422 S.W.3d 68
Tex. App.2014Background
- This Texas interlocutory appeal reviews denial of a motion to compel arbitration arising from a dispute over father’s property interests between Curry Glassell and her brother Alfred Glassell III and related entities.
- Curry signed a letter agreement with GPC to facilitate a $100 million Chesapeake sale; the agreement included a broad arbitration clause and a related tax/ownership structure involving Cabo Blanco and overriding royalties.
- Cabo Blanco was created to hold overriding royalties for tax purposes; Alfred III and others served as directors; the sale negotiations and related costs were to be allocated to Curry under the agreement.
- Curry alleges extensive fraud, fiduciary breaches, misrepresentations, and an accounting related to Curry’s interests, costs, and Cabo Blanco after the Chesapeake deal.
- The trial court denied arbitration; on rehearing the scope was clarified to cover claims related to the Chesapeake sale, the overriding royalties, Cabo Blanco, and overpayments of costs, while some preexisting non-arbitrable claims remained for court.
- The court held certain claims against GPC and Alfred III in official capacity, and claims against nonsignatories for overcharges, are arbitrable, while the remaining claims are not and are remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of arbitration clause for GPC claims | Curry: clause limited to contract-cost claims only | GPC: broad clause covers sale, royalties, Cabo Blanco | Arbitration covers sale, royalties, Cabo Blanco claims against GPC and Alfred III |
| Arbitration of claims against nonsignatories | Curry argues nonsignatories barred | GPC: theories of agency/alter ego/equitable estoppel apply | Some nonsignatory claims subject to arbitration under agency/direct-benefits theory; others not arbitratable |
| Equitable estoppel applicability to overpayment of costs | Curry claims against nonsignatories should be arbitrable under Meyer/Merrill Lynch | Only direct-benefit estoppel applies per Merrill Lynch | Overpayment of costs claims against nonsignatories subject to arbitration under direct-benefit estoppel |
| Alter ego/agency to bind Cabo Blanco | Curry claims alter ego binds Cabo Blanco | Cabo Blanco lacks sufficient evidence of alter ego; agency theory | No alter-ego or agency binding for remaining non-signatory claims; limitations apply |
| Record on scope and remand | All related claims should be arbitrated under broad clause | Only those tied to the Chesapeake sale and related structures arbitration | Remaining nonarbitrable claims remanded to court; specified arbitrable claims ordered to proceed in arbitration |
Key Cases Cited
- In re Morgan Stanley & Co., 293 S.W.3d 182 (Tex. 2009) (burden-shifting after showing arbitration agreement exists)
- In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (scope and application of arbitration clauses)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (scope of arbitration based on complaint substance)
- Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005) (claims analyzed by substance, not artful pleading)
- In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185 (Tex. 2007) (limits direct-benefits estoppel; rejects intertwined misconduct)
- In re Palm Harbor Homes, Inc., 195 S.W.3d 672 (Tex. 2006) (arbitration interpretation under contract law)
- In re Vesta Ins. Grp., Inc., 192 S.W.3d 759 (Tex. 2006) (nonliability for torts arising from contract connections subject to arbitration)