Jody James Farms, JV v. The Altman Group, Inc., No. 17-0062 (Tex. May 11, 2018)
Parties may not be compelled to arbitrate unless they have agreed to arbitrate or are bound by principles of agency or contract law to do so. Jody James and the Agency did not agree to Jody James be compelled to arbitrate under agency, third-party-beneficiary, or estoppel theories.
In the absence of an agreement to arbitrate arbitrability, the court must decide the issue in the first instance, because it involves a gateway issue, regardless of whether arbitrability would otherwise go to the arbitrator based on incorporation of AAA rules into the agreement of parties that have agreed to submit disputes between them to arbitration in the AAA forum. This scenario does not apply to nonsignatories. At least not in this case.
In the absence of an agreement to arbitrate arbitrability, the court must decide the issue in the first instance, because it involves a gateway issue, regardless of whether arbitrability would otherwise go to the arbitrator based on incorporation of AAA rules into the agreement of parties that have agreed to submit disputes between them to arbitration in the AAA forum. This scenario does not apply to nonsignatories. At least not in this case.
The Texas Supreme Court therefore reverses the court of appeals’ judgment, vacates the arbitration award, and remands to the trial court for further proceedings.
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| Texas Supreme Court Opinion |
IN THE SUPREME COURT OF TEXAS
══════════
No. 17-0062
══════════
JODY JAMES FARMS, JV, PETITIONER
V.
THE ALTMAN GROUP, INC. AND LAURIE DIAZ, RESPONDENTS
══════════════════════════════════════════
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE SEVENTH DISTRICT OF TEXAS
══════════════════════════════════════════
Argued March 20, 2018
JODY JAMES FARMS, JV, Petitioner,
v.
THE ALTMAN GROUP, INC. AND LAURIE DIAZ, Respondents.
Supreme Court of Texas.
Anna M.W. McKim, J. Paul Manning, for The Altman Group, Inc. and Laurie Diaz, Respondents.
Jody D. Jenkins, for Jody James Farms, JV, Petitioner.
On Petition for Review from the Court of Appeals for the Seventh District of Texas.
JUSTICE GUZMAN delivered the opinion of the Court.
JUSTICE JOHNSON did not participate in the decision.
EVA M. GUZMAN, Justice.
Arbitration is a creature of contract between consenting parties.[1] Nevertheless, as may be required by principles of contract law and agency,[2] a person who has agreed to arbitrate disputes with one party may be required to arbitrate related disputes with non-parties.[3] This, however, is not one of those cases.
Determining whether a claim involving a non-signatory must be arbitrated is a gateway matter for the trial court, not the arbitrator, which means the determination is reviewed de novo rather than with the deference that must be accorded to arbitrators. Applying the appropriate standard of review, we hold the lower courts erroneously required a signatory to arbitrate its non-contractual claims against non-signatories. We therefore vacate the arbitrator's take-nothing award and remand the case to the trial court for further proceedings.
I. Background
Jody James Farms, JV purchased a Crop Revenue Coverage Insurance Policy from Rain & Hail, LLC, through the Altman Group, an independent insurance agency. The insurance policy, which was reinsured by the Federal Crop Insurance Corporation (FCIC) under the authority of the Federal Crop Insurance Act,[4] contains an arbitration clause in section 20(a):
If you and we fail to agree on any determination made by us except those specified in section 20(d), the disagreement may be resolved through mediation in accordance with section 20(g). If resolution cannot be reached through mediation, or you and we do not agree to mediation, the disagreement must be resolved through arbitration in accordance with the rules of the American Arbitration Association (AAA), except as provided in sections 20(c) and (f), and unless rules are established by FCIC for this purpose. Any mediator or arbitrator with a familial, financial or other business relationship to you or us, or our agent or loss adjuster, is disqualified from hearing the dispute.[5]
The policy defines "us" and "we" as referring to the insurer (Rain & Hail) and "you" as referring to the named insured (Jody James). Neither the Altman Group nor any of its employees is expressly named in the policy, and neither the Altman Group nor any of its employees signed the agreement.
This dispute follows Rain & Hail's denial of coverage for a grain sorghum crop loss Jody James suffered. Though Jody James claims it promptly called an Altman Group agent, Laurie Diaz, to report the loss, Rain & Hail denied the claim on several bases, including that Jody James "failed to provide a timely notice of damage which has resulted in [Rain & Hail's] inability to make necessary and required loss determinations for indemnity under your . . . policy."
Jody James disagreed with Rain & Hail's coverage determination, so the parties arbitrated the dispute as required by the insurance policy. Jody James lost. The arbitrator agreed with Rain & Hail that Jody James did not "timely present[] notice of its claim in accordance with the provisions of the crop insurance policy" and, further, "did not state a presentable loss" because crops from performing and non-performing farm units were commingled.
Based on the adverse arbitration ruling, Jody James sued the Altman Group and Diaz (collectively, the Agency) for breach of fiduciary duty and deceptive-trade practices.[6]Jody James asserts the Agency's failure to timely submit the crop-loss claim resulted in denial of coverage and a $68,000 pecuniary loss.
Jody James seeks damages equal to the amount of the loss, plus attorney's fees and interest.
The Agency moved to compel arbitration under the insurance policy, which Jody James opposed and the trial court granted. Following an unsuccessful motion for reconsideration, the case proceeded to arbitration where Jody James continued to assert its right to proceed in court against the Agency, a non-signatory to the arbitration agreement. The arbitrator resolved that issue and the merits of the dispute in the Agency's favor, issuing a take-nothing arbitration award.
The Agency asked the trial court to confirm and enforce the arbitrator's award, while Jody James moved to vacate it, again asserting that no valid arbitration agreement exists between the parties. The trial court's final judgment confirmed the award, denied Jody James's motion, and denied the Agency's request for attorney's fees. Applying a deferential standard of review to the arbitrator's determinations, the court of appeals affirmed.[7]
We granted Jody James's petition for review, which challenges the arbitrator's authority to determine whether a non-signatory can compel a signatory to arbitrate.
II. Discussion
Jody James and the Agency disagree about (1) whether the Agency is liable for Jody James's loss; (2) whether they agreed to arbitrate the merits of that issue; and (3) whether the trial court or the arbitrator should decide whether they agreed to arbitrate the merits. The third matter— who answers the question of arbitrability—is the primary focus of this appeal.
