NO. 01-15-00194-CV

IN THE COURT OF APPEALS

FIRST DISTRICT OF TEXAS

HOUSTON, TEXAS

AN LUXURY IMPORTS, L.T.D. d/b/a

BMW OF DALLAS, AN LUXURY

IMPORTS GP., LLC and UNITED

STATES WARRANTY CORP.

APPELLANTS

 TRIAL COURT NO. 2014-33551

VS.

D. SCOTT SOUTHALL 

APPELLEE

On Appeal from the 295th District Court 

Of Harris County, Texas

BRIEF OF APPELLANTS AN LUXURY IMPORTS, L.T.D.

d/b/a BMW OF DALLAS, AN LUXURY IMPORTS GP., LLC

and UNITED STATES WARRANTY CORP.

JOHNSON, DeLUCA, KURISKY & GOULD

A Professional Corporation

4 Houston Center, Suite 1000

1221 Lamar Street

Houston, Texas 77057

(713) 652-2525 – Telephone

(713) 652-5130 – Facsimile

ACCEPTED

01-15-00194-cv

FIRST COURT OF APPEALS

HOUSTON, TEXAS

4/6/2015 1:40:06 PM

CHRISTOPHER PRINE

CLERK

 FILED IN 1st COURT OF APPEALS HOUSTON, TEXAS 4/6/2015 1:40:06 PM CHRISTOPHER A. PRINE Clerk
ii

GEORGE A. KURISKY, JR.

SBT No.: 11767700

DANIEL J. KASPRZAK

SBT No.: 11105300

MARK A. BANKSTON

SBT No.: 24001430

ATTORNEYS FOR APPELLANTS 

AN LUXURY IMPORTS, L.T.D.

d/b/a BMW OF DALLAS, AN LUXURY IMPORTS GP., LLC

and UNITED STATES WARRANTY CORP.
iii

IDENTITIES OF PARTIES AND COUNSEL

The following is a complete list of names and addresses of all parties to the 

trial court proceeding and their counsel:

Appellants: AN Luxury Imports, Ltd d/b/a BMW of Dallas

AN Luxury Imports GP, LLC

United States Warranty Corp.

Appellants’ Counsel: George A. Kurisky, Jr.

Daniel J. Kasprzak

Mark A. Bankston 

Johnson DeLuca Kurisky & Gould P.C.

1221 Lamar Street

Suite 1000

Houston, Texas 77010

Appellee: D. Scott Southall

Appellee’s Counsel Victor S. Elgohary

6406 Arcadia Bend Ct.

Houston, Texas 77041
iv

TABLE OF CONTENTS

IDENTITIES OF PARTIES AND COUNSEL ....................................................... iii

TABLE OF CONTENTS..........................................................................................iv

INDEX OF AUTHORITIES.....................................................................................vi

STATEMENT OF THE CASE..................................................................................1

REQUEST FOR ORAL ARGUMENT .....................................................................3

ISSUES PRESENTED...............................................................................................3

STATEMENT OF FACTS ........................................................................................4

PROCEDURAL FACTS ...........................................................................................6

SUMMARY OF ARGUMENT ................................................................................8

STANDARD OF REVIEW.....................................................................................10

ARGUMENT AND AUTHORITIES......................................................................12

1. The Trial Court Erred by Denying Arbitration Because Southall and 

BMW of Dallas Agreed to Submit Disputes to Arbitration and the 

Claims Asserted Against the Defendants are Within the Scope of the 

Arbitration Agreement......................................................12

(A) The Arbitration Agreement Between Southall and BMW 

of Dallas is a Valid Contract.....................................................14

(1) All Contract Signed by Southall Must be Considered 

Together Because They Pertain to the Same Transaction 

of Purchasing the Vehicle .........................................................16

(2) Southall’s Arguments Regarding the Forum Selection 

Clause are not Persuasive..........................................................18
v

(3) The Arbitration Agreement Governs Southall’s 

Claims Against U.S. Warranty..................................................22

(B) Southall’s Claims are Within the Scope of the Arbitration 

Agreement.................................................................................28

(1) Southall’s Warranty Claims are Subject to the 

Arbitration Agreement..............................................................30

(2) Southall’s Fraud and Non-Disclosures are Subject to 

the Arbitration Agreement ........................................................31

CONCLUSION........................................................................................................33

PRAYER..................................................................................................................33

CERTIFICATE OF COMPLIANCE ......................................................................35

CERTIFICATE OF SERVICE ...............................................................................35
vi

INDEX OF AUTHORITIES

Cases

Aldridge v. Thrift Financial Marketing, LLC, 376 S.W.3d 877, 882

(Tex. App.—Fort Worth 2012, no pet.).................................................................11

Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 270-71 (1995)....................14

Ascendant Anesthesia PLLC v. Abazi, 348 S.W.3d 454, 462

(Tex. App.—Dallas 2011, no pet.).........................................................................27

Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 355 (Tex. 2001).................13

Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) .......... 14, 15, 21, 22

Citigroup Global Markets, Inc. v. Brown, 261 S.W.3d 394, 399 

 (Tex. App.—Houston [14th Dist.] 2008, no pet. h.)..............................................11

Cleveland Const., Inc. v. Levco Const., Inc., 359 S.W.3d 843, 852

(Tex. App.—Houston [1st Dist.] 2012, pet. dism’d).......................... 11, 12, 13, 15

Cotton Commercial USA, Inc. v. Cleark Creek Indep. School Dist., 397 S.W.3d 99, 

103 n. 3 (Tex. App.—Houston [14th Dist.] 2012, no pet.)........................... 10, 13

Dean Witter Reynolds v. Byrd, 470 U.S. 213, 217 (1985).......................... 10, 26, 27

Enterprise Field Services, LLC v. TOC-Rocky Mountain, Inc., No. 01–12–00345–

CV, 2013 WL 744006, at *1, n. 1 (Tex. App.—Houston [1st Dist.] Feb. 28, 

2013, pet. filed).....................................................................................................13

EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996)..................................14

Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 55 n. 9 (Tex. 2008) .........................11

Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.2000)

..............................................................................................................................22
vii

Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312

(Tex.2005) (per curiam).........................................................................................20

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) .........................14

Grant Thornton LLP v. Prospect High Income Fund, 

 314 S.W.3d 913, 919-20 (Tex. 2010) ....................................................................32

Helena Chemical Co. v. Wilkins, 18 S.W.3d 744, 750

(Tex. App.—San Antonio 2000) affm’d 47 S.W.3d 486 (Tex. 2001)...................26

Howsan v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002).............................14

In re Bank One, 216 S.W.3d 825, 826 (Tex. 2007).................................................28

In re Certain Underwriters at Lloyd’s, 18 S.W.3d 867, 875-76 

(Tex. App.—Beaumont 2000, no pet.) ................................................................26

In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005).................11

In re D. Wilson Constr., 196 S.W.3d 774, 781 (Tex. 2006)....................................28

In re Dallas Peterbilt, Ltd., 196 S.W.3d 161, 163 (Tex. 2006)...............................28

In re Dillard Dept. Stores, 186 S.W.3d. 514, 515 (Tex. 2006)...............................28

In re FirstMerit Bank, 52 S.W.3d 749, 753 (Tex. 2001).........................................14

In re Kaplan Higher Educ. Corp., 235 S.W.3d, 206, 208 & n.1 (Tex. 2007).........28

In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex.2005) (orig. 

proceeding)...........................................................................................................12

In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009) .................. 11, 26, 28

In re Prudential, 159 S.W.3d at 283........................................................................27

In re Rubiola, 334 S.W.3d 220, 224 (Tex. 2011)....................................................28

