Lead Opinion
EN BANC MAJORITY OPINION
Mike Hall Chevrolet, Inc. d/b/a Champion Chevrolet (Champion) brings this interlocutory appeal from the trial court’s order denying its motion to compel arbitration pursuant to the Federal Arbitration Act (FAA). See Tex. Civ. Prac. & Rem. Code § 51.016 (providing that matters subject to the FAA may be appealed under the same circumstances that an appeal from a federal court order is permitted by 9 U.S.C. § 16). In a single broad issue, Champion asserts the trial court erred in denying arbitration because there is a valid arbitration agreement and the claims asserted in the underlying suit are within its scope.
We grant Champion’s motion for en banc reconsideration, withdraw the majority and dissenting opinions issued September 4, 2014, and issue en banc majority and dissenting opinions in their stead.
I. FACTUAL AND PROCEDURAL BACKGROUND
On August 13, 2007, Champion sold a used 2003 Chevrolet Trailblazer to Rosa Elvia Guerrero. Champion alleges that in connection with the purchase, Guerrero executed a Buyer’s Order and Invoice, Retail Installment Contract, Security Agreement, and Arbitration Agreement. The Arbitration Agreement provides in relevant part:
This Arbitration Agreement (“Agreement”) applies to Customer(s) (“you”) who is/are in the process of: (1) purchasing or leasing a vehicle(s) including any negotiations or application(s) for credit or other dealings or interactions with the Dealership (hereinafter including its employees, agents, successors, assigns, subsidiaries, parents and affiliates); (2) servicing any vehicle(s) with the Dealership; or (3) reviewing, negotiating or executing any documents or agreements during the course of interactions with the Dealership (collectively, “Customer(s)/Dealership Dealings”). You and the Dealership agree that arbitration will be the sole method of resolv*698 ing any claim, dispute, or controversy (collectively, “Claims”) that either Party has arising from Customer(s)/Dealership Dealings. Such Claims include, but are not limited to, the following: (1) Claims in contract, tort, regulatory, statutory, equitable, or otherwise; (2) Claims relating to any representations, promises, undertakings, warranties, covenants or service; (3) Claims regarding the interpretation, scope, or validity of this Agreement, or arbitrability of any issue; (4) Claims between you and Dealership; and (5) Claims arising out of or relating to your application for credit, this Agreement and/or any and all documents executed, presented or negotiated during Customer(s)/Dealership Dealings, or any resulting transaction, service, or relationship, including that with the Dealership, or any relationship with third parties who do not sign this Agreement that arises out of the Customer(s)/Dealership Dealings.
The Retail Installment Sales Contract contains no arbitration clause, but it has a merger clause stating: “This contract contains the entire agreement between you and us relating to the sale and financing of the vehicle.” Similarly, the Security Agreement does not contain an arbitration clause, but it also has a merger clause, which states:
Entire Agreement., This Security Agreement embodies the entire agreement and understanding of Secured Party relating to the subject matter hereof and supersedes all prior representations, agreements and understandings, oral or written, relating to such subject matter.
The Buyer’s Order addresses arbitration:
Any controversy or claim arising out of or relating to this purchase agreement or the breach thereof shall be settled by binding arbitration in accordance with the commercial arbitration rules of the American arbitration association [sic]. Any controversy or claim subject to this arbitration provision shall be decided by one arbitrator, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Any arbitration proceeding shall be conducted in the city and state where the vehicle purchased [sic ] hereunder from the company.
It is alleged that Champion installed used tires on the vehicle as part of a “wheel swap.” It is also alleged that Champion serviced the vehicle on several occasions after Guerrero’s purchase. Guerrero and her minor son, Ruben Dominguez, died in an accident on March 23, 2009, which was allegedly caused by a failed tire on the vehicle. Guerrero’s daughter, Ariana Dominguez, and two other passengers in Guerrero’s vehicle, a friend and a niece, survived but were injured. Guerrero’s vehicle crossed into oncoming; traffic and collided with other vehicles, killing one of the drivers.
