IN RE OLSHAN FOUND. REPAIR CO. OF DALLAS

• Decision Date: 21 June 2006
• Docket Number: No. 10,10
• Parties: In re OLSHAN FOUNDATION REPAIR COMPANY OF DALLAS, LLC d/b/a Olshan Foundation Repair Company.
• Court: Texas Court of Appeals

192 S.W.3d 922

In re OLSHAN FOUNDATION REPAIR COMPANY OF DALLAS, LLC d/b/a Olshan Foundation Repair Company.

No. 10-06-00025-CV.

Court of Appeals of Texas, Waco.

June 21, 2006.

Kimberly A. Elkjer, Robert M. Millimet, Scheef & Stone, L.L.P., Dallas, and Stephen E. Van Buren, Attorney At Law, Houston, for Appellant/Relator.

Angela E. Tekell, Tekell & Atkins, L.L.P., Waco, for Appellee/Respondent.

Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.

OPINION

PER CURIAM.

Jason and Jacqueline Seay sued Olshan Foundation Repair Company of Dallas for breach of warranty, DTPA violations, and negligence arising out of foundation repairs made by Olshan. After the trial court denied Olshan's motion to compel arbitration, Olshan now petitions us for a writ of mandamus,¹ citing the Federal Arbitration Act (FAA) and providing an evidentiary affidavit in support of the FAA's applicability. 9 U.S.C.A. §§ 1-16 (West 1999). Because Olshan admittedly (Relator's Petition at p. 20) did not invoke the FAA or raise its applicability in the trial court,² we deny the petition regarding Olshan's arbitration motion. See In re Neatherlin Homes, Inc., 160 S.W.3d 82, 83 (Tex.App.-Waco 2004, orig. proceeding)

(citing In re L & L Kempwood Assoc., L.P., 9 S.W.3d 125, 127 (Tex.1999) (invoking the FAA), and In re American Optical Corp., 988 S.W.2d 711, 714 (Tex.1998) (raising argument in trial court)).

Olshan also asked the trial court to dismiss the Seays' claims under the Residential Construction Liability Act (RCLA) because the Seays allegedly failed to give Olshan proper pre-suit notice. See TEX. PROP.CODE ANN. §§ 27.001-.007 (Vernon Supp.2005). The trial court also denied that motion, and Olshan seeks mandamus on that ruling. The Seays point out: (1) neither the current RCLA nor its predecessor creates a cause of action that must be pled; (2) Olshan received adequate pre-suit notice from the Seays; (3) abatement, not dismissal, would be the proper remedy under RCLA; and (4) Respondent properly found that the pre-suit notice warranted denial of Olshan's motion to dismiss. We agree with the Seays; thus, we deny the petition seeking to require Respondent to dismiss the underlying suit.

For the above reasons, we deny Olshan's petition for writ of mandamus.

Justice VANCE concurring.

Chief Justice GRAY dissenting.

BILL VANCE, Justice, concurring.

I write separately to note that, even if the FAA had been invoked, in denying Olshan's motion to compel arbitration, Respondent could have found that no arbitration agreement existed or that Olshan's foundation repair was done under a verbal agreement with Seay. See In re Dillard Dept. Stores, Inc., ___ S.W.3d ___, ___, 2006 WL 508629, at *1 (Tex. Mar.3, 2006) ("In reviewing findings of fact in a mandamus proceeding, we cannot substitute our judgment for that of the trial court."). Under the FAA, courts decide whether an arbitration agreement was ever concluded, i.e., signed. Buckeye Check Cashing, Inc. v. Cardegna, ___ U.S. ___, ___ n. 1, 126 S.Ct. 1204, 1208 n. 1, 163 L.Ed.2d 1038 (2006). While Texas law expresses a strong presumption in favor of arbitration, the presumption arises only after the party seeking arbitration proves the existence of an arbitration agreement. J.M. Davidson v. Webster, 128 S.W.3d 223, 227 (Tex.2003). Courts interpret arbitration agreements under traditional state-law contract principles, which are also used to determine the formation of such contracts when deciding whether an arbitration agreement exists. Id. at 227-28 (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995)).

In the trial court's December 15, 2005 evidentiary hearing on Olshan's motion to compel arbitration, the parties vigorously contested whether an arbitration agreement existed.³ Olshan contended that an agreement with Scott Perrin (the prior homeowner) dated November 19, 2001 (the "Perrin bid") but signed only by Olshan salesman Shannon Kemp, contains the applicable arbitration agreement.⁴ Olshan asserted for the first time at the December 15 hearing that both its copy and Perrin's copy of the Perrin bid with Perrin's signature had been lost or destroyed.⁵ If a written and signed document is lost or destroyed, its existence and terms may be shown by clear and convincing evidence. A.G. Edwards & Sons, Inc. v. Beyer, 170 S.W.3d 684, 692-93 (Tex.App.-El Paso 2005, pet. filed).

