Court Opinion

ID: 3100968
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:07:59.246223+00
Date Added: 2024-06-11T11:51:38.946569
License: Public Domain

IN THE
                TENTH COURT OF APPEALS

                     No. 10-08-00315-CV

LDF CONSTRUCTION, INC., LYNN D. FOSTER,
MARK W. TODD ARCHITECTS, INC. AND
MARK W. TODD,
                                      Appellants
v.

SAM BRYAN, CONNIE BRYAN, AND SAMMY
R. BRYAN, DDS, P. A.,
                                           Appellees

                 From the 278th District Court
                    Walker County, Texas
                    Trial Court No. 24,273
                        ______________

                     No. 10-08-00348-CV

    IN RE LDF CONSTRUCTION, INC. AND LYNN D. FOSTER

                     Original Proceeding
                        ____________
                       10-08-00407-CV

    IN RE MARK TODD AND MARK W. TODD ARCHITECTS

                     Original Proceeding
                                    OPINION

       This is one of the last combinations of proceedings where a party has to pursue a

mandamus proceeding if the Federal Arbitration Act (FAA) might be applicable and

also pursue an interlocutory appeal if the Texas Arbitration Act (TAA) might be

applicable. The invitation of the Texas Supreme Court has been acted upon. See Am.

Std. v. Brownsville Indep. Sch. Dist. (In re D. Wilson Constr. Co.), 196 S.W.3d 774, 780 n.4

(Tex. 2006) (“We again invite the Legislature, ‘[i]n the interests of promoting the policy

considerations of rigorous and expedited enforcement of arbitration agreements, . . . to

consider amending the Texas Act to permit interlocutory appeals of orders issued

pursuant to the Federal Act.’” (citing Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272

(Tex. 1992)).    Effective September 1, 2009, section 51.016 of the Civil Practice and

Remedies Code was amended to allow an interlocutory appeal of an order denying a

motion to compel arbitration under the FAA. See TEX. CIV. PRAC. & REM. CODE ANN. §

51.016 (Vernon Supp. 2009).       These proceedings, however, were filed before the

effective date of the new statutory provision.

       In these proceedings, the appellants/relators have had to do things the hard

way—file both an appeal and petitions for a writ of mandamus. It has made the task for

both the trial court and this Court more complex due to multiple issues and methods

necessary to insure that the proper procedural vehicle was used to obtain review.

Because in this instance we conclude that the FAA applies, we dismiss the interlocutory

appeal, LDF Construction, Inc. v. Bryan, No. 10-08-00315-CV. We conditionally grant the

LDF Construction, Inc. v. Bryan                                                       Page 2
petitions for writ of mandamus to compel arbitration filed by LDF Construction, Inc.

and Lynn D. Foster (LDF) and Mark Todd and Mark Todd Architects (Todd).

                                        A BRIEF HISTORY

       Sam Bryan, an orthodontist, contracted with Joyce Matlack, a California resident

who specialized in dental-related interior designs, to provide interior design services

for a new office for Bryan. Bryan then contracted with Todd to develop a set of master

and schematic plans to be designed according to the interior plans provided by

Matlack. Three years later, LDF entered into an agreement with Bryan to build the new

office. The construction of the office was to comply with the specifications and designs

by Todd. Bryan’s contracts with LDF and Matlack contained arbitration provisions, but

the contract between Bryan and Todd did not.

       When construction of the office did not go as expected, Bryan, his wife, and

Sammy R. Bryan, DDS, P.A. (Bryan) sued LDF, Todd, and Matlack and Matlack/Van

Every Design, Inc. (Matlack).1         Todd, Matlack, and LDF each moved to compel

arbitration. The trial court initially granted Matlack’s motion to compel arbitration.

However, that ruling was withdrawn at the hearing on Todd’s and LDF’s motions. The

trial court ultimately denied Todd’s and LDF’s motions to compel arbitration but did

not rule on Matlack’s motion. That motion remains pending in the trial court. LDF and

Todd filed separate notices of appeal of the trial court’s decision and filed separate

1Bryan, in response to Todd’s and LDF’s petitions for writ of mandamus, conceded the validity of the
Matlack arbitration provision but, nevertheless, sued Matlack along with Todd and LDF.

