Friday, November 23, 2007

In re Pisces Foods, 228 S.W.3d 349 (Tex.App.- Austin May 2007)

In re Pisces Foods, L.L.C. d/b/a Wendy's Restaurants and/or d/b/a Wendy's Old Fashioned Hamburgers Restaurant, No. 03-06-00274-CV (Tex.App.- Austin, May 24, 2007)(Opinion by Justice Waldrop)(mediation as prerequisite to arbitration) Appeal from County Court at Law No. 1 of Travis County Disposition: Arbitration mandmamus denied As presented in this petition, there is no question of fact with respect to the mediation prerequisite. The agreement expressly requires mediation as a precondition for requesting arbitration. The agreement binds relator. There is no allegation or proof that either party requested mediation, that they held a mediation, or that Jimenez resisted participating in mediation. Relator has failed to comply with the terms of its contract with Jimenez setting up preconditions for arbitration. Under either the Warehouseman or the HIM/Kemiron theories, the arbitration clause has not been triggered. See Warehousemen, 331 F.3d at 488; HIM, 317 F.3d at 44; Kemiron, 290 F.3d at 1291. We do not express any opinion regarding whether relator has waived the right to arbitrate upon satisfaction of the preconditions, only that the right to compel arbitration has not yet accrued under the terms of the contract. Nor do we express any opinion regarding whether this lawsuit should continue in the trial court despite the fact that an alternative dispute resolution and arbitration agreement exists (whether enforceable or not), but Jimenez has not complied with it and the relator has not properly invoked it. On the undisputed record presented here, the trial court did not abuse its discretion by refusing to compel arbitration. ORIGINAL PROCEEDING FROM TRAVIS COUNTY O P I N I O N Relator Pisces Foods, L.L.C., d/b/a Wendy's Restaurants and/or Wendy's Old Fashioned Hamburgers Restaurant Number 17, seeks a writ of mandamus ordering the trial court to compel arbitration of a personal injury claim brought by a former employee. We find no abuse of discretion in the denial of the motion to compel and deny the petition. Carmen Jimenez worked at relator's restaurant. She alleges that she was injured when a drawer at the restaurant fell on her while she was working. She sued relator on theories of negligence and premises liability. Relator filed a motion to abate and refer the case to arbitration. At the hearing on the motion, the trial court excluded evidence of the arbitration agreement (1) and declined to either abate the case or refer it to arbitration. Relator then filed this petition for writ of mandamus. We review the refusal to compel arbitration under the Federal Arbitration Act by writ of mandamus using an abuse of discretion standard. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272-73 (Tex.1992). A trial court abuses its discretion if it erroneously applies the law to the facts, or if it errs in determining the law. In re Bruce Terminix Co., 988 S.W.2d 702, 703 (Tex. 1998) (orig. proceeding). A party seeking arbitration must establish its right to arbitration under a contract. Weekley Homes, Inc. v. Jennings, 936 S.W.2d 16, 18 (Tex. App.--San Antonio 1996, writ denied) (Weekley I). Under the Federal Arbitration Act, "upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C.A. § 4 (1999); see Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (once party seeking to compel arbitration establishes that agreement exists under the FAA and that claims are within agreement's scope, trial court must compel arbitration and stay its proceedings). Relator has a dispute resolution program that seeks to resolve employee complaints and avoid litigation of such complaints. (2) The Speak Out Program Highlights pamphlet attached to Phil Stanton's affidavit outlines a four-step program. The steps are: (1) talking about problems one-on-one with a store manager, (2) formal review by the corporate human resources department, (3) mediation, and (4) final and binding arbitration. The Highlights pamphlet expressly states, "Each Step must be followed in sequence so that we have every opportunity to work together toward an agreeable resolution of the issue." The sequential nature of the program is emphasized in the arbitration paragraph, which begins as follows: "If you have a work-related problem that involves a legally protected right that could not be settled through Steps 1, 2 or 3 of the Program, you may request arbitration." The Highlights pamphlet also states that the program is "a mandatory condition of your employment, which you accept and agree to by becoming employed or continuing your employment with the Company at any time on or after March 1, 2002. The Company is also mutually bound to use this program for any covered claim." Even if we consider the excluded affidavit and assume without deciding that Jimenez agreed to the program and that her claims are within the agreement, relator has not shown itself entitled to arbitration. According to relator's own literature, mediation must occur and fail before arbitration is an option under the company's mandatory program. Relator concedes that no mediation occurred. Accordingly, relator failed to prove itself entitled to arbitration. Relator argues that the failure to request mediation did not waive its right to arbitration, citing In re Weekley Homes, 985 S.W.2d 111, 114 (Tex. App.