The underlying case began as the administration of Guerrero’s estate. Another daughter, Alexandra Deike, was appointed to serve as Administratrix of her mother’s estate. Ariana Dominguez was appointed to serve as Administratrix the estate of her brother, Ruben. On January 31, 2011, Alexandra Deike, individually and on behalf of the estate of her mother, Ariana Dominguez, individually and on behalf of the estate of her brother, and Gregorio Dominguez, Ruben’s father, (collectively the Guerrero parties) filed wrongful death, survival, personal injury, and product liability claims in the probate action against Michelin North America, Inc., the tire manufacturer, and a tire service company, who is no longer a party. Guerrero’s parents (the parents) intervened, adding wrongful death claims against the tire
Champion filed its Motion to Compel Arbitration and for Stay or Dismissal of Litigation on May 16, 2012. It originally sought to compel arbitration with only the Guerrero parties; no other parties were included in Champion’s motion. After a hearing on June 26, 2012, the trial court ordered the parties to engage in discovery on the arbitration issue.
On February 5, 2013, Champion filed a Plea to the Jurisdiction and Amended Motion to Compel Arbitration. The amended motion expressly sought to compel arbitration of only the survival actions regarding Rosa Guerrero and Ruben Dominguez. In the jurisdictional plea, Champion sought dismissal of the personal injury and wrongful death claims, asserting the probate court lacked jurisdiction. The Guerrero parties responded in opposition. The trial court conducted a hearing on Champion’s motion on February 28, 2013. The court denied the plea to the jurisdiction, but it advised the parties it would defer its ruling on the amended motion to compel arbitration until March 8, 2013, pending receipt of additional briefing. On March 6, 2013, Champion filed a Supplement to its Amended Motion to Compel Arbitration to add “all claims which are asserted by, or derivative of, Rosa Guerrero, Ruben Dominguez, Ariana Dominguez, as requested in the Original Motion” to compel arbitration. The Guerrero parties, the parents, and the passengers responded. After a hearing on June 25, 2013, the trial court signed an order denying the motion to compel arbitration without stating a basis for the ruling. Champion filed a timely notice of interlocutory appeal.
II. GOVERNING LAW AND STANDARD OF REVIEW
Arbitration cannot be ordered in the absence of an agreement to arbitrate. See Freis v. Canales,
Federal law provides that arbitration agreements are governed by contract law and are subject to contract defenses. See In re Poly-Am., L.P.,
Under Texas law, the trial court conducts a summary proceeding to determine the applicability of an arbitration clause. In re Weekley Homes, L.P.,
Whether an arbitration agreement is enforceable is a question of law which is reviewed do novo. J.M. Davidson, Inc.,
When reviewing the denial of a motion to compel arbitration, if the court’s factual findings are in dispute, we review the court’s ruling under a legal sufficiency or “no evidence” standard of review. Id. In conducting a legal sufficiency review, we credit favorable evidence if a reasonable fact finder could do so and disregard contrary evidence unless a reasonable fact finder could not do so. City of Keller v. Wilson,
The record must be construed in a light favorable to supporting the trial court’s ruling. See J.M. Davidson, Inc.,
III. DISCUSSION
A. Champion’s Issues
Although Champion raises a single broad issue asserting the trial court erred in denying arbitration, it includes several sub-issues. Champion first argues the trial court erred by denying its motion to compel arbitration because Guerrero and Champion agreed to submit disputes such as the underlying action to arbitration. Champion argues courts must resolve any doubts about an agreement to arbitrate in favor of arbitration, citing Cantella & Co. v. Goodwin,
Generally, an arbitration agreement is enforced only between signatories to the agreement. Van Zanten v. Energy Transfer Ptnrs., L.P.,
Champion also argues the individual claims of the Guerrero parties, the parents, and the passengers are within the scope of the agreement because they seek to derive a benefit from the sales contract by alleging claims related to the sale and service of the vehicle. See In re Kellogg Brown & Root, Inc.,
Finally, Champion asserts it has not waived its right to arbitrate this dispute. See Perry Homes v. Cull,
B. The Responses in Opposition to Arbitration
The Guerrero parties allege: (1) the court’s general order must be affirmed because Champion failed to negate every legal theory supported by the record; (2) Champion failed to offer admissible evidence to prove a valid arbitration agreement exists and that the underlying dispute is within its scope, and the trial court properly refused to give weight to the unauthenticated documents containing hearsay attached to Champion’s amended motion to compel arbitration; (3) nonsig-natories are not bound because the arbitration documents do not mention heirs or others with claims based on wrongful death; and (4) the merger clauses in the contracts that do not contain arbitration agreements require that the court give no effect to the arbitration agreement and the arbitration language in the Buyer’s Order.
