In the

Court of Appeals

Second Appellate District of Texas

at Fort Worth

___________________________

No. 02-18-00132-CV

No. 02-18-00135-CV

___________________________

On Appeal from the 348th District Court

Tarrant County, Texas

Trial Court No. 348-296927-17

Before Sudderth, C.J.; Meier and Gabriel, JJ.

Memorandum Opinion by Chief Justice Sudderth

APACHE CORPORATION, Appellant

V.

BRYAN C. WAGNER, WAGNER OIL COMPANY, TRADE EXPLORATION 

CORPORATION, AND WAGNER & COCHRAN, INC., Appellees
2

MEMORANDUM OPINION

I. Introduction

In two issues in this interlocutory appeal,

1 Appellant Apache Corporation 

complains that the trial court erred (1) by denying its motion to compel arbitration

because the parties’ indemnity dispute falls within the scope of their arbitration 

agreement and (2) by deciding Appellees Bryan C. Wagner, Wagner Oil Company 

(WOC), Trade Exploration Corporation (Trade), and Wagner & Cochran, Inc. 

(W&C)’s motion to stay arbitration when a mandatory venue statute required that any 

arbitration challenge be decided by a court in Harris County. We reverse.

II. Background

A. The Parties 

Apache is a Delaware corporation with its office located in Houston. WOC is 

a Texas corporation with its office located in Fort Worth, and Wagner is WOC’s 

president and CEO. From January 1999 to June 2006, WOC acted as the operating 

entity for Wagner’s oil and gas assets as well as for certain oil and gas assets owned by 

Trade and W&C that were purchased by WOC using funds provided by those entities.

 

1See Tex. Civ. Prac. & Rem. Code Ann. § 15.003(b) (West 2017), § 51.016 (West 

2015).
3

B. The Agreements

1. Purchase and Sale Agreement Between WOC and Apache

WOC purchased oil-and-gas-related assets2from Apache pursuant to a June 4, 

2001 purchase and sale agreement (PSA) that was negotiated by WOC and executed 

by Wagner on WOC’s behalf in his capacity as its president. Wagner, Trade, and 

W&C provided the funds for the approximately $25 million purchase in, respectively, 

80%, 19%, and 1% shares.3 The PSA listed the “Effective Time” of the purchase and 

sale as “April 1, 2001, at 7:00 a.m., at the location of the Assets.”

With regard to Apache’s representations and warranties in the PSA, the parties 

excluded compliance with “Environmental Laws,” a defined term, and WOC 

acknowledged that its sole remedy for any noncompliance by Apache with 

“Environmental Laws” would be provided in Article 6 of the PSA. Article 6 defined 

“Environmental Law” to mean “all laws, statutes, ordinances, rules and regulations of 

any governmental authority pertaining to protection of the environment in effect as of 

the Effective Time and as interpreted by court decisions or administrative orders as of 

the Effective Time in the jurisdiction in which such Asset is located.” And it 

 

2These assets included oil and gas wells, leasehold estates created by oil and gas 

leases, fixtures and improvements appurtenant to these wells and leases, fee mineral 

interests, and “[a]ll oil, gas and other hydrocarbons produced from or attributable to” 

the leases, as well as various licenses, records, and other items related to the sale.

3WOC represented in the PSA that in buying the assets, it was not acting under 

any specific contractual commitment to any third party, or any specific nominee 

agreement with any third party, to transfer to, or to hold title on behalf of, such third 

party with respect to all or any part of the assets.
4

provided for (1) WOC, as the buyer, to give Apache, as the seller, written notice of 

adverse environmental conditions discovered on or before June 20, 2001, (2) waiver 

of those conditions for failure to give timely notice, and (3) the remedies available to 

WOC. To access these remedies, WOC had to give proper notice to Apache and 

then—before closing—the parties could (1) agree on an adjustment to the purchase 

price to reflect the cost to remedy the adverse environmental condition, (2) remediate 

the condition at Apache’s cost, or (3) remove the damaged item from the assets being 

conveyed and reduce of the purchase price by the allocated value of that item.

Article 6.3 provided that Article 6 was the

SOLE AND EXCLUSIVE REMEDY THAT [WOC] SHALL HAVE 

AGAINST [APACHE] WITH RESPECT TO ANY MATTER OR 

CIRCUMSTANCE OR LIABILITY RELATING TO ADVERSE 

ENVIRONMENTAL CONDITIONS, ENVIRONMENTAL LAWS, 

THE RELEASE OF MATERIALS INTO THE ENVIRONMENT 

OR PROTECTION OF THE ENVIRONMENT OR HEALTH.