LDF Construction, Inc. v. Bryan                                                              Page 3
petitions for a writ of mandamus. Both notices of appeal were filed in one proceeding,

TEX. R. APP. P. 12.2(c), whereas each mandamus was filed as a separate proceeding.

                                  GENERAL LAW OF ARBITRATION

       The Texas statutes governing arbitration of disputes are found in Chapter 171 of

the Civil Practice and Remedies Code.          See TEX. CIV. PRAC. & REM. CODE ANN. §§

171.001-171.098 (Vernon 2005). The FAA, which applies to "any maritime transaction or

a contract evidencing a transaction involving commerce," is found in title 9 of the

United States Code. See 9 U.S.C. § 2.

       In evaluating a motion to compel arbitration, a court must first determine

whether a valid arbitration agreement exists, and then whether the agreement

encompasses the claims raised. Am. Std. v. Brownsville Indep. Sch. Dist. (In re D. Wilson

Constr. Co.), 196 S.W.3d 774, 781 (Tex. 2006); see In re Dillard Dep't Stores, Inc., 186 S.W.3d
514, 515 (Tex. 2006) (per curiam). Whether a valid arbitration agreement exists is a legal

question subject to de novo review.         Id.   Although the Texas Supreme Court has

repeatedly expressed a strong presumption favoring arbitration, the presumption arises

only after the party seeking to compel arbitration proves that a valid arbitration

agreement exists.       J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003)

(emphasis added). Courts must resolve any doubts about an arbitration agreement's

scope in favor of arbitration. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001).

       Arbitration agreements are interpreted under traditional contract principles. J.M.

Davidson, 128 S.W.3d at 227. If the trial court finds a valid agreement, the burden shifts

to the party opposing arbitration to raise an affirmative defense to enforcing arbitration.

LDF Construction, Inc. v. Bryan                                                          Page 4
Id. Absent a defense to enforcing the arbitration agreement, the trial court has no

discretion but to compel arbitration and stay its own proceedings. In re J.D. Edwards

World Solutions Co., 87 S.W.3d 546, 549 (Tex. 2002) (per curiam).

       The types of issues raised as a defense determine whether the arbitrator or the

trial court resolves those issues. A court may determine a specific challenge to the

validity of the arbitration agreement but a challenge to the validity of the contract as a

whole, and not specifically to the arbitration agreement, must go to the arbitrator.

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 448-449, 126 S. Ct. 1204, 163 L. Ed.
2d 1038 (2006); In re Labatt Food Serv., L.P., 279 S.W.3d 640, 647-648 (Tex. 2009). See

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-404, 87 S. Ct. 1801, 18 L.

Ed. 2d 1270 (1967) (claim of fraud in the inducement of arbitration clause itself may be

adjudicated by court, but court may not consider claim of fraud in the inducement of

the contract generally); In re Houston Pipe Line Co., No. 08-0800, 2009 Tex. LEXIS 468, *4,

52 Tex. Sup. J. 1098 (Tex. July 3, 2009) (“When a party disputes the scope of an

arbitration provision or raises a defense to the provision, the trial court, not the

arbitrator, must decide the issues.”); In re Morgan Stanley & Co., 293 S.W.3d 182, 185

(Tex. 2009) (“[D]efenses attacking the validity of a contract as a whole, and not

specifically aimed at the agreement to arbitrate, are for the arbitrator, not the court.”);

Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56 (Tex. 2008) ("[T]he party opposing

arbitration must show that the fraud relates to the arbitration clause specifically, not to

the broader contract in which it appears."); Perry Homes v. Cull, 258 S.W.3d 580, 589

(Tex. 2008) ("[A]rbitrators generally must decide defenses that apply to the whole

LDF Construction, Inc. v. Bryan                                                      Page 5
contract, while courts decide defenses relating solely to the arbitration clause."); In re

Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 190 & n.12 (Tex. 2007) (noting that a defense

relating to the parties' entire contract rather than the arbitration clause alone is a

question for the arbitrators); In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001)

(noting that the defenses of unconscionability, duress, fraudulent inducement, and

revocation must specifically relate to the arbitration part of a contract and not the

contract as a whole if they are to defeat arbitration, and that validity of an arbitration

provision is a separate issue from validity of the whole contract). Further, questions

that "grow out of the dispute and bear on its final disposition," for example, whether

conditions precedent have been met, notice, time limits, laches, and estoppel, are

procedural arbitrability issues that are reserved for resolution by the arbitrator. Howsam

v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002).

