### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-18-00099- CV

Toll Dall as TX, LLC f

/k/a T oll TX, LP, Appellant

v. Brent Dusing an d Ed ith Dusin g, Appellees 1

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 353 RD JUDICI AL DISTRICT NO. D-1 -GN-1 6-0 0219 6, H ONO RAB LE O RLINDA NARANJO , JUDGE P RESIDING

M E M O R A N D U M O P I N I O N

I n this interlocutory appea l from the trial court’s denial of a motion to compel arbitra tion, we ag ain addre ss whether an arbitra tion a g ree ment betwee n the orig inal purcha ser of a home and its builder is enfor cea ble ag ainst a subsequent purcha ser, but with a slight twist. See Toll Austin, TX, LLC v. Dusing , No. 03-16-00621- CV, 2016 WL 7187482, at *3–4 (Tex. App.—Austin
Dec

. 7, 2016, no pet.) (mem. op.) (holding that subsequent purcha ser of home was not bound by arbitra tion clause in orig inal owner ’s purc hase c ontrac t absent evide nce of assig nment of contract

or circ umstances justify ing application of equitable estoppel). Toll Dallas TX, L L C, contends that our prior holding ag ainst its affiliate Toll Austin, TX, L L C, doe s not c ontrol this appeal bec ause a differ ent var iety

of equitable estoppel applies here that was not addr essed in the pr ior appe al. We

As noted by appellee s’ counsel at oral arg ument, Edith Dusing ’s name appea rs incorre ctly 1 as “Elizabeth Dusing ” in various documents in the cler k’s rec ord, including the order on appea l. We advise the parties and the trial court that her name should appea r hence forth in these pro ce edings as “Edith Dusing .”ag ree with Toll Dallas and, for the following rea sons, revers e the trial court’s order denying Toll

Dallas’s motion to compel and rema nd for entry of an order abating t h e proce eding s ag ainst Toll Dallas a nd compelling the Dusing s to arbitrate their disputes with Toll Dallas.

BACK GR OUND On Fe bruar

y 2, 2015, the Dusing s purcha sed the home at issue from Br odney Pool, who in 2005 enter ed into an Ag ree ment of Sale (Orig inal Contract) with Toll Dallas’s prede cessor 2
for the construction and sale of the home. The Orig inal Contract provided that “Seller [Toll Dallas] shall cause to be provided to B uy er [Pool] a 10 y ear limit ed wa

rra nty (the “ home warranty ”) from Toll Brothe rs, I nc.” The Or igina l Contract containe d a broa d arbitra tion provision: 3
Buy er, on behalf of Buyer and all perma nent residents of the Premises, including minor children, here by ag ree that any and all disputes with Seller, Selle r’s pare nt c o mp a ny o r th e ir s u

b s id ia r ie s o r a f f il ia te s a r is in g o ut o f th e Pr e mi s e s , th is A g r e e me n t, the Home Warranty , any other ag ree ments, communications or dealing s involving Buy er, or the construction or condition of the Premises including, but not limit ed to, disputes conce rning brea ch of contra ct, express and implied war ranties, omissi o ns b y S el l er , on-site and off- site conditions and all other torts and statutory cause s o f action, including but not limit ed to those arising or administered under the Dec eptive Trade Practice s Act (DTPA), Resid en t i al Construction L iability Act (RCL A) or Texas Residential Construction Commi ssion Act (TRCAA) (the “Claims”) shall be resolved by

binding a rbitration . . . .

L ike the Orig inal Contract, the war rant y re fe re nced there in, entitled “Home Builder ’s L imited Warranty ” (Warr anty

), conta ined a br oad ar

bitration provision:

The Or igina l Contract was be tween T oll Tex as, L P, and Br odney Pool. Toll Dallas, L P, 2 is the succe ssor entity to Toll Texas, L P. Acc ording ly , we ref er to Toll Dallas in this opinion when the re cord r efe rs to either Toll Te x as or Toll Da llas. Toll Brothe rs, I nc., is an a ffiliate of Toll Dallas and Toll Austin. 3 2Any disp utes between YO U a n d US , or parties acting on OUR behalf , including PW C [t he administrator of the Warranty ], relat ed to or arising from this L I MI TED WAR R AN TY, the design or construct ion of the HOME or the COMMON EL EMENTS or the sale of the HO M E o r t ransf er of title to the COMMON EL EMENTS wi ll be resolve d by bin din g arbitration

