.) (citing Cliff v. Huggins, 724 S.W.2d 778,

5
779 (Tex. 1987)); see Evans, 889 S.W.2d at 268. Pursuant to the Texas Supreme Court opinion

in Craddock v. Sunshine Bus Lines, Inc.,

[a] default judgment should be set aside and a new trial ordered in any case in which the
failure of the defendant to answer before judgment was not intentional, or the result of
conscious indifference on his part, but was due to a mistake or an accident; provided the
motion for a new trial sets up a meritorious defense and is filed at a time when the
granting thereof will occasion no delay or otherwise work an injury to the plaintiff.

Freeman, 79 S.W.3d at 641 (quoting Cliff, 724 S.W.2d at 779 (quoting Craddock v. Sunshine

Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. [Comm’n Op.] 1939))).

However, when a defendant answers the lawsuit but does not receive proper notice of a

dispositive setting, the traditional Craddock requirements are modified. Mabon Ltd. v. Afri-

Carib Enters., Inc., 369 S.W.3d 809, 812–13 (Tex. 2012) (per curiam) (citing LBL Oil Co. v.

Int’l Power Servs., Inc., 777 S.W.2d 390 (Tex. 1989) (per curiam); Lopez v. Lopez, 757 S.W.2d

721, 722 (Tex. 1988) (per curiam)). Under such a circumstance, only the first Craddock factor

applies, and the defendant is not required to prove the second and third factors. In re Marriage

of Ordaz & Cuba, No. 13-23-00177-CV, 2024 WL 3963900, at *2 (Tex. App.—Corpus Christi–

Edinburg Aug. 28, 2024, no pet.) (mem. op.); Tex. Sting, Ltd. v. R.B. Foods, Inc., 82 S.W.3d 644,

651–52 (Tex. App.—San Antonio 2002, pet. denied) (citing Lopez, 757 S.W.2d at 723); In re

Marriage of Parker, 20 S.W.3d 812, 817 (Tex. App.—Texarkana 2000, no pet.).

ChampionX argued that it had made an appearance and that its motion to dismiss the case

should be construed as an answer. “Texas appellate courts have been reluctant to uphold default

judgments where some response is found in the record, even if the response is in the form of a

6
letter.” Rhojo Enters., LLC v. Stevens, 540 S.W.3d 621, 624 (Tex. App.—Beaumont 2018, no

pet.) (quoting Home Sav. of Am. FSB v. Harris Cnty. Water Control & Improvement Dist.

No. 70, 928 S.W.2d 217, 218 (Tex. App.—Houston [14th Dist.] 1996, no writ) (citing Smith v.

Lippmann, 826 S.W.2d 137, 138 (Tex. 1992) (per curiam)). For this reason, “Texas courts

generally go to great lengths to recognize any appearance or response as an answer in order to

prevent inequity or injustice in the context of a default judgment.” Id.; see Reid v. Asset

Acceptance, LLC, No. 10-05-00347-CV, 2006 WL 3028072, at *1 (Tex. App.—Waco Oct. 25,

2006, no pet.) (mem. op.) (construing a letter as an answer). Accordingly, “if the defendant has

answered or ‘appeared’ in some manner, due process thereafter entitles the defendant to notice of

any trial setting—and that includes a hearing on a motion for default judgment.” Schoendienst v.

Haug, 399 S.W.3d 313, 316 (Tex. App.—Austin 2013, no pet.) (citing LBL Oil Co., 777 S.W.2d

at 390–91).

“In the absence of a written answer, ‘whether a defendant is considered to have

“appeared” depends on the nature and quality of the party’s activities in the case.’” Id. (quoting

In re Marriage of Runberg, 159 S.W.3d 194, 198 (Tex. App.—Amarillo 2005, no pet.)). A

motion to dismiss a case can qualify as an appearance sufficient to prevent default judgment

without notice of a default judgment hearing.

For example, in LBL Oil Co. v. International Power Services, Inc., a defendant filed a

motion to dismiss the plaintiff’s claim but did not file a formal answer. LBL Oil Co. v. Int’l

Power Servs., Inc., 777 S.W.2d 390, 390 (Tex. 1989) (per curiam). After the trial court denied

the defendant’s dismissal motion, the plaintiff filed a motion for default judgment on the ground
7
that the time to file an answer had expired. Id. No notice of hearing of the default judgment

motion was served on the defendant. Id. The Texas Supreme Court held that, because the

defendant had made an appearance in the case, he was entitled to “actual or constructive notice

of the hearing on the motion for default judgment,” id. at 391, “as a matter of due process” id. at

390–91. Similarly, in Rhojo Enterprises, LLC, a defendant’s motion to dismiss was considered

to be an answer because it “contained the proper style of the case,” had “the names of the parties

and the trial court,” was signed and dated by the proper person, had a certificate of service

showing that it was served on opposing counsel, and contained denials of the allegations in the

plaintiff’s original petition. Rhojo Enters., LLC, 540 S.W.3d at 625.

