Monday, November 12, 2007
Context: Residential construction / remodeling / contractors In per curiam opinion Fourteenth Court of Appeals grants mandamus relief to set aside Houston county judge's order denying arbitration sought by defendant in dispute involving commerce. Court says that subject matter of dispute was covered by Federal Arbitration Act (FAA) and that appellate complaint against trial court judge was properly brought by petition for mandamus. In Re Studio 8 Floors & Walls, Inc., No. 14-07-00764-CV (Tex.App.- Houston [14th Dist.] Nov. 8, 2007)(arbitration mandamus) Appeal from County Civil Court at Law No 4 of Harris County (Hon. Roberta Lloyd) Relator's counsel: Kristopher K. Ahn Respondent's attorneys: Kenneth Paul McDaniel, Nathan Desai ORIGINAL PROCEEDING WRIT OF MANDAMUS M E M O R A N D U M O P I N I O N In this original proceeding, relator asks this Court to compel the Honorable Roberta A. Lloyd, presiding judge of Harris County Civil Court at Law No. 4 to (1) vacate the August 8, 2007, order denying relator's motion to compel arbitration in trial court cause number 888,319 styled Dolores Mora v. Studio 8 Floors & Walls, Inc.; and (2) enter an order granting the motion and compelling arbitration. Relator claims the trial court abused its discretion by denying relator's motion and there is no adequate remedy by appeal. We conditionally grant the writ. Mandamus relief is available if the trial court abuses its discretion, either in resolving factual issues or in determining legal principles when there is no other adequate remedy by law. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law, or if it clearly fails to correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005). The underlying suit is for breach of a contract to install floor and wall tile in the real party plaintiff's kitchen. The contract at issue contains the following statement: Should there be any disputes between the parties, client agrees on arbitration as a means to resolve the conflict and will NOT resort to lawsuit for resolution. Relator moved to compel arbitration under the Federal Arbitration Act. The trial court denied the motion, and relator filed this proceeding. On September 21, 2007, we ordered all proceedings in the underlying action stayed pending our decision on relator's petition. Relief from a denial of arbitration sought under the Federal Arbitration Act must be pursued by mandamus. EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 91 (Tex. 1996). "Mandamus is proper to correct a clear abuse of discretion when there is no adequate remedy by appeal, as when a party is erroneously denied its contracted‑for arbitration rights under the FAA." In re D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006). A trial court has no discretion in determining what the law is or applying the law to the facts. Walker, 827 S.W.2d at 840. Federal and state law strongly favor arbitration. Jack B. Anglin v. Tipps, 842 S.W.2d 266, 268 (Tex. 1992). A presumption exists in favor of agreements to arbitrate under the FAA, and courts must resolve any doubts about these agreements in favor of arbitration. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996). A party seeking to compel arbitration by a writ of mandamus must (1) establish the existence of a valid agreement to arbitrate under the FAA, and (2) show that the claims in dispute are within the scope of the agreement. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005). "Whether a valid arbitration agreement exists is a legal question subject to de novo review." D. Wilson Constr. Co., 196 S.W.3d at 781. Under the FAA, absent unmistakable evidence that the parties intended the contrary, it is the courts rather than arbitrators that must decide "gateway matters" such as whether a valid arbitration agreement exists. In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005). Claims must be brought on the contract (and arbitrated) if liability arises solely from the contract or must be determined by reference to it. Id. at 132. Although an arbitration agreement does not have to assume any particular form, the language of the agreement must clearly indicate the intent to arbitrate. See Massey v. Galvan, 822 S.W.2d 309, 316 (Tex. App.-Houston [14th Dist.] 1992, writ denied). The language in the arbitration agreement at issue is clear, and the contract was signed by the real party. The suit is for breach of contract; therefore, the claims in dispute are clearly within the scope of the agreement. The FAA applies to all suits in state or federal court when the dispute concerns a A"ontract evidencing a transaction involving commerce." Jack B. Anglin Co., 842 S.W.2d at 269‑70. The FAA does not require a substantial effect on interstate commerce; it only requires that commerce be involved or affected. In re L & L Kempwood Assocs., L.P., 9 S.W.3d 125, 127 (Tex. 1999) (orig. proceeding) (contract for renovation work on Houston apartments to be done by Texas business for Georgia owners involved interstate commerce). Activities than can serve as interstate commerce include transportation of materials across state lines or manufacture of parts in a different state. In re Big 8 Food Stores, Ltd., 166 S.W.3d 869, 879 (Tex. App.-El Paso 2005, orig. proceeding). Purchasing goods and services from outside Texas that are shipped to Texas establishes that a party is engaged in interstate commerce. In re Border Steel, Inc., 229 S.W.3d 825, 830-31 (Tex. App.-El Paso 2007, orig. proceeding). Relator furnished an affidavit from Linda Chou, the owner of Studio 8 Floors & Walls, to the court below. She averred, in part, that "Studio 8 is a small business based in Texas. Studio 8 use[d] tile and materials from China, Italy, and other locations outside of Texas in performing its contract with Plaintiff. Studio 8 also used other materials such as grout and tools purchased at interstate companies such as Home Depot and Lowes in performing its contract with Plaintiff." Thus, the contract involves commerce. We conclude that relator established the existence of a valid agreement to arbitrate under the FAA and the claims in dispute are within the scope of the agreement. Therefore, the trial court abused its discretion in denying relator's motion to compel arbitration. Accordingly, we conditionally grant the petition for a writ of mandamus and direct the trial court to vacate its August 8, 2007, order denying relator's motion to compel arbitration and enter an order compelling arbitration. The writ will issue only if the trial court fails to act in accordance with this opinion. PER CURIAM Petition Conditionally Granted and Memorandum Opinion filed November 8, 2007. Panel consists of Chief Justice Hedges and Justices Anderson and Seymore.
Sunday, November 11, 2007
Finding that right to arbitrate had not been waived, Tyler Court of Appeals orders trial court to abate case and compel arbitration. Structured Capital Resources Corporation v. Arctic Cold Storage, LLC and Mickey Cox, No. 12-06-00355-CV (Tex.App.- Tyler, Oct. 24, 2007)(Opinion by Chief Justice Worthen)(denial of motion to compel arbitration reversed, mandamus granted, interlocutory appeal also filed) Style: In Re Structured Capital Resources Corp., N0. 12-06-00413-CV Interlocutory Appeal and mandamus from 349th District Court of Anderson County OPINION Structured Capital Resources Corporation (SCR) seeks relief from the trial court’s order denying arbitration of its contract dispute with Arctic Cold Storage, LLC and Mickey Cox (collectively ACS). SCR has sought relief by petition for writ of mandamus based on the Federal Arbitration Act (FAA) and by interlocutory appeal based on the Texas Arbitration Act. We consolidate the two proceedings. Because the FAA is applicable and SCR did not waive its right to arbitration, we conditionally grant mandamus relief. We dismiss the interlocutory appeal for want of jurisdiction. Background On September 8, 2005, the parties entered into an agreement by which SCR, Global Positioning Standards LLC (GPS), and Parkway Financial were to arrange financing for ACS for a six percent placement fee. The contract provides for arbitration of disputes arising out of the agreement. On March 30, 2006, ACS closed on a loan for approximately $5,500,000.00, which SCR arranged pursuant to that agreement. At the insistence of the lender at closing, ACS deposited $330,000.00 for SCR’s fee in escrow with the title company. However, ACS refused to pay SCR the full six percent required by the agreement, offering instead a $50,000.00 settlement. SCR filed its original petition and application for temporary restraining order on April 11, 2006, alleging breach of contract and requesting the court prevent ACS from removing the funds from escrow. The trial court granted SCR’s request for emergency relief. Nonetheless, ACS transferred approximately $240,000.00 of the money out of escrow. SCR then asked the trial court for a temporary injunction ordering ACS to tender the money into the registry of the court. The trial court granted that request on May 8, 2006. ACS filed a counterclaim against SCR and a third party petition against Everette Hull, president of SCR. Trial was set for September 5, 2006. However, on August 2, GPS filed a plea in intervention claiming that ACS breached the loan brokerage agreement with GPS. ACS counterclaimed against GPS. At the request of GPS, the trial date was postponed to October 2, 2006. On August 24, 2006, the parties attended mediation. Mediation was not successful. On September 5, SCR moved to abate the proceedings, requesting the trial court order arbitration. The trial court denied the motion to abate on September 22, 2006. SCR filed both a petition for writ of mandamus and an interlocutory appeal in this court complaining of the trial court’s action. Jurisdiction By statute, the denial of a motion to compel arbitration under the Texas Arbitration Act is appealable. See Tex. Civ. Prac. & Rem. Code Ann. § 171.098 (Vernon 2005); In re Valero Energy Corp., 968 S.W.2d 916, 916 (Tex. 1998) (orig. proceeding). However, mandamus is appropriate when a state court erroneously denies a motion to compel arbitration under the federal scheme. In re Valero Energy Corp., 968 S.W.2d at 916. At oral argument, the parties agreed that the Federal Arbitration Act controls in this case. Therefore, we dismiss SCR’s interlocutory appeal, our number 12-06-00355-CV, for want of jurisdiction and consider only the petition for writ of mandamus. Standard of Review Mandamus is proper to correct a clear abuse of discretion when there is no adequate remedy by appeal, as when a party is erroneously denied its contracted for arbitration rights under the FAA. In re D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006) (orig. proceeding). A clear abuse of discretion occurs when the trial court errs in analyzing or applying the law to the facts or when the trial court has but one reasonable decision and does not make that decision. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). Denial of Motion to Abate for Arbitration In its sole issue, SCR contends the trial court abused its discretion in denying its motion to abate for arbitration because SCR did not waive the right to arbitrate. It asserts that it sought emergency relief to preserve the status quo until it could arbitrate the dispute, but did not request the court to resolve the case on the merits, and it engaged in minimal litigation only. SCR argues that it did not substantially invoke the judicial process and ACS did not prove it was prejudiced by SCR’s acts. Applicable Law The party resisting arbitration has the burden to present evidence on its defense to the arbitration agreement, including the defense of waiver. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (orig. proceeding). Whether a party’s conduct waives its arbitration rights is a question of law and depends on the individual facts and circumstances of each case. Id. at 574; Southwind Group, Inc. v. Landwehr, 188 S.W.3d 730, 735 (Tex. App.–Eastland 2006, orig. proceeding). Waiver may be implied or express, but it must be intentional. See EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996) (orig. proceeding). Because public policy favors resolving disputes through arbitration, there is a strong presumption against the waiver of contractual arbitration rights. In re Oakwood, 987 S.W.2d at 574. Accordingly, we resolve any doubts about waiver in favor of arbitration. Id. Waiver may be found when it is shown that a party acted inconsistently with its right to arbitrate and such actions prejudiced the other party. Id. A party waives an arbitration clause when it substantially invokes the judicial process to the other party’s detriment. In re Bank One, N.A., 216 S.W.3d 825, 827 (Tex. 2007) (orig. proceeding). Substantially invoking the judicial process may occur when the party seeking arbitration has filed motions going to the merits to obtain a final resolution of the dispute. See In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 764 (Tex. 2006) (orig. proceeding); Williams Indus., Inc. v. Earth Dev. Sys. Corp., 110 S.W.3d 131, 135 (Tex. App.