Tuesday, May 20, 2008

Failure to prove existence of agreement to arbitrate warrants denial of motion to compel arbitration

Houston Court of Appeals holds that motion to compel arbitration was properly denied in the trial court where party seeking arbitration failed prove that valid arbitration agreement existed. No authenticating affidavit was filed. In Re Universal Finances Consulting Group, Inc. No. 14-08-00226-CV (Tex.App.- Houston [14th Dist.] May 20, 2008)(Boyce) (Motion and mandamus petition to compel arbitration denied in the absence of proper showing that valid agreement existed) On March 24, 2008, relators, Universal Finances Consulting Group, Inc., Zhuodao Zhao, John J. Dunn, and Universal Med-Health Services, Inc., filed a petition for writ of mandamus in this court. See Tex. Gov't Code Ann. ' 22.221 (Vernon 2004); see also Tex. R. App. P. 52. In the petition, relators ask this court to compel the Honorable Tony Lindsay, presiding judge of the 280th District Court of Harris County, to vacate her order denying their amended motion to compel arbitration and to stay the trial court proceedings. On August 16, 2007, real party in interest, Bill Cargill, filed suit against relators for the return of money he had advanced under a purported escrow agreement to obtain a standby letter of credit to fund the operations of Agri Dynamic Technology, S.A. de C.V., a Mexican corporation formed for agricultural reclamation and development in Mexico. Relying on an arbitration provision contained in an asset purchase agreement that was referenced in the escrow agreement, relators filed a motion to compel arbitration and an amended motion for arbitration. After a hearing, respondent denied relators' amended motion to compel arbitration because the "motion is not supported by Defendants [sic] pleadings and . . . Defendants have failed to provide competent evidence in support of their motion that establishes that there is a valid arbitration agreement, . . ."To obtain mandamus relief, the relator must demonstrate that (1) the trial court clearly abused its discretion; and (2) there is no adequate remedy by appeal. In re Sw. Bell Tele. Co., 226 S.W.3d 400, 403 (Tex. 2007) (orig. proceeding). The trial court abuses its discretion if it reaches a decision that constitutes a clear and prejudicial error of law. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). As to factual matters, the relator must establish that the trial court could have reached only one decision. Id. at 840. The party seeking to compel arbitration under the FAA must establish that (1) a valid arbitration agreement exists, and (2) the claims at issue fall within that agreement's scope. In re Dillard Dep't Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding) (per curiam). Whether a valid arbitration agreement exists is a legal question subject to de novo review. In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006). Cargill objected that the escrow agreement and the asset purchase agreement are not authenticated and, therefore, are not competent evidence of an agreement to arbitrate. No presumption of arbitrability arises until the court has found that there is an enforceable arbitration agreement. In re Jebbia, 26 S.W.3d 753, 757 (Tex. App.- Houston [14th Dist.] 2000, orig. proceeding). To compel arbitration on a summary motion, a trial court must first determine as a matter of law that the parties have agreed to arbitrate. Id. (citing Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992) (orig. proceeding)). The evidentiary standards for a motion to compel arbitration are the same as for a motion for summary judgment. TMI, Inc. v. Brooks, 225 S.W.3d 783, 794 (Tex. App.- Houston [14th Dist.] 2007, pet. denied) (op. on reh'g). Under the summary judgment standard, copies of documents must be authenticated in order to constitute competent summary judgment evidence. Republic Nat'l Leasing Corp. v. Schindler, 717 S.W.2d 606, 607 (Tex. 1986) (per curiam). A properly sworn affidavit stating that the attached documents are true and correct copies of the original authenticates the copies so they may be considered as summary judgment evidence. Id. Here, no affidavit was submitted with either the motion to compel or the amended motion to compel authenticating the escrow agreement or the asset purchase agreement. We conclude that there is no competent evidence of an agreement to arbitrate. Because respondent could not have properly considered the escrow agreement or the asset purchase agreement, she did not abuse her discretion by denying relators' amended motion to compel arbitration. Relators have not established their entitlement to the extraordinary relief of a writ of mandamus. Accordingly, we deny relators' petition for writ of mandamus. PER CURIAM Petition Denied and Memorandum Opinion filed May 20, 2008. Panel consists of Chief Justice Hedges and Justices Boyce and Hudson.[1] -------------------------------------------------------------------------------- [1] Senior Justice J. Harvey Hudson sitting by assignment. In Re Universal Finances Consulting Group, Inc. (Tex.App.- Houston [14th Dist.] May 20, 2008)(Boyce) (arbitration mandamus, motion to compel arbitration properly denied)(Opinion by Justice Bill Boyce) Before Chief Justice Hedges, Justices Hudson and Boyce 14-08-00226-CV In Re Universal Finances Consulting Group, Inc., Zhuodao Zhoa, John J. Dunn, and Universal Med-Health Services, Inc. Appeal from 280th District Court of Harris County Trial Court Judge: Hon. Tony Lindsay

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