Jody James asserts that the trial court must determine, as a threshold matter, whether an arbitration agreement exists between it and the Agency. The Agency argues it makes no difference who actually holds the power to determine arbitrability, because both the trial court and the arbitrator concluded Jody James must arbitrate.
We disagree with the Agency. Who may properly adjudicate arbitrability is critical to ascertaining the appropriate standard of review. A trial court's arbitrability determinations are reviewed de novo,[8] while an arbitrator's determinations are entitled to deference.[9]Under the Federal Arbitration Act, an arbitration award must be confirmed except in extremely limited circumstances, such as corruption, fraud, undue means, evident partiality, and lack of authority.[10] The answer to the third question is thus significant and ultimately dispositive of this appeal, because it controls the standard of review we apply in evaluating the arbitrator's authority.
A. Standard of Review
Whether parties have agreed to arbitrate is a gateway matter ordinarily committed to the trial court[11] and controlled by state law governing "the validity, revocability, and enforceability of contracts generally."[12] Parties can, however, agree to arbitrate arbitrability. Arbitration is a matter of contract, and that which the parties agree must be arbitrated shall be arbitrated.[13] A presumption favors adjudication of arbitrability by the courts absent clear and unmistakable evidence of the parties' intent to submit that matter to arbitration.[14] The unmistakable clarity standard follows "the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration" and protects unwilling parties from compelled arbitration of matters they reasonably expected a judge, not an arbitrator, would decide.[15]
The court of appeals held that an arbitration agreement incorporating the American Arbitration Association (AAA) rules evinces clear and unmistakable intent to arbitrate arbitrability because the AAA rules declare that an "arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence . . . of the arbitration agreement or to the arbitrability of any claim or counterclaim."[16]Jody James and Rain & Hail's arbitration agreement expressly incorporates the AAA rules, so the court of appeals applied a "narrow and deferential review" to the arbitrator's determination that Jody James's claims against the Agency were arbitrable.[17]
While such deference may be the consequence of incorporating the AAA rules in disputes between signatories to an arbitration agreement,[18] which we need not decide, the analysis is necessarily different when a dispute arises between a party to the arbitration agreement and a non-signatory. As to that matter, Texas courts differ about whether an arbitration agreement's mere incorporation of the AAA rules shows clear intent to arbitrate arbitrability.[19] We hold it does not. Even when the party resisting arbitration is a signatory to an arbitration agreement, questions related to the existence of an arbitration agreement with a non-signatory are for the court, not the arbitrator.
The involvement of a non-signatory is an important distinction because a party cannot be forced to arbitrate absent a binding agreement to do so.[20] The question is not whether Jody James agreed to arbitrate with someone, but whether a binding arbitration agreement exists between Jody James and the Agency. What might seem like a chicken-and-egg problem is resolved by application of the presumption favoring a judicial determination.[21] A contract that is silent on a matter cannot speak to that matter with unmistakable clarity, so an agreement silent about arbitrating claims against non-signatories does not unmistakably mandate arbitration of arbitrability in such cases.[22]
To the extent Jody James and Rain & Hail's agreement expressed any intent to arbitrate arbitrability, it did so only with respect to one another. Jody James's agreement with Rain & Hail requires disagreements to "be resolved through arbitration in accordance with the rules of the [AAA]" only "[i]f [Jody James] and [Rain & Hail] fail to agree on any determination made by [Rain & Hail]." The insurance policy directly incorporates the AAA rules only for these disputes, not for disputes between Jody James and unspecified third parties. The contract also does not "expressly provide[] that certain non-signatories are considered parties" or otherwise expressly extend the contract's benefits to third parties.[23] And no agreement between Jody James and the Agency incorporates the AAA rules as to disputes between them.[24]
Given the absence of clear and unmistakable evidence that Jody James agreed to arbitrate arbitrability in disputes with non-signatories, compelled arbitration cannot precede a judicial determination that an agreement to arbitrate exists. The trial court was therefore charged with determining whether a valid agreement to arbitrate exists between Jody James and the Agency before any issue may be referred to arbitration. We review the resolution of that question de novo, because arbitrators lack authority to resolve a dispute absent a valid arbitration agreement.[25]
B. Analysis
Who is bound by an arbitration agreement is normally a function of the parties' intent, as expressed in the agreement's terms.[26] Courts have also articulated six scenarios in which arbitration with non-signatories may be required: (1) incorporation by reference, (2) assumption, (3) agency, (4) alter ego, (5) equitable estoppel, and (6) third-party beneficiary.[27] The Agency argues the insurance policy's language mandates arbitration here and, alternatively, that agency, third-party-beneficiary, and estoppel theories preclude Jody James from avoiding arbitration even though the Agency is a non-signatory.
1. The Insurance Policy
When relying on a contract to compel arbitration, the moving party must first establish the existence of a valid and enforceable arbitration agreement.[28] Second, the claims at issue must fall within the arbitration agreement's scope.[29] Whether a non-signatory may enforce an arbitration agreement's terms is a question within the first element.[30]
Section 20(a) of the crop insurance policy requires a "disagreement to be resolved through arbitration." "[D]isagreement" occurs when "[Jody James] and [Rain & Hail] fail to agree on any determination made by [Rain & Hail]." The arbitration agreement's text does not reference any other disagreement, such as disagreements between Jody James and another person or entity.
This litigation centers on the Agency's alleged failure to inform Rain & Hail of Jody James's insurance claim in a timely manner, which is not a disagreement between Rain & Hail and Jody James. This suit does not arise from a disagreement between Rain & Hail and Jody James; indeed, the claims against the Agency actually embrace and depend on Rain & Hail's determination that the claim was late. Section 20(a) thus does not require Jody James to arbitrate this dispute with the Agency.
The Agency, however, cites the first sentence in subsection 20(a)(1) as supporting a much broader application of the policy's arbitration agreement. Subsection 20(a)(1) is a subpart of section 20(a), in which the general arbitration agreement resides. Subsection 20(a)(1) reads as follows:
All disputes involving determinations made by us, except those specified in subsection 20(d), are subject to mediation or arbitration. However, if the dispute in any way involves a policy or procedure interpretation, regarding whether a specific policy provision or procedure is applicable to the situation, how it is applicable, or the meaning of any policy provision or procedure, either you or we must obtain an interpretation from FCIC in accordance with 7 CFR part 400, subpart X or such other procedures as established by FCIC.
