Opinion
NO. 03-15-00806-CV
08-09-2017
Balfour Beatty Construction, LLC, Appellant v. Eagle Contracting Services, LLC, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT
NO. D-1-GN-15-004760 , HONORABLE TIM SULAK, JUDGE PRESIDING MEMORANDUM OPINION
This is an appeal from an order denying a motion to compel arbitration rendered by the district court of Travis County. See Tex. Civ. Prac. & Rem. Code § 171.098(a)(i). Appellant is Balfour Beatty Construction, LLC (Balfour) and appellee is Eagle Contracting Services, LLC (Eagle). This Court will affirm the order.
The clerk's record does not contain an order denying the motion to compel arbitration. There is, however, a letter signed by the district court "ordering" that the motion to compel be denied. We will treat the court's letter as an order. Although the law may not require that a judgment or order be in any particular form, cf. Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001), the use of a letter in place of a conventional judgment or order may sometimes have unintended consequences: a court's letter is not a finding of fact or a conclusion of law as contemplated by the Texas rules of court, nor is it competent evidence of the court's basis for judgment. See Cherokee Water Co. v. Gregg Cty. Appraisal Dist., 801 S.W.2d 872, 878 (Tex. 1990).
In 2014, Balfour was the general contractor on a construction project in Austin. The owner of the project is GW Apartments, LLC. Balfour contracted with Eagle, a commercial heating, ventilating, and air conditioning (HVAC) contractor to do the HVAC work on the job. Under the agreement, Eagle furnished construction labor, materials, and services for the installation of the HVAC system.
In 2015, there was a series of disagreements between Balfour and Eagle. The parties could not agree whether the contract documents called for Eagle to install sheet-metal duct work. Balfour also complained that Eagle was behind the project schedule as outlined in the contract documents. In September, Balfour denied Eagle's work crew access to the job site for the claimed reason that the work crew had violated safety provisions contained in the contract documents. Two days after the lockout, Balfour sent Eagle a notification of termination.
Eagle filed suit seeking $1,768,516.66 for unpaid work and for the enforcement of its mechanic's and materialmen's liens. Eagle pleaded that Balfour breached the contract documents by, among other things, failing to have an agreed-upon project schedule; by terminating Eagle; and by wrongfully construing the scope of work.
In response, Balfour filed a motion to compel arbitration. The motion to compel was based on a provision in the sub-contract between Balfour and Eagle that required certain claims to be arbitrated at Balfour's option. The relevant part of that provision states:
Article 10: Contract Interpretation and DisputesAfter hearing, the district court denied the motion to compel arbitration.
A. Any disputes between Subcontractor and Contractor not involving the conduct of the Owner or the Contract Documents will, at the election of Contractor, be settled by arbitration . . . . (Emphasis supplied.)
The parties' subcontract defined "subcontract documents" as including ". . . this Subcontract form, the Subcontract Terms and Conditions, and all other Exhibits including: Exhibit A—Contract Documents." (Emphasis added.) Accordingly, the contract documents are a part of the subcontract.
Balfour presents one general issue: "It was reversible error for the trial court to refuse to refer the payment, termination, and breach of contract claims to arbitration." We disagree.
Arbitration is a creature of contract and a party seeking to compel arbitration must rely upon an agreement to arbitrate. In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 187 (Tex. 2007); In re Bayer Materialscience, LLC, 265 S.W.3d 452, 455 (Tex. App.—Houston [1st Dist.] 2007, orig. proceeding). In the construction of any contract, the court's task is to give effect to the parties' intent, Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000), as found in the language of the instrument. J. M. Davidson, Inc. v. Webster, 128 S.W.3d 225, 229 (Tex. 2003).
Section 10A of the subcontract provides that any dispute between Balfour and Eagle will be settled by arbitration at Balfour's election, save for two categories: (1) those involving the conduct of the owner and (2) those "involving . . . the Contract Documents." Stated differently, arbitration is not required in those disputes involving either the owner or the contract documents. We think it apparent that both Balfour's complaints about Eagle's job performance and the allegations in Eagle's petition show no more than a dispute between the parties over what the contract does or does not require.
Balfour reminds us, repeatedly, of the many opinions of the Texas Supreme Court, this Court and other courts of appeal expressing a strong presumption favoring arbitration. We, of course, acknowledge these authorities. But we also recognize the principle that in deciding whether parties have agreed to arbitrate a given dispute, courts do not resolve any doubts or indulge any presumptions in favor of arbitration until the existence of a valid agreement to arbitrate the given dispute is established. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). Here the plain language of the contract prompts the conclusion that the parties did not agree to arbitrate the dispute involved in this case.
The order of the district court is affirmed.
/s/_________
Bob E. Shannon, Justice Before Chief Justice Rose, Justices Pemberton and Shannon Affirmed Filed: August 9, 2017
Before Bob E. Shannon, Chief Justice (retired), Third Court of Appeals, sitting by assignment. See Tex. Gov't Code § 74.003(b).