Dallas Court of Appeals says grant of new trial cannot be conditioned on waiver of contractual right to arbitrate claim after case is revived - In re CGI Construction, Inc. (Tex.App.- Dallas 2018)

In re CGI Construction, Inc., No. 05-18-00320-CV (Tex.App. - Dallas, Jun. 18, 2018) (orig. proc.) (granting mandamus relief and directing trial court to issue a written order reforming the order setting aside the default judgment by removing the condition requiring waiver of arbitration rights.) 

Mandamus Granted in No. 05-18-00320-CV

IN RE CGI CONSTRUCTION, INC., Relator.

No. 05-18-00320-CV.

Court of Appeals of Texas, Fifth District, Dallas.

Opinion Filed June 18, 2018.

Elizabeth Patricia Ardanowski, for VV Services LP d/b/a Pivot Building Services, Real party in interest.

Peter T. Martin, David R. Weiner, Brent M. Rosenthal, for CGI Construction, Inc., Relator.

Original Proceeding from the 95th Judicial District Court, Dallas County, Texas, Trial Court Cause No. DC-17-16221-D.

CONDITIONALLY GRANT.

Before Justices Lang-Miers, Fillmore, and Stoddart.

MEMORANDUM OPINION

Opinion by Justice ROBERT M. FILLMORE.

In this original proceeding, we must decide whether a trial court may set aside a default judgment on the condition that the defaulting party waive its right to seek contractually-agreed arbitration. We conclude such a condition is improper as a matter of law and conditionally grant a writ of mandamus to remove the condition from the order setting aside the default judgment.

Background

The underlying proceeding is a contract dispute between a subcontractor and general contractor relating to two construction projects. The trial court signed a no-answer default judgment against relator CGI Construction, Inc. (CGI), CGI timely moved to set aside the default judgment, and the trial court granted the motion to set aside. 

However, the trial court placed two conditions on its order. 

First, it required CGI to pay real party in interest VV Services LP d/b/a Pivot Building Services (Pivot) $4,795 in fees and costs incurred to obtain the default judgment. 

Second, it required CGI to waive its right to seek arbitration in the proceeding. 

CGI does not agree to waive its arbitration rights and seeks a writ directing the trial court to vacate that condition from the order setting aside the default judgment. CGI has paid the fees and costs ordered and does not challenge that condition. At our request, Pivot filed a response to the petition.

Mandamus Standard

To establish a right to mandamus relief, CGI must establish that the trial court clearly abused its discretion and CGI lacks an adequate remedy on appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding). A trial court clearly 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) (orig. proceeding) (per curiam). To determine if a party has an adequate remedy by appeal, the appellate court evaluates whether "any benefits to mandamus review are outweighed by the detriments." In re Prudential Ins. Co. of Am., 148 S.W.3d at 136. Further, an appeal is not an adequate remedy when a party stands to lose a substantial right. Walker v. Packer, 827 S.W.2d 833, 842 (Tex. 1992) (orig. proceeding).

Applicable Law

To have a default judgment set aside, a party must satisfy the three elements of Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939). Under Craddock, a defendant must: (1) demonstrate that its failure to answer before judgment was not intentional, or the result of conscious indifference, but was due to mistake or accident; (2) set up a meritorious defense in its motion to set aside; and (3) file the motion at a time when granting it will occasion no delay or otherwise work an injury to the plaintiff. Id.at 126.

Trial courts are permitted to grant new trials conditioned upon the payment of attorney's fees, expenses for witnesses, travel expenses, and other costs incurred in obtaining the default judgment. Equitable Gen. Ins. Co. of Tex. v. Yates, 684 S.W.2d 669, 671 (Tex. 1984) (citing United Beef Producers, Inc. v. Lookingbill, 532 S.W.2d 958, 959 (Tex. 1976)). Such conditional grants of new trial in default judgment cases are governed by the equitable consideration of not causing any injury to the party obtaining the original judgment. Yates, 684 S.W.2d at 671 (citing Craddock).

Arbitration of disputes is strongly favored under both federal and Texas law. Henry v. Cash Biz, LP, No. 16-0854, 2018 WL 1022838, at *3 (Tex. Feb. 23, 2018); Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898 (Tex. 1995) (per curiam); Cambridge Legacy Grp., Inc. v. Jain, 407 S.W.3d 443, 447 (Tex. App.-Dallas 2013, pet. denied). "Because public policy favors resolving disputes through arbitration, the law imposes a strong presumption against the waiver of contractual arbitration rights." Pilot Travel Centers, LLC v. McCray, 416 S.W.3d 168, 182 (Tex. App.-Dallas 2013, no pet.).

Discussion

CGI argues this Court should grant mandamus relief because the trial court committed a clear abuse of discretion in requiring CGI to waive its contractual right to arbitration as a condition to setting aside a default judgment. Pivot has cited no authority, and we have found none, permitting a court to condition the setting aside of a default judgment on waiver of contractual arbitration rights. In light of the reluctance of courts to impair the sanctity of contracts or vested rights, Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494, 503-04 (Tex. 2015), and the public policy favoring arbitration, Henry, 2018 WL 1022838, at *3, we conclude the trial court may not condition the granting of a new trial and motion to set aside default judgment on waiver of contractual arbitration rights. The trial court, therefore, abused its discretion by conditioning its order on CGI's waiver of its contractual arbitration rights. 

CGI lacks an adequate remedy on appeal because arbitration is a substantial right that will be lost if the order remains in place until after trial. See In re M.W.M., Jr., 523 S.W.3d 203, 206 (Tex. App.-Dallas 2017, orig. proceeding) (appeal is an inadequate remedy when a trial court denies a party its contracted-for arbitration rights); see also Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc., 347 S.W.3d 897, 901 (Tex. App.-Dallas 2011, pet. denied) (same).

Pivot argues that the condition was proper because the trial court determined that CGI had not met the third Craddock element, i.e., that a new trial would cause neither delay nor undue prejudice. Pivot contends that allowing CGI to move to compel arbitration will cause delay, added costs, and injury to Pivot, and those costs will multiply if Pivot must participate in arbitration. The trial judge echoed Pivot's concerns and expressed his own concern regarding the costs of arbitration. The trial judge opined that "the additional delay and cost imposed at this point would just be astronomical. I mean, the Court's own experience in AAA arbitration is — well, it gets plum horrifying sometimes." Pivot maintains that those statements constitute a finding that CGI did not meet the third Craddock element. We disagree. The trial judge made no explicit findings on any of the Craddock elements. Further, the trial judge set aside the default judgment. Had the trial judge decided CGI had not met the third Craddock element, he would have denied the motion to set aside the default judgment.