–Houston [1st Dist.] 2003, no pet.). Substantially Invoking the Legal Process ACS asserts that SCR substantially invoked the legal process by pursuing the court order that kept $330,000.00 out of ACS’s reach. We disagree. SCR’s request that the funds be placed in the court’s registry was presented as a request for an injunction. ACS points out that this is not the proper procedure. An order requiring the deposit of funds into the registry of a court cannot be characterized as an appealable temporary injunction, even if entered in response to a motion for injunctive relief. Faddoul, Glasheen & Valles, P.C. v. Oaxaca, 52 S.W.3d 209, 212 (Tex. App.– El Paso 2001, no pet.). However, it is entirely permissible for a trial court to order disputed funds paid into the registry of the court until its ownership is determined if there is evidence that the funds are in danger of being lost or depleted. Castilleja v. Camero, 414 S.W.2d 431, 433 (Tex. 1967) (orig. proceeding). Central to the question before us is the fact that merely placing the funds into the court’s registry does not settle the question of who the funds belong to, and therefore such an order cannot be considered an order on the merits. The same result ensues if the court’s order placing the money into the court’s registry were actually an injunction. The purpose of a temporary injunction is to preserve the existing condition until a final hearing can be had on the merits. Cave v. Montgomery, 259 S.W.2d 924, 926 (Tex. Civ. App.–Amarillo 1953, writ ref’d n.r.e.). A proper request for temporary injunctive relief is not a request for a final disposition. See id. Further, the FAA does not preclude a court from issuing injunctive relief, including a preliminary injunction, to preserve the status quo during the process of arbitration, where the contract at issue reflects a consensus of the parties that such relief was contemplated. RGI, Inc. v. Tucker & Assocs., Inc., 858 F.2d 227, 230 (5th Cir. 1988). Moreover, while disallowed in at least two circuits, the issuance of preliminary injunctions as a means of preserving the status quo pending arbitration is permitted in several federal circuits, even in the absence of a prior agreement by the parties to use injunctive relief. See Speedee Oil Change Sys., Inc. v. State Street Capital, Inc., 727 F. Supp. 289, 291 (E.D. La. 1989). Ultimately, a preliminary injunction can be used to prevent injury and, in the process, protect the integrity of the applicable dispute resolution process. See Ortho Pharm. Corp. v. Amgen, Inc., 882 F.2d 806, 814 (3rd Cir. 1989). From SCR’s perspective, a temporary injunction, or court order, to maintain the status quo, that is, keep the money from disappearing, was desirable whether it was going to trial or arbitration. Requesting either a temporary injunction or an order requiring the deposit of disputed funds into the court’s registry is not inconsistent with the right to arbitrate. We cannot use SCR’s request for injunctive relief to infer that it intentionally relinquished its right to arbitration. See In re D. Wilson Constr. Co., 196 S.W.3d at 783 (party that filed a suit to obtain injunctive relief to preserve evidence in a personal injury case pending in a separate court, where it also filed cross actions, did not waive its right to arbitrate). Prejudice to ACS SCR propounded three discovery documents including requests for disclosure, interrogatories, and production, and a fourth document merely requesting identification of items previously requested but not produced. In furtherance of its own claims, ACS presented nine discovery requests to SCR, Hull, and GPS. The record does not contain most of ACS’s requests or any responses from any party. The parties began, but did not finish, the deposition of Everette Hull. Taking unfair advantage of discovery proceedings that would not have been available in arbitration might constitute sufficient prejudice to infer waiver. Tenneco Resins, Inc. v. Davy Int’l, AG, 770 F.2d 416, 421 (5th Cir. 1985). However, when only a minimal amount of discovery has been conducted, which may also be useful for the purpose of arbitration, the court should not ordinarily infer waiver based on prejudice to the party opposing the motion to stay litigation. Id; see also In re D. Wilson Constr. Co., 196 S.W.3d at 783; In re Vesta, 192 S.W.3d at 763; In re Bruce Terminix Co., 988 S.W.2d at 704-05. The parties’ agreement states that arbitration is to be conducted in accordance with the rules and procedures of the American Arbitration Association. Those rules permit the arbitrator to allow discovery. See In re Bruce Terminix Co., 988 S.W.2d at 704-05. There is nothing to indicate that the discovery propounded by SCR, if responded to at all, would not be useful in arbitration. See In re Vesta,192 S.W.3d at 763. There is no indication that SCR obtained sensitive documents or information through the discovery process that it would not have been able to obtain in the arbitration proceeding. Williams Indus., Inc., 110 S.W.3d at 140. Counsel for ACS stated on the record that, as of the date of the hearing on the motion for arbitration, ACS had incurred “in the neighborhood of $35,000.00 in attorney’s fees in this lawsuit.” No evidence of fees or costs was presented. Nothing shows how much of the attorney’s fees was attributable to SCR’s complained of actions. See Williams Indus., Inc., 110 S.W.3d at 140. Much of the costs incurred by ACS necessarily resulted from its prosecution of its own claims against SCR, Hull, and GPS. See In re Vesta, 192 S.W.3d at 763. Further, there is no evidence that the time and funds expended would not have been expended or inured to ACS’s benefit in arbitration. See Transwestern Pipeline Co. v. Horizon Oil & Gas Co., 809 S.W.2d 589, 593 (Tex. App.–Dallas 1991, writ dism’d w.o.j.). Generalized complaints about delay and expense, absent explanations and evidentiary support, will not establish prejudice. See Williams Indus., Inc., 110 S.W.3d at 139. To support its argument that SCR waived arbitration, ACS relies on the case of Marble Slab Creamery, Inc. v. Wesic, Inc., 823 S.W.2d 436 (Tex. App.–Houston [14th Dist.] 1992, no writ). Marble Slab was both the plaintiff and the proponent of arbitration. Over the course of approximately eight months, Marble Slab obtained a temporary injunction, the defendant filed counterclaims and a third party suit, and the defendant was ordered to submit to mediation, participated in depositions, and responded to requests for admissions, requests for production, and interrogatories. Marble Slab requested arbitration a little over a month before the trial date. The court described Marble Slab’s actions as the “active pursuit of its legal remedies” and held those actions sufficient to constitute waiver of its right to compel arbitration. Id. at 438. At first blush, it would appear that Marble Slab supports ACS’s position. However, we decline to follow Marble Slab. There, the time period between filing suit and requesting arbitration was twice as long as in the instant case. Moreover, the court listed generally the types of discovery the parties had participated in but did not specifically state the extent of discovery. Due to the lack of specificity in the opinion, we cannot determine that the facts in Marble Slab are sufficiently analogous to the facts here to justify reliance on that case. ACS did not meet its burden to prove that SCR substantially invoked the judicial process to ACS’s prejudice thereby waiving its right to arbitrate. Therefore, ACS has not overcome the strong presumption against waiver of SCR’s contractual arbitration rights. See In re Oakwood, 987 S.W.2d at 574. Conclusion We conclude that SCR’s conduct, as a matter of law, did not result in the waiver of its arbitration rights. Accordingly, the trial court abused its discretion by denying SCR’s motion to compel arbitration. Therefore, we conditionally grant mandamus relief on SCR’s motion to abate and compel arbitration. We trust that the trial court will promptly vacate its order of September 22, 2006 denying SCR’s motion to abate and compel arbitration and issue an order granting the motion to abate and compel arbitration. The writ will issue only if the trial court fails to comply with this court’s opinion and order within ten days. The trial court shall furnish this court, within the time for compliance with this court’s opinion and order, a certified copy of its order evidencing such compliance. We dismiss SCR’s interlocutory appeal for want of jurisdiction. JAMES T. WORTHEN Chief Justice Opinion delivered October 24, 2007. Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J. (PUBLISH)
Court of Appeals affirms arbitration award on remand from Tex. Sup. Ct., finding that complaint about scope of arbitration was waived. Malcolm S. Robinson v. Royce B. West; Julia L. S. Gooden a/k/a Julia L. S. Gooden Wood; and Robinson, West, & Gooden, P.C., No. 11-03-00028-CV (Tex.App.- Eastland, Mar. 29, 2007)(Opinion by Chief Justice Wright)(Before Chief Justice Wright, Justices McCall and Strange)Appeal from 116th District Court of Dallas County O P I N I O N O N R E M A N D Malcolm S. Robinson, Royce B. West, and Julia L. S. Gooden were partners in the law firm known as Robinson, West, and Gooden, P.C. Robinson filed suit against West, Gooden, and the law firm alleging various causes of action, including one for dissolution of the law firm. Appellees filed several counterclaims. By an agreed motion, the parties agreed to submit their claims to arbitration. That motion contained the following relevant provisions: 1. Plaintiff and Defendants have both sued each other in the above referenced matter. 2. The parties, however, have agreed and do hereby agree to arbitrate their disputes and dissolve the corporation to wit: Robinson, West & Gooden P.C. Robinson submitted his demand for arbitration to the American Arbitration Association on September 21, 2001. The parties and the arbitrator held a preliminary hearing by conference call on November 21, 2001. They agreed upon a scheduling order under the terms of which the parties were to "amend/specify claims and/or counterclaims" by February 1, 2002. Robinson filed his amended claims for relief on January 28, 2002. Appellees filed theirs on February 1, 2002, and included a claim that the corporation not be dissolved. The arbitrator's award denied the relief requested by Robinson and did not dissolve the corporation. The trial court confirmed the award, and Robinson perfected an appeal to this court. We reversed the trial court's judgment and rendered judgment compelling arbitration of the dissolution issue. The Texas Supreme Court reversed this court and remanded the case to us. West v. Robinson, 180 S.W.3d 575 (Tex. 2005). On remand, we are to consider appellees' argument that the parties modified the arbitration agreement and that Robinson waived his complaint about the scope of the arbitration agreement. We now affirm the trial court's judgment confirming the arbitrator's award. This court reviews a trial court's decision to confirm or to vacate an arbitration award de novo. Babcock & Wilcox Co. v. PMAC, Ltd., 863 S.W.2d 225 (Tex. App.CHouston [14th Dist.] 1993, writ den'd). Whether an issue was submitted to the arbitrator is a question of law. Babcock, 863 S.W.2d at 229-30. Arbitration should not be denied unless it can be said with positive assurance that the particular dispute is not covered. Emerald Texas, Inc. v. Peel, 920 S.W.2d 398 (Tex. App.CHouston [1st Dist.] 1996, no writ). Texas law favors arbitration, and we resolve any doubts regarding the scope of an arbitration agreement in favor of arbitration. Emerald, 920 S.W.2d at 402. Rule 6 of the American Arbitration Association Commercial Arbitration Rules provides: After filing of a claim, if either party desires to make any new or different claim or counterclaim, it shall be made in writing and filed with the AAA. . . . After the arbitrator is appointed, however, no new or different claim may be submitted except with the arbitrator's consent. The rules of the American Arbitration Association provide for the submission of new or different claims. The rules also provide for the acceptance of those claims by the arbitrator. When appellees submitted their claims to the arbitrator on February 1, 2002, they included a claim that the corporation not be dissolved. The arbitrator accepted the claim and did not dissolve the corporation. Rule 8 of the American Arbitration Association Commercial Arbitration Rules provides: a. The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement. . . . . c. A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award. If Robinson had timely objected to appellees' counterclaim that the corporation not be dissolved, we would have a different question before us. However, Rule 39 of the American Arbitration Association Commercial Arbitration Rules makes it clear that a party waives the right to object if he "proceeds with the arbitration after knowledge that any provision or requirement of [the] rules has not been complied with." Robinson did not object to the claim of non-dissolution. He proceeded with the arbitration and waived any complaint he otherwise might have legitimately had. The judgment of the trial court is affirmed. JIM R. WRIGHT CHIEF JUSTICE March 29, 2007 Panel consists of: Wright, C.J., McCall, J., and Strange, J.
