Opinion
No. 10-02-129-CV
Opinion delivered and filed June 11, 2003.
From the County Court at Law No. 1, Johnson County, Texas, Trial Court # C-200100123.
Affirmed.
Before Chief Justice DAVIS, Justice VANCE, and Justice GRAY.
MEMORANDUM OPINION
This is an appeal from a trial court's order regarding arbitration. Ronald and Patti Hoeppner contracted with Statewide Remodeling, Inc. (Statewide) to add a sunroom to their home. The construction contract was printed on a single sheet of paper. One side of the sheet holds the Hoeppners' signatures and the specifications and price for the work, and the other side of the sheet, entitled "Terms and Conditions," holds twenty-three boilerplate provisions covering various matters. These provisions were not referred to on the other side of the sheet. Provision twenty-three reads:
ARBITRATION — In the event of a dispute between the parties relating to this agreement, the parties or their representatives will meet promptly in an effort to resolve the dispute amicably. Upon the request of any party to this agreement, all unresolved disputes (not limited to breach of contract action) relating to this agreement and not barred by the applicable limitations period, except those claims by a seller or creditor against a buyer or debtor for payment on an account under Rule 185 of the Texas Rules of Civil Procedure, shall be submitted for binding arbitration in accordance with the Better Business Bureau Rules or [sic] Arbitration then in effect, and then neither party shall have a right to bring suit in court.
After the Hoeppners sued Statewide over defects in the construction work, Statewide filed a "Plea in Abatement and Motion to Compel Arbitration," requesting that the suit be dismissed, or in the alternative, abated for arbitration. The motion asserted that the Federal Arbitration Act (FAA) applied because the sunroom was manufactured in Michigan, thus involving interstate commerce. 9 U.S.C. § 1-16. The trial court entered an order which stated: "Statewide Remodeling, Inc.'s Motion to Compel Arbitration should be GRANTED and this cause shall be DISMISSED." We take this as an order compelling the parties to arbitration while also dismissing the lawsuit. The order is silent about which procedures govern the arbitration, and we do not know whether the court intended the FAA to apply.
On appeal, the Hoeppners contend that (1) they did not know about the arbitration provision, and so it was not part of their contract with Statewide, and (2) even if they had known about the provision and agreed to it, the provision was not enforceable under the FAA because the evidence was insufficient to show an interstate-commerce nexus. The FAA applies only to agreements involving interstate or foreign commerce and maritime transactions. Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 201-02, 76 S.Ct. 273, 275-76, 100 L.Ed.2d 199 (1956).
We will affirm the order.
Standard of Review
The interpretation and enforceability of an agreement to arbitrate is governed by the Texas common law of contracts. J.M. Davidson, Inc. v. Webster, 49 S.W.3d 507, 511 (Tex.App.-Corpus Christi 2001, no pet.); Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388 (Tex.App.-Houston [14th Dist.] 1997, pet. dism'd w.o.j.). Under that law, the court must first determine as a matter of law whether the agreement is ambiguous. Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). If not ambiguous, then rights and obligations under the agreement are also determined as a matter of law. ACS Investors, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997). The agreement is construed according to the plain meaning of its express wording. Lyons v. Montgomery, 701 S.W.2d 641, 643 (Tex. 1985); Kahn v. Seely, 980 S.W.2d 794, 797 (Tex.App.-San Antonio 1998, pet. denied). As questions of law, we review these findings de novo.
Enforceability of the Arbitration Provision
In Cantella Co., Inc. v. Goodwin, under facts very similar to the present case, the Texas Supreme Court held that an arbitration provision included in contract terms on one side of the single sheet comprising the contract, where the other side contained a disclosure provision and signatures, was a part of the contract. Cantella Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (per curiam). The Court rejected an argument that the arbitration provision was somehow "hidden." Id. The Court stated that the provision's conspicuousness, combined with the legal presumption that a party who signs a contract knows its contents, made the provision binding. Id.
Applying Cantella, we find that the arbitration provision is a part of the contract and therefore enforceable. We overrule issue one.
The Order to Arbitrate
The trial court granted the motion to arbitrate and dismissed the lawsuit. There was no reference in the order as to the terms and conditions under which the arbitration would occur, although Statewide's motion referred to the FAA. Section three of the FAA states:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration. [Emphasis added.]
"Courts of the United States" refers to both federal and state courts. Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 26 n. 34 103 S.Ct. 927, 942 n. 34, 74 L.Ed.2d 765 (1983).
"Courts of the United States" refers to both federal and state courts. Moses H. Cone Memorial Hosp. v. Mercury Const. Corp., 460 U.S. 1, 26 n. 34 103 S.Ct. 927, 942 n. 34, 74 L.Ed.2d 765 (1983).
9 U.S.C. § 3. Thus, under the FAA, the arbitration would proceed under the Better Business Bureau Rules as contained in the arbitration provision of the contract.
But the Hoeppners argue that the evidence to prove the interstate-commerce nexus required before the FAA applies was insufficient, because the affidavit Statewide submitted at the hearing on Statewide's motion was substantively defective and also was inadmissible because it was hearsay. Statewide counters that the affidavit contained facts necessary to establish the interstate-commerce nexus, and that under the Texas Supreme Court's decision in Jack B. Anglin Co. v. Tipps, an application for arbitration may be decided summarily on the basis of affidavits, although an evidentiary hearing is sometimes required, and therefore the affidavit was not inadmissible hearsay. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992).
The issue is immaterial, however, because if the FAA does not apply and, as the parties agree, the Texas Arbitration Act does not apply, the Texas common law on arbitration does. L.H. Lacy Co. v. City of Lubbock, 559 S.W.2d 348, 351-52 (Tex. 1977) (common law arbitration and statutory arbitration are "cumulative" and part of a "dual system"); Peacock v. Wave Tec Pools, 2003 WL 131843, *2 (Tex.App.-Waco January 15, 2003, no pet. h.); Central Nat. Ins. Co. of Omaha v. Glover, 856 S.W.2d 490, 492 (Tex.App.-Houston [1st Dist.] 1993, no writ); Riha v. Smulcer, 843 S.W.2d 289, 292 (Tex.App.-Houston [14th Dist.] 1992, no writ); Bailey and Williams v. Westfall, 727 S.W.2d 86, 90 n. 4 (Tex.App.-Dallas 1987, writ ref'd n.r.e.). And under common law, the arbitration provision is to be enforced according to its plain terms, requiring arbitration under the Better Business Bureau Rules. ACS Investors, 943 S.W.2d at 430. Thus, in either event, the Better Business Bureau Rules apply. We overrule issue two.
The Texas Arbitration Act applies when the amount in controversy exceed $50,000 unless the parties' lawyers sign the arbitration agreement, neither of which is true here. Tex. Civ. Prac. Rem. Code Ann. § 171.002 (Vernon Supp. 2003).
Conclusion
Having overruled issues one and two, we affirm the order.