However, to the extent the trial judge's statement could be construed as a finding that CGI did not meet the third Craddock element, the record shows the finding was an abuse of discretion. 

The purpose of the third element of the Craddock test is to protect a plaintiff against undue delay or injury that would result in a disadvantage when presenting the merits of its case at a new trial, such as the loss of a witness or other critical evidence. Culinaire of Fla., Inc. v. FelCor/CSS Holdings, LP, No. 05-14-00832-CV, 2015 WL 3769580, at *4 (Tex. App.-Dallas June 17, 2015, pet. denied) (mem. op.). "Once a defendant has alleged that granting a new trial will not injure the plaintiff, the burden of going forward with proof of injury shifts to the plaintiff." Id. Here, CGI asserted that granting a new trial would not delay or otherwise injure Pivot because CGI offered to go to arbitration immediately and to reimburse Pivot's reasonable expenses incurred in obtaining the default judgment. The burden was thereby shifted to Pivot to disprove this assertion. See id. In its response to the motion to set aside default judgment, Pivot complained that it has unpaid invoices and further delays will increase those costs. Pivot also argued "on information and belief" that CGI "may be close to filing for bankruptcy" and delay in the underlying proceeding may impact recoverability of unpaid invoices in a bankruptcy. Finally, Pivot complained that arbitration is expensive:

Moreover, arbitration proceedings are far more costly in costs, filing fees, and paying for an arbitrator's time than are the costs already incurred in filing fees, service fees, and costs already incurred by Plaintiff in this Court. This is just MORE damage and injury that will be incurred by Plaintiff through granting of Defendant's motion, that Defendant ignores in its motion.

Pivot did not allege a specific injury, such as the loss of witnesses or valuable evidence, and presented no evidence of an alleged injury. Accordingly, Pivot did not prove harm or injury sufficient to preclude the granting of a new trial. See, e.g., id. (being required to incur legal costs is not sufficient to show undue delay and injury such that a default judgment should not be set aside).

For these reasons, we conclude the trial court abused its discretion by conditioning the order on CGI waiving its contractual arbitration rights and that CGI has no adequate remedy on appeal. Accordingly, we conditionally grant the writ of mandamus. 

We direct the trial court to, within twenty-one (21) days of the date of this opinion, issue a written order reforming the order setting aside the default judgment by removing the condition requiring waiver of arbitration rights. We are confident the trial court will comply, but a writ will issue if the trial court fails to comply.

Trial Court's Reformed Order post-mandamus 

Trial court judge strayed beyond the gateway area - mandamus granted

Houston Court of Appeals holds that trial court went beyond its limited role of determining gateway matters and strayed into arbitrators' territory by taking up issues of manner and procedure relating to the arbitration process.

OPINION BY JANE BLAND

This is an interlocutory appeal and a companion petition for a writ of mandamus that challenge the trial court's order designating an arbitral forum. Donna Miller, both individually and as the executor of her deceased husband's estate, has sued her husband's former employers, Academy, Ltd. and Academy Managing Co., L.L.C. (Academy), contending that Academy breached its agreement, pursuant to its executive compensation plan, to pay the estate $2.4 million if Academy underwent a change of control within a three-year period.

Academy invoked the agreement's arbitration provision and moved in the trial court to compel arbitration, which it did. Then, in a motion to clarify that ruling, Miller asked the trial court to interpret the arbitration provision as not requiring administration by the American Arbitration Association. In its order granting Miller's motion, the trial court declared that "the previously ordered arbitration of this cause shall be conducted privately and without having to file and administer the arbitration with the American Arbitration Association."

 Academy seeks either appellate or mandamus relief from the trial court's order granting Miller's motion to clarify and supplementing its prior order compelling arbitration. We hold that we lack jurisdiction over Academy's appeal, but we exercise our mandamus jurisdiction to correct the trial court's error in interpreting a contract issue that properly belongs to the arbitrators. We therefore conditionally grant the writ.

Background

In 2007, Academy established an executive compensation plan, named "Plan I," for certain employees, including the decedent. Plan I contains the following arbitration provision:

Section 14. Dispute Resolution; Governing Law

(a) The exclusive venue for any action in respect of Section 13 of this Retention Plan shall be the state and Federal courts located in Harris County, Texas.

(b) Except as provided in Section 14(a) above, any controversy or claim arising out of or relating to this Retention Plan Shall be settled by arbitration in Harris County, Texas by three arbitrators appointed by the parties. If the parties cannot agree within 30 days on the appointment of arbitrators, one shall be appointed by the Company and one by the applicable Participant, and the third shall be appointed by the first two arbitrators. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association for resolution of commercial disputes, except with respect to the selection of arbitrators, which shall be as provided in this paragraph. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators have no authority to modify any provision of this Retention Plan other than a benefit specifically provided under or by virtue of the Retention Plan. If a Participant substantially prevails on at least one material issue which is the subject of such arbitration, the Company shall be responsible for all of the fees and expenses of the American Arbitration Association and the arbitrators. Otherwise, each party shall share the fees and expenses of the American Arbitration Association and the arbitrators equally.

Discussion

I. Appellate Jurisdiction

 The parties do not contend that their arbitration agreement is governed exclusively by either the Federal Arbitration Act or the Texas General Arbitration Act, and Academy has invoked both sections 51.016 and 171.098 of the Texas Civil Practice and Remedies Code as the basis for our jurisdiction over its appeal. As a threshold issue, Miller challenges whether appellate jurisdiction exists, contending that Academy's challenge to the trial court's order requiring a non-AAA-administered arbitration does not fall within any of the specific grounds for appeal that either of these sections authorizes.

Section 171.098(a)(1), the appeal provision of the state arbitration statute, requires, as a predicate to our interlocutory appellate jurisdiction, the filing of "an application to compel arbitration made under Section 171.021" and an order denying that application. TEX. CIV. PRAC. & REM. CODE ANN. § 171.098 (West 2012). To prevail under Section 171.021, such a motion must show the existence of an agreement to arbitrate that applies to the parties' dispute and that the opposing party has refused to arbitrate. TEX. CIV. PRAC. & REM. CODE ANN. § 171.021(a) (West 2012). Section 51.016 allows for state court appeals in agreements governed by the FAA. TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West 2012). Pertinent to this case, a party may appeal (1) an order refusing to stay litigation pending arbitration of its subject matter, (2) denial of a petition to order arbitration, and (3) an order denying an application to compel arbitration. Id. (incorporating grounds set forth in 9 U.S.C. § 16).

