Court Opinion

ID: 7799362
Source: CourtListenerOpinion
Date Created: 2022-08-10 06:11:09.828779+00
Date Added: 2024-06-11T16:28:56.521161
License: Public Domain

CONCUR; and Opinion Filed August 5, 2022

                             S In The
                        Court of Appeals
                 Fifth District of Texas at Dallas
                         No. 05-20-00380-CV
                         No. 05-20-00387-CV
                         No. 05-20-00388-CV
                         No. 05-20-00389-CV
                         No. 05-20-00390-CV

PRESTONWOOD TRADITION, LP; TRADITION MANAGEMENT, LLC;
PRESTONWOOD TSL, LP; PRESTONWOOD TSL GP, LLC; TRADITION
          SENIOR LIVING, L.P.; TRADITION SL, LLC; AND
                   JONATHAN S. PERLMAN,
                       Appellants / Relators
                                 V.
 MARY JO JENNINGS, INDIVIDUALLY AND AS THE INDEPENDENT
  EXECUTRIX AND REPRESENTATIVE OF THE BENEFICIARIES OF
       THE ESTATE OF LEAH ALICE CORKEN; LISA CULLEN,
     INDIVIDUALLY; MATT CORKEN, INDIVIDUALLY; DIANNE
TANNERY, INDIVIDUALLY AND AS THE INDEPENDENT EXECUTRIX
 AND REPRESENTATIVE OF THE BENEFICIARIES OF THE ESTATE
OF JUANITA PURDY; THOMAS DUCKER, INDIVIDUALLY; SHERRIL
  KERR, INDIVIDUALLY AND AS THE INDEPENDENT EXECUTRIX
 AND REPRESENTATIVE OF THE BENEFICIARIES OF THE ESTATE
   OF GLENNA DAY; GREGORY B. DAY, INDIVIDUALLY; MARSHA
 SPRING REPP AND STEPHEN SPRING, INDIVIDUALLY AND AS THE
CO-EXECUTORS AND REPRESENTATIVES OF THE BENEFICIARIES
  OF THE ESTATE OF SOLOMON H. SPRING; MICHAEL SOLOMON,
       MATTHEW ABRAMOWITZ, AND PAUL ABRAMOWITZ,
        INDIVIDUALLY AND AS THE CO-EXECUTORS AND
  REPRESENTATIVES OF THE BENEFICIARIES OF THE ESTATE OF
JOYCE ABRAMOWITZ; AND MARC ABRAMOWITZ, INDIVIDUALLY,
                 Appellees / Real Parties in Interest
   On Appeal from the County Court at Law No. 2, Dallas County, Texas
  Trial Court Cause Nos. CC-19-03747-B, CC-19-03737-B, CC-19-03754-B,
                   CC-19-03757-B, and CC-19-03745-B

                         CONCURRING OPINION
                           Before the En Banc Court
                      Concurring Opinion by Justice Schenck
      I concur in the Court’s decision and write separately to emphasize that there

have been numerous recent opinions from this Court and superior courts discussing

our obligations to adhere to established law concerning the prompt enforcement of

arbitration agreements, and to avoid violating the governing federal law and the

Constitution’s Supremacy Clause. See, e.g., In re Whataburger Restaurants LLC,

645 S.W.3d 188, 198 n.41 (Tex. 2022); Baby Dolls Topless Saloons, Inc. v. Sotero,

No. 05-19-01443-CV, 2020 WL 4915436 (Tex. App.—Dallas Aug. 21, 2020) (mem.

op.) (Whitehill, J., dissenting), rev’d, 642 S.W.3d 583 (Tex. 2022); Aerotek, Inc. v.

Boyd, 598 S.W.3d 373, 374 (Tex. App.—Dallas 2020) (Schenck, J., dissenting),

rev’d, 624 S.W.3d 199 (2021); In re Baby Dolls Topless Saloons, Inc., No. 05-20-

00015-CV, 2020 WL 881017, at *5 (Tex. App.—Dallas Feb. 24, 2020, orig.

proceeding) (mem. op.) (Schenck, J., dissenting); RSL Funding, LLC v. Newsome,

559 S.W.3d 169, 176 (Tex. App.—Dallas 2016) (Schenck, J., dissenting), rev’d, 569

S.W.3d 116 (Tex. 2018).

