Lead Opinion
OPINION
Southwinds Express Construction, LLC challenges the trial court’s judgment confirming an arbitration award in favor of D.H. Griffin of Texas, Inc. Southwinds contends that the trial court erred in confirming the arbitrator’s award because (1) the arbitration agreement between the parties did not cover the claims asserted
.Background
The Lemoine Company contracted with Griffin in 2013 to serve as the- demolition subcontractor on a construction, renovation, and demolition project for a hospital in Louisiana. Griffin, in turn, requested bids from Southwinds for the removal of construction and demolition debris from the project site.
Southwinds proposed that it would perform (1) “concrete excavation and haul off’ for free; (2) brick haul-off for $40 per truckload; and (3) construction and demo-litioh (“C&D”) haul-off for $12 per cubic yard plus disposal fees. Griffin accepted Southwinds’s proposal concerning concrete haul-off and brick haul-off, but declined the proposed terms for C&D haul-off.
Griffin and Southwinds entered into a Subcontractor Agreement reflecting their agreement on September 26, 2013. This agreement included a provision requiring arbitration of “a claim” made by either party.
The arbitration provision in paragraph 3 of the Subcontractor Agreement states as follows:
In the event that a claim is not resolved through the negotiations of the parties, claim resolution will be resolved through mediation unless, in the sole discretion of [Griffin], [Griffin] believes mediation would be a useless exercise in which case [Griffin], unilaterally, may escalate the claims process to binding arbitration at any time. If mediation fails, both parties agree that the claim will be resolved pursuant to binding arbitration. Any mediation or arbitration will be conducted under the rules of the American Arbitration Association’s (“AAA”) Construction Industry Dispute Resolution Procedures (including Mediation and Arbitration Rules) in effect at the time of the execution of this Agreement; provided, however, that where there is a conflict, if any, between those rules and this Agreement, this Agreement governs.
This written agreement included an attached “Exhibit A” that identified the scope of work under the agreement as follows:
Southwinds Express Construction LLC will remove and haul off concrete slabs, foundations and parking at the [hospital] site in Lafayette, Louisiana for No Charge. Southwinds Express Construction LLC will haul brick and concrete generated from the demolition operation for Forty Dollars ($40.00) per load.
Weeks later, Griffin and Southwinds orally agreed that Southwinds would perform C&D haul-off for $9 per cubic yard including disposal fees.
Griffin contends that Southwinds stopped paying landfill disposal fees in November and December 2013, and that the landfill owner consequently barred South-winds from use of the landfill. Griffin contends that with no landfill available for debris disposal, Southwinds abandoned work on the project and left Griffin with landfill fee arrearages totaling $67,000. Griffin contends that it was required to pay the landfill fees because the landfill operator threatened to place a lien on the project property if the fees were not paid. Griffin also contends that it had to hire third parties to complete the removal of construction and demolition debris.
Griffin filed a demand for arbitration in March 2014. Southwinds objected to the arbitrator’s jurisdiction, contending that the arbitration provision in the written Subcontractor Agreement did not extend to any claims arising from the subsequent oral agreement to provide C&D haul-off services. The arbitrator overruled South-winds’s objection.
A two-day arbitration hearing was held in January 2015. The arbitrator issued an Award of Arbitration on March 12, 2015. In its award, the arbitrator found that the oral agreement was a modification of the Subcontractor Agreement; the oral agreement caused the C&D haul-off to be included within the scope of work of the Subcontractor Agreement; and any claim relating to the C&D haul-off therefore was a claim under the Subcontractor Agreement subject to the Subcontractor Agreement’s arbitration provision.
Concluding she had jurisdiction to consider this dispute, the arbitrator determined that Southwinds breached its agreement with Griffin. The arbitrator awarded Griffin $42,251.20 in actual damages, $36,851.08 in attorney’s fees, and $8,800 in arbitration fees and expenses; she also ordered Southwinds to release a lien it had filed against the project.
Griffin sought to have the arbitration award confirmed in district court in April 2015. After briefing and argument from the parties, the trial court signed a final judgment confirming the arbitration award on June 16, 2015. Southwinds appealed.