The appealed order, purporting to clarify the parties' rights under the arbitration agreement, does not fall within any of the types of appealable orders identified under either the state or federal statutes. We therefore lack appellate jurisdiction over Academy's attempted interlocutory appeal.

II. Mandamus Jurisdiction

Academy alternatively seeks mandamus relief, complaining that the trial court abused its discretion in signing the order, because it effectively denies Academy's right to arbitrate the underlying dispute according to the arbitration agreement's terms. A writ of mandamus issues to correct a clear abuse of discretion when no adequate remedy at law exists. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). A trial court has no discretion to apply the law incorrectly. Id. at 840. A party seeking relief from the failure to enforce a valid arbitration agreement, according to its terms, has no adequate remedy at law and is entitled to mandamus relief to correct the trial court's error. See In re Serv. Corp. Int'l, 355 S.W.3d 655, 657 (Tex. 2011) (orig. proceeding) (holding that mandamus relief is available from trial court's appointment of arbitrator in contravention of parties' agreement that they would select arbitrator by mutual agreement or, if unable to agree, seek appointment by AAA); see Aspen Tech., Inv. v. Shasha, 253 S.W.3d 857 (Tex. App.-Houston [14th Dist.] 2008, orig. proceeding) (granting relief from trial court's order compelling arbitration under clause in parties' 2006 agreement instead of under parties' 2008 agreement, which had valid arbitration clause that supplanted earlier one); accord BP Exploration Libya Ltd. v. ExxonMobil Libya Ltd., 689 F.3d 481, 496-97 (5th Cir. 2012) (vacating district court's order requiring parties to proceed to arbitration before five arbitrators, where parties had expressly agreed to arbitrate before three-member panel).

The parties' arbitration agreement provides that they are to select three arbitrators by mutual agreement, or, if they "cannot agree within 30 days on the appointment of arbitrators, one shall be appointed by the Company and one by the applicable Participant, and the third shall be appointed by the first two arbitrators." The parties apparently have no quarrel over this selection method, and they can comply with it before determining whether the arbitration is subject to formal AAA administration.

Because no obstacle to the appointment of the arbitrators exists, we next consider if the question decided by the trial court—whether the arbitration agreement requires the parties to file and administer the arbitration through the American Arbitration Association or merely requires that the arbitrators use the rules set forth by the AAA—is for the courts or the arbitrators to decide. In Green Tree Financial Corp. v. Bazzle, the United States Supreme Court explained the narrow scope of the judicial role in interpreting arbitration agreements:

In certain limited circumstances, courts assume that the parties intended courts, not arbitrators, to decide a particular arbitration-related matter (in the absence of "clea[r] and unmistakabl[e]" evidence to the contrary). AT&T Technologies, Inc. v. Communications Workers, 475 U. S. 643, 649 (1986). These limited instances typically involve matters of a kind that "contracting parties would likely have expected a court" to decide. Howsam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 83 (2002). They include certain gateway matters, such as whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy. See generally Howsam, supra. See also John Wiley & Sons, Inc. v. Livingston, 376 U. S. 543, 546-547 (1964) (whether an arbitration agreement survives a corporate merger); AT&T, supra, at 651-52 (whether a labor-management layoff controversy falls within the scope of an arbitration clause).

539 U.S. 444, 452 (2003); see also Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 82-83, 123 S. Ct. 588, 591 (2002) (holding that applicability of NASD time limit rule is matter presumptively for arbitrator, not for judge). The question of whether the parties agreed to formal AAA administration in this case concerns neither the validity nor the scope of the arbitration agreement. Consequently, the issue belongs to the arbitrators, not to the courts. See Howsam, 537 U.S. at 83; In re D. Wilson Constr. Co., 196 S.W.3d 774, 780-81 (Tex. 2006) (orig. proceeding); see also Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc., 347 S.W.3d 897, 902 (Tex. App.-Dallas 2011, pet. denied) (holding that challenge to Civilian Board of Contract Appeals' [CBCA] jurisdiction as arbitrator of dispute, as well as waiver and election-of-remedies complaints, "are matters of procedure that are for the arbitrator and not for the court," and conditionally granting writ of mandamus directing trial court to vacate portion of order requiring arbitration to proceed under AAA instead of CBCA); Am. Realty Trust, Inc. v. JDN Real Estate—McKinney, L.P., 74 S.W.3d 527, 531 (Tex. App.-Dallas 2002, pet. denied) (citing John Wiley & Sons v. Livingston, 376 U.S. 543, 557, 84 S. Ct. 909, 918 (1964) ("[I]f a court determines the parties have an obligation to submit the subject matter of a dispute to arbitration, `procedural' questions concerning the dispute . . . are left to the arbitrator.")). We hold that the trial court erred in straying past the gateway and into the arbitrators' presumptive arena by addressing whether the parties agreed to formal AAA administration and ordering that they did not.

Conclusion

We dismiss Academy's appeal for lack of jurisdiction. We conditionally grant mandamus relief to Academy and direct the trial court to vacate its March 5, 2012 order supplementing its earlier order compelling arbitration. We are confident the trial court will comply, and the writ will issue only if it fails to do so.

SOURCE: HOUSTON COURT OF APPEALS -  Nos. 01-12-00293-CV & 01-12-00356-CV – 2/21/2013

Americo Life, Inc. v. Robert L. Myer, No. 10-0734 (Tex. 2011)

Americo Life, Inc. v. Myer, No. 10-0734 (Tex. Dec. 16, 2011)

PER CURIAM OPINION OF THE TEXAS SUPREME COURT
   
This case concerns an arbitration provision that allows each party to appoint one arbitrator to a panel, subject to certain requirements. At issue is whether Americo Life, Inc. waived its objection to the removal of the arbitrator it selected. The underlying dispute concerned the financing mechanism for Americo’s purchase of several insurance companies from Robert Myer. FN1 Pursuant to the financing agreement, Americo and Myer submitted their dispute to arbitration under American Arbitration Association (AAA) rules. The arbitrators found in favor of Myer, and Americo filed a

FN 1: Petitioners Americo Life, Inc., Americo Financial Life and Annuity Insurance Company, Great Southern Life Insurance Company, the Ohio State Life Insurance Company, and National Farmers’ Union Life Insurance Company are referred to as Americo. Respondents Robert L. Myer and Strider Marketing Group, Inc. are referred to as Myer.

motion to vacate the award. The trial court granted the motion. It held that Americo was entitled to any arbitrator that met the requirements set forth in the financing agreement and that the arbitrator removed by the AAA met those requirements. The court of appeals reversed, holding that Americo had waived these arguments by not presenting them to the AAA. Because the record demonstrates otherwise, we reverse the court of appeals’ judgment and remand the case to the court of appeals for further proceedings.

