## COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH NO. 02 - 13 - 00047 - CV

BBVA COMPASS INVESTM ENT SOLUTIONS, INC.; DOR IS G. SILVA; KAREN L. MCRO BERTS; MARIO RAMOS; AND DAV ID S. NEEL, JR. APPELLANTS

V. EDWARD BROOKS AND GE NEVA BROOKS APPELLEE S

---------- FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY

TRIAL COURT NO. 236

- 260857

- 12

---------- 

### OPINION

---------- The trial court denied Appellants ’ motion to stay proceedings and compel arbitration. In one issue, Appellants argue the trial co urt erred in doing so. We agree, reverse the trial court’s order, and remand the cause for further proceedings consistent with this opinion.2 Factual Background Edward and Geneva Brooks, appellees, maintained an IRA with BBVA Compass Investment Solutions, Inc. (Compass). In August 2010, Compass transferred all of the Brooks es ’ money into the account of Ethel Delores Williams and closed their account. When the Brooks es discovered the error, they assert Compass told them an unidentified person claimed Edwa rd Brooks was deceased and presented a power of attorney to trans fer the money out of the IRA. The Brooks es ’ efforts to resolve the matter to their satisfaction failed, and on August 16, 2012, they filed suit and thereafter amended their petition several times. Compass does not concede these facts as true, but Compass does concede that for purposes of the motion to compel arbitration, the Brooks es ’ allegations are to be taken a s true. The Parties In the Brooks es ’ “Second Amended Petition,” which was thei r live pleading at the time of the hearing on the motion to compel arbitration, they identified the defendants as Compass; Pershing, LLC (Pershing); Doris G. Silva; Karen L. McRoberts; Mario Ramos; David S. Neel, Jr.; Williams; and John Doe. Compass ident ified Silva, McRoberts, Ramos, and Neel as its employees. All references to “Appellants” are to Compass, Silva, McRoberts, Ramos, and Neel. Pershing is identified in Appellants’ brief as the clearing firm and custodian of the Brooks es ’ IRA account . Pers hing was originally an appellant as well, but it subsequently dismissed its appeal. In their “Third Amended Petition,” the Brooks es identified3

Williams as the person into whose account their money was transferred. Williams is not a party to the appeal. The Brookses identified John Doe simply as “an unidentified individual” and dropped him from their “Third Amended Petition.” In any event, John Doe is not a party to the appeal. Procedural Background The Brooks es filed their original petition on A u gust 1 6, 2012. Appellants filed their answer on September 17, 2012, and asserted the dispute was subject to arbitration. Pershing and Williams filed separate answers

. The Brooks es file d their “First Amended Petition” on October 3, 2012. On November 9, 2012, A ppellants and Pershing filed a joint “Motion to Stay Proceedings and Compel Arbitration.” On January 4, 2013, the Brooks es filed their “Second Amended Petition” in which they alleged seventeen separate claims for relief. Among the claims, the Brooks es al leged a breach of contract. On January 8 , 2013, the Brooks es filed their “Response and Objections to Defendants’ Motion to Stay Proceedings and Compel Arbitration.” On January 9, 2013, Appellants and Pershing filed a reply in support of their motion to c ompel arbitration. The Brooks es file d a sur - reply on January 23, 2013. The hearing on the motion to compel arbitration was on January 25, 2013, and consisted only of argument of counsel. At the conclusion of the hearing, the trial court denied the moti on without stating its reasons. On the same date the trial judge signed a written order denying the motion. The written order provides no expl anation for the ruling either.4 Appellants ’ Motion to Strike 1 As a preliminary matter, we address Appellants’ mo tion to strike some of the exhibits attached to the Brooks es ’ brief. Specifically, they complain about the exhibits attached as Tabs 3, 4, 5, 6, 7, 8, 9, 11, 12, and 13 to the Brooks es ’ brief. For the reasons that follow, we grant Appellants’ motion. A ppellants object to Tab 4, which contains the Brooks es ’ Fourth Amended Petition, because the Brooks es filed their Fourth Amended Petition after the trial court ruled and is, therefore, irrelevant. The trial court denied Appellants’ motion
to stay proceedi ngs and compel arbitrat ion on January 25, 2013. The Brooks es filed their Fourth Amended Petition on February 22, 2013 . We note further that the Brooks es ’ Fourth Amended Petition does not appear in the c lerk’s r ecord. We grant Appellants’ motion to strik e Tab 4 of the Brooks es ’ brief. 2 Appellants object to Tabs 3, 5, 6, 7, 8, 9, 11, 12, and 13 because they contain documents that are outside the record. An appellate court cannot look outside the record but is bound to determine the case on the record file d. See Quorum Int’l v. Tarrant Appraisal Dist. , 114 S.W.3d 568, 572 (Tex. App.