. Binding arbitra tion shall be the sole reme dy for resolving any an d all disputes betwee n YOU and US, or OUR repr esenta tives. Disputes subject to binding arbitra tion include, but a re not limited to:

. . . Any disag ree ment that a condition in the HOME or the COMMON EL EMENTS is a CONSTRUCTI ON DEF ECT and is there fore cover ed b y this L I MI TED WARR ANTY;

. . . [and] Any other claim arising out of or rela ting to the sale, des ign or construction of YOUR HOME or the COMMON EL EMENTS, including, but not limit ed to any claim arising out of, rela tin g t o o r b as ed on any implied war

ranty or claim for neg lige nce or strict liability not eff ectively waived by this L I MI TED WARRANTY.
(Emphase s added.) 4

I n May 2016, t h e Du sings filed a lawsuit ag ainst Toll Austin, asser ting claims of
neg lige nce and DTPA violations due to faulty construction, based on alleg ed water infiltration into

The L imited W arr anty

define d the following words: 4

• “WE”, “U S” and “O UR” re fer to the BU I L DER.

• BU I L DER means the individual, partne rs h i p , corpor ation or other entity which participa tes in the Warranty Prog ram administered by the Professional W ar ranty Service Corporation and provides YOU with this L I MI TED WARR ANTY. Throug hout this document BUI L DER is also refe rre d to as “WE”, “U S” and “O UR.”

• “YOU ” and “YOU R” ref er to the HOMEOWNER, including any subsequent owner s.

• HOMEOWNER means the f irst person(s) to whom a HOME . . . is sold, or for whom such HOME is constructe d, for occupa ncy by such person or such person’ s family , and such person’ s(s’) succe ssors in title to the HOME, or mortg ag ees in possession and any repr esenta tives of such person( s) who has standing to make a c laim on that person(s) behalf

.
3the home. Toll A ustin filed a plea in a batement and motion to compel arbitra tion, contending that the t rial court was required to order the parties to arbitrate based on the provisi ons in the Original
Contract and Warranty

. The trial court denied the motion, and we aff irmed its order

. See Toll
Austin , 2016 WL 7187482 at *4.

Th e Du s ings then amende d their petition to add Toll Dallas as a defe ndant. After d i s co very , Toll Dallas moved to compel arbitra tion. Toll Dallas contende d that it had “n ew l y 5
discovere d ev i d en ce ” establishing that Pool assig ned the Warranty to the Dusing s as part of their home-purc hase contra ct and the Dus i n g s “knew of the water intrusion issue befor e closing , neg otiated a better purcha se price beca use of this known conditio n , an d even ag ree d to pursue a

war ranty claim ag ainst Toll Br others and share the proceeds with Pool.” Toll Dallas summ arized its motion: “Contrar

y to the Dusing s’ prior arg uments to the t ri al court and the Third Court of Appea ls, newly discovere d evidenc e establishes that: 1) the Dusing s are assig nees of the Warranty from Pool; 2) the Dusing s have made claims and soug ht relief under the Warranty and are there fore bound by the ar bitration clause in the War ranty [.] ” Toll Dallas attac hed the f ollowing e vidence to its m otion to compel:

• A proper

ty -inspection repor

t prepa red for the Dusing s on J anuar y 9, 2015, which identified structura l conce rns with t h e fo undation, draina g e and g rading , and J uliet balconies, and which noted “obvious signs o f m o i s ture penetr ation along the front wall of the baseme nt are a notably in the exercise room” and “sig ns on the stucco that may be indicative of a flashing and/or moisture protec tion deficienc y notably around the J uliet balconies.”

Toll Dallas’s motion to compel asser ted, “Af ter the trial court denied Toll Austin’s Motion 5 to Compel Arbitration, and afte r the Third Court of Appea ls uphe ld tha t r uling, the Dusing s beg an to produce documents t hat nega ted m any of t he facts they relied upon a

nd arg ued in opposition to Toll Austin’s Pl ea in Aba tement.” 4• A mold-inspection repor t dated J anuar

y 12, 2015, stating, “The Client [Brent Dusing ] indicated that the purpose of this inspection was to deter mine if there is a mold problem in the Ex erc ise Room [l o cate d in the baseme nt of the home] based on previous water intrusion. He is in the proce ss of purcha sing this property .”