Indemnity and arbitration were continuous themes in the PSA. With regard to 

inspection of the leases, for example, WOC agreed to indemnify and hold harmless

Apache and its partners, joint interest owners, subsidiaries, affiliates, and their 

respective officers, directors, employees, and agents “from and against any and all 

losses or causes of action arising from [WOC’s] inspection of the leases, including, 

without limitation, claims for (i) property damage, (ii) personal injuries or death of 

employees of [WOC], its contractors, agents, consultants and representatives, 

(iii) personal injuries or death of employees of [Apache], its contractors, agents, or 
5

consultants or representatives, and (iv) personal injuries or death of third parties.”

And any title defect adjustment disputes required resolution “by Arbitration pursuant 

to Section 11.12.”

Assignment was also addressed in the PSA in more than one place. With 

regard to the post-closing obligations as to the assets’ files and records, WOC was 

obligated to retain and make available to Apache for seven calendar years after the 

closing date the files and records; any assignment by WOC of the purchased assets 

was made subject to this requirement. Article 11.5, “Assignment,” provided that 

neither party could assign all or any portion of its rights or delegate all or any portion 

of its duties under the PSA “unless it continue[d] to remain liable for the performance 

of its obligations . . . and obtain[ed] the prior written consent of the other Party, 

which consent [could] not be unreasonably withheld.” And Article 11.10, “Parties in 

Interest,” provided that the PSA would be binding upon and inure both to WOC and 

Apache “and their respective successors and assigns.”

Under Article 9.4, Apache retained some liabilities, and the PSA expressly 

covered what Apache would be responsible for as compared to WOC: Except for the 

retained liabilities, WOC expressly agreed to assume responsibility for and to pay, 

perform, fulfill, and discharge all claims, costs, expenses, liabilities, and obligations 

accruing or relating to the owning, developing, exploring, operating, and maintaining 

of the assets, “whether relating to periods before or after the effective time, including, 
6

without limitation, all adverse environmental conditions, whether occurring before or 

after the effective time, regardless of the negligence or strict liability of [Apache].”

The parties also set forth their “express intention” that WOC was buying the 

assets “as is and in their present condition and state of repair.” In doing so, WOC 

released and discharged “any and all claims at law or in equity, known or unknown, 

whether now existing or arising in the future, contingent or otherwise, against 

[Apache] with respect to any adverse environmental conditions,” and expressly agreed 

to assume the risk, set out in all capital letters,“that the assets may contain waste 

materials, including naturally occurring radioactive materials, hydrocarbons, hazardous 

wastes, hazardous materials or hazardous substances, and that adverse physical 

conditions, including, but not limited to, the presence of unknown abandoned oil and 

gas wells, water wells, sumps and pipelines may not have been revealed by [WOC’s] 

investigation.”

Article 9.5, the PSA’s primary indemnity provision, provided in all capital 

letters that from and after the closing date, Apache would indemnify WOC, its 

officers, directors, employees, and agents within a year of the closing for all losses, 

damages, claims, demands, suits, costs, expenses, liabilities, and sanctions of every 

kind and character, including reasonable attorney’s fees, court costs, and costs of 

investigation arising from or in connection with the retained liabilities or any breach 

by Apache of the PSA. And it provided that from and after the closing date, WOC
7

SHALL DEFEND, INDEMNIFY, RELEASE AND HOLD 

HARMLESS [APACHE] AGAINST ALL LOSSES, DAMAGES, 

CLAIMS, DEMANDS, SUITS, COSTS, EXPENSES, LIABILITIES 

AND SANCTIONS OF EVERY KIND AND CHARACTER, 

INCLUDING WITHOUT LIMITATION REASONABLE 

ATTORNEYS’ FEES, COURT COSTS AND COSTS OF 

INVESTIGATION, WHICH ARISE FROM OR IN CONNECTION 

WITH (i) ANY OF THE CLAIMS, COSTS, EXPENSES, 

LIABILITIES AND OBLIGATIONS ASSUMED BY [WOC]

PURSUANT TO SECTION 9.4, OR (ii) ANY BREACH BY [WOC]

OF THIS AGREEMENT.

The PSA’s arbitration clause states,

11.12 Arbitration. Any disputes arising out of or in 

connection with this Agreement or the application, implementation, 

validity, breach or termination of this Agreement shall be finally and 

exclusively resolved by arbitration in Houston, Texas pursuant to the 

dispute resolution provisions contained in Exhibit B. Notwithstanding 

the above, in the event a third party brings an action against [WOC] or 

[Apache] concerning this Agreement or the Assets or transactions 

contemplated herein, [WOC] and [Apache] shall not be subject to 

mandatory arbitration under this section and [WOC] or [Apache] shall 

each be entitled to assert their respective claims, if any, against each 

other in such third party action.