J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003).................. 12, 20
viii

Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 271 (Tex.1992) ......................27

Kaye/Bassman Intern. Corp. v. Help Desk Now, Inc., 321 S.W.3d 806, 813

(Tex. App.—Dallas 2010, pet. denied)..................................................................20

Okorafor v. Uncle Sam & Assocs., Inc., 295 S.W.3d 27, 38

(Tex. App.—Houston [1st Dist.] 2009, pet. denied) .............................................11

Pennzoil Coc. v. Arnold Oil Co., 30 S.W.3d 494, 498 

(Tex. App.—San Antonio 2000, orig. proceeding) ...............................................28

Prudential Secs. Inc. v. Marshall, 909 S.W.2d 896, 900 (Tex. 1995).....................28

Schlumberger Tech. Corp. v. Baker Hughes, Inc., 355 S.W.3d 791, 800

(Tex. App.—Houston [1st Dist.] 2011, no pet.)................................................... 11

Smith v. National Resort Cmty., Inc., 585 S.W.2d 655, 658 (Tex. 1979) ...............32

Speedemissions, Inc. v. Bear Gate, LP, 404 S.W.3d 34, 41 

(Tex.App. – Houston [1st Dist.] 2013, no pet.)......................................... 15, 24, 25

Stary v. DeBord, 967 S.W.2d 352, 352–53 (Tex. 1998)..........................................13

Texas Petrochemicals LP v. ISP Water Management Services LLC, 

 301 S.W.3d 879, 884 (Tex. App.—Beaumont 2009, no pet.)........................ 15, 27

The Courage Co., L.L.C. v. The Chemshare Corp., 93 S.W.3d 323, 333 

 (Tex. App.—Houston [14th Dist.] 2002, no pet.)..................................................22

Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006).........................................14

Young v. Villegas, 231 S.W.3d 1, 5 (Tex. App.—Houston [14th Dist.] 2007, pet. 

denied) ..................................................................................................................13
ix

STATUTES

9 U.S.C. § 1..............................................................................................................13

9 U.S.C. § 16............................................................................................................13

9 U.S.C. § 16(a)(1)(C) .............................................................................................14

9 U.S.C. § 206..........................................................................................................14

9 U.S.C. § 32............................................................................................................14

TEX. BUS. & COM. CODE § 17.01........................................................................32

TEX. CIV. PRAC. & REM. CODE § 51.016........................................................... 10, 13

TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 ................................................. 10, 13

SECONDARY SOURCES

Restatement 2nd of TORTS § 552 ............................................................................32
1

STATEMENT OF THE CASE

This case arises out of the December 19, 2013 purchase of a 2007 Porsche 

Cayman, VIN #WPOAB29847U781868 (the “Vehicle”). Appellee, D. Scott 

Southall, (“Southall”) purchased the Vehicle from AN Luxury Imports, LTD d/b/a 

BMW of Dallas, Inc. (“Appellant” or “BMW of Dallas”) on December 19, 2013. 

At the time of purchase, Southall signed several documents, including an 

Arbitration Agreement (the “Arbitration Agreement”), and a Used Vehicle Limited 

Mechanical Warranty (the “Warranty Agreement”), as part of the single agreement 

to buy the Vehicle.

Southall alleges that on February 7, 2014, fifty days after the purchase, “the 

engine in the Cayman suffered a severe mechanical breakdown when it threw a 

piston rod in one of the cylinders during a trip to Austin, Texas.” (Cl. R. at p. 6). 

Southall alleges that he attempted to make a claim for repairs under the terms of 

the Warranty Agreement. (Id.) Southall alleges that United States Warranty Corp.

(“U.S. Warranty”), the Administrator for the Warranty Agreement, inspected the 

Vehicle and denied the claim, stating that the mechanical failure was caused by 

racing or other competition. (Id.) Southall alleges that his mechanic inspected the 

Vehicle and determined that the Vehicle’s motor had “fatally exceeded its 

maximum allowable RPM prior to his acquisition of the vehicle.” (Id.) 
2

Southall asserts claims for (1) breach of contract (Cl. R. at p. 6), (2) unfair 

settlement practices (Cl. R. at p. 7), (3) breach of the duty of good faith and fair 

dealing (Cl. R. at p. 8), (4) violations of the Texas Deceptive Trade Practices Act

(Cl. R. at pp. 8 – 9), (5) negligence (Cl. R. at p. 9), (6) fraud by nondisclosure (Cl. 

R. at p. 10), and (7) negligent misrepresentation (Cl. R. at pp. 10 -11). Southall 

also seeks to impute liability to AN Luxury Imports GP, LLC (“ANLI,” and with 

BMW of Dallas and U.S. Warranty, collectively “Defendants”), asserting that 

ANLI is the general partner of BMW of Dallas, and therefore liable for the 

partnership’s debts. (Cl. R. at P. 11).

BMW of Dallas and ANLI answered the suit on July 23, 2014, asserting a 

general denial and a number of affirmative defenses subject to its right to compel 

arbitration. (Cl. R. at pp. 13 – 18). On August 5, 2014, BMW of Dallas and ANLI 

moved to compel arbitration and to stay or dismiss the lawsuit. (Cl. R. at pp. 19 -

36). U.S. Warranty answered the suit on August 25, 2014. On September 10, 

2014, U.S. Warranty joined BMW of Dallas and ANLI in filing a supplement to 

the Motion to Compel Arbitration and to stay or dismiss the lawsuit. (Cl. R. at pp. 

98-100). On October 27, 2014, the trial court conducted a hearing on the 

Defendants’ Motion to Compel Arbitration. On February 9, 2015, the trial court 

entered an order denying the Defendants’ Motion to Compel Arbitration. (Cl. R. at 

p. 130). It is from this order denying arbitration signed on February 9, 2015, that 
3

BMW of Dallas, along with its affiliates, ANLI, and U.S. Warranty, take this 

appeal. Defendants respectfully request that this Court reverse the trial court’s 

order and compel arbitration because Southall and BMW of Dallas agreed to 

submit any disputes to arbitration and order that the claims asserted against BMW 

of Dallas, ANLI, and U.S. warranty fall within the scope of the Arbitration 

Agreement. 

REQUEST FOR ORAL ARGUMENT

Appellants request oral argument because some of the legal issues made the 

basis of this brief are complex and concern matters of important public policy, the 

holding of this case is potentially far-reaching and could affect myriad future 

lawsuits.

ISSUES PRESENTED

I. THE TRIAL COURT ERRED BY DENYING ARBITRATION 

BECAUSE SOUTHALL AND BMW OF DALLAS AGREED TO 

SUBMIT DISPUTES TO ARBITRATION AND THE CLAIMS 

ASSERTED AGAINST THE DEFENDANTS ARE WITHIN THE 

SCOPE OF THE ARBITRATION AGREEMENT

(A) The Arbitration Agreement Between Southall and BMW of Dallas 

is a Valid Contract

(1) All Contracts Signed by Southall Must Be Considered 

Together Because They Pertain to the Same Transaction of 

Purchasing the Vehicle

(2) Southall’s Arguments Regarding the Forum Selection 

Clause are not Persuasive
4

(3) The Arbitration Agreement Governs Southall’s Claims 

against U. S. Warranty

(B) Southall’s Claims are Within the Scope of the Arbitration

Agreement

(1) Southall’s Warranty Claims are Subject to the Arbitration 

Agreement

(2) Southall’s Fraud and Non-Disclosures are Subject to the 

Arbitration Agreement

STATEMENT OF FACTS

BMW of Dallas is a retailer of new and used vehicles in Dallas, Texas. (Cl. 

