BBVA Compass Investment Solutions, Inc., Doris G. Silva, Karen L. McRoberts, Mario Ramos, and David S. Neel, Jr. v. Edward Brooks and Geneva Brooks
456 S.W.3d 711
| Tex. App. | 2015Background
- Brookses' IRA funds were transferred from Compass in August 2010 by an unidentified person via power of attorney, and the account was closed.
- Brookses allege unauthorized transfer and related fiduciary/contractual breaches; Compass disputes facts but concedes arbitration scope for motion.
- Brookses filed suit August 16, 2012; multiple amendments; Appellants moved to stay proceedings and compel arbitration on November 9, 2012.
- Hearing on arbitration motion held January 25, 2013; trial court denied the motion without explanation; written order issued the same day.
- Arbitration clause Paragraph 19 states all controversies concerning construction, performance or breach of the agreement or any transaction involving securities/account shall be arbitrated under NASD CAPNASD or AAA rules.
- Court held arbitration clause survives contract termination and that scope includes all controversies arising from breach/performance, including related tort claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the arbitration clause cover Brookses' claims? | Brookses: scope limited to contract performance, not all disputes. | Brookses: clause broad; covers all controversies related to the agreement and securities account. | Yes, clause covers all controversies, including post-breach disputes. |
| Are tort claims within the arbitration scope? | Tort claims are generally not automatically subject to arbitration. | Arbitration clause broadly includes any controversy arising from the contract and related activities. | Tort claims are within scope due to intertwined relationship with contract. |
| Is the arbitration clause substantively or procedurally unconscionable? | Arbitration costs and surprise render clause unconscionable. | Costs were not proven to be excessive; circumstances at signing do not show procedural unconscionability. | Not substantiially or procedurally unconscionable; no sufficient evidence of undue costs or surprise. |
Key Cases Cited
- UBS Fin. Servs., Inc. v. Branton, 241 S.W.3d 179 (Tex. App.—Fort Worth 2007) (broad arbitration language can reach tort claims intertwined with contract)
- Hearthshire Braeswood Plaza Ltd. P’ship, SMP v. Bill Kelly Co., 849 S.W.2d 380 (Tex. App.—Houston [14th Dist.] 1993) (tort claims not automatically exempt from arbitration; consider contractual intertwinement)
- Sun Communications, Inc. v. Financial Services Plus, Inc., 86 S.W.3d 313 (Tex. App.—Austin 2002) (factually intertwined tort and contract claims may be compelled to arbitrate)
- In re Wachovia Sec., LLC, 312 S.W.3d 243 (Tex. App.—Dallas 2010) (contractual interpretation governs scope; plain-language approach)
- Am. Emp’rs’ Ins. Co. v. Aiken, 942 S.W.2d 156 (Tex. App.—Fort Worth 1997) (contractual disputes may give rise to both contract and tort claims in arbitration context)