Opinion
NO. 09-12-00157-CV
07-26-2012
WORTHINGTON MID-RISE CONSTRUCTION, INC., Appellant v. RSL CONTRACTORS, LTD., HARTFORD CASUALTY INSURANCE COMPANY AND CONSTRUCTION SUPERVISORS, INC., Appellees
On Appeal from the 9th District Court
Montgomery County, Texas
Trial Cause No. 11-09-10706 CV
MEMORANDUM OPINION
This is an interlocutory appeal from a trial court's order denying Worthington Mid-Rise Construction, Inc.'s motion to arbitrate. We reverse the order denying the motion to arbitrate and remand this case to the trial court with instructions to enter an order compelling arbitration between Worthington and RSL Contractors, Ltd., and staying all other proceedings pending the outcome of the arbitration.
See Tex. Civ. Prac. & Rem. Code Ann. § 51.016 (West Supp. 2011); 9 U.S.C.A. § 16 (West 2009).
The general contractor, Construction Supervisors, Inc., subcontracted work to Worthington, which in turn subcontracted work to RSL. RSL demanded payment for its work. Asserting nonpayment, RSL filed a mechanic's and materialman's lien affidavit in the county's real property records. CSI, as principal, and Hartford Casualty Insurance Company, as surety, filed a "Bond to Indemnify Against Lien" in which they obligated themselves to pay the amount that RSL would have been entitled to recover if it proved its claim to be a valid lien.
RSL sued CSI and Hartford on the lien and the bond. In an amended petition, RSL added Worthington as a defendant on a breach of contract claim. Worthington disputed RSL's right to payment for the work. A little over a month after filing its answer, Worthington filed a motion to compel arbitration. RSL did not file a response to the motion to arbitrate. Hartford and CSI, in their response to Worthington's arbitration motion, contended that RSL's claims against them were not arbitrable.
Worthington argues the trial court abused its discretion in denying the arbitration motion, because the contract between Worthington and RSL contains a valid arbitration clause, and the dispute falls within the scope of the agreement to arbitrate. RSL argues that, because the order denying the arbitration motion is a general order (not stating the grounds for denial), Worthington had the burden to demonstrate the denial was an abuse of discretion, and Worthington failed to do so. CSI and Hartford argue, that to the extent the motion to compel arbitration can be interpreted to apply to them, the trial court was correct in denying Worthington's motion.
The Worthington/RSL subcontract contains an arbitration provision. The arbitration clause provides that a dispute which "arises out of or relates to this Agreement or its breach" must be arbitrated if "direct discussions" do not resolve the dispute. The parties do not argue that direct discussions did not occur.
A party seeking to compel arbitration under the Federal Arbitration Act must establish that there is a valid arbitration agreement and that the claims raised fall within that agreement's scope. We apply state contract law principles governing the formation of contracts when we determine the validity of agreements to arbitrate under the FAA. The trial court's decision as to the validity of an arbitration agreement is a legal determination that we review de novo.
In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005).
In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 676 (Tex. 2006).
Inre D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006).
The contract language -- "arises out of or relates to the Agreement" -- is broad and unambiguous. There is no claim that the elements of the contract were not established, or that the contract was illusory or ambiguous. RSL did not raise any affirmative defenses to the arbitration agreement. RSL's claim arises out of and is related to the contract between Worthington and RSL and falls within the scope of the agreement. We conclude that Worthington and RSL agreed to arbitrate this dispute, and that a valid arbitration agreement exists.
Once a party carries its initial burden of establishing the arbitration agreement's existence and shows the alleged claims fall within the agreement's scope, the burden shifts to the party opposing arbitration to raise an affirmative defense to enforcing arbitration. In the trial court, RSL did not file a response to the motion to compel arbitration. RSL did not urge waiver until it filed with this Court a pleading contending that Worthington, by not timely requesting the trial judge to rule on the arbitration motion, waived the right to arbitrate. RSL did not plead waiver or any defense in the trial court. RSL waived its affirmative defenses to arbitration.
Inre Global Constr. Co., L.L.C., 166 S.W.3d 795, 798 (Tex. App.—Houston [14th Dist.] 2005, orig. proceeding).
Cont'l Homes of Tex., L.P. v. City of San Antonio, 275 S.W.3d 9, 15 (Tex. App.— San Antonio 2008, pet. denied); see also Tex. R. Civ. P. 94.
At the conclusion of its motion to arbitrate Worthington asked for an order compelling arbitration of its dispute with RSL; the request does not include CSI or Hartford. The trial court's order ruling on the motion is simply marked "denied." In its brief on appeal, Worthington asks that this Court order RSL to arbitrate its claim against Worthington and that this Court order all trial court proceedings abated until either arbitration is concluded on that claim or the claim is dismissed for failure to submit it to arbitration. CSI and Hartford concur in that stay request in the event that arbitration is required only between Worthington and RSL.
The trial court abused its discretion in denying Worthington's motion to compel arbitration as to RSL. The order is reversed. The case is remanded to the trial court for the trial court to enter an order compelling arbitration between Worthington and RSL Contractors, Ltd., and staying other proceedings pending the outcome of the arbitration.
In the CSI/Worthington contract which is attached to various pleadings in this record, we do not find any pages that contain a dispute resolution clause.
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REVERSED AND REMANDED.
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DAVID GAULTNEY
Justice
Before McKeithen, C.J., Gaultney and Kreger, JJ.