As in Rhojo, ChampionX’s dismissal motion contained the style of the case, properly

identified the parties and court, was signed and dated by the proper person, and had a certificate

of service showing that it was served on Matthews’s counsel. Further, ChampionX argued that

the dismissal motion was sufficient to constitute an answer. The trial court could have agreed

with ChampionX on that matter since the dismissal motion referred to specific paragraphs of

Matthews’s petition, denied the specific claims in Matthews’s petition by showing that they were

subject to arbitration, invoked the trial court’s jurisdiction to enforce the arbitration provisions in

the Agreement, and prayed for reasonable and necessary attorney fees.

Under the first Craddock factor, “conscious indifference” means “that the defendant

knew it was sued but did not care.” Fid. & Guar. Ins. Co. v. Drewery Const. Co., 186 S.W.3d

571, 576 (Tex. 2006) (per curiam). For this prong, “[a]n excuse need not be a good one to

suffice.” Id. Considering the procedural history of this case, the trial court was free to find that
8
ChampionX knew it was sued but showed that it cared by filing a dismissal motion. As a result,

it could have determined that ChampionX did not file a more formal answer because it believed

none was necessary. Accordingly, the trial court was free to determine that the first Craddock

requirement was met.

“If, after the defendant has answered or otherwise ‘appeared,’ the plaintiff proceeds to

obtain the default judgment without notice, due process requires that the judgment be set aside,”

and the second and third Craddock requirements need not be proved. Schoendienst, 399 S.W.3d

at 316 (citing LBL Oil Co., 777 S.W.2d at 390–91); see In re Marriage of Parker, 20 S.W.3d at

817. The appellate record shows that, even though the dismissal motion was on file, the trial

court granted Matthews’s default judgment motion one day after it was filed without a hearing.

ChampionX filed a motion to set aside the default judgment on the ground that it was granted

without notice of a dispositive hearing. The trial court heard the motion to set aside the default

judgment on February 22, 2024. ChampionX had filed a formal answer by that time.

In light of all of the foregoing facts, we find the trial court was free to determine (1) that

ChampionX had made an appearance or answer to the merits of Matthews’s petition sufficient to

trigger the requirement of notice of a default judgment hearing under LBL Oil Co. and (2) that

ChampionX met the first Craddock requirement. Consequently, we find no abuse of discretion

in the trial court’s decision to set aside its default judgment, and we overrule Matthews’s first

point of error.

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III. The Trial Court Properly Applied the Arbitration Agreement, but Should Have
Stayed the Case

A. Matthews’s Claims Were Subject to Arbitration

Under the guise of a motion to dismiss,2 ChampionX sought to compel arbitration. As a

result, we will review the trial court’s order as “an order compelling the parties to arbitration

while also dismissing the lawsuit.” Hoeppner v. Statewide Remodeling, Inc., No. 10-02-129-CV,

2003 WL 21357277, at *1 (Tex. App.—Waco June 11, 2003, pet. denied) (mem. op.).

“We review a trial court’s order denying a motion to compel arbitration for abuse of

discretion.” ABP Holdings, Inc. v. Rainbow Int’l LLC, No. 10-21-00122-CV, 2021 WL

5920276, at *3 (Tex. App.—Waco Dec. 15, 2021, no pet.) (mem. op.) (quoting Henry v. Cash

Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018)). “Whether the claims in dispute fall within the scope

of a valid arbitration agreement . . . [is a] question[] of law, which [is] reviewed de novo.” Id.

(citing Henry, 551 S.W.3d at 115).

“A party seeking to compel arbitration must establish the existence of a valid, enforceable

arbitration agreement and that the claims at issue fall within that agreement’s scope.” Tom

Wright Constr., LLC v. JDM Steel Constr., LLC, No. 10-17-00124-CV, 2017 WL 4543651, at *2

(Tex. App.—Waco Oct. 11, 2017, no pet.) (mem. op.) (citing In re Kellogg Brown & Root, Inc.,

166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding)). “If the movant establishes that an

arbitration agreement governs the dispute, the burden shifts to the party opposing arbitration to

establish a defense to the arbitration agreement.” Id. (citing In re Provine, 312 S.W.3d 824, 829

2
Arguing that ChampionX’s motion was a motion for summary judgment or a Rule 91a dismissal motion, Matthews
claimed that he did not get proper notice under those procedures.
10
(Tex. App.—Houston [1st Dist.] 2009, orig. proceeding) (citing In re Oakwood Mobile Homes,

Inc., 987 S.W.2d 571, 573 (Tex. 1999) (per curiam) (orig. proceeding), abrogated on other

grounds by In re Halliburton Co., 80 S.W.3d 566, 571 (Tex. 2002) (orig. proceeding))).