The passengers filed a response to Champion’s amended motion to compel arbitration in which they assert that their claims do not fall within the scope of the arbitration clauses. They also argue that Champion waived its right to arbitration by seeking to dismiss plaintiffs’ claims and substantially invoking the judicial process.
C. Did Champion establish the existence of a valid arbitration agreement?
On appeal, Champion alleges that Guerrero executed several documents as part of a single transaction when she purchased the vehicle: (1) Buyer’s Order and Invoice; (2) Motor Vehicle Retail Installment Sales Contract; (3) Security Agreement; and (4) Arbitration Agreement. The general rule is that separate documents executed at the same time, for the same purpose, and in the course of the
1. Burden of Proof
When an entity seeks to compel arbitration, it must first establish its right to that contract remedy. See Mohamed v. Auto Nation USA Corp.,
The party moving to compel arbitration has the initial burden of proof to establish the arbitration agreement’s existence and to show that the claims asserted against it fell within the arbitration agreement’s scope. See J.M. Davidson, Inc.,
Although public policy favors arbitration, arbitration is also a creature of contract. In re Bunzl USA, Inc.,
In sum, a prerequisite to compelling arbitration is to prove the existence and execution of the arbitration agreement. See, e.g., Citigroup Global Markets, Inc. v. Brown,
2. Evidence
The evidentiary, standards for a motion to compel arbitration are the same as for a motion for summary judgment. In re Jebbia,
Champion attached to its original motion to compel arbitration a copy of the Arbitration Agreement that it alleges is part of the sales documents signed when Guerrero purchased the vehicle. The copy was referred to in the motion as a “true and correct” copy, but no affidavit or other type of verification was included with the motion. In their response, the Guerrero parties objected to the attachment as inadmissible. Champion later filed an amended motion to compel arbitration, attaching all four sales documents, but it did not include an affidavit or other authentication. The Guerrero parties again objected to the lack of authentication and that no proof of execution was provided. “Simply attaching a document to a pleading does not make the document admissible as evidence, dispense with proper foundational evidentiary requirements, or relieve a litigant of complying with other admissibility requirements.” Gruber v. CACV of Colorado, LLC, No. 05-07-00379-CV,
Champion asserts that the Arbitration Agreement was properly received into evidence because the Guerrero parties failed to challenge it by a sworn pleading or affidavit, citing Rule of Civil Procedure 93(7), which provides that a written contract is received into evidence unless a party files a verified pleading denying the execution of the document. Tex. R. Civ. P. 93 (7). To support its position, Champion cites Gutierrez v. Rodriguez,
The trial court may summarily decide whether to compel arbitration on the basis of affidavits, pleadings, discovery, and stipulations if the material facts are not controverted. See Texas La Fiesta Auto Sales, LLC v. Belk,
Because Champion has not authenticated the Arbitration Agreement or any of the sales documents it attached to its motions to compel arbitration, there is no competent evidence of an agreement to arbitrate. See In re Universal Fin. Consulting Group, Inc., No. 14-08-00226-CV,
Accordingly, we conclude the trial court did not abuse its discretion in denying the motion to compel arbitration.
3. Was there a judicial admission?
In their response in opposition to arbitration, the Guerrero parties stated, “In connection with the purchase, Rosa Guerrero apparently signed various documents.” In addition, counsel stated, “The ones that were signed in August were signed at roughly the same time, evidently. We still, of course, don’t have evidence to show that. But, evidently, in looking at their dates, they seem to be signed at the same time.” Based on these statements, Champion asserts the Guererro parties’ counsel judicially admitted the existence of an arbitration agreement signed by Guerrero.