R. at p. 33). BMW of Dallas is a limited partnership in which ANLI is the general 

partner. (Cl. R. at pp. 44-45).

On or about December 19, 2013, BMW of Dallas sold the Vehicle to 

Southall. (Cl. R. at p. 3). Incident to the sale, Southall executed several 

documents that were part of a single transaction (the “Purchase Contract”), 

including without limitation, (a) Retail Purchase Agreement (the “Sale

Agreement”); (b) the Arbitration Agreement; and (c) the Used Vehicle Limited 

Mechanical Warranty (the “Warranty Agreement”). (Cl. R. at pp. 28-31; 32; 64-

65). The Arbitration Agreement specifically states that it is subject to the Federal 

Arbitration Act. (Cl. R. at p. 32).

The Arbitration Agreement signed contemporaneously with the other closing

documents provides in pertinent part:
5

This Arbitration Agreement (“Agreement”) applies to 

Customer(s) (“you”) who is/are in the process of: (1) 

purchasing or leasing a vehicle(s) including any negotiations or 

application(s) for credit or other dealings or interactions with 

the Dealership (hereinafter including its employees, agents, 

successors, assigns, subsidiaries, parents and affiliates); (2) 

servicing any vehicle(s) with the Dealership; or (3) reviewing, 

negotiating or executing any documents or agreements during 

the course of interactions with the Dealership (collectively, 

“Customer(s)/Dealership Dealings”). You and the Dealership 

agree that arbitration will be the sole method of resolving 

any claim, dispute, or controversy (collectively, “Claims”) 

that either Party has arising from Customer(s)/Dealership 

Dealings. Such Claims include, but are not limited to, the 

following: (1) Claims in contract, tort, regulatory, statutory, 

equitable, or otherwise; (2) Claims relating to any 

representations, promises, undertakings, warranties, 

covenants or service; (3) Claims regarding the interpretation, 

scope, or validity of this Agreement, or arbitrability of any 

issue; (4) Claims between you and Dealership; and (5) Claims 

arising out of or relating to your application for credit, this 

Agreement and/or any and all documents executed, presented or 

negotiated during Customer(s)/Dealership Dealings, or any 

resulting transaction, service, or relationship, including that 

with the Dealership, or any relationship with third parties 

who do not sign this Agreement that arises out of the 

Customer(s)/Dealership Dealings.

(Cl. R. at p. 32). (emphasis added). 

The Sale Agreement references the Arbitration Agreement, stating “If you 

have signed an arbitration agreement, it is incorporated into and made a part 

of this agreement for all purposes” and “If You have executed an Arbitration 

Agreement in conjunction with this Agreement such Arbitration Agreement 
6

shall be incorporated herein by reference and made a part of this 

Agreement.” (Cl. R. a pp. 30 and 31).

Southall claims that he did not request service on the Vehicle from BMW of 

Dallas. (Cl. R. at p. 40). This lawsuit is premised on the alleged obligation and 

failure of BMW of Dallas to repair Vehicle. If Southall did not ask BMW of 

Dallas to make repairs to the Vehicle, his claims are not ripe. 

Southall alleges that on February 2, 2014, the Vehicle’s engine suffered a 

severe mechanical breakdown during a trip to Austin, Texas. (Cl. R. at p. 6). 

Southall alleges that the engine threw a piston rod in one of the cylinders. (Id.).

Southall alleges that he informed U.S. Warranty of his claim. (Cl. R. at p. 

6). He further alleges that an adjuster acting on behalf of U.S. Warranty inspected 

the Vehicle in Houston, Texas. (Id.). Southall alleges that “BMW of Dallas, 

through its agent U.S. warranty, denied the claim stating that the breakdown was 

caused by racing or other competition.” (Id.). 

PROCEDURAL FACTS

On or about June 11, 2014, Southall filed a lawsuit in the 295th District 

Court of Harris County Texas, asserting claims for breach of contract, violations of 

the Texas Insurance Code, breach of the duty of good faith and fair dealing, 

violations of the Texas Deceptive Trade Practices Act, negligence, fraud by 

nondisclosure, and negligent misrepresentation. (Cl. R. at pp. 4-12). On July 23, 
7

2014, BMW of Dallas and ANLI answered the suit subject to compelling 

arbitration. (Cl. R. at pp. 13-18). BMW of Dallas and ANLI’s answer included a 

paragraph stating that the claims against them were subject to an arbitration 

agreement and demanded arbitration. (Cl. R. at p. 13).

On August 5, 2014, BMW of Dallas and ANLI moved to compel arbitration 

and for the stay or dismissal of the lawsuit. (Cl. R. at pp. 19-36). On August 24, 

2014, Appellant filed a response to the Motion to Compel Arbitration. (Cl. R. at 

pp. 37 – 68). In his response, Appellant argued that (1) the purchase agreement 

provides that exclusive venue and jurisdiction lies in the courts of the county in 

which the dealer is located and that there is no evidence that the Arbitration 

Agreement “ties to” the Retail Purchase Agreement; read together, the agreements 

should be construed as giving the Appellant an option to bring a claim in the forum 

of his choosing (Cl. R. at pp. 38-40); and (2) Appellants complaint is based on the 

Defendants’ alleged failure to perform under the Used Vehicle Limited Mechanical 

Warranty, which has no arbitration provision and is therefore outside the scope of 

the Arbitration Agreement. (Cl. R. at pp. 40-41). On August 25, 2014, Defendants 

filed their reply and amended reply in support of the Motion to Compel 

Arbitration. (Cl. R. at pp. 68-76 and 77-85). On August 25, 2014, Defendants also 

filed a Response to Motion to Sever Subject to Motion to Compel Arbitration and 

Supplement to Motion to Compel Arbitration. (Cl. R. at pp. 86-97).
8

On August 25, 2014, U.S. Warranty answered the lawsuit, subject to 

compelling arbitration. On September 10, 2014, U.S. Warranty joined BMW of 

Dallas and ANLI in a supplemental Motion to Compel Arbitration. (Cl. R. at pp. 

98-100). On October 24, 2014, Appellant filed a response to the supplemental 

motion to compel arbitration, arguing that (1) the claims against U.S. Warranty are 

not subject to arbitration because U.S. Warranty is not a party to the Arbitration 

Agreement; and (2) the claims against U.S. Warranty are not subject to arbitration 

because there is no evidence that U.S. Warranty is an affiliate of BMW of Dallas.

(Cl. R. at pp. 101-129).

On October 27, 2014, the trial court conducted a hearing on the Defendants’ 

Motion to Compel Arbitration. The trial court did not rule on the Motion to 

Compel Arbitration at the October 27, 2014, hearing. On February 2, 2015, the 

trial court entered an order denying Defendants’ Motion to Compel Arbitration. 

(Cl. R. at p. 130).

SUMMARY OF ARGUMENT

The trial court erred by denying Defendant’s Motion to Compel Arbitration 

because Southall and BMW of Dallas agreed to submit disputes, such as the instant 

case, to arbitration and Southall’s claims in this case are within the scope of the 

Arbitration Agreement. Because Southall and BMW of Dallas executed the 

Arbitration Agreement at the time of sale of the Vehicle as part of one sales 
9

transaction and intended to submit any dispute between them to arbitration, a valid 

agreement to arbitrate exists. 

All claims asserted by Southall fall within the scope of the Arbitration 

Agreement because they are expressly encompassed within the terms of the 

Arbitration Agreement. Each of Southall’s causes of action are based on one of 

two contentions: (1) Defendants have not fulfilled their duties under the Warranty 

Agreement by repairing the Vehicle, or (2) BMW of Dallas had prior knowledge of 

the condition of the Vehicle’s engine, had a duty to disclose that condition, and 

failed to do so. The Arbitration Agreement expressly and unambiguously includes 

claims relating to warranties and claims relating to representations within its scope 

of claims. 

