Prestonwood Tradition, LP Tradition Management, LLC Prestonwood TSL, LP Prestonwood TSL GP, LLC v. Sherril Kerr, Individually and as the Independent and Representative
05-20-00388-CV
Tex. App.Oct 22, 2021Background
- This is a dissent (Justice Partida-Kipness) from the Dallas Court of Appeals in an appeal from orders staying AAA arbitration proceedings and denying pleas in abatement brought by Prestonwood Entities.
- Dispute arises from leases containing an arbitration clause that incorporates the AAA Commercial Arbitration Rules; AAA Rule 7(a) empowers arbitrators to decide arbitrability.
- Estate Representatives (non-signatories to the leases) sued on personal injury/wrongful death claims and opposed arbitration; they are not the original signatories to the leases.
- Trial court stayed the AAA proceedings and denied Prestonwood’s pleas in abatement, thereby deciding gateway arbitrability issues itself.
- The dissent argues the trial court did not abuse its discretion: (1) courts—rather than arbitrators—should decide substantive arbitrability for non-signatories absent clear and unmistakable delegation; (2) the Texas Arbitration Act (TAA), not the FAA, governs and renders the personal-injury arbitration clauses unenforceable because statutory signature/advice-of-counsel requirements were not met.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion by deciding gateway arbitrability instead of referring the question to the AAA/arbitrator | Prestonwood: incorporation of AAA Commercial Rules (Rule 7) is clear and unmistakable delegation of arbitrability | Estate Reps: they are non-signatories; no clear and unmistakable evidence they agreed to delegate arbitrability | Dissent: Trial court did not abuse its discretion; courts decide substantive arbitrability for non-signatories absent clear and unmistakable delegation |
| Whether incorporation of AAA rules constitutes "clear and unmistakable" evidence to delegate arbitrability where claimants are non-signatories | Prestonwood: invoking AAA rules delegates arbitrability to arbitrator | Estate Reps: reference to AAA rules does not bind non-signatories or show their agreement to delegate | Dissent: Incorporation of AAA rules by signatories is not clear and unmistakable evidence that non-signatories agreed to arbitrate arbitrability (applies Roe) |
| Whether the FAA governs the arbitration agreements | Prestonwood: FAA applies; arbitrability governed by federal law and arbitrator | Estate Reps: no interstate-commerce evidence; FAA does not apply | Dissent: FAA does not apply—no evidence of interstate commerce—so TAA controls |
| Whether the TAA renders arbitration unenforceable for the Estate Representatives’ personal-injury claims | Prestonwood: arbitration clauses are enforceable | Estate Reps: TAA requires written, signed agreement with counsel for personal-injury claims; requirements not met | Dissent: TAA governs and arbitration is unenforceable for personal-injury claims because required signatures/advice-of-counsel are absent; trial court reasonably denied compel |
Key Cases Cited
- Robinson v. Home Owners Mgmt. Enters., Inc., 590 S.W.3d 518 (Tex. 2019) (arbitration is contractual; enforce according to terms; party cannot be compelled absent agreement)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (courts decide arbitrability unless parties clearly and unmistakably delegate)
- Howsam v. Dean Witter Reynolds, 537 U.S. 79 (2002) (distinguishes gateway matters for courts from procedural questions for arbitrators)
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (arbitrators’ authority limited to contractually assigned powers)
- G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502 (Tex. 2015) (substantive arbitrability usually decided by courts)
- Roe v. Ladymon, 318 S.W.3d 502 (Tex. App.—Dallas 2010) (incorporation of AAA rules by signatories does not clearly show non-signatory agreed to delegate arbitrability)
- Jody James Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624 (Tex. 2018) (absence of clear and unmistakable delegation bars compelled arbitration against non-signatories)