Reading the words of subsection 20(a)(1)'s first sentence "in the context in which they are used,"[31] we first observe that it is structurally constrained to the scope of arbitration in Section 20(a), to which it is appended. Second, the first sentence must be considered in light of subsection (a)(1)'s remainder, which is devoted to restricting the scope of arbitration in a specific manner. Construed in context, subsection (a)(1) is thus a limiter, not an expander. This reading accords with the interpretive canon that "[m]aterial within an indented subpart relates only to that subpart."[32] The context of the entire contract confirms the same; when referring to arbitration elsewhere, the insurance policy consistently treats arbitration as pertaining to Rain & Hail and Jody James without expressing any broader application.
Subsection 20(a)(1) is not itself an arbitration agreement; instead, it only describes how far the agreement reaches. The parties must arbitrate "[a]ll disputes" within the arbitration agreement except pure "policy or procedure interpretation[s],"[33] but those disputes only fall within the scope of the agreement if there is a valid arbitration agreement in the first instance.
A valid arbitration agreement exists for disagreements between Jody James and Rain & Hail, but the insurance policy cannot be reasonably read to encompass disagreements between the signatories and other parties.
Accordingly, we turn to alternative theories for compelling arbitration.
Accordingly, we turn to alternative theories for compelling arbitration.
2. Agency
"[A] contracting party generally cannot avoid unfavorable clauses by suing the other party's agents."[34] Thus, an agent of a signatory may sometimes invoke an arbitration clause against another signatory.[35] To establish an agency relationship, a non-signatory must show it was subject to the principal signatory's control and authorized to act as its agent.[36]
The record does not support the conclusion that Rain & Hail had control over the Agency's actions in relaying a claim from Jody James to Rain & Hail. The Agency points to the insurance contract's references to the "insurance agent," but mere references do not create an agency relationship; the touchstone is control.[37] Because Rain & Hail did not exercise control over the Agency, arbitration cannot be compelled on that basis.
3. Third-Party-Beneficiary Status
Like other contracts, arbitration agreements may also be enforced by third-party beneficiaries, so long as "the parties to the contract intended to secure a benefit to that third party and entered into the contract directly for the third party's benefit."[38] The benefit must be more than incidental, and the contracting parties' intent to "confer a direct benefit to a third party must be clearly and fully spelled out or enforcement by the third party must be denied."[39] Whether "the third party intended or expected to benefit from the contract" is irrelevant, because "only the `intention of the contracting parties in this respect is of controlling importance.'"[40] As a matter of interpretation, a mere description of the contract's intended use cannot—on its own—confer third-party-beneficiary status.[41]
The contract between Jody James and Rain & Hail does not facially benefit the Agency, but the Agency gleans an intended benefit by reading the contract in the context of the Federal Crop Insurance Act, which sets out guidelines for the FCIC's administration of the Act.[42] The FCIC's board must "encourage the sale of Federal crop insurance through licensed private insurance agents . . ., in which case the agent . . . shall be reasonably compensated from premiums paid by the insured for such sales and renewals recognizing the function of the agent . . . to provide continuing services while the insurance is in effect."[43]
But as the Agency concedes, the statute's language is nothing more than a statement of intent. A statement of intent is not enough, and no other language in the statute or the contract provides direct benefits to the Agency. The insurer might pay the Agency for continuing service throughout the life of the insurance policy, but the agreement between Jody James and Rain & Hail makes no provision for making any such payments nor even identifies any amount owed to the Agency. The Federal Crop Insurance Act intends general beneficence for insurance agents, but nothing more.
The circumstances here are comparable to South Texas Water Authority v. Lomas,[44] in which we held that the City of Kingsville's citizens were not third-party beneficiaries to a water-supply contract between Kingsville and the South Texas Water Authority.[45] The water authority's enabling legislation stated its purpose was to act "for the benefit of the people of this state,"[46] and the water-supply contract at issue specified that the water's intended use was for municipal and industrial customers.[47] The contract did not, however, identify any of the specific citizens claiming third-party beneficiary status, and we held the citizens were not third-party beneficiaries because "general beneficence does not create third-party rights."[48] The same is true here. The contract between Jody James and Rain & Hail does not express an intent to make the insurance agency a direct beneficiary. Any benefit to the Agency is, at best, indirect and incidental.
4. Estoppel
We have recognized equitable estoppel as a basis for compelling arbitration, and the Agency contends, as its principal argument, that Jody James is estopped from resisting arbitration of its claims. Our arbitration-estoppel jurisprudence is rooted in a theory of promissory estoppel: "When a promisor induces substantial action or forbearance by another, promissory estoppel prevents any denial of that promise if injustice can be avoided only by enforcement."[49] Estoppel in the arbitration context is based on principles of contract and agency and does not create a requirement to arbitrate where none existed before.[50] Estoppel simply "`prevents a party from insisting upon his strict legal rights when it would be unjust to allow him to enforce them.'"[51] In that spirit, we have recognized and applied the doctrine of direct-benefits estoppel,[52] which the Agency asserts requires arbitration in this case. The Agency also urges that an "alternative estoppel theory" applies, notwithstanding our past reluctance to adopt novel formulations of estoppel to compel arbitration.[53]
a. Direct-Benefits Estoppel
Direct-benefits estoppel applies to parties who seek "to derive a direct benefit" from a contract with an arbitration agreement.[54] This estoppel theory precludes a plaintiff from seeking to hold the non-signatory liable based on the terms of an agreement that contains an arbitration provision while simultaneously asserting the provision lacks force because the defendant is a non-signatory.[55] Simply put, a person "cannot both have his contract and defeat it too."[56] When a claim depends on the contract's existence and cannot stand independently—that is, the alleged liability "arises solely from the contract or must be determined by reference to it"[57]—equity prevents a person from avoiding the arbitration clause that was part of that agreement.[58] But "when the substance of the claim arises from general obligations imposed by state law, including statutes, torts and other common law duties, or federal law," direct-benefits estoppel is not implicated even if the claim refers to or relates to the contract or would not have arisen "but for" the contract's existence.[59]