• A J anuar

y 14, 2015 email from the Du s i n gs ’ re altor, Dianna Salazar, to a contra ctor, J udd Fults , reque sting him to provide a repa ir estimate for the J uliet balconies.

• A J anuar

y 14, 2015 amendment to t h e P o o l-Dusing sales contra ct stating, “Toll Br others to inspect proper ty during repa ir of baseme nt wall for possible war ranty reimburse ment. I f Toll Br others pay s for any portion of repa irs the buy er is reimburse d for repa ir over $30,000 and the rema ining amount to be g iven to Br odney Pool. Any proce eds from Toll B rothers reg arding [J ]ul iet balconies g oes to buy er.”

• A J anuar

y 20, 2015 amendment to the Pool-Dusing sales contra ct providing , “Seller to pay buy ers $30,000 at closing or re d uce sales price

. Non rea lty ad d endum is part of contra ct. Toll [B]rot hers bui lders warranty to transfer at c losin g. ”

• A J anuar

y 21, 2015 email from Toll Br others repr esenta tive Br andon Cooper to Pool’s rea ltor, Desmond Milvenan, stating, “I n response to y our question reg arding the transfe r of war ranty , I can confirm that any time left in the Toll Br others war

ranty is transfe ra b l e with the sale of the home.” Milvenan forwa rded the email to Salazar the same day

.

• A Februa

ry 19, 2015 email from Cooper to Br ent Dusi ng , in which Cooper provided “update s on the war ranty claims” that had been made with r espec t to the home. Cooper’s email explained t hat,“since our war ranty is direc tly with y ou [as the new owner of the home], I have to direc t my corr espondenc e to y ou.” Cooper further explained that, with respe ct to the “two outstanding [warra nty ] claims

. . . [(1)] the improper flashing at the upstairs balconies

. . . [a n d (2)] the water intrusion at the baseme nt wall,” the balcony -flashing repa irs had been comple te d , w it h th e e xc e ption of forthcoming painting work, and the baseme nt-wall water intrusion was considere d “non-w arr antabl e” beca use the “wa terproof

ing of the home was done cor re ctl y .” Cooper indicated that he would update his file with a “possible structura l failure [of one parti cu l ar are a of the baseme nt wall with a leak] as an open war ranty claim” but would “bring out an eng ineer ing company to inspect the are a” to assess the possible cla im.

5• A Marc h 26, 2015 letter from Cooper to Br ent Dusing , stating that “in reg ards to the war ranty reque st on [t he Dusing s’] home,” “the flashing repa irs at the balconies are 100% completed.” I t further provided, “the water proofing was compromised by [t he Dusing s’] contra ctor, leaving it in a condition to wher e we could not perf

orm a water test an d deter mine [i ]f there was any latent defe cts” but that “Water Proofing items are not cover ed in this war ranty [an d t] h e r e f o r e a ny c la im c o n c e r

n in g th e w a

te r p r o o f in g is n o t w a

r r a n ta b le

. ” Co o p e r continued, “I n reg ards to the conce rn . . . about the structura l integ rity of the baseme nt walls, we had an eng ineer ing firm p[er]form a n onsite inspection. Per the attache d eng ineer ’s repor t, the concr ete wall is structura lly sound and will not need further attention. Be cause of the rea sons sta ted above, w e ar e closing out this warra

nty reque st.”

• A J une 9, 2015 email from B rent Dusing to Cooper, stating , “As part of the purcha se [of the home], the previous owner transfe rre d the Warranty to me

. Can y ou send me a

copy of the Warr anty

issued by Toll Brothe rs[? ]”

• A J uly 23, 2015 email from Br ent Dusing to Cooper, stating, “[T] hese are the following issues that we believe fall under the structura l war ranty

. We would like Toll Br others to fix these issues, please , per the terms of our war ranty .” L isted as war

rantied issues we re: the balconies, mold re mediation, water in the exercise room cause d by leaking throug h the balconies, cra cks in the slab, failure in the water

proofing sy st ems of the baseme nt wall and foundation construction, and the draina g e sy stem.