      I.     THE U.S. SUPREME COURT HAS SPOKEN–LOUDLY AND REPEATEDLY

      U.S. Supreme Court cases contain language that suggests a per se invalidation

of state law limits on arbitration, in essence deeming any transaction to effectively

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involve commerce under the Federal Arbitration Act (“FAA” or “Act”). See AT&T

Mobility LLC v. Concepcion, 563 U.S. 333, 341 (2011) (“When state law prohibits

outright the arbitration of a particular type of claim, the analysis is straightforward:

The conflicting rule is displaced by the FAA.”); see also Nitro-Lift Techs., LLC v.

Howard 568 U.S. 17, 22 (2012) (same); Kindred Nursing Ctrs. Ltd. P’ship v. Clark,

137 S. Ct. 1421, 1426 (2017) (same); Marmet Health Care Ctr., Inc. v. Brown, 565

U.S. 530, 533 (2012) (same). As a recent Harvard Law Review article reminds us,

      From the republic’s birth, ensuring fealty of state judges to federal
      commands has been a matter of constitutional concern. Article VI of
      the Constitution highlights the Framers’ particular interest in requiring
      state court compliance with federal law. Its Oaths Clause mandates that
      “Members of the several State Legislatures, and all executive and
      judicial Officers” take an oath to support the Federal Constitution.
      Article VI’s Supremacy Clause goes a step further by singling out state
      judges, bluntly providing that “the Judges in every State shall be
      bound” by federal law.

See Note, State Courts and the Federalization of Arbitration Law, 134 HARV.

L. REV. 1184, 1999 (Jan. 2021).

      Section 2 of the FAA is its “primary substantive provision.” Moses H. Cone

Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). This section provides

that written agreements to arbitrate controversies arising out of an existing contract

shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law

or in equity for the revocation of any contract. Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213, 218 (1985). That provision, together with the rest of the FAA, applies

to the full reach of the federal commerce power and preempts and supplants any state

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law, whether labeled as a rule of substance or procedure, that would conflict with

the FAA’s policy and goal of enforcing agreements to resolve controversies by

arbitration rather than litigation. ASW Allstate Painting & Const. Co., Inc. v.

Lexington Ins. Co., 188 F.3d 307, 311 (5th Cir. 1999). So regardless of whose law

applies, state statutes (and state court decisions) that are peculiarly hostile to the

arbitration process could be preempted by the FAA.

        Insofar as the reach of the FAA is concerned, the U.S. Supreme Court has

made clear that the Act reaches to the full limits of the congressional authority under

the commerce clause. E.g., AT&T Mobility, 563 U.S. at 339. That power, rightly or

wrongly, has been held to be virtually limitless.1 It obviously includes, for example,

the power to regulate the sale and leasing of real property as is involved here. See

42 U.S.C. § 604. The power to redress discrimination in a court under this law in

any given case is not dependent on particularized proof of the nature of the impact

on interstate commerce, but on a constitutionally minimal connection to it—and is

not to be avoided by procedures aimed at making receipt of the proof particularly

challenging or applied to avoid receipt of the housing agreement itself.2 See Groome

    1
      As I have said before, I disagree with the U.S. Supreme Court’s decisions in this respect but am
nevertheless obliged to adhere to them faithfully. Aerotek, 598 S.W.3d at 374.
    2
      To be clear, I would make short work of a trial court’s refusal to admit into evidence the agreement
containing the arbitration clause. As such a clause operates independently from the rest of the agreement
and, under federal law, is enforceable separately, see Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U.S. 395, 402 (1967) and Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214–15 (5th Cir. 2003), I
struggle to imagine a scenario where striking its receipt in a motion to compel arbitration would not amount
to an abuse of discretion.
                                                   –4–
Res. Ltd., L.L.C. v. Parish of Jefferson, 234 F.3d 192, 202 (5th Cir. 2000). I presume,

therefore, that a court receiving a discrimination claim would apply that law where

the agreement itself indicated as little as the connection to the telephone or mail

systems, as this one does. See In re Profanchik, 31 S.W.3d 381, 385 (Tex. App.—

Corpus Christi 2000, orig. proceeding). Erecting a contrary approach for arbitration

in state court would seem problematic.

      Despite these recent U.S. Supreme Court decisions addressing the reach and

preemptive effect of the FAA, our caselaw continues in many respects to

unflinchingly retreat to our own past decisions concerning questions ranging from

the standard of review, the role of parties in determining the governing law, and the

manner and extent of proof of the relation of the particular contract to interstate

commerce.