The parties entered into a financing agreement for Americo’s purchase of several insurance
companies from Myer. This agreement provides that any disputes “shall be referred to three
arbitrators.” It further provides that “Americo shall appoint one arbitrator and Myer shall appoint
one arbitrator and such two arbitrators to select the third.” The financing agreement provides that
each arbitrator “shall be a knowledgeable, independent businessperson or professional.”
However, the contract also provides that, subject to exceptions not at issue here, the
proceedings “shall be conducted in accordance with the commercial arbitration rules of the
American Arbitration Association.” At the time the parties entered into the financing agreement,
the AAA rules provided that its “rules and any amendment of them shall apply in the form in effect
at the time the administrative filing requirements are met for a demand for arbitration or submission
agreement received by the AAA.” At the time of the demand for arbitration between the parties, the
AAA rules provided that “[a]ny arbitrator shall be impartial and independent . . . and shall be subject
to disqualification for (i) partiality or lack of independence . . . .”

Here, Myer argued to the AAA that Americo’s selected arbitrator, Ernest Figari, Jr., was not
impartial and therefore should be removed. Americo responded that Figari was, in fact, impartial.

-- Page 2 end --

The parties dispute whether Americo additionally responded that its selected arbitrator need only
meet the “independent” and “knowledgeable” requirements from the financing agreement.
The AAA agreed with Myer and removed Figari from the arbitration panel. Americo
asserted a standing objection to the continuation of the arbitration without Figari. Americo also
stated that it would proceed to arbitrate without waiving its objection and without waiver of the right
to appeal any decision based on the removal of Figari. Americo subsequently selected another
arbitrator.

The arbitration panel rendered a unanimous decision awarding Myer declaratory relief,
breach of contract damages of $9.29 million, $15.8 million in damages for wrongfully withheld
payments under the financing agreement, and $1.29 million in attorney’s fees and costs. Myer filed
a petition to confirm the award in the district court and Americo filed a motion to vacate or modify
the award. Americo argued that, inter alia, the award was not made by arbitrators selected under
the financing agreement’s requirements and was therefore void.2 The court granted Americo’s
motion to vacate and found that the AAA failed to follow the arbitration selection method contained
in the financing agreement, that the AAA had no authority to strike Figari, and that the award was
void because it was issued by an improperly appointed panel.

The court of appeals reversed. It held that:

After arbitration, appellees argued to the trial court the award should be
vacated under section five of the Federal Arbitration Act because the award was not
made by arbitrators who were appointed under the method provided in the

 
FN 2: Americo’s motion to vacate or modify the award was pursuant to section five of the Federal Arbitration Act (FAA), which provides: “If in the agreement provision be made for a method of naming or appointing an arbitrator or arbitrators or an umpire, such method shall be followed . . . .” 9 U.S.C. § 5.
    
-- Page 3 end --
 

[financing] agreement. In their brief in support of their motion to vacate the
arbitration award, appellees further explained their argument to mean the [financing]
agreement did not require the party-appointed arbitrators to be “independent and
impartial. Nor does the Agreement allow the AAA to disqualify a party’s appointed
arbitrator for partiality, bias, or any other basis.” They continued to argue that
because their right to select an arbitrator was governed by the standards in the
[financing] agreement, the impartiality standard set out in the AAA rules was
inapplicable. Essentially, appellees argued to the trial court they had a right to a
non-neutral arbitrator. This, however, is not the argument they raised to the AAA
in response to appellants’ objection to Figari.

315 S.W.3d 72, 75 (Tex. App.—Dallas 2009, pet. filed) (emphasis in original) (footnote omitted).

We have held that “appellate courts should reach the merits of an appeal whenever
reasonably possible.” Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008) (citing Verburgt v. Dorner,
959 S.W.2d 615, 616 (Tex. 1997)). Here, the record demonstrates that Americo argued to both the
AAA and the district court that it was entitled to any arbitrator who met the requirements set forth
in the financing agreement, regardless of the AAA’s requirements.

In response to Myer’s objection to Figari, Americo argued to the AAA that Figari was
neutral. However, Americo also asserted:

Finally, an argument can be made that the AAA rules do not govern the
selection of and qualifications for arbitrators in this proceeding. . . . The Agreement
states that “[e]ach arbitrator shall be a knowledgeable, independent businessperson
or professional.” . . .

As long as Mr. Figari is “a knowledgeable, independent businessperson or
professional,” he is an acceptable designee for the arbitration panel hearing this
matter, irrespective of the AAA rules. . . . Here, the parties’ arbitration agreement
plainly provides the method for selecting arbitrators for the three-person panel and
establishes the qualifications for serving on the panel. . . . Mr. Figari possesses the
requisite qualifications and the fact that he has served previously and is now serving
as a member of a panel considering a dispute between some of these same parties
does not change that fact. There has been—and can be—no allegation that Mr.
Figari has been anything but knowledgeable and independent in his performance on
the panels in Myer I and Myer II.

-- Page 4 end --

Furthermore, Americo wrote the AAA again after the AAA removed Figari but before the
arbitration, stating:

[T]he AAA Commercial Arbitration Rules do not govern the selection of and
qualifications for arbitrators to hear disputes between Americo and Myer. . . . The
Agreement states that “[e]ach arbitrator shall be a knowledgeable, independent
businessperson or professional.” . . .

Mr. Figari is “a knowledgeable, independent businessperson or professional”.
Therefore, he is a proper designee for the Panel to hear this matter.

In addition, Americo’s letter to the AAA cited Brook v. Peak International, Ltd., which discusses
the vacation of arbitration awards by arbitrators not appointed under the method provided by a
contract and the preservation of such a complaint by presenting it during arbitration. 294 F.3d 668,
673 (5th Cir. 2002). Americo reiterated this argument in the district court, stating that “the Award
must be vacated under FAA § 5 and applicable law, because the Award was not made by arbitrators
who were appointed under the method provided in the Agreement.”

