Court Opinion

ID: 2879105
Source: CourtListenerOpinion
Date Created: 2015-09-07 05:05:00.775046+00
Date Added: 2024-06-11T12:46:09.349407
License: Public Domain

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                                                   OPINION

                                              No. 04-08-00620-CV

                         IN RE MP VENTURES OF SOUTH TEXAS, LTD.

                                       Original Mandamus Proceeding1

Opinion by:       Catherine Stone, Justice

Sitting:          Catherine Stone, Justice
                  Sandee Bryan Marion, Justice
                  Phylis J. Speedlin, Justice

Delivered and Filed: November 12, 2008

PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED

           Relator MP Ventures of South Texas, Ltd. (“MP Ventures”), a defendant in the underlying

proceeding, seeks a writ of mandamus to compel arbitration under the Federal Arbitration Act

(“FAA”). We conditionally grant mandamus relief.

                                               BACKGROUND

           On February 22, 2005, Walter Oggoian (“Oggoian”) contracted with Florian Sunrooms (MP

Ventures of South Texas d/b/a Florian Sunrooms) to purchase a greenhouse to be installed on

           … This proceeding arises out of Cause No. 07-938-B, styled Walter Oggoian v. MP Ventures of South Texas,
           1

Ltd. d/b/a Florian Sunrooms, pending in the 198th Judicial District Court, Kerr County, Texas, the Honorable Emil Karl
Prohl presiding.
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Oggoian’s property in Kerr County. Oggoian claims that in the summer of 2006, the greenhouse

failed to maintain the appropriate temperature, getting so hot that the exhaust fans had to run

constantly and the panes of glass shattered. On November 26, 2007, Oggoian sued MP Ventures for

breach of contract, negligent misrepresentation, and deceptive trade practices. Oggoian’s original

petition alleged that MP Ventures published numerous brochures representing that its greenhouses

would maintain a relatively consistent temperature.

         The sales contract (“the agreement”) between MP Ventures and Oggoian called for

arbitration of “all unresolved disputes (not limited to breach of contract action) relating to this

agreement.” MP Ventures moved to compel arbitration under the agreement’s arbitration provision,

alleging that Chapter 171 of the Civil Practice and Remedies Code (Texas Arbitration Act (“TAA”))

applied. The trial court held a hearing, at which Oggoian argued that the TAA did not apply because

the “consumer exception” contained in section 171.002(a)(2) of the Civil Practice and Remedies

Code rendered the arbitration provision unenforceable.2 The trial court asked the parties to provide

additional briefing on the issue and on February 11, 2008, MP Ventures filed “Defendant’s Amended

Motion to Compel Arbitration and Abate Proceedings and Memorandum of Law to the Court in

Support of the Motion to Compel Arbitration.” In its amended motion to compel arbitration, MP

Ventures conceded that the TAA did not apply, but added a new claim that the arbitration provision

was enforceable pursuant to common law contract principles and the Federal Arbitration Act. On

April 9, 2008, the trial court signed an order denying MP Ventures’ motion to compel arbitration

         2
            … The “consumer exception” found in section 170.002(a)(2) provides that “[t]his chapter does not apply to
. . . an agreement for the acquisition by one or more individuals of property, services, money, or credit in which the total
consideration to be furnished by the individual is not more than $50,000, except as provided by Subsection(b).” T EX .
C IV . P RAC . & R EM . C O D E A N N . § 171.002(a)(2) (Vernon 1997).

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                                                                                          04-08-00620-CV

based on the consumer exception in section 171.002(a)(2) of the Civil Practice and Remedies Code.

MP Ventures subsequently filed a request for clarification with the trial court, seeking to determine

whether the trial court’s order denied MP Ventures’ (1) motion to compel arbitration, (2) amended

motion to compel arbitration, or (3) both motions. In a letter dated June 6, 2008, the trial court

explained that the order was based on “all materials and briefs provided to the Court, including

Defendant’s Amended Motion to Compel Arbitration.” MP Ventures now seeks mandamus relief

from the trial court’s failure to compel arbitration under the agreement.

