IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

ASHLI ABERNATHY, ET AL., §

§

Plaintiffs, §

§

VS. § NO. 4:05-CV-189-A

§

ALTA COLLEGES, INC., ET AL., §

§

Defendants. §

MEMORANDUM OPINION

and

ORDER

Came on for consideration the motion of defendants, Alta

Colleges, Inc., and Elbert, Inc., for an order compelling

arbitration and staying this action. The court, having

considered the motion, plaintiffs' response, the reply, the

record, and applicable authorities, finds that the motion should

be granted.

I.

Plaintiffs' Claims

On February 16, 2005, plaintiffs filed their original

petition in the 17th Judicial District Court of Tarrant County,

Texas. On March 21, 2005, defendants filed their notice of

removal, bringing the action before this court. 

Plaintiffs allege that they are or were students at Westwood

College in Fort Worth, Texas, owned and operated by defendants. 

Plaintiffs allege that defendants, through their representatives,

made material misrepresentations to plaintiffs to induce them to

attend Westwood College. Plaintiffs assert claims under the

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 1 of 8 PageID 1047
2

Texas Deceptive Trade Practices-Consumer Protection Act, Tex.

Bus. & Com. Code Ann. § 17.41-.63 (Vernon 2002), and for breach

of contract. 

II.

Pertinent Contract Provisions

The contract upon which plaintiffs sue, designated "Texas

Enrollment Agreement," contains one of two arbitration

provisions. Agreements signed before mid-2003 provide:

I, the applicant . . .

. . . .

(9) Acknowledge that the College and I agree that

any disputes relative to this contract or the education

and training received by me shall be resolved through

binding arbitration. The parties shall attempt to

agree to an impartial arbitrator or arbitrators. If

they cannot agree, the same shall be selected by the

County District Court.

Defs.' App. at AC4. Those who enrolled after mid-2003 signed an

agreement providing:

I, the applicant . . .

. . . .

(9) Acknowledge that any disputes relative to this

contract or the education and training received by me,

no matter how described, pleaded or styled, shall be

resolved through binding arbitration under the Federal

Arbitration Act conducted by the American Arbitration

Association ("AAA") at Dallas, Texas, under the

Commercial Rules. The award rendered by the arbitrator

may be entered in any court having jurisdiction. Refer

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 2 of 8 PageID 1048
3

to "Agreement to Binding Arbitration and Waiver of Jury

Trial" form in the application materials.

Id. at 96. 

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 3 of 8 PageID 1049
 

1A number of plaintiffs also executed loan documents

containing an arbitration provision. There is no need to

consider specifically the terms of those agreements.

4

All of the contracts, no matter when signed, contain a

provision set forth immediately above the plaintiff's signature

providing:

I ACKNOWLEDGE HAVING READ AND DO UNDERSTAND THIS

AGREEMENT, WHICH INCLUDES INFORMATION PRINTED ON THE

REVERSE SIDE OF THIS AGREEMENT AND WHICH IS

INCORPORATED HEREIN BY REFERENCE. I HAVE NOT BEEN MADE

ANY VERBAL PROMISES OR GUARANTEES.

Defs.' App. at AC4, 96.

Thirty-one of the plaintiffs also executed an agreement

entitled "Agreement to Binding Arbitration and Waiver of Jury

Trial." That one-page document sets forth specifically that

plaintiff and the school agree that any dispute arising between

them will be submitted to arbitration under the Federal

Arbitration Act, conducted by the American Arbitration

Association. Defs.' App. at AC170-200.1

III.

Pertinent Law

Federal policy favors arbitration agreements, requiring

courts to rigorously enforce agreements to arbitrate, resolving

any doubts in favor of arbitration. Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625-26 (1985). A

party seeking to compel arbitration must only establish (1) the

existence of a valid agreement to arbitrate and (2) that the

claims asserted are within the scope of the arbitration

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 4 of 8 PageID 1050
5

agreement. Pennzoil Exploration & Prod. Co. v. Ramco Energy,

Ltd., 139 F.3d 1061, 1065 (5th Cir. 1998). 

