Court Opinion

ID: 2880755
Source: CourtListenerOpinion
Date Created: 2015-09-07 15:06:13.409753+00
Date Added: 2024-06-11T11:36:00.245970
License: Public Domain

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     AFFIRMED; Opinion filed April 28,1999

                                                    In The

                                          Court of Appeals
                              Jfiftfj IHstrttt nf tttexas at Uallas

                                             No. 05-97-00674-CV

                              BOB THOMPSON HOMES, INC., Appellant
                                                       V.

                            RICK PETERS AND ANNE 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
                      and subjectto an initial presentation of the claim or dispute to the Architect
                      as required under Paragraph 15.5. Notice of the 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 entered upon 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 of the

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 itsbriefthat the contractat issuecontainedany ambiguity. Afteroralargument.Thompson submitteda letterbrief
arguingthat if there is any ambiguity,it must be resolvedin favor of arbitration because of the publicpolicyfavoringarbitration. It analogizesthe
argumentto the principlethat, when the languageof an insurance policy is ambiguous, the construction that affords coverage will be adopted. We
donotagreewithThompson'sconclusion. Where an ambiguity existsin a contract, the contractlanguage 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 specificrule about insurancepoliciesissimplya corollaryof the more
generalrule. Inthiscase,Thompsondraftedthe formcontract,andThompson,not Peters,struckout the generalarbitration clause. Thereis no reason
we should not apply the general contract principle and construe the effect of striking out the general arbitration clause against Thompson.

                                                                     -2-
        Thompson moved the trial court to compel arbitration; Peters objected to arbitration.
Despite the deletion of the 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 of the Contract Documents on written 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 payment should 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 to make

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 notbe animpartial arbitrator, because it and

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 be delegated the authority to actas an arbitrator. City ofSan Antonio v. McKenzie

Constr. Co., 150 S.W.2d 989, 995-96 (Tex. 1941). Butin thatcase 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 said Contractor." City ofSan Antonio, 150 S.W.2d at 996.

We do not dispute that parties to a contract can designate another party to 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. Belmont Contractors, 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. KM Continental Offshore 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 of a 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, is of no

assistance.

       Finally, Thompson points out that state lawstrongly favors arbitration. Courts mustresolve

anydoubts about an agreement 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 of such

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

       Turning to thecontract 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 is the 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.

                                                                                   OjlS

Do Not Publish
Tex. R. App. P. 47
970674F.U05
                                                                                       3-aiaciU

                                (Baurt at Appeals
                       JTfftl| jBtstrtrt of Gkxas at lallas
                                     No. 05-97-00674-CV

BOB    THOMPSON          HOMES,       INC.,         Appeal from the 199th District Court of
Appellant                                           Collin County, Texas. (Tr.Ct.No. 199-139-
                                                    97).
                                                    Opinion delivered by Justice Lagarde,
                                                    Justices Moseley and Bridges participating.
RICK PETERS AND ANNE PETERS,
Appellees

                                         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