Ellis v. Schlimmer
337 S.W.3d 860
| Tex. | 2011Background
- Ron and Tana Schlimmer purchased a Corpus Christi home from Veronica Ellis; Pacesetter Builders, Inc. was the broker and Ellis was the listing agent.
- Schlimmers later alleged undisclosed defects and sued Pacesetter and Ellis for fraud, breach of contract, negligent misrepresentation, and DTPA violations; Ellis’s third-party claim against the builder was severed.
- Five months before trial, Pacesetter and Ellis discovered a mandatory arbitration clause in Schlimmers’ real estate contract with Ellis, providing binding arbitration after mediation.
- Pacesetter and Ellis moved to abate and compel arbitration; Schlimmers asserted waiver, estoppel, and argued the clause did not cover their dispute.
- Trial court denied the motion; Pacesetter and Ellis appealed under Tex. Civ. Prac. & Rem. Code § 171.098(a)(1), but the court of appeals dismissed for lack of jurisdiction.
- Texas Supreme Court reversed and remanded to allow the court of appeals to address the merits, holding that the strong policy favoring arbitration applies and the court should consider the appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the interlocutory appeal was proper. | Ellis/Pacesetter argued the appeal was authorized under the TAA/FAA. | Schlimmers contended there was no proper basis for the appeal. | The Supreme Court reversed and remanded for merits review. |
| Whether the court of appeals erred in dismissing for lack of jurisdiction and misallocating burden. | Arbitration should be enforced; the burden rests on Schlimmers to show defenses to arbitration. | Schlimmers argued defenses and argued the clause did not cover the dispute. | Court of appeals erred; the case should be reviewed on merits |
Key Cases Cited
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex.2003) (burden on opponent of arbitration to show defenses to enforcement)
- In re Poly-America, L.P., 262 S.W.3d 337 (Tex.2008) (resolve doubts in favor of arbitration; scope and waiver considerations)
- Forest Oil Corp. v. McAllen, 268 S.W.3d 51 (Tex.2008) (strong policy favoring arbitration governs, even on appeal)
- In re D. Wilson Constr. Co., 196 S.W.3d 774 (Tex.2006) (TAA preemption by FAA only when state law would prevent enforcement)
- Klein v. Hernandez, 315 S.W.3d 1 (Tex.2010) (jurisdictional questions in interlocutory appeals)