Opinion ID: 2831475
Heading Depth: 2
Heading Rank: 2

Heading: Arbitration Under the Subcontracts

Text: Finally, we turn to the Subcontractors’ arguments that Sapphire agreed through the subcontracts to arbitrate its claims against the Subcontractors, or alternatively, that Sapphire is equitably estopped from denying its assent to the arbitration agreement in the subcontracts. While we note that Sapphire is not a signatory to the subcontracts, its claims that the Subcontractors “contractually agreed” to perform their services and are liable to Sapphire for having breached those agreements at least appear to be “based on” and “directly seek benefits” under the subcontracts, and thus Sapphire may be equitably estopped to deny obligations under the subcontracts. See FirstMerit Bank, 52 S.W.3d at 755–56. We need not decide that issue, however, because we conclude that, even if the subcontracts are binding on Sapphire, they do not require the parties to arbitrate these claims. The Subcontractors provided their respective services pursuant to essentially identical subcontracts that they entered into with G.T. Leach. Both of these subcontracts contain three sections that pertain to the arbitration of disputes between the parties. First, section 11.1 states the parties’ agreement to arbitrate disputes: All claims, disputes and other matters in question arising out of, or relating to, this Subcontract or the breach thereof shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association unless the parties mutually agree otherwise. Section 11.3 then states that, if G.T. Leach “enter[s] into arbitration with [Sapphire] or others regarding matters relating to this Subcontract, Subcontractor will agree, if requested by [G.T. 37 Leach] to consolidation of this arbitration with [G.T. Leach’s] arbitration with [Sapphire],” and in that case the Subcontractors “shall be bound by the result of the arbitration with [Sapphire] to the same degree as [G.T. Leach].” Finally, however, section 12.13 states that the parties do not agree to mandatory arbitration: Notwithstanding any provision to the contrary contained in the Contract Documents, Subcontractor expressly agrees that this Subcontract does not contain a provision for the mandatory arbitration of disputes, nor does it incorporate by reference such a provision if such is contained in the [general] contract between [G.T. Leach] and [Sapphire]. The court of appeals held that the disclaimer in this section 12.13 “nullif[ies]” the arbitration agreement in section 11.1, and Sapphire relies on that holding here. The Subcontractors contend that section 12.13’s disclaimer does not nullify the agreement in section 11.1 because (1) the agreement appears earlier within the contract, and “terms stated earlier in an agreement must be favored over subsequent terms” in that same agreement, Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); (2) the agreement is more specific than the disclaimer, and specific provisions control over general provisions, see Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133–34 (Tex. 1994); (3) we must consider and give effect to all of the provisions with reference to the whole instrument, Myers v. Gulf Coast Minerals Mgmt. Corp., 361 S.W.2d 193, 196 (Tex. 1962); and (4) we must construe the provisions together if we can, rather than allow one to cancel the other, In re U.S. Home Corp., 236 S.W.3d 761, 765 (Tex. 2007). We conclude that there is no way to give full effect to both provisions, and that one must necessarily “nullify” the other at least to some extent. If we give effect to the agreement to arbitrate in section 11.1, for example, then we must necessarily conclude that the agreement does “contain a provision for the mandatory arbitration of disputes,” and thus nullify section 12.13’s disclaimer. The Subcontractors argue that we can give effect to both by construing the disclaimer to mean that arbitration is “mandatory” unless all parties mutually agree not to arbitrate, in which case 38 arbitration would not be mandatory. But parties can always mutually agree not to do what they previously agreed to do, and in any event, section 11.1 already provides that the parties can “mutually agree” not to arbitrate. Generally, we must give the subcontracts their plain meaning and enforce them without rendering either provision entirely superfluous. Cf. El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 808 (Tex. 2012) (prohibiting such a result); see also Moayedi, 438 S.W.3d at 7; Mercer v. Hardy, 444 S.W.2d 593, 595 (Tex. 1969). But we cannot do that when the plain meaning of one provision unambiguously requires that we not enforce another. See Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d 628, 637 (Tex. 2010). There is a direct conflict between section 11.1’s provision that all disputes “shall be decided by arbitration” and section 12.13’s provision that “this Subcontract does not contain a provision for the mandatory arbitration of disputes.” And if that were all that the two provisions provided, an ambiguity might exist that requires us to rely on canons of construction to determine the parties’ intent. But section 12.13 explicitly states that the Subcontract does not require mandatory arbitration “[n]otwithstanding any provision to the contrary” in any of the contract documents. Cf. In re Lee, 411 S.W.3d 445, 454 (Tex. 2013) (“The use of the word ‘notwithstanding’ indicates that the Legislature intended section 153.0071 to be controlling.”). Like the statute at issue in DeQueen, which expressly provided that any conflicting “rule of law, statute, or regulation . . . is ineffective,” the language of section 12.13 “specifically provide[s] the means for resolving conflicts” by providing that, in the event of any conflict, section 12.13 prevails. DeQueen, 325 S.W.3d at 632, 637. There is thus no ambiguity, and we need not rely on canons of construction like the rules that earlier or more specific provisions prevail. Id. Although these canons provide useful tools for resolving conflicting provisions, there is no conflict to resolve here because the plain language of 39 section 12.13 resolves the conflict. Id. at 638. We therefore conclude that, even if Sapphire is equitably estopped from denying its assent to the agreements contained in the subcontracts, those agreements do not include a valid, enforceable agreement to arbitrate its claims against the Subcontractors. The court of appeals, therefore, did not err in affirming the trial court’s denial of the Subcontractors’ motions to compel arbitration. We therefore affirm the court of appeals with respect to the trial court’s denial of the Insurance Brokers’, Engineers’, and Subcontractors’ motions to compel arbitration.