Opinion
No. 05-02-01058-CV.
Opinion Filed March 7, 2003.
Appeal from the 192nd Judicial District Court, Dallas County, Texas, Trial Court Cause No. 02-00422-K.
AFFIRM.
Before Justices WRIGHT, BRIDGES, and O'NEILL.
MEMORANDUM OPINION
Appellants Meridien Hotels, Inc. and MHI Leasco Dallas, Inc. (Meridien) appeal the trial court's interlocutory order granting LaSalle Hotel Operating Partnership, L.P.'s (LaSalle) motion to stay arbitration and denying their motion to compel arbitration. Meridien also brings a writ of mandamus complaining of the same order. See Jack B. Anglin, Inc. v. Tipps., 842 S.W.2d 266, 270 (Tex. 1992). This Court consolidated the interlocutory appeal with the mandamus petition. Because we conclude the trial court did not err in granting the motion to stay arbitration and in denying the motion to compel arbitration, we need not decide whether the Texas or the Federal Arbitration Act applies. We therefore affirm the trial court's arbitration order and deny the petition for writ of mandamus.
Meridien (as tenant) and LaSalle (as landlord) entered into a commercial lease in which Meridien leased from LaSalle real property for use as a hotel. Article 22.22 of the lease contained a provision which entitled LaSalle to purchase Meridien's interest in the hotel if Meridien or its parent or affiliates elected to transfer all or substantially all of its hotel business to a third party (a "permitted transfer"). In the event of such a transfer under article 22.22, the lease required LaSalle (if it elected to purchase Meridien's interest) to pay the then fair market value of the interest. If the parties could not agree on the fair market value, the lease required that issue be submitted to arbitration.
In June 2001, Meridien notified LaSalle of a proposed permitted transfer. LaSalle decided to assert its rights under article 22.22 of the lease and to purchase Meridien's interest in the hotel. However, the parties could not agree on the fair market value and Meridien filed a demand for arbitration of that issue. Meridien also sought arbitration of other disputes between the parties. On the same date, Meridien filed a declaratory action in district court seeking a determination of the parties' rights under the lease.
LaSalle filed a motion to stay arbitration asserting no arbitrable issue existed because the lease was not terminated under article 22.22 or, in the alternative, the demand for arbitration included claims that were not within the scope of the limited arbitration clause. The trial court initially denied in part and granted in part the motion to stay arbitration. Specifically, the trial court concluded that the sole issue for arbitration would be the "fair market value" of Meridien's interest pursuant to article 22.22 of the lease.
The trial court subsequently granted a partial summary judgment in favor of LaSalle concluding, among other things, that as a matter of law (1) Meridien defaulted on the lease, and (2) LaSalle lawfully terminated the lease under its default provisions. LaSalle then requested the trial court to vacate the portion of its earlier arbitration order to the extent it required arbitration of the fair market value of Meridian's interest, which was no longer relevant in light of the trial court's partial summary judgment that the lease was terminated for a default, not under article 22.22. According to LaSalle, the only arbitrable issue between the parties was moot. The trial court granted LaSalle's motion and stayed arbitration. This appeal followed.
Federal and state policy strongly favor arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983); Prudential Sec. Inc. v. Marshall., 909 S.W.2d 896, 898 (Tex. 1995) (per curiam). A party seeking to compel arbitration must show (1) the existence of an arbitration agreement, and (2) that the claim at issue falls within the scope of the arbitration agreement. See In re J.D. Edwards World Solutions Co., 87 S.W.3d 546, 549 (Tex. 2002) (original proceeding); Jenkens Gilchrist, P.C. v. Riggs, 87 S.W.3d 198, 201 (Tex.App.-Dallas 2002, no pet.).
In this case, the arbitration clause at issue is extremely limited — it required the parties to submit only the discrete issue of fair market value to arbitration if there was a transfer under article 22.22. The parties do not dispute the clause did not require the issue of whether such a transfer occurred to be submitted to arbitration. Thus, the trial court was required to determine that issue. Having done so, and concluding no such transfer occurred, no issue remained that was within the scope of the arbitration agreement. Moreover, because of the procedural posture of the case and the somewhat unique arbitration clause, arbitration could serve no purpose. Indeed, it would be fruitless for the parties to engage in arbitration of an issue that the trial court's order renders irrelevant. For these same reasons, the public policy favoring arbitration would not be served in this case. Specifically, the purpose of an arbitration clause is to provide a rapid, efficient and inexpensive alternative to litigation. See Jack B. Anglin, 842 S.W.3d at 268-69. None of these policies would be served where, as here, any arbitration decision could have no legal effect. We conclude the trial court did not err in granting LaSalle's motion to stay arbitration and denying Meridien's motion to compel.
We recognize that the trial court's ruling with respect to the default issue is not final and the trial court may still change its ruling on that issue. However, if it does so, it is likely the trial court would likewise change its ruling regarding the arbitration issue.
In reaching this conclusion, we reject Meridian's assertion that this Court must review the trial court's partial summary judgment regarding the default issue. According to Meridien, it did not default on the lease and therefore it was entitled to the fair market value of its interest in the lease. Thus, it asserts the trial court should have compelled arbitration of that issue. Meridien seeks review of an interlocutory summary judgment concerning the ultimate issue in this case. Unless authorized by statute, this Court has no jurisdiction over interlocutory orders. See New York Underwriters Ins. Co. v. Sanchez, 799 S.W.2d 677, 679 (Tex. 1990). Therefore, this Court has no jurisdiction to review the trial court's partial summary judgment.
We affirm the trial court's arbitration order and deny the petition for writ of mandamus.