Exhibit B defined “Covered Dispute” as “[a]ny and all disputes concerning or 

arising out of the Agreement to which this Exhibit is attached.” It set forth that 

unless the parties mutually agreed otherwise, if they were unable to resolve an 

arbitrable dispute pursuant to the PSA’s dispute resolution procedures in Exhibit B, 

then the claimant had fifteen days after the parties reached an impasse to serve notice 

requesting that the dispute be submitted to binding arbitration “in accordance with 

the terms of this Appendix and the then current American Arbitration Association 

(‘AAA’) Rules for Arbitration of Commercial Disputes (‘AAA Rules’).” It also 
8

provided that arbitration would be governed by the Federal Arbitration Act (FAA) 

and that the arbitration hearing would be held in Houston, Texas, “at a location 

designated by the arbitrator.” And it provided that the arbitrator’s decision would be 

final, binding, and nonappealable with regard to “grounds of error in the application 

of the law or the findings of fact.”

2. The Apache Assignment

The assignment, conveyance, and bill of sale from Apache to WOC (the 

Apache Assignment), which “granted, sold, assigned, conveyed and delivered” the 

property covered in the PSA, was made “pursuant to and subject to all of the terms 

and conditions” of the PSA and listed the same effective date—“April 1, 2001, 

7:00 A.M., local time”—as the PSA. Wagner executed the assignment on WOC’s 

behalf on June 28, 2001.

3. Assignment from WOC to Wagner, Trade, and W&C

WOC, through H.E. Patterson, its senior vice president, assigned the assets to 

Wagner, Trade, and W&C (the WOC Assignment) on June 29, 2001, with the same

effective date—April 1, 2001—as the PSA and Apache Assignment. Wagner signed 

for himself individually and on behalf of Trade as its vice president. 

Dean O. Cochran Jr. signed for W&C as its president.

The WOC assignment describes the Apache Assignment. It further states, 

“This Assignment is subject to all terms, provisions and conditions contained in the 

APACHE Assignment, and Assignees assume and agree to be bound by and perform 
9

their proportionate parts of all obligations imposed upon [WOC] by the APACHE 

Assignment.”

C. Arbitration Demand

Apache was subsequently named as a defendant in five lawsuits in Louisiana; 

none of these lawsuits were brought by parties to the PSA. On November 20, 2017, 

Apache filed a demand for arbitration against Appellees with AAA, seeking to 

arbitrate the issue of whether Appellees owed it the $15 million that Apache had 

expended in the defense of those lawsuits, related litigation, and settlement costs.

D. The Tarrant County Declaratory Judgment Action

On December 15, 2017,4 Appellees filed a declaratory judgment action in 

Tarrant County, seeking declarations that, among other things, (1) Wagner, Trade, and 

W&C were not parties to the PSA and, accordingly, not subject to the PSA’s 

indemnity and arbitration clauses, (2) Apache was not a third-party beneficiary of the 

WOC Assignment, (3) mandatory arbitration did not apply to a claim for defense and 

indemnity arising from a third-party lawsuit against either Apache or WOC related to 

the PSA or the assets or transactions contemplated in it, and such a claim had to be 

brought in the third-party lawsuit, (4) the Louisiana lawsuits brought by third parties 

 

4Although Apache complains that Appellees started to participate in the 

arbitration process before filing their declaratory judgment action in Tarrant County,

the record reflects that WOC objected to arbitrability and expressly refused to waive 

any of its objections when it selected its arbitrator eight days before filing its Tarrant 

County lawsuit. And the parties signed a rule 11 agreement in early January 2018 to 

reflect that by responding to Appellees’ Tarrant County lawsuit, Apache was not 

waiving any of its rights or arguments relating to arbitration, venue, or jurisdiction.
10

against Apache and WOC concerned the PSA or the assets or transactions 

contemplated therein,

5

and (5) Appellees had no duty to defend or indemnify Apache 

or to arbitrate the dispute. Apache filed a motion to transfer the case to Harris 

County and a motion to abate and compel arbitration. Appellees filed an application 

to stay arbitration.