— Fort Worth 2003, pet. denied). Appellants are correct. The exhibits attached to those Tabs to the Brooks es ’ brief are not otherwise part of the c lerk’s r ecord or the

1 Pershing joined the motion to strike, but, as noted earlier, Pershing subsequently dismissed its appeal.

2 The Brooks es filed a “Third Amended Petition” on January 29, 2013, tha t is part of the c lerk’s r ecord. As it post

- dates the hearing , it does not impact this appeal.5

r eporter ’s r ecord. We grant Appellants ’ motion to strike Tabs 3, 5, 6, 7, 8, 9, 11, 12, and 13 attached to the Brooks es ’ brief. The Arbitration Provision Paragraph 19 of the b rokerage a greement provides, in relevant part: (e) . . . You agree that, except as provi ded below, all controversies which may arise between you and Compass, its affiliates, officers, directors, employees, representatives, and agents concerning the construction, performance or breach of this agreement, agreements related hereto, or any transa ction involving securities and/or your securities account, whether entered into prior to, or subsequent to the date hereof, shall be resolved by arbitration in accordance with the Code of Arbitration Procedure of the National Association of Securities Deal ers (“CAPNASD”) or, if the CAPNASD is unavailable for any reason, the rules of procedure of the American Arbitration Association. (Original all in capital letters.) Although Silva, McRobert s, Ramos, and Neel were

non signatories, Appellants argue they wer e subject to the arbitration provisions as Compass’s “agents.” Standard of Review Generally A party seeking to compel arbitration must show that the claims at issue (1) are subject to a valid arbitration agreement and (2) fall within the scope of that
agr eement. In re Rubiola , 334 S.W.3d 220, 223 (Tex. 2011) (orig. proceeding); Aldridge v. Thrift Fin. Mktg., LLC. , 376 S.W.3d 877, 882 (Tex. App.

— Fort Worth 2012, no pet.); In re Trammell , 246 S.W.3d 815, 820 (Tex. App.

— Dallas 2008, orig. proceeding). F eder al and state law strongly favor arbitration. Cantella & Co. v. Goodwin , 924 S.W.2d 943, 944 (Tex. 1996) (orig. proceeding) (per curiam) ; Wee Tots Pediatrics, P.A. v. Morohunfola , 268 S.W.3d 784, 790 (Te x.6

App.

— Fort Worth 2008, orig. proceeding ). A ppellat e courts review a trial court’s denial of a motion to compel arbitration for an abuse of discretion. In re Labatt Food Serv., L.P. , 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding); Carr v. Main Carr Dev., LLC , 337 S.W.3d 489, 494 (Tex. App.

— Dallas 2011 , pet. denied); New Hampshire Ins. Co. v. Magellan Reinsuranc e Co. , No. 02

- 12

- 00196

- CV, 2013 WL 1830349, at *3 (Tex. App.

— Fort Worth May 2, 2013, no pet. ) (op. on reh’g). Appellants’ Arguments Appellants’ contend the trial court erred by denying their mot ion to compel arbitration because the agreement was broad enough to encompass all controversies between the parties concerning the performance of the agreement. They contend that the application is straightforward but that the trial court simply ignored i t. The Brooks es ’ Arguments The Brooks es argue the trial court properly denied Appellants’ motion to compel arbitration because the scope of the arbitration clause does not encompass Appellants’ tortious conduct and because the contractual relationship betw een the parties ended once Appellants liquidated and closed the account. The Brooks es contend the arbitration clause is limited to disputes involving the purchase, sale, and clearance of securities. The Brooks es assert their claims are tort claims, such as coercion, intentional misrepresentations, DTPA violations, and conversion, which occurred after the liquidation of the brokerage7

account. The y maintain their tort claims ar o se independently of the brokerage agreement. The Brooks es explained their posi tion at trial to the judge as follows:

Now, we can step back and say, the wrongful transfer is a breach of fiduciary duty. It’s a breach of contract. That falls within the arbitration agreement. We concede that. [ 3 ] It’s everything that comes afterwards that has nothing to do with the arbitration agreement. And I would submit to Your Honor that a boilerplate arbitration agreement does not contemplate the violation of criminal statutes. It doesn’t contemplate deliberate fraud. It doesn’t contemplate con version. And it doesn’t contemplate coercion. All of which we claim in this case, Your Honor. The Brooks es concluded their trial arguments as follows:

Finally, Your Honor, I’ll just point this out. T here would be no question. If [Appellants] had rea ched into Mr. Brooks’s back pocket and stolen a check out of it, there would have been no question but that that action was not part of an arbitration agreement. Your Honor, I submit to you, there’s absolutely no difference in what [Appellants] and Pershi ng did in this case versus the scenario I gave you. The Brooks es argue Appellants terminated the account but retroactively attempt to benefit from the arbitration clause found in th e terminated contract. The Brooks es contend the conduct about which they are complaining occurred when the parti es had no contract whatsoever.

3 The Brooks es ’ position on whether their breach of contract claim is subject to arbitration has varied. During the trial court hearing, the Brooks es conceded t he breach of contract claim fell within the arbitration agreement. In the Brooks es ’ written response to Appellants ’ motion to compel arbitration that they filed in the trial court, they stated that the transfer of the money out of the account with its ens uing violations of fiduciary and contractual duties were breaches “[a]rguably” subject to arbitration. Most recently, in their s ur - r eply brief filed here on appeal, the Brooks es contend the breach of contract claim is not subject to arbitration because th e arbitrati on clause is unconscionable.8

Arbitration Clause Survives Termination or Repudiation of Contract An agreement to arbitrate contained within a contract survives the termination or repudiation of the contract as a who le. See Dish Network L.L.C. v. Brenner , Nos. 13

- 12

- 00564

- CV, 13

- 12

- 00620

- CV, 2013 WL 3326640, at *7 (Tex. App.

— Corpus Christi June 27, 2013, no pet.) (mem. op.); Cleveland Constr., Inc. v. Levco Constr., Inc. , 359 S.W.3d 843, 854 (Tex. App.

— Houston [1st D ist.] 2012, pet. dism’d); Henry v. Gonzalez , 18 S.W.3d 684, 690 (Tex. App.

— San Antonio 2000, pet. dism’d); In re Koch Indus., Inc. , 49 S.W.3d 439, 445 (Tex. App.

— San Antonio 2001, orig. proceeding) ; Dallas Cardiology Assocs., P.A. v. Mallick , 978 S .W.2d 20 9, 213 (Tex. App.

— Texarkana 1998, pet. denied)

. An arbitration agreement within a written contract is separable from the entire
contract. See Pepe Int’l Dev. Co. v. Pub Brewing Co. , 915 S.W.2d 925 , 932 (Tex. App.

— Houston [1st Dist.] 1996, no writ). Beca use the arbitration clause survived, the question turns to the scope of the arbitration provision. Scope Generally When determining whether a claim is within the scope of an arbi tration agreement, courts focus on the factual allegations of the complaint r ather than the legal causes of action asserted. McReynolds v. Elston , 222 S.W.3d 731, 740 (Tex. App.

— Houston [14th Dist.] 2007, no pet.). Whether a claim is subject to arbitration turns on its substance ; parties cannot evade an arbitration clause through artful pleading. Trammell , 246 S.W.3d at 820. A strong presumption favors arbitration, and c ourts resolve any doubts about an agreement’s scope,9

waiver, and other issues unrelated to its validity in favor of arbitration. Ellis v. Schlimmer

, 337 S.W.3d 860, 862 (Tex. 2011) (per curiam)

. U nless 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

. Prudential Sec. Inc. v. Marsh all , 909 S.W.2d 896, 899 (Tex. 1995) (orig. proceeding). W hether a claim falls within the scope of an arbitration agreement involves the trial court’s legal interpretation of the agreement and is subject to de novo review. Tex. Petrochemicals LP v. ISP W ater Mg m t. Servs. LLC , 301 S.W.3d 879, 884 (Tex. App.