Standard of Review
We review a trial court’s decision to confirm or vacate an arbitration award under a de novo standard of review. D.R. Horton-Tex., Ltd. v. Bernhard,
Analysis
I. Arbitrability of the C&D Claims
Southwinds contended below that the C&D haul-off claims were not covered by a valid arbitration agreement because they were the subject of the parties’ oral agreement—which, according to Southwinds,
After the arbitrator ruled in Griffin’s favor on the merits, Griffin filed an action in district court seeking confirmation of the arbitrator’s award. Southwinds moved to vacate the award, contending the arbitrator exceeded her power by deciding matters outside the scope of her authority—namely, the C&D haul-off claims.
In its final judgment confirming the arbitrator’s award, the trial court stated:
The Court is persuaded that the agreement between the parties contemplated additional potential work such as the C&D work. Thus, this work arose out of the agreement and, consequently, the arbitration agreement contemplated additional work. Further, the issue of whether there was, in fact, an enforceable oral agreement to do the C&D work was for the arbitrator to decide, not this Court. The Court will note, though, that the agreement between the parties does NOT state that no subsequent oral agreements could be formed; only that no oral representations prior to the written agreement existed or were relied upon.
On appeal, Southwinds contends the trial court erred in determining that C&D haul-off claims fell within the scope of the Subcontractor Agreement’s arbitration provision. Griffin responds that the Subcontractor Agreement’s arbitration provision .governed at least a portion of the dispute between the parties; the arbitration provision referenced that any arbitration would be conducted pursuant to the American Arbitration Association (“AAA”) rules, which state that determinations of arbitrability shall be made by the arbitrator; and the parties therefore clearly and unmistakably agreed to submit the determination of arbitrability of the C&D haul-off claims to the arbitrator rather than the trial court.
A. Who Determines Arbitrability?
Arbitration is a matter of contract. Howsam v. Dean Witter Reynolds, Inc.,
When there is an undisputed arbitration provision in an agreement between the parties, we ordinarily look to the arbitration provision’s language to determine whether the parties “clearly and unmistakably” intended for the arbitrator to determine arbitrability or instead left that decision to the trial court. See Howsam,
Southwinds therefore challenges the existence of an agreement to arbitrate the C&D haul-off claims. As the Supreme Court of Texas has explained:
[W]here the very existence of an agreement is challenged, ordering arbitration could result in an arbitrator deciding that no agreement was ever formed. Such an outcome would be a statement that the arbitrator never had any authority to decide the issue. ... We therefore conclude that where a party attacks the very existence of an agreement, as opposed to its continued validity or enforcement, the courts must first resolve that dispute.
In re Morgan Stanley & Co.,
In Texas La Fiesta Auto Sales, LLC v. Belle,
In Valero Energy Corp. v. Teco Pipeline Co.,
These cases inform our analysis here. Similar to the argument advanced in Valero, Southwinds contends the C&D haul-off claims arise from a separate agreement. Consistent with Valero, we conclude that the arbitrability of the C&D haul-off claim is a matter for trial court determination because those claims allegedly stem from a separate agreement. See id. We reach this conclusion because, as we stated in Texas La Fiesta, the trial court must determine the threshold issue of whether a valid arbitration agreement exists under circumstances like those present here. See Texas La Fiesta,
When, as in this case, the arbitrator determines arbitrability even though it is a question for the trial court, we ordinarily would remand for the trial court to consider the issue. See, e.g., Leshin,
B. Were the C&D Claims Arbitrable?
Both the arbitrator and the trial court determined that the C&D haul-off claims were governed by the Subcontractor Agreement’s arbitration provision. Despite the uniformity of result, our determination that it was the trial court’s prerogative to resolve the question of ar-bitrability is important because it determines the applicable standard of review. See id. at 511. As the court succinctly summarized in Ladymon:
The parties to this appeal disagree about a preliminary—but critical—question of law: who has the primary power to decide whether Ladymon is required to arbitrate—the arbitrator or a court? The answer determines the applicable standard of review: if the question is primarily for the arbitrator to decide, courts will review the arbitrator’s determination of that issue with .great deference, but if the question is primarily for the court to decide, courts will review the question independently or de novo.
Id.; see also McReynolds v. Elston,
.Griffin contends . that the oral agreement modified the Subcontractor Agreement, leaving intact the Subcontractor Agreement’s arbitration provision and extending its reach to encompass the C&D haul-off claims.