E. Arbitration

In its motion to abate and to compel arbitration, Apache argued that because 

WOC had agreed that the arbitrator would decide issues of arbitrability, pursuant to 

the AAA Commercial rules, which were expressly incorporated into the arbitration 

agreement, the trial court was required to compel arbitration. Apache further argued 

that WOC’s assignees were required to arbitrate because they had expressly assumed 

the arbitration obligations in article 11.10 of the PSA and because they had agreed to 

be bound by and perform all of WOC’s PSA obligations in the WOC Assignment. 

Apache also contended that WOC’s assignees were required to arbitrate under 

incorporation by reference and direct benefits estoppel theories.

In their response to Apache’s motion to abate and compel arbitration, 

Appellees argued that the third-party-dispute exemption in the arbitration clause 

 

5At the hearing on Apache’s motion to transfer and Appellees’ motion to stay, 

Wagner and WOC’s counsel asserted that some of the plaintiffs in the declaratory 

judgment action were parties to all five of the Louisiana lawsuits but that not all of the 

plaintiffs were parties to all of the lawsuits, two of which had settled, two of which 

had been prevailed upon by Apache, and one of which was still pending. In response 

to the trial court’s query, Wagner and WOC’s counsel stated that there were no crossactions in the Louisiana lawsuits between the parties to the instant case.
11

applied to their dispute and adopted and incorporated by reference the arguments in 

their stay application. They also argued that because Wagner, Trade, and W&C were 

nonsignatories to the PSA, the arbitration clause did not bind them.

F. Hearing

On March 22, 2018, the trial court heard Apache’s motion to transfer and

Appellees’ motion to stay the arbitration proceedings. Apache argued that the 

designation of Houston in the arbitration clause as the arbitration location, plus the 

provisions in civil practice and remedies code sections 171.096(a) and 15.020, meant 

arbitration had to occur in Harris County and that, despite the third-party actions, the 

arbitration clause applied. Apache also argued that the WOC assignment 

incorporated the arbitration clause when it was made subject to the PSA’s terms and 

conditions.

Trade and W&C’s counsel argued that the WOC Assignment did not contain 

an arbitration clause or extend the PSA’s arbitration clause to them, that the WOC 

Assignment was not sued on by any party, and that they were not parties to the PSA. 

They further argued that venue was appropriate in Tarrant County because the PSA 

and WOC Assignment were negotiated there and that WOC and Apache had only 

agreed that certain disputes would be arbitrated, not that any dispute arising out of or 

in connection with the PSA must be brought in Houston.

Wagner and WOC’s counsel argued that the arbitration should be stayed until 

they could get a declaration of what the arbitration agreement meant when the express 
12

exception in the arbitration clause showed that the parties had never contemplated 

subjecting indemnity claims relating to third-party claims to the arbitration provision. 

He also argued that Apache had the burden to show that the issue of arbitrability was 

up to the arbitrator and that the arbitration clause was silent on that issue.

Apache’s counsel responded that both conditions precedent in the arbitration 

clause—(1) a dispute arising out of the PSA and (2) a third party’s suing Apache or 

WOC related to the PSA, assets, or transactions covered thereby—had to be met 

before the exception would come into play and that the broad “any disputes” 

language was clear and unmistakable evidence that the parties had agreed that 

threshold questions of arbitrability would be decided by the arbitrator, particularly 

when the AAA Commercial rules were incorporated into the PSA through the exhibit 

referenced in the arbitration clause.

G. Trial Court’s Orders

The trial court denied Apache’s motion to transfer venue, granted Appellees a 

stay of arbitration, and denied Apache’s motion to abate and compel arbitration.

Apache appealed these orders. We filed the arbitration appeal in cause number 02-18-

00132-CV and the venue appeal in cause number 02-18-00135-CV.6 We subsequently 

consolidated these cases.

 

6Apache also filed a petition for writ of mandamus in cause number 02-18-

00137-CV, which we denied on May 17, 2018.
13

In a letter ruling, the trial court elaborated that the exemption in the PSA’s 

arbitration clause applied to the class of claims “referenced in th[e] second sentence” 

of the clause, i.e., third-party claims, precluding mandatory arbitration of the claims at 

issue. The trial court further determined that Apache had failed to establish clearly 

and unmistakably that the arbitrator, rather than the court, was to decide the “gateway 

matter” of whether a valid arbitration agreement existed.

III. Arbitration

We review a trial court’s denial of a motion to compel arbitration for an abuse 

of discretion. Diligent Tex. Dedicated LLC v. York, No. 02-17-00416-CV, 2018 WL 

4140637, at *4 (Tex. App.—Fort Worth Aug. 30, 2018, pets. filed) (mem. op.) (citing 

Legoland Discovery Ctr. (Dallas), LLC v. Superior Builders, LLC, 531 S.W.3d 218, 221 (Tex. 