• A Novembe r 20, 2015 demand letter from the Dusing s’ attorne y to the Toll en t i t i es , descr ibing the same issues as Br ent Dusing ’s J uly 23 email as “cove red by

the ten y ear

structura l warr anty

issued by Toll” and noting that the letter “ser

ves as notice of a claim under that war ranty .” The letter further stated, “the Dusing s purcha sed the house in Fe bruar y 2015 and wer e assig ned the structura l warr anty

issued by Toll.”
(Emphasis adde d.)

The trial court denied Toll Dallas’s motion to compel, as well as Toll Austin’s motion for rec onsideration of its motion to compel, and Toll Dallas appe als.

6DISCUSSIO N
I t is undisputed that t h e Dusing s wer e not parties to the arbitra tion ag ree ment contained in the Warranty that Toll B rothers provided Pool conte mporane ously upon execution of
t h e Orig inal Contract. Although the g ener al rule is that only parties to an arbitra tion ag ree m en t
may be compelle d to arbitra te claims falling under its scope, courts have rec og nized exceptions binding nonparties to an arbitra tion clause “whe n the rules of law or equity would bind them to the
contra ct g ener ally .” In re W eek ley Homes, L.P. , 180 S.W .3d 127, 129, 130–31 (Tex. 2005); see also
G.T. Leach Builders, LLC v. Sapphire V.P., LP , 458 S.W .3d 502, 523 (Tex. 2015) (quoting W eek ley
Homes , 180 S.W .3d at 1 29, and rec og nizi ng that nonparties may be bound to arbitra tion clause under cer tain circ umstances) ; Mey er v. W MC O- GP, LLC , 211 S.W .3d 302, 305 (Tex. 2006) (“[S] ometimes a person who i s not a party to t h e agr ee m en t can compel arbitration with one who is, and vice versa .”). T h e d et ermination of whether an arbitra tion ag ree ment binds a nonparty is a “g atewa y matter” involving the validity of the ag ree ment that must be decide d by the court, W eek ley
Homes , 180 S.W .3d at 130, and it is a leg al question that we review de novo, J.M. Davidson, Inc.
v. W ebster , 128 S.W .3d 223, 227 (Tex. 2003).

A party seeking to compel arbitra tion has the burden of establishing that (1) there is a valid ag ree ment betwee n the parties to a rbitrate and (2) the claims raised fall within the scope of that ag ree ment. See In re Kellogg Brown & Root, Inc. , 166 S.W .3d 732, 737 (Tex. 2005)

. Courts do not rea ch the second require ment if the first is not established. See id. (noting that presumption favor ing ag ree ments to arbitra te and resolving doubts reg arding ag ree m en t ’s s co pe in favor of arbitra tion “only arises afte r the party seeking to c ompel arbitra tion pr oves the exis tence of a valid

7arbitr ation ag ree ment betwee n the parties” ). A nonparty to an ag ree ment to arbitra te may not be

require d to arbitra te absent the ap p l i ca t i o n of one of the six theories rec og nized by the supreme
court: (1) incorpora

tion by r e f e renc e, (2) assumption, (3) ag ency , (4) alter eg o, (5) equitable estoppel,

a n d ( 6 ) th ir d

- p a

r ty b e n e f ic ia r y . S e e id

. a t 7 3 9

. T o ll D a ll a s a s s e r

ts th e s a me tw o th e o r ie s

— a s s u

mp ti o n and equitable estoppel—as did Toll Austin in its appea l; howeve r, T o ll D allas attempts to distinguish Toll Austin as discussed below. I f we ag ree with Toll Dallas o n ei t h er of these theories, then

we must addre ss its further contentions that: (1) the parties’ dispute falls within the scope of the
W ar ra n ty ’s broad arbitra tion clause and (2) the Dusing s did not meet their burden to supp o rt a defe nse to arbitra tion. See Kellogg Brown & Root , 166 S.W .3d at 737 (noting that party seeking to compel arbitra tion must prove valid ag ree ment to arbitra te and that dispute fa l ls within scope of
agr ee ment); J.M. Davidson , 128 S.W .3d at 227 (“I f the trial court finds a valid ag reem en t [ t o arbitra te], the burden s h i ft s to the party opposing arbitra tion to raise an aff irmative defe nse to enfor cing arbitra tion.”).