In the archetypal direct-benefits case, the party opposing arbitration seeks to enforce the terms of an agreement with an arbitration clause. In Rachal v. Reitz,[60] for instance, we held a trust beneficiary's suit to remove the trustee was arbitrable even though the beneficiary did not sign the trust agreement.[61] Though the complainant could not allege a contract claim, the lawsuit was nevertheless premised on the trustee's alleged violation of the trust's terms.[62] The trustee sought to compel arbitration based on the trust's arbitration provision, and we agreed arbitration was required.[63] By pressing a lawsuit that was necessarily based on the trust's terms and validity, the beneficiary was barred by direct-benefits estoppel from avoiding the trust's arbitration provision.[64]
In comparison, we held in G.T. Leach Builders v. Sapphire V.P.[65] that a mere relationship between the signatory's claims and the contract containing an arbitration provision was not enough to compel a signatory to arbitrate claims against third parties under a direct-benefits estoppel theory.[66] The signatory, Sapphire V.P., was the developer of a hurricane-damaged condominium project. Sapphire sued several insurance brokers, alleging they allowed an insurance policy to expire shortly before the hurricane. Sapphire also sued the project's general contractor and engineers for negligent construction.[67] Each party had a separate contract with Sapphire, but only the general contract had an arbitration provision.[68]
Sapphire was obligated to arbitrate its claims against the general contractor based on its agreement to do so in the general contract,[69] and the insurance brokers and engineers argued they were similarly entitled to arbitrate Sapphire's claims against them under a direct-benefits estoppel theory.[70] Sapphire's allegations against the engineers and insurance brokers, however, relied on duties under their separate contracts for engineering and insurance services, respectively.[71] Even though Sapphire's claims against the engineers and insurance brokers might not have existed but for the general contract to construct the condominium project, those claims relied on duties independent from it.[72] Because the claims did not depend on the general contract, direct-benefits estoppel did not apply.[73]
Like Sapphire's allegations against the engineers and insurance brokers, Jody James's claims are independent of the insurance policy. Jody James might seek a measure of loss that equates to the amount of a contract loss, but direct-benefits estoppel does not apply simply because "the claim refers to . . . the contract."[74] Instead, liability "`must be determined by reference to it.'"[75] Rather than relying on the insurance policy, Jody James's complaint premises the Agency's liability on tort and DTPA duties that are general, non-contract obligations.
To establish a fiduciary relationship, Jody James must prove a relationship between the parties involving "a high degree of trust and confidence . . . prior to, and apart from" the insurance contract.[76] A fiduciary duty generally "arises from the relationship of the parties and not from the contract."[77] Likewise, DTPA claims are created by statute,[78]and "a DTPA claim for misrepresentation is considered separate and distinct from any breach of contract."[79]
This is not a case of mere artful pleading.[80] The insurance policy does not impose any duties or obligations on the Agency. At most, by permitting Jody James to report claims through an insurance agent, the policy may assume that an Agency has a pre-existing duty to follow through in filing an insurance claim. But without contractually mandated duties, Jody James would be unable to maintain a contract claim against the Agency under the insurance policy even if it were inclined to do so. Instead of enforcing expectations created by contract, any liability is necessarily extra-contractual. Accordingly, direct-benefits estoppel has not been shown here.
b. "Alternative Estoppel Theory"
The Agency also relies on the Second Circuit Court of Appeals' "alternative estoppel theory,"[81] also referred to as an "intertwined-claims" theory, to support compelled arbitration.[82] Under this estoppel theory, non-signatories can successfully compel arbitration when (1) they have a "close relationship" with a signatory to a contract with an arbitration agreement and (2) the claims are "intimately founded in and intertwined with the underlying contract obligations."[83] In In re Merrill Lynch Trust Co., we acknowledged the existence of this theory without deciding its validity in Texas.[84] Since then, the Fifth Circuit Court of Appeals has predicted we would adopt this estoppel formulation.[85] We need not consider the viability of such a theory in this case, because even if we were to embrace it, the Agency has not shown its applicability.
The Second Circuit carefully limited the alternative estoppel theory's application, explaining its precedent does not "mean that whenever a relationship of any kind may be found among the parties to a dispute and their dispute deals with the subject matter of an arbitration contract made by one of them, that party will be estopped from refusing to arbitrate."[86] Rather, "the obligation to arbitrate depends on consent"; alternative estoppel requires not only a dispute intertwined with the contract but also a relationship between the parties that developed in a manner that makes it "unfair" not to compel arbitration.[87]
In defining any form of arbitration estoppel, we are guided by similar concerns. Like the Second Circuit, we focus on the principle that arbitration is "a matter of consent, not coercion."[88] This is why, when defining the contours of direct-benefits estoppel, we have insisted the doctrine cannot "create liability for noncontracting parties that does not otherwise exist."[89] More recently, we rejected the even looser concerted-misconduct estoppel theory, because the FAA is only meant "to make arbitration agreements `as enforceable as other contracts, but not more so.'"[90] Any arbitration doctrine forcing an unwilling party into arbitration must thus have some basis in fairness and consent.
Regardless of how intertwined Jody James's claims are with the insurance policy, which is a matter of debate, the relationship between the Agency and Rain & Hail is not close enough to imply any consent by Jody James to arbitrate this lawsuit. Concerns for consent and fairness mandate a particularly close relationship to invoke alternative estoppel.[91] The Second Circuit's alternative-estoppel cases compelling arbitration typically involve some corporate affiliation between a signatory and non-signatory,[92] not just a working relationship.
III. Conclusion
No party may be compelled to arbitrate unless they have agreed to arbitrate or are bound by principles of agency or contract law to do so. Jody James and the Agency did not agree to arbitrate any matter—not the question of arbitrability and not the merits of this dispute. Nor may Jody James be compelled to arbitrate under agency, third-party-beneficiary, or estoppel theories. We therefore reverse the court of appeals' judgment, vacate the arbitration award, and remand to the trial court for further proceedings.
[1] Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989).
[4] See 7 U.S.C. § 1508(h).
[5] Section 20(c) establishes the binding nature of arbitration, subject to judicial review. Section 20(d) governs certain disagreements involving the FCIC. And section 20(f) explains how to resolve conflicts between the contract and other laws.
[6] See TEX. BUS. & COMM. CODE §§ 17.41-.506.
[7] 506 S.W.3d 595, 600 (2016).
[8] In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009); J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003).
[10] 9 U.S.C. § 10.
[12] Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009) (quoting Perry v. Thomas, 482 U.S. 483, 493 n.9 (1987)).
