Court Opinion

ID: 3108811
Source: CourtListenerOpinion
Date Created: 2015-10-16 06:30:08.454269+00
Date Added: 2024-06-11T11:44:50.523427
License: Public Domain

NO. 07-11-0068-CV

                                IN THE COURT OF APPEALS

                        FOR THE SEVENTH DISTRICT OF TEXAS

                                          AT AMARILLO

                                             PANEL E

                                      MAY 16, 2011
                             _____________________________

                STEPHANIE A. HRYCYK AND HRYCYK FINANCIAL LLC,

                                                                 Appellants
                                                  v.

                      NORRIS DEAN BUTLER AND JOANN BUTLER,

                                                                 Appellees
                             _____________________________

            FROM THE 181ST DISTRICT COURT OF RANDALL COUNTY;

              NO. 63,035-B; HONORABLE JOHN B. BOARD, PRESIDING
                         _____________________________

                                  Memorandum Opinion
                             _____________________________

Before QUINN, C.J., CAMPBELL, J., and BOYD, S.J.1

      Stephanie A. Hrycyk and Hrycyk Financial, LLC (collectively referred to as

Hrycyk) appeal from an order denying their motion to compel arbitration in a lawsuit filed

against them by Norris Dean Butler and Joann Butler (the Butlers). That lawsuit relates

to financial advice provided by Hrycyk and the Butlers’ reliance upon it to acquire

various investments.      We affirm the order for the simple reason that there is no

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       John T. Boyd, Senior Justice, sitting by assignment.
evidence illustrating that the arbitration clauses at issue encompass disputes between

these parties.

       According to the record before us, there are four pertinent agreements involved.

The first was executed in 1999 between the Butlers and Hrycyk and specified the nature

of their arrangement. It did not contain an arbitration clause. The second and third

agreements were executed in 1999 and 2002, respectively, and purport to be contracts

between the Butlers and an entity named H. Beck, Inc. Additionally, the signatures

appearing on them were those of the Butlers, as investors, and Stephanie Hrycyk under

the label “Registered Representative.” The term “registered representative” was not

defined in the document.2 Nor was the nature of the relationship contemplated by that

term discussed. Simply put, whether Hrycyk was, and had the legal duties and authority

implicit in being, an employee, partner, agent, or the like of H. Beck is unknown. Nor is

it known whether Hrycyk’s status as a purported “registered representative” rendered

her nothing more than an independent contractor or someone who merely referred

business to Beck. Nonetheless, the agreements contained arbitration clauses stating

that “any controversy which may arise between You and H. Beck, Inc. concerning any

transaction or the construction, performance, or breach of this Agreement or any other

agreement between us . . . shall be determined by arbitration.” (Emphasis added).

       The final, and rather illegible, agreement in question apparently was signed by

the Butlers in 2007. Also appearing on it are two other signatures, neither of which can

be read nor interpreted as belonging to either Stephanie Hrycyk or Hrycyk Financial.

However, a closing paragraph refers to “Emmett A Larkin, Company, Inc.” The one

       2
        The same term appeared in the original contract signed by the Butlers and Hrycyk in 1999 and
was also undefined and unexplained there.

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above it also mentions arbitration. Through it, the Butlers apparently agreed that “all

controversies which may arise between ME/US or between ME/US and the organization

that has introduced MY/OUR account carried by you, including but not limited to those

involving any transaction over the construction, performance, or breach of this or any

other agreement between us . . . shall be determined by arbitration.” We also note that

the record holds no evidence of who “introduced” the Butlers to Larkin.

      Next, Hrycyk moved the trial court to enforce the aforementioned arbitration

clauses, and the court held a hearing on the motion. No witnesses were presented at

that hearing, however. Instead, legal counsel simply argued their respective positions.

And, as we all know, their arguments generally constitute evidence of nothing, despite

their eloquence. See Tex. Dep’t of Public Safety v. Mendoza, 952 S.W.2d 560, 564

(Tex. App.–San Antonio 1997, no writ) (holding that argument of legal counsel at a

hearing is not evidence). Yet, Hrycyk did accompany her motion with her affidavit. And,

in that instrument she authenticated the aforementioned Beck contracts, stated that she

“was a registered representative of H. Beck Inc.” at the time of their execution,

attempted to authenticate the 2007 agreement as one between the Butlers and

“Gramercy Securities Inc.” (an entity unmentioned in the particular document), stated

that she was a “registered representative of Gramercy,” stated that the contracts with

the arbitration clauses “were made in consideration of Hrycyk . . . providing services to

…” the Butlers, acknowledged providing investment advising services to the Butlers

since 1999, indicated the nature of investments acquired by the Butlers and their

geographic location, and concluded by stating that Beck and Gramercy were “both

broker-dealers with their primary places of business outside of the state of Texas.”

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Having received this affidavit and argument of counsel, the trial court denied the motion

before it.

       Whether a trial court errs in refusing to order arbitration depends on whether it

abused its discretion. Torster v. Panda Energy Mgmt., L.P., No. 07-10-00442-CV, 2011

Tex. App. LEXIS 1628, at *5 (Tex. App.–Amarillo March 7, 2011, no pet. h.) (not

designated for publication); Sidley, Austin, Brown, & Wood, L.L.P. v. J.A. Green Dev.

Corp., 327 S.W.3d 859, 863 (Tex. App.–Dallas 2010, no pet.) (stating that we apply a

no evidence standard to the trial court’s factual determinations and a de novo standard

to the legal determination which is the same as a standard of abused discretion). A trial

court abuses its discretion when its decision deviates from guiding rules and principles

and is otherwise arbitrary, capricious, and unreasonable. See Downer v. Aquamarine

Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). One of those guiding rules and

principles obligates the party seeking arbitration to establish the existence of a valid

agreement requiring arbitration and encompassing the litigants and dispute in question.

In re Bank One, N.A., 216 S.W.3d 825, 826 (Tex. 2007) (orig. proceeding).            It is

compliance with the latter rule that we find missing here.

       As can be seen from what we described above, the arbitration clauses are in

contracts between the Butlers and third parties. Additionally, none expressly mention

disputes with Hrycyk as being encompassed by the clauses.           Despite that, Hrycyk

seeks to benefit from them through her supposed relationship with those third parties.

But again, there is no evidence in the record before us of any such relationship.

Moreover, the conclusory allegation about being their “registered representative” fails to

fill the void. Such allegations not only lack probative value, City of San Antonio v.

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Pollock, 284 S.W.3d 809, 816 (Tex. 2009) (stating that conclusory allegations have no

probative value), but also leave one guessing at the nature of the legal relationship, if

any, contemplated. And, we are not authorized to engage in such guessing.

       Nor may we simply assume that Hrycyk was the party who “introduced” the

Butlers to Larkin or Gramercy for purposes of the arbitration clause in the 2007 contract.

And given that Gramercy is nowhere mentioned in the 2007 contract and the lack of any

evidence explaining whether Gramercy succeeded to Larkin’s rights in the agreement,

we would be hard pressed to conclude that Hrycyk’s status as a “registered

representative” of Gramercy somehow entitles her to contractual rights granted Larkin.

       Simply put, we have before us 1) arbitration clauses that expressly encompass

entities other than Hrycyk and 2) no probative evidence that Hrycyk has any type of

actual relationship to those entities. Given this, we cannot say that the burden to prove

the applicability of the clauses was met. Thus, the trial court did not abuse its discretion

in view of the record before us.

       The order denying arbitration is affirmed.

                                                 Brian Quinn
                                                 Chief Justice

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