App.—Fort Worth 2017, no pet.)). But because unambiguous contracts are construed 

as a matter of law, Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1, 7 (Tex. 

2014), we review de novo a trial court’s determination regarding whether a valid 

agreement to arbitrate exists and its construction of an unambiguous arbitration 

agreement. See In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009) (orig. 

proceeding); In re Guggenheim Corp. Funding, LLC, 380 S.W.3d 879, 886 (Tex. App.—

Houston [14th Dist.] 2012, orig. proceeding [mand. dism’d]); see also Granite Re Inc. v. 

Jay Mills Contracting Inc., No. 02-14-00357-CV, 2015 WL 1869216, at *3 (Tex. App.—

Fort Worth Apr. 23, 2015, no pet.) (mem. op. on reh’g).
14

As described by our supreme court, arbitration is a creature of contract 

between consenting parties. Jody James Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 

629 (Tex. 2018). Who is bound by an arbitration agreement is normally a function of 

the parties’ intent as expressed in their agreement’s terms. Id. at 633. When relying 

on a contract to compel arbitration, the movant must first establish the existence of a 

valid and enforceable arbitration agreement and then must establish whether the 

claims at issue fall within the arbitration agreement’s scope. Id.; In re Kellogg Brown & 

Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). Doubts about scope 

are resolved in favor of arbitration, but the presumption favoring arbitration 

agreements arises only after the party seeking to compel arbitration proves that a valid 

arbitration agreement exists. Kellogg Brown & Root, Inc., 166 S.W.3d at 737–38.

An arbitration clause is a “specialized kind of forum-selection clause,” Pinto 

Tech. Ventures, L.P. v. Sheldon, 526 S.W.3d 428, 437 (Tex. 2017), and whether claims are 

covered by a forum-selection clause “should be [determined] according to a commonsense examination of the substance of the claims made.” In re Int’l Profit Assocs., Inc., 

274 S.W.3d 672, 677–78 (Tex. 2009) (orig. proceeding). To determine whether a 

claim falls within the scope of the agreement, courts must focus on the factual 

allegations of the complaint, rather than the legal causes of action asserted. In re 

Rubiola, 334 S.W.3d 220, 225 (Tex. 2011) (orig. proceeding); see also In re Kaplan Higher 

Educ. Corp., 235 S.W.3d 206, 210 (Tex. 2007) (orig. proceeding) (stating that when an 

agreement between two parties clearly provides for the substance of the dispute to be 
15

arbitrated, one cannot avoid it by simply pleading that a nonsignatory agent or affiliate 

was pulling the strings). Because forum-selection clauses are creatures of contract, the 

circumstances in which nonsignatories can be bound to one are rare. Pinto Tech. 

Ventures, L.P., 526 S.W.3d at 443.

We review a contractual provision in light of the entire contract. BBVA 

Compass Inv. Sols., Inc. v. Brooks, 456 S.W.3d 711, 718–19 (Tex. App.—Fort Worth 

2015, no pet.). That is, as the supreme court has instructed us,

[w]e “construe contracts from a utilitarian standpoint bearing in mind 

the particular business activity sought to be served,” and avoiding 

unreasonable constructions when possible and proper. Reilly v. Rangers 

Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987). To that end, we consider 

the entire writing, harmonizing and giving effect to all the contract 

provisions so that none will be rendered meaningless. Moayedi, 438 

S.W.3d at 7. No single provision taken alone is given controlling effect; 

rather, each must be considered in the context of the instrument as a 

whole. Id. We also give words their plain, common, or generally 

accepted meaning unless the contract shows that the parties used words 

in a technical or different sense. Id.

Plains Expl. & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex. 2015).

A contract is not ambiguous if its language can be given a certain or definite 

meaning. Id. But if the contract is subject to two or more reasonable interpretations 

after applying the pertinent contract principles, the contract is ambiguous, creating a 

fact issue regarding the parties’ intent. Id. Mere disagreement over the interpretation 

of an agreement does not necessarily render the contract ambiguous. Id. Further, our 

primary concern is to determine the true intent of the parties as expressed by the plain 
16

language of the agreement. N. Shore Energy, L.L.C. v. Harkins, 501 S.W.3d 598, 602 

(Tex. 2016).

A. Arbitration Agreement

We must determine whether Apache showed, under Texas contract law, that 

there was a valid agreement to arbitrate between it and Appellees.