In contrast, the trial judge decides questions of substantive arbitrability, which

implicate "gateway" issues, for example, whether a particular agreement binds the

parties to arbitrate. Id. at 85.

                             THE TEXAS ANOMALY OF TAA VS FAA

       The TAA and FAA provide alternative procedural vehicles for relief. In re Educ.

Mgmt. Corp., 14 S.W.3d 418, 425 (Tex. App.—Houston [14th Dist.] 2000, orig.

proceeding). A trial court's order denying a motion to compel arbitration may be

reviewed by interlocutory appeal when the motion is brought under the TAA. TEX. CIV.

PRAC. & REM. CODE ANN. § 171.098(a)(1) (Vernon 2005). Until just recently and when

the orders at issue in these proceedings were signed, mandamus was the appropriate

LDF Construction, Inc. v. Bryan                                                       Page 6
vehicle to challenge an order denying arbitration under the FAA. In re Bank One, N.A.,

216 S.W.3d 825, 826 (Tex. 2007) (orig. proceeding) (per curiam); EZ Pawn Corp. v.

Mancias, 934 S.W.2d 87, 91 (Tex. 1996) (per curiam). But see TEX. CIV. PRAC. & REM. CODE

ANN. § 51.016 (Vernon Supp. 2009). Prior to September 1, 2009, litigants like LDF and

Todd who alleged entitlement to arbitration under the FAA, and in the alternative,

under the TAA, were burdened with the need to pursue parallel proceedings—an

interlocutory appeal of the trial court's denial under the TAA, and a writ of mandamus

from the denial under the FAA. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex.

1992).

                              WHICH ARBITRATION ACT APPLIES?

         If the arbitration clause is enforceable under the FAA, an analysis of

enforceability under the TAA is unnecessary. See In re D. Wilson Constr. Co., 196 S.W.3d
774, 783-84 (Tex. 2006). Accordingly, we first review the petition for writ of mandamus

to assess enforceability of the arbitration provision under the FAA.

         The FAA applies to "any maritime transaction or a contract evidencing a

transaction involving commerce." See 9 U.S.C. § 2. "'[C]ommerce' . . . means commerce

among the several States." 9 U.S.C. § 1. Interstate commerce is not limited to the

interstate shipment of goods, but includes all contracts "relating to" interstate

commerce.      In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754 (Tex. 2001).       The FAA

"extends to any contract affecting commerce, as far as the Commerce Clause of the

United States Constitution will reach." L & L Kempwood Assocs., L.P. v. Omega Builders,

Inc. (In re L & L Kempwood Assocs., L.P.), 9 S.W.3d 125, 127 (Tex. 1999) (per curiam).

LDF Construction, Inc. v. Bryan                                                          Page 7
       Bryan alleged in his first amended petition that Matlack was a resident of

California. He also alleged that the company, Matlack/Van Every Design, Inc. was a

California company. Bryan alleged that both Matlack and the company conducted

business in Texas but did not have a principle office in Texas and did not have a

registered agent listed with the Secretary of State.     Service of process was to be

effectuated by serving Matlack at her business address in Santa Cruz, California.

       Bryan further alleged that in May of 2004 he met Matlack while attending an

orthodontist meeting in Florida. Matlack informed Bryan that she was an interior

designer, specializing in the design of dental offices. Matlack eventually traveled to

Texas to meet with Bryan to discuss designing a new office for Bryan in Huntsville,

Texas. Bryan approved a contract submitted by Matlack. The letterhead of the contract,

which was admitted into evidence at the hearing on LDF’s and Todd’s motions to

compel arbitration, indicated that Matlack’s business address was Santa Cruz,

California.    According to Bryan, Matlack then sent design plans to Bryan for his

approval and eventually, a plan was approved.