--San Antonio 1998, orig. proceeding) (Weekley II). The parties in the Weekley cases had an agreement that permitted the parties to request arbitration only after participating in mediation. The trial court denied a motion to compel arbitration because the parties had not mediated. Weekley I, 936 S.W.2d at 17. The court of appeals affirmed, finding that mediation was a necessary precondition to arbitration under the terms of the parties' contract. Id. at 18-19. The parties then went to mediation, which failed. Weekley II, 985 S.W.2d at 113. When the relator again sought to compel arbitration, the trial court denied the motion after concluding that the relator had waived the right to arbitrate by filing its first motion to compel arbitration before mediating the case. Id. The court of appeals found that denial to be an abuse of discretion because the arbitration agreement did not expressly provide that requesting arbitration before mediation waived any right a party had to arbitrate, and nothing about the relator's behavior indicated that it intended to waive its right to arbitrate. Id. at 114. The San Antonio court also wrote that the question of whether a party has followed the procedures necessary to invoke an arbitration clause is ordinarily left to the arbitrator. Id. (citing John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964)). This latter reasoning bears closer scrutiny with respect to the particular facts of this case. The Supreme Court in John Wiley distinguished between concepts of substantive arbitrability and procedural arbitrability, but noted that cases would rarely present issues that were plainly one or the other. 376 U.S. at 556-57. The court defined substantive issues as those relating to whether the subject matter of the dispute was within an arbitration agreement and procedural issues as those relating to whether the procedures for invoking and using arbitration were met. Id. at 557. Generally, substantive issues are to be decided by courts and procedural issues are to be submitted as part of the arbitration. Id. at 557-58. The John Wiley court held that the issues concerning fulfillment of arbitration prerequisites blended substance and procedure and should be resolved by the arbitrator. Id. at 557. In that case, the union argued that Wiley's consistent refusal to recognize the union's representative status made following the grievance steps under the contract utterly futile and a bit ridiculous. The union also argued that time limits in the grievance procedure were not dispositive because the violations of the bargaining agreement were continuing. These arguments were inseparable from the disputes underlying the validity of the agreement. Id. Courts nevertheless have held that issues related to the meeting of conditions precedent to arbitration--including time limits, notice, and laches--are procedural arbitrability issues. See Howsam v. Dean Witter Reynolds, 537 U.S. 79, 84-86 (2002). In concluding that a National Association of Securities Dealers arbitrator should determine whether the parties had met NASD requirements for requesting arbitration, the Supreme Court deemed such issues as "presumptively for the arbitrator, not for the judge." Id. at 85. The Tyler court of appeals held that a trial court abused its discretion by failing to compel arbitration despite an allegation that the party requesting arbitration failed to satisfy the precondition that it participate in mediation. In re R & R Personnel Specialists of Tyler, Inc., 146 S.W.3d 699, 704 (Tex. App.--Tyler 2004, orig. proceeding). The court held that compliance with a mediation precondition was a procedural arbitrability issue that should be resolved by an arbitrator. Id. Some courts have noted an exception to this bright-line distinction. In John Wiley, the Supreme Court wrote that doubts about whether preconditions have been met "cannot ordinarily be answered without consideration of the merits of the dispute which is presented for arbitration." 376 U.S. at 557 (emphasis added). The Court wrote: Once it is determined, as we have, that the parties are obligated to submit the subject matter of a dispute to arbitration, "procedural" questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator. Even under a contrary rule, a court could deny arbitration only if it could confidently be said not only that a claim was strictly "procedural," and therefore within the purview of the court, but also that it should operate to bar arbitration altogether, and not merely limit or qualify an arbitral award. Id. The Fifth Circuit derived from this language a narrow exception to the general rule that arbitrators decide questions of procedural arbitrability, applicable when those issues are essentially undisputed factually. General Warehousemen & Helpers Union Local 767 v. Albertson's Distribution, Inc., 331 F.3d 485, 488 (5th Cir. 2003). The Fifth Circuit wrote: We have interpreted this rare exception to mean that "a court will not order arbitration if 'no rational mind' could question that the parties intended for a procedural provision to preclude arbitration and that the breach of the procedural requirement was clear." [Oil, Chem. & Atomic Worker's Int'l Union, Local 4-447 v. Chevron Chem. Co., 815 F.2d 338, 342 (5th Cir. 1987)] (quoting Rochester Tel. Corp. v. Communication Workers of Am., 340 F.2d 237, 239 (2d Cir. 1965)). Warehousemen, 331 F.3d at 488. The Dallas court of appeals similarly noted the possibility of an exception. Discussing procedural arbitrability, that court wrote: "Such procedural questions include whether any contractually-based prerequisites to arbitration have been satisfied, at least when such issues are intertwined with the underlying facts of the dispute." American Realty Trust, Inc. v. JDN Real Estate-McKinney, L.P., 74 S.W.3d 527, 531 (Tex. App.