1. Apache–WOC Agreement to Arbitrate

In the PSA, WOC and Apache agreed to arbitrate “[a]ny disputes arising out of 

or in connection with this Agreement or the application, implementation, validity, 

breach or termination of this Agreement . . . pursuant to the dispute resolution 

provisions contained in Exhibit B,”7and the Apache Assignment was made subject 

“to the terms and conditions” of the PSA. Accordingly, Apache showed that there 

was a valid agreement to arbitrate between it and WOC.

2. WOC Assignees

Determining whether a claim involving a nonsignatory must be arbitrated is a 

gateway matter for the trial court, not the arbitrator. Jody James Farms, JV, 547 S.W.3d 

at 629, 630 (“Who may properly adjudicate arbitrability is critical to ascertaining the 

appropriate standard of review.”).

Contract language can extend enforcement rights to nonsignatories, such as 

when the arbitration agreement expressly provides that certain nonsignatories are 

 

7Within this agreement, Apache and WOC carved out an exception, the 

applicability of which we address below.
17

considered parties to the agreement. Pinto Tech. Ventures, L.P., 526 S.W.3d at 445. But 

the mere incorporation of AAA rules does not demonstrate a clear intent to arbitrate 

arbitrability as to a nonsignatory; rather, compelled arbitration cannot precede a 

judicial determination that an agreement to arbitrate exists in the absence of clear and 

unmistakable evidence that a party agreed to arbitrate arbitrability in disputes with 

nonsignatories. Jody James Farms, JV, 547 S.W.3d at 632–33.

The matter before us involves a signatory defendant trying to force 

nonsignatory plaintiffs into a forum not selected by the nonsignatory plaintiffs. There 

are six scenarios in which arbitration with nonsignatories may be required: 

incorporation by reference, assumption, agency, alter ego, equitable estoppel, and 

third-party beneficiary. Id. at 633 (referencing Kellogg Brown & Root, Inc., 166 S.W.3d at

739). Apache argues that WOC’s assignees are subject to three of these theories—

assumption, direct benefits estoppel,8and incorporation by reference.

9

 

8Under “direct benefits” estoppel, a nonsignatory plaintiff seeking the benefits 

of a contract is estopped from simultaneously attempting to avoid the contract’s 

burdens and may be compelled to arbitrate if he seeks to enforce the terms of a 

contract containing an arbitration provision, such as suing for breach of contract, 

breach of warranty, or revocation of acceptance based on the contract’s written terms. 

Kellogg Brown & Root, Inc., 166 S.W.3d at 739–40; see Meyer v. WMCO-GP, LLC, 211 

S.W.3d 302, 307 (Tex. 2006) (“When a party’s right to recover and its damages 

depend on the agreement containing the arbitration provision, the party is relying on 

the agreement for its claims.”).

9Documents incorporated into a contract by reference become a part of the 

contract when they do more than merely mention it. See In re 24R, Inc., 324 S.W.3d 

564, 567 (Tex. 2010) (orig. proceeding); Bob Montgomery Chevrolet, Inc. v. Dent Zone Co., 

409 S.W.3d 181, 189 (Tex. App.—Dallas 2013, no pet.). The language of the signed 
18

Under the assumption scenario, an assignee may be held liable under another 

party’s contract if it makes an express or implicit assumption of the contract’s 

obligations. NextEra Retail of Tex., LP v. Inv’rs Warranty of Am., Inc., 418 S.W.3d 222, 

227 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (stating that while an implied 

assumption is disfavored, it may arise when the benefit received by the assignee is so 

entwined with the burden imposed by the assignor’s contract that the assignee is 

estopped from denying assumption and the assignee would otherwise be unjustly 

enriched). And instruments pertaining to the same transaction may be read together 

to ascertain the parties’ intent. Fort Worth ISD v. City of Fort Worth, 22 S.W.3d 831, 840 

(Tex. 2000) (stating that such instruments may be read together “even if the parties 

executed the instruments at different times and the instruments do not expressly refer 

to each other”).10 The PSA, Apache Assignment, and WOC Assignment all pertain to 

 

document must show that the parties intended for the other document to become a 

part of the agreement. Bob Montgomery Chevrolet, Inc., 409 S.W.3d at 189–90 (“[T]he 

referring language in the original document must demonstrate the parties intended to 

incorporate all or part of the referenced document.”); see Gross v. WB Tex. Resort 

Cmtys., L.P., No. 02-12-00411-CV, 2014 WL 7334950, at *3 (Tex. App.—Fort Worth 

Dec. 23, 2014, no pet.) (mem. op.); see also In re Prudential Ins. Co. of Am., 148 S.W.3d 

124, 135 (Tex. 2004) (orig. proceeding) (holding that lease’s jury waiver was 

incorporated by reference into guaranty agreement, which “plainly refer[red]” to the 

lease when guarantors agreed to “faithfully perform and fulfill all of [the] terms, 

covenants, conditions, provisions, and agreements” of the lease if the partnership 

defaulted).

