Opinion
No. 10-06-00098-CV
Opinion delivered and filed May 9, 2007.
Appeal from the 414th District Court McLennan County, Texas, Trial Court No. 2005-34-1-5.
Reversed and remanded
Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
MEMORANDUM OPINION
Coody Custom Homes, LLC (Custom Homes) and Chris Coody bring this interlocutory appeal from the trial court's denial of their motion to compel arbitration. We will reverse and remand.
A party seeking to compel arbitration must establish that: (1) there is a valid arbitration agreement; and (2) the claims raised fall within the agreement's scope. In re Kellogg Brown Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). Because there is a presumption favoring agreements to arbitrate, doubts regarding an agreement's scope are resolved in favor of arbitration; however, the presumption arises only after the party seeking to compel arbitration proves that a valid arbitration agreement exists. Id. We review de novo the trial court's denial of the motion to compel arbitration. Dennis v. College Station Hosp., L.P., 169 S.W.3d 282, 285 (Tex.App.-Waco 2005, pet. denied).
Jeffery D. Howe contracted with Custom Homes to build his home. The original construction contract included a provision that any dispute would be subject to arbitration. The parties had a number of disagreements and eventually agreed to mediate their disputes. The mediation resulted in a settlement memorandum which states that the terms of the settlement "shall be enforceable in a court of law by any court of competent jurisdiction in McLennan County, Texas." It also states that a more detailed settlement agreement was to follow, which never came. The parties then signed a supplemental agreement to the construction contract and settlement memorandum regarding time to finish repairs to the home. All of the agreements failed to end the dispute, and Howe filed suit against Custom Homes and its president Coody. Custom Homes and Coody moved to compel arbitration under the original construction contract which the trial court denied.
Though couched in terms of waiver, Howe successfully argued to the trial court that the enforcement provision of the settlement memorandum supersedes the arbitration provision in the construction contract. Waiver occurs where a party takes an action inconsistent with arbitration and that action prejudices the party claiming waiver. In re Serv. Corp. Int'l, 85 S.W.3d 171, 174 (Tex. 2002). Custom Homes and Coody, upon being sued, took only such action that was consistent with the right to arbitrate. Howe argues that waiver occurred by Custom Homes signing the settlement agreement; however, this argument goes to the validity of the arbitration provision. We will look at all three agreements to determine whether there is a valid agreement to arbitrate and if the claims raised are within the agreement's scope.
"All writings that pertain to the same transaction will be considered together, even if they were executed at different times and do not expressly refer to one another." DeWitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 102 (Tex. 1999). Treating related contracts as parts of a single instrument gives effect to the parties' intent. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000); see also DeWitt Co. Elec. Coop., 1 S.W.3d at 102; Khan v. Trans. Chem. Ltd., 178 Fed. Appx. 419, 421 (5th Cir. 2006). Here there can be no doubt that the parties intended the construction contract, settlement memorandum, and supplemental agreement to be one contract given that each subsequent agreement references the original contract, and all relate to the construction of the same home.
Custom Homes and Coody argue that the arbitration provision in the original contract and the enforcement provision in the settlement memorandum are not conflicting because the arbitration award can be enforced in the courts. Howe contends that the two provisions are in direct conflict and that the settlement memorandum provides that where terms of the construction contract conflict with the settlement "such other terms shall be considered null and void."
An arbitration clause is interpreted the same as any contract. Holcim (Texas) Ltd. P'ship. v. Humboldt Wedag, Inc., 211 S.W.3d 796, 804-05 (Tex.App.-Waco 2006, no pet.). If a contract can be given definite legal meaning or interpretation, then it is not ambiguous, and the court will construe the contract as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393, (Tex. 1983). In construing a contract, we presume that the parties intended every clause to have an effect. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996).
The settlement provision providing for enforcement in McLennan County courts is merely a venue selection clause. Texas courts have held that venue, choice of law, and forum selection clauses can be "harmonized" with arbitration provisions. New Concept Constr. Co., Inc. v. Kirbyville Consol. Indep. Sch. Dist., 119 S.W.3d 468, 470 (Tex.App.-Beaumont 2003, pet. denied); see also Pers. Sec. Safety Sys. v. Motorola, Inc., 297 F.3d 388, 396 (5th Cir. 2002); In re Winter Park Constr., Inc., 30 S.W.3d 576, 578 (Tex.App.-Texarkana 2000, orig. proceeding). For example, a provision stating that an action relating to a construction contract be brought "in a court of competent jurisdiction in the County in which the work was performed" was construed to be a venue selection clause and not inconsistent with an arbitration provision in the same contract. New Concept, 119 S.W.3d 468.
The venue provision here is consistent with the arbitration provision. The enforcement paragraph in the settlement memorandum does not specifically exclude arbitration. The TAA calls for a trial court's involvement in the context of arbitration by conferring jurisdiction on the court to enforce an arbitration agreement and to render judgment on an arbitration award. TEX. CIV. PRAC. REM. CODE ANN. § 171.081 (Vernon 2005); see also New Concept, 119 S.W.3d at 470-71. The enforcement provision sets the venue in which the parties may file suit if the court's involvement is necessary in the event arbitration is waived or for proceedings consistent with the enforcement of the arbitration clause. Id. at 470-471. Therefore, the arbitration provision in the original construction contract is valid.
In reviewing the scope of an arbitration clause, a court should not deny arbitration unless the clause is not susceptible of any interpretation that would cover the dispute. Prudential Sec., Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995); Dennis, 169 S.W.3d at 285-286. Howe contends that his claims against Coody individually are outside the scope of the arbitration provision and therefore the entire dispute is not subject to arbitration. However, equitable estoppel requires arbitration of claims against a non-signatory where those claims are based on the contract containing the arbitration provision. See Meyer v. WMCO-GP, L.L.C., 211 S.W.3d 302, 305-07 (Tex. 2007).
Each of Howe's claims center on the construction contract with the additional provisions of the settlement memorandum and supplement. Howe alleges in his trial pleadings that Coody is the alter ego of Custom Homes and personally liable for the corporation's alleged misconduct. Without invoking the construction contract, Howe can make no claim against Coody. Therefore, these claims against Coody are inseparable from the claims against the corporation. See In re Educ. Mgmt. Corp., 14 S.W.3d 418, 424-25 (Tex.App.-Houston [14th Dist.] 2000, no pet.) (nonsignatory must arbitrate claims relating to status as alter ego of signatory). A claimant cannot "on the one hand, seek to hold the non-signatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny arbitration's applicability because the defendant is a non-signatory." Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 528 (5th Cir. 2000); see also Meyer, 211 S.W.3d at 306-07. Allegations of "concerted misconduct" on the part of both a signatory and a non-signatory to an arbitration provision preclude a signatory claimant from opposing arbitration. Meyer, 211 S.W.3d at 306 (citing Meyer v. WMCO-GP, L.L.C., 126 S.W.3d 313, 320 (Tex.App.-Beaumont 2004, pet. granted) (overruled on other grounds). Therefore, the claims against both Custom Homes and Coody are within the scope of this arbitration provision.
Accordingly, we sustain the sole issue on appeal. We reverse the judgment and remand this case to the trial court with instructions to stay all further proceedings in that court and order the parties to arbitrate their claims in accordance with the arbitration provision in the original construction contract. See Dennis, 169 S.W.3d at 287-88.