[14] Id. at 944; see 9 U.S.C. § 4 (the court shall order the parties to arbitration "upon being satisfied that the making of the agreement for arbitration . . . is not in issue").
[16] 506 S.W.3d 595, 599 (2016) (citing Chesapeake Appalachia, LLC v. Scout Petrol., LLC, 809 F.3d 746, 763 (3d Cir. 2016); Oracle Am., Inc. v. Myriad Grp., A.G., 724 F.3d 1069, 1074 (9th Cir. 2013); Petrofac, Inc. v. DynMcDermott Petrol. Ops. Co., 687 F.3d 671, 675 (5th Cir. 2012); Fallo v. High-Tech Inst., 559 F.3d 874, 878 (8th Cir. 2009); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1372-73 (Fed. Cir. 2006); Terminix Int'l Co. v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327, 1332-33 (11th Cir. 2005); Contec Corp. v. Remote Sol. Co., 398 F.3d 205, 208 (2d Cir. 2005)); see also AM. ARBITRATION ASS'N COMMERCIAL ARBITRATION RULES R-7(a), (b) (2017). Amendments to the AAA rules since this dispute arose are not germane to its disposition. Accordingly, we cite the current rules for convenience.
[17] 506 S.W.3d at 599-600.
[18] See Oracle, 724 F.3d at 1071 (addressing an arbitration clause in a license agreement signed by both parties in the dispute); Petrofac, 687 F.3d at 675 ("[T]he parties expressly incorporated into their arbitration agreement the AAA rules."); Fallo, 559 F.3d at 876 (reviewing an arbitration agreement between plaintiff students and defendant school); Qualcomm, 466 F.3d at 1368, 1372-73 (reviewing an agreement between appellant and appellees); Terminix, 432 F.3d at 1332-33 (same); c.f. Contec, 398 F.3d at 207 (reviewing an arbitration clause in Agreement signed by predecessor corporations of the plaintiff and defendant).
[19] Compare Jody James Farms, 506 S.W.3d at 599-600 (finding clear and unmistakable evidence), and Rent-A-Ctr. Tex., L.P. v. Bell, No. 09-16-00085-CV, 2016 WL 4499093, at *4 (Tex. App.-Beaumont Aug. 25, 2016, no pet.) (mem. op.) (finding clear and unmistakable evidence "to delegate gateway issues of arbitrability to the arbitrator, including the arbitrability of David's claim even though he is a non-signatory"), with Leshin v. Oliva, No. 04-14-00657-CV, 2015 WL 4554333, at *6 (Tex. App.-San Antonio July 29, 2015, no pet.) (mem. op.) (finding no clear and unmistakable evidence to arbitrate arbitrability in dispute involving a non-signatory), and Elgohary v. Herrera, 405 S.W.3d 785, 791-92 (Tex. App.-Houston [1st Dist.] 2013, no pet.) (same), and Roe v. Ladymon, 318 S.W.3d 502, 517 (Tex. App.-Dallas 2010, no pet.) (same).
[20] United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960) ("[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.").
[21] If an arbitrator must determine whether a valid arbitration agreement exists as to the parties before it, a conundrum arises: "[A]n arbitrator would be put in the position of deciding whether he was authorized to decide the parties' dispute, concluding either that he was not authorized, a logical circularity, or that he was, and raising himself by his own bootstraps." In re Morgan Stanley & Co., Inc., 293 S.W.3d 182, 193 (Tex. 2009) (Hecht, J., dissenting). The presumption favoring a judicial determination, outlined in First Options, resolves this conundrum. By requiring clear and unmistakable evidence before an arbitrator may decide the question of arbitrability, the arbitrator is empowered by something more than "his own bootstraps."
[25] 9 U.S.C. § 10 (explaining that courts may vacate arbitration awards "where the arbitrators exceeded their powers"); Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 682 (2010) ("[A]n arbitrator derives his or her powers from the parties' agreement.").
[26] Rubiola, 334 S.W.3d at 224 (quoting Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347, 355, 358 (5th Cir. 2003)).
[28] See G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 525 (Tex. 2015); In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001).
[31] URI, Inc. v. Kleberg Cty., ___ S.W.3d ___, 2018 WL 1440148, at *7 (Tex. 2018).
[32] ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 156 (2012).
[33] The parties do not argue the FCIC must interpret any policy or procedure, and we agree FCIC review is not implicated by the issues in this case. 7 C.F.R. part 400, subpart X, which the insurance contract cites as the authority for FCIC interpretations, clarifies the applicability of the FCIC's interpretative powers and duties. The parties may obtain "a final agency determination of the interpretation of any provision of the [Federal Crop Insurance] Act or the regulations promulgated thereunder." 7 C.F.R. § 400.765(a). Furthermore, the "FCIC will not interpret any specific factual situation or case, such as actions of any participant under the terms of a policy or any reinsurance agreement." Id. § 400.768(a). This case calls for an interpretation of the insurance contract as it applies to the "specific. . . case" between Jody James and the Agency; accordingly, the FCIC-interpretation clause is inapplicable.
[35] See id.
[36] See Cmty. Health Sys. Prof'l Servs. Corp. v. Hansen, 525 S.W.3d 671, 697 (Tex. 2017) ("To establish an agency relationship, one must show a manifestation of consent by the purported agent to act on the principal's behalf and subject to the principal's control, together with a manifestation of consent by the purported principal authorizing his agent to act."); Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 589 (Tex. 2017) ("Authority to act on the principal's behalf and control are the two essential elements of agency.").
[38] In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 677 (Tex. 2006); see also In re NEXT Fin. Grp., Inc., 271 S.W.3d 263, 267 (Tex. 2008) (ruling that securities brokerage firm could compel arbitration based on arbitration agreement in application for securities industry registration signed by plaintiff employee because the brokerage firm was "a clearly intended third-party beneficiary").
[40] First Bank v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017) (quoting Banker v. Breaux, 128 S.W.2d 23, 24 (Tex. 1939)).
[42] See 7 U.S.C. § 1507(c).
[43] Id.
[44] 223 S.W.3d 304 (Tex. 2007).
[45] Id. at 306.
[46] Id. at 307.
[47] Id. at 306.
[48] Id.
[52] Id. at 131, 134 (citing Kellogg Brown & Root, 166 S.W.3d at 741).