U.S. Warranty is not a signatory to the Arbitration Agreement. (Cl. R. at p. 

32). The claims asserted by Southall against U.S. Warranty are factually 

intertwined with the claims asserted against BMW of Dallas and ANLI. In fact, 

the claims are identical. Additionally, the Warranty Agreement, Arbitration 

Agreement and the Sale Agreement were all signed as components of one 

transaction and must be read together. Southall agreed to arbitrate his claims 

against U.S. Warranty. Moreover, Southall seeks to assert rights and retain 

benefits under the Warranty Agreement and Sale Agreement, but wishes to avoid 
10

application of the Arbitration Agreement. Southall is equitably estopped from 

doing this.

Even if the claims against U.S. Warranty cannot be compelled to arbitration, 

the Court must order the claims against BMW of Dallas and ANLI to arbitration. 

The Supreme Court of the United States made it clear that the Federal Arbitration 

Act requires arbitrable claims to be compelled to arbitration, even where the result 

would be “the possibly inefficient maintenance of separate proceedings in different 

forums.” Dean Witter Reynolds v. Byrd, 470 U.S. 213, 217 (1985). Therefore, the 

trial court’s order denying arbitration of the Southall’s claims must be reversed. If 

the parties or this Court wish to avoid piecemeal litigation, this Court can order all 

claims asserted against the collective Defendants to be arbitrated together.

The Court has jurisdiction to consider this interlocutory appeal of the trial 

court’s denial of the Motion to Compel Arbitration pursuant to TEX. CIV. PRAC. &

REM. CODE § 51.016 because the Arbitration Agreement is governed by the FAA. 

STANDARD OF REVIEW

Interlocutory review of a trial court’s order denying arbitration under the 

Federal Arbitration Act (“FAA”) is allowed under Texas law. TEX. CIV. PRAC. &

REM. CODE ANN. § 51.016 (West Supp. 2012); Cotton Commercial USA, Inc. v. 

Clear Creek Indep. School Dist., 397 S.W.3d 99, 103 n. 3 (Tex. App.—Houston 

[14th Dist.] 2012, no pet.) (“The Texas Civil Practice and Remedies Code now 
11

provides for the interlocutory appeal of a trial court’s denial of a motion to compel 

arbitration under the FAA.”); Cleveland Constr., Inc. v. Levco Constr., Inc., 359 

S.W.3d 843, 850–51 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d) (same). 

A trial court’s denial of a motion to compel arbitration is generally reviewed 

for an abuse of discretion. Schlumberger Tech. Corp. v. Baker Hughes, Inc., 355 

S.W.3d 791, 800 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing Okorafor 

v. Uncle Sam & Assocs., Inc., 295 S.W.3d 27, 38 (Tex. App.—Houston [1st Dist.] 

2009, pet. denied)). A trial court abuses its discretion if it clearly fails to analyze 

the law correctly or apply the law to the facts. Citigroup Global Markets, Inc. v. 

Brown, 261 S.W.3d 394, 399 (Tex. App.—Houston [14th Dist.] 2008, no pet. h.)

(citing In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005). 

However, “[w]hen an appeal from a denial of a motion to compel arbitration turns 

on a legal determination,” a de novo standard is applied. Forest Oil Corp. v. 

McAllen, 268 S.W.3d 51, 55 n. 9 (Tex. 2008); Schlumberger Tech Corp., 355 

S.W.3d at 800. Both the validity and enforceability of an arbitration agreement are 

questions of law and subject to de novo review. Aldridge v. Thrift Financial 

Marketing, LLC, 376 S.W.3d 877, 882 (Tex. App.—Fort Worth 2012, no pet.)

(validity); In re Labatt Food Service, L.P., 279 S.W.3d 640, 643 (Tex. 2009)

(enforceability). 
12

A party seeking to compel arbitration must establish that there is a valid 

arbitration agreement and that the claims raised fall within that agreement's scope. 

In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex.2005) (orig. 

proceeding); J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003); 

Cleveland Constr., 359 S.W.3d at 852. Although there is a strong presumption 

favoring arbitration, that presumption arises only after the party seeking to compel 

arbitration proves that a valid arbitration agreement exists. J.M. Davidson, 128 

S.W.3d at 227; Cleveland Constr., 359 S.W.3d at 852. Ordinary principles of state 

contract law determine whether there is a valid agreement to arbitrate. Kellogg 

Brown & Root, 166 S.W.3d at 738; Cleveland Constr., 359 S.W.3d at 852.

ARGUMENT & AUTHORITIES

I. THE TRIAL COURT ERRED BY DENYING ARBITRATION 

BECAUSE SOUTHALL AND BMW OF DALLAS AGREED TO 

SUBMIT DISPUTES TO ARBITRATION AND THE CLAIMS 

ASSERTED AGAINST THE DEFENDANTS ARE WITHIN THE 

SCOPE OF THE ARBITRATION AGREEMENT

The trial court erred by denying Defendants’ Motion to Compel Arbitration

because Southall and BMW of Dallas agreed to submit disputes, such as the instant 

case, to arbitration and Southall’s claims in this case are within the scope of the 

Arbitration Agreement. The Court has jurisdiction to consider this interlocutory 

appeal of the trial court’s denial of the Motion to Compel Arbitration pursuant to 
13

TEX. CIV. PRAC. & REM. CODE § 51.016 because the Arbitration Agreement is 

governed by the FAA. 

Under Texas law, “[i]nterlocutory orders are not appealable unless explicitly 

made so by statute.” Young v. Villegas, 231 S.W.3d 1, 5 (Tex. App.—Houston 

[14th Dist.] 2007, pet. denied) (citing Stary v. DeBord, 967 S.W.2d 352, 352–53 

(Tex. 1998)). Statutes authorizing interlocutory appeals must be strictly construed. 

Young, 231 S.W.3d at 5 (citing Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 

352, 355 (Tex. 2001)). In this case, Section 51.016 of the Civil Practice and 

Remedies Code provides:

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. 2012) (emphasis 

added). As evidenced by the plain language of section 51.016 and established 

precedent, a person may appeal an order denying arbitration if it would be allowed 

under 9 U.S.C. § 16.” See id.; Cotton Commercial USA, Inc., 397 S.W.3d at 103, 

n. 9; Cleveland Constr., Inc., 359 S.W.3d at 850-51; Enterprise Field Services, 

LLC v. TOC-Rocky Mountain, Inc., No. 01–12–00345–CV, 2013 WL 744006, at 

*1, n. 1 (Tex. App.—Houston [1st Dist.] Feb. 28, 2013, pet. filed). Under 9 U.S.C. 
14

§ 16, an appeal may be taken from an order denying an application to compel 

arbitration. 9 U.S.C. § 16(a)(1)(C); see also 9 U.S.C. § 206. Because the subject 

matter of this interlocutory order concerns the FAA and an appeal would be 

allowed under federal law, this court has proper jurisdiction pursuant to section 

51.016 of the Civil Practice and Remedies Code. 

(A) The Arbitration Agreement Between Southall and BMW of Dallas

is a Valid Contract

Federal and state law strongly favors arbitration. In re FirstMerit Bank, 52 

S.W.3d 749, 753 (Tex. 2001); EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 

(Tex. 1996); Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996). 

The FAA applies to all contracts involving interstate commerce and was enacted to 

overcome courts’ reluctance to enforce arbitration agreements. See 9 U.S.C. § 32; 

Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 270-71 (1995). The FAA 

establishes a strong federal policy in favor of enforcing arbitration agreements. 

