f AFFIRMED; Opinion filed April 28,1999

In The

Court of Appeals

Jfiftfj IHstrttt nf tttexas at Uallas

No. 05-97-00674-CV

BOBTHOMPSON HOMES, INC., Appellant

V.

RICK PETERS ANDANNE PETERS, Appellees

On Appeal from the 199th District Court

Collin County, Texas

Trial Court Cause No. 199-139-97

OPINION

Before Justices Lagarde, Moseley, and Bridges

Opinion By Justice Lagarde

Bob Thompson Homes, Inc. (Thompson) appeals an interlocutory order denying its motion

to compel arbitration. In one point oferror, itasserts that the trial court erred in denying arbitration

because its contract with appellees Rick and Anne Peters (collectively Peters) requires arbitration

of any dispute arising out of the contract. We affirm the trial court's order.

On March 3, 1994, Thompson and Peters signed acontract, under which Thompson would

construct a single-family residence for Peters. The contract designated Caperton/Johnson as the

architect. The contract was a form contract, provided by Thompson. The form contained the

following provision:
All claims or disputes between the Contractor [Thompson] and the

Owner [Peters] arising out of or relating to the Contract Documents, or the

breach thereof, shall be decided by arbitration in accordance with the

Construction Industry Arbitration Rules of the American Arbitration

Association currently in effect unless the parties mutually agree otherwise

andsubjectto an initial presentation of the claim or dispute to the Architect

as required under Paragraph 15.5. Notice ofthe demand for arbitration shall

be filed in writing with the other party to this Agreement and with the

American Arbitration Association and shall be made within a reasonable time

after the dispute has arisen. The award rendered by the arbitrator or

arbitrators shall be final andjudgment may be enteredupon it in accordance

with applicable law in any court having jurisdiction thereof. . . . The

agreement herein among the parties to the Agreement and any other written

agreement to arbitrate referred to herein shall be specifically enforceable

under applicable law in any court having jurisdiction thereof.

Before Peters signed the form contract, however, Thompson crossed this provision out and Rick

Peters initialed the strike-out to indicate his assent. In an affidavit later filed with the court,

Thompson explained that the deletions "represent changes that [Thompson] has made to this

standard form and incorporated in essentially all contracts with its customers through the date ofthe

Peters contract. These standard changes were made by [Thompson] in the initial draft submitted

to Peters and represent [Thompson's] changes."1

As construction progressed, Peters became dissatisfied with Thompson's performance.

Peters complained of major plumbing leaks, faulty electrical wiring, improper and defective

installation of fixtures, appliances, and carpeting, and the like. When Thompson did not remedy

the defects to Peters's satisfaction, Peters stopped making the contracted installment payments.

Thompson sued Peters for payment. Peters counterclaimed for various claims in contract and in tort.

Neitherpartyarguedin itsbriefthatthe contractat issuecontainedany ambiguity. Afteroralargument.Thompson submitteda letterbrief

arguingthat ifthere is any ambiguity,it must be resolvedin favorof arbitration becauseof the publicpolicyfavoringarbitration. It analogizesthe

argumentto the principlethat,when the languageof an insurance policy is ambiguous, the construction that affords coverage willbe adopted. We

donotagreewithThompson'sconclusion. Where an ambiguity existsina contract, thecontractlanguage willbe construed strictly againstthe party

who drafted it.since the drafter is responsible for the language used. Gonzalez v.XfissionAm, Ins. Co., 795 S.W.2d 734,737 (Tex. 1990). Because

insurersare almostinvariably, if not always,the draftersof their policies,the specificruleabout insurancepoliciesissimplya corollaryof the more

generalrule. Inthiscase,Thompsondraftedthe formcontract,andThompson,not Peters,struckoutthe generalarbitration clause. Thereisno reason

we should not apply the general contract principle and construe the effect of striking out the general arbitration clause againstThompson.

-2-
Thompson moved the trial court to compel arbitration; Peters objected to arbitration.