Are the Dusin gs required to arbitr ate under th e doctrine of e quitabl e estoppe l?
I n Toll Austin , we held that beca use the Dusing s’ claims “do not arise solely from the Tol l- Po o l A g r e e me n t

. . . [b u t] from [Toll ’s] g ener al obliga tions imposed by common-law neg lige nce and rele vant statutes,” t h e Du s i n g s did not “see k to derive any benef it from the Toll-Pool Ag ree ment” by way of t heir lawsuit. See Toll Austin , 2016 WL 7187482, at *3; see also W eek ley
Homes , 180 S.W .3d at 131–32 (“Claims must be broug ht on the contra ct (and arbitra ted) if liability arises solely from the contra ct or must be deter mined by ref

ere nce to it. On the other hand, claims can be brought i n tort (and in court) i f l iability arises from g ener al obl iga tions imposed by law.”)

.
8Acc ording ly , we held the Dusing s wer e “not bound by the arbitra tion provision under the direc tbenef its-estoppel doctrine.” Toll Aust in , 2016 WL 7187482, at *3.
I n this appea l, howeve r, Toll Dallas contends that the other varie ty of direc t-bene fits estoppel rec og nized by th e Texas Supreme Court applies y et was not expli citly addre ssed in Toll
Austin

. That second varie ty estops a nonparty to an arbitra tion ag ree ment from avoiding arbitra tion when that nonparty seeks and obtains direc t benef its from a contra ct by means other than a lawsuit.
See W eek ley Homes , 180 S.W .3d at 1 3 2 , 1 34. “I n some case s, a nonparty may be compelled to arbitra te if it deliberately seeks and obtains substantial benef its from the contra ct itself.” Id. at 132. The policy underlying this varie ty of the equitable doctrine s ee k s t o preve nt injusti ce to another party when a “promisor induces substantial a ction or forbe ara nce by another ” by “consistently and knowing ly insist[ ing] that others trea t it as a party ” and then “‘turning its back on the portions of the
contra ct, such as an arbitra tion clause , that it fi n d s d i s t ast eful.’” Id. at 133-35 (interna l citations omitted and quoting E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Interme diates,
S.A.S. , 269 F.3d 187, 200 n.7 ( 3d Cir. 2001)).

We conclude that the Dusing s are bound to the arbit ra t ion clause by this second varie ty of equitable estoppel. The evidenc e shows that the Dusing s made claims under the Warranty and obtained repa irs to the balconies and their flashing as a result there of, and there was signific ant

corr espondenc e betwee n the Dusing s and Toll Br others about whether cer tain other cla i m s were

cover ed. Toll Br others contra cted with an eng ineer ing firm to deter mine whether further claims of the Dusing s wer e cover ed by the W ar ra nty

. The Dusing s neg otiated a lower purcha se price with Pool due to the ir rec eipt of Warranty repa irs from Toll B rothers. Ba sed on this e vidence , we must conclude that t h e Du s i n gs both soug ht and obtained substantial and direc t benef its under the
9Warran t y s ufficie nt to trig g er the estoppel doctrine and bind them to the arbitra tion ag ree ment.

See W eek ley Homes , 180 S.W .3d at 133–34 (holding that non-par ty to home -construc tion c ontrac t who l ived i n home, negotiated directly with builder on many issues befor e an d afte r construction, paid deposit on construction, selec ted floor plan, made custom desig n choice s, signe d letter of intent

as “purc haser , ” a

n d r e q u e s ted and rec eived reimburse ment from builder for repa irs post-construction

was estopped from avoiding contra ct’s arbitra tion provision); cf. D.R. Horton-Eme rald, L t d