Howsan v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002); Gilmer v. 

Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991). Indeed, a presumption 

exists in favor of agreements to arbitrate under the FAA. Cantella, 924 S.W.2d at 

944. Courts must resolve any doubts about an agreement to arbitrate in favor 

of arbitration. Id. (emphasis added); Tittle v. Enron Corp., 463 F.3d 410, 418 (5th

Cir. 2006). A party opposing arbitration bears the burden of defeating it. Cantella, 

924 S.W.2d at 944. An arbitration agreement is valid and enforceable if an 
15

arbitration agreement exists and the claims asserted are within the scope of the 

agreement. Speedemissions, Inc. v. Bear Gate, LP, 404 S.W.3d 34, 41 (Tex.App. –

Houston [1st Dist.] 2013, no pet.); Texas Petrochemicals LP v. ISP Water 

Management Services LLC, 301 S.W.3d 879, 884 (Tex. App.—Beaumont 2009, no 

pet.). Once a party seeking to compel arbitration establishes that an arbitration 

agreement exists and that the claims are within the scope of the arbitration 

agreement, the court has no discretion but to compel arbitration and stay its 

proceedings pending arbitration. Cantella, 924 S.W.2d at 944.

In this case, Southall and BMW of Dallas executed an Arbitration 

Agreement at the time of sale. (Cl. R. at p. 32). Ordinary principles of state 

contract law determine whether there is a valid agreement to arbitrate. Cleveland 

Const., Inc. v. Levco Const., Inc., 359 S.W.3d 843, 852 (Tex. App.—Houston [1st 

Dist.] 2012, pet. dism’d). The elements of a valid contract are (a) an offer, (b) an 

acceptance, (c) a meeting of the minds, (d) each party’s consent to the terms, and 

(e) execution and delivery of the contract with the intent that it be mutual and 

binding. Id. “Under generally accepted principles of contract interpretation, all 

writings that pertain to the same transaction will be considered together, even if 

they were executed at different times and do not expressly refer to one another.” 

Id. at 853. 
16

(1) All Contracts Signed by Southall Must Be Considered 

Together Because They Pertain to the Same Transaction of 

Purchasing the Vehicle

On December 19, 2013, Southall and BMW of Dallas executed the (a) Sale 

Agreement; (b) the Arbitration Agreement; (c) the Warranty Agreement. (Cl. R. at 

pp. 28-31, 32, and 64-65).

The Arbitration Agreement signed contemporaneously with the other closing 

documents provides in pertinent part:

This Arbitration Agreement (“Agreement”) applies to 

Customer(s) (“you”) who is/are in the process of: (1) 

purchasing or leasing a vehicle(s) including any negotiations or 

application(s) for credit or other dealings or interactions with 

the Dealership (hereinafter including its employees, agents, 

successors, assigns, subsidiaries, parents and affiliates); (2) 

servicing any vehicle(s) with the Dealership; or (3) reviewing, 

negotiating or executing any documents or agreements during 

the course of interactions with the Dealership (collectively, 

“Customer(s)/Dealership Dealings”). You and the Dealership 

agree that arbitration will be the sole method of resolving 

any claim, dispute, or controversy (collectively, “Claims”) 

that either Party has arising from Customer(s)/Dealership 

Dealings. Such Claims include, but are not limited to, the 

following: (1) Claims in contract, tort, regulatory, statutory, 

equitable, or otherwise; (2) Claims relating to any 

representations, promises, undertakings, warranties, 

covenants or service; (3) Claims regarding the interpretation, 

scope, or validity of this Agreement, or arbitrability of any 

issue; (4) Claims between you and Dealership; and (5) Claims 

arising out of or relating to your application for credit, this 

Agreement and/or any and all documents executed, presented or 

negotiated during Customer(s)/Dealership Dealings, or any 

resulting transaction, service, or relationship, including that 

with the Dealership, or any relationship with third parties 
17

who do not sign this Agreement that arises out of the 

Customer(s)/Dealership Dealings.

(Cl. R. at p. 32). (emphasis added).

The Sale Agreement references the Arbitration Agreement, stating “If you 

have signed an arbitration agreement, it is incorporated into and made a part 

of this agreement for all purposes” and “If You have executed an Arbitration 

Agreement in conjunction with this Agreement such Arbitration Agreement 

shall be incorporated herein by reference and made a part of this 

Agreement.” (Cl. R. at pp. 30 and 31).

Similarly, the Sale Agreement references the Warranty Agreement, stating 

“USED VEHICLE LIMITED WARRANTY APPLIES. We are providing the 

attached Used Vehicle Limited Warranty in connection with this transaction. 

Any implied warranties are limited in duration to the terms of the Used 

Vehicle Limited Warranty”. (Cl. R. at p. 30).

The Sale Agreement also states “The provisions of this Agreement shall 

survive the consummation of Your purchase of the Vehicle.” (Cl. R. at p. 31).

The closing documents signed at the time of sale between Southall and 

BMW of Dallas constitutes a valid contract because they meet the requirements of 

the general contract law of Texas. BMW of Dallas accepted Southall’s offer to 

buy the Vehicle at the price set forth in the Retail Purchase Agreement, subject to 

the additional terms and conditions contained in the contemporaneously executed 
18

documents. The terms of the sale were clearly set forth in the sales documents.

Both parties demonstrated their consent to the sale by executing the sales 

documents. There was a meeting of the minds on all terms and conditions of the 

sale of the Vehicle, as evidenced by the sales documents. The sales documents 

were delivered to Southall along with the Vehicle with the intent that they be 

mutual and binding. Southall continues to acknowledge that the Sale 

Agreement and the Purchase Agreement are parts of the same transaction, 

and has offered sworn testimony to that effect on two separate occasions, 

stating: 

“On December 19, 2013, I purchased a 2007 Porsche 

Cayman VIN #WPOAB29847U781868 (“Porsche”) from 

BMW of Dallas. As part of my purchase, I also received 

a Used Vehicle Limited Mechanical Warranty through 

United States Warranty Corp. on the vehicle.”

(Cl. R. at pp. 66 and 128) (emphasis added).

Because Southall and BMW of Dallas executed the Arbitration Agreement

and Warranty Agreement at the time of the sale of the Vehicle as part of one sales 

transaction, a valid agreement to arbitrate exists.

(2) Southall’s Arguments Regarding the Forum Selection 

Clause are not Persuasive

Southall’s arguments against compelling arbitration in this case are without 

merit. Southall argues Paragraph 17 of the Sale Agreement provides for exclusive 

venue and jurisdiction, precluding the Court from compelling Southall to arbitrate.
19

(Cl. R. at p. 38). The Sale Agreement addresses arbitration as an alternative means 

of resolving disputes. The forum selection clause cannot be read to eradicate 

BMW of Dallas’s rights to compel arbitration.

Appellant cites to Paragraph 17 of the Sale Agreement, which states in part:

The sole and exclusive venue for any dispute or litigation 

arising under or concerning this Agreement shall be in the 

courts located in and for the county in which Dealer is 

located, and the parties irrevocably consent to the 

jurisdiction of said courts.

(Cl. R. at pp. 31 and 38). From this provision, Appellant argues that Southall and 

BMW of Dallas intended to give “the courts” sole and exclusive jurisdiction over a 

dispute arising under the contract, and that the courts of Harris County provide a 

proper venue because ANLI is owned by a corporation that is owned by another 

corporation that “has over 10 locations in Harris County.” (Cl. R. at p. 39). 