A judicial admission results when a party makes a statement of fact which conclusively disproves a right of recovery or a defense. See Brown v. Lanier Worldwide, Inc.,
We conclude counsel’s statements in this case are not “deliberate, clear, and unequivocal.” These statements do not rise to the level required to constitute judicial admissions. See Horizon/CMS Healthcare Corp. v. Auld,
We hold that the Guerrero parties did not judicially admit that Guerrero executed an agreement requiring arbitration of this dispute.
4. Was a Ruling Required on the Objection to Champion’s Proof?
Next, Champion asserts the Guerrero parties have waived any objection to the admissibility of the Arbitration Agreement and other contract documents attached to its motion to compel arbitration. Although the Guerrero parties objected in the trial court to the admissibility of the contract documents based on the lack of authentication, the record contains no ruling on their objection.
As we have previously recognized, we apply the same evidentiary standards for a motion to compel arbitration as for a motion for summary judgment. See TMI, Inc. v. Brooks,
However, “[a] complete absence of authentication is a defect of substance that is not waived by a party failing to object and may be urged for the first time on appeal.” Blanche v. First Nationwide Mfg. Corp.,
The Texas Supreme Court has recognized that it has “explicitly allowed parties to deviate” from the preservation requirements in limited circumstances. See Mansions,
An examination of the cases that Champion cites in support of its contention that a ruling on the objection was required to preserve error reveals that the defects at issue were actually defects in form, not substance.
The court has granted en banc reconsideration to address an apparent conflict with Courtland Building Co. v. Jalal Family P’ship,
The Property Owners [the Jalals and the Family Partnership] did not object to Courtland’s failure to authenticate the exhibits offered in support of motion to compel arbitration, thereby waiving such objections to form. See Commint Tech. Servs., Inc. v. Quickel,314 S.W.3d 646 ,*708 651 (Tex.App.-Houston [14th Dist.] 2010, no pet.).
This statement does not address the issue before this Court in the present case because, in Courtland, there was no dispute that there was a valid arbitration agreement and authentication of the arbitration agreement was not at issue.
The Texas Supreme Court has held that the complete absence of authenticating evidence is a defect in substance that can be raised for the first time on appeal. See Mansions in the Forest, L.P.,
We hold the Guerrero parties did not waive their objection to the authentication and admissibility of the documents Champion offered to show the existence of an agreement to arbitrate.
IV. CONCLUSION
We. conclude the trial court did not abuse its discretion in denying Champion’s motion to compel arbitration because Champion failed to meet its burden to establish the existence of an arbitration agreement. See In re Bunzl USA, Inc.,
Notes
. The notice of appeal was filed by Mike Hall Chevrolet, Inc. d/b/a Champion Chevrolet. In its brief, Champion asserts that Mike Hall Chevrolet, Inc. changed its assumed name from Champion Chevrolet Highway 6 to Auto-Nation Chevrolet Highway 6 during the pen-dency of the underlying suit. We refer to appellant as Champion in this opinion.
. We express no opinion on Champion's argument that factually intertwined claims must be compelled to arbitration in this case.
. Although the Guerrero parties also included a hearsay objection to the attachments, we treat their objection as one to the lack of authentication because the substance of the objection was that an unauthenticated document is hearsay. See, e.g., Tex. R. Evid. 803 (6); 902(10) (providing documents authenticated by a business records affidavit are exceptions to hearsay).
. We note that the preservation rules in summary judgment practice have sometimes caused confusion. See Mayo, No. 14-07-00491-CV,
. Every court of appeals that has considered this issue has held that the complete absence of authenticating evidence is a defect in substance. See Smith v. DeLooze, No. 13—14—00092—CV,
Dissenting Opinion
en banc dissenting.
A majority of the en banc court affirms the denial of a motion to compel arbitration on a single basis — that the failure of the movant to authenticate the attached copy of the arbitration agreement is a defect in substance that may be raised for the first time on appeal. In reaching this result, the en banc court applies an exception to the waiver-by-failure-to-object doctrine in an authentication context, contrary to the key precedent from the Supreme Court of Texas. Because the en banc court’s decision conflicts with the high court’s precedent, I respectfully dissent.
