Court Opinion

ID: 9676854
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:36:12.368758+00
Date Added: 2024-06-11T18:16:51.725864
License: Public Domain

Dissenting Opinion by
Justice CASTILLO.
Before Justices HINOJOSA, CASTILLO, and CHAVEZ.1
DISSENTING OPINION
I respectfully dissent. The majority: (1) does not correctly apply the appropriate standard of review to the question of what issues are included within the scope of the parties’ arbitration agreement; (2) does not identify the burdens of proof associated with determining the scope of the parties’ arbitration agreement; and (3) as a result, fails to give effect to presumptions favoring arbitration.
I. The Arbitration Clause
The Amended Agreement entered into by Perlstein and Steller included the following arbitration agreement:
ARTICLE XVI
ARBITRATION
16.01. Arbitration Generally. Any controversy, claim or dispute between or among the parties directly or indirectly concerning this Agreement or the breach thereof or the subject matter hereof, including questions concerning the scope and applicability of this Article XVI, shall be finally settled by arbitration ....
16.02. Exception to Arbitration. Notwithstanding the foregoing, nothing contained herein shall require arbitration of any issue arising under this Agreement for which injunctive relief is successfully sought by the Partnership or any party hereto.
*43(Emphasis added.) In determining whether this clause compels arbitration, the trial court was required to decide two issues: (1) whether a valid, enforceable arbitration agreement exists; and (2) if so, whether the asserted claim falls within the scope of the agreement. Dallas Cardiology Assocs., P.A. v. Mallick, 978 S.W.2d 209, 212 (Tex.App.-Texarkana 1998, pet. denied); Nationwide of Bryan, Inc. v. Dyer, 969 S.W.2d 518, 520 (Tex.App.-Austin 1998, no pet.).
Whether Perlstein and Steller have agreed to arbitrate is not the question before us; they have. Rather, Perlstein presents two issues regarding the scope of the parties’ arbitration agreement: (1) whether the question of the arbitrability of Steller’s claim of fraudulent inducement to enter into the Partnership Agreement is itself subject to arbitration; and (2) whether Steller’s claim of fraudulent inducement is subject to arbitration on the merits.
II. THE STANDARD OF REVIEW
Texas law long has followed a public policy, originally developed in federal jurisprudence, that strongly encourages and favors arbitration. EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex.1996) (orig.proceeding) (per curiam) (citing L.H. Lacy Co. v. City of Lubbock, 559 S.W.2d 348, 351 (Tex.1977)). We review a trial court’s determination concerning the existence of an arbitration agreement under an abuse-of-discretion standard. Southwest Tex. Pathology Assocs., L.L.P. v. Roosth, 27 S.W.3d 204, 207 (Tex.App.-San Antonio 2000, pet. dism’d w.o.j.); ANCO Ins. Servs. of Houston, Inc. v. Romero, 27 S.W.3d 1, 3 (Tex.App.-San Antonio 2000, pet. denied). As noted by the majority, the abuse-of-discretion standard contains both legal and factual components. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.1992) (orig.proceeding). To the extent our review addresses the trial court’s legal interpretation of the arbitration clause at issue — a question of law — we perform a de novo review. D. Wilson Constr. Co. v. Cris Equip. Co., Inc., 988 S.W.2d 388, 393 (Tex.App.-Corpus Christi 1999, orig. proceeding) (op. on reh’g); Leander Cut Stone Co., Inc. v. Brazos Masonry, Inc., 987 S.W.2d 638, 640 (Tex.App.-Waco 1999, no pet.). To establish that a trial court abused its discretion in resolving a factual issue, a party must show that the trial court reasonably could have reached only one decision. Walker, 827 S.W.2d at 840.