       There was no other evidence about the nature of the contract or services or

source of supplies. This is, however, a commercial construction contract, and there was

no effort to show that the materials were of a uniquely local origin.       Even if the

materials were of such a nature, there is still an impact on interstate commerce. See The

Daniel Ball, 77 U.S. 557, 565, 19 L. Ed. 999, 10 Wall. 557 (1870) (although goods loaded

and unloaded within the same state, interstate commerce was impacted because some

LDF Construction, Inc. v. Bryan                                                     Page 8
goods were destined to other states). Further, Bryan does not contend that the FAA

does not apply. Accordingly, we hold that the FAA, not the TAA, applies.

                                       LDF AND FOSTER

       In evaluating LDF’s motion to compel arbitration, we first determine whether

LDF proved a valid arbitration agreement exists. An agreement to arbitrate is valid

except on grounds as exist at law or in equity to revoke any contract. 9 U.S.C. § 2; see In

re Morgan Stanley & Co., 293 S.W.3d 182, 184 (Tex. 2009). LDF introduced its contract

and arbitration provision into evidence at the hearing on its motion to compel

arbitration. The provision states that “[a]ny claim arising out of or related to the

Contract…is subject to arbitration.”      Bryan’s only dispute with the validity of the

provision, both to the trial court and on appeal, is that the entire contract was procured

by fraud. As discussed more fully below, this is not a specific challenge to the validity

of the arbitration provision but is a challenge to the validity of the contract as a whole

and such is left to resolution by the arbitrator.       See Buckeye Check Cashing, Inc. v.

Cardegna, 546 U.S. 440, 444-446, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006). There was no

challenge to the validity solely of the arbitration provision in the contract, and LDF thus

satisfied the first step.

       Next, we determine whether the claims raised by Bryan fall within the scope of

the arbitration provision.        When addressing this issue, we focus on the factual

allegations involved in the dispute and not on the legal causes of action raised by the

parties. In re Conseco Fin. Servicing Corp., 19 S.W.3d 562, 568 (Tex. App.—Waco 2000,

orig. proceeding). Any doubts as to whether the dispute falls within the scope of the

LDF Construction, Inc. v. Bryan                                                      Page 9
arbitration agreement should be resolved in favor of arbitration. Id. (citing Mastrobuono

v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62 & n.8, 115 S. Ct. 1212, 131 L. Ed. 2d 76

(1995)).

       Bryan pled many causes of action against LDF and Foster: breach of contract,

breach of implied warranty and workmanlike performance, negligence, and various

claims of fraud. After securing designs and plans from Matlack and Todd, Bryan

contracted with LDF to construct a new office. The contract included Todd’s and

Matlack’s work. LDF was to finish the office within 210 days and “execute the Work

described in the Contract Documents.” The contract also listed Todd as the architect

overseeing the project. Bryan alleged LDF knew the provisions in the contract relating

to the architect would not be followed.

       Construction of the office did not go well.     There were problems with the

foundation, patient chairs were not centered with the windows, electrical panels and

conduit had to be moved, and weeks of inactivity occurred at the jobsite. When it came

time to install the sheetrock, Bryan began to question the ceiling heights. Bryan alleges

he received either unintelligible answers or no answer at all from LDF, Matlack, and

Todd. LDF, Matlack, and Todd eventually acknowledged that the ceiling heights could

be altered but for an additional cost.

       Bryan alleged that LDF, Todd, and Matlack were aware of the problems with the

ceiling height and discussed among themselves ways to “cover-up” and fix the

problems, rather than informing Bryan of the problems. Bryan also alleged that LDF,

Todd, and Matlack held themselves out to be professionals who where competent and

LDF Construction, Inc. v. Bryan                                                   Page 10
experienced. Bryan claimed that LDF, Todd, and Matlack contracted with him “to

provide services that would facilitate, correspond, and accentuate the endeavors

contractually and voluntarily undertaken by the other defendants” according to a

specific scheme and design approved by Bryan.

       Bryan further alleged that LDF, Todd, and Matlack failed with regard to

workmanship and integrity of the work undertaken by them. It was alleged that Todd

and Matlack prepared inaccurate, incompatible plans while LDF, who had a duty to

ensure that construction was conducted in accordance with the plans, did not inform

Bryan of the problems with the plans upon LDF’s discovery of the problems.