— Beaumont 2009, no pet.) ; McReynolds , 222 S.W.3d at 740 . When reviewed de novo, appellate courts give absolutely no deference to the trial court’s decision. Quick v. City of Austin , 7 S.W.3d 109, 116 ( Tex. 1998). Scope as Contractual Interpretation Whether an arbitration agreement imposes a duty to arbitrate a particular dispute is a matter of contractual interpretation and a question of law for the
court

. The Babcock & Wilcox Co. v. PMAC, Ltd. , 863 S .W.2d 225, 229

– 30 (Tex. App.

— Houston [14th Dist.] 1993, writ denied ). Courts examine the l anguage in an arbitration agreement in context and give the language its plain grammatical meaning. In re Wachovia Sec., LLC , 312 S.W.3d 243, 247 (Tex . App.

— Dallas 2010, orig. proceeding ). When construing a contractual provision, the provision is reviewed in light of the entire contract. See Clark v. Cotton Schmidt, L.L.P. , 327 S.W.3d 765, 772

– 73 (Tex. App.

— Fort Worth 2010, no pet.).10

Appellants contend that the ar bitration language is broad and covers the complained

- of conduct alleged by the Bookses, that the relationship between the Brookses and them arises solely as a result of their agreement, and that, consequently, all interactions between them necessarily occ urred as part of the Appellant’s performance or nonperformance of the agreement. The Brooks es contend the only purpose of the contract was to establish an account for the purchase or selling of stocks and bonds. The Agreement provides: This Agreement aut horizes Compass Brokerage, Inc. (Compass) . . . to establish an account (Securities Account) and to purchase and sell, as your agent, stocks, options, bonds, and other securities (Securities) without recourse, solely upon your order and for your account as customer, and in accordance with the terms an d conditions of this Agreement. The Brooks es then emphasize the language in the arbitration clause that it encompasses “transactions involving securities and/or your securities account ” and argue that their cla ims are not from any such transactions but are for conduct not covered by the clause

. We agree with Appellants

. The purpose of the agreement was not to establish an account “ to ” purchase and sell securities. The purpose was to establish an account “ and ” to purchase and sell securities. Transactions involving securities were listed as one of the things the arbitration clause in the agreement covered. They were not, however, listed as the only thing the arbitration clause covered. The Brooks es read the a rbitration clause as limited to controversies concerning “any transactions involving securities,” but they11

overlook the disjunctive “or” that precedes the quoted language. T he arbitration clause, as noted above, was not limited to security transactions bu t applied to “all controversies . . . concerning the construction, performance or breach of this agreement, agreements related hereto, or any transaction involving securities and/or your securities account.” (Emphasis added.) The Brooks es acknowledged at trial that the wrongful transfer was what started this dispute. The unauthorized transfer of the Brooks es ’ money w ould appear to be a breach of the ir agreement ; consequently , all of Appellants’ subsequent conduct about which the Brooks es complain fall wi thin the plain language of the clause that encompassed “all controversies

. . . concerning

. . . the performance or breach of the agreement. ” Whether Claims Other than Contractual Ones are Within Scope The Brooks es assert tort claims are generally not sub ject to arbitration. See Hearthshire Braeswood Plaza Ltd. P’ship, SMP v. Bill Kelly Co. , 849 S.W.2d 380, 391 (Tex. App.

— Houston [14th Dist.] 1993, writ denied) (stating “causes of action sounding in tort are not automatically exempted from arbitration”) ; In re Computer Components Corp. , No. 05

- 99

- 01289

- CV, 1999 WL 1212163 , at *2 (Tex. App.

— Dallas 1999, orig. proceeding ) (not designated for publication) (“Tort claims are generally not subject to arbitration, but also are not automatically exempt from it.”)

. The y assert state court claims in tort are exempt from arbitration if liability arises from general obligations imposed by law that would12

exist whether there was an agreement or not. See generally In re Weekley Homes, L.P. , 180 S.W.3d 127, 132 (Tex. 200 5) (orig

. proceeding)

. The Brooks es rely on Fridl v. Cook , 908 S.W.2d 507 (Tex. App.