--Dallas 2002, pet. denied) (citing Del E. Webb Constr. v. Richardson Hosp. Auth., 823 F.2d 145, 149 (5th Cir.1987)). These courts did not use the exception because each of them faced disputed facts concerning the procedural arbitrability issues. See John Wiley, 376 U.S. at 557-58; Warehousemen, 331 F.3d at 488-490; American Realty, 74 S.W.3d at 532; see also Weekley II, 985 S.W.2d at 114. Other courts have upheld decisions that arbitration could not be compelled when parties who were contractually required to mediate or follow other grievance procedures as a precondition to arbitration had failed to do so. HIM Portland, LLC v. Devito Builders, Inc., 317 F.3d 41, 44 (1st Cir. 2003); Kemiron Atl., Inc. v. Aguakem Int'l, Inc., 290 F.3d 1287, 1290-91 (11th Cir. 2002); Allen v. Apollo Group, Inc., No. Civ. A. H-04-3041, 2004 U.S. Dist. LEXIS 26750, at *27 (S.D. Tex. Nov. 9, 2004). But see Guam v. Pacificare Health Ins. Co. of Micronesia, Inc., 2004 Guam 17, 2004 Guam LEXIS, 18 at *40 n.7 (Guam 2004) (distinguishing HIM because it "did not address the issue of whether the court or the arbitrators should decide whether a condition precedent to arbitration was satisfied"). These courts reasoned that because the parties contractually agreed to mediate before arbitrating, compelling arbitration in the absence of mediation would thwart the parties' original intention. As the Eleventh Circuit wrote: The FAA's policy in favor of arbitration does not operate without regard to the wishes of the contracting parties. Here, the parties agreed to conditions precedent before arbitration can take place and, by placing those conditions in the contract, the parties clearly intended to make arbitration a dispute resolution mechanism of last resort. Kemiron, 290 F.3d at 1290. The courts held that the parties' failure to conduct the required mediation meant that the arbitration clause was not invoked. HIM, 317 F.3d at 44; Kemiron, 290 F.3d at 1291 ("Because neither party requested mediation, the arbitration provision has not been activated and the FAA does not apply.") Without addressing the procedural arbitrability line of cases, these courts treat the precursor mediation as a contract compliance issue rather than an arbitration procedural issue. As presented in this petition, there is no question of fact with respect to the mediation prerequisite. The agreement expressly requires mediation as a precondition for requesting arbitration. The agreement binds relator. There is no allegation or proof that either party requested mediation, that they held a mediation, or that Jimenez resisted participating in mediation. Relator has failed to comply with the terms of its contract with Jimenez setting up preconditions for arbitration. Under either the Warehouseman or the HIM/Kemiron theories, the arbitration clause has not been triggered. See Warehousemen, 331 F.3d at 488; HIM, 317 F.3d at 44; Kemiron, 290 F.3d at 1291. We do not express any opinion regarding whether relator has waived the right to arbitrate upon satisfaction of the preconditions, only that the right to compel arbitration has not yet accrued under the terms of the contract. Nor do we express any opinion regarding whether this lawsuit should continue in the trial court despite the fact that an alternative dispute resolution and arbitration agreement exists (whether enforceable or not), but Jimenez has not complied with it and the relator has not properly invoked it. On the undisputed record presented here, the trial court did not abuse its discretion by refusing to compel arbitration. The petition for writ of mandamus is denied. G. Alan Waldrop, Justice Before Justices Patterson, Pemberton and Waldrop Filed: May 24, 2007 1. Relator contends that the court abused its discretion by excluding Pisces Vice President of Operations Phil Stanton's affidavit and its attachments that set out the terms of the dispute resolution program. For purposes of this opinion, we will consider the affidavit and its attachments as if they were admitted. 2. Jimenez contends that she did not agree to be bound by the program and that forcing her participation would be unconscionable. We need not reach these assertions.

Monday, November 12, 2007

Houston Court orders arbitration under FAA in commercial dispute

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

Structured Capital Resources Corp v. Arctic Cold Storage LLC (Tex.App. - Tyler 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)

Robinson v. West (Tex.App.-Eastland 2007)(op. on remand)

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.

No agreement found - arbitration award thrown out

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[1] filed wrongful death and survival claims against Heritage Oaks West Retirement Village and others[2] 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 [1] 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.” [2] 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.”

Arbitration award vacated in firefighters' dispute with city over pay

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.