Rachal v. Reitz
2011 Tex. App. LEXIS 5598
| Tex. App. | 2011Background
- Interlocutory appeal from trial court’s denial of motion to compel arbitration and stay litigation.
- Trust established by A.F. Reitz; Hal Rachal, as successor trustee, with Reitz as beneficiary.
- Reitz sued Rachal for failure to provide accounting and for breaches of fiduciary duty, seeking removal as trustee.
- Rachal moved to compel arbitration based on a trust provision stating arbitration is the sole remedy for disputes involving the trust.
- Trial court denied arbitration; Rachal appeals arguing a valid arbitration agreement exists and covers Reitz’s claims.
- Texas law applies under the Texas General Arbitration Act (TAA).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists. | Rachal asserts the trust provision creates an arbitration agreement. | Rachal contends the settlor’s intent binds parties to arbitrate disputes under the trust. | No valid agreement proven; no meeting of contract elements. |
| Whether the arbitration provision covers Reitz’s claims. | Disputes arise under the trust; arbitration should cover claims. | Scope limited to the trust; disputes not arbitrable absent contract. | Broader trust-based arbitration clause could cover claims but not enforceable as contract. |
| Whether the trust arbitration provision meets § 171.021(a) requirements. | Agreement should be treated as meeting written agreement to arbitrate. | Trust instrument alone not a mutual contract; no signature by parties. | Arbitration provision not a valid agreement under § 171.021(a). |
Key Cases Cited
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (burden to show valid arbitration agreement; contract principles apply)
- In re Palm Harbor Homes, Inc., 195 S.W.3d 672 (Tex. 2006) (agreement to arbitrate; attach copied agreement; signatures not always required)
- In re Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005) (non-signatories may be bound to arbitration in some contexts)
- Bates v. MTH Homes-Tex., L.P., 177 S.W.3d 419 (Tex. App.-Houston [1st Dist.] 2005) (requires clear intent to submit disputes to arbitration; focus on contract elements)
- Roe v. Ladymon, 318 S.W.3d 502 (Tex. App.-Dallas 2010) (cannot compel arbitration absent agreement)