Under federal law, a district court’s finding regarding the existence of an agreement to arbitrate is reviewed like “any other district court decision finding an agreement between parties, i.e., accepting findings of fact that are not ‘clearly erroneous’ but deciding questions of law de novo.” Hardin Constr. Group, Inc. v. Strictly Painting, Inc., 945 S.W.2d 308, 312 (Tex.App.-San Antonio 1997, orig. proceeding [mand. denied]) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947-48, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)). A finding is clearly erroneous under federal standards when there is evidence to support it, but on reviewing the evidence the court is left with a definite and firm conviction that a mistake has been made. Id. (citing Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156, 1159 (5th Cir.1986)). Thus, in the context of appellate review of arbitration orders, the factual component of the abuse-of-discretion standard applied by Texas courts is similar to the clearly erroneous standard applied by federal courts. Strictly Painting, 945 S.W.2d at 312. Further, the strong public policy favoring arbitration and the broad language of the arbitration agreement at issue here both create judicial presumptions that impose evidentiary burdens on the parties. First Options, 514 U.S. at 944-45, 115 S.Ct. *441920; AT & T Techs., Inc. v. Communications Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986); see Prudential-Bache Sec., Inc. v. Garza, 848 S.W.2d 803, 807 (Tex.App.-Corpus Christi 1993, orig. proceeding) (discussing evidentiary procedure). Accordingly, our review of the trial court’s ruling on the two issues presented to us includes not only a legal analysis as performed by the majority but also factual components, including eviden-tiary burdens the majority does not consider.
III. THE EVIDENTIARY BURDENS
Arbitration is a matter of contract; a party cannot be required to submit to arbitration unless it agreed in advance that the dispute would be arbitrated. Lost Creek Mun. Util. Dist. v. Travis Indus. Painters, Inc., 827 S.W.2d 103, 105 (Tex.App.-Austin 1992, writ denied) (citing United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (I960)). A party seeking to compel arbitration under the Texas Arbitration Act (the “TAA”) must make an “application” for a court order. Tex. Crv. PRAC. & Rem.Code Ann. §§ 171.021(a), 171.024(b) (Vernon Supp.2003). Once a party requests arbitration, demonstrates that a written agreement to arbitrate exists, and shows that the claims presented fall within the scope of that agreement, the trial court has no discretion but to order arbitration of those claims. Tex. Civ. Prac. & Rem.Code Ann. § 171.021 (Vernon Supp. 2003); Capital Income Props.-LXXX v. Blackmon, 843 S.W.2d 22, 23-24 (Tex.1992) (orig.proceeding) (per curiam).
The party seeking arbitration bears the initial burden of establishing that a claim falls within the scope of a valid arbitration agreement. EZ Pawn Corp., 934 S.W.2d at 91. Once the proponent of arbitration establishes that a claim falls within the arbitration agreement, the burden shifts to the party opposing arbitration to establish some ground for revocation of the arbitration agreement. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999) (orig.proceeding) (per curiam).
Because arbitration is favored in the law, a presumption of arbitrability attaches once the existence of an arbitration agreement is established. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996) (orig.proceeding) (per curiam); Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898-99 (Tex.1995) (orig.proceeding) (per curiam); Mallick, 978 S.W.2d at 212. Further, a broad arbitration clause that purports to cover all claims or disputes regarding the contract or its breach also creates a presumption of arbitrability. AT & T Techs., 475 U.S. at 650, 106 S.Ct. 1415.
The presumptions favoring arbitration require that questions about the scope of arbitrable issues be resolved in favor of arbitration “whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Collins v. Int’l Dairy Queen, Inc., 2 F.Supp.2d 1473, 1477 (M.D.Ga.1998) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). The strong policy favoring arbitration reflected in these presumptions applies to questions of arbitrability under the TAA as well as under the Federal Arbitration Act.2 See Ambulance Billings Sys., Inc., v. Gemini Ambulance Servs., Inc., 103 S.W.3d 507, 514 (San Antonio 2003, no pet. h.) (consolidated interlocutory appeal and orig. proceeding) (applying presumption of arbitra-bility in interpreting broad arbitration *45clause under the TAA). Accordingly, “[an] order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” Warrior & Gulf Navigation, 363 U.S. at 582-83, 80 S.Ct. 1347; Ambulance Billings Sys., Inc., 103 S.W.3d at 514. Given the law’s presumption in favor of arbitration, where a contract provides for arbitration of some issues, it may be presumed that the parties likely gave some thought to the scope of the arbitration clause. First Options, 514 U.S. at 945, 115 S.Ct. 1920. In such cases, “[in] the absence of any express provision excluding a particular grievance from arbitration, we think only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.” AT&T Techs., 475 U.S. at 650, 106 S.Ct. 1415 (quoting Warrior & Gulf Navigation, 363 U.S. at 584-85, 80 S.Ct. 1347).