Furthermore, Bryan alleged, LDF performed services in an unacceptable and

unworkmanlike manner in that among other things, deviations from the plans were

made without informing Bryan.

       Bryan added a claim to his first amended petition regarding a bill from a sub-

contractor for carpentry work. Rough carpentry work was completed in October of

2007. According to Bryan, copies of Applications and Certificates for Payment, which

were sworn to by LDF for the months of September and October, indicated that no

money was owed regarding the carpentry. Bryan claimed that upon closer inspection,

the certificates were inaccurate and that LDF knew they were inaccurate. Bryan alleged

that LDF provided the bill to the subcontractor who signed it and sent it on to Bryan.

Bryan further alleged that LDF used this bill to cause Bryan financial injury, mental

anguish, and emotional distress.

LDF Construction, Inc. v. Bryan                                                Page 11
        All of Bryan’s claims center on the construction of Bryan’s office and the failures

of the office’s construction to comply with Bryan’s contract.                   The language of the

arbitration provision is very broad and encompasses any claim “arising out of or related

to” the contract. There is no claim by Bryan that does not have its origin outside the

relationship created by the contract.2              Even Bryan’s tort claims arise from the

relationship around the contract. Likewise, Bryan’s claims in his personal capacity

(non-signatory) against Foster in his individual capacity (non-signatory) all arise out of

that same relationship, the one created by the contract, and but for the contract would

not exist. In re Conseco Fin. Servicing Corp., 19 S.W.3d 562, 570 (Tex. App.—Waco 2000,

orig. proceeding). Finally, we note that there is no suggestion that Foster’s actions were

in any capacity other than as an agent for LDF.

        Accordingly, we hold that all claims against LDF, including those that are made

against Foster, are within the scope of the arbitration agreement.

Defenses

        Having determined that LDF proved the existence of an arbitration agreement

between the parties and that the claims asserted by Bryan are within the scope of the

arbitration agreement, we now turn to the defenses to arbitration raised by Bryan and

which appear to have been relied upon by the trial court. The primary defense is that

the construction agreement, including the arbitration agreement, was induced by fraud.

2 The only claim Bryan contends was outside the scope of the arbitration provision is his claim pursuant
to the fraudulent lien statute. TEX. CIV. PRAC. & REM. CODE § 12.002 (Vernon Supp. 2009). Nevertheless,
this claim also falls within the scope of the arbitration provision because, but for the contract with LDF,
the subcontractor would not have incurred costs of performing carpentry work for which he sought
payment from Bryan. See In re Conseco Fin. Servicing Corp., 19 S.W.3d 562, 570 (Tex. App.—Waco 2000,
orig. proceeding).

LDF Construction, Inc. v. Bryan                                                                    Page 12
This is a defense to the entire contract. This is not just a defense to the mandatory

arbitration provision. A plaintiff cannot sue for the benefits on the contract, in essence

sue for breach of contact, and sue on only part of the contract. See In re FirstMerit Bank,

N.A., 52 S.W.3d 749, 755 (Tex. 2001) (“[A] litigant who sues based on a contract subjects

him or herself to the contract's terms.”). Having brought the suit as a breach of contract

claim, a plaintiff cannot excise a single paragraph from the contract, the arbitration

clause, and reject it. See In re Weekley Homes, L.P., 180 S.W.3d 127, 133 (Tex. 2005)

(“Having obtained these substantial actions from Weekley by demanding compliance

with the provisions of the contract, Von Bergen cannot equitably object to the

arbitration    clause    attached   to   them.”).    Bryan    is   not   asserting   that   the

fraud/unconsionablilty claim goes to only the arbitration clause. Since the claim is

asserted to the contract as a whole, it is a claim that is decided by the arbitrator, rather

than the court. See In re Morgan Stanley & Co., 293 S.W.3d 182, 185 (Tex. 2009).