The court of appeals is correct that Americo did not expressly state that arbitrators were not
required to be neutral. 315 S.W.3d at 75–76. However, Americo argued that the AAA requirements
did not apply, that the only applicable requirements were that they be knowledgeable and
independent businesspersons or professionals, and that Figari met these qualifications. Americo
properly preserved this argument. Therefore, without hearing oral argument, TEX. R.APP. P. 59.1,
we reverse the court of appeals’ judgment and remand the case to the court of appeals for further
proceedings consistent with this opinion.

OPINION DELIVERED: December 16, 2011

-- Page 5 end --

CASE DETAILS:
AMERICO LIFE, INC., AMERICO FINANCIAL LIFE AND ANNUITY INSURANCE COMPANY, GREAT SOUTHERN LIFE INSURANCE COMPANY, THE OHIO STATE LIFE INSURANCE COMPANY, AND NATIONAL FARMERS' UNION LIFE INSURANCE COMPANY v. ROBERT L. MYER AND STRIDER MARKETING GROUP, INC.; from Dallas County; 5th district (05-08-01053-CV, 315 SW3d 72, 10-22-09)

Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing oral argument, the Court reverses the court of appeals' judgment and remands the case to that court.

Per Curiam Opinion

Click below to read the Dallas Court of Appeal's Opinion: 315 S.W.3d 72 (2009)

Mandamus granted to enforce arbitration under contracted-for rules, not before the AAA as the trial court had ordered

Dallas Court of Appeals dismisses interlocutory appeal as unauthorized by statute, but grants mandamus relief to enforce arbitration under to the rules and procedure specified in the arbitration agreement, holding that an appeal from a final award/judgment would not provide an adequate remedy under the circumstances. Trial court found to have abused discretion in ordering arbitration under AAA rules contrary to the provisions of the underlying arbitration agreement.

Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc.

No. 05-10-01542-CV (Tex.App. - Dallas, Aug. 15, 2011)(interlocutory appeal of order compelling arbitration dismissed for lack of jurisdiction)

In re Austin Commercial Contractors, L.P .,

No. 05-10-01542-CV (Tex.App. - Dallas, Aug. 15, 2011)(mandamus granted)
 

POINT OF LAW

Parties may specify by contract the rules under which their arbitration will be conducted, and enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA. Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). And there is no adequate remedy by appeal when a party is erroneously denied its contracted-for arbitration rights under the FAA. In re D. Wilson Const. Co., 196 S.W.3d 774, 780-81 (Tex. 2006).

THE DECISION

We dismiss ACCLP's interlocutory appeal for lack of jurisdiction. We conditionally grant the petition for mandamus insofar as it complains of the portion of the October 29, 2010 order that orders the arbitration to proceed before the AAA. We direct the trial court (1) to vacate that portion of its order, and (2) to amend the order to require the arbitration to proceed as directed by the Prime Contract, under the rules of the CBCA. We are confident the district court will comply without delay. The writ will issue only if it does not.

FULL TEXT OF OPINION BY JUSTICE FITZGERALD

In this consolidated interlocutory appeal and mandamus proceeding, Austin Commercial Contractors, L.P. (“ACCLP”) challenges the trial court's October 29, 2010 Order Regarding Plaintiff's Motion to Compel Arbitration, which both compels arbitration and orders the arbitration to proceed before the American Arbitration Association (the “AAA”). We dismiss the interlocutory appeal for lack of jurisdiction, but we conditionally grant the petition for mandamus.

Background

The Regents of the University of California entered into an agreement with ACCLP (the “Prime Contract”) for the latter to act as general contractor on a project involving construction of a new building at the Los Alamos National Laboratories in New Mexico.   See Footnote 1  As general contractor, ACCLP entered into a Consultant Agreement with Carter & Burgess to provide all architectural and engineering services required by the project. ACCLP sued Carter & Burgess alleging breach of contract. Carter & Burgess answered subject to a motion to dismiss. It also served discovery and asserted a counterclaim for breach of contract.

Approximately two and one half months after filing suit, ACCLP filed a motion to compel arbitration pursuant to the Consultant Agreement. It relied on a clause in that agreement which states:

19.1 Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be subject to the dispute resolution procedures, if any, set out in the Prime Contract between [ACCLP] and [LANS]. Should the Prime Contract contain no specific requirement for the resolution of disputes, any such controversy or claim shall be resolved by arbitration pursuant to the Construction Industry Rules of the American Arbitration Association then prevailing, and judgment upon the award by the Arbitrator(s) shall be entered in any Court having jurisdiction thereof.

The Prime Contract does contain specific requirements for dispute resolution: submission of the dispute to mediation and then-if not resolved-to binding arbitration before the Civilian Board of Contract Appeals (the “CBCA”).   See Footnote 2  ACCLP's motion sought two specific rulings: the parties should be compelled to arbitration, and the arbitration should proceed before the CBCA.

Carter & Burgess opposed the motion. It contended that the CBCA lacked jurisdiction over a dispute between ACCLP and Carter & Burgess, that there was no agreement requiring it to arbitrate before the CBCA, and that the CBCA could not assume jurisdiction merely through agreement of the parties. Carter & Burgess also contended that ACCLP had waived its right to elect arbitration by filing suit. And, alternatively, Carter & Burgess argued that if the agreements do require arbitration before the CBCA, then ACCLP had failed to satisfy conditions precedent to arbitration.

The trial court's October 29, 2010 order granted the motion in part and denied it in part.   See Footnote 3  It ordered the matter to proceed to arbitration as ACCLP had requested; neither party challenges that ruling in this Court. But the order also ordered the arbitration to proceed before the AAA. ACCLP appealed and sought mandamus relief as to this ruling. We consolidated the two proceedings for resolution in this Court.

Interlocutory Appeal

In 2009, the Texas Legislature added a provision to the civil practice and remedies code addressing interlocutory appeals arising under the Federal Arbitration Act:

In a matter subject to the Federal Arbitration Act (9 U.S.C. Section 1 et seq.), a person may take an appeal or writ of error to the court of appeals from the judgment or interlocutory order of a district court, county court at law, or county court under the same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16.

Tex. Civ. Prac. & Rem. Code Ann. § 51.016 (West Supp. 2011). The parties agree any arbitration ordered will be governed by the Federal Arbitration Act. Thus, an interlocutory appeal in this case will be permitted only if it would be permitted under the same circumstances under section 16. See CMH Homes v. Perez, 340 S.W.3d 444, 449 (Tex. 2011). Section 16, in turn, allows appeals from:

(1) an order--

        (A) refusing a stay of any action under section 3 of this title,

        (B) denying a petition under section 4 of this title to order arbitration to proceed,

        (C) denying an application under section 206 of this title to compel arbitration,

        (D) confirming or denying confirmation of an award or partial award, or

        (E) modifying, correcting, or vacating an award;

(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or

(3) a final decision with respect to an arbitration that is subject to this title.