Context: Health care liability claim, malpractice, negligence, wrongful death, survival action agreement to arbitrate, non-signatory Court finds that Defendant failed to prove existence of a valid arbitration agreement. Relative did not have authority or apparent authority to sign for deceased patient with binging effect. Judgment on arbitration award reversed. Eugenia Ginger Sikes, Cynthia Durham, and Jennifer Branam, Individually and on Behalf of the Estate of Joel Sikes, Deceased v. Heritage Oaks West Retirement Village, Shamrock Care Center, Inc., Individually and d/b/a Heritage Oaks West Retirement Village, James Moore, Heritage Oaks Retirement Village, Navarro Convalescent, Inc., Individually and d/b/a Heritage Oaks Retirement (Tex.App.- Waco, Sep. 26, 2007)(Opinion by Justice Reyna)(no valid arbitrationa agreement, estoppel)(Before Chief Justice Gray, Justices Vance and Reyna) Appeal from 13th District Court of Navarro County Opinion The wife and children of decedent Joel Sikes filed wrongful death and survival claims against Heritage Oaks West Retirement Village and others alleging malpractice in his treatment. The Sikeses appeal the trial court’s judgment on an arbitration award. They first complain that the Dispute Resolution Plan is unenforceable because: 1) it does not comply with former article 4590i; 2) Heritage failed to sign the agreement; 3) the wrongful death claims are not within the scope of the agreement; 4) Eugenia Sikes lacked authority to sign the agreement on behalf of her husband; 5) the agreed order to arbitrate was both revoked and superseded; and 6) Heritage failed to negate the Sikeses’ contractual defenses to arbitration. In the alternative, the Sikeses contend that the judgment on the arbitrator’s decision is in error because: 1) under federal law, the arbitrator’s decision failed to adjudicate all claims and reflected a manifest disregard of the law; and 2) under state law, the decision resulted from a gross mistake and a failure to execute an honest judgment. We will reverse and remand. A party seeking to compel arbitration must establish that: (1) there is a valid arbitration agreement; and (2) the claims raised fall within the agreement’s scope. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). Because there is a presumption favoring agreements to arbitrate, doubts regarding an agreement’s scope are resolved in favor of arbitration; however, the presumption arises only after the party seeking to compel arbitration proves that a valid arbitration agreement exists. Id. The Sikeses contend in their first issue that the Dispute Resolution Plan is unenforceable because it does not comply with former article 4590i. Ordinarily, state laws burdening arbitration are preempted by the Federal Arbitration Act (FAA), but the Sikeses contend that the McCarran-Ferguson Act “reverse preempts” the FAA to allow the application of stricter state law. See In re Kepka, 178 S.W.3d 279, 292 (Tex. App.—Houston [1st] 2005, orig. proceeding). However, the Sikeses failed to raise this issue before the trial court and have not preserved it for appellate review. The Sikeses contend in their fourth issue that Eugenia Sikes lacked authority to sign the Dispute Resolution Plan on behalf of her husband. Eugenia signed the document on the line labeled “Power of Attorney/Guardian’s Signature.” The Sikeses presented affidavit proof that Eugenia was neither Joel Sikes’s guardian nor had she been given power of attorney. Affidavits further established that Joel Sikes was not incapacitated and was capable of signing the document upon admittance to the nursing home. Heritage offered no rebuttal evidence. Instead, Heritage argues that Eugenia is estopped from denying the validity of the signature. Heritage relies on arbitration cases stating that in certain circumstances a non-signatory to an arbitration agreement can be equitably estopped from denying that his claims are arbitrable. See, e.g., Kellogg Brown & Root, 166 S.W.3d at 739. However, this form of estoppel arises only when the plaintiff seeks “to derive a direct benefit from the contract containing the arbitration provision.” Id. at 741. Stated another way, “nonparties generally must arbitrate claims if liability arises from a contract with an arbitration clause, but not if liability arises from general obligations imposed by law.” In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 761 (Tex. 2006) (orig. proceeding) (per curiam). Here, the Sikeses do not assert claims arising under Joel’s purported arbitration agreement with Heritage. Rather, their malpractice claims “arise[ ] from general obligations imposed by law.” See id. Therefore, Heritage’s equitable estoppel theory does not excuse Heritage from proving the existence of a valid arbitration agreement. Nonetheless, Eugenia may be estopped to deny her authority to sign the arbitration agreement if she acted with apparent authority. See Baptist Memorial Hosp. Sys. v. Sampson, 969 S.W.2d 945, 949 (Tex. 1998) (“Apparent authority in Texas is based on estoppel.”). Apparent authority looks to the actions of the principal, Joel Sikes, to determine if he participated in, had knowledge of, or acquiesced in his agent, Eugenia, signing on his behalf. See id.; Tex. Cityview Care Ctr., L.P. v. Fryer, 227 S.W.3d 345, 353 (Tex. App.—Fort Worth 2007, pet. filed); Lifshutz v. Lifshutz, 199 S.W.3d 9, 22 (Tex. App.—San Antonio 2006, pet. denied). Without actions by the principal, “no mere combination of circumstances which may mislead persons into a false inference of authority, however reasonable, will serve as a predicate for apparent authority.” Hall v. F.A. Halamicek Enters., Inc., 669 S.W.2d 368, 375 (Tex. App.—Corpus Christi 1984, no writ). There is no evidence of Joel Sikes taking actions to induce the belief that Eugenia was his agent. In fact, there is no evidence he was even present when the form was signed. See Texas Cityview, 227 S.W.3d at 353-54. Because there is no evidence that Eugenia had authority to sign the agreement, Heritage failed to prove the existence of a valid arbitration agreement. Id. at 354. Similarly, the arbitration agreement is unenforceable against Eugenia in her individual capacity because there is no evidence that she signed in that capacity. Id.; see also Kepka, 178 S.W.3d at 294. To the extent that Heritage attempts to assert the common-law affirmative defense of equitable estoppel, this too fails under agency principles. In signing the arbitration agreement, Eugenia acted without authority and, therefore, any misrepresentation on her part cannot be imputed to the ostensible principal, Joel Sikes. Great Am. Life Ins. Co. v. Lonze, 803 S.W.2d 750, 754 (Tex. App.—Dallas 1990, writ denied). Accordingly, we sustain the Sikeses’s fourth issue. The Sikeses contend in their fifth issue that the court erred by concluding that they are bound by an agreed order to arbitrate which was later superseded by an amended order to which they did not agree. An “agreed order to arbitrate” was rendered by the court with each party’s attorney signing to indicate his agreement as to form and substance. Subsequent to that order, the Sikeses amended their pleadings to add an additional defendant, and a second motion to compel arbitration was filed and was granted in an amended order. The Sikeses asked the court to reconsider its ruling on the second motion to compel. After a hearing, the court signed a final order sending the case to arbitration. The Sikeses contend that they revoked the agreed order or in the alternative that the subsequent order superseded the agreed order. Heritage counters that the agreed order is a separate arbitration agreement which is “more than a mere common law contract” and cannot be revoked “without leave of the court.” Brown v. Eubank, 443 S.W.2d 386, 390 (Tex. App.—Dallas 1969, no writ). The Brown case is distinguishable because the complaining party in that case did not seek to set aside the agreed order for arbitration until after the arbitrators had rendered their decision. Here, the Sikeses withdrew their consent before the case was submitted to arbitration. Thus, the amended arbitration order (entered over the Sikeses’ objection) superseded the original agreed order. See B & M Mach. Co. v. Avionic Enters., Inc., 566 S.W.2d 901, 902 (Tex. 1978); Wortham v. Dow Chem. Co., 179 S.W.3d 189, 202 n.18 (Tex. App.—Houston [14th Dist.] 2005, no pet.); Kolfeldt v. Thoma, 822 S.W.2d 366, 368 (Tex. App.—Houston [14th Dist.] 1992, orig. proceeding). Therefore, because the agreed order was no longer effective, we sustain the Sikeses’ fifth issue. Because of our disposition of the Sikeses’ fourth and fifth issues, we need not address the remaining issues presented. Having found there is no valid agreement to arbitrate, we reverse the judgment of the trial court and remand this cause for further proceedings consistent with this opinion. FELIPE REYNA Justice Before Chief Justice Gray, Justice Vance, and Justice Reyna (Chief Justice Gray joins no part of the Court’s opinion and dissents to the judgment of the Court without a separate opinion.) Reversed and remanded Opinion delivered and filed September 26, 2007  Eugenia Sikes and daughters Cynthia Durham and Jennifer Branam brought suit individually and on behalf of the Estate of Joel Sikes. The plaintiffs/appellants are collectively referred to as “the Sikeses.”  The Sikeses sued Heritage Oaks West Retirement Village; parent organizations Shamrock Care Center, Inc. and Navarro Convalescent, Inc.; Heritage Oaks Retirement Village; The Westwind Corp. (dba Centex Management Co.); James Moore; and Carolee Hughey. The defendants/appellees are collectively referred to as “Heritage.”