By suing on a contract, a plaintiff subjects himself to the

contract's terms, including an arbitration provision. In re

FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001). One

cannot rely on a contract when it works to his advantage and then

repudiate it when it works to his disadvantage. Hughes Masonry

Co. v. Greater Clark County Sch. Bldg. Corp., 659 F.2d 836, 839

(7th Cir. 1981). When a party to a contract asserts a defense to

the contract as a whole, the enforceability of the contract is

for the arbitrator to decide. Will-Drill Res., Inc. v. Samson

Res. Co., 352 F.3d 211, 218-19 (5th Cir. 2003). If the party

instead only attacks the enforceability of an arbitration

provision within a contract on grounds separate and independent

from the entire contract, then the court determines the

enforceability of the arbitration provision. Id. See also Banc

One Acceptance Corp. v. Hill, 367 F.3d 426, 430 (5th Cir. 2004);

FirstMerit, 52 S.W.3d at 756.

Whenever the issues raised in a case are within the reach of

an arbitration agreement, the district court has no discretion

but to grant a request for stay. 9 U.S.C. § 3; Hornbeck Offshore

(1984) Corp. v. Coastal Carriers Corp., 981 F.2d 752, 754 (5th

Cir. 1993).

IV.

Law Applied to the Facts

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 5 of 8 PageID 1051
6

There is no dispute that each plaintiff entered into a

written agreement to arbitrate. Nor is it disputed that the

claims asserted by plaintiffs are within the reach of the

arbitration agreements. Plaintiffs' focus is on whether the

agreements are enforceable.

Plaintiffs first attack the motion on the ground that

defendants' supporting evidence is inadmissible. They mistakenly

assume that the contracts attached to the declaration of Kelly

Coates as exhibits are inadmissible hearsay. The documents,

however, have independent legal significance and are not hearsay. 

Kepner-Tregoe, Inc. v. Leadership Software, Inc., 12 F.3d 527,

540 (5th Cir. 1994). Moreover, they are properly authenticated

through the declaration. 

Plaintiffs next argue that they were misled and fraudulently

induced into signing the contracts. Because their defenses

relate to the formation of the contract as a whole, and not just

the arbitration clause, the matter is one properly decided by the

arbitrator and not the court. Miller v. Pub. Storage Mgmt.,

Inc., 121 F.3d 218, 218-19 (5th Cir. 1997); FirstMerit, 52 S.W.3d

at 756. And, although plaintiffs allege procedural

unconscionability, the facts at hand do not come close to

establishing such a defense. See In re Rangel, 45 S.W.3d 783

(Tex. App.--Waco 2001, no pet.) (no procedural unconscionability

found where plaintiff was 75 years old, never attended school,

was functionally illiterate, and was hard of hearing). There is

nothing per se unconscionable about arbitration agreements and

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 6 of 8 PageID 1052
7

parties claiming unconscionability bear the burden of

demonstrating it. Carter v. Countrywide Credit Indus., Inc., 362

F.3d 294, 301 n.5 (5th Cir. 2004).

Finally, plaintiffs allege that the multiple arbitration

provisions are contradictory and, therefore, cannot be enforced. 

They fail to show, however, that any individual plaintiff signed

contradictory agreements. 

V.

Order

For the reasons discussed herein,

The court ORDERS that defendants' motion for an order

compelling arbitration and staying this action be, and is hereby,

granted; that plaintiffs proceed immediately to initiate 

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 7 of 8 PageID 1053
8

arbitration proceedings; and, that this action be, and is hereby,

stayed pending arbitration.

SIGNED May 23 , 2005.

 /s/ John McBryde 

JOHN McBRYDE

United States District Judge

 

 Case 4:05-cv-00189-A Document 21 Filed 05/23/05 Page 8 of 8 PageID 1054