— El Paso 1995, writ dism’d w.o.j.). In Fridl , the plaintiff contracted with the defendant to market the defendant’s company’s products, but thereafter the defendant alleg edly diverted the business the plaintiff generated to another one of his companies and thereby avoided paying the plaintiff his commissions. Id. at 509

– 14. The arbitration clause in that case encompassed “ [ a ] ny and all controversies , disputes or claims a rising out of or relating to this Agreement or a breach thereof .” Id. at 509. The court wrote that t he alleged fraud claim was not link ed to any contractual breach because the defendant and the defendant’s company with which the plaintiff contracted coul d have honored their contractual obligations “in every respect” and yet been liable for fraudulently inducing the plaintiff to obtain business for a business outside the contract , so the court ruled the claim arose outside the contract. Id. at 513. Fridl is distinguishable. The Brooks es ’ claims are both direct and collateral results of Appellants’ alleged breach of their contractual agreement with the Brooks es

. The Brooks es also rely on Computer Components Corp. for the proposition that a conversion cla im can be maintained without reference to the contract. Regarding tort claims, the court wrote: “Tort claims are generally not subject to arbitration, but also are not automatically exempt from it.” Computer13

Components Corp. , 1999 WL 1212163 at *2 (citi ng Hearthshire Braeswood , 849 S.W.2d at 391 )

. The court continued: In deciding if the tort should be sent to arbitration with the contractual claims, the court must determine if the tort claim is ‘so interwoven with the contract that it could not stand alone or, on the other hand, is a tort completely independent of the contract that it could be maintained without reference to the contract.’ Id. (quot ing Hearthshire Braeswood , 849 S.W.2d at 391). The court concluded: In the present case, the conversion claim is one which could be maintained without reference to the contract and independent of the contract. Therefore, we conclude the conversion claim is not so interwoven with the contract claim as to require it to be submitted to arbi tration with the co nt r act claim. Id. In Computer Components , the cont r act in question was an employment
contract. Id. at *1. Although not entirely clear, the employee, while employed, apparently converted some property in which Computer Components had a security interest

. Id. Computer Components is distinguishable. The converted property in Computer Components was not the subject of the contract. In contrast, t he Brooks es ’ property was the very subject of the ir contract with Compass

. In another case, Sun Communicatio ns, Inc. (Sun) and Financial Services Plus, Inc. (FSP) entered a services contract containing an arbitration agreement. In re Sun Communications, Inc. , 86 S.W.3d 313, 31 6 (Tex. App.

— Austin 2002, orig. proceeding) (per curiam)

. When a dispute arose, FSP s ued Sun for conversion and breach of fiduciary duty, both of which were torts , but did not sue Sun for breach of contract

. Id. When Sun filed a motion to compel arbitration,14

FSP argued its dispute arose entirely outside any contractual relat ionship betwe en the parties; the trial court denied Sun’s motion. Id. at 316

– 17. The court wrote, “If a dispute is ‘factually intertwined’ with arbitrable claims, the parties should be compelled to arbitrate their dispute even if the dispute is grounded in a legal th eory distinct from a breach of contract claim.” Id. at 318 (citing Jack B. Anglin Co. Inc. v. Tipps , 842 S.W.2d 266, 271 (Tex. 1992) (orig. proceeding) ). The court continued, “[W]e determine whether the facts alleged in support of the tort claim, standin g alone, are independent of the contract and whether the tort claim could be maintained without reference to the contract.” Id. The court ruled that because FSP’s claims rested on reports required under the contract, its claims were inextricably intertwi ned with the contract ; hence, the trial court abused its discretion by refusing to grant Sun’s motion to compel arbitration. Id. at 319

– 20. Sun Communications is instructive. FSP appeared to have deliberately avoided any breach of contract claim and fram ed its claims strictly in tort to avoid the arbitration clause in the contract. In Sun Communications , the court looked to see if the tort claims could nevertheless be maintained without reference to the contract and determined they could not, so the clai ms were subject to the arbitration clause. Here t he Brooks es a lleged a breach of contract

. However, the Brooks es asked the trial court to look only at everything that came after the breach. The Brooks es ’ claims similarly cannot be maintained without ref erence to the agreements with Compass. But for Compass’s transferr ing the Brooks es ’15

money out of their account and subsequently closing their account, there would be no dispute. See In re Conseco Fin. Servicing Corp. , 19 S.W.3d 562, 570 (Tex. App.