9 U.S.C. § 16(a) (West 2009). Section 16 goes on to identify interlocutory orders that will not support an immediate appeal:

        (1) granting a stay of any action under section 3 of this title;

        (2) directing arbitration to proceed under section 4 of this title;

        (3) compelling arbitration under section 206 of this title; or

        (4) refusing to enjoin an arbitration that is subject to this title.

Id. § 16(b).

        It is clear the portion of the trial court's order compelling arbitration would not be appealable under federal law, so it is not appealable in this case. See id § 16(b)(3). The portion of the court's order directing arbitration to proceed before the AAA actually speaks to the rules under which the arbitration shall take place. (The Prime Contract directs the Board to arbitrate all claims “in accordance with the Rules of the Board; the Consultant Agreement directs resolution, when appropriate, “by arbitration pursuant to the Construction Industry Rules of the [AAA].”) We find no provision in section 16 permitting appeal of such an order. Accordingly, we conclude this portion of the trial court's order is not appealable either. See CMH Homes, 340 S.W.3d at 451. Our conclusion comports with the rule that section 16 “generally permits immediate appeal of orders hostile to arbitration, whether the orders are final or interlocutory, but bars appeal of interlocutory orders favorable to arbitration.” See Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 86 (2000); In re Gulf Exploration, LLC, 289 S.W.3d 836, 839 (Tex. 2009).         The trial court's order is not appealable under section 16. Accordingly we dismiss ACCLP's interlocutory appeal for lack of jurisdiction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.016.   See Footnote 4

Petition for Mandamus

To show itself entitled to mandamus, a relator must show that (1) the trial court clearly abused its discretion, and (2) the relator has no adequate remedy by appeal. Gulf Exploration, 289 S.W.3d at 842. Mandamus is generally unavailable if the order at issue compels arbitration: even if the relator can meet the first prong of this test by showing an abuse of discretion, it can rarely meet the second prong. Id. Indeed, “[i]f a trial court compels arbitration when the parties have not agreed to it, that error can unquestionably be reviewed by [final] appeal.” Id. Although parties may expend time and money if they are ordered to arbitration improperly, delay and expense-standing alone-will not render the final appeal inadequate. Id. That rule is especially true when the substance of the arbitration is a contract claim, because the party that prevails can recover its fees and expenses. Id.

The case before us involves only contract claims, and it does not implicate any conflicting legislative mandates. See id. (identifying rare exception when mandamus may allow appellate court to give direction to law that would otherwise prove elusive in appeal from final judgment). Thus, the parties have an adequate remedy by appeal with which to make their challenges, if any, to the portion of the trial court's order compelling arbitration.

ACCLP contends, however, that it has no adequate remedy by appeal for the second portion of the trial court's order, which requires the arbitration to proceed under AAA rules rather than the rules of CBCA. We must agree. Parties may specify by contract the rules under which their arbitration will be conducted, and enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA. Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). And there is no adequate remedy by appeal when a party is erroneously denied its contracted-for arbitration rights under the FAA. In re D. Wilson Const. Co., 196 S.W.3d 774, 780-81 (Tex. 2006).

Recently, in CMH Homes v. Perez, 340 S.W.3d 444 (Tex. 2011), our supreme court addressed a case in which the parties had contracted to name their arbitrator but were unable to reach agreement on the issue. The trial court intervened and appointed an arbitrator. CMH Homes filed an interlocutory appeal challenging the appointment and requesting, in the alternative, that its appeal be treated as a petition for mandamus. Id. at 446. The court of appeals concluded it lacked jurisdiction to hear the interlocutory appeal, and the supreme court affirmed that ruling. Id. at 452. However, the supreme court concluded the court of appeals erroneously declined to treat the appeal as a mandamus proceeding. Id. at 454. In reaching that conclusion, the supreme court cited In re Louisiana Pacific Corp., 972 S.W.2d 63 (Tex. 1998), in which the court had concluded a trial court's order appointing an arbitrator could be reviewed by mandamus. 340 S.W.3d at 452. The court stated that its holding in Louisiana Pacific was not altered by the Legislature's adoption of section 51.016 because “[t]here is still no remedy by appeal because the FAA does not provide for the review of this type of order in state court.” Id. The court stressed there is no adequate remedy by appeal when a party is denied its contractual arbitration rights. Id. (citing D. Wilson, 196 S.W.3d at 780). We conclude we are bound by this principle in the case before us: if the trial court denied AACLP its contractual arbitration rights by ordering arbitration before the AAA, then ACCLP will lack an adequate remedy by appeal.

We further conclude the trial court clearly abused its discretion in compelling arbitration to proceed under the rules of the AAA. The Consultant Agreement unambiguously provides that any claim arising out of or relating to the breach of that agreement “shall be subject to the dispute resolution procedures, if any, set out in the Prime Contract.” And, as we discussed above, the Prime Contract does set out specific dispute resolution procedures, which are centered on binding arbitration under the rules of the CBCA. Thus, the back-up procedure of arbitration before the AAA should not have been implicated unless Carter & Burgess identified a reason the Prime Contract's dispute resolution procedure was, in essence, non-existent. But Carter & Burgess's objections to the jurisdiction of the CBCA and its contention that ACCLP has failed to satisfy conditions precedent to arbitration are matters of procedure that are for the arbitrator and not for the court. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002) (questions of procedural arbitrability are matters for arbitrator to decide); see also Am. Realty Trust, Inc. v. JDN Real Estate- McKinney, L.P., 74 S.W.3d 527, 531 (Tex. App.-Dallas 2002, pet. denied) (question whether any contractually-based prerequisites to arbitration have been satisfied is for arbitrator). Nor are we persuaded by Carter & Burgess's argument that by initiating arbitration before the AAA-as it was ordered to do-ACCLP has waived its right to complain of arbitration in that forum.