       Bryan also asserts that LDF cannot avail itself of the arbitration provision

because of conditions precedent to enforcement that were not, and cannot now be,

performed. The provision states that prior to arbitration, the parties will attempt to

resolve the dispute, first through the architect and then through nonbinding mediation.3

Bryan asserts that because these provisions are conditions precedent to the institution of

litigation and cannot be complied with, the arbitration provision is negated.               We

disagree. There is no indication in the provision that the parties intended to dispense

3 We note that while these proceedings were pending, we abated the proceedings for mediation. A
settlement was not reached.

LDF Construction, Inc. v. Bryan                                                         Page 13
with arbitration if the other methods of resolution did not occur first. In re U.S. Home

Corp., 236 S.W.3d 761, 764 (Tex. 2007). Further, Bryan cannot unilaterally skip the

efforts to resolve the dispute by other methods by skipping directly to litigation and

thereby avoid the arbitration provision. Cf. Global Evangelism Educ. Ministries, Inc. v.

Caddell, No. 04-08-00686-CV, 2009 Tex. App. LEXIS 1085, *5-6 (Tex. App.—San Antonio

Feb. 18, 2009, no pet.) (mem. op.) (party that first filed suit rather than seeking

mediation cannot rely on the failure of conditions precedent to evade arbitration). To

hold otherwise would allow the provision to be avoided simply because one party

chose to go directly to litigation. The agreement provided for three levels of dispute

resolution before enforcement in the courts. Because this is an issue to be decided by

the arbitrator,4 the arbitrator may decide that the methods of dispute resolution skipped

by Bryan need to be utilized before proceeding to arbitration; or the arbitrator may

decide that at this point the other methods of dispute resolution would be ineffective

and, therefore, proceed with the resolution of the disputes by arbitration.

           Bryan also asserts that LDF cannot avail itself of the arbitration provision in

Matlack’s contract. In this regard, Bryan argues that because LDF comes to court with

unclean hands, LDF cannot use a mandamus proceeding to compel arbitration as a non-

signatory under another party’s agreement. Because of our holdings above, we are not

utilizing the arbitration provision in Matlack’s agreement but rather we are using the

provision in LDF’s own contract to compel arbitration of all claims Bryan has asserted

against all the LDF related defendants.

4   Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002).

LDF Construction, Inc. v. Bryan                                                                           Page 14
       Accordingly, because Bryan has failed to prove any valid reason why their

claims against LDF should not be referred to binding arbitration, we conditionally grant

LDF’s petition for writ of mandamus.

                                          TODD

       We now turn to the trial court’s denial of Todd’s motion to also refer Bryan’s

claims against Todd to arbitration. Todd had a written contract with Bryan but that

contract did not have an arbitration provision in it. Thus, Todd is a non-signatory to

any arbitration agreement. Bryan asserts that the trial court, having reviewed the

evidence, did not abuse its discretion in refusing to refer the claims raised against Todd

to arbitration. We disagree.

       As a rule, arbitration of a claim cannot be compelled unless it falls within the

scope of a valid arbitration agreement; but sometimes a person who is not a party to the

agreement can compel arbitration with one who is, and vice versa. Meyer v. WMCO-GP,

LLC, 211 S.W.3d 302, 305 (Tex. 2006). Non-signatories to an agreement subject to the

FAA may be bound to an arbitration clause when rules of law or equity would bind

them to the contract generally. In re Labatt Food Serv., 279 S.W.3d at 643; In re Weekley

Homes, 180 S.W.3d at 131. Several rules of law and equity, such as the principles of

equitable estoppel and agency, may be used to compel arbitration. See In re Labatt Food

Serv., 279 S.W.3d at 644; see also Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524,

527 (5th Cir. 2000).

       Equitable estoppel applies to allow a non-signatory to compel arbitration when

the signatory to a written agreement containing an arbitration clause must rely on the

LDF Construction, Inc. v. Bryan                                                      Page 15
terms of the written agreement in asserting its claims against the non-signatory. Grigson

v. Creative Artists Agency, L.L.C., 210 F.3d 524 (5th Cir. Tex. 2000). When a signatory's

claims against a non-signatory make reference to or presume the existence of the

written agreement, the signatory's claims arise out of and relate directly to the written

agreement, and arbitration is appropriate. Id.; Meyer v. WMCO-GP, LLC, 211 S.W.3d
302, 307 (Tex. 2006). The Fifth Circuit refers to this as the “intertwined-claims test.”