Beaumont Court of Appeals throws out arbitration decision, holding that the panel of arbitrators went beyond the scope of their authority. The City of Beaumont v. International Association of Firefighters, Local Union No. 399, No. 09-06-00481-CV (Tex.App.- Beaumont, Nov. 8, 2007)(Opinion by Justice Horton) (fire fighter litigation, arbitration) (Before Justices Gaultney, Kreger and Horton) Appeal from 58th District Court of Jefferson County Disposition: Reversed and dismissed without prejudice to further arbitration This case arises from the arbitration of a compensation dispute between the City of Beaumont ("City") and the International Association of Firefighters, Local Union No. 399 ("IAFF"). The arbitration was conducted pursuant to the Fire and Police Employee Relations Act ("FPERA"). See Tex. Loc. Gov't Code Ann. §§ 174.001-.253 (Vernon 1999 & Supp. 2006). In this appeal, we hold that the arbitration panel exceeded its authority by considering an issue for which proper notice was not given, by arbitrating an issue that was not in dispute, and by proceeding to arbitrate without enforcing all of the provisions which the parties had agreed would apply to their dispute. Accordingly, the judgment entered by the trial court must be set aside. We render judgment that the IAFF take nothing by its suit, without prejudice, however, to such rights it may have, if any, to initiate further arbitration proceedings under the governing contract. Procedural Background and The Arbitration Award The terms of the agreement governing the present dispute between the IAFF and the City are contained within a collective bargaining agreement dated effective October 1, 2001 ("the 2001 contract"). Under that contract, the parties agreed to commence collective bargaining on a new contract by no later than July 1, 2005. The 2001 contract contains an "Evergreen Clause," in which the parties' acknowledged the contract's four-year term, and further agreed "that [the contract] shall remain in full force until replaced by a successor agreement." The impasse procedure, Article XXXIV of the 2001 contract, contains the parties' agreement to arbitrate compensation disputes. It required "written notice to the other party containing specifications of the issue or issues in dispute." With respect to issues submitted to arbitration, Article XXXIV's impasse procedure further provided: 3. In making its decision, the Arbitration Panel may consider only the following: a) The requirements of Section 174.021, Local Government Code. b) The total compensation, including wages and benefits, and conditions of employment provided by the EMPLOYER to members of the bargaining unit. c) The total compensation and terms and conditions of employment of State Civil Service certified, full-time firefighters in all Texas cities. d) The rate of increase or decrease in the cost of living for the Houston area determined by the Consumer Price Index for the period beginning with the effective date of the current contract and ending with the most recent published report at the time of the commencement of the hearing. e) After all other possible considerations of comparison, the arbitration panel may give consideration to revenues available to the employer. 4. Information concerning hours of work and insurance benefits and costs may be considered by the Arbitration Panel for purposes of determining total compensation and terms and conditions of employment but may not be used specifically to support an amendment by the EMPLOYER of the hours of work of Beaumont firefighters or the coverage and costs of insurance benefits for such firefighters. The parties commenced negotiations for a new contract on June 3, 2005. By August 2005, the parties had reached an impasse, and the IAFF requested arbitration. On March 8, 2006, the IAFF notified the arbitrators of its issues for arbitration, as follows: 1) The appropriate wage increase for the contract years 2005-2008 (Article XXX and Addendum A); 2) Whether the contract should continue to include impasse procedure language inconsistent with the statutory command (Article XXXIV); 3) Whether the contract should be modified so that negotiations commence on February 1 to allow for timely resolution of contract language by agreement or arbitration (Article XXXV); 4) Whether retirees should pay the same health insurance premiums as active members (Article XXXI); 5) Whether vacations and holidays shall be awarded to members in the same way as civilian employees, pursuant to statute (Article XIII); 6) Whether the pension contribution of the City should be increased, since members do not participate in Social Security Retirement benefits and the City does not make contributions on their behalf in that regard (Article XV); 7) Whether various provisions for "extra" pay should be increased to reflect current economic realities (Article XVII - Educational Incentive Pay; Article XIX - Certification Pay; Article XX - Skills Incentive Pay; Article XXI - Clothing Maintenance; Article XXIX - Standby Pay)[;] 8) Whether Training and Arson/Prevention Division members shall be covered by a set work schedule as had been in effect January 1, 2005 (four days per week, ten hours per day) (Article XXIII); [and] 9) Whether members will be allowed to participate in IAFF "457" Retirement Plans and IAFF "Retiree Savings Health Plans (flex plan)" (New Article). Subsequently, during March and July 2006, the arbitration panel heard evidence regarding the parties' dispute. The panel issued its decision on July 21, 2006. The panel, consisting of three members, voted two-to-one in favor of the award. In explaining the majority panel's reasoning, the author of the award stated: "I shall not apply the requirement set forth in Article XXXIV, Section 3(c) of the expiring Agreement to the determinations reached herein." The award further explained that "this Board is not bound by provisions which are contrary to statute, even if the Employer wants them applied and the Union is prepared to accept their applicability in this proceeding to assure it does not lose on another, arguably more important issue." Thus, in reaching its decision on the IAFF's compensation award, the panel's award reflects that the arbitration panel did not follow the criteria to which the parties had agreed under Article XXXIV of their 2001contract. Judicial Review FPERA awards are subject to judicial review. The FPERA states: (a) An award of an arbitration board may be reviewed by a district court for the judicial district in which the municipality is located only on the grounds that: (1) the arbitration board was without jurisdiction; (2) the arbitration board exceeded its jurisdiction; (3) the order is not supported by competent, material, and substantial evidence on the whole record; or (4) the order was obtained by fraud, collusion, or similar unlawful means. Tex. Loc. Gov't Code Ann. § 174.253(a) (Vernon 1999). The district court entered its judgment confirming the arbitration award on October 23, 2006. We review a trial court's decision to affirm or vacate an arbitration award de novo. Babcock & Wilcox Co. v. PMAC, Ltd., 863 S.W.2d 225, 229 (Tex. App.-Houston [14th Dist.] 1993, writ denied). Jurisdiction of Arbitration Panel In issue four of its brief, the City alleges that the trial court should not have confirmed the award because the arbitrators exceeded their authority. The scope of an arbitrator's authority to adjudicate a dispute is determined by the scope of the controlling arbitration clause. A party seeking to compel arbitration must establish the existence of an arbitration agreement and show that the claims raised fall within the scope of that agreement. See Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996). Whether a given issue is within the scope of the issues submitted to an arbitrator is a question of law. Babcock, 863 S.W.2d at 229-230. The agreement to arbitrate in the contract before us requires that "both parties shall submit all issues in dispute to arbitration." The contract defines the disputed issues as "all matters which the parties have been unable to resolve through collective bargaining." The contract further requires each party to provide "written notice to the other party containing specifications of the issue or issues in dispute[.]" It appears that the parties' 2001 contract contemplated that written notice occur prior to the arbitration hearing. The IAFF submitted a written notice defining the issues in dispute. In its first issue, the IAFF identified the contract years as the years 2005-2008, which would be the term of the future agreement. In its next issue, the IAFF asked: "Whether the contract should continue to include impasse procedure language inconsistent with the statutory command." In reviewing the issues for arbitration, we conclude that the IAFF's written statement of issues contains no written notice of any contention that section 3(c) (other Texas firefighters) should not be applied as a criteria for the compensation to be awarded for the term under consideration. Instead, the issue on which the IAFF provided notice concerned whether the future contract's terms "should continue to include impasse procedure language inconsistent with the statutory command[.]" Generally, subject to our later discussion, whether an existing contract term should be included in a new contract would be an issue on which the parties could engage in collective bargaining. With respect to the prospective 2005-2008 contract and whether it would include Article XXXIV 3(c)'s criteria, the IAFF's notice is sufficient. However, with respect to a claim that Article XXXIV 3(c)'s criteria should not be applied by the arbitrators in this arbitration proceeding, the notice is deficient. Even were we to conclude that the IAFF's statement of the issue was broad enough to create some ambiguity over whether notice was provided (although we do not), the rule of ejusdem generis provides that "when words of a general nature are used in connection with the designation of particular objects or classes of persons or things, the meaning of the general words will be restricted to the particular designation." Hilco Elec. Coop. v. Midlothian Butane Gas Co., Inc., 111 S.W.3d 75, 81 (Tex. 2003). By referring to the contract years in issue one as being for the term 2005-2008, it is reasonable to conclude that "the contract" referenced in issue two is likewise a reference to the new contract to begin in 2005. In this case, the IAFF does not contend that the City waived the contract's written notice requirement, nor does the IAFF identify any amended pleading in which it notified the City of a claim that section 3(c) should not be applied in determining the compensation package of the firefighters for the contract term in issue. In determining the effect of the absence of the required contractual notice, we observe that contractual provisions must be considered with reference to the entire instrument. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). The provision requiring written notice of issues to be arbitrated is clear, specific, and unambiguous. In light of the absence of FPERA guidelines about the notice a party must provide on disputed issues, parties to FPERA agreements likely consider it wise to provide a contractual notice requirement so they will know what issues are to be arbitrated. When a contract provides a written notice provision, and an arbitration panel unilaterally decides issues that were not submitted, the arbitrators' action effectively deprives the parties of their contractually required notice. On the record before us, we conclude that the City did not receive the notice to which it was entitled. Therefore, the application of section 3(c)'s criteria to the compensation award was not an issue submitted by the parties to arbitration. In deciding an issue that was not submitted to it, the arbitrators exceeded the scope of authority delegated to them to arbitrate disputes under the FPERA. See Tex. Loc. Gov't Code Ann. § 174.156 (Vernon 1999). Additionally, the contract limited the arbitrators to deciding "matters which the parties have been unable to resolve through collective bargaining." Whether wage rates of other Texas full-time certified firefighters were factors to be considered in determining a compensation award was a question already resolved for the 2005 contract; the 2001 contract expressly provided that the wages of other Texas full-time certified firefighters could be considered. Thus, the criteria for determining the firefighters' compensation award had already been agreed to by the parties. It was not an issue in dispute. While the IAFF contended that the criteria should not continue to be included in new contracts, that issue is different from whether parties had previously agreed under the 2001 contract's criteria that the wages of other firefighters would be a factor to consider in determining the compensation award for the 2005 contract term under consideration. The parties had agreed on that issue, as Article XXXIV's section 3(c)'s presence in the 2001 contract was not disputed. It has long been settled that an arbitration award that exceeds the authority conferred by the arbitration agreement is void. Fortune v. Killebrew, 86 Tex. 172, 23 S.W. 976, 978 (1893) ("An award in excess of the authority of the arbitrators is void, unless the matter in excess is such as may be disregarded, and a valid award be left standing.") In Gulf Oil Corp. v. Guidry, 327 S.W.2d 406, 408 (Tex. 1959), the Texas Supreme Court held that Fortune "settles the law in this state to be that when arbitrators attempt to determine matters not submitted to their determination, as to such matters the award is void." In Guidry, the Supreme Court further explained that "the authority of arbitrators is derived from the arbitration agreement and is limited to a decision of the matters submitted therein either expressly or by necessary implication." Id. "Arbitrators therefore exceed their authority when they decide matters not properly before them." Barsness v. Scott, 126 S.W.3d 232, 241 (Tex. App.