Seven Hills Commercial, LLC v. Mirabal Custom Homes, Inc.
442 S.W.3d 706
| Tex. App. | 2014Background
- Consolidated interlocutory appeal about arbitration under Seven Hills Operating Agreement.
- Arbitration clause requires arbitration for disputes including scope and applicability determinations.
- Question whether non-signatories or agents are bound by arbitration.
- Court held arbitrator has primary role to determine arbitrability under the clause.
- Court reversed some orders compelling arbitration and remanded for arbitration-related proceedings.
- Some claims (D&G and Guion against PREG, Post-Investment, and Post) not compelled to arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who has primary authority to decide arbitrability | Seven Hills and agents seek arbitration; arbitrator should decide scope | Arbitrator or court? disputes about scope must be decided per agreement | Arbitrator has primary responsibility to decide arbitrability |
| MCHI’s claim against Catenary, PREG, and Post arbitration eligibility | Claims arose during original and operative agreements; should arbitrate | Pre-existing acts before agreement not arbitrable; focus on scope | Claim is within arbitrability due to agency/signatory scope |
| D&G and Guion claims arbitration status | Claims relate to employment/relationship tied to operating agreements | Claims relate to separate agreement; not within arbitration scope | Arbitration not compelled for D&G/Guion claims against PREG, Post-Investment, and Post |
| Seven Hills’ status as non-signatory pursuing arbitration | Operating Agreement master agreement; Seven Hills may enforce arbitration | Sept Hills not party to agreement; enforceability uncertain | Seven Hills can compel arbitration as non-signatory under master agreement principles |
| Whether prerequisites to arbitration (negotiation/mediation) bar arbitration | Conditions precedent not clearly required for all parties; arbitrator decides | Procedural prerequisites must be met; court may deny arbitration | Arbitrator has primary responsibility to decide if prerequisites were met |
Key Cases Cited
- In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (presence of valid arbitration agreement governs arbitrability as gateway matter)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (burden-shifting framework for compelling arbitration)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (clear and unmistakable evidence to delegate arbitrability to arbitrators)
- Ladymon v. Roe, 318 S.W.3d 502 (Tex. App.—Dallas 2010) (courts favor arbitration where scope is in dispute; depends on valid agreement)
- n re Labatt Food Servs., L.P., 279 S.W.3d 640 (Tex. 2009) (whether arbitrator may decide arbitrability; gateway issue)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (waiver and invocation of arbitration rights analyzed case-by-case)