The trial court stated in its final judgment that “the agreement between the
Claims generally are arbitra-ble when the facts alleged “touch matters” that are covered by, have a “significant relationship” to, are “inextricably enmeshed” with, or are “factually intertwined” with the contract that contains the arbitration provision. AutoNation USA Corp. v. Leroy,
Here, we agree with the trial court that the Subcontractor Agreement contemplated additional work. The Subcontractor Agreement stated that Griffin could “at any time require deviation from” the Subcontractor Agreement, including material changes to the scope of work, by providing authorization to Southwinds.
Additionally, the Subcontractor Agreement’s broad arbitration provision covered “a claim by [Southwinds] against [Griffin]” and “a claim [filed by Griffin] against [Southwinds].” The parties did not limit the arbitration provision’s scope to claims arising out of the Subcontractor Agreement or to claims related to the Subcontractor Agreement. The parties placed no limitation on the nature of the claims be
Considering that the contract contemplated additions to the scope of work such as the C&D haul-off, and considering that the asserted claims had a significant relationship with and were factually intertwined with the contractual responsibilities identified in the Subcontractor Agreement, the trial court correctly determined that the C&D haul-off claims were governed by that agreement’s broad arbitration provision.
We also note that neither the FAA nor Texas law requires arbitration provisions to be signed if they are in writing and agreed to by the parties. In re AdvancePCS Health L.P.,
The parties here agree that, after they executed the Subcontractor Agreement, they mutually agreed that Southwinds would perform C&D haul-off services for $9 per cubic yard. To that end, Griffin sent Southwinds a new contract. The contract was identical to the original Subcontractor Agreement except that it included one additional sentence in the “Scope of Work” exhibit stating that Southwinds would perform C&D haul-off services at $9 per cubic
Based on this record, these payment terms were not essential to the agreement. See, e.g., Eastman Gas Co. v. Goodrich Petroleum Co.,
Finally, after having relied on the second written agreement in asserting its counterclaim during the arbitration proceeding, Southwinds cannot argue convincingly that the arbitration provision in that agreement is unenforceable. See In re Citgo Petroleum Corp.,
The trial court properly determined that the C&D haul-off claims were arbitrable.
II. Mediation as a Condition Precedent to Arbitration
Southwinds next contends that the trial court erred in determining that mediation was not a condition precedent to arbitration.
The Subcontractor Agreement-provides: In the event that a claim is not resolved through the negotiations of the parties, claim resolution will be resolved through*77 mediation unless, in the sole discretion of [Griffin], [Griffin] believes mediation would be a useless exercise in which case [Griffin], unilaterally, may escalate the claims process to binding arbitration at any time. If mediation fails, both parties agree that the claim will be resolved pursuant to binding arbitration.
Southwinds argues that Griffin’s “bilateral promise to adhere to a specific [dispute resolution] process is illusory and unenforceable” because Griffin “at its own option or whim ... can stop the dispute resolution process and escalate it” by skipping mediation and going straight to arbitration. According to Southwinds, “[T]he Subcontractor Agreement does not equally bind both parties to the same dispute resolution procedure” because “Griffin’s promise to adhere to the dispute resolution procedure is totally optional to it, but not Southwinds.” Southwinds asserts as follows: “If enforced as written, [the arbitration provision] deprives Southwinds of a valuable right to resolve disputes through mediation.”
Southwinds contends that, after the Subcontractor Agreement is reformed to remove Griffin’s supposedly illusory promise, the agreement requires arbitration of claims only if the claims are first mediated unsuccessfully, Because mediation did not occur, Southwinds contends that arbitration was improper due to the failure to satisfy a condition precedent.
A. Who Determines Whether an Arbitration Provision is Illusory?
Before reaching, the merits of South-winds’s contention, we first must address whether the trial court or the arbitrator decides whether the arbitration provision is illusory and- unenforceable,. We agree with Southwinds that this determination is the trial court’s to make, but we rely on. a different basis than, the one Southwinds urges..
Generally, “[o]nce it is determined .,. that the parties are obligated to submit to arbitration, ‘procedural’ questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator.” Valero,
Southwinds relies on Amir v. International Bank of Commerce,
Amir acknowledged that, “[t]ypically, questions of whether prerequisites to arbitration have been fulfilled are left to the arbitrators to resolve.” Id. at 692. The court went on to observe as follows:
If, however, there is clearly established proof that a strictly procedural requirement has not been met and that procedural requirement precludes arbitration, a court can deny a motion to compel arbitration on this ground. This is a narrow exception. As an example, a trial court cannot compel arbitration when the provision requires the parties to mediate before arbitration. To do so would frustrate the parties’ original intent clearly expressed in the agreement.