Conclusion

We dismiss ACCLP's interlocutory appeal for lack of jurisdiction. We conditionally grant the petition for mandamus insofar as it complains of the portion of the October 29, 2010 order that orders the arbitration to proceed before the AAA. We direct the trial court (1) to vacate that portion of its order, and (2) to amend the order to require the arbitration to proceed as directed by the Prime Contract, under the rules of the CBCA. We are confident the district court will comply without delay. The writ will issue only if it does not.                                           

                                                        KERRY P. FITZGERALD

                                                        JUSTICE

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For footnotes: Click link below:
 

Mandatory Attorney-Client Arbitration: Enforceability of arbitration clauses in agreements for legal services

Should courts enforce arbitration clauses included in contracts for legal services? If so as a general proposition, under what circumstances should former clients be able to avoid an arbitration clause contained in retainer agreement, letter agreement, or other type of contract for legal services? In a case decided today, a panel of the First Court of Appeals in Houston rejected public policy and unconscionability arguments and granted mandamus relief to enforce arbitration against a client whom the defendant attorney had represented in a personal injury case. One justice on the three-member panel, however, dissented and wrote separately to express concern about the propriety of forcing clients to arbitrate malpractice claims against their former counsel when they were not aware of the consequences and appraised of the implications due to the attorney's failure to expressly disclose and explain the arbitration requirement. DISSENTING OPINION BY JUSTICE CHARLES SEYMORE In consideration of the unique relationship between attorney and client, I write this dissenting opinion to express my concern about mandatory arbitration provisions in attorney-client agreements. I have no disagreement with the majority’s analysis and disposition of all issues with the exception of Shelly Letney’s claim that the method or means of inducing her signature on the agreement renders enforcement procedurally unconscionable. I adopt former Fourth Court of Appeals Chief Justice Phil Hardberger’s concern that special public-policy considerations are implicated when an attorney imposes an arbitration provision on his or her client. See Henry v. Gonzalez, 18 S.W.3d 684, 692 (Tex. App.—San Antonio 2000, pet. dism’d) (Hardberger, C.J., dissenting). Accordingly, I disagree with the majority’s decision to “decline to impose a requirement that attorneys must, in all cases, fully inform prospective clients regarding implications of an arbitration clause in an attorney-client contract.” Whatever public policy may be served by enforcing arbitration agreements is more than offset by the public policy of insuring that consumers of legal services have protection from attorneys who might take advantage of their clients. Shelly Letney, a personal-injury claimant, is representative of the average consumer of legal services. She should be afforded the expectation that an attorney is obligated to fully reveal and explain potential conflicts of interests at the inception of the relationship. Moreover, the attorney should offer the prospective client an opportunity to seek advice from another source before signing an attorney-client agreement that contains language potentially detrimental to the client’s interests if the client later finds it appropriate or necessary to pursue the attorney for malpractice or other misconduct. Under the Texas Disciplinary Rules of Professional Conduct, “A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Tex. Disciplinary R. Prof’l Conduct 1.03(b), reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (Vernon 2005) (Tex. State Bar R. art. X, §9). The Supreme Court of Texas Professional Ethics Committee agrees that lawyers should be allowed to insert arbitration clauses in their client contracts as long as “(1) the client is aware of the significant advantages and disadvantages of arbitration and has sufficient information to permit the client to make an informed decision about whether to agree to the arbitration provision, and (2) the arbitration provision does not limit the lawyer’s liability for malpractice.” See Tex. Comm. On Prof’l Ethics, Op. 586 (2008). Notwithstanding the application of settled contract law and public policy favoring alternate dispute resolution, many respected jurists and lawyers oppose arbitration because it is not cost effective, disgorges unwary consumers of the right to a jury trial, and eliminates appellate review for errors of law. I remain a proponent of arbitration. However, when the legislature and rule-making authority in the legal profession fail to protect consumers of legal services, I believe the courts have an obligation to act because public perception of the legal profession’s ability to self-police is not favorable. Based on Shelly Letney’s averment that she was unaware of the arbitration agreement and her sworn statement that petitioner did not fully explain the terms, I would hold the trial court did not abuse its discretion by denying the petitioner’s motion to compel arbitration. Accordingly, I respectfully dissent. LINK TO MAJORITY OPINION: Pham v. Letney (Tex.App.- Houston [1st Dist.] March 4, 2010)(Hedges) (arbitration agreement in legal services contract between lawyer and client enforced by mandamus, interlocutory appeal of order denying motion to compel arbitration dismissed, FAA applied, TAA would be preempted) INTERLOCUTORY APPEAL DISMISSED: Opinion by Chief Justice Hedges Before Chief Justice Hedges, Justices Seymore and Justice Sullivan 14-08-01153-CV Steven Tuan Pham v. Shelly Letney Appeal from 215th District Court of Harris County Trial Court Judge: Levi James Benton DISSENTING OPINION by Justice Seymore in Pham v. Letney (In consideration of the unique relationship between attorney and client, Justice Seymore dissents and writes separately to express his concern about mandatory arbitration clauses in attorney-client retainer agreements / contracts for legal services) THE PETITION FOR MANDAMUS WAS DOCKETED SEPARATELY [links to pdf version of opinions] In re Tuam Pham (pdf) (Tex.App.- Houston [1st Dist.] March 4, 2010)(Hedges) MOTION OR WRIT GRANTED: Opinion by Chief Justice Adele Hedges Before Chief Justice Hedges, Justices Seymore and Sullivan 14-09-00387-CV In Re Steven Tuam Pham Appeal from 215th District Court of Harris County Dissenting Opinion by Justice Seymore In re Tuam Pham (pdf) RELATED HOUSTON COURT OF APPEALS CASE: Labidi v. Sydow, 287 S.W.3d 922 (Tex. App.—Houston [14th Dist.] 2009, orig. proceeding). Labidi, MD v. Sydow (pdf) (Tex.App.- Houston [14th Dist.] Jun. 25, 2009)(Guzman) (consolidation of an interlocutory appeal and a petition for writ of mandamus, challenge to district court's order compelling arbitration and staying proceedings in the trial court fails)(unconscionabiltiy argument rejected re arbitration of attorney-client disputes)(public policy arguments overruled) DISMISSED: Opinion by Justice Eva Guzman Panel members: Justices Guzman, Mirabal and Boyce 14-08-00527-CV Abdel Hakim Labidi, M.D. Ph.D. v. Michael D. Sydow, Et Al Appeal from 61st District Court of Harris County RELATED TERMS: attorney-client relationship, fiduciary duty, confidentiality, arbitration of attorney-client disputes, legal services contract with arbitration clause provision, professional legal malpractice

EMPLOYMENT ARBITRATION: Hatton v. D.R. Horton, Inc. Sequel: Appeal After Arbitration Based on EAF Was Enforced by Mandamus Fails