                                            DISCUSSION

        The sole issue in this petition for writ of mandamus is whether the trial court abused its

discretion in denying MP Ventures’ amended motion to compel arbitration. Mandamus will issue

only to correct a clear abuse of discretion for which the relator has no adequate remedy at law. In

re Prudential, 148 S.W.3d 124, 135 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d
833, 839-40 (Tex. 1992) (orig. proceeding). A trial court has no discretion in determining what the

law is or in applying the law to the facts, and a clear failure to analyze or apply the law correctly will

constitute an abuse of discretion. Walker, 827 S.W.2d at 840. When a motion to compel arbitration

under the FAA has been erroneously denied, there is no adequate remedy at law, and mandamus will

issue. In re D. Wilson Const. Co., 196 S.W.3d 774, 780 (Tex. 2006) (orig. proceeding).

        A party seeking a writ of mandamus to compel arbitration under the FAA must: (1) establish

the existence of a valid arbitration agreement; and (2) show that the claims asserted are within the

scope of the agreement. See In re AdvancePCS Health L.P., 172 S.W.3d 603, 607 (Tex. 2005) (orig.

proceeding). Whether there is an enforceable agreement to arbitrate is a legal question subject to de

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novo review. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). Once a valid

arbitration agreement has been established, a presumption attaches favoring arbitration and the

burden shifts to the party resisting arbitration to establish a defense to enforcing arbitration. See In

re AdvancePCS, 172 S.W.3d at 607; In re Hartigan, 107 S.W.3d 684, 687-88 (Tex. App.—San

Antonio 2003, orig. proceeding [mand. denied]).

        In the case at hand, in support of MP Ventures’ motion to compel arbitration and the

amended motion to compel arbitration, MP Ventures submitted a copy of the agreement that

contained the arbitration provision. Oggoian’s arguments in the trial court and in his response to the

petition for writ of mandamus do not deny the existence of the agreement to arbitrate. To the

contrary, Oggoian acknowledged that “[t]his matter is governed by Chapter 171 of the Civil Practice

and Remedies Code, the Texas General Arbitration Act.” Accordingly, we conclude that MP

Ventures met its initial burden of establishing a valid agreement to arbitrate. In addition, MP

Ventures was required to show that the claims asserted are within the scope of the agreement. Once

again, Oggoian’s arguments in the trial court and in his response to the petition for writ of mandamus

do not deny that the claims fall within the scope of the agreement to arbitrate. Given the

comprehensive language in the arbitration provision, “all unresolved disputes (not limited to breach

of contract action) relating to this agreement,” we conclude that the claims asserted by Oggoian fall

within the scope of the agreement.3

        3
            … W e note that the agreement did not specify whether the Texas or Federal Arbitration Act applied.

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         We next address whether the FAA applies to the arbitration agreement.4 When there is no

express agreement to arbitrate under the FAA, a party may establish the applicability of the FAA by

showing that the transaction affects or involves interstate commerce. Jack B. Anglin Co. v. Tipps,

842 S.W.2d 266, 269-70 (Tex. 1992); Associated Glass, Ltd. v. Eye Ten Oaks Invs., Ltd., 147
S.W.3d 507, 511 (Tex. App.—San Antonio 2004, orig. proceeding). Commerce under the Federal

Act is broadly construed and the amount of commerce considered in the contract need not be

substantial. Eye Ten Oaks, 147 S.W.3d at 511. As long as a contract relates to interstate commerce,

the FAA is implicated. Id.

         A party who alleges interstate commerce is affected may show it in several ways: (1) location

of headquarters in another state; (2) transportation of materials across state lines; (3) manufacture

of parts in a different state; (4) billings prepared out of state; and (5) interstate mail and phone calls

in support of a contract.           Stewart Title Guar. Co. v. Mack, 945 S.W.2d 330, 333 (Tex.

App.—Houston [1st Dist.] 1997, orig. proceeding) (citing Anglin, 842 S.W.2d at 270). This court

has on more than one occasion held that the FAA applies when the materials used to carry out the

terms of the contract are transported from out of state. In re Cutler-Gallaway Servs., Inc., No. 04-