Id. (internal citations omitted); see also In re Igloo Prods. Corp.,
Amir addresses situations in which “there is clearly established proof that a strictly procedural requirement has not been met and that procedural requirement precludes arbitration”—such as, the court notes, where the parties’ agreement clearly requires the parties to mediate before arbitration. See Amir,
This case, in contrast, involves an arbitration provision that expressly allows Griffin unilaterally to “escalate the claims process to binding arbitration at any time.” Thus, this case does not fall within the “narrow exception” under which the agreement unambiguously requires mediation as a condition precedent to arbitration. See id.; cf. In re Pisces Foods, L.L.C.,
Southwinds is correct that the determination here was for the trial court to make, but not for the reason it advances. South-winds contends that we must (1) determine that Griffin’s option to avoid mediation makes the arbitration provision illusory; and then (2) read the option out of the agreement. After removing the option, Southwinds argues that mediation is a condition precedent to arbitration. Because Griffin indisputably did not mediate before arbitrating, Southwinds contends that this case falls within the “narrow exception” described above so the trial court can decide a strictly procedural requirement was not met.
Southwinds flips the order in which we must proceed. Contrary to Southwinds’s assertion, the threshold question is not whether a condition precedent was satisfied. Instead, the threshold question is whether an arbitration provision allowing one contracting party to skip mediation before arbitrating is illusory and unenforceable. A decision on the arbitration provision’s enforceability comes before a decision on whether the arbitration provision imposes a condition precedent.
When Southwinds asserts that Griffin’s option to skip mediation makes the arbitration provision illusory, Southwinds attacks the arbitration provision itself as being unenforceable as drafted. This un-enforceability challenge was the trial court’s to decide. See In re Labatt Food Serv., L.P.,
B. Did Griffin’s Option Not to Mediate Before Arbitrating Make the Arbitration Provision Illusory and Unenforceable?
In reaching its conclusion that mediation was not a condition precedent to arbitration, the trial court necessarily concluded that Griffin’s unilateral option to bypass mediation before arbitrating did not make the arbitration provision illusory and unenforceable. We agree.
“An arbitration clause is not illusory unless one party can avoid its promise to arbitrate by amending the provision or terminating it altogether.” In re 24R, Inc.,
The arbitration agreement in NACE provided that disputes would be resolved through arbitration but allowed NACE the unilateral right to pursue litigation if it was unsatisfied by the arbitration result. NACE Int’l,
The arbitration provision in this case provided that the parties would mediate all disputes unless Griffin in its sole discretion believed that mediation would be useless, in which case Griffin could escalate directly to arbitration. The agreément did not allow Griffin to avoid arbitration; nor did it allow Griffin to litigate an unsatisfactory arbitration result. We conclude that Griffin’s ability to unilaterally bypass mediation in favor of arbitration did not render the arbitration provision illusory. See id. at *4; Cleveland Constr., Inc. v. Levco Constr., Inc.,
Having concluded that the arbitration provision was not illusory, we further agree with the trial court’s conclusion that, under the plain language of the parties’ agreement allowing Griffin the option to bypass mediation, mediation was not a condition precedent to arbitration for Griffin. Cf. In re Pisces Foods, 228 S.W.3d at
III. Manifest Disregard and Gross Mistake
In its final issue, Southwinds argues that the arbitration award should be vacated because it is tainted by manifest disregard of the law and gross mistake in applying the law. Southwinds contends that the arbitrator manifestly disregarded the law and made a gross mistake of law in deciding matters that were not covered by a valid arbitration agreement.
Under the Texas Arbitration Act, “[unless grounds are offered for vacating, modifying, or correcting an award under Section 171.088 or 171.091, the court, on application of a party, shall confirm the award.” Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (Vernon 2011); see also Hoskins v. Hoskins,
Likewise, neither gross mistake nor manifest disregard of the law is a basis for vacating an arbitration award under the Federal Arbitration Act. See 9 U.S.C. § 10 (2012) (no mention of gross mistake or manifest disregard in grounds for vacating an arbitration award under the Federal Arbitration Act); Hall St. Assocs., L.L.C. v. Mattel, Inc.,
Accordingly, regardless of whether the Texas Arbitration Act or the Federal Arbitration Act applied in this case, the trial court properly confirmed the arbitrator’s award. See Citigroup Glob. Mkts., Inc. v. Bacon,
Additionally, because we have concluded above that a valid and enforceable arbitration agreement covered all claims, including the C&D haul-off claims, Southwinds’s argument that there was no valid arbitration agreement cannot form the basis for any manifest disregard of the law or gross mistake in applying the law on the part of the arbitrator.