Grigson, 210 F.3d at 527. The Texas Supreme Court has referred to this principal as

“direct benefits” estoppel. See Meyer, 211 S.W.3d at 305 (“a person who seeks by his

claim ‘to derive a direct benefit from the contract containing the arbitration provision’

may be equitably estopped from refusing arbitration.” (emphasis added)).

       Todd asserts that Bryan is equitably estopped from preventing arbitration of the

claims asserted against them. As with LDF, Bryan alleged various claims against Todd:

breach of contract, breach of implied warranty and workmanlike performance,

negligence, DTPA, and various claims of fraud.        According to the first amended

petition, Bryan began searching for an architect in 2004 to design his office based upon

the design, interior details, and overall schematics supplied by Matlack.          Bryan

ultimately contracted with Todd.     Bryan’s contract with Todd provided that Todd

would devise a set of master and schematic plans to be designed according to the plans

and specifications provided by Matlack. Matlack sent plans to Bryan for approval.

Todd was to design the appropriate plans to the approved specifications set out by

Matlack. Todd drafted approximately 60 pages of intricate drawings, design diagrams,

roof plans, ceiling plans, etc.

LDF Construction, Inc. v. Bryan                                                   Page 16
       Thus far, the allegations in this section are those essentially unique to Todd or

that relate to Todd and Matlack. Previously, we have discussed in detail, for the

purpose of addressing the scope of LDF’s arbitration provision, the allegations made

against LDF. It is now necessary to repeat many of those same allegations. However,

this time, the purpose of this review of the allegations is to show how interrelated

Bryan’s allegations against LDF, Todd, and Matlack are and thus how impractical it

would be to try to resolve the allegations against LDF and Matlack in one forum and

those against Todd in another.

       In 2007, LDF contracted with Bryan to construct the new building. The contract

included Todd’s and Matlack’s work. LDF was to finish the building within 210 days

and “execute the Work described in the Contract Documents.” The contract also listed

Todd as the architect overseeing the project.       Bryan alleged that LDF knew the

provisions in the contract relating to the architect would not be followed.

       As previously described, construction of the office did not go well. When it came

time to install the sheetrock, Bryan began to question the ceiling heights. Bryan alleged

he received either unintelligible answers or no answer at all from LDF, Matlack, and

Todd. LDF, Matlack, and Todd eventually acknowledged that the ceiling heights could

be altered but for an additional cost. As construction problems mounted, Bryan began

to investigate the cause.

       After a review of the plans, Bryan learned that the plans of Todd and Matlack

were incompatible and that Todd’s plans did not incorporate Matlack’s designs. Bryan

alleges that LDF, Todd, and Matlack were aware of the problems and discussed among

LDF Construction, Inc. v. Bryan                                                   Page 17
themselves ways to “cover-up” and fix the problems, rather than informing Bryan of

the problems. LDF, Todd, and Matlack, Bryan alleged, held themselves out to be

professionals who where competent and experienced. Bryan claimed that LDF, Todd,

and Matlack contracted with him “to provide services that would facilitate, correspond,

and accentuate the endeavors contractually and voluntarily undertaken by the other

defendants” according to a specific scheme and design approved by Bryan.

       Bryan further alleged that LDF, Todd, and Matlack failed with regard to

workmanship and integrity of the work undertaken by them.           Todd and Matlack

prepared inaccurate, incompatible plans while LDF, who had a duty to ensure that

construction was conducted in accordance with the plans, did not inform Bryan of the

problems with the plans upon LDF’s discovery of the problems. Furthermore, Bryan

alleged, LDF performed services in an unacceptable and unworkmanlike manner in that

among other things, deviations from the plans were made without informing Bryan.

       In this instance, the claims against Todd are so intertwined and interdependent

with the claims against LDF and Matlack, both of which have arbitration provisions in

their contracts with Bryan, that it would be impractical to resolve the disputes against

them in arbitration without simultaneously resolving the claims against Todd.