-San Antonio 2003, pet. denied). By altering binding terms of the existing contract, as contrasted to forging new terms of a prospective contract, the panel went beyond its authority. Generally, we do not believe the FPERA's arbitration provision authorizes arbitrators to retroactively alter the terms of an existing contract. In discussing the appropriate role of the arbitrator, the United States Supreme Court has said: [A]n arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award. United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). Because the parties had agreed in their contract to allow wages of other Texas firefighters to be considered, we conclude that whether Article XXXIV section 3(c) of the 2001 contract could be considered in setting the compensation award for the 2005-2008 term was not an issue in dispute. As previously stated, the arbitrators, by deciding to ignore section 3(c), considered an issue that had already been resolved. By doing so, the panel exceeded its authority. Finally, we also conclude that the parties did not agree to arbitrate disputes without the panel's application of the agreed criteria to the award. Whether the agreement encompasses the claims raised is an issue of law. See In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006). Generally, in deciding the meaning of contract terms that contain an arbitration clause, courts apply ordinary state law rules of contract construction. Webster, 128 S.W.3d 227-28. The section of the contract that established the criteria to apply regarding the firefighters' compensation package is found within the contract's arbitration provision for arbitrating compensation issues. Because the challenged criteria under which the parties agreed to arbitrate is found in the same section of the contract that relates to the agreement to arbitrate, we conclude that the arbitration agreement was conditional on the arbitrators' following the parties' agreed criteria. We conclude that there was no agreement to arbitrate absent the application of the agreed criteria. If arbitrators had the authority to decide what portions of the arbitration clause are enforceable, they could effectively grant themselves the power to compel parties to arbitrate claims upon which there was no agreement to arbitrate. We do not believe that arbitrators have such power under the FPERA, because the statute "does not require compulsory arbitration." Tex. Loc. Gov't Code Ann. § 174.163 (Vernon 1999). Thus, the ambit of what the parties agreed to arbitrate is a matter of their agreement, and their agreement was conditional on the arbitrators' application of the agreed criteria. In other words, whether the asserted invalidity of section (3)(c) affects the parties' agreement to arbitrate in the first instance depends upon whether the allegedly invalid criteria was an independent or a mutually dependent promise. See Hanks v. GAB Bus. Serv., Inc., 644 S.W.2d 707, 708 (Tex. 1982). This question is determined by the intent of the parties at the time the contract was formed, as evidenced by the language of the contract. Greenstein v. Simpson, 660 S.W.2d 155, 160 (Tex. App.-Waco 1983, writ ref'd n.r.e.) (citing Nutt v. Members Mut. Ins. Co., 474 S.W.2d 575, 577-78 (Tex. Civ. App.-Dallas 1971, writ ref'd n.r.e.)). The test is whether or not the parties would have entered into the agreement absent the unenforceable part. Rogers v. Wolfson, 763 S.W.2d 922, 925 (Tex. App.-Dallas 1989, writ denied). Nevertheless, an agreement containing more than one promise is not necessarily rendered invalid by the illegality of one of the promises. In such a case, the invalid provisions may be severed and the valid portions of the agreement upheld provided the invalid provision does not constitute the main or essential purpose of the agreement. Williams v. Williams, 569 S.W.2d 867, 871 (Tex. 1978). The issue of severability is a question of law. John R. Ray & Sons, Inc. v. Stroman, 923 S.W.2d 80, 86 (Tex. App.- Houston [14th Dist.] 1996, writ denied); see also Rogers, 763 S.W.2d 922, 925-26. The criteria for determining wages is contained in the same article as the arbitration agreement. This placement provides strong evidence that the parties reasonably expected the arbitrators to consider the criteria in determining a compensation award. We conclude that the promise to arbitrate in article XXXIV of the contract is a mutual condition dependent on the arbitration panel's application of criteria that included article XXXIV section 3(c). The existence of the severability clause in the contract does not change our conclusion that the clauses are mutually dependent promises. The severability clause reads: If any article or section of this agreement or any provision should be held invalid by operation of law, or by any tribunal of competent jurisdiction, or if compliance with or enforcement of any article or section should be restrained by such tribunal pending final determination as to its validity, the remainder of this agreement shall remain in full force and effect and shall not be affected thereby. Nevertheless, a severability clause does not transmute an otherwise dependent promise into one that is independent and divisible. See Patrizi v. McAninch, 153 Tex. 389, 269 S.W.2d 343, 348-349 (1954). We conclude that a promise to arbitrate under certain conditions is not a promise to arbitrate if those conditions are removed. As a result, we hold that if Article XXXIV's criteria is unenforceable (an issue we do not reach), then the dependent promise to arbitrate would also be unenforceable. By construing the contract in a way that modified the scope of the parties' agreement to arbitrate, the arbitrators exceeded their authority. Issues Not Reached We expressly do not address several of the issues raised by the parties in their briefs. Because we resolve the dispute on the question of whether the arbitration panel exceeded its authority, it is unnecessary that we reach whether the FPERA permits or prohibits contracts that allow consideration of the compensation or conditions of employment of other public employees. See Tex. Loc. Gov't Code Ann. §§ 174.021, 174.022, 174.156 (Vernon 1999). Should the parties choose to do so, they may perfect that issue for consideration by the courts. In its brief, the City asks that we reverse the trial court's judgment based on twelve additional issues. The City's additional issues range from a procedural challenge to a constitutional argument that the retroactive nature of an award for back-pay violates the Texas Constitution. We are mindful that generally, "we only decide constitutional questions when we cannot resolve issues on nonconstitutional grounds." In re B.L.D., 113 S.W.3d 340, 349 (Tex. 2003). Additionally, we are not required to resolve issues that would give the City no greater relief than the relief we have granted on issue four. See Tex. R. App. P. 47.1. As a result, we do not address the City's remaining issues. See id. Relief Granted For the reasons stated, we conclude that the arbitration panel exceeded its authority in several respects. It arbitrated an issue on which the City was not given written notice as required by the parties' contract. It arbitrated an issue that had been settled previously by collective bargaining and which was not an issue in dispute. It proceeded to arbitrate while refusing to apply the criteria under which the parties had agreed to arbitration in the first place. Where an arbitration panel exceeds its authority by deciding issues not submitted to it, the Texas Supreme Court has declared that the arbitration award, as to such matters, is void. Guidry, 327 S.W.2d at 408. We believe the rule applies to each of the reasons the arbitration panel exceeded its authority here. Thus, the appropriate remedy here is to reverse the judgment in its entirety, and render judgment that the IAFF take nothing, without prejudice, however, to such rights as the IAFF may have, if any, to further arbitration under the governing contract. Guidry, 327 S.W.2d at 411. REVERSED, ARBITRATION AWARD VACATED, DISMISSED WITHOUT PREJUDICE. ____________________________ HOLLIS HORTON Justice Submitted on September 20, 2007 Opinion Delivered November 8, 2007 Before Gaultney, Kreger, and Horton, JJ.
Monday, November 5, 2007
Context: Employment, Workplace Safety, Nonsubscriber, Negligence, Wrongful Death and Survivor Claims Arbitration agreement provided for disputes to be submitted to arbitration only if they could not be resolved through company's internal dispute resolution mechanism or mediation. Houston Court of Appeals does not reach the issue whether survivors are bound be deceased employee's agreement to arbitrate claims that could not be resolved internally or through mediation. Court declines to grant mandamus to set aside trial court's denial of employer's motion to compel arbitration. In Re Igloo Products Corp. , No. 14-07-00185-CV (Tex.App.- Houston [14th Dist.] Nov. 1, 2007)(Frost)(arbitration mandamus denied) Appeal from 155th District Court of Waller County (Judge Daniel R. Beck) IN RE IGLOO PRODUCTS CORP. AND JOSE RODRIGUEZ, Relators ORIGINAL PROCEEDING WRIT OF MANDAMUS OPINION BY JUSTICE KEM FROST In this original proceeding, relators Igloo Products Corporation and Jose Rodriguez seek a writ of mandamus directing the respondent, Dan R. Beck, presiding judge of the 155th District Court of Waller County, (1) to vacate his January 9, 2007 order denying relators' motion to compel arbitration, and (2) to grant relators' motion to compel arbitration of all claims pending in the action and to stay trial court proceedings pending such arbitration. We deny the petition for writ of mandamus. Underlying Facts and Procedural History Igloo Products Corporation is a manufacturing company in Houston, Texas. Igloo does not carry workers' compensation insurance and is thus not a subscriber to the Texas Workers' Compensation Act. Tex. Labor Code Ann. ' 406.002 (Vernon 2006). Igloo, however, has established the Igloo Products Corp. Employee Injury Benefit Plan ("the Plan") under the federal Employee Retirement Income Security Act ("ERISA"). See generally 29 U.S.C. '1001 et seq. The Plan specifies certain medical, wage-replacement, dismemberment, burial, and death benefits payable to participating employees in the event of injury or death suffered in the course and scope of employment with Igloo. Participation in the Plan is not a condition of employment with Igloo. To participate in the Plan and to secure the right to receive the specified benefits, an employee must execute an Election and Arbitration Agreement. Joel Varela was fatally injured on June 23, 2006, during the course and scope of his employment with Igloo. Because Varela was a participating employee under the Plan, Igloo paid medical, funeral, and burial expense benefits to his surviving spouse. Thereafter, Varela's spouse and children (collectively "the Varelas") filed the underlying lawsuit against Igloo and its employee, relator Jose Rodriguez. (Igloo and Jose Rodriguez are hereinafter collectively referred to as "the Igloo Parties.") The Varelas alleged that Joel Varela's death resulted from the Igloo Parties' negligence and gross negligence. The Varelas assert claims under the Texas Wrongful Death Act. See Tex. Civ. Prac. & Rem. Code Ann. '' 71.001 B .012 (Vernon 1997 and Supp. 2006). In the trial court, the Igloo Parties moved to compel arbitration of the Varelas' claims under the terms of the Election and Arbitration Agreement that Joel Varela had executed in connection with his participation in the Plan ("the Agreement"). The Agreement purports to bind Varela's "beneficiaries, heirs, children, spouse, parents and legal representatives." The Igloo Parties further asserted that by having accepted payment of benefits under the Plan, the Varelas were equitably estopped and contractually precluded from avoiding the Agreement's arbitration provision. The Varelas opposed the motion to compel arbitration, arguing that neither Joel Varela's execution of the Agreement nor Igloo's payment of benefits owing to his estate could bind them to arbitrate their individual, personal claims for Joel Varela's wrongful death. The Varelas also contended that, even if the Agreement applied to their wrongful death claims, the trial court should not compel arbitration because the parties have not mediated the Varelas' claims. The trial court denied the Igloo Parties' motion to compel arbitration, and the Igloo Parties have filed a petition for writ of mandamus in this court. Standard of Review The Igloo Parties assert, and the Varelas do not dispute, that the Agreement in this case is subject to the Federal Arbitration Act ("FAA"). See generally 9 U.S.C. '1 et seq. Mandamus relief is available when the trial court abuses its discretion by erroneously denying a party its contracted‑for arbitration rights under the FAA. See In re D. Wilson Const. Co., 196 S.W.3d 774, 780-81 (Tex. 2006) (orig. proceeding). Therefore, the Igloo Parties' right to mandamus relief hinges on whether the trial court's refusal to compel arbitration was an abuse of its discretion. A party seeking to compel arbitration must establish that a valid arbitration agreement exists and that the claims asserted are within the scope of the agreement. See In re D. Wilson Construction Co., 196 S.W.3d at 781. If these two showings are made, the burden shifts to the party opposing arbitration to present a valid defense to the agreement. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227-28 (Tex. 2003). In the absence of evidence of a valid defense, the trial court has no discretion to exercise and must compel arbitration and stay its own proceedings. In re J.D. Edwards World Solutions Co., 87 S.W.3d 546, 549 (Tex. 2002) (orig. proceeding). The trial court denied the Igloo Parties' motion to compel arbitration. The trial court concluded that the Igloo Parties failed to prove that (1) there is a valid, enforceable arbitration agreement between the Igloo Parties and the Varelas and (2) the Varelas' claims are within the scope of a valid, enforceable arbitration agreement. Analysis Both the Plan and the Agreement address resolution of disputes between Igloo and those employees who choose to participate in the Plan. Pertinent portions of both documents are set forth below. ELECTION AND ARBITRATION AGREEMENT By signing this Election and Arbitration Agreement (hereinafter "Agreement"), I, the undersigned employee of Igloo Products Corp. (hereinafter "the Company"), voluntarily elect to participate in the Igloo Products Corp. Employee Injury Benefit Plan (hereinafter the "Plan") and agree with the Company to the following: * * * MUTUAL PROMISES TO RESOLVE CLAIMS BY BINDING ARBITRATION: I recognize that disputes may arise between the Company (or one of its affiliates) and me during or after my employment with the Company. I understand and agree that any and all such disputes that cannot first be resolved through the Company's internal dispute resolution procedures or mediation must be submitted to binding arbitration. I acknowledge and understand that by signing this Agreement I am giving up the right to a jury trial on all of the claims covered by this Agreement in exchange for eligibility for the Plan's medical, disability, dismemberment, death and burial benefits and in anticipation of gaining the benefits or a speedy, impartial, mutually-binding procedure for resolving disputes. Igloo Products Corp. Employee Injury Benefit Plan * * * Arbitration of Employment Disputes: By executing and agreeing to the Election and Arbitration Agreement, an Employee affirmatively agrees to submit to binding arbitration all claims or disputes covered by the Election and Arbitration Agreement. * * * B. Arbitration Procedures. The following provisions are incorporated by reference into, and made part of, the Election and Arbitration Agreement, the same as if they were set forth at length in the Election and Arbitration Agreement itself: * * * 3. Mediation: The Company (and each Employer) and I agree that the arbitration procedures described in this Paragraph B . . . and incorporated by reference into the Election and Arbitration Agreement shall not be invoked unless the party seeking arbitration has first mediated the dispute with the other party or parties . . . . The Varelas concede that Joel Varela entered into a valid arbitration agreement with Igloo. They dispute, however, whether that agreement binds them to arbitrate their own personal claims for wrongful death of their husband and father. The Varelas assert that Joel Varela did not and could not bind his spouse and children to arbitrate rather than litigate their wrongful death claims against Igloo. The Igloo Parties assert that the Varelas' acceptance of medical, funeral, and burial benefits under the Plan independently binds them to the arbitration provision. However, we need not address these arguments because we conclude that, even presuming, without deciding, that the Varelas are bound to the arbitration provisions of the Agreement, the Varelas' claims are not within the scope of claims subject to arbitration under the Agreement. The Agreement requires that "any and all ... disputes that cannot first be resolved through the Company's internal dispute resolution procedures or mediation must be submitted to binding arbitration." The Plan's arbitration procedures, which are incorporated by reference into the Agreement, "shall not be invoked unless the party seeking arbitration has first mediated the dispute with the other party." Neither party has suggested the Plan or the Agreement is ambiguous, and we conclude that both documents unambiguously provide for the arbitration only of claims that cannot first be resolved through Igloo's internal dispute resolution procedures or mediation. The Igloo Parties admit that the Varelas' claims have not been mediated or otherwise submitted to Igloo's internal dispute resolution procedures. In their motion to compel arbitration, the Igloo Parties neither alleged nor presented any proof that (1) the Varelas' claims fell within the category of claims that could not be resolved through Igloo's internal dispute resolution procedures or through mediation or (2) the Varelas' claims had been subjected to Igloo's internal dispute resolution procedures or mediation. The Igloo Parties contend, however, that it is for the arbitrator, not the courts, to decide whether arbitration is precluded by there having been no prior mediation or internal dispute resolution procedures. In making this argument, the Igloo Parties rely primarily on Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002). Howsam involved a dispute between a securities brokerage firm and its former customer. After the customer commenced arbitration proceedings under the arbitration clause of her brokerage account agreement, the firm filed suit in federal district court seeking a declaratory judgment that the dispute was ineligible for arbitration and an injunction prohibiting the customer's prosecution of the arbitration proceeding. The firm claimed that arbitration was precluded by the terms of the arbitration code of the National Association of Securities Dealers ("NASD"), under the auspices of which the customer had elected to arbitrate. The NASD code included a rule that no dispute "shall be eligible for submission [to arbitration] . . . where six (6) years have elapsed from the occurrence or event giving rise to the . . . dispute." Finding that the NASD arbitrator should interpret whether the NASD time-limit rule precluded prosecution of the arbitration, the district court dismissed the firm's action. On appeal, the Court of Appeals for the Tenth Circuit reversed, concluding that application of the NASD rule presented a question of the underlying dispute's arbitrability, which is presumptively for a court to decide. On certiorari, the United States Supreme Court stated that courts, rather than arbitrators, should decide "gateway" matters that "contracting parties would likely have expected a court to have decided . . . where they are not likely to have thought that they had agreed that an arbitrator would do so, and consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate." Howsam, 537 U.S. at 83B84, 123 S. Ct. at 592. The Supreme Court stated that courts, rather than arbitrators, should decide gateway disputes as to whether parties are bound by a given arbitration clause or whether an arbitration agreement covers a particular kind of controversy. See id., 537 U.S. at 84, 123 S. Ct. at 592. On the other hand, matters of "procedural arbitrability," such as allegations of waiver, delay, or a similar defense to arbitrability, are presumptively for the arbitrator to decide. See id. However, this presumption may be overcome by language in the arbitration agreement reflecting an intent contrary to this presumption. See id. The agreement in Howsam did not exempt from the scope of the arbitration clause claims based on an event that occurred more than six years before the claim was submitted to arbitration. See id., 537 U.S. at 81B82, 123 S. Ct. at 591. The United States Supreme Court held that application of the NASD time-limit rule was the province of the arbitrator based on the arbitration agreement at issue. See id., 537 U.S. at 84-86, 123 S. Ct. at 592-3. Two of our sister courts have construed Howsam in the context of an agreement containing a mediation requirement. See In re Pisces Foods, L.L.C., 228 S.W.3d 349 (Tex. App.-Austin 2007, orig. proceeding); In re R&R Personnel Specialists of Tyler, Inc., 146 S.W.3d 699 (Tex. App.-Tyler 2004, orig. proceeding). In R&R Personnel Specialists, the party opposing arbitration argued that the movant had waived its right to arbitration by failing (1) to give timely notice of its underlying claim; (2) to give written notice of its intent to arbitrate the claim; and (3) to participate in mediation before seeking arbitration. Citing Howsam, but without quoting the contractual language on which any one of these purported requirements was based, the court of appeals characterized waiver as a question of procedural arbitrability for the arbitrator to decide. The court granted mandamus relief directing the trial court to vacate its order denying arbitration and to compel such arbitration. R&R Personnel Specialists, 146 S.W.3d at 704B05. In Pisces Foods, the trial court denied an employer's motion to compel arbitration of an employee's personal injury claim. The arbitration agreement stated: Each Step [of this dispute resolution program] must be followed in sequence so that we have every opportunity to work together toward an agreeable resolution of the issue . . . . If you have a work-related problem that involves a legally protected right that could not be settled through Steps 1, 2 or 3 [internal dispute resolution procedures and mediation] of the Program, you may request arbitration. Pisces Foods, 228 S.W.3d at 351. Without deciding (1) the employee's claim that she was not bound by the agreement or (2) the employer's claim that the agreement had been wrongfully excluded from evidence at the hearing on the motion to compel arbitration, the court of appeals held that arbitration was not available under the agreement because no mediation had occurred. Id. Discussing both Howsam and R&R Personnel Specialists, as well as a number of decisions from other jurisdictions, the Austin Court of Appeals held that the relator's right to arbitration had not yet accrued or been triggered because there was no proof that either party had requested or attempted mediation. Pisces Foods, 228 S.W.3d at 353-54. The Varelas do not contend (as did the employee in R&R Personnel Specialists) that failure to mediate the claims constitutes a waiver of the Igloo Parties' right to compel arbitration. They assert that the Agreement has not yet been triggered and that the trial court thus properly declined to compel arbitration. If Joel Varela agreed to arbitrate all claims and disputes with Igloo without any reference to mediation but with separate arbitration procedures providing for prior submission of disputes to mediation, we might reach a different conclusion. In this case, however, the only claims that Joel Varela agreed to arbitrate were "disputes that cannot first be resolved through [Igloo's] internal dispute resolution procedures or mediation." Because arbitration is a matter of contract, a party cannot be required to submit to arbitration any dispute which he has not agreed to submit to arbitration. Howsam, 537 U.S. at 83, 123 S. Ct. at 591. Joel Varela agreed to arbitrate only disputes that were not resolved by Igloo's internal dispute resolution procedures or mediation. Therefore, the issue at hand is a "gateway dispute" as to whether the arbitration agreement covers a particular kind of controversy, and courts, rather than the arbitrator, must resolve this issue. See id., 537 U.S. at 84, 123 S. Ct. at 592; HIM Portland, LLC v. Devito Builders, Inc., 317 F.3d 41, 44 (1st Cir. 2003); Kemiron Atlantic, Inc. v. Aguakem International, Inc., 290 F.3d 1287, 1289-90 (11th Cir. 2002); Pisces Foods, 228 S.W.3d at 353-54; see also Allen v. Apollo Group, Inc., No. Civ.A.H-04-3041, 2004 WL 3119918, at *5-8 (S.D. Tex. Nov. 9, 2004) (Rosenthal, J.). Presuming, without deciding, that the Varelas are bound by the arbitration provisions in question, the trial court did not abuse its discretion by impliedly determining that the Igloo Parties did not prove that the Varelas' claims fall within the scope of the arbitration agreement because they are not "disputes that cannot first be resolved through [Igloo's] internal dispute resolution procedures or mediation." See Pisces Foods, 228 S.W.3d at 353-54. Accordingly, we deny the Igloo Parties' petition for writ of mandamus and vacate our March 8, 2007 order staying proceedings in the trial court. /s/ Kem Thompson Frost Justice Petition Denied and Opinion filed November 1, 2007. Panel consists of Justices Frost, Seymore, and Guzman.  The Election and Arbitration Agreement specifically excludes criminal matters and claims for unemployment benefits from the arbitration requirement.  The Varelas previously asserted a claim under the Texas survival statute, but they no longer assert this claim. See Tex. Civ. Prac. & Rem. Code Ann. ' 71.021 (Vernon 1997).  In 1992, addressing whether a party is entitled to mandamus relief for wrongful denial of its arbitration rights under an agreement subject to the FAA, the Texas Supreme Court concluded that the Texas Arbitraton Act ("TAA") does not provide such a party the ability to assert an interlocutory appeal. See Jack B. Anglin, Inc. v. Tipps, 842 S.W.2d 266, 272-73 (Tex. 1992). In 2006, the Texas Supreme Court decided that such a party can file an interlocutory appeal of the trial court's denial of a motion to compel arbitration under an agreement governed by the FAA. See In re D. Wilson Const. Co., 196 S.W.3d 774, 778-80 (Tex. 2006). It might appear that the Igloo Parties are not entitled to mandamus relief in this case because the FAA governs the Agreement and, under In re D. Wilson Const. Co., they have an adequate remedy at law by interlocutory appeal. See id. However, the Texas Supreme Court reaffirmed in In re D. Wilson Const. Co. that mandamus remains available when a party is erroneously denied its contracted‑for arbitration rights under the FAA. See In re D. Wilson Const. Co., 196 S.W.3d at 780-81. Therefore, we conclude that mandamus relief is still potentially available to the Igloo Parties.  All boldface and underlining emphasis shown in the quoted material is contained in the original documentation.  Italic emphasis added; underlining in original.  All emphasis added.  See also In re Weekley Homes, 985 S.W.2d 111 (Tex. App.-San Antonio 1998, orig. proceeding) (holding, pre-Howsam, that whether party's failure to mediate before invoking arbitration provision releases other parties from obligation to arbitrate is procedural question for arbitrator to address in cases in which arbitration agreement did not exempt claims that had not been mediated).  See General Warehousemen & Helpers Union Local 767 v. Albertson's Distribution, Inc., 331 F.3d 485, 488 (5th Cir. 2003); HIM Portland, LLC v. Devito Builders, Inc., 317 F.3d 41, 44 (1st Cir. 2003); Kemiron Atlantic, Inc. v. Aguakem International, Inc., 290 F.3d 1287 (11th Cir. 2002); Allen v. Apollo Group, Inc., No. Civ.A.H-04-3041, 2004 WL 3119918 (S.D. Tex. Nov. 9, 2004) (unreported decision).  The Varelas assert a waiver argument, but it is based solely on the contention that by substantially invoking the judicial process, the Igloo Parties have waived the right to arbitrate. However, based on our disposition, we need not address the Varelas' argument in this regard.  This court relied on Howsam in granting mandamus relief directing the trial court to compel arbitration in In re Global Construction Company, L.L.C., 166 S.W.3d 795 (Tex. App.-Houston [14th Dist.] 2005, orig. proceeding). The question posed was whether "the underlying dispute, in which the real party in interest claims that arbitration is time-barred, is an issue of procedural arbitrability and thus for the arbitrator, or is an issue of substantive arbitrability for the court." Id. at 796 (citing Howsam). Under the contract at issue in that case, a demand for arbitration was required to be made "within 30 days after the date on which the party making the demand receives the final written decision [of the Architect]." The trial court "expressly found that [the party] waived its right to arbitrate those claims that had been submitted to the architect by failing to demand arbitration within thirty days." Id. at 797. We held that Aany contractual time limit on a request for arbitration is a matter for the arbitrator." Id. at 799. Although the contract in that case required mediation, the parties did not raise, and the court did not address, this requirement. Id. at 797-99. Indeed, in that case, the parties had agreed that the claims involved fell within the scope of the agreement. Id. at 798. In addition, unlike the Agreement in this case, the arbitration agreement in that case stated that '[a]ny claims arising out of or related to the Contract' are subject to arbitration." Id. at 796. Therefore, In re Global Construction Company is not on point.