Appellant then contends that there is no evidence tying the Arbitration Agreement 

to the Sale Agreement. (Id.). 

There is no conflict between the Arbitration Agreement and the Sale 

Agreement. The first page of the Sale Agreement expressly incorporates the 

Arbitration Agreement into the Sale Agreement. (Cl. R. at p. 30). Paragraph 10, 

on the second page of the Sale Agreement also incorporates the Arbitration 

Agreement by reference. (Cl. R. at p. 31). Appellant selectively quoted Paragraph 

17. The remainder of Paragraph 17, states:
20

Any and all arbitration proceedings shall also take place in 

the county where the dealer is located, unless agreed 

otherwise by the parties. This Agreement shall be construed 

and governed by the laws of the state in which Dealer is 

located. In the event of any dispute or litigation arising 

under this Agreement, the prevailing party shall be entitled 

to recover its costs and expenses including court costs and 

reasonable attorney’s fees.

(Cl. R. at p. 31). Upon reading all of the Sale Agreement and all of Paragraph 17, 

it is readily apparent that Southall and BMW of Dallas did not intend to give the 

courts of the State of Texas (in the county most convenient for Southall) exclusive 

jurisdiction over disputes arising from Southall’s Purchase Contract.

Even if there were conflicting language in the Sale Agreement and the 

Arbitration Agreement, which Defendants dispute, the Court must ascertain the 

true intentions of the parties as expressed in the written instruments. See J.M. 

Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). The Court must 

consider the entire writing and attempt to harmonize and give effect to all the 

provisions of the contract by analyzing the provisions with reference to the whole 

agreement. Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 

2005) (per curiam); J.M. Davidson, 128 S.W.3d at 229. When the provisions of a 

contract appear to conflict, courts attempt to harmonize the provisions and assume 

the parties intended every provision to have some effect. Kaye/Bassman Intern. 

Corp. v. Help Desk Now, Inc., 321 S.W.3d 806, 813 (Tex. App.—Dallas 2010, pet. 

denied). Courts must resolve any doubts about an agreement to arbitrate in favor 
21

of arbitration. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996). 

From the plain language of the Sale Agreement and the Arbitration Agreement in 

this case, it is clear that the parties intended there to be one contract for the sale of 

the Vehicle – not several separate contracts that can be interpreted apart from one 

another as Southall urges. 

Southall’s position is illogical and would render meaningless the writings 

because the closing documents work hand-in-hand. The Sale Agreement is the 

conditional sales contract in which Southall offered to purchase the Vehicle, while 

the Arbitration Agreement provides that all disputes arising out of Southall’s 

dealings with the dealership are to be submitted to binding arbitration. The 

Warranty Agreement is a third portion of the overall Purchase Contract. The three

documents are indispensable parts of the Purchase Contract and cannot be severed 

in the manner advocated by Southall. 

It is clear from the language of the Arbitration Agreement that Southall and 

BMW of Dallas intended to submit any disputes arising out of the Purchase 

Contract to binding arbitration. The forum selection provision in the Sale 

Agreement governs only if Southall and BMW of Dallas had not agreed to submit 

all disputes to Arbitration. This is the only sensible construction in light of the 

terms of the three Agreements. 
22

Because the trial court abused its discretion by failing to resolve any doubts 

about the language of the various contract documents in favor of arbitration, the 

Court should reverse the trial court’s order denying arbitration.

(3) The Arbitration Agreement Governs Southall’s Claims 

against U. S. Warranty

Appellant next argues that the Warranty Agreement does not contain an 

arbitration provision, precluding the Court from compelling Southall to arbitrate 

his claims against U.S. Warranty.

It is well established that instruments pertaining to the same transaction may 

be read together to ascertain the parties’ intent, even if the parties executed the 

instruments at different times and the instruments do not expressly refer to each 

other. The Courage Co., L.L.C. v. The Chemshare Corp., 93 S.W.3d 323, 333 

(Tex. App.—Houston [14th Dist.] 2002, no pet.) (citing Fort Worth Indep. Sch. 

Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.2000)). A court may 

determine, as a matter of law, that multiple documents comprise a written contract, 

and in appropriate instances, may construe all the documents as if they were part of 

a single, unified instrument. Id. (citing Fort Worth Indep. Sch. Dist., 22 S.W.3d at 

840). As demonstrated above, courts must resolve any doubts about an agreement 

to arbitrate in favor of arbitration. Cantella & Co., 924 S.W.2d at 944. Southall 

and BMW of Dallas executed the Arbitration Agreement on the same day as the 

Sale Agreement and Warranty Agreement as a single transaction whereby Southall
23

purchased the Vehicle. The Arbitration Agreement provides that it covers “(1) 

purchasing or leasing a vehicle(s) including any negotiations or application(s) for 

credit or other dealings or interactions with the Dealership; (2) servicing any 

vehicle(s) with the dealership; and reviewing, negotiating or executing any 

documents or agreements during the course of interactions with the Dealership.” 

(Cl. R. at p. 32) (emphasis added). The Arbitration Agreement further states:

You and the Dealership agree that arbitration will be 

the sole method of resolving any claim, dispute, or 

controversy (collectively, “Claims”) that either Party has 

arising from Customer(s)/Dealership Dealings. Such 

Claims include, but are not limited to, the following: (1) 

Claims in contract, tort, regulatory, statutory, 

equitable, or otherwise; (2) Claims relating to any 

representations, promises, undertakings, warranties, 

covenants or service; (3) Claims regarding the 

interpretation, scope, or validity of this Agreement, or 

arbitrability of any issue; (4) Claims between you and the 

Dealership; and (5) Claims arising out of or relating to 

your application for credit, this Agreement and/or any 

and all documents executed, presented or negotiated 

during the Customer(s)/Dealership Dealings, or any 

resulting transaction, service, or relationship, including 

that with the Dealership, or any relationship with third 

parties who do not sign this Agreement that arises out 

of the Customer(s)/Dealership Dealings.

(Cl. R. at p. 32) (emphasis added).

It is clear from the language of the Arbitration Agreement that Southall and 

BMW of Dallas intended to submit any disputes arising out of, inter alia, the Sale 

Agreement, the Warranty Agreement and/or the Arbitration Agreement to binding 
24

arbitration. Because the trial court erred by resolving any doubts about the 

language of the various contract documents against arbitration, the Court should 

reverse the trial court’s order denying arbitration.

Southall cites to Speedemissions, Inc. v. Bear Gate, L.P. for support for his 

contention that he cannot be compelled to arbitrate his claims against U.S. 

Warranty because U.S. Warranty is not a signatory to the Arbitration Agreement. 

See Speedemissions, Inc. v. Bear Gate, L.P., 404 S.W.3d 34 (Tex.App. – Houston 

[1st Dist.] 2013); (Cl. R. at p. 103). 

Speedemissions is readily distinguishable from this case. Speedemissions, 

Inc. sought to purchase a business in Houston, Texas, Mr. Sticker, Inc.

Speedemissions, Inc., 404 S.W. 3d at 37. Mr. Sticker owned and operated six 

vehicle inspection stores. Id. Mr. Sticker owned the land and improvements on 

which two of the stores operated. Id. Speedemissions Inc. did not wish to 

purchase the land and improvements. Id. Prior to the sale of Mr. Sticker’s stock, 

Mr. Sticker’s owners formed a limited liability company and a limited partnership. 

Id. The limited liability company was made the managing partner of the 

partnership. Id. Then the land and improvements in question were transferred 

from Mr. Sticker to the limited partnership. Id. Speedemissions, Inc. entered into a 

stock purchase agreement with Mr. Sticker, and separate lease agreements with the 

limited partnership. Id. The stock purchase agreement contained an arbitration 
25

provision. Speedemissions, Inc., 404 S.W.3d at 38. The lease agreements did not. 