      Decisions pre-dating this century often suggest an abuse of discretion

standard of review applies to the trial court’s decision whether to compel arbitration

pursuant to an agreement to arbitrate. Freis v. Canales, 877 S.W.2d 283, 284 (Tex.

1994) (orig. proceeding). As the U.S. Supreme Court and our own supreme court

have made clear, the question of enforcement of an agreement is reviewed de novo.

See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, at 941 (1995); Jody

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James Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 630 (Tex. 2018).3 The

question of the existence (i.e., formation) of the agreement as a question of fact under

the Tipps4 procedure and reviewed under what appears to be a clear error standard.

See Aerotek, 624 S.W.3d at 204. It is thus unclear where, other than in the

application of evidentiary rules addressed in relevant part above, see supra n.2, this

discretion continues to obtain.

        Likewise, cases pre-dating the U.S. Supreme Court’s decisions settling the

reach and preemptive effect of the FAA that reference the parties’ agreements

concerning the applicability of the Act are regularly cited in cases where there would

be no potential conflict between the two acts, insofar as recognizing and upholding

the parties’ agreements. E.g., Ford v. NYLCare Health Plans of the Gulf Coast,

Inc., 141 F.3d 243, 249 (5th Cir. 1998). Whether that rule survives more recent

decisions of the Supreme Court concerning the scope and preemptive effect of the

FAA—or whether a state procedure uniquely hostile to proof of the commitment—

is far from clear. E.g., Hall St. Assocs. v. Mattel, Inc., 552 U.S. 576 (2008).

        Finally, as noted above, the obligation to produce and prove evidence of an

agreement under the FAA as the U.S. Supreme Court has read it (i.e., to reach as far

    3
      In Jody James Farms, JV v. Altman Group, Inc., cited by the dissent, the Texas Supreme Court appears
to recognize this albeit without directly revising the abuse of discretion mantra, holding that enforcement
decisions are reviewed “de novo.” 547 S.W.3d 624, 630 (Tex. 2018).
    4
      Jack B. Anglin v. Tipps, 842 S.W.2d 266 (Tex. 1992). Notably, many of the early decisions citing
this standard trace back to a period when review of the denial of a motion to compel arbitration was
available only by mandamus, requiring proof of an abuse of discretion.
                                                   –6–
any other federal statute) is not particularly onerous. See Allied-Bruce Terminix Co.,

Inc. v. Dobson, 513 U.S. 265, 274 (1995). Attaching a contract containing an

arbitration clause that could be regulated by Congress pursuant to its commerce

powers is enough. Erecting unique barriers and standards different from those used

to determine the applicability of other federal law, would appear to be preempted.

See Concepcion, 563 U.S. at 341–42.

      II.    STATE COURT DECISIONS APPEARING TO EVADE OR IGNORE THESE
             HOLDINGS   ARE    COUNTERPRODUCTIVE    AND    UNDERMINE
             CONFIDENCE

      As noted, I share the concerns set forth in a fairly recent Harvard Law Review

article addressing the breadth of the FAA and state court actions in the face of the

federalization of arbitration. See Note, 134 HARV. L. REV. at 1184. I have expressed

these concerns previously and will not repeat them here beyond summarizing the

author’s concerns. See Aerotek, 598 S.W.3d at 379–80.

      Responding to the burdens the Supreme Court’s interpretations of the FAA

have placed on them, some state courts continued to avoid the expansive reach of

section 2 of the FAA in numerous ways including, but not limited to, (1) open

defiance, (2) finding that an arbitration agreement does not involve interstate

commerce, as the dissent finds in this case, (3) holding that a choice-of-law clause

in an arbitration agreement incorporates state law contrary to the FAA, and (4)

defining arbitration under section 2 narrowly under state law. See Note, 134 HARV.

L. REV. at 1194. As the author notes, each time the Supreme Court rebukes state

                                         –7–
courts’ attempts at pushback, the state courts begin the process anew. Id. at 1202.

“[S]tate court insubordination exacerbates the FAA’s harms to the constitutional

order while doing little to properly recalibrate the federal-state balance.” Id. at 1199.

                                   CONCLUSION

      When we or others interject ourselves and impose theories aimed at

obstructing arbitration, we defy our superiors, ignore the separation of powers, cause

extraordinary delay in a process that is supposed to be quick, and undermine

confidence in the state courts. Id. at 1205. I believe we should resist the urge to

further address this area of the law.

                                             /David J. Schenck/
                                             DAVID J. SCHENCK
                                             JUSTICE

200380CF.P05

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