10In Fort Worth ISD, the court read two Fort Worth ordinances and 

“contemporaneous, related documents” together as a valid agreement enforceable by 

the local school district, notwithstanding the city’s argument that no single instrument 

reflected any agreement between the city and the school district. 22 S.W.3d at 834, 
19

the same ultimate transaction—the purchase, sale, and conveyance of the oil-and-gas 

related assets and liabilities.

In the WOC Assignment, a separate agreement that did not involve Apache but 

that bore the same effective date and conveyed the same assets governed by the PSA 

and the Apache Assignment, WOC and the other Appellees agreed that their

assignment was “subject to all terms, provisions and conditions contained in the 

APACHE Assignment,” and that “Assignees assume[d] and agree[d] to be bound by 

and perform their proportionate parts of all obligations imposed upon Assignor by 

the APACHE Assignment.” [Emphasis added.] The Apache Assignment, between 

Apache and WOC, was made subject to all of the PSA’s terms and conditions. And 

the PSA itself, in article 11, which governed assignment, provided that the PSA would 

be binding upon and inure both to WOC and Apache “and their respective successors 

and assigns.” Wagner, albeit in his corporate capacity, signed the PSA on June 4, 

2001, and the Apache Assignment on June 28, 2001, giving him intimate familiarity 

with these documents’ requirements before he signed the WOC Assignment in his 

personal capacity on June 29, 2001.

Based on the above, we conclude that the remaining Appellees are also subject 

to the PSA’s arbitration clause. Compare Rieder v. Meeker, No. 02-17-00176-CV, 2018 

WL 5074703, at *16 (Tex. App.—Fort Worth Oct. 18, 2018, no pet. h.) (mem. op.) 

 

838–40 (observing that, as a matter of law, a court may determine that multiple 

documents comprise a written contract and that in “appropriate instances, courts may 

construe all documents as if they were part of a single, unified instrument”).
20

(holding that forum selection clause was enforceable against nonsignatories who were 

managing board members of and closely related to a signatory because they were so 

closely related to the signatory that enforcement of the clause against them was 

foreseeable), with Ball Up, LLC v. Strategic Partners Corp., Nos. 02-17-00197-CV, 02-17-

00198-CV, 2018 WL 3673044, at *8 (Tex. App.—Fort Worth Aug. 2, 2018, no pet.) 

(mem. op.) (holding that a nonsignatory stranger to the contract with the forum 

selection clause could not enforce the clause against a signatory to attain personal 

jurisdiction over it in Texas). Accordingly, we do not reach Apache’s other theories. 

See Tex. R. App. P. 47.1.

But our analysis does not end here. Apache also had the burden to establish 

that the claims in Appellees’ declaratory judgment action fell within the scope of the 

arbitration clause.

B. Arbitration Clause’s Scope

The arbitration clause at issue applies broadly to any disputes “arising out of or 

in connection with [the PSA] or the application, implementation, validity, breach or 

termination of the PSA,” with a carved-out exception. That exception states that 

notwithstanding the breadth of the first sentence’s language,

in the event a third party brings an action against [WOC] or [Apache]

concerning this Agreement or the Assets or transactions contemplated 

herein, [WOC] and [Apache] shall not be subject to mandatory 

arbitration under this section and [WOC] or [Apache] shall each be 

entitled to assert their respective claims, if any, against each other in such 

third party action.
21

Apache argues that the carve-out only allowed Appellees to avoid arbitration if 

a third party filed suit related to the assets and Appellees filed cross-claims against 

Apache in the same third-party action. Apache complains that the trial court’s 

interpretation rendered the phrase “in such third party action” surplusage.

Appellees respond that the carve-out’s proper construction should be 

understood to mean that when the claim involves a third party and the assets, the PSA 

does not require arbitration, regardless of whether the issues are litigated in the thirdparty action or as a stand-alone lawsuit between Apache and Appellees.