Thus, presumptions in favor of arbitration affect a court’s application of ordinary state law principles governing the formation of contracts when determining whether the parties agreed to arbitrate a certain matter. First Options, 514 U.S. at 944, 115 S.Ct. 1920. However, the law treats silence or ambiguity about who decides arbitrability differently from the way it treats silence or ambiguity about whether a particular merits-related dispute falls within the scope of a valid arbitration agreement. Id. at 944-45, 115 S.Ct. 1920. Only if the parties did not expressly agree to submit the arbitrability question itself to arbitration should the court decide that question as it would decide any other question that the parties did not submit to arbitration, that is, independently under state law contract principles. Id. at 944, 115 S.Ct. 1920.
Accordingly, the proponent of arbitration of the arbitrability question itself, as opposed to the proponent of arbitration of a merits-based dispute, must produce “clear and unmistakable” evidence that the parties intended to include the arbitrability question in their arbitration agreement. Id. On the other hand, it is the opponent of arbitration of a merits-based controversy who must produce convincing evidence that the parties intended to exclude the controversy from the scope of the arbitration clause. Int’l Dairy Queen, 2 F.Supp.2d at 1477 (citing AT & T Techs., 475 U.S. at 650, 106 S.Ct. 1415; First Options, 514 U.S. at 945, 115 S.Ct. 1920); see Prudential Sec. Inc., 909 S.W.2d at 900 (“The burden was on [the parties opposing arbitration] to show that their claims fell outside the scope of the arbitration agreement.”).
IV. ANALYSIS
A. The Arbitrability Question
The arbitration clause between Perlstein and Steller in the Amended Agreement is extremely broad, providing for arbitration of “[a]ny controversy, claim or dispute between or among the parties directly or indirectly concerning this Agreement or the breach thereof or the subject matter hereof, including questions concerning the scope and applicability of this Article XVI.” (Emphasis added.) Construction of this contract language itself is subject to the presumptions favoring arbitration created both by public policy and by the arbitration agreement’s expansive “directly or indirectly” language. Int’l Dairy Queen, Inc., 2 F.Supp.2d at 1477 (citing Moses H. Cone, 460 U.S. at 24-25, 103 S.Ct. 927). We cannot say “with positive assurance that the arbitration clause is not susceptible of an interpretation” that covers the arbitrability question. Warrior & Gulf Navigation, 363 U.S. at 582-83, 80 S.Ct. 1347. To the contrary, the arbitration clause expressly includes the question *46of arbitrability. Moreover, public policy favoring arbitration as well as the broad “directly or indirectly” language in the arbitration clause itself both operate to create a presumption that the parties intended to include the arbitrability question within the scope of their agreement. See First Options, 514 U.S. at 944, 115 S.Ct. 1920; see also AT & T Techs., 475 U.S. at 650,106 S.Ct. 1415; Neal v. Hardee’s Food Sys., Inc., 918 F.2d 34, 38 (5th Cir.1990) (holding that parties who included lanT guage “any and all disputes” in arbitration clause intended clause to reach all aspects of their relationship); see also B.F. Goodrich Co. v. McCorkle, 865 S.W.2d 618, 620 (Tex.App.-Houston [14th Dist.] 1993, orig. proceeding) (holding that parties who included language “any dispute or disagreement between the parties” in arbitration clause intended clause to reach all aspects of their relationship). Accordingly, I dissent from the majority’s analysis of the parties’ agreement as purely a question of contract interpretation under Texas law and the majority’s resulting failure to take into account the effects of the evidentiary burdens created by the arbitration clause itself. I would find that Perlstein met his burden of establishing by clear and unmistakable evidence that Steller agreed to arbitrate the question of arbitrability, and the trial court reasonably could have reached only one decision. See Walker, 827 S.W.2d at 840. On this record, therefore, I would hold that the trial court abused its discretion in denying Perlstein’s motion to abate and compel arbitration of the arbitrability question.