[53] See, e.g., In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 191-95 (Tex. 2007) (declining to recognize "concerted-misconduct estoppel"); see also G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 529 (Tex. 2015) ("[T]he fact that the claims would not have arisen but for the existence of the general contract is not enough to establish equitable estoppel.").
[54] G.T. Leach Builders, 458 S.W.3d at 527 (internal quotation marks omitted).
[55] Id.
[57] Id. at 132.
[59] Id. at 528.
[60] 403 S.W.3d 840 (Tex. 2013).
[61] Id. at 842, 847-48.
[62] Id.
[63] Id. at 842.
[64] Id. at 847.
[65] 458 S.W.3d 502 (Tex. 2015).
[66] Id. at 527-30.
[67] Id. at 509-10.
[68] Id. at 510, 523.
[69] Id.
[70] Id. at 527, 529.
[71] Id. at 528-29.
[72] See id.
[73] Id.
[74] Id. at 528 (emphasis added).
[75] Id. (quoting In re Weekley Homes L.P., 180 S.W.3d 127, 132 (Tex. 2005)).
[77] Manges v. Guerra, 673 S.W.2d 180, 183 (Tex. 1984) (emphasis added).
[78] See TEX. BUS. & COMM. CODE § 17.43 ("The remedies provided in this subchapter are in addition to any other procedures or remedies provided for in any other law.").
[80] Cf. Weekley Homes, 180 S.W.3d at 131-32 ("[W]hether a claim seeks a direct benefit from a contract containing an arbitration clause turns on the substance of the claim, not artful pleading.").
[84] See 235 S.W.3d at 193 (using the theory as an example of how other federal circuit courts treat estoppel).
[85] Hays v. HCA Holdings, Inc., 838 F.3d 605, 612 (5th Cir. 2016); see also Cotton Comm'l USA, Inc. v. Clear Creek Indep. Sch. Dist., 387 S.W.3d 99, 105 (Tex. App.-Houston [14th Dist.] 2012, no pet.).
[87] Id. at 358, 361.
[88] Merrill Lynch Trust, 235 S.W.3d at 192 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)).
[90] Merrill Lynch Trust, 235 S.W.3d at 192 (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967)).
[91] See Sokol Holdings, 542 F.3d at 361 ("In each case, the promise to arbitrate by x, the entity opposing arbitration, was reasonably seen on the basis of the relationships among the parties as extending not only to y,its contractual counterparty, but also to y1, an entity that was, or would predictably become, with x's knowledge and consent, affiliated or associated with y in such a manner as to make it unfair to allow x to avoid its commitment to arbitrate on the ground that y1 was not the very entity with which x had a contract.").
[92] See id. at 359-61 (surveying cases).
506 S.W.3d 595 (2016)
JODY JAMES FARMS, JV, Appellant
No. 07-15-00060-CV.
October 17, 2016.
Rehearing Overruled December 13, 2016.
OPINION OF THE COA BELOW
JODY JAMES FARMS, JV, Appellant
v.
THE ALTMAN GROUP, INC. and Laurie Diaz, Appellees.
Court of Appeals of Texas, Amarillo.
On Appeal from the 110th District Court Floyd County, Texas Trial Court No. 10,422, Honorable William P. Smith, Presiding.
Anna McKim, J. Paul Manning, for The Altman Group, Inc.
J. Paul Manning, for Diaz, Laurie.
Jody D. Jenkins, for Jody James Farms, JV.
Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.
OPINION
James T. Campbell, Justice.
Appellant Jody James Farms, JV ("JJF") appeals the trial court's order confirming 596*596an arbitration award in favor of appellees The Altman Group, Inc. and Laurie Diaz ("Altman and Diaz" or "appellees"). We will affirm the court's order.
Background
In 2010, JJF purchased a Crop Revenue Coverage Insurance Policy from Rain & Hail, L.L.C. JJF purchased the insurance through The Altman Group, an insurance agency. Diaz is a registered insurance agent employed by The Altman Group.
The policy was one issued for the 2010 crop year under the authority of section 508(h) of the Federal Crop Insurance Act,[1] and reinsured by the Federal Crop Insurance Corporation (FCIC).[2] The policy contains, within its "basic provisions," a section 20, entitled "Mediation, Arbitration, Appeal, Reconsideration, and Administrative and Judicial Review." Section 20 is lengthy, and provides for resolution, by various means, of various categories of disputes. Some disputes are narrowly described, such as that given in section 20(d) for reconsideration of determinations made by the insurer or FCIC regarding whether the insured has "used a good farming practice...." Others, like the provision the parties in this case discuss, are described in broad terms.[3] Section 20(a) of the policy reads in part:
If [the insured] and [the insurer] fail to agree on any determination made by [the insurer] except those specified in Section 20(d), the disagreement may be resolved through mediation in accordance with Section 20(g). If resolution cannot be reached through mediation, or [the insured] and [the insurer] do not agree to mediation, the disagreement must be resolved through arbitration in accordance with the rules of the American Arbitration Association....[4]
Subsection 20(a)(1) reads in part:
All disputes involving determinations made by [the insurer], except those specified in section 20(d), are subject to mediation or arbitration.[5]
In November of 2010, JJF incurred a loss on an insured grain sorghum crop. According to JJF, it notified Diaz of the loss in a telephone conversation. The claim was not formally submitted to Rain & Hail until some time later. Rain & Hail eventually 597*597 denied the claim, in part because it was not timely submitted.[6]
After Rain & Hail denied JJF's claim, their disagreement over its determination was arbitrated under the policy. The arbitrator upheld Rain & Hail's denial of the claim.[7]
Thereafter, JJF filed suit against Altman and Diaz asserting they breached a fiduciary duty and violated the Texas Deceptive Trade Practices Act when they failed to submit the claim in a timely fashion. Altman and Diaz sought an order compelling arbitration under the Federal Arbitration Act[8] and, over JJF's objection, the trial court compelled arbitration of its causes of action. The arbitrator found in favor of Altman and Diaz and the trial court entered an order confirming and enforcing that finding, thus ordering that JJF take nothing. From that order, JJF now appeals.