For the exception to apply, a third party had to sue either Apache or WOC, 

raising some issue connected to the PSA, the assets, or “transactions contemplated” in 

the PSA. The record reflects that various third parties, in five Louisiana lawsuits, sued 

Apache, and that Apache, in turn, sought arbitration with regard to its breach-ofcontract-based indemnity issues. The plain language of the last portion of the carveout closes with a second reference to the third-party action.11

Considering both the language of the carve-out and the rest of the PSA to 

provide context for the arbitration clause, we read the carve-out as limited to crossclaims within a third-party action. See Plains Expl. & Prod. Co., 473 S.W.3d at 305 

(explaining that courts should construe contracts by giving effect to all of the 

 

11Appellees argue that the language of the carve-out—such third-party action—

“simply refers back to the two circumstances that define the parameters of the ‘event’

that triggers the carve-out sentence” and that the second clause is permissive. For the 

reasons set forth above and below, we disagree.
22

provisions and bearing in mind the business activity sought to be served); see also

Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 242 (Tex. 2016) (referencing “the 

fundamental principle that courts cannot rewrite the parties’ contract or add to or 

subtract from its language”); Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 

327 S.W.3d 118, 126 (Tex. 2010) (op. on reh’g) (“Courts strive to honor the parties’

agreement and not remake their contract by reading additional provisions into it.”).

We reach this conclusion not only by applying the plain language used in the 

PSA but also by taking a utilitarian view of the business activity sought to be served 

here. See N. Shore Energy, L.L.C., 501 S.W.3d at 602 (“Our primary concern is to 

determine the true intent of the parties as expressed by the plain language of the 

agreement.”); Plains Expl. & Prod. Co., 473 S.W.3d at 305 (requiring contracts to be 

construed “from a utilitarian standpoint bearing in mind the particular business 

activity sought to be served”). The overriding theme of the PSA was for Apache to 

walk away from all but its specific retained liabilities, handing the potentially profitable 

assets to WOC in exchange for $25 million, an “as-is” sale with a sole remedy for any 

noncompliance by Apache with environmental laws available only before closing so 

that the parties could adjust the purchase price—“closing” here was meant as a cutoff 

date for the Article 6 remedies.12 The parties agreed to a broad indemnification 

 

12The PSA was effective April 1, 2001, signed June 4, 2001, and closed June 29, 

2001. While closing is typically when assets are transferred, here, as noted above, 

“closing” had the additional significance of cutting off remedies with regard to 

adverse environmental conditions related to the assets.
23

provision, and it is clear from the PSA’s plain language that Apache did not want any 

liability other than that which it specifically retained, not even for any damages 

sustained during WOC’s inspection of the to-be-sold-“as is” assets. The parties also 

agreed to a broad, far-reaching arbitration procedure covering “[a]ny and all disputes”

except for those involving engagement in any third-party actions. See Nat’l City Mortg. 

Co. v. Adams, 310 S.W.3d 139, 144 (Tex. App.—Fort Worth 2010, no pet.) (op. on 

reh’g) (observing that a defining characteristic of indemnification is that it does not 

apply to claims between the parties to the agreement but rather relates to liability 

claims of persons not party to the agreement); see also Prudential Sec. Inc. v. Marshall, 909 

S.W.2d 896, 899 (Tex. 1995) (orig. proceeding) (reciting that the policy in favor of 

enforcing arbitration agreements is so compelling that courts should not deny 

arbitration “unless it can be said with positive assurance that an arbitration clause is not

susceptible of an interpretation which would cover the dispute at issue” (quoting Neal 

v. Hardee’s Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990))); S.P., III v. N.P., No. 02-16-

00278-CV, 2017 WL 3821887, at *6 (Tex. App.—Fort Worth Aug. 31, 2017, no pet.)

(mem. op.) (“A strong presumption favors arbitration, and courts resolve any doubts 

about an agreement’s ‘scope, waiver, and other issues unrelated to its validity in favor 

of arbitration. Unless it can be said with positive assurance that an arbitration clause 

is not susceptible of an interpretation which would cover the dispute at issue, a court 

should not deny arbitration.’” (quoting BBVA Compass Inv. Sols., 456 S.W.3d at 718 

(footnote omitted))).
24

Accordingly, we conclude that the trial court abused its discretion by denying 

Apache’s motion to compel arbitration and sustain Apache’s first issue. Because we 

sustain Apache’s first issue, we do not reach its second issue on venue. See Tex. R. 

App. P. 47.1.

IV. Conclusion

The trial court erred in its construction of the parties’ arbitration agreement. 

Accordingly, we sustain Apache’s first issue, vacate the trial court’s order granting the 

stay of arbitration, and remand this case to the trial court to compel arbitration 

pursuant to the parties’ agreement.

/s/ Bonnie Sudderth

Bonnie Sudderth

Chief Justice

Delivered: November 29, 2018