CRS Industries, Inc. v. MacDonald Systems. Inc.
01-16-00783-CV
| Tex. App. | May 9, 2017Background
- CRS (Florida) manufactured commercial air-purification products and contracted with MacDonald (Texas) to market/sell CRS’s commercial products in a territory.
- MacDonald alleges it designed a new air filtration system incorporating a CRS product and identified a buyer (DuPure), with an agreement to earn $300 profit per unit; CRS later terminated MacDonald and refused to pay.
- MacDonald sued in Texas asserting promissory estoppel, quantum meruit, and breach of contract to recover the promised per-unit profit.
- CRS moved to compel arbitration and stay the suit under a broad arbitration clause in the parties’ written commercial-products contract; MacDonald argued the dispute involved a residential product outside the contract’s scope but did not challenge the contract’s validity.
- The trial court denied the motion to compel without findings; CRS appealed interlocutorily and filed a mandamus petition.
Issues
| Issue | Plaintiff's Argument (MacDonald) | Defendant's Argument (CRS) | Held |
|---|---|---|---|
| Whether MacDonald’s claims fall within the contract’s arbitration clause | Claims concern a residential product outside the commercial-product contract and thus outside the arbitration clause | Claims arise from and are factually intertwined with the parties’ written contract and therefore fall within its broad arbitration provision | The arbitration agreement is valid and its expansive "arising out of or relating to" language encompasses MacDonald’s claims; compel arbitration and stay suit |
| Whether CRS’s mandamus petition requires separate resolution | Mandamus relief not addressed in detail by MacDonald | Mandamus filed but interlocutory appeal is available to address arbitrability | Mandamus dismissed as moot because interlocutory appeal resolved the arbitability issue |
Key Cases Cited
- Rapid Settlements v. Green, 294 S.W.3d 701 (Tex. App.—Houston [1st Dist.] 2009) (FAA applies when arbitration clause involves interstate commerce)
- In re Rubiola, 334 S.W.3d 220 (Tex. 2011) (party seeking arbitration must show valid agreement and that claims fall within its scope)
- Houston Progressive Radiology Assocs. v. Lee, 474 S.W.3d 435 (Tex. App.—Houston [1st Dist.] 2015) (abuse-of-discretion standard for denial of motion to compel arbitration)
- Valerus Compression Servs. v. Austin, 417 S.W.3d 202 (Tex. App.—Houston [1st Dist.] 2013) (questions of contract formation are legal and reviewed de novo)
- FD Frontier Drilling (Cyprus) v. Didmon, 438 S.W.3d 688 (Tex. App.—Houston [1st Dist.] 2014) (scope inquiry focuses on factual allegations, not labels of causes of action)
- In re Dillard Dep’t Stores, 186 S.W.3d 514 (Tex. 2006) (claims factually intertwined with contract are within broad arbitration clauses)
- Richmont Holdings v. Superior Recharge Sys., 392 S.W.3d 633 (Tex. 2013) (trial court must compel arbitration if agreement covers the claims and no defense to enforcement exists)
- Royston, Rayzor, Vickery & Williams, LLP v. Lopez, 467 S.W.3d 494 (Tex. 2015) (when interlocutory appeal resolves arbitrability, related mandamus may be unnecessary)
- Hou-Scape, Inc. v. Lloyd, 945 S.W.2d 202 (Tex. App.—Houston [1st Dist.] 1997) (broad arbitration clauses cover disputes touching on contract even if plead as tort or statutory claims)