Having concluded that a valid and enforceable arbitration agreement existed covering all claims between the parties and that Southwinds failed to demonstrate any meritorious grounds for vacatur of the arbitrator’s award, we conclude that the trial court properly confirmed the award. We affirm the trial court’s judgment.
(Frost, .C.J., concurring).
Notes
. To that end, Griffin sent Southwinds a second unexecuted Subcontractor Agreement that-was identical to the previously executed agreement except that the scope of work exhibit included this addition: “Construction debris generated and hauled will be an' all inclusive rate of $9.00 per cubic yard (including transportation and disposal cost).” The second agreement was dated October 14, 2013.
In the portion of the contract stating that Griffin would pay Southwinds for invoiced amounts within 10 days after Griffin received payment from Lemoine, Southwinds interli-neated "except for trucking and dump fees which will be'Net 14.” Similarly, Southwinds modified the scope of work exhibit with the interlineation, "Payment terms will be Net 14.” Southwinds executed the modified second agreement. The parties dispute whether
. Because the substantive principles applicable to the analysis in this appeal are the same under both the Federal Arbitration Act and the Texas Arbitration Act, we rely on cases discussing both statutes. See Forest Oil Corp. v. McAllen,
. Although the Subcontractor Agreement required modifications to the scope of work to be in writing, Texas courts have allowed parties to orally modify contracts with such provisions. See, e.g., Double Diamond, Inc. v. Hilco Elec. Coop., Inc.,
. This case does not involve enforcement of an arbitration agreement against a non-signatory; rather, this case involves a determination that a valid arbitration agreement signed by both parties covers claims arising from a separate oral agreement covering factually intertwined issues.
. Southwinds additionally argues that the trial court erred by failing to vacate the arbitrator’s award under the Texas Arbitration Act. Southwinds identified two statutory grounds for vacatur of the award. First, it argued that the award should be vacated because there was no valid agreement to arbitrate. See Tex, Civ. Prac. & Rem. Code Ann. § 171.088(a)(4) (Vernon 2011). Second, it argued that the arbitration award should be vacated because the arbitrator exceeded her power by deciding matters outside the scope of her authority, specifically contending that the arbitrator exceeded her authority "by essentially dispensing her own justice in deciding the C&D removal matters without an agreement to arbitrate these matters.” See id. § 171.088(a)(3)(A).
Having concluded that a valid and enforceable arbitration agreement covered all claims, including the C&D haul-off claims, we reject Southwinds’s argument that the trial court failed to properly apply the statutory vacatur grounds.
. In its final judgment, the trial court stated that “the Court is not persuaded that the mediation clause was a condition precedent to arbitration.”
. Southwinds also contends, without any supporting argument or case law, that the arbitrator manifestly disregarded the law and made a gross mistake of law “in awarding
Concurrence Opinion
concurring
In this case, in which no party moved to compel or stay arbitration, the trial court confirmed an arbitration award under the Texas Arbitration Act and rejected four grounds for vacating the award. The appellant says the trial court erred in not vacating the award on these four grounds. In this context, a reviewing court may reverse only on a ground for vacatur listed in Texas Civil Practice and Remedies Code section 171.088. Because two of the appellant’s grounds are not listed in this statute, the trial court had no power to vacate the award based upon these two grounds. Because the appellant did not establish its entitlement to vacatur under the other two grounds, the trial court did not err in denying vacatur and confirming the arbitration award.
Grounds for vacatur not listed in Texas Civil Practice and Remedies Code section 171.088 fail.
The trial court confirmed an arbitration award as to the C&D haul-off claims asserted by appellee/applicant D.H. Griffin of Texas, Inc. against appellant/respondent Southwinds Express Construction, LLC. (hereinafter the “Claims”). D.H.- Griffin asked the trial court to confirm the arbitration award under Texas Civil Practice and Remedies Code section 171.087.