         4
           … Oggoian contends that we cannot consider relator’s arguments that the FAA applies because (1) the initial
motion to compel arbitration was based solely on the TAA, and (2) the trial court only gave the parties the opportunity
to provide additional briefing on the applicability of the TAA, not to amend its motion and submit additional evidence
without a hearing. Oggoian concludes that MP Ventures cannot ask this court for relief based on the FAA because it was
not an argument made to the trial court. W e disagree. In the trial court’s letter to all counsel of record, Judge Prohl
explained that the order was entered after considering all materials and briefs provided to the court, including the
amended motion to compel arbitration. Therefore, it is clear that the court considered MP Ventures’ amended motion
to compel arbitration when making its final determination. The trial court was not required under the circumstances to
hold an additional hearing because Oggoian never controverted the facts or allegations in the amended motion to compel
arbitration. If material facts are uncontroverted, the trial court may decide whether to compel arbitration based on the
affidavits, pleadings, discovery, and stipulations. Anglin, 842 S.W .2d at 269. The trial court is only required to hold
a hearing to resolve disputed facts. Id. (emphasis added). Accordingly, we will consider relator’s arguments regarding
the enforcement of the arbitration provision under the FAA.

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07-00216-CV, 2007 WL 1481999, *1 (Tex. App.—San Antonio 2007, orig. proceeding) (mem. op.)

(citing Allied-Bruce Terminex Companies, Inc. v. Dobson, 513 U.S. 265, 282 (1995)) (holding that

interstate commerce is affected because the contracts involved the transport of stone materials from

Arizona to Texas); Eye Ten Oaks, 147 S.W.3d at 511 (holding that the contract relates to interstate

commerce because the window systems installed by relator were shipped from Georgia to San

Antonio).

       The material evidence before the trial court consisted of the pleadings, the contract, and

David Patrick Wheeler’s affidavit. In relator’s amended motion to compel arbitration and in its

petition in this court, relator argues various factors demonstrate that the transaction between Oggoian

and MP Ventures affected interstate commerce. Wheeler’s affidavit states that materials used in the

project were transported from Florian Solar Products, LLC in South Carolina to San Antonio, Texas

and a letter was transmitted by MP Ventures to Florian in South Carolina. The record contains no

indication that Oggoian either disputed Wheeler’s affidavit or offered evidence to the contrary. In

addition, Oggoian has not provided any argument to this court regarding whether interstate

commerce is affected. The trial court and this court “must accept as true the clear, direct, and

positive evidence of an undisputed affidavit, even of a party’s agent.” Anglin, 842 S.W.2d at 270.

Oggoian now attempts to dispute the affidavit by arguing that the affidavit is not “competent

evidence” because it was submitted after the hearing and it is inadmissible hearsay. However,

Oggoian has not shown that he objected to the admissibility of the affidavit in the trial court.

Accordingly, we hold that MP Ventures met its burden to show that interstate commerce is affected

and the arbitration agreement is governed by the FAA.

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                                                                                     04-08-00620-CV

       Finally, we acknowledge that Oggoian relied upon the consumer exception found in the

Texas Arbitration Act as a defense to MP Ventures’ motion to compel arbitration. Thus, we must

determine whether the statutory consumer exception is a viable defense to the Federal Arbitration

Act. We conclude that it is not. The FAA supersedes any contrary state law. See U.S. CONST . art.

VI § 2; Southland Corp. v. Keating, 465 U.S. 1, 16 n.11 (1984) (enforcing arbitration agreement

under federal law even though it was alleged that the agreement was illegal pursuant to a state

statute). In a similar case, the Texas Supreme Court has held that the FAA preempts the application

of the non-waiver provision of the Texas Deceptive Trade Practices Act. See Anglin, 824 S.W.2d

at 270-71. In short, the FAA “represents a federal policy favoring arbitration, notwithstanding any

state substantive or procedural policies to the contrary.” In re Border Steel, Inc., 229 S.W.3d 825,

831 (Tex. App.—El Paso 2007, orig. proceeding [mand. denied]).

       Having determined that the FAA is the governing statute, and that the consumer exception

relied upon by Oggoian is preempted by the FAA, we conclude the trial court erred in denying the

motion to compel arbitration. When a trial court erroneously denies a motion to compel arbitration

and the underlying contract is governed by the FAA, mandamus relief is appropriate. In re Bank

One, N.A., 216 S.W.3d 825, 826 (Tex. 2007) (orig. proceeding).

                                         CONCLUSION

       We conclude the trial court clearly abused its discretion in denying MP Ventures’ amended

motion to compel arbitration. Accordingly, we conditionally grant the writ of mandamus. The writ

will issue only if the trial court fails to withdraw its orders denying MP Ventures’ amended motion

to compel arbitration and enter an order compelling arbitration within 10 days.

                                                      Catherine Stone, Justice

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