— Waco 2 000, orig. proceeding) (“Absent the contract, there would be no relationship between [the parties], and there would have been no debt the collection of which caused the difficulty between them.”).
In Hearthshire Braeswood , the court held that it was possi ble to pursue the tort claim regarding one project (the Landing project) without mentioning the other project , for which there were contracts (the Gardens contracts). Hearthshire Braeswood , 849 S.W.2d at 391. The court overruled the attack on the trial c ourt’s order refusing to compel arbitration of the Landing project claim. Id. Hearthshire Braeswood does not help the Brooks es . Before the Brooks es can get any relief on their tort claims complaining of Appellants’ actions after the liquidation of their account, they will first have to establish they had an account with Compass and that Appellants liquidated that account without their authorization. In a previous case, we have held that the following clause , which was virtually identical substantively to the one in this case, brought the plaintiff’s tort claims within the scope of the arbitration clause: any and all controversies which may arise between the Firm , any of [ the ] Firm’s employees or agents and Client concerning any account, transaction, dis

pute or the construction, performance or breach of this or any other a greement , whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration

.16

UBS Fin. Servs., Inc. v. Branton , 241 S.W.3d 179, 186 (Tex. App.

— Fort Wort h 2007, orig. proceeding ) ( underlined emphasis in original; emphasis in italics added) . Other courts have construed language in arbitration provisions to encompass tort claims. See, e.g. , New Hampshire Ins. Co., 2013 WL 1830349, at *4 (holding court coul d not conclude with positive assurance that other

- than

contractual claims did not require

— or at a minimum touch on in some way

— the interpretation of the contract); Graham

- Rutledge & Co. Inc. v. Nadia Corp. , 281 S.W.3d 683, 690

– 91 (Tex. App.

— Dallas 2009, no pet.) (compelling arbitration of fraud and other tort claims based on an arbitration clause covering “[a]ny controversy or claim relating to this contract”); AutoNation USA Corp. v. Leroy , 105 S.W.3d 190, 197 (Tex. App.

— Ho uston [14th Dist.] 2003, orig. pr oceeding ) (compelling arbitration of subsequent transaction for financing vehicle because financing would not have occurred without vehicle sales agreement , which contained an arbitration provision encompass ing “‘[a]ny controversy or claim arising out of o r relating to’ the Purchase Agreement” ); Conseco Fin. Servicing Corp. , 19 S.W.3d at 570 (holding that broad arbitration provision , “‘[a]ll di s putes, claims or controversies arising from or relating to’ the contract , ” encompassed

even tort and DTPA claims n ot based on the formation, negotiation, terms, or performance of contract); Dallas Cardiology Assocs., P.A. , 978 S.W.2d at 215 (relying on broad arbitration clause , “[a]ny dispute arising over the terms and conditions of this [a]greement,” to send tort cla ims to arbitration because it could not be said with positive assurance that the particular dispute was not covered);17

Am. Emp ’

rs’ Ins. Co. v. Aiken , 942 S.W.2d 156, 160 (Tex. App.

— Fort Worth 1997, no writ) ( “ Here, the contract included the agreement to arb itrate any dispute arising in connection with nonperformance of the contract. And a dispute arising out of a contractual relationship may give rise to both breach of contract and tort claims at the same time because the breach of a duty owed under the

con tract may involve tortious conduct.” ); Sw. Health Plan, Inc. v. Sparkman , 921 S.W.2d 355, 358 (Tex. App.