(1) there was no agreement to arbitrate, the issue was not adversely determined in any proceeding to compel arbitration, and Southwinds objected at the arbitration that there was no agreement to arbitrate;
(2) the arbitrator exceeded her power by deciding the Claims because the parties had not agreed to arbitrate them;
(3) the award is tainted by manifest disregard of law and gross mistake in applying the law; and
(4) by failing to mediate the Claims, D.H. Griffin failed to fulfill a condition precedent to any obligation of South-winds to arbitrate the Claims, thus precluding confirmation of the arbitration award.
Significantly, no party sought to compel or stay arbitration of the Claims. If the trial court had compelled arbitration or denied a stay of arbitration, this court could review either of these rulings on appeal, and would not be limited to the section 171.088 grounds for vacatur.
Southwinds sought vacatur on the grounds that the award is tainted by manifest disregard of law and gross mistake in applying the law. Southwinds also sought vacatur on the ground that by failing to mediate the claims D.H. Griffin failed to fulfill a condition precedent to any obligation of Southwinds to arbitrate the Claims. Because none of these grounds is listed in section 171.088, the trial court lacked authority to vacate the award on these grounds and did not err in rejecting them.
The trial court did not err in determining that the Claims fall within the scope of the parties’ arbitration agreement.
In paragraph 3 of the Subcontractor Agreement of September 26, 2013 (the “Agreement”), D.H. Griffin and South-winds agree as follows:
In the event that a claim is not resolved through the negotiations of the parties, claim resolution will be resolved through mediation unless, in the sole discretion of [D.H. Griffin], [D.H. Griffin] believes mediation would be a useless exercise in which case [D.H. Griffin], unilaterally, may escalate the claims process to binding arbitration at any time. If mediation fails, both parties agree that the claim will be resolved pursuant to binding arbitration. Any mediation or arbitration will be conducted under the rules of the American Arbitration Association’s (“AAA”) Construction Industry Dispute Resolution Procedures (including Mediation and Arbitration Rules) in effect at the time of the execution of this Agreement; provided, however, that where there is a conflict, if any, between those rules and this Agreement, this Agreement governs.
On appeal, Southwinds asserts that the trial court erred in confirming the award and denying Southwinds’ motion to vacate based on the argument that there was no agreement to arbitrate because the Claims do not fall within the scope of this arbitration agreement. As the party seeking to vacate the arbitration award, Southwinds had the burden of presenting a record establishing that (1) there was no agreement to arbitrate because the Claims were outside the scope of the arbitration agreement; (2) this issue was not adversely determined in a motion to compel or stay arbitration; and (3) Southwinds did not participate in the arbitration without raising this objection.
To the extent the appellant argues that there was no arbitration agreement based on a failure to mediate, the appellant did not prove that it raised this objection in the arbitration.
On appeal, Southwinds also appears to assert that the trial court erred in confirming the award and denying vacatur based on an argument that there was no agreement to arbitrate because the parties have not mediated the Claims and claims that have not been mediated do not fall within the Arbitration Clause. As the party seeking to. .vacate the arbitration award, South-winds was obliged to present a record establishing that (1) there was no agreement to arbitrate because the parties have not mediated the Claims and claims that have not been mediated do not fall within the Arbitration Clause; (2) this issue was not adversely determined in a motion to compel or stay arbitration; and (3) South-winds did not participate in the arbitration without raising this objection.
To the extent the appellant argues that the arbitrator exceeded her power because the Claims are outside the scope of the Arbitration Clause, the trial court did not err in rejecting this argument.
It may be presumed for the sake of argument, that an arbitrator exceeds her powers within the meaning of section 171.088(a)(3)(A) if none of the claims the arbitrator determines in an arbitration are covered by an arbitration agreement.
Section 171.088(a) provides that on application of a party, the court shall vacate an arbitration award if “(3) the arbitrators: (A) exceeded their powers ... (4) there was no agreement to arbitrate, the issue was not adversely determined in a proceeding under Subchapter B [of Chapter 171], and the party did not participate in
This court need not address whether it is for the courts or the arbitrator to decide issues as to Southwinds’s arguments that mediation is a condition precedent to arbitration.
On appeal, Southwinds asserts generally that, under the Agreement, mediation is a condition precedent to arbitration. South-winds also argues that the clause in the Agreement granting D.H. Griffin, but not Southwinds, a unilateral opt-out of the Agreement’s requirement of mediation before arbitration would render the mediation requirement illusory and must be stricken from the Agreement.