Despite the deletion ofthe arbitration clause, Thompson contended that other provisions, taken

together, meant that, in the event ofadispute between the parties, the architect, Caperton/Johnson,

would serve as arbitrator. It relied principally on three provisions:

In case of a dispute between Owner and Contractor as to whether any part of an

application for payment should be paid, Architect shall make the final decision on

the amount that should be paid.

The Architect will interpret and decide matters concerning performance under and

requirements ofthe Contract Documents onwritten request of either the Owner or

Contractor. The Architect will make initial decisions on all claims, disputes orother

matters in question between the Owner and Contractor. The Architect's decisions

in matters relating to aesthetic effect will be final if consistent with the intent

expressed in the Contract Documents.

The Architect will have authority to reject Work which does not conform to the

Contract Documents.

Because the architect was given this authority, Thompson concludes that the contract contemplated

Caperton/Johnson as arbitrator.

Peters responds that the striking ofthe formal arbitration clause means that he did not agree

to the arbitration process. At most, he argues, the contract gave Caperton/Johnson the authority to

decide the amount that should be paid ifthe parties disagreed whether any amount ofan application

for paymentshould bepaid. Inquestions ofperformance under the contract, Caperton/Johnson had

the authority to make "initial decisions on all claims, disputes orother matters in question"; Peters,

stressing the word "initial," contends that Caperton/Johnson was explicitly given authority tomake

final decisions only in matters relating to aesthetic effect. While Caperton/Johnson had the authority

to reject work that did not conform to the contract between the parties, Peters asserts that nothing

in the contract gave Caperton/Johnson the exclusive right to do so.
Peters also argued thatCaperton/Johnson would notbeanimpartial arbitrator, because itand

Thompson enjoyed a long professional relationship andThompson often used Caperton/Johnson as

its architect. In response, Thompson cites authority for the proposition that an engineer, working

on a project, may bedelegated theauthority toactasanarbitrator. City ofSan Antonio v. McKenzie

Constr. Co., 150 S.W.2d 989, 995-96 (Tex. 1941). Butinthatcase thesupreme court emphasized

the critical language: the engineer"shall determine all questions in relation to said work, and the

construction thereof. He shall in all cases decide every question which may arise relative to the

execution of this contract on the part of saidContractor." City ofSan Antonio, 150S.W.2dat 996.

We do not dispute that parties to a contract can designate anotherpartyto the same contract as an

arbitrator, if they chooseto do so. Caperton/Johnson is not disqualified from being an arbitrator in

the Peters' home building contract simply because it is the architect on the project. The real issue

is whether the contract in this case gave Caperton/Johnson the authority to make final, binding

decisions in any matter except claims for payment or matters relating to aesthetic effect.

Arbitration is a creature of contract, and a clause requiring arbitration will be interpreted

under contract principles. BelmontContractors, Inc., v. LyondellPetrochemicalCo., 896 S.W.2d

352, 357 (Tex. App.-Houston [1st Dist] 1995, no writ). Thompson argued to the trial court that its

"intent was to create an agreement whereby disputes such as the one between [Thompson] and

[Peters] would be referred to the Architect for final resolution." Yet the parties' objective, not

subjective, intent controls. Hasty, Inc., v. Inwood BuckhornJoint Venture, 908 S.W.2d 494, 499

(Tex. App.-Dallas 1995, writ denied). We do not ask about the subjective intent of the parties.

Hasty, Inc., 908 S.W.2d at 499. Circumstances surrounding the execution of a contract should be

considered, but the circumstances are merely an aid in the construction of the contract's language.

-4-
Moreover, the circumstances to be considered are not the parties' statements ofwhat they intended

the contract to mean. KMContinentalOffshore Prod Co. v. ACFPetroleum Co., 746 S.W.2d 23 8,

241 (Tex. App.-Houston [1st Dist] 1987, writ denied). We may consider all the circumstances

before and contemporaneous with the execution ofa contract, "other than oral statements by the

parties of what they intended it to mean." City ofPinehurst v. Spooner Addition Water Co., 432

S.W.2d 515, 518 (Tex. 1968) (emphasis added). Thompson's subjective intent, therefore, isof no

assistance.

