Court Opinion

ID: 9635209
Source: CourtListenerOpinion
Date Created: 2023-08-22 13:41:43.263113+00
Date Added: 2024-06-11T18:09:21.586827
License: Public Domain

ADELE HEDGES, Justice,
dissenting.
I respectfully dissent. I begin with the premise that, contrary to the majority’s position, the Relators should not be treated as a single entity. I then deduce that, *647because the right to arbitrate was validly invoked by the Retailer, and the Ripple’s claims against the Manufacturer are inseparable from their claims against the Retailer, I would hold that the trial court erred in denying the Relators’ motion to arbitrate all claims.

Validity of Agreements to Arbitrate

Relators argue that the trial court abused its discretion in refusing to order that the parties arbitrate their dispute because the two arbitration agreements were valid and enforceable. The Ripples contend that the agreements are unenforceable because (a) relators failed to show adequate consideration for the opt-out provision favoring the Manufacturer, and (b) the opt-out provision defeats the parties’ express agreement to arbitrate. This deficiency, the Ripples contend, renders the entire arbitration agreement invalid and unenforceable.
State and federal policies favoring arbitration do not apply to the determination of whether a valid and enforceable contract exists. See Fleetwood Enterpr., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.2002). The purpose of the Federal Arbitration Act is “to make arbitration agreements as enforceable as other contracts, but not more so.” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n. 12, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). See also Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, 473 U.S. 614, 625-26, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). Accordingly, a court considering a motion to compel arbitration must first determine whether there is a valid and binding contract to arbitrate. This determination is a matter of contract interpretation for the court. Labor Ready Central III, L.P. v. Gonzalez, 64 S.W.3d 519, 521-22 (Tex.App.Corpus Christi 2001, no pet.). Under either the Federal Arbitration Act or the Texas Arbitration Act, state contract law must be applied in deciding whether there is a binding arbitration agreement. Labor Ready Central, 64 S.W.3d at 522 n. 2. See also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 945, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995); J.M. Davidson, Inc. v. Webster, 49 S.W.3d 507, 512 (Tex.App.Corpus Christi 2001, pet. granted); Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 387-88 (Tex.App.Houston [14th Dist.] 1998, pet. dism’d w.o.j.).