Sunday, November 4, 2007
Houston's First Court of Appeals holds that it lacks jurisdiction to consider interlocutory appeal of trial court’s order denying confirmation of arbitration award, vacating the award, and directing rehearing by a different arbitrator. Appeal dismissed. Mandamus denied. Thrivent Financial for Lutherans v. Colin K. Brock, No. 01-07-00356-CV (Tex.App.- Houston [1st Dist.] Nov. 1, 2007)(Opinion by Justice Higley )(arbitration award vacated Appeal from County Court of Austin County Original Proceeding on Petition of Writ of Mandamus O P I N I O N This interlocutory appeal and original proceeding arise from a dispute between Colin Brock and his insurer, Thrivent Financial for Lutherans (“Thrivent”) over nonpayment of disability benefits, which Brock claims Thrivent owes him under a Thrivent insurance policy. As required by the policy, the trial court compelled the parties to arbitrate. Following an evidentiary hearing, the arbitrator denied Brock’s claims. Thrivent moved the trial court to confirm the arbitration award. In turn, Brock requested the trial court to vacate the arbitration award on the ground that the award was obtained “by fraud, corruption, or other undue means.” The trial court signed an order denying Thrivent’s motion to confirm the award, vacating the arbitration award, and directing a rehearing before a new arbitrator. Thrivent appeals the order and also seeks review by way of a petition for writ of mandamus. Brock contends that we have no appellate jurisdiction over the interlocutory order and requests that the petition for mandamus be denied. We dismiss Thrivent’s interlocutory appeal for lack of jurisdiction and deny its petition for writ of mandamus. Interlocutory Appeal Appellate courts have jurisdiction to consider immediate appeals of interlocutory orders, such as the one in this case, only if a statute explicitly provides appellate jurisdiction. Stary v. DeBord, 967 S.W.2d 352, 352–53 (Tex. 1998); Eichelberger v. Hayton, 814 S.W.2d 179, 182 (Tex. App.—Houston [1st Dist.] 1991, writ denied). Texas courts strictly construe statutes authorizing interlocutory appeals because a statute authorizing an appeal from an interlocutory order is in derogation of the general rule that only final judgments are appealable. Walker Sand, Inc. v. Baytown Asphalt Materials, Ltd., 95 S.W.3d 511, 514 (Tex. App.—Houston [1st Dist.] 2002, no pet.). The Texas Arbitration Act (TAA) permits interlocutory appeals of certain orders relating to the arbitration process. Specifically, TAA section 171.098 permits appeals from orders (1) denying an application to compel arbitration made under Section 171.021; (2) granting an application to stay arbitration made under Section 171.023; (3) confirming or denying confirmation of an award; (4) modifying or correcting an award; or (5) vacating an award without directing a rehearing. Tex. Civ. Prac. & Rem. Code Ann. § 171.098(a) (Vernon 2005). Brock contends that Thrivent’s appeal should be dismissed because the trial court’s order vacates the arbitration award and directs rehearing. Brock points out that such an order is not appealable under section 171.098. Brock notes that subsection 171.098(a)(5) permits an appeal of an ordering vacating an award when no rehearing is directed, but no provision permits an appeal when a rehearing is directed. Thrivent responds that the order is appealable because it also denies confirmation of the arbitration award. Thrivent cites subsection 171.098(a)(3), which permits an appeal from an order denying confirmation of an award. Thus, we must determine whether an order denying confirmation of an arbitration award, vacating the award, and directing rehearing is an appealable order. In Stolhandske v. Stern, we held that an order vacating an arbitration award and ordering rehearing was not an appealable interlocutory order. 14 S.W.3d 810, 815 (Tex. App.—Houston [1st Dist.] 2000, no pet.). We based this holding, in part, on the language of subsection 171.098(a)(5), which limits the review of orders vacating arbitration awards to those in which the trial court did not order a rehearing. See id. at 813. We contrasted the Federal Arbitration Act, which permits the appeal of all orders vacating arbitration awards, without specifically limiting the right of appeal to those orders that do not direct a rehearing. Id. at 814 (citing 9 U.S.C. § 16(a)(1)(E)). We also concluded that an order vacating an arbitration award is not appealable under section 171.098(a)(3) as an implicit order denying confirmation of an award. Id. at 813–14. We reasoned, “The vacating of an arbitration award does not [automatically] deny a motion to confirm, but renders the consideration of an application to confirm moot.” Id. at 815 (citing North Carolina v. Davidson & Jones Constr. Co., 323 S.E.2d 466, 469 (N.C. Ct. App. 1984)). Lastly, in Stolhandske, we noted that the TAA is based on the Uniform Arbitration Act and looked to case law of other states, which have also adopted the uniform act. See id. at 814 (citing Tex. Civ. Prac. & Rem. Code Ann. § 171.003 (providing, “This chapter shall be construed to effect its purpose and make uniform the construction of other states’ law applicable to an arbitration.”)). Citing cases from Maine, Minnesota, and Florida, we concluded, “[A]n order vacating an award and directing a rehearing is the functional equivalent of an order granting a new trial. Accordingly, such an order is not subject to direct appellate review.” Id. (citing Maine Dep’t of Transp. v. Maine State Employees Ass’n, 581 A.2d 813, 814 (Me. 1990); Minnesota Teamsters Pub. & Law Enforcement Employees Union, Local No. 320 v. County of Carver, 571 N.W.2d 598, 599 (Minn. Ct. App. 1997); Carner v. Freedman, 175 So.2d 70, 71 (Fla. 3rd Dist. Ct. App. 1965)). In Stolhandske, we also discussed National Avenue Building Co. v. Stewart, 910 S.W.2d 334 (Mo. Ct. App. 1995), in which the Missouri Court of Appeals determined that it did not have jurisdiction to review an order that (1) specifically denied a motion to confirm an award; (2) vacated the award; and (3) directed a rehearing. 14 S.W.3d at 814–15. We noted that the court in Stewart decided that it had jurisdiction because the order appealed from specifically denied a motion to confirm and because Missouri law permits appeals from orders granting new trials. Id. at 815 (citing Stewart, 910 S.W.2d at 338–39). In dismissing the appeal in Stolhanske, we found Stewart to be inapposite. We cited the fact that the order at issue in Stewart specifically denied a motion to confirm an arbitration award. Id. In contrast, the order in Stolhanske did not deny a motion to confirm; it only vacated the award and directed a rehearing. Id. We also noted that Texas, unlike Missouri, does not allow appeals from orders granting new trials. Id. In contrast to the order in Stolhanske, the order signed by the trial court in the instant case denied Thrivent’s motion to confirm the arbitration award in addition to vacating the award and directing a rehearing. We specifically stated in Stolhanske that we were not determining whether we would have jurisdiction to decide an appeal of such an order. Id. at 815 n.1. Thus, while it is instructive, our holding in Stolhandske is not controlling. Since we issued our opinion in Stolhanske, we have not had an opportunity to determine whether we have jurisdiction to hear an appeal of an order that denies a motion to confirm an arbitration award, vacates the award, and directs a rehearing. As noted by the parties, a split in authority exists on this issue in Texas and nationally. In Prudential Securities, Inc. v. Vondergoltz, the Fourteenth Court of Appeals held that section 171.098(a) did not authorize the appeal of an order denying confirmation of an arbitration award, vacating the award, and directing a rehearing. 14 S.W.3d 329, 331 (Tex. App.—Houston [14th Dist.] 2000, no pet.). The Vondergoltz court recognized that, in Stewart, the Missouri Court of Appeals held a similar order to be appealable, but disagreed with the Stewart court’s analysis. Id. The Vondergoltz court noted that the Stewart court had reasoned that the Missouri legislature “could easily have added a proviso to subdivision (3) stating ‘without directing a rehearing,’” as it had added to subdivision (5), if it had intended an order denying the confirmation of an award not be appealable when rehearing is directed. Id. (citing Stewart, 910 S.W.2d at 341). Rejecting this reasoning, the Fourteenth Court of Appeals in Vondergoltz determined that “an order denying confirmation of an arbitration award is the functional equivalent of an order vacating an award.” Id. On this basis, the court concluded, [W]here appeals are expressly provided in a statute for orders (a) denying confirmation of an award and (b) vacating an award without directing a rehearing, it most logically follows that an appeal is not allowed for orders denying confirmation or vacating an award where rehearing is directed as to either. To hold otherwise would render the language “without directing a rehearing” without effect and would elevate form over substance by allowing an appeal where rehearing is directed in denying a request for confirmation but not in granting a request to vacate an award. Id. (footnote omitted). Lastly, the Vondergoltz court reasoned that “to the extent an order directing rehearing of an arbitration is analogous to an order granting a motion for new trial, the rule in Texas that the latter is not final or appealable dictates a result contrary to that reached in Stewart by reference to the opposite rule.” Id. (footnote omitted). In addition to the Fourteenth Court of Appeals, courts in Minnesota and the District of Columbia, when interpreting statutes nearly identical to section 171.098(a), have also held that an order like the one at issue are not appealable. As here, in Kowler Associates v. Ross, the appellant argued that the order was appealable because it not only vacated the award and directed rehearing, but also denied the confirmation, which the appellant characterized as “a separate basis for the appeal,” under the third subsection of Minnesota Statute section 572.26. 544 N.W.2d 800, 801 (Minn. Ct. App. 1996) (citing Minn. Stat. § 572.26 subd. 1(3)). The Minnesota Court of Appeals disagreed. The Kowler court cited a provision of the Minnesota arbitration act requiring a court to confirm an arbitration award, unless grounds are offered to vacate or modify the award. As discussed infra, the TAA contains a similar provision, specifically, section171.087. Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (Vernon 2005) (providing,“Unless grounds are offered for vacating, modifying, or correcting an award underSection 171.088 or 171.091, the court, on application of a party, shall confirm theaward.”). Id. (citing Minn. Stat. § 572.18). The court noted that the Minnesota act, in section 572.19, contained a separate provision governing the vacatur of arbitration awards. See id. Because the respondent had moved to vacate the award, the Kowler court reasoned that “the separate procedure for determining whether the award should be vacated applied.” Id. (citing Minn. Stat. § 572.19). The court continued, “The underlying action is a proceeding to vacate the award, and the decision to confirm the award depends on determination of the application to vacate.” Id. On this basis, the court concluded, “[T]he order denying confirmation of the award is not appealable unless there is a basis for appeal of the prerequisite order vacating the award.” Id. The Kowler court also relied on rules of statutory construction to support its decision that the order was not appealable. The court opined, “[I]f an order that vacates an award and directs rehearing were construed to be appealable as an order denying confirmation of the award, then section 572.26, subd. 1(5), would be of no effect and an order vacating an award always would be appealable, even if a rehearing has been directed.” Id. The court reasoned, “Such a construction would be inconsistent with the rules of statutory interpretation and the statutory prohibition against appeals from orders directing a rehearing.” Id. In support of its holding, the Kowler court made two final points. First, the court pointed out that “[a]n appeal may be taken from an order that denies confirmation, if the order also vacates the award without a rehearing.” Id. at 802. Second, the court observed, “[W]hen a rehearing is directed, appellate review is premature because the arbitration process has not been completed.” Id. In Connerton, Ray & Simon v. Simon, the District of Columbia Court of Appeals also held that it had no jurisdiction to review an order such as the one at issue in this case. 791 A.2d 86, 88 (D.C. 2002). The court concluded that the axioms of statutory construction dictated that the order was not appealable. As did the Fourteenth Court of Appeals and the Minnesota Court of Appeals, the District of Columbia Court of Appeals reasoned that, if it were to hold that the order was appealable because it in part denied confirmation of an award, then subpart five of the jurisdictional statute, specifying that only orders vacating an award “without directing a rehearing” are appealable, would be “rendered superfluous.” Id. at 87–88 (discussing D.C. Code § 16–4317(a)(5)). The court opined that such a reading violates the basic principle of statutory construction that each provision of a statute should be construed to give effect to all of the statute’s provisions and not to render any provision superfluous. Id. at 88. The Simon court also relied on the tenet of statutory construction that, “[w]hen a statute contains potentially inconsistent provisions, the more specific provision must govern or control, as a clearer and more definite expression of the legislative will.” Id. (internal quotation omitted). The court noted that “D.C. Code 16-4317(a)(5) specifically addresses the jurisdictional impact of ordering a new hearing, whereas 16-4317(a)(3) is more general.” Id. Taking the opposite position from the above cases, the Texarkana Court of Appeals, in Werline v. East Texas Salt Water Disposal Co., held that section 171.098(a)(3) permited an appeal to review an order such as the one at issue. 209 S.W.3d 888, 896 (Tex. App.—Texarkana 2006, pet. filed). In so doing, the Werline court roundly criticized the Fourteenth Court of Appeals’s opinion in Vondergoltz and agreed with the reasoning of the Missouri Court of Appeals in Stewart. Id. at 895–96. According to the Werline court, Vondergoltz “is contrary to the plain language of the statute, and in essence, rewrites it.” Id. at 895. The Texarkana Court of Appeals assailed Vondergoltz by stating that the opinion renders subsection (a)(3) “essentially meaningless” because Vondergoltz’s interpretation “adds the phrase ‘without directing a rehearing’ into subsection (a)(3), and thereby rewrites the statute.” Id. The Werline court pointed out that the TAA requires a court to confirm an award unless grounds exist for vacating, modifying, or correcting an arbitration award and reasons that “unless the trial court fails to follow the statutory procedures, a denial of an application to confirm must be accompanied by a vacatur or other order.” Id. (citing Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (Vernon 2005)). With this as background, Werline offers the following critique: Under Vondergoltz, an interlocutory appeal would only be authorized under subsection (a)(3) in the rare situation when the trial court denies a motion to confirm, but fails to vacate the award. Thus, only if the trial court refuses to follow the statutory procedures would an interlocutory appeal be available under subsection (a)(3). Vondergoltz renders subsection (a)(3) meaningless under the guise of preventing subsection (a)(5) from being meaningless. Id. The Werline court further criticized Vondergoltz by charging that it “destroys the benefits of the arbitral process” and creates the possibility that appeal will be denied indefinitely. Id. The court cautioned that the arbitration process could “continue ad infinitum” and warned that “[t]he trial court could continue to grant vacatur multiple times until the result it desires is reached or one of the party’s resources are exhausted.” Id. at 895, 896. The Werline court opined that subsections (a)(3) and (a)(5) of section 171.098 can be harmonized under the plain language of the statute to give effect to each. Id. at 896. Specifically, the court commented that, under the statute’s plain language, “a party can appeal the denial of an application to confirm, but is prohibited from appealing from the granting of a vacatur which directs a rehearing.” Id. The court concluded, “We agree with Stewart that the trial court’s order granting a motion to vacate and directing a rehearing does not extinguish a party’s right to appeal the denial of its motion to confirm.” Id. (footnote omitted). The Texarkana Court of Appeals’s opinion is thoughtful; however, we do not agree with its holding and offer the following observations. First, the impact of the Werline court’s admonition that the arbitration process could “continue ad infinitum” under Vondergoltz’s holding is weakened by the fact that an order vacating an arbitration order and ordering rehearing, without denying the confirmation, could also in theory result in perpetual arbitration. We assume that the legislature considered this when enacting TAA section 171.098(5), which by implication does not permit an appeal of such an order, as we held in Stolhandske. See Tex. Civ. Prac. & Rem. Code Ann. § 171.098(a)(5); Stolhandske, 14 S.W.3d at 813. Regarding the Werline court’s comment that, “[u]nder Vondergoltz, an interlocutory appeal would only be authorized under subsection (a)(3) in the rare situation when the trial court denies a motion to confirm, but fails to vacate the award,” we note that perhaps the legislature foresaw such a “rare situation” and enacted subsection (a)(3) to cover it. 209 S.W.3d at 895. Moreover, as pointed out by the Minnesota Court of Appeals in Kowler, “[a]n appeal may be taken from an order that denies confirmation, if the order also vacates the award without a rehearing.” 544 N.W.2d at 802 (citing subsections (3) and (5) of the comparable Minnesota statute). Taking the relevant legal authorities into due consideration, we next determine whether we have jurisdiction to determine Thrivent’s appeal. We begin by noting that the substance and function of an interlocutory order, when viewed in the context of the record, controls our jurisdiction. See Walker Sand, 95 S.W.3d at 515. Here, the governing statutory procedure and the record shows that the proceeding was predominantly one to vacate the arbitration award. That is, vacatur of the award was the paramount consideration of the trial court and controls jurisdiction in this case. As discussed, TAA section 171.087 provides, “Unless grounds are offered for vacating, modifying, or correcting an award under Section 171.088 or 171.091, the court, on application of a party, shall confirm the award.” Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (Vernon 2005). In accordance with this provision, the trial court’s decision to confirm or deny the award in this case depended on its decision whether to vacate the award. See Kowler, 544 N.W.2d at 801. The record reflects that Brock asserted that the award should be vacated and confirmation denied because the award was obtained “by fraud, corruption, or other undue means,” one of the grounds expressly identified in section 171.088 to support vacatur. See Tex. Civ. Prac. & Rem. Code Ann. § 171.088(a)(1) (Vernon 2005); see also 9 U.S.C.S. § 10(a) (Lexis Supp. 2007) (providing, in Federal Arbitration Act, that award procured by fraud, corruption, or undue means may be vacated). The record reflects that the underlying proceeding focused on whether Brock’s allegations regarding “fraud, corruption, or undue means” were correct. Thus, the trial court’s denial of the confirmation was subsidiary to the trial court’s vacatur of the award. Moreover, the trial court’s vacatur of the award rendered moot the trial court’s decision to deny confirmation of the award. See Stolhandske, 14 S.W.3d at 815. In any event, the determinative ruling is the vacatur of the award, and the order at issue here is not subject to appeal unless the vacatur is appealable. See Kowler, 544 N.W.2d at 801. As discussed, an order vacating an award and ordering rehearing, such as the one in this case, is not an appealable order. See Tex. Civ. Prac. & Rem. Code Ann. § 171.098(a)(5); Stolhandske, 14 S.W.3d at 813. In addition, an order directing a rehearing, like the one at issue, does not have the indicia of finality that the other types of orders listed in section 171.098(a) possess. See Tex. Civ. Prac. & Rem. Code Ann. § 171.098(a). For example, orders denying an application to arbitrate or confirming an arbitration award are final as to the merits of the issue being decided and are ripe for appeal. See id. This can also be said of an order that simply denies an award or vacates it. In contrast, an order directing rehearing of the arbitration contemplates the continuation of the arbitration process and leaves unresolved disputed issues. Bison Building Materials, Ltd. v. Aldridge, No. 01–05–00330–CV, 2006 WL 2641280, at *5 (Tex. App.—Houston [1st Dist.] 2006, pet. filed) (holding that order confirming arbitration award in part, vacating award it in part, and implicitly directing rehearing is not appealable interlocutory order); Brooks v. Pep Boys Auto. Supercenters, 104 S.W.3d 656, 660 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (explaining that orders compelling arbitration are interlocutory per se because they contemplate continuing resolution of issues through arbitral process). Orders, such as the one at issue, do not possess the attribute of finality underlying TAA section 171.098, including subsection 171.098(a)(3). See Simon, 791 A.2d at 88. Strictly construing TAA section 171.098, as we must, we conclude that we lack jurisdiction to consider Thrivent’s interlocutory appeal of the trial court’s order denying the arbitration award, vacating the award, and directing rehearing. Accordingly, we dismiss Thrivent’s interlocutory appeal for lack of jurisdiction. Petition for Writ of Mandamus By petition for writ of mandamus, Thrivent also challenges the trial court’s order denying the arbitration award, vacating the award, and directing rehearing. Thrivent requests that we “order the trial court to reverse its ruling and render judgment confirming the January of 2007 arbitration award that Brock take nothing.” We deny Thrivent’s petition for writ of mandamus. Conclusion We dismiss the appeal in appellate cause number 01–07–00356–CV for lack of jurisdiction. We deny Thrivent’s petition for writ of mandamus in appellate cause number 01–07–00484–CV. Laura Carter Higley Justice Panel consists of Justices Taft, Hanks, and Higley.