APPELLATE OPINION AFTER MANDAMUS OFFERS NOTHING NEW In a short but signed opinion by its newest member - Justice Tracy Christopher - Houston's Fourteenth Court of Appeals declines to revisit - in an appeal from final take-nothing judgment - questions of enforceability of an arbitration requirement imposed by an employer that were previously the subject of a mandamus proceeding favorably decided for the employer. (A prior mandamus does not preclude a subsequent appeal). Hatton v. D.R. Horton, Inc. (Tex.App.- Houston [14th Dist.] Feb. 11, 2010) (arbitration agreement held enforceable in appeal from final judgment, with reference to prior grant of mandamus relief on same facts and legal arguments) (arbitration in the employment context, consent to arbitration by signing of AEF - employee acknowledgment form) MEMORANDUM OPINION The enforceability of the arbitration clause contained in D.R. Horton, Inc.’s employee handbook acknowledgment form is again before this Court. As we have already twice determined that the arbitration clause at issue here is valid and enforceable,[1] we issue this memorandum opinion and affirm the trial court’s judgment. Appellant Brenda Hatton began working for D.R. Horton in June of 1997 and signed its “Employee Acknowledgment Form” (“EAF”) in 2001. The EAF contained, among other matters, the arbitration clause at issue here. Hatton sued D.R. Horton in 2005 for discrimination and breach of contract. D.R. Horton filed a motion to dismiss and compel arbitration, and the trial court denied the motion. In November 2006, a panel of this court conditionally granted D.R. Horton’s petition for writ of mandamus in this lawsuit.[2] The trial court subsequently vacated its order denying D.R. Horton’s motion to dismiss and compel arbitration. D.R. Horton and Hatton submitted to court-ordered binding arbitration. Following arbitration, the trial court entered a final take-nothing judgment in favor of D.R. Horton on December 11, 2008. Hatton timely filed this appeal from the trial court’s final judgment. As she did in her response to D.R. Horton’s petition for writ of mandamus, Hatton argues the arbitration provision contained in the EAF is unenforceable because it is (a) illusory, (b) indefinite, and (c) unconscionable. These are the same legal arguments made and addressed in both our prior opinion in this case and in a similar case, D.R. Horton, Inc. v. Brooks.[3] In these opinions, we determined the arbitration clause at issue is valid and enforceable. Because the legal arguments in this case are the same as those addressed in our prior opinions, these opinions are controlling and we cite the parties to them. We therefore overrule Hatton’s three issues and affirm the trial court’s judgment. /s/ Tracy Christopher, Justice Panel consists of Chief Justice Hedges and Justices Anderson and Christopher. [1] D.R. Horton, Inc. v. Brooks, 207 S.W.3d 862 (Tex. App.—Houston [14th Dist.] 2006, orig. proceeding); D.R. Horton, Inc. v. Hatton, Nos. 14-06-00262-CV, 14-06-00284-CV, 2006 WL 3193722, at *1 (Tex. App.—Houston [14th Dist.] Nov. 7, 2006, orig. proceeding) (mem. op.). [2] Hatton, 2006 WL 3193722, at *1. [3] 207 S.W.3d at 867–870. The arbitration clause and other provisions contained in the EAF at issue here are set forth in Brooks; except for minor grammatical differences, the EAF signed by Hatton is the same as that set forth in that opinion. TRIAL COURT'S JUDGMENT AFFIRMED: Opinion by Justice Christopher Panel members: Chief Justice Hedges and Justices Anderson and Christopher. 14-09-00054-CV Brenda Hatton v. D.R. Horton, Inc. [link to pdf version] Appeal from 152nd District Court of Harris County Trial Court Judge: Kenneth Price Wise ORIGINAL MANDAMUS OPINION BY JUSTICE EVA GUZMAN

The enforceability of the arbitration clause contained in D.R. Horton, Inc.'s employee handbook acknowledgment form is again before this Court. In Cause No. 14-06-00262-CV, an interlocutory appeal, and Cause No. 14-06-00284-CV,[1] a petition for writ of mandamus, D.R. Horton seeks relief from the trial court's order denying its motion to compel arbitration pursuant to the arbitration clause.

Brenda Hatton, the appellee and real party in interest in the subject cases, began working for D.R. Horton in June of 1997 and signed its “Employee Acknowledgment Form" (“EAF") in 2001, which contained, among other matters, the arbitration clause at issue here. In 2005, Hatton filed suit against D.R. Horton, asserting a discrimination claim under the Texas Labor Code and a breach of contract claim. D.R. Horton filed a motion to compel arbitration, and the trial court denied the motion.

In the subject cases, D.R. Horton argues that the trial court abused its discretion by denying arbitration because the arbitration clause is valid and covers the parties' dispute. Hatton argues the arbitration provision contained in the EAF is unenforceable because it is illusory, unconscionable, and its terms are too indefinite to form a binding contract. These are the same arguments made and addressed in our opinion issued on November 2, 2006, in D.R. Horton, Inc. v. Brooks, Cause No. 14-06-00099-CV, and In re D.R. Horton, Inc., Cause No. 14-06-00152-CV.[2] In that opinion, we determined the arbitration clause was valid.

We conditionally granted D.R. Horton's petition for a writ of mandamus and dismissed its interlocutory appeal as moot. Because the facts and legal arguments in the subject consolidated cases are the same as those addressed in our November 2, 2006 opinion, that opinion is controlling and we cite the parties to it.

For the reasons stated in our November 2, 2006 opinion, we conclude that the trial court abused its discretion in failing to order Hatton to arbitrate her claims against D.R. Horton pursuant to the arbitration agreement between the parties. Accordingly, we conditionally grant D.R. Horton's petition for writ of mandamus in Cause No. 14-06-00284-CV and direct the trial court to vacate the order denying D.R. Horton's motion to compel and to enter an order compelling the parties to arbitration. The writ will issue only if the trial court fails to comply with this opinion. Having granted full relief under our mandamus jurisdiction, we dismiss as moot D.R. Horton's interlocutory appeal, Cause No. 14-06-00262-CV. See In re D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006) (orig. proceeding).

/s/ Eva M. Guzman, Justice

Petition for Writ of Mandamus Conditionally Granted and Memorandum Opinion filed November 7, 2006.

Panel consists of Chief Justice Hedges, and Justices Yates and Guzman.

NOTE: Justice Eva Guzman is now a member of the Texas Supreme Court