474 S.W.3d 701
Tex. App.2014Background
- Morgan financed multiple real estate projects with Amegy Bank over several years; Playa Vista note and guaranty were involved in a 2007 transaction and a May 2010 modification; the modification required arbitration under an Arbitration Agreement and Jury and Class Action Waiver; Amegy sued Morgan in August 2010 for breach of guaranty on a different note and Morgan and Amegy arbitrated that dispute with an award in January 2012; Amegy’s claim related to the Playa guaranty was nonsuited in arbitration; Bronze Queen sued Morgan for breach of the Playa guaranty in February 2013 and Morgan moved to compel arbitration, which the trial court denied; the appellate court affirmatively held there was no valid arbitration agreement governing the Playa dispute and no waiver or implied agreement, thus arbitration was not required.
- There was an arbitration agreement framework in the Modification and the Arbitration Agreement, but its scope and enforceability are contested; the Playa guaranty claim was not subject to arbitration under the Modification.
- The Modification and the Agreement expressly exclude arbitration for certain matters, including the validity or scope of the arbitration provision; the trial court’s denial of Morgan’s motion to compel arbitration was based on the lack of an agreement to arbitrate the Playa dispute.
- The record shows the Playa claim was not submitted to arbitration on the merits and there was no evidence of an implied contract to arbitrate by acceptance through conduct; waiver arguments fail due to lack of substantial invocation and prejudice.
- Texas law governs arbitrability as a gateway issue, with de novo review of contract interpretation under state law; the federal FAA does not override state contract law on whether a valid arbitration agreement exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there an agreement to arbitrate the Playa guaranty claim by submission and withdrawal? | Morgan says Amegy’s amended pleadings to include the Playa claim created an agreement. | Bronze Queen says adding a claim to arbitration pleadings does not create an agreement. | No implied agreement; no binding arbitration created. |
| Did Amegy waive the right to arbitrate by pursuing arbitration on the Playa claim for months? | Amegy’s arbitration submission and lengthy pursuit show waiver by participation. | There was no actual submission of the Playa claim to arbitration on the merits. | No waiver; no substantial invocation of arbitration. |
| Do the Modification and Agreement require arbitration of the Playa dispute? | Modification prioritizes arbitration for disputes arising from the note. | Agreement exempts certain disputes, including matters affecting jury trial and validity of arbitration provision; modification language excludes arbitration here. | Modification does not require arbitration; dispute must be in court. |
Key Cases Cited
- In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (orig. proceeding; standards for enforceability of arbitration agreements; de novo review)
- In re Rubiola, 334 S.W.3d 220 (Tex. 2011) (valid arbitration agreement exists; governing law; presumption favors arbitration)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (review of legal determinations in arbitration gateway decisions)
- In re Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005) (gateway issue; summary determinations to arbitrate)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (waiver of arbitration requires prejudice; substantial invocation standard)