Defenses

       Bryan asserts that Todd cannot assert equitable estoppel to compel Bryan to

arbitration because Todd has unclean hands. Bryan relies upon the principle in law that

he who seeks equity must do equity. See Truly v. Austin, 744 S.W.2d 934, 938 (Tex. 1988)

(“It is well-settled that a party seeking an equitable remedy must do equity and come to

LDF Construction, Inc. v. Bryan                                                  Page 18
court with clean hands.”). A party seeking to invoke this equitable doctrine must show

that he has been seriously harmed and the wrong complained of cannot be corrected

without applying the doctrine. City of Fredericksburg v. Bopp, 126 S.W.3d 218, 221 (Tex.

App.—San Antonio 2003, no pet.). Bryan asserts that at the hearing he proved Todd did

not come to court with “clean hands.” Specifically, Bryan argues that Todd’s attorney

admitted that there was a discrepancy in the ceiling height. Further, he argues that in

an email presented at the hearing, LDF knew of the discrepancies and sent nineteen

“requests for information” to Todd requesting information from Todd on how to

proceed. According to the email, Todd told LDF how to proceed regarding the ceiling

height discrepancies.

       Todd and LDF assert that Bryan did not present any evidence of “unclean

hands” at the hearing. Specifically, Todd and LDF assert that this Court cannot rely on

the email because it was not properly introduced into evidence at the hearing. We need

not resolve whether trial counsel’s references to documents not otherwise introduced

into evidence was evidence properly before the trial court. Even if we consider the

email and argument of counsel as evidence regarding the conduct of Todd, it would

only go so show a possible breach of the contract and is not of the character of evidence

that shows “unclean hands” such as to defeat the application of the doctrine of

collateral estoppel to compel Bryan to arbitrate the claims against the non-signatory to

the arbitration agreement, Todd, along with the claims that are subject to arbitration

against LDF and Matlack.

LDF Construction, Inc. v. Bryan                                                   Page 19
       Bryan also argues that the trial court had discretion not to apply equitable

estoppel, even if it could be applied in the same circumstances. We disagree. "A trial

court has no 'discretion' in determining what the law is or applying the law to the facts."

Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 308 (Tex. 2006) (quoting, Walker v. Packer, 827
S.W.2d 833, 840 (Tex. 1992)).

       Accordingly, we hold that Bryan’s claims against Todd should also have been

referred to arbitration and conditionally grant Todd’s petition for writ of mandamus.

                                        MATLACK

       Finally, we note that the trial court withdrew its order which referred the claims

against Matlack to arbitration, holding that the order was rendered without adequate

notice to Bryan. Bryan conceded in his brief filed with this Court that he does not

contest the validity of the Matlack arbitration agreement. Matlack filed amicus briefs

with this Court in these proceedings in support of having all the claims of Bryan against

all the defendants referred to arbitration together. We have no reason to believe that

the trial court will not grant Matlack’s pending motion to refer Bryan’s claims against

Matlack to arbitration, especially in light of the discussion and holdings herein. Because

the trial court has not ruled on Matlack’s pending motion, because we have no

proceeding before us which addresses that motion, and further because we cannot

compel the trial court to rule on the motion in a certain way, we decline at this time to

mandate the trial court’s ruling on that motion. See In re Salazar, 134 S.W.3d 357, 358

(Tex. App.—Waco 2003, orig. proceeding); see also State ex rel. Curry v. Gray, 726 S.W.2d
125, 128 (Tex. Crim. App. 1987).

LDF Construction, Inc. v. Bryan                                                     Page 20
                                     CONCLUSION

       In summary, we conditionally grant LDF’s and Todd’s petitions for writ of

mandamus. A writ will issue only if the trial court fails to withdraw its order denying

the abatement of the trial court proceedings and the referral of Bryan’s claims against

LDF and Todd to binding arbitration within 21 days from the date of this opinion.

Further, the appeal by LDF and Todd is dismissed.

                                        TOM GRAY
                                        Chief Justice

Before Chief Justice Gray,
       Justice Reyna, and
       Justice Davis
Appeal dismissed
Petitions conditionally granted
Opinion delivered and filed March 10, 2010
[CV06]

LDF Construction, Inc. v. Bryan                                                 Page 21