Royston, Rayzor, Vickery, & Williams, Llp v. Francisco "Frank" Lopez
467 S.W.3d 494
| Tex. | 2015Background
- Lopez (client) signed a two‑page employment contract with Royston, Rayzor, Vickery & Williams, LLP that included a mutual arbitration clause covering disputes arising from the representation but expressly excluded any claims by the firm to recover fees and expenses.
- The firm represented Lopez in a divorce matter that settled after court‑ordered mediation; Lopez later sued the firm alleging it induced him to accept an inadequate settlement.
- The firm moved to compel arbitration under the Texas Arbitration Act and common law; the trial court denied the motion based solely on the written employment contract admitted at the hearing.
- The court of appeals affirmed the denial, holding the arbitration clause substantively unconscionable because it was one‑sided (firm could exclude its fee claims while Lopez had to arbitrate his claims) and cited other contract provisions (firm’s unilateral withdrawal right; client bears costs) in support.
- The Supreme Court of Texas granted review, addressing whether Lopez proved defenses to arbitration (unconscionability, public policy, illusory promise) and whether any ethical‑disclosure rule renders the clause unenforceable.
- The Court reversed the court of appeals: it held Lopez failed to prove the clause was substantively unconscionable, that public policy does not automatically require attorneys to explain arbitration clauses to prospective clients as a matter of law, and that the clause was not illusory.
Issues
| Issue | Plaintiff's Argument (Lopez) | Defendant's Argument (Royston, Rayzor) | Held |
|---|---|---|---|
| Substantive unconscionability of arbitration clause | Clause is grossly one‑sided: firm excepted fee claims while forcing Lopez to arbitrate his claims | Clause binds both parties to arbitrate covered claims; excluding certain disputes does not make clause unconscionable | Court: Lopez failed to prove substantive unconscionability; exception for fee claims alone does not invalidate clause |
| Public policy / ethical disclosure to prospective client | Attorney must explain arbitration’s advantages/disadvantages to prospective clients; failure makes clause unenforceable | Disciplinary Rules and ethics opinions are advisory; Legislature’s arbitration policy governs enforceability | Court: No judicially imposed public‑policy rule requiring mandatory disclosure to prospective clients; clause not unenforceable on public policy grounds |
| Illusory promise | Clause is illusory because firm can realistically avoid arbitration of fee claims while Lopez must arbitrate his claims | Clause is supported by consideration from the underlying contract and does not permit unilateral escape or modification of arbitration obligation for covered claims | Court: Clause not illusory; mutual obligation and underlying contract supply consideration |
| Burden of proof / evidentiary showing at hearing | Lopez argued he need not present evidence beyond the contract language to prevail | Firm argued party opposing arbitration bears burden to prove defenses; trial record lacked any evidence beyond contract | Court: Opponent bears burden to prove defenses; Lopez failed to present evidence sufficient to avoid arbitration |
Key Cases Cited
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (party opposing arbitration must prove a defense; arbitration strongly favored)
- In re Poly‑Am., L.P., 262 S.W.3d 337 (Tex. 2008) (defenses to arbitration are matters for courts; burden on party resisting arbitration)
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (challenges to arbitration must be directed at arbitration clause itself; exclusion of some claims does not automatically render clause unconscionable)
- In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002) (courts may consider both procedural and substantive unconscionability)
- Hoover Slovacek, L.L.P. v. Walton, 206 S.W.3d 557 (Tex. 2006) (attorney‑client contracts receive special scrutiny; fee provisions can implicate public policy)
- In re McKinney, 167 S.W.3d 833 (Tex. 2005) (absent fraud, signatory bound by contract terms even if not read)
- In re 24R, Inc., 324 S.W.3d 564 (Tex. 2010) (illusory promises lack consideration and are unenforceable)
- In re AdvancePCS Health, L.P., 172 S.W.3d 603 (Tex. 2005) (arbitration clause within broader contract may be supported by consideration from the underlying agreement)