On Sept. 29, 2026, the Fifteenth Court of Appeals issued its opinion in Karl Drusch and TrueAero, LLC v. Stratton Borchers, addressing interlocutory appeals from two separate divisions of the Texas Business Court. The case may provide guidance on arbitration-delegation clauses and the scope and applicability of arbitration agreements across multiple contracts.

Background

The dispute arose from Stratton Borchers’s termination as president of TrueAero, LLC (TrueAero), an aviation services company. Borchers initially filed his lawsuit in the Texas Business Court’s First Division, asserting employment-related claims. That court compelled arbitration pursuant to an arbitration clause in the operating agreement for TrueAero Group, LLC (TrueAero Group), the holding company for TrueAero.

While the arbitration was ongoing, a separate dispute emerged. Borchers had purchased membership units in TrueAero Group via a promissory note and a security agreement secured by those same units. When Borchers allegedly defaulted on the note, TrueAero Group demanded that Borchers cure the default by paying the full amount of the note, including interest and $5,000 in attorneys’ fees. Borchers tendered all amounts allegedly owed other than the attorneys’ fees, arguing that there was no contractual or statutory basis for paying them. TrueAero Group then proceeded with a private sale of Borchers’s membership units to Karl Drusch, TrueAero Group’s CEO and majority owner.

Borchers then filed a second lawsuit in the Texas Business Court’s Eighth Division, seeking injunctive relief to recover and prevent the private sale of his membership units. The Eighth Division denied Drusch’s motion to compel arbitration, finding that the security agreement contained no arbitration provision, and granted a temporary injunction preventing transfer of the disputed units.

The Court’s Analysis

Subject-Matter Jurisdiction

The Fifteenth Court of Appeals affirmed that the Eighth Division had jurisdiction. Despite Drusch’s expert testimony opining that the units had no value, the court found that Drusch had not “readily established” that the $5 million amount-in-controversy pleading was false, particularly because Drusch purchased the units for $100,000 and TrueAero Group had accepted them as collateral for a nearly $94,000 loan.

Arbitration: Existence vs. Scope

The central issue was whether the Eighth Division should have compelled arbitration. The appellate court distinguished between two types of arbitration questions:

• Existence questions: Courts must decide whether a valid arbitration agreement exists.
• Scope questions: When properly delegated under the parties’ arbitration agreement, the arbitrator decides whether claims fall within the arbitration agreement’s scope.

Here, the operating agreement provided that disputes “be submitted to the American Arbitration Association.” Under the Texas Supreme Court’s decision in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, the court found that incorporating the AAA rules into the parties’ arbitration agreement constitutes a clear delegation of arbitrability questions to the arbitrator. Importantly, “an arbitration agreement does not have to be included in each of the contract documents it purports to cover.”

The appellate court held that, because a valid arbitration agreement existed, the question of whether claims under the security agreement fell within the arbitration agreement’s scope was for the arbitrator to decide — not the trial court.

Temporary Injunction Affirmed

Despite reversing the Eighth Division’s arbitration ruling, the Fifteenth Court of Appeals affirmed the trial court’s temporary injunction preventing Drusch from further transferring the disputed membership units. The appellate court held:

• Probable right to recover: Drusch’s demand for attorneys’ fees was likely improper because no express contractual or statutory provision authorized recovery of attorneys’ fees.
• Irreparable harm: While Borchers could receive financial compensation for the units, he also faced potential loss of standing to pursue his arbitration claims if the units were transferred. That loss of standing would be irreparable and supported the injunction.

Stay of Arbitration Reversed

The appellate court also reversed the First Division’s order staying the pending arbitration. Under both federal and Texas arbitration law, when the same issues must be decided in arbitration and litigation, the litigation must be stayed — not the arbitration. Because the parties delegated arbitrability to the arbitrator via the AAA rules, the appellate court held that the First Division should not have halted the arbitration proceedings.

Practical Implications for Businesses

The Fifteenth Court of Appeals’ decision in this case may provide the following reminders to businesses and practitioners:

1. Arbitration across multiple agreements. The lack of an arbitration agreement in one contract does not necessarily mean a dispute arising under that contract is not subject to arbitration. Depending on the contractual language chosen by the parties, arbitration may still be required under a separate contract containing an arbitration clause. Additionally, if the arbitration clause delegates arbitrability to the arbitrator, courts cannot decide whether claims arising from the contract without an arbitration clause must be arbitrated.
2. Delegation clauses. Agreeing to the AAA rules (or other arbitration rules with similar delegation provisions) may effectively delegate gateway arbitrability questions to the arbitrator, even when the parties’ agreement does not explicitly state who decides arbitrability.
3. Consolidation of related disputes. The court noted complications arising from Borchers filing two cases in different Texas Business Court divisions. According to the appellate court, the Texas Business Court should consider consolidation, reassignment, or other mechanisms to avoid conflicting rulings and procedural inefficiencies.
4. Arbitration takes priority. When parties have agreed to arbitrate, courts must stay litigation — not the reverse — to preserve the contractual benefit to the parties and the arbitrator’s authority.

Conclusion

The Drusch v. Borchers decision reinforces the deference some Texas courts afford to arbitration, and specifically to delegation clauses. Businesses operating in Texas should consider reviewing their arbitration agreements, and any related contracts, for clarity regarding dispute-resolution mechanisms.