. v. Mitchell , No. 01-17-00426- CV, 2018 WL 542403, at *8 (Te x . App.—Houston [1st Dist.] J an. 25, 2018, no pet.) (mem. op.) (holding that subsequent home purcha ser was not bound by arbitra tion cl au s e i n orig inal construction contra ct mere ly due to automatic transfe r of builder’s war ranty to subsequent purcha ser and his sending notice to war ranty company and rec eiving home inspection).
We sustain Toll Dallas’s second issue and, there fore , need not consider its first issue

asser ting that the Dusing s are bound to arbitra te due to assig nm en t of the Warranty

. See Tex. R. App. P. 47.1, 47.4. Be cause of our conclusion that the trial court abused its discretion in deter mining that there was no valid ag ree ment to arbitra te t h at i s en fo rc eable ag ainst the Dusing s, we must consider whether the Dusing s’ claims fall wit h i n the scope of the Warranty ’s arbitra tion clause

. See Rachal v. Reitz , 403 S.W .3d 840, 843 (Tex. 2013); Kellogg Brown & Root , 166 S.W .3d at 738.

Do the Dusin gs’ claim s fall wit hin the scope of the Warranty’s arbitration clause ?
I n deter mining the scope of an arbitra tion clause, we resolve doubts conce rning the clause ’s scope in favor of arbitra tion. Kirby Hi g h l a n d L a ke s Surgery Ctr., L.L.P. v. Kirby , 183 S.W .3d 891, 896 (Tex. App.—Austin 2006, no pet.). “Ar bitration i s heavily favor ed under fede ral and state law and should not be denied unless it can be said with positive assura nce that the

10arbitr at i o n cl au s e cannot be interpre ted so as to encompa ss the dispute in question.” In re Sun

Commc’ns, Inc. , 86 S.W .3d 313, 317 (Tex. App.—Austin 2002, no pet.) (citing Prudential Sec. Inc.

v. Mars hall , 909 S.W .2d 896, 898–99 (Tex. 1995)). To deter mine the scope of an arbitra tion
ag ree ment, we first look to the terms of that ag ree ment. See Marshall , 909 S.W .2d at 900. We then examine the fac tual alleg ations in the petition rather tha n the leg al ca

uses of a ction. Id. The arbitra tion c lause in the Warranty provides that “any disputes

. . . rela ted to .

. . the desig n or construction of the HOME

. . . will be resolved by binding arbitra tion. Binding arbitra tion shall be the sole reme dy for resolving any and all disputes betwee n YOU and US, or OUR
repr esenta tives.” The clause additionally contains a non-exclusive l i s t o f d isputes “subjec t to binding a rbitration,” including

• Any disag ree ment that a condition in the HOME

. . . is a CONSTRUCTI ON DEF ECT and is there fore cover ed by this L I MI TED WARRANTY;

• Any alleg ed viol at i o n of consumer protec tion, unfair trade prac tice, or any other statute;

• Any

alleg ation of neg lige nce, strict liability , fra ud, and/or bre ach of

duty of g ood faith, and a

ny other c laims arising in equity or fr om common law;

• Any dispute conce rning the issues that should be submitt ed to binding arbitra tion; [ and]

• Any other claim arising out of or re lating to the sale, desig n or construction of YOU R HOME . . . including , but not lim ited to any claim ar ising out of, rela ting to or based on any implied war ranty or claim for neg lige nce or strict liability not effe ctively

waived by

this L I MI TED WARRANTY.

This is the ty

pe of lang uag e that fede ral and Texas courts interpre ting arbitra tion clause s have held
to be “extremely broad” and “ca pable of extensive rea ch.” See Kirby Highland Lakes , 183 S.W .3d

11at 898 (citing Pennzoil Expl. & Prod. Co. v. Ramco Energy, Ltd. , 139 F.3d 1061, 1067–68 (5th Cir.

1998)) (noting that clause cover ing “all di s p u t es . . . related to ” ag ree ment at issue is “extremely broad” and extends to a ll disputes that “touch” matters cove red by ag ree ment). I ndeed, the clause in the Warranty is broade r than that at issue i n K i r b y Highland Lakes and Pennzoil Exploration beca use i t cover s dispu t es “r el at ed to” t he home’s desig n or construction and not mere ly disputes
“re lated to” the Warranty

. Cf. Pennzoil Expl. , 1 3 9 F. 3 d at 1067–68; Kirby Highland Lakes , 183
S.W .3d at 898. We, there fore , compar e this “extremely broad” clause with the fac tual alleg ations in the Dusing s’ live petition:

• This is a defe ctive-r esidential-c onstruction case involving Plaintiffs’ home;

• As the g ener al contra ctor, Toll Br others constructe d and completed the Home in late 2006;

• Plaintiffs experience d signific ant wat er infiltration into the residenc e near the baseme nt, a cold joint in the south wall, and the Jul iet balcony ;

• Plaintiffs notified Toll Brother s of the problems, but T oll B rothers failed to proper ly addre ss the issues;

• Plaintiffs were forc ed to hire a n outside contra ctor to f

ix the J uliet balcony ;

• T h en ag ain in October of 2015, Plaintiffs experience d the same significan t water intrusion in the basement and c old joint along the south wa ll;

• At the time Plaintiffs[ ] purcha sed the home, they wer e n o t awa re of the latent problems with the foundati o n an d draina g e sy stem nor di d they have knowledg e of the se flooding or wa ter intrusions;

• T o l l Br o thers was responsible for the desig n and construction of the foundation, the installation of the Fr ench d ra i n , and for water proofing the concr ete wa lls;

• Toll Br others failed to proper ly desig n and construct the foundation, Fr ench draina g e sy stem, and wa

terproof ing; [and]
12• T o ll Br others neg lige ntly hired, trained, and supervised the subcontrac t o rs and/or e mploy ees who constructe d the home.

Given the wide rea ch of the Warranty ’s arbitra tion c lause—c overing “any disputes

. . . rela ted to the desig n or construction” of the home—we can o n l y co n cl u d e that the Dusing s’ fac tual alleg ations—succinctly , that T o ll D a ll a s im p r o p e r ly d e s ig

n e d and constructe d the home—fa ll squarel y within its scope. Ba rring the application of a cog nizable defe nse, the Dusing s are thus bound to arbitrate their dispute. See J .M. Dav idson, Inc. , 128 S.W .3d at 227.

Did the Dusin gs m eet their burden to prove a defe nse to th e Warranty’s arbitrati on clause?

T h e Du sings contend that, even if the Warranty ’s arbitra tion clause is enfor cea ble
ag ainst them and this dispute falls within its scope, they can nonetheless avoid arbitra tion due to the common-law doctrines of law of the case , judicial estoppel, and misnomer. Howeve r, none of these doctrines a

pply here

. The law-of

-the-c ase doctrine “posits that wh en a court decide s upon a rule of law, that decision shoul d co ntinue to g overn the same issue in subsequent stag es in the same case .” Medic al Ctr. Pharm. v. Holder , 634 F.3d 830, 834 ( 5th Cir. 2011) (quoting Arizona v. Califor nia , 460 U.S. 605, 618 (1983)) ; see Howlett v. State , 994 S.W .2d 663, 666 (Tex. Crim. App. 1999) (lawof-the- case doctrine “provide s that an appellate court’s resolution of a question of law in a previous
appea l of t he same case will gove rn the disposition of the s ame issue when raised in a subsequent
appea l”). I t is a court-ma de doctrine desig ned to promote judicial consistency and eff iciency by eliminating the need for appellate courts to prepa re opinions discussing previously resolved matters.
Duncan v. State , 151 S.W .3d 564, 566 (Tex. App.—For t Worth 2004, pet. ref

’d). “[W ]hen the fac ts

13and leg al issues are virtually identical, they s h o u l d b e controlled by an appellate court’s previous

resolution.” State v. Swearingen , 478 S.W .3d 716, 720 (Tex. Crim. App. 2015). “Unde r the law of the case doctrine, a court of appea ls is ordinarily bound by its initial decision if there is a subsequent
appea l in the same case ; but a deter mination to revisit an ear lier decision is within the discretion of the cour t under the pa

rticular circ umstances of eac h case .” Gotham Ins. Co. v . W arren E& P, Inc. , 455 S.W .3d 558, 562 n.8 (Tex. 2014).