The problem with the en banc court’s exception is that it is at odds with the most recent pronouncement of the Supreme Court of Texas regarding the necessity of preserving error in the trial court as to objections to summary-judgment evidence.
Appellant/defendant Mike Hall Chevrolet, Inc. d/b/a Champion Chevrolet (“Champion”) filed a motion to compel arbitration based on an arbitration agreement between Rosa Guerrero and Champion. Champion attached to its motion a copy of the agreement reflecting signatures by Guerrero and by a Champion representative. In its motion, Champion asserted that Guerrero signed this agreement incident to the purchase of the vehicle in question. Champion also stated that a true and correct copy of the agreement was attached as Exhibit “A” to the motion to .compel arbitration. Though the exhibit contained the agreement, it did not contain an affidavit or any sworn statements. Thus, Champion failed to authenticate this exhibit to Champion’s motion to compel arbitration.
Even if all claimants objected to this defect in the trial court, they did not preserve error because none of them secured a ruling.
In Courtland Building Company v. Jalal Family Partnership, this court reviewed a trial court’s order denying a motion to compel arbitration.
Recharting the Course: Preservation-of-Error Analysis
The Mansions case maps the preservation-of-error analysis. In this 2012 opinion, the Supreme Court of Texas notes that, though an affidavit need not contain a jurat, if a purported affiant does not swear to the statements in a purported affidavit, then the written statement is unsworn and “no affidavit at all.”
The reasoning of the Mansions court as to the necessity of a trial-court objection and adverse ruling signals a shift because it contradicts the reasoning the high court employed four decades earlier in Perkins v. Crittenden as to why no preservation of error was required in the trial court.
Declining to apply Perkins, the Mansions court characterized the Perkins holding as one of the “limited circumstances” in which the high court has allowed. parties to deviate from the general preservation-of-error requirement.
A promissory nóte is not like other documents. It is a special piece of paper — a negotiable instrument that can be transferred from one holder to another and ultimately exchanged for money. Because promissory notes are governed by a unique set of rules, it is not surprising that the Supreme Court of Texas would recognize an exception to the general preservation-of-error rule for promissory notes. An arbitration agreement is not a promissory note. Perkins does not apply to arbitration agreements. It is not on point.
Because today’s case does not involve the proffer of an unsworn or unverified promissory note as summary-judgment evidence, under the Mansions precedent, the Perkins case offers no support for the en banc court’s holding
Applying the Mansions Framework
Significantly, the Mansions court did not adopt or follow the defect-of-form/defect-of-substance dichotomy the en banc majority invokes today.
To get the right answer, we must ask the right question: Does the normal preservation-of-error rule apply or does today’s case present a limited circumstance in which it does not apply? The normal rule applies. Instead of treating the arbitration agreement like a promissory note in a “limited circumstances” case, the en banc court should conclude that no exception to the normal error-preservation rule is justified for this deficiency. Therefore, the appellees waived the defect by their failure to preserve error in the trial court.
The rule requiring error preservation is grounded in principles of fairness and efficiency, under which an appellate court ought not entertain a complaint that was not ruled on by the trial court.
Conclusion
The en banc majority concludes that, in addition to being bound by Mansions, this court is bound by the decisions of prior panels of this court to hold that a complete failure to authenticate an exhibit is a defect in substance that may be raised for the first time on appeal.
. As pointed out by the en banc majority, the same rules apply to objections to evidence offered in a summary proceeding on a motion to compel arbitration.
.
. See id. at 317.
. See Courtland Building Co. v. Jalal Family P’ship,
. See ante at pp. 699-709.
. The majority agrees that the trial court did not rule on any such objections. See ante at pp. 705-06.
. See Mansions in the Forest L.P.,
. See Courtland Building Co.,
. See id. at 270-71 & n. 4.
. See id.
. See id. at 277.
. See ante at pp. 702-09.
. Mansions in the Forest L.P.,
. See id.