But the Seays, who had agreed to purchase Perrin's home on November 14, 2001, contended that Perrin had nothing to do with the foundation repair work that was actually done; Jason Seay testified that Perrin told him that Perrin would not sign an agreement with Olshan and that Perrin would not pay for any of the foundation repair. Because the house had obvious foundation problems, the Seays' lender would not do a mortgage without an engineer's site plan that ensured the foundation could be repaired. The Seays' engineer inspected the house on November 21 and wrote a report with repair plans (calling for sixteen piers) dated November 26 that was faxed to Olshan by Norma Boggs on that date.⁶ Olshan then prepared the Perrin bid dated November 19 for sixteen piers for $6,400 with the handwritten notation "bid per engineer report" (the engineer's report called for sixteen piers) and faxed it to Boggs on November 28, who in turn faxed it to the Seays on November 29.⁷ Under the Seays' version of events, the Perrin bid could not have been in existence at the time Perrin says he received it, signed it, and faxed it (within a few days of November 19) to Olshan. This is why, the Seays contend, there is no available copy of the Perrin bid signed by Perrin—it never existed.⁸ Respondent could have believed the Seays' version of these events and thus concluded that Olshan failed to meet its burden of proving by clear and convincing evidence that a signed version of the Perrin bid was lost or destroyed.⁹

Respondent could have further concluded that Olshan's foundation repair work was done under a verbal agreement between Seay and Olshan's Wegman and that the warranty was provided pursuant to that verbal agreement, independent of any alleged agreement between Perrin and Olshan. See Edwards v. Schuh, 5 S.W.3d 829, 832-33 (Tex.App.-Austin 1999, no pet.)

(subsequent purchasers not required to arbitrate warranty claim against builder, where claim could be brought under express warranty contained in builder's letter independent from warranty in construction contract that contained arbitration clause). The Olshan warranty certificate itself does not refer to any other agreement or to arbitration.

Four witnesses testified at the hearing, and many exhibits were admitted into evidence. Much conflicting and contradictory evidence about the respective dealings between Perrin and Olshan and Seay and Olshan was presented to Respondent, who resolved the disputed fact issues against Olshan. Cf. Dillard, ___ S.W.3d at ___, 2006 WL 508629, at *1-3 (relator must establish that trial court could reasonably have reached only one decision; the evidence compelled a finding that employee agreed to arbitrate). An appellate court may not substitute its judgment on the facts for that of the trial court. In re Republic Lloyds, 104 S.W.3d 354, 357 (Tex. App.-Houston [14th Dist.] 2003, orig. proceeding); In re Rangel, 45 S.W.3d 783, 786 (Tex.App.-Waco 2001, orig. proceeding). In other words, an appellate court may not deal with disputed matters of fact in an original mandamus proceeding. Republic Lloyds, 104 S.W.3d at 357 (citing Hooks v. Fourth Court of Appeals, 808 S.W.2d 56, 60 (Tex.1991) (orig.proceeding), and Brady v. Fourteenth Court of Appeals, 795 S.W.2d 712, 714 (Tex.1990) (orig.proceeding)). Because Respondent resolved the disputed fact issues and an appellate court cannot, Olshan has not established its right to mandamus relief, and I would deny the petition on this basis as well.

TOM GRAY, Chief Justice, dissenting.

This dissenting opinion will be divided into two principal sections. The two sections will address the problems with the majority opinion and state what I consider to be a proper analysis of the issue.

PROBLEMS WITH THE MAJORITY OPINION

I will begin my analysis with the problems in, and the problems avoided by, the majority opinion. The majority opinion, to the casual reader, would appear uncontroversial and straightforward. It is neither.

The first thing the casual reader will not see, which is also a controversial part, goes to the core of our advocacy system.

The United States legal system has two very well-recognized concepts. The system is based upon judicial restraint. "We cannot raise points of error sua sponte. As the Texas Supreme Court recently reiterated, our task is to consider only those issues presented by the parties. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex.1993)." Madeksho v. Abraham, Watkins, Nichols & Friend, 57 S.W.3d 448, 455 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). "Historically, [the Texas Supreme Court] ha[s] used the term `fundamental error' to describe situations in which an appellate court may review error that was neither raised in the trial court nor assigned on appeal. In light of [the Supreme Court's] strong policy considerations favoring preservation, [that Court] ha[s] called fundamental error `a discredited doctrine.'" In re B.L.D., 113 S.W.3d 340, 350 (Tex.2003),cert. denied sub nom. Dossey v. Tex. Dep't of Protective & Reg. Servs., 541 U.S. 945, 124 S.Ct. 1674, 158 L.Ed.2d 371 (2004) (B.L.D. quoting Cox v. Johnson, 638 S.W.2d 867, 868 (Tex.1982) (per curiam)) (internal citations omitted); but see Pena v. State, 191 S.W.3d 133, 136 (Tex.Crim. App.2006)

("[A]ppellate courts are free to review `unassigned error'—a claim that was preserved in the trial below but was not raised on appeal."). Generally, judges are limited to answering the question presented, and only the question presented. Another well-recognized...