Speedemissions, Inc., 404 S.W.3d at 40. The stock purchase agreement did not 

reference the lease agreements. Speedemissions, Inc., 404 S.W.3d at 39. The lease 

agreement did not reference the stock purchase agreements. Id. The lease 

agreements had a term of five years and provided Speedemissions, Inc. the option 

of renegotiating and renewing the leases for an additional five years. Id. At the 

end of the initial lease period, Speedemissions, Inc. and the limited partnership did 

not successfully renegotiate the leases. Speedemissions, Inc., 404 S.W.3d at 40. 

Speedemissions, Inc. instituted arbitration against the limited partnership, which 

was dismissed on the request of the limited partnership. Id. Speedemission, Inc. 

then filed suit against the limited partnership and moved to compel arbitration. Id. 

The trial court denied the request, which generated an appeal. Id. In affirming the 

trial court’s order, this Court stated:

“The language of the Stock Purchase Agreement and Lease 

Agreements demonstrates that the parties intended for these 

agreements to be complete, separate agreements. The Stock 

Purchase Agreement and the Lease Agreements are between 

different parties. They each have a distinct and separate 

purpose. And they were not executed as part of a single 

stock purchase and sale/leaseback agreement.”

Speedemissions, Inc., 404 S.W.3d at 43.

In this case, the Sale Agreement, Arbitration Agreement and Warranty 

Agreement are all between the same parties, Southall and BMW of Dallas. (Cl. R. 
26

at pp. 28-31, 32, and 64-65). Each Agreement was executed as part of one 

transaction; the sale of the Vehicle. 

More importantly, the Arbitration Agreement specifies that the parties agree 

to arbitrate claims against each other as well as claims against third parties who are 

not signatories to the Arbitration Agreement. (Cl. R. at p. 32). U.S. Warranty 

did not sign the Arbitration Agreement and did not agree to arbitrate 

Southall’s claims. Southall did sign the Arbitration Agreement. Southall did 

agree to arbitrate his claims against U.S. Warranty.

Whether an arbitration agreement binds a nonsignatory is a gateway matter 

for the court, not the arbitrator, to determine, unless the parties clearly and 

unmistakably provide otherwise. In re Labatt Food Service, L.P., 279 S.W.3d 640 

(Tex. 2009). The parties must arbitrate any claims that fall within the scope of the 

arbitration agreements, even though piecemeal litigation might result. Helena 

Chemical Co. v. Wilkins, 18 S.W.3d 744, 750 (Tex. App.—San Antonio 2000) 

aff’d 47 S.W.3d 486 (Tex. 2001) (citing Dean Witter Reynolds, Inc. v. Byrd, 470 

U.S. 213, 220–21 (1985)); In re Certain Underwriters at Lloyd’s, 18 S.W.3d 867, 

875-76 (Tex. App.—Beaumont 2000, no pet.) (“Even when arbitrable and nonarbitrable claims are intertwined and arise out of the same transaction, the 

arbitrable claims are still subject to arbitration.”) Recent cases have held that 

claims that are not otherwise arbitrable can become arbitrable when factually 
27

intertwined with arbitrable claims. Ascendant Anesthesia PLLC v. Abazi, 348 

S.W.3d 454, 462 (Tex. App.—Dallas 2011, no pet.) (citing Texas Petrochemicals 

LP v. ISP Water Mgmt. Servs. LLC, 301 S.W.3d 879, 885 (Tex. App.—Beaumont 

2009, no pet.); see also Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 271 

(Tex. 1992) (holding misrepresentation claims grounded in a legal theory distinct 

from contract claims yet factually intertwined are subject to the arbitration 

provision of the contract). “To be within the scope of an arbitration provision, the 

allegations need only be factually intertwined with arbitrable claims or otherwise 

touch upon the subject matter of the agreement containing the arbitration 

provision.” In re Prudential, 159 S.W.3d at 283. 

In this case, U.S. Warranty is not a signatory to the Arbitration Agreement, 

but Southall’s claims against U.S. Warranty are factually intertwined with his 

claims against the other defendants. Even if the Court chooses not to compel 

Southall’s claims against U.S. Warranty to arbitration, the Supreme Court of the 

United States has made it clear that the FAA requires arbitrable claims to be 

compelled to arbitration, even where the result would be “the possibly inefficient 

maintenance of separate proceedings in different forums.” Dean Witter Reynolds, 

470 U.S. at 217. Therefore, the trial court’s order denying arbitration of Southall’s 

claims must be reversed. If the parties or this Court wish to avoid piecemeal 

litigation, this Court can order all of Southall’s claims to be arbitrated together.
28

(B) Southall’s Claims are Within the Scope of the Arbitration 

Agreement

The party moving for arbitration must show that the claim falls within the 

scope of the arbitration agreement. In re Rubiola, 334 S.W.3d 220, 224 (Tex. 

2011); In re Dallas Peterbilt, Ltd., 196 S.W.3d 161, 163 (Tex. 2006); In re Dillard 

Dept. Stores, 186 S.W.3d. 514, 515 (Tex. 2006); Prudential Secs. Inc. v. Marshall, 

909 S.W.2d 896, 900 (Tex. 1995). To determine whether the claim is within the 

scope of the arbitration agreement, the court examines the terms of the agreement 

and the factual allegations of the plaintiff’s claim. See In re Rubiola, 334 S.W.3d 

at 225. Generally, federal law governs the scope of the arbitration agreement. In 

re Labatt Food, 279 S.W.3d 640, 643 (Tex. 2009).

Many arbitration agreements provide that “any controversy or claim arising 

from or relating” the contract is subject to arbitration. E.g., In re Kaplan Higher 

Educ. Corp., 235 S.W.3d, 206, 208 & n.1 (Tex. 2007); In re Bank One, 216 

S.W.3d 825, 826 (Tex. 2007). Under a broad arbitration clause, arbitration can be 

compelled even though the particular dispute is not specifically covered. See In re 

D. Wilson Constr., 196 S.W.3d 774, 781 (Tex. 2006). If the facts alleged in 

support of the claim have a “significant relationship” to or are “factually 

intertwined” with the contract that is subject to the arbitration agreement, the claim 

is within the scope of the agreement and is arbitrable. Pennzoil Coc. v. Arnold Oil 

Co., 30 S.W.3d 494, 498 (Tex. App.—San Antonio 2000, orig. proceeding).
29

The claims asserted by Appellee are within the scope of the Arbitration 

Agreement because his claims relate to representations, warranties, and service. 

For Plaintiff to argue that he did not ask BMW of Dallas to service the Vehicle is 

disingenuous at best. This majority of this lawsuit centers on Southall’s alleged 

damages because the Vehicle has not been repaired. Southall acknowledges 

making a “claim” to U.S. Warranty for the repair of the Vehicle. (Cl. R. at p. 6). 

The Warranty Agreement requires that any repair made under its coverage be made 

at BMW of Dallas or any other ANIL dealership. (Cl. R. at p. 65). The remainder 

of Southall’s claims are based on his assertion that the Vehicle’s engine had been 

subjected to abuse before he purchased the Vehicle, that BMW of Dallas somehow 

knew that the engine had been subjected to such abuse, and was therefore 

damaged, and that BMW of Dallas had a duty to disclose this information to him 

but failed to do so. (Cl. R. at pp. 6, and 9). 