— Fort Worth 1996, no writ) ( “Sparkman complains that appellants breached their contractual duty to provide for Tyson’s medical expenses, and Sparkman’s claims for fraud, fraudulent concealment, misrepresentation, bad faith, DTPA violations, and violations of the Texas Insurance Code all relate to the contractual dispute. As a result, they are subject to arbitration.” (Citation omitted.) ). We do not fin d the Brooks es ’ analogy to Compass taking money out of the back pocket of Mr. Brooks persuasive. Any money taken out of Mr. Brooks’s back pocket w ould not have been money Appellants were holding in an account pursuant to a contract between Appellants and Mr. Brooks. All the damages in dispute here ar o se as a consequence of Appellants’ alleged payment of all the sums within the Brookses’ account with Compass to a third party, the liquidation of the Brooks es ’ account at Compass , and Appellants’ subsequent f ailed attempts to make the Brooks es whole to their satisfaction

. Resolving any doubts about the scope of the arbitration agreement in favor of arbitration, and holding it cannot be said with positive assurance that the18

arbitratio n clause does not encompass the dispute in question, w e agree with Appellants that all of the Brooks es ’ claims , even those not based on the contract, are within the scope of the arbitration provision. See Ellis , 337 S.W.3d at 862; Prudential Sec. Inc. , 909 S.W.2d at 899.

Unconscion ab le Provisions Generally Appellants contend that the Brookses argued the arbitration provision was substantively unconscionable by claiming the arbitration costs were so high they were oppressive and, additionally, procedurally unconscionable by claiming unfair surprise because, at the time of the agreement, the Brookses could not anticipate Appellants’ alleged future wrongdoing. Texas recognizes provisions can be both substantive ly and procedural ly unconscionab le

. In re Olshan Found. Repair Co., LLC , 3 28 S.W.3d 883, 892 (Tex. 2010) (orig. proceeding )

. Whether a provision is s ubstantive ly unconscionab le depends on the fairness of the provision itself ; whether a provision is p rocedural ly unconscionab le depends on the circumstances surrounding the adoptio n of the provision. Id. Whether a valid arbitration agreement exists is a legal question subject to de novo review. J.M. Davidson, Inc. v. Webster , 128 S.W.3d 223, 227 (Tex. 2003); Aldridge , 376 S.W.3d at 882. A trial court’s decision concerning wheth er an arbitration agreement is

u nconscionab le is reviewed for an abuse of discretion. Olshan Found. Repair Co. v. Ayala , 180 S.W.3d 212, 214 (Tex. App.

— San Antonio 2005, pet. denied). Because a trial court has no discretion to determine what the law is o r apply the19

law incorrectly, its failure to properly analyze or apply the law constitutes an abuse of discretion. In re Poly

- Am., L.P. , 262 S.W.3d 337, 349 (Tex. 2008) (orig. proceeding). “[T]he basic test for unconscionability is whether, given the part ies’ general commercial background and the commercial needs of the particular trade or case, the clause involved is so one

- sided that it is unconscionable under the circumstances existing when the parties made the contract.” In re FirstMerit Bank, N.A. , 5 2 S.W.3d 749, 757 (Tex. 2001 ) (orig. proceeding) . The principle is designed to prevent unfair surprise and oppression, but it is not designed to disturb the allocation of risks because of superior bargaining power. Id.

Not Substantively Unconscionable A complaint of the prohibitive cost of arbitration is a claim that asserts the provision is substantive ly unconscionab le

. Olshan Found. Repair Co. , 328 S.W.3d at 89 2. The party opposing arbitration bears the burden to prove the costs of arbitration rende r it unconscionable. Id. at 893. The Brooks es , relying on the affidavit of Geneva Brooks, argue the costs of arbitration would be so high as to be unconscionable. The Brooks es argue that because there was no objection to Geneva Brooks’ affidavit and bec ause Appellants offered no evidence controverting her affidavit , her affidavit was sufficient. On January 8, 2013, the Brooks es filed their “Response and Objections to Defendants’ Motion to Stay Proceedings and Compel Arbitration.” Attached to this respo nse was the “Affidavit of Geneva Brooks.” In her affidavit, Geneva Brooks stated, “Arbitration would impose a financial burden on my husband and20

me. The arbitration agreement requires us to follow one set of rules for the arbitration with Compass, and a separate set of rules for the arbitration with Pershing. This will make arbitration less efficient and much more costly.” Appellants disputed Geneva Brooks’ s assertion that two sets of rules would apply, asserted her affidavit was conclusory and insuffic ient under Olshan , and maintained she was not qualified to offer an opinion. We do not have to resolve all these issues . W e hold Geneva Brooks’s affidavit is insufficient evidence under Olshan