“Once the movant established a valid arbitration agreement covering the claims at issue, a

trial court has no discretion to deny the motion to compel arbitration unless the opposing party

proves a defense to arbitration.” Id. (citing In re Provine, 312 S.W.3d at 829).

Here, ChampionX provided the trial court with the Agreement, signed by Matthews,

showing that any claims “arising out of or in any way related to the application for employment,

employment or cessation of employment with the Company,” including “employment

discrimination . . . [or] retaliation” were subject to binding arbitration under the Federal

Arbitration Act. The trial court reviewed the petition, Matthews’s own request for arbitration,

and correspondence discussing the pending arbitration proceedings before correctly determining

that Matthews was raising employment discrimination claims that fell within the scope of the

Agreement. Further, Matthews raised no defense to the arbitration prior to dismissal of his

claims.3 We find that the trial court correctly determined that Matthews’s claims fell within the

scope of the Agreement.4

B. A Stay of the Case, Rather Than Dismissal, Is Required

Even so, we find that the trial court should not have dismissed the case. The applicable

portion of Section 3 of the Federal Arbitration Act provides that, if a trial court determines that

3
After the dismissal, Matthews purported to supplement his petition to include a claim alleging that the arbitration
provision was unenforceable because ChampionX had breached the arbitration provision.
4
Our resolution of this matter is dispositive of Matthews’s discovery complaint.
11
arbitration should be compelled, it “shall on application of one of the parties stay the trial of the

action until such arbitration has been had in accordance with the terms of the agreement.”

9 U.S.C.A. § 3. In a recent opinion, Smith v. Spizzirri, the United States Supreme Court found

that a stay, rather than dismissal, is required when a district court finds that a lawsuit involves an

arbitrable dispute and a party requests a stay pending arbitration. Smith v. Spizzirri, 601 U.S.

472, 474 (2024) (“The question here is whether § 3 permits a court to dismiss the case instead of

issuing a stay when the dispute is subject to arbitration and a party requests a stay pending

arbitration. It does not.”). The Court explained:

[S]taying rather than dismissing a suit comports with the supervisory role that the
FAA envisions for the courts. The FAA provides mechanisms for courts with
proper jurisdiction to assist parties in arbitration by, for example, appointing an
arbitrator, see 9 U.S.C. § 5; enforcing subpoenas issued by arbitrators to compel
testimony or produce evidence, see § 7; and facilitating recovery on an arbitral
award, see § 9. Keeping the suit on the court’s docket makes good sense in light
of this potential ongoing role, and it avoids costs and complications that might
arise if a party were required to bring a new suit and pay a new filing fee to
invoke the FAA’s procedural protections.

Id. at 478.

In its dismissal motion, ChampionX alternatively pled for a stay of the trial court

proceedings. In his reply to ChampionX’s response to his motion for new trial, Matthews

requested a stay and argued that dismissal was improper under Spizzirri. At the hearing on his

motion for new trial, Matthews apprised the trial court of Spizzirri and informed it that a stay was

“the preferred method of disposition.” In response, ChampionX argued that the trial court did

12
not have subject-matter jurisdiction.5 However, after Spizzirri, the United States Court of

Appeals for the Fifth Circuit clarified that a court’s resolution of a motion to compel arbitration

requires the court to have both subject-matter and personal jurisdiction and that “the resolution of

a motion to compel arbitration never results in dismissal.” Hines v. Stamos, 111 F.4th 551, 565

(5th Cir. 2024).

We sustain Matthews’s point of error arguing that the trial court should have issued a stay

instead of a dismissal.

IV. Conclusion

We reverse the trial court’s dismissal of Matthews’s claims and remand the case to the

trial court for further proceedings, including the issuance of a stay pending arbitration.

Scott E. Stevens
Chief Justice

Date Submitted: December 27, 2024
Date Decided: February 12, 2025

5
See Gilbert v. Donahoe, 751 F.3d 303, 306 (5th Cir. 2014) (finding, in a case decided before Spizzirri, that a court
lacked subject-matter jurisdiction and should dismiss when the parties’ dispute is the subject of binding arbitration).
13