578 S.W.3d 613
Tex. App.2019Background
- Contours Community Development Corporation executed a promissory Note (signed by Carter as Executive Director) and a First Modification with Amegy Bank; both documents include a jury-trial waiver and an arbitration clause.
- The clauses state disputes will be decided by a judge without a jury; if a court determines the jury-waiver is unenforceable, either party may move for an "Arbitration Order" within 30 days to compel arbitration and stay litigation.
- The arbitration clause also provides that arbitration applies "only if a jury trial waiver is not permitted by applicable law or ruling by a court," and that the validity/scope of the arbitration provision "may be determined only by a court."
- Carter (pro se, a non‑signatory in his individual capacity) filed a JAMS arbitration demand against Amegy; JAMS would not dismiss and Amegy sued for declaratory relief and to stay the arbitration.
- The trial court granted Amegy summary judgment and issued seven declarations, including that arbitration cannot be commenced unless a court finds the jury-waiver unenforceable and that Carter cannot force Amegy to arbitrate.
- The court of appeals modified the judgment to delete two declarations (that arbitration cannot be commenced absent a court determination and that an "Arbitration Order" is required) but otherwise affirmed: the court held no agreement to arbitrate exists now because neither condition triggering arbitration has occurred.
Issues
| Issue | Plaintiff's Argument (Carter) | Defendant's Argument (Amegy) | Held |
|---|---|---|---|
| Whether arbitration may be compelled now | The clause does not require a court determination or arbitration order before initiating arbitration; Carter can commence arbitration under JAMS | Arbitration is not authorized now because the agreement conditions arbitration on (a) jury-waiver being not permitted by law or (b) a court ruling so; neither has occurred | Held for Amegy: no arbitration now; Carter cannot force arbitration because neither triggering condition exists |
| Whether a court order compelling arbitration is a prerequisite | Arbitration may be commenced without an "Arbitration Order" when applicable law already disallows jury waivers; the parties’ direction to use JAMS suffices | The parties' references to an "Arbitration Order" and 30‑day deadline mean arbitration must await court action | Held for Carter in part: trial court erred to declare arbitration cannot be commenced until an Arbitration Order exists — arbitration may proceed in some circumstances without such an order |
| Who decides arbitrability/validity of arbitration clause | Arbitrator should decide threshold arbitrability/contract validity issues; general rule favors arbitrator deciding contract validity attacks | Agreement expressly provides that validity, enforceability, meaning, and scope of the arbitration provision "may be determined only by a court" | Held for Amegy: the parties agreed that only a court may determine validity/enforceability/scope of the arbitration clause; trial court did not err on this point |
| Whether non‑signatory Carter can enforce arbitration | As an obligated party to related instruments and because Amegy refuses to arbitrate, Carter may invoke arbitration | Amegy disputes entitlement because arbitration is not currently triggered under the contracts | Held: Court assumed without deciding Carter might be able to enforce arbitration, but even so he cannot force arbitration now because triggering conditions are unmet |
Key Cases Cited
- In re D. Wilson Const. Co., 196 S.W.3d 774 (Tex. 2006) (party seeking arbitration must show a valid agreement and that claims fall within its scope)
- In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) (Texas law permits jury‑trial waivers in arbitration contexts)
- Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896 (Tex. 1995) (doubts about arbitrability should be resolved in favor of arbitration)
- Osornia v. AmeriMex Motor & Controls, Inc., 367 S.W.3d 707 (Tex. App.—Houston [14th Dist.] 2012) (broad arbitration clause presumption and burden to show exclusion)
- Morgan v. Bronze Queen Mngmt. Co., LLC, 474 S.W.3d 701 (Tex. App.—Houston [14th Dist.] 2014) (construing similar conditional arbitration language)
- Jody James Farms, JV v. Altman Group, Inc., 547 S.W.3d 624 (Tex. 2018) (courts presume parties intend courts, not arbitrators, to decide questions about an arbitration clause’s validity and scope)
- Ewing v. Act‑Catastrophe Texas, L.C., 375 S.W.3d 545 (Tex. App.—Houston [14th Dist.] 2012) (arbitration may proceed and awards be enforced without a prior order compelling arbitration)