Additionally, Southall’s argument that he was not in the process of 

purchasing or leasing a vehicle or reviewing, negotiating or executing any 

documents or agreements, and thus not within the scope of the Arbitration 

Agreement is defeated by the plain language of the Sale Agreement. The Sale 

Agreement, which incorporates the Arbitration Agreement, states “The provision 

of this Agreement shall survive the consummation of Your purchase of the 

Vehicle”. (Cl. R. at p. 31). This provision evidences a meeting of the minds and 
30

creates an enforceable right in BMW of Dallas to compel the arbitration of 

Southall’s claims, even after he completed his purchase.

(1) Southall’s Warranty Claims are Subject to the Arbitration 

Agreement

Southall alleges that he acquired a Used Vehicle Limited Mechanical 

Warranty when he purchased the Vehicle. (Cl. R. at p. 5). He alleges that shortly 

after his purchase, the Vehicle experienced a severe mechanical breakdown. (Cl. 

R. at p. 6). He alleges that he informed U.S. Warranty of his claim, and that U.S. 

Warranty’s claims adjuster denied his claim stating that the breakdown was caused 

by racing. (Id.).

On the above allegations, Southall asserts claims for (1) breach of contract, 

(2) unfair settlement practices, (3) breach of the duty of good faith and fair dealing, 

(4) violations of the Texas Deceptive Trade Practices Act, and (5) negligence. 

The Arbitration Agreement specifically contemplates each of these causes of 

action. The Arbitration Agreement states that it applies to Customers who are in 

the process of purchasing a vehicle. (Cl. R. at p. 32). It was in the course of 

purchasing the Vehicle that Southall executed this agreement. The Arbitration 

Agreement states that Southall and BMW of Dallas agree to arbitrate any claim, 

dispute or controversy that either party has that arises from their course of dealing. 

(Id.). Specifically enumerated among the claims subject to arbitration, by way of 

example only, are “Claims in contract, tort, regulatory, statutory, equitable, or 
31

otherwise” and “Claims relating to any representations, promises, undertakings, 

warranties, covenants or service”, and “Claims arising out of or relating to... any 

resulting transaction, service, or relationship, including that with the Dealership, or 

any relationship with third parties who do not sign this agreement...” (Id.).

As demonstrated above, and by the trial court’s record, the Arbitration 

Agreement is very broad. The Arbitration Agreement specifically mandates the 

arbitration of claims arising out of alleged breaches of the Purchase Contract, 

including the Warranty Agreement. Every cause of action asserted by Southall that 

is based on BMW of Dallas’ refusal to repair the Vehicle is subject to mandatory 

arbitration. The Court should overrule the trial court’s order denying Defendants’ 

Motion to Compel Arbitration, and order that all of Southall’s are subject to 

mandatory arbitration.

(2) Southall’s Fraud and Non-Disclosures are Subject to the 

Arbitration Agreement

Southall alleges that after the Vehicle’s engine failed, Southall’s mechanic 

inspected the Vehicle. During that inspection, Southall allegedly learned that the 

Vehicle’s engine had “fatally exceeded its maximum allowable RPM prior to his 

acquisition of the vehicle.” (Cl. R. at p. 6). Southall further alleges that BMW of 

Dallas knew of the Vehicle’s prior misuse and the condition of its engine and 

failed to disclose the information to Southall. (Cl. R. at p. 9).
32

On these allegations, Southall asserts causes of action for (1) violation of the 

Texas Deceptive Trade Practices Act, (2) fraud by nondisclosure, and (3) negligent 

misrepresentation. (Cl. R. at pp. 9-11). These claims are levied solely against 

BMW of Dallas. 

Once again, the express terms of the Arbitration Agreement mandate that 

these claims must be resolved through Arbitration. The nondisclosures of which 

Southall complains allegedly occurred while he was in the process of “purchasing 

or leasing a vehicle(s) including any negotiations or application(s) or other 

dealings or interactions with the Dealership”. (Cl. R. at p. 32). The Deceptive 

Trade Practices Act is a statutory claim. TEX. BUS. & COM. CODE § 17.01 et seq. 

Fraud by nondisclosure is a common law tort claim. See. Smith v. National Resort 

Cmty., Inc., 585 S.W.2d 655, 658 (Tex. 1979) (citing Restatement 2nd of Torts § 

551 (1977), which addresses liability for nondisclosure under the common law). 

Negligent misrepresentation is also a common law tort claim. See Grant Thornton 

LLP v. Prospect High Income Fund, 314 S.W.3d 913, 919-20 (Tex. 2010) (citing 

Restatement 2nd of Torts, § 552 (1977), which addresses liability for negligent 

misrepresentation under the common law). The Arbitration Agreement names tort 

claims and statutory claims as claims subject to mandatory arbitration. (Cl. R. at p. 

32). The Arbitration Agreement also identifies claims relating to any 

representations or promises as subject to mandatory arbitration. The Court should 
33

overrule the trial court’s order denying Defendants’ Motion to Compel Arbitration, 

and order that all of Southall’s are subject to mandatory arbitration.

CONCLUSION

The trial court’s order denying arbitration should be reversed because 

Southall and BMW of Dallas agreed to submit disputes, such as the instant case, to 

arbitration and Southall’s claims in this case are within the scope of the Arbitration 

Agreement. Southall’s claims against U.S. Warranty fall within the scope of the 

Arbitration Agreement because the Arbitration Agreement expressly provides that 

claims against third party are subject to arbitration if they arise as a result of 

Southall’s dealings with BMW of Dallas. Additionally, Southall’s claims against 

U.S. Warranty are factually intertwined with his claims against BMW of Dallas. 

Even if Southall’s claims against U.S. Warranty cannot be compelled to arbitration

(and they can), the arbitrable claims must be compelled to arbitration even if the 

result is piecemeal litigation.

PRAYER

WHEREFORE, PREMISES CONSIDERED, AN LUXURY IMPORTS, 

L.T.D. d/b/a BMW OF DALLAS, AN LUXURY IMPORTS GP., LLC and 

UNITED STATES WARRANTY CORP. respectfully pray that this Court reverse 

the Order of the trial court denying arbitration dated February 9, 2015, and grant 
34

Defendants such and further relief, both general and special, at law or in equity, to 

which it may show itself to be justly entitled.

Respectfully submitted,

JOHNSON DELUCA KURISKY & GOULD, P.C.

By: /s/ George A. Kurisky, Jr.

GEORGE A. KURISKY, JR.

SBT No: 11767700

DANIEL J. KASPRZAK

Texas Bar No. 11105300

MARK A. BANKSTON

SBT No.: 24001430

4 Houston Center

1221 Lamar Street, Suite 1000

Houston, Texas 77010

(713) 652-2525 - Telephone

(713) 652-5130 - Facsimile

ATTORNEYS FOR APPELLANTS, AN 

LUXURY IMPORTS, L.T.D. d/b/a BMW 

OF DALLAS, AN LUXURY IMPORTS 

GP., LLC and UNITED STATES 

WARRANTY CORP.
35

CERTIFICATE OF COMPLIANCE

As required by Rule 9.4, Texas Rules of Appellate Procedure, the 

undersigned certifies that this brief contains 7,140 words, exclusive of the portions 

described in Rule 9.4(i)(1).

/s/George A. Kurisky, Jr.

George A. Kurisky, Jr.

CERTIFICATE OF SERVICE

I certify that on the 6th day of April, 2015, a true and correct copy of the 

foregoing document was forwarded as indicated to all counsel of record listed 

below:

Via email: victor@vselgohary.com

and U.S. Mail

Victor S. Elgohary

6406 Arcadia Bend Ct.

Houston, Texas 77041

Counsel for Plaintiff, D. Scot Southall

/s/ Mark A. Bankston

Mark A. Bankston