Opinion
No. 01-03-01198-CV.
Opinion issued: May 13, 2004.
On Appeal from the 405th District Court, Galveston County, Texas, Trial Court Cause No. 03CV0084.
Misty Ann Cabaniss Blair, Drucker, Rutledge, Ward Smith, L.L.P., The Woodlands, TX, for appellant.
Nelson T. Hensley, Houston, TX, for appellee.
Panel consists of Justices NUCHIA, JENNINGS, and KEYES.
MEMORANDUM OPINION
This is an interlocutory appeal of the trial court's order denying the motion of appellant, Marc Colosi, to compel arbitration of the claims asserted against him by appellee, Jim Guidry. We reverse in part and affirm in part.
A party may appeal an order denying an application to compel arbitration. See Tex. Civ. Prac. Rem. Code Ann. § 171.098(a)(1) (Vernon Supp. 2004).
BACKGROUND
Guidry entered into an agreement with NSI Nursing Solutions, Inc. (NSI) in which Guidry agreed to find and refer healthcare providers to NSI, who would contract with them to provide NSI's recruitment and placement services. NSI agreed to pay Guidry a commission, depending on the size of the contract NSI signed with the healthcare providers. Guidry negotiated this agreement, referred to by the parties as the "Bird-Dog Agreement," with Marc Colosi, President and Chief Executive Officer of NSI. The agreement contained the following arbitration clause:
Any dispute arising out of, under or related to this Agreement shall be resolved by binding Pennsylvania Arbitration Law and under the rules and procedures of the Bar Association Alternate Dispute Resolution Program of Lancaster County, Pennsylvania, which shall have sole venue and jurisdiction. . . . This provision shall survive any termination, cancellation, rescission or expiration of this Agreement.
Approximately 14 months after executing the Bird-Dog Agreement, Guidry sued NSI and Colosi for fraudulent inducement and breach of contract. Guidry alleged that Colosi, as an officer of NSI, had personal knowledge of NSI's business and, (1) prior to executing the agreement, had made false statements of past and present facts and false promises of future performance, (2) knew that the statements and promises were false when made, and (3) made the statements with the intent to deceive. Guidry also alleged that the statements were material and were made to induce Guidry to enter into the written agreements with NSI and that Guidry relied on the statements. Guidry alleged that, after executing the agreement, NSI and Colosi had made no payment for work performed by Guidry and had, accordingly, breached the written agreements.
Guidry further alleged, "No amount of money can reasonably compensate Plaintiff for the harm created by Defendant's fraud and breach of contract" and requested rescission of the written agreements. In the alternative, Guidry prayed for a judgment for damages.
NSI and Colosi filed a motion to compel arbitration and to dismiss the cause for lack of jurisdiction. The trial court granted the motion to compel arbitration of Guidry's claims and causes of action as they related to NSI, but denied the motion as to Colosi and denied the motion to dismiss. On appeal, Colosi challenges the trial court's denial of his motion to compel arbitration.
DISCUSSION
Standard of Review
In reviewing a trial court's denial of a motion to compel arbitration, we use a "no evidence" standard for factual issues. Ikon Office Solutions, Inc. v. Eifert, 2 S.W.3d 688, 693 (Tex. App.-Houston [14th Dist.] 1999, no pet.). However, we review legal conclusions de novo. Id. In Texas, there is a strong presumption favoring arbitration. Pepe Int'l Dev. Co. v. Pub Brewing Co., 915 S.W.2d 925, 930 (Tex. App.-Houston [1st Dist.] 1996, no writ). Courts must indulge every reasonable presumption in favor of arbitration and must resolve all doubts as to the arbitrability of an issue in favor of arbitration. Fridl v. Cook, 908 S.W.2d 507, 511 (Tex. App.-El Paso 1995, writ dism'd).
Enforceability of the Arbitration Clause
A party seeking to compel arbitration has the initial burden to establish the existence of a valid arbitration agreement and to show that the other party's claims fall within the scope of the agreement. Williams Indus., Inc. v. Earth Dev. Sys. Corp., 110 S.W.3d 131, 134 (Tex. App.-Houston [1st Dist.] 2003, no pet.). If the agreement is valid and the claims are within the scope of the agreement, the trial court must compel arbitration. Pepe Int'l, 915 S.W.2d at 929.
In the present case, Guidry does not contend that the arbitration agreement is invalid. Therefore, the issue before this Court is whether Guidry's claims are within the scope of the arbitration clause.
Although he asserts that "Appellant has not established the existence of a valid arbitration agreement to arbitrate all of Appellee's claims," the crux of his argument is not that the agreement is invalid, but that he has made tort claims against Colosi that are not subject to the agreement and that a second, unintegrated contract between the parties that is not covered by the arbitration agreement was also breached.
Scope of the Arbitration Clause
In his sole issue, Colosi contends that all of Guidry's claims are subject to the arbitration agreement. Colosi argues that, even though the claims against Colosi are cast in tort, those claims "are inextricably enmeshed and factually intertwined" with that agreement and, because Guidry's tort claim against Colosi is for fraud in the inducement, it is a matter for the arbitrator to decide, citing Pepe International. See 915 S.W.2d at 930. Colosi also argues that, although Guidry refers to two contracts, he made claims only under the Bird-Dog Agreement.
1. The Tort Claims
The arbitration clause in this case was broad, requiring the arbitration of "any disputes arising out of, under or related to this Agreement." Guidry's claim that Colosi made false statements to Guidry and fraudulently induced Guidry to enter into "written agreements" with NSI is clearly related to the Bird-Dog Agreement. Allegations of fraud in the inducement of the underlying contract are matters for the arbitrator to decide. Pepe Int'l, 915 S.W.2d at 930.
Guidry's allegations against Colosi were for fraud in the inducement. Therefore, the claims against Colosi relating to the Bird-Dog Agreement are within the scope of the arbitration clause. Accordingly, we sustain Colosi's issue as it relates to the Bird-Dog Agreement.
2. The Second Agreement
Colosi contends that all of Guidry's claims are controlled by the Bird-Dog Agreement, noting that the Bird-Dog Agreement is the only agreement attached to the pleadings.
Guidry contended in the trial court and contends on appeal that he was fraudulently induced to enter into a second agreement, which was also breached by the defendants. In his petition, Guidry alleged the following regarding this second agreement:
Shortly after entering into the "bird-dog agreement," Defendant sought out Plaintiff for an even closer business association. Defendant Marc Colosi told Plaintiff he needed executive recruiters to which his company, NSI, could refer all non-staff nursing placements. In essence, Defendant was looking for a business relationship whereby his company would be paid a referral fee for referring all non-staff nursing placements to outside recruiters. In an effort to induce Plaintiff to enter into such agreement, Defendant Marc Colosi made numerous representations to Plaintiff, including statements that NSI had turned down close to one million dollars worth of executive search assignments in 2001 due to lack of such agreements. Consequently, Plaintiff entered into an agreement with Defendant.
It was Colosi's burden to establish the existence of a valid arbitration agreement and to show that Guidry's claims fell within the scope of the agreement. See Williams Indus., 110 S.W.3d at 134. Colosi moved to arbitrate only the Bird-Dog Agreement. Therefore, he has not carried his burden with respect to the second agreement. We overrule Colosi's issue as it relates to the second agreement.
We reverse the order of the trial court as it relates to the arbitration of Guidry's claims against Colosi under the Bird-Dog Agreement and render an order compelling arbitration of those claims. We affirm the order of the trial court as it relates to the arbitration of Guidry's claims against Colosi under the second agreement. We remand the cause to the court below for further proceedings consistent with this opinion.