. “[F]or evidence to be sufficient, it must show that the plai ntiffs are likely to be charged excessive arbitration fees.” Id. at 895. Nothing in Geneva Brooks’ s affidavit states that the arbitration fees would be excessive. “[P]arties must at least provide evidence of the likely cost of their particular arbitrati on, through invoices, expert testimony, reliable cost estimates, or other comparable evidence.” Id. Nothing in Geneva Brooks’ s affidavit remotely approaches the likely cost of arbitration. “Evidence that merely speculates about the risk of possible cost is insufficient.” Id. Geneva Brooks’ s affidavit does not even go so far as to speculate. “ [A] comparison of the total costs of the two forums [(arbitration and litigation)] is the most important factor in determining whether the arbitral forum is an ad equate and accessible substitute to litigation.” Id. at 894

– 95. Geneva Brooks’ s affidavit provides no basis for comparing the two forums. “Other factors include the actual cost of arbitration compared to the total amount of damages the claimant is seeki ng and the claimant’s overall ability to pay the21

arbitration fees and costs.” Id. at 895. Geneva Brooks’ s affidavit provides no basis by which to determine the actual cost of arbitration compared to the total amount of damages sought and, further, no bas is by which to determine the Brooks es ’ overall ability to pay the arbitration fees and costs. “[T]hese considerations are less relevant if litigation costs more than arbitration.” Id. Because there is no basis to compare litigation costs to arbitration costs, it is not possible to know how to weigh the evidence, even if some evidence of the costs of arbitration had been presented. In short, the record contains no specific evidence that the Brooks es will actually be charged excessive arbitration fees,

an d, therefore, there is no legally sufficient evidence that such fees prevent the Brooks es from effectively pursuing their claim in the arbitral forum. See id. at 897. Not Procedurally Unconscionable T he circumstances surrounding the adoption of the arbi tration agreement determine whether the provision is procedurally unconscionable

. Id. at 892. Whether a contract is unconscionable or contrary to public policy at the time it is formed is a question of law. Poly

- Am., L.P. , 262 S.W.3d at 349. The Brook s es contend Edward Brooks could not have foreseen Appellants’ conduct when he signed the brokerage agreement. The Brooks es assert Appellants’ conduct constituted oppression and unfair surprise and inval idates the arbitration clause.22

Appellants argue that the Brooks es ’ surprise at subsequent events does
not render an arbitration clause procedurally unconscionable. Appellants stress that whether a provision is procedural ly unconscionab le depends on the circumstances surrounding the adoption of the arbitrat ion provision. Olshan Found. Repair Co. , 328 S.W.3d at 892. Situations that are p rocedural ly unconscionab le involve those in which one of the parties was incapable of understanding the agreement without assistance, and the other party did not provide tha t assistance, such as where one of the parties was functionally illiterate or where one of the parties did not speak English. Superbag Operating Co. v. Sanchez

, No. 01

- 12

- 00342

- CV, 2013 WL 396247 , at *6 (Tex. App.

— Houston [1st Dist.] Jan. 31, 2013, no pet .) (mem. op.) (citing In re Turner Bros. Trucking Co. , 8 S.W.3d 370 , 377 (Tex. App.

— Texarkana 1999 , orig. proceeding ) (involving functional illiteracy); Prevot v. Phillips Petroleum Co. , 133 F. Supp. 2d
937 , 940

– 41 (S.D. Tex. 2001) (involving language barr ier) ). We agree with Appellants. Subsequent events do not retroactively make an agreement procedurally unconscionable. The focus is on the time the agreement is entered. See Olshan Found. Repair Co. , 328 S.W.3d at 892; In re Halliburton , 80 S.W.3d 566, 571 (Tex. 2002) (orig. proceeding), cert. denied , 537 U.S. 1112 (2003)

. The Brooks es are not arguing they w ere not capable of understanding the agreement, w ere functionally illiterate, or could not read or speak English. Conclusion23

We sustain Appell ants ’ point of error in which they asserted the trial court erred by denying their motion to compel arbitration. We reverse the trial court’s order and remand the cause to the trial court for proceedings consistent with this opinion.

/s/ Anne Gardner ANNE GARDNER JUSTICE PANEL: DAUPHINOT, GARDNER, and WALKER, JJ.
DELIVERED: February 12, 2015