. See id. at 316-18.
. Compare id. at 316-18, with Perkins v. Crittenden,
. See Perkins,
. See id. at 566-68.
. See id. at 568.
. See Mansions in the Forest, L.P.,
. See Mansions in the Forest, L.P.,
. Id.
. See id.
. See ante at pp. 706-09.
. See Mansions in the Forest, L.P.,
. See Mansions in the Forest, L.P.,
. See id.', Timothy Patton, Summary Judgments in Texas § 6.10[l][d] (3d ed.2012).
. See Mansions in the Forest, L.P.,
. See Mansions in the Forest, L.P.,
. See In re B.L.D.,
. See ante at pp. 707-08.
. See Mansions in the Forest, L.P.,
. See Glassman v. Goodfriend,
Though the en banc majority is correct that many intermediate courts of appeals have reached the same conclusion as the en banc majority does today, the en banc court is not bound by these decisions. Most of these cases were decided before Mansions and the intermediate courts in the post-Mansions cases do not address the effect of the Mansions court’s analysis or invoke the Mansions court’s preservation-of-error framework. Moreover, in Mansions the Supreme Court of Texas noted that its decision conflicted with the decisions of eight different intermediate courts of appeals (including the Fourteenth Court of Appeals) and did not cite any court of appeals case that supported its analysis. See Mansions in the Forest, L.P.,
Dissenting Opinion
dissenting
This case is a classic example where a rule of procedure would clarify the procedures for motions to compel arbitration and prevent unnecessary appeals. It also showcases the unnecessary expense involved in cases where we do not stick to the rule that objections should be made in the trial court and that the trial court should rule on the objections.
Motions to compel arbitration are governed by section 171.021 of the Texas Civil Practice and Remedies Code. This section, entitled “Proceeding to Compel Arbitration,” provides in part:
(a) A court shall order the parties to arbitrate on application of a party showing:
(1) an agreement to arbitrate; and
(2) the opposing party’s refusal to arbitrate.
(b) If a party opposing an application made under Subsection (a) denies the existence of the agreement, the court shall summarily determine that issue....
See Tex. Crv. PRAC. & Rem. Code Ann. § 171.021 (West 2011).
This would appear to be a relatively straightforward proceeding, requiring the party opposing arbitration to deny the arbitration agreement’s existence. Guerrero did not. Yet today our court denies relief to Champion for the sole reason that Champion failed to properly authenticate
Relying on summary-judgment eviden-tiary procedures, the majority concludes that Champion failed to properly prove up the arbitration agreements. If our record consisted of only Champion’s amended motion to compel arbitration, I might agree. But it contains much more. Guerrero deposed several Champion witnesses — including Perng, the custodian of Champion’s records. Perng’s deposition was attached to one of Guerrero’s responses. Perng testified that she brought the original purchase and warranty files to the deposition; that the files contained all of the records related to the Guerrero sale and any original documents signed by Guerrero; and that the files were kept contemporaneously in the ordinary course of business and as an ordinary practice. She also testified that these files contained an Arbitration Agreement, Buyer’s Order and Invoice, Motor Vehicle Retail Installment Sales Contract, and Security Agreement, and she explained details regarding each document. Guerrero’s attorney saw the original documents with Guerrero’s signature. That is why — in good faith— he could not argue in his pleadings or at the hearing that she did not sign the agreements; it is why he admitted that she did sign “various documents”; and it is why he specifically admits that she signed an agreement without an arbitration clause and with a merger clause.
Under Texas Rule of Evidence 901, “The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.”
Justice Wise authored the En Banc Majority Opinion, in which Justices Boyce, Jamison, Donovan, and Brown joined. Chief Justice Frost authored an En Banc Dissenting Opinion. Justice Christopher authored an En Banc Dissenting Opinion, in which Justices McCally and Busby joined.
. In fact, that is what happened after we issued our original panel opinion in this case.
. During the pendency of this appeal, Rule 901 was revised to read as follows: "To satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.” See Tex. Sup.Ct. Mise. Dkt. No. 15-9048 (Mar. 12, 2015).