Even if this court needed to address whether it is for the courts or the arbitrator to decide the condition-precedent issues, the better course would be to address these issues based on section 171.088 rather than cases in which the court reviews a motion to compel or stay arbitration.
If this court had to address this question, a sounder option would be to rely upon section 171.088 to do so. To the extent Southwinds asserts that mediation is a condition precedent to arbitration without basing its argument on a lack of any arbitration agreement, Southwinds does not advance a vacatur ground listed in section 171.088, and therefore the trial court lacked authority to vacate the award on this basis.
Instead of resolving these issues under the section 171.088 analysis, the majority bases its analysis on various cases in which the courts are reviewing motions to compel or stay arbitration.
In addition, a review of the majority’s cited eases reveals considerable conflict and uncertainty among courts as to the analysis of purported conditions precedent to arbitration. In many of these cases the courts do not discuss the specific language of the agreement regarding the alleged condition precedent.
More than a half-century ago, in John Wiley & Sons, the Supreme Court of the United States held that it was for the arbitrator to decide whether the parties completed the grievance procedure required before arbitration, concluding that, though the grievance procedure was a procedural matter, this issue grew out of the parties’ dispute and bore on its final disposition.
In addition, in In re U.S. Home Corp., the Supreme Court of Texas determined that it could decide whether mediation was a condition precedent to arbitration that had not been satisfied such that the parties had no duty to arbitrate, without relying on any alleged exception under John Wiley & Sons, thus raising an issue as to the viability of this court’s analysis in cases such as Valero and Omoruyi, in which this court either indicates that the arbitrators always should determine this issue or almost always should determine this issue subject to a narrow exception based on the John Wiley & Sons dictum.
Today, the majority wades into these troubled waters. The better course would be to decide the appeal under the vacatur analysis expounded above, without relying upon cases in which the court reviews a motion to compel or stay arbitration.
Conclusion
For the reasons stated above, I respectfully concur in the court’s judgment but I respectfully decline to join the majority’s opinion.
.See Tex. Civ. Prac. &. Rem. Code Ann § 171.087 (West, Westlaw through 2015 R.S.).
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088 (West, Westlaw through 2015 R.S.).
. See Perry Homes v. Cull,
.See Tex. Civ. Prac. & Rem. Code Ann § 171.088; Hoskins v. Hoskins,
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088; Hoskins,
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088(a)(4); Patel v. Moin, No. 14-15-00851-CV,
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088(a)(4).
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088(a)(4); Patel,
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088(a)(4); Aspri Investments, LLC,
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088(a)(3)(A).
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088(a).
. Id.
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088(a)(4); Aspri Investments, LLC,
. The majority concludes that Southwinds is arguing that this clause makes the entire arbitration agreement illusory. See ante at 77-80, A review of Southwinds’s brief reveals that Southwinds is not asserting that the Arbitration Clause is illusory but only that this one opt-out clause is illusory. In its brief, South-winds asserts as follows: "The clause in the written Subcontractor Agreement that allows Griffin to unilateral[ly] avoid its agreed upon obligation to resolve disputes through mediation is clearly illusory and unenforceable.., As provided by [the Savings Clause of the Agreement], the dispute resolution clause in the written Subcontractor Agreement can be upheld and given its intended effect by eliminating Griffin's illusory, unilateral right.. .With the dispute resolution clause properly limited, the bargained for procedure clearly provides that mediation is a mandatory and necessary precondition to arbitration.”
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088; Hoskins,
. See Tex. Civ. Prac. & Rem. Code Ann § 171.088.
. See ante at 71-73, 76-80.
. See Ewing,
. See, e.g., In re R & R Personnel Specialists of Tyler, Inc.,
. See Valero Energy Corp. v. Teco Pipeline Co.,
.See BG Group, PLC v. Republic of Argentina, — U.S. —,—,
.See G.T. Leach Builders, LLC v. Sapphire V.P., L.P.,
. John Wiley & Sons, Inc. v. Livingston,
. See id. at 557-58,
. See Howsam,
. See id.; John Wiley & Sons, Inc.,
. See BG Group, PLC, — U.S. at —,
. See, e.g., Amir v. Int’l Bank of Commerce,
. See ante at 77-78; In re Igloo Products Corp.,
. See ante at 77-78; In re Igloo Products Corp.,
.See In re U.S. Home Corp.,