Be cause we have conclude d that a differ ent varie ty of equitable estoppel is befor e us than was befor e us in Toll Austin , we deter mine that the doctrine of law of the case is inapplicable.
See City of

New Braunfels v. Carowest Land, Ltd. , 549 S.W .3d 163, 174 (Tex. App.—Austin 2017, pet. filed) (dete rmining that law-of -the-c ase doctrine did not prec lude appellate court from revisiting its prior conclusions about subject-matter jurisdiction whe n parties did not raise, and court did not consider, particula

r doctrine that was raised in subsequent appea l); Black v. 7-Elev en Convenienc e Stores , No. 03-12-00014- CV, 2014 WL 902498, at * 5 (Tex. A pp.—Austin Ma

r. 7, 2014, no pet.) (noting that “law of the ca se,” like star e decisis, applies onl y to questions of l aw, not questions of fac t or mix ed questions of fac t a nd law). There fore , the doctrine of law of the case does not a pply in this appeal.
T h e doctrine of judicial estoppel prec ludes a party who succe ssfully main t ai n s

a p o s i t ion in one proce eding from afte rwa rds adopting a clea

rly inconsistent position in another proce eding to obtain an unfair advanta g e. Ferguson v. Building Materials Corp. of Am. , 295 S.W .3d 642, 643 (Tex. 2009). The Dusing s contend that the doctrine applies here due to sworn
statements in court filings made by the Toll entities that “All of Plaintiffs’ claims ag ainst Toll Dallas

14(or Toll Austin) arise solely from either the Ag ree ment of Sale or the Warranty

. The Ag ree ment of

Sale and the W arr anty contain va l i d an d enfor cea ble arbitration clause s.” Fr om these statements, the Dusing s contend that Toll D allas knew that “any outcome of [Toll Austin’s] motion to compel arbitra tion would apply to both Toll Austin and Toll Dallas.” Howeve r, this is not a proper application of the judicial-estoppel doctrine beca use, as explained above with respe ct to law of the

case , we are prese nted with a differ ent equitable theory

. Toll Dallas’s sworn s t at em ents that the
outcome of Toll A ustin’s motion to compel would apply equally to it are ineffe ctual in lig ht of the

new e quitable theory

we a ddress he re. L astly , the Dusing s contend that their “misnomer” of T o l l Da llas in their orig inal pleading s—they cl a im to h a v e “ mi s n a me d ” Toll Dallas by initially mistakenly suing “Toll Austin”— applies to relieve them of the obliga tion to arbitra te beca us e Toll Austin acknow ledg ed from the beg inning, an d Toll Dallas has known all along , that Toll Dallas is the corr ect defe ndant and is bound by the Toll Austin decision. I n the first i n s t ance, we note that the Dusing s’ naming of Toll Austin as the orig inal defe ndant rathe r than T oll Dallas—a completely separ ate, althoug h aff iliated, corpor ate entity

—constitutes misidentifica tion r ather than misnomer. See In re Greater
Hous. Orthopaedic Specialists, Inc. , 295 S.W .3d 323, 325 (Tex. 2009) (per curia m) (explaining that misidentification “ar ises when two separ ate leg al entities exis t and a pl ai n t i ff m i stakenly sues an entity with a name simil ar to that of t he correc t entity ” and dif fer s from misnomer, which “ occur s when a party misnames itself or another party , but the corr ect parties are involved”). I n any event, the distinction betwee n misnomer and misidentification in this case is immaterial beca use the Dusing s have not advanc ed a cog nizable theory for why their alleg ed misnomer of the corr ect party

15would absolve them of the obliga tion to arbitra te under the Warranty

. Although the Dusing s asser t that the doctrine of misnomer applies, their explanation of its application does not differ signific antly from t h ei r co ntentions about law of the case , which we have alre ady reje cted. We conclude , there fore , that the Dusing s have not met their burden to prove that they are not bound by the Warranty ’s ar

bitration clause due to any of their a lleg ed “de fense s.”

CONCLUSION
We reve rse the trial court’s denial of Toll Dallas’s motion to compel arbitra tion and

rema nd this caus e t o t h e t ri al court for entry of an order compelling the Dusing s to arbitra te their disputes with Toll Dallas and aba ting f urther c ourt proce eding s ag ainst Toll Dallas.

__________________________________________ Thomas J . Ba

ker, Justi ce Be fore J ustices Goodwin, B aker , and Tria na Reverse d and Remande d Filed: May

16, 2019

16