Adequacy of Consideration

Under Texas law, when there is no consideration for a contract other than the parties’ mutual promises, a bilateral agreement is enforceable only if the parties’ obligations are “mutual and binding.” Labor Ready Central, 64 S.W.3d at 522; see also Sterling Computer Sys. of Tex., Inc. v. Texas Pipe Bending Co., 507 S.W.2d 282, 283 (Tex.App.-Houston [14th Dist.] 1974, writ refd n.r.e.) (noting contract must be based on valuable consideration, and if there is no consideration or mutual obligation, contact lacks mutuality and is unenforceable). This principle is applicable to agreements to arbitrate. See In re Tenet Healthcare, Ltd., 84 S.W.3d 760, 766-67 (Tex.App.Houston [1st Dist.] 2002), (orig.proeeeding) (parties’ mutual promises to give up the right to litigate constituted valid consideration for their agreement to arbitrate because neither party could unilaterally rescind the contract or the obligation to arbitrate). See also Tenet Healthcare Ltd., 960 S.W.2d at 388; Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex.App.San Antonio 1999, pet. denied); In re Jebbia, 26 S.W.3d 753, 758 (Tex.App.Houston [14th Dist.] 2000, orig. proceeding); In re Alamo Lumber Co., 23 S.W.3d 577, 579-80 (Tex.App.San Antonio 2000, orig. proceeding). Mutuality of obligation is not necessary if there is an adequate consideration supporting a party’s unilateral prom-*648fee. Johnson v. Breckenridge-Stephens Title Co., 257 S.W. 223, 225 (Tex.Comm’n App.1924, judgm’t adopted) (citing East Line & Red River R.R. Co. v. Scott, 72 Tex. 70,10 S.W. 99 (1888)).
The record before this Court consists only of the relators’ verified petition for mandamus, the Ripples’ verified response, and authenticated copies of various pleadings and exhibits attached to the relators’ petition. In reviewing the trial court’s ruling, we may consider only the evidence and inferences therefrom that, when viewed in their most favorable light, tend to support the court’s determination, and we must disregard all evidence and inferences to the contrary. Certain Underwriters at Lloyd’s of London v. Celebrity, Inc., 950 S.W.2d 375, 377 (Tex.App.Tyler 1996, no writ). We must uphold the trial court’s ruling if there is sufficient evidence to support it on any legal theory asserted. Pepe Int’l Dev. Co. v. Garcia, 915 S.W.2d 925, 929 (Tex.App.Houston [1st Dist.] 1996, no writ).
Reviewing the record before us in this light, I find that the trial court could reasonably have inferred from the documents in evidence that the relators failed to prove that the Ripples received any consideration for giving the opt-out right to the Manufacturer. Indeed, the record is confusing at best about the parties’ respective benefits and obligations under the terms of their underlying transaction. Cf. Emerald Texas, Inc. v. Peel, 920 S.W.2d 398, 402 (Tex.App.-Houston [1st Dist.] 1996, no writ) (where the party contesting the arbitration was shown to have received, along with ownership of the house, an “entire bundle of rights”). Here, there was no affirmative proof showing that the Ripples acquired any adequate consideration in return for their giving the unilateral opt-out provision. In Palm Harbor Homes v. McCoy, 944 S.W.2d 716 (Tex.App.-Fort Worth 1997) (orig.proceeding), the buyers of a mobile home made an argument identical to the one before us, i.e., that the arbitration agreement between the retailer and the buyers failed for want of consideration because only the lender or mortgagee could opt out of arbitration. Id. at 724. The court rejected this argument, but only because the buyers did not proffer evidence that the retailer was a lender or mortgagee. Id. The clear implication from the court’s holding was that, had the retailer been a lender or mortgagee, the arbitration provision would have failed for lack of consideration.
Accordingly, the trial court did not abuse its discretion in ruling that the opt-out provision rendered the agreement to arbitrate invalid as to the Manufacturer. See Sterling Computer Sys., 507 S.W.2d at 283. However, because the Retailer had no opt-out option, the arbitration agreement is valid as between the Retailer and the Ripples.
Inherently Inseparable Claims
Relators contend that even if the opt-out provision invalidates the agreements as to the Manufacturer, the Manufacturer should still be made a party to the arbitration because the claims against the Manufacturer are “inherently inseparable” from the claims against the Retailer. Moreover, the relators contend, the claims being asserted against both relators are “based on the same operative facts.”
In certain circumstances, a defendant can compel arbitration even though it is not a signatory to the arbitration agreement. In Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524 (5th Cir.), the Fifth Circuit recognized one of those circumstances as a situation in which a “signatory to the contract containing an arbitration clause raises allegations of substantially interdependent and concerted *649misconduct by both the nonsignatory and one or more of the signatories to the contract.” Id. at 527; In re Koch Industries, 49 S.W.3d 439, 447 (Tex.App.-San Antonio 2001, orig. proceeding). Other courts have embraced the same concept when the claims against both the nonsignatory and the signatory “are based on the same operative facts and are inherently inseparable.” In re Nasr, 50 S.W.3d 23, 28 (Tex.App.-Beaumont 2001, orig. proceeding); accord In re Education Management Corp., Inc., 14 S.W.3d 418, 424 (Tex.App.Houston [14th Dist.] 2000, orig. proceeding).
The record is clear that the Ripples’ claim against both the Retailer and the Manufacturer meet the Grigson test and the “same operative facts” and “inseparable” criteria. The Ripples have pleaded a cause of action against the Retailer and the Manufacturer under the Texas Residential Liability Act, Tex. PROP.Code Ann. section 27.004, for the sale and manufacture of a defective manufactured home.
Both the Retailer and the Manufacturer sought arbitration. Because the right to arbitrate was validly invoked by the Retailer, and the Ripple’s claims against the Manufacturer are inseparable from their claims against the Retailer, I would hold that the trial court erred in denying the relators’ motion to arbitrate all claims. This holding would promote the interest of judicial economy.
I would reverse the order of the trial court denying the relators’ demand to arbitrate and remand this cause to the trial court for further proceedings pursuant to this opinion.