Analysis
An arbitration award under the FAA must be confirmed unless it is vacated, modified or corrected as prescribed in sections 10 and 11 of the FAA. 9 U.S.C. §§ 9-11; Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008); Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 90 (Tex. 2011). One of the grounds on which an award may be vacated is that the arbitrator exceeded the arbitrator's powers. 9 U.S.C. § 10(a)(4). A party moving to vacate an award has the burden of proof. Lummus Global Amazonas, S.A. v. Aguaytia Energy Del Peru, S.R. Ltda., 256 F.Supp.2d 594, 604 (S.D. Tex. 2002); Petrobras Am., Inc. v. Astra Oil Trading NV, No. 01-11-00073-CV, 2012 WL 1068311 at *16, 2012 Tex. App. LEXIS 2458 at *46 (Tex. App.-Houston [1st Dist.] March 29, 2012, no pet.) (mem. op.).
JJF contends on appeal the trial court erred by enforcing the arbitrator's award because the arbitrator exceeded his authority. It argues there was no agreement to arbitrate between JJF and Altman and Diaz; and in any event its claims are outside the scope of the policy's arbitration agreement. See In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011)(orig. proceeding) (party seeking to compel arbitration under FAA must establish there is a valid arbitration clause and claims in dispute fall within that agreement's scope) (citing In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005)).[9]
598*598 In cases in which a party resists arbitration, "it matters whether the party resisting arbitration is a signatory or not." Merrill Lynch Investment Mgrs. v. Optibase, Ltd., 337 F.3d 125, 131 (2nd Cir. 2003); see Roe v. Ladymon, 318 S.W.3d 502, 515 (Tex. App.-Dallas 2010, no pet.); see also DK Joint Venture 1 v. Weyand, 649 F.3d 310, 316-17 (5th Cir. 2011); Elgohary v. Herrera, 405 S.W.3d 785, 791 (Tex. App.-Houston [1st Dist.] 2013, no pet.). Here JJF, the party resisting arbitration, was a party to the policy containing the broad requirement that "[a]ll disputes involving determinations made by [Rain & Hail]," with an exception not relevant here, were subject to arbitration. Altman and Diaz, though not parties to the policy, sought to enforce JJF's agreement to arbitrate.[10]
After the trial court referred JJF's claims against Altman and Diaz to arbitration, JJF filed with the arbitrator a motion to dismiss the arbitration. Among other contentions, the motion argued the claims were not arbitrable because appellees were not parties to the policy, and because JJF's claims against them were entirely separate from its claim against Rain & Hail under the policy and in fact did not even arise until JJF's claim against Rain & Hail was finally resolved against JJF. The arbitrator denied JJF's motion to dismiss by written order.
In the trial court, JJF's response to appellees' petition to confirm the arbitration award also addressed the arbitrator's authority, noting that under American Arbitration Association rules, "it is the arbitrator's responsibility to `rule on his ... jurisdiction, including any objections with respect to the existence ... of the arbitration agreement or to the arbitrability of any claim.'"[11]
"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 (Tex. 2005) (orig. proceeding). We review the issue in the manner set out in First Options. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed. 2d 985 (1995) ("Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute ..., so the question `who has the primary power to decide arbitrability' turns upon what the parties agreed about that matter") (internal citation omitted; italics in original); see In re Weekley Homes, 180 S.W.3d at 130-31(determining whether nonparty must arbitrate, Texas courts "apply state law while endeavoring to keep it as consistent as possible with federal law"). In this instance, the contract is one promulgated by the FCIC pursuant to its statutory authorization. See 7 U.S.C. § 1508(h) (providing 599*599 for review and approval of policies by FCIC).
Federal courts are largely in agreement that incorporation of the AAA rules containing language like that JJF quoted to the trial court constitutes clear and unmistakable evidence that the parties to the arbitration agreement "agreed to arbitrate arbitrability." See Oracle Am., Inc. v. Myriad Group, A.G., 724 F.3d 1069, 1074 (9th Cir. 2013)("virtually every circuit to have considered the issue" has so held); see also Chesapeake Appalachia, LLC v. Scout Petr., LLC, 809 F.3d 746 (3rd Cir. 2016) (quoting "virtually every circuit" language); Petrofac, Inc. v. DynMcDermott Petr. Ops. Co., 687 F.3d 671, 675 (5th Cir. 2012) (agreeing with "most of our sister circuits that the express adoption of [AAA] rules presents clear and unmistakable evidence that the parties agreed to arbitrate arbitrability"); Fallo v. High-Tech Inst., 559 F.3d 874, 878 (8th Cir. 2009); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1372-73 (Fed. Cir. 2006); Terminix Int'l Co., L.P. v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327, 1332-33 (11th Cir. 2005); Contec Corp. v. Remote Solution Co., 398 F.3d 205, 208 (2nd Cir. 2005).
In Haddock v. Quinn, 287 S.W.3d 158, 172 (Tex. App.-Fort Worth 2009, orig. proceeding),[12] the court recognized the "majority view," consistent with the holdings of the federal circuit courts, but found that a "general reference" to the AAA rules in the arbitration agreement did not clearly and unmistakably indicate the parties' intent to submit issues of arbitrability to the arbitrator in that case. See also Burlington Res. Oil & Gas Co. L.P. v. San Juan Basin Royalty Trust, 249 S.W.3d 34, 40 (Tex. App.-Houston [1st Dist.] 2007, pet. denied) (also finding agreement's reference to AAA rules did not provide clear and unmistakable evidence of intention to submit arbitrability issues to arbitrator).
We find Haddock distinguishable from our present case. The arbitrability issue there concerned the waiver of the right to arbitration through inconsistent litigation conduct, 287 S.W.3d at 170, and the court appropriately relied primarily on waiver cases. Id. at 173-74. And the court noted that rule 7(a) of the AAA rules, on which the party urging arbitration relied, did not exist at the time the arbitration agreement was added to the parties' contract. Id. at 175. Similarly, the court in Burlington Resources found the agreement there limited arbitration to specifically identified audit disputes, and did not contain "a clear and unmistakable indication that the parties authorized an arbitrator to decide the arbitrability of claims or amounts not specifically identified" in the agreement, notwithstanding its reference to the AAA rules. 249 S.W.3d at 41.[13]
We will apply the majority view to this federal crop insurance policy,[14] and thus 600*600 find its incorporation of the AAA rules[15] constitutes clear and unmistakable evidence the parties to the policy intended the arbitrator to decide whether JJF's agreement to arbitrate is binding on it as against its effort to litigate its claims against Altman and Diaz in court. Petrofac, 687 F.3d at 675; In re Weekley Homes, 180 S.W.3d at 130-31.[16] In its motion to dismiss the arbitration, JJF contended both that it had no agreement to arbitrate with Altman and Diaz, and that its claims against them were outside the scope of the policy's arbitration agreement. As noted, the arbitrator denied JJF's motion by written order.