Finally, Thompson points outthatstate lawstrongly favors arbitration. Courts mustresolve

anydoubts about anagreement to arbitrate infavor of arbitration. Cantella &Co. v. Goodwin, 924

S.W.2d 943, 944 (Tex. 1996) (percuriam). Once a party seeking to compel arbitration establishes

that an agreement toarbitrate exists and that the claims raised are within the agreement's scope, the

trial court has no discretion but to compel arbitration. Goodwin, 924 S.W.2d at 944. We do not

disagree with these principles. Yet"[although doubts regarding the scope of an arbitration clause

are to be resolved in favor of arbitration, there must be an initial showing by the party seeking

arbitration that the parties agreed to arbitration." Solis v. Evans, 951 S.W.2d 44, 51 (Tex.

App.-Corpus Christi 1997, orig. proceeding). Arbitration cannot be ordered in the absence ofsuch

an agreement. Freisv. Canales, 877 S.W.2d 283, 284 (Tex. 1994) (per curiam).

Turning tothecontract inthis case, we see thatCaperton/Johnson did not have theauthority

to make final decisions concerning Thompson's performance; therefore, Caperton/Johnson could

not resolve the dispute that arose between the parties in this case through the process of binding

arbitration. In matters of performance, Caperton/Johnson was explicitly given authority to make

only initial decisions; the contract is completely silent on who will make the final decisions.
Therefore, the contract does not prevent Peters from seeking afinal, and binding, decision from a

court oflaw. To the contrary, ifthe contract itself does not give anyone the authority to make a

final and binding decision, a court isthe only entity left that can make a final decision and enforce

it.

We conclude that Thompson did not meet its burden ofinitially showing that the parties

agreed to arbitration. Accordingly, we affirm the trial court's order denying Thompson's motion

to compel arbitration.

Do Not Publish

Tex. R. App. P. 47

970674F.U05

OjlS
3-aiaciU

(Baurt at Appeals

JTfftl| jBtstrtrt of Gkxas at lallas

No. 05-97-00674-CV

BOB THOMPSON HOMES, INC.,

Appellant

RICK PETERS AND ANNE PETERS,

Appellees

Appeal from the 199th District Court of

Collin County, Texas. (Tr.Ct.No. 199-139-

97).

Opinion delivered by Justice Lagarde,

Justices Moseley and Bridges participating.

JUDGMENT

In accordance with this Court's opinion of this date, the judgment of the trial court

is AFFIRMED. It is ORDERED that appellees Rick Peters and Anne Peters recover their

costs of this appeal from appellant Bob Thompson Homes, Inc. and from the cash deposit

in lieu of cost bond. After all costs have been paid, the clerk of the district court is directed

to release the balance, if any, of the cash deposit to McManemin & Smith, P.C., as counsel

for appellant Bob Thompson Homes, Inc.

Judgment entered April 28, 1999.

SUE LAGARDE

JUSTICE
Fifth Court of Appeals

Case Party & Attorney Address List

Page: 1

Date Printed: 04/28/1999

Case Number: 05-97-00674-CV Date Filed: 04/24/1997

Style: Bob Thompson Homes, Inc.

v.

Peters, Rick & Anne Peters

Trial Judge: Roach, John R.

Trial Court Reporter:

Trial Court: 199TH DISTRICT COURT Trial County: COLLIN

ANT Daniel P. Callahan

ATT 003648700

Godwin & Carlton, SMITH, PC.

1600 PLAZA OF THE AMERICAS

600 N. PEARL STREET, LB. 175

Dallas, TX 75201

Phone 214/953-1321

Fax 214/953-0695

APE Bruce H. White

ATT 021288850

Dixon Dixon & Jessup Ltd, Lip

1445 Ross Ave Ste 5500

Dallas, Tx 75202-2801

Phone 214/754-0155

Fax / -

Author of opinion Justice Lagarde

Trial Court Judge Roach

Rehear denied

**THIS OPINION IS RELEASED FOR PUBLICATION YES / NO