Necessarily, then, I would not reach the question of whether Steller’s fraud-in-the-inducement claim is subject to an implied exclusion from arbitration, either because of the terms of the remedies clause in the Purchase Agreement or because it is otherwise not subject to arbitration. That would be a decision for the arbitrators. However, as I also dissent from the approach taken by the majority in analyzing the scope of the parties’ arbitration agreement, I also address the issue of whether, on this record, the merits of the parties’ controversy now in litigation is arbitrable.
B. The Scope Question
As to whether Steller’s fraudulent-inducement claim with regard to the Purchase Agreement is included within the scope of the parties’ arbitration agreement in the Amended Agreement, Steller was required to produce convincing evidence that the parties intended to exclude the controversy from the reach of the arbitration clause. See Int’l Dairy Queen, 2 F.Supp.2d at 1477. It did not. Construction of the contract language itself is subject to the presumptions favoring arbitration created both by public policy and by the extremely expansive “directly or indirectly” language in the parties’ arbitration agreement. Int’l Dairy Queen, Inc., 2 F.Supp.2d at 1477 (citing Moses H. Cone, 460 U.S. at 24-25, 103 S.Ct. 927). Section 16.02 of the Amended Agreement, to which the majority refers but does not recite, immediately follows the parties’ general arbitration agreement in section 16.01 and contains a single exclusion to arbitration. Unlike the remedies clause in the Purchase Agreement, the express exclusion in the Amended Agreement does not include the parties’ current dispute. Thus, the interplay of the various clauses in the two agreements creates even more ambiguity than those examined at length by the majority. Given the broad “directly or indirectly” language of the arbitration clause, I would conclude that inconsistent contractual provisions, whether the documents are merged or not, do not defeat the presumptions favoring arbitration. AT & T Techs., 475 U.S. at 650,106 S.Ct. 1415; Warrior & Calf Navigation, 363 U.S. at 584-85, 80 *47S.Ct. 1347. The record is devoid of any evidence that the parties intended the remedies clause in the Purchase Agreement to create another exclusion to arbitration in addition to the single exception listed in section 16.02 of the Amended Agreement. I would conclude, on this record, that we cannot say “with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” Warrior & Gulf Navigation, 363 U.S. at 582-83, 80 S.Ct. 1347. “[0]nly the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.” AT & T Techs., 475 U.S. at 650, 106 S.Ct. 1415 (quoting Warrior & Gulf Navigation, 363 U.S. at 584-85, 80 S.Ct. 1347). Steller presented no such evidence. On this record, I would conclude that Steller did not meet its burden to produce convincing evidence that the parties intended to exclude Steller’s fraudulent-inducement claim from arbitration. See Warrior & Gulf Navigation, 363 U.S. at 582-83, 80 S.Ct. 1347.
How arbitrators would decide the issue, of course, would be based on the record developed before the arbitrators regarding the parties’ intent. Steller, as the opponent of arbitration of a merits-based dispute, would be required to produce to the arbitrators convincing evidence that the parties intended to exclude the party’s current controversy from the reach of the arbitration clause. See Int’l Dairy Queen, 2 F.Supp.2d at 1477. In any event, since the majority reached the issue of the arbi-trability of the parties’ current dispute, I also dissent from the majority’s conclusion that the trial court did not abuse its discretion in denying Perlstein’s motion to compel arbitration of Steller’s fraudulent-inducement claim.
I would reverse the trial court’s order denying Perlstein’s motion to compel arbitration and order the case abated pending arbitration of the arbitrability question.

. Retired Justice Melchor Chavez, assigned to this Court by the Chief Justice of the Texas Supreme Court pursuant to Tex Gov't Code Ann. § 74.003 (Vernon 1998).

. 9 U.S.C. § 1-307 (2003).