JJF's brief on appeal contends the arbitrator exceeded his authority "by entering an award where no agreement to arbitrate existed and the scope of the arbitration agreement did not cover the disputes." JJF gives no other reason for its assertion the arbitrator exceeded his authority. Because we conclude JJF agreed in the policy that an arbitrator would have authority to determine the question of arbitrability, the arbitrator did not exceed his authority by resolving the question contrary to JJF's position. And, under the narrow and deferential review standard applied to arbitration awards, JJF's arguments give us no basis to conclude the arbitrator acted outside his powers in his resolution of the merits of the issues presented to him, whether issues of arbitrability or those relating to appellees' asserted liability to JJF. See Forsythe Int'l, S.A. v. Gibbs Oil Co., 915 F.2d 1017, 1020 (5th Cir. 1990); Petrobras, 2012 WL 1068311 at *11-12, *16, 2012 Tex. App. LEXIS 2458 at *30-31, *46 (standard of review of awards under FAA). The trial court did not err by affirming the arbitration award over JJF's contrary argument.
For the reasons discussed, we overrule JJF's appellate issue and affirm the trial court's judgment.
[1] 7 U.S.C. § 1508(h); see generally Olsen v. United States, 546 F.Supp.2d 1122 (E.D. Wash. 2008), aff'd, 334 Fed.Appx. 834 (9th Cir. 2009); Greenwood v. Rural Cmty. Ins. Servs., No. 2:02CV00047, 2005 U.S. Dist. LEXIS 29331 (E.D. Mo. Nov. 22, 2005); 7 C.F.R. § 457.2 (2004). See Wiley v. Glickman, No. A3-99-32, 1999 WL 33283312, 1999 U.S. Dist. LEXIS 20278 (D. N.D. Sept. 3, 1999) (reciting history of crop revenue coverage policies).
[2] The FCIC is managed by the United States Department of Agriculture's Risk Management Agency. See 7 U.S.C. § 6933 (creating USDA's Office of Risk Management).
[3] The policy's section 20 is much like, though not identical to, the section 20 (for reinsured policies) contained in the policy form set out in 7 C.F.R. § 457.8.
[4] Section 20(g) describes the requirements and procedures for mediation.
[5] Subsection 20(a)(1) continues with language requiring, however, that if a dispute "in any way involves a policy or procedure interpretation, regarding whether a specific policy provision or procedure is applicable to the situation, how it is applicable, or the meaning of any policy provision or procedure," parties must obtain "an interpretation from FCIC in accordance with 7 C.F.R. part 400, subpart X or such other procedure as established by FCIC." The FCIC interpretation procedure was not initiated in this case. JJF's brief cites the provision in its argument that the policy's arbitration provisions are not suited to its claims against Altman and Diaz, but the parties do not otherwise discuss its potential application.
[6] JJF's brief contends Rain & Hail denied JJF's claim because it determined the claim was untimely submitted. The statement is true, but not complete. Rain & Hail's letter explaining its denial of the claim detailed three reasons. It cited JJF's failure to submit a timely notice of loss, but it said also JJF's manner of storing the harvested grain sorghum precluded adjustment of the loss. The letter quoted from FCIC's loss adjustment manual and concluded, "Based on the claim adjustment procedures spelled out above, your grain sorghum claim must be denied because without our measurements of the farm-stored production, you do not have the required verifiable records for the stored grain." The letter also stated Rain & Hail's belief that JJF "intentionally misrepresented" the planting dates of its grain sorghum crop. Citing the policy's "concealment, misrepresentation or fraud" provisions, Rain & Hail declared the policy coverage for grain sorghum for the 2010 crop year to be void.
[7] The arbitration award recited the arbitrator's agreement with Rain & Hail on the claim notice issue and on its contention that JJF's commingling of stored grain precluded a "presentable loss."
[8] See 9 U.S.C. § 1 et seq.
[9] By its over-arching sole appellate issue, JJF questions "whether a non-party to an arbitration agreement can compel arbitration of claims that are not within the scope of the arbitration agreement." JJF's argument encompasses both the existence of an arbitration agreement between these parties and the scope of the policy's arbitration provision.
[10] "A person who has agreed to arbitrate disputes with one party may in some cases be required to arbitrate related disputes with others." Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 304 (Tex. 2006)
[11] JJF's response to appellees' motion to confirm the award also constituted its motion to vacate the award. JJF cited rule R-7 of the AAA's Commercial Arbitration Rules (2010), available at https://www.adr.org. JJF also quoted from rule R-8 of the same rules, stating in its response, "The arbitrator has the power `to determine the existence or validity of a contract of which an arbitration clause forms a part.'" Commercial Arbitration Rules (2010), available at https://www.adr.org. JJF went on to argue the merits of its contention its claims against Altman and Diaz were not arbitrable.
[12] In its opinion, the court addressed a consolidated interlocutory appeal and mandamus proceeding.
[13] The courts in Haddock, 287 S.W.3d at 174-75, and Burlington Resources, 249 S.W.3d at 41, also considered language in each arbitration agreement stating that its terms controlled over any inconsistent provision of the AAA rules as indicating the parties did not clearly and unmistakably agree to allow the arbitrator to determine questions of arbitrability. Similar language is present in section 20(f) of JJF's crop insurance policy, but we do not consider its presence determinative of the parties' intention regarding arbitrability.
[14] Among the policy's basic provisions also is its section 36, entitled "Applicability of State and Local Statutes." That section provides:
If the provisions of this policy conflict with statutes of the State or locality in which this policy is issued, the policy provisions will prevail. State and local laws and regulations in conflict with federal statutes, this policy, and the applicable regulations do not apply to this policy.
[15] See Risk Management Agency Final Agency Determination FAD-126, Nov. 2, 2010, available at http://www.rma.usda.gov/regs/533/2010.html. (2008 crop year; generally addressing application of AAA rules incorporated by reference into policy).
[16] We do not suggest that JJF's act of filing its motion to dismiss with the arbitrator and thus obtaining the arbitrator's ruling was itself an indication of its willingness to arbitrate the question. See First Options v. Kaplan,514 U.S. 938, 946, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).
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