Gainey v. Minoo, LLC

• Decision Date: 12 December 2019
• Docket Number: No. 02-19-00171-CV,02-19-00171-CV
• Citation: Gainey v. Minoo, LLC, No. 02-19-00171-CV (Tex. App. Dec 12, 2019)
• Parties: CHRISTOPHER GAINEY A/K/A CHRIS GAINEY, PHILIP LEVY, AND MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES OF NEVADA, INC., Appellants v. MINOO, LLC, Appellee
• Court: Texas Court of Appeals

CHRISTOPHER GAINEY A/K/A CHRIS GAINEY, PHILIP LEVY, AND MARCUS& MILLICHAP REAL ESTATE INVESTMENT SERVICES OF NEVADA, INC., Appellants v. MINOO, LLC, Appellee

No. 02-19-00171-CV

Court of Appeals Second Appellate District of Texas at Fort Worth

December 12, 2019

On Appeal from the 431st District Court Denton County, Texas

Trial CourtNo. 18-2578-431

Before Birdwell, Bassel, and Wallach, JJ.

Memorandum Opinion by Justice BasselMEMORANDUM OPINION

I.Introduction

This appeal involves the denial of a motion to compel arbitration.Marcus & Millichap Real Estate Investment Services of Nevada, Inc.; Christopher Gainey; and Philip Levy are the Appellants, and we will refer to them as the Real Estate Agents or the Agents.The party opposing the arbitration, Minoo, LLC, sued the Agents claiming that they had represented a seller in a real estate transaction.In that transaction, Minoo was the buyer of a shopping center and claimed that the Real Estate Agents had failed to disclose information that a major tenant of the shopping center was planning to move.We refer to Minoo as the Buyer.

The Real Estate Agents raise four issues arguing that the trial court should have ordered the claims against them to arbitration even though neither they nor the Buyer had signed the agreement containing the arbitration clause.The issues involve (1) a general challenge to the denial of the Agents' motion to compel arbitration, (2) various theories that bind the Buyer to arbitrate its claims against them, (3) various theories that make the Real Estate Agents able to compel arbitration, and (4) a theory regarding why—if the arbitration agreement may be invoked by the Agents against the Buyer—the arbitration clause covered the claims made by the Buyer.The Buyer counters these arguments and also contends that the Agents failed to present evidence to support their motion to compel arbitration and that this failing alone is enough to sustain the trial court's denial of the motion to compel.

We sustain the Agents' issues for the following reasons:

• We have a record that is sufficient for us to reach the merits of this appeal and to determine whether the trial court abused its discretion by denying the motion to compel arbitration.

• The Buyer acknowledged that the party that had signed the agreement containing the arbitration clause was its agent.The Buyer, as principal, was bound to the agreement by the acts of its agent.

• The Real Estate Agents were third-party beneficiaries of the agreement containing the arbitration clause and thus were able to compel arbitration of the Buyer's claims against them.

• The arbitration clause covered the Buyer's claims because its artful pleading of fraudulent-inducement claims cannot avoid the arbitration clause's broad scope that encompasses claims "relating to" the agreement.

Therefore, we reverse the trial court's order denying the Agents' motion to compel arbitration and render an order granting this motion.We also remand this case to the trial court and order the case stayed pending completion of arbitration.

II.Factual Background

The Buyer pleaded in its live pleading, its first amended petition, that its agent had negotiated the purchase of the shopping center that forms the basis of the controversy and that its agent had "entered into the Commercial Earnest Money Contract for the purchase of the Property . . . on behalf of [the Buyer]."We will refer to this agreement as the Purchase Agreement.

The Buyer pleaded that the Real Estate Agents acted as the seller's real estate agents in the sale of the shopping center and that the relationship between the three Agents was that

Defendants Levy and Gainey were and are real estate agents for DefendantsMarcus & Millichap Capital Corporation("Millichap") and/or Marcus & Millichap Real Estate Investment Services of Nevada, Inc.("Millichap Nevada"), and acted as the real estate agents and broker for Hebron Plaza, LLC[the seller] in the sale of the shopping center that is the subject of this suit.

The petition emphasizes that the individual Real Estate Agents were acting in the scope of an agency relationship that they had with the corporate agent: "At all times herein, Defendants Levy and Gainey acted within the scope of duties and agency on behalf of Defendants Millichap and Millichap Nevada, real estate brokers doing business in the State of Texas."The remaining defendant is David R. Harrison, who is not a party to this appeal.¹

Harrison is described at one point in the Buyer's petition as the manager of the seller of the shopping center, but most of the petition's allegations focus on hisownership stake in the liquor store that was the largest tenant in the shopping center.The crux of the suit is that the liquor store tenant had plans to move from the shopping center but that this fact was not disclosed to the Buyer.

The prospect of the largest tenant's move allegedly came to light when one of its employees "intimated" to the Buyer's real estate broker that the liquor store might be moving its location.This revelation prompted an inquiry by the Buyer's broker to the Real Estate Agents.The petition described the inquiry and the Agents' response as follows:

On or about April 2, 2014, Levy contacted [the Buyer's] broker regarding the status of the underwriting for the purchase of the property.[The Buyer's] broker responded to Levy (and Defendants Millichap and/or Millichap Nevada, Gainey[,] and Harrison were copied on such email) and advised that [the liquor store] employees stated the store was closing but that Harrison has assured [the Buyer] that [the liquor store] is staying at the Property.[The Buyer's] broker stated in such email[,]"Dave has assured me [the liquor store] is staying.If not, we need full disclosure."No response was made by any Defendant copied on the email until April 9, 2014, when Levy requested another update on the underwriting.Defendants Levy and Gainey, and on behalf of Millichap and/or Millichap Nevada, failed to make any disclosure to [the Buyer] or its agents that [the liquor store] was either in the process of moving its liquor license and/or planning on vacating the Property.

Allegedly another prospective purchaser of the shopping center had advised the Real Estate Agents that it did not purchase the center because it became aware of the tenant's planned move.Harrison allegedly assured the Buyer that the tenant did not plan to move.Finally, the Buyer alleges that additional inquiries about the status of the tenant did not produce a disclosure of the tenant's plans to move.

The Buyer allegedly predicated the value of the shopping center on the tenant's continued presence and pleaded that it had "relied on the statements and assurances made by Defendant Harrison that [the liquor store] would not be vacating the Tenant Space in deciding to purchase such Property."Allegedly, no one disclosed that the tenant had entered into a lease at another shopping center and had begun the process of obtaining approval from governmental agencies to move and to acquire another liquor license for it new location.

After completing its due diligence, the Buyer's agent entered into the Purchase Agreement for the shopping center, and the Buyer later closed on the purchase.About a year after the closing, the liquor store vacated its space in the shopping center.

The petition alleges the consequences of the failure to disclose the tenant's imminent departure as follows: "[The Buyer] and [the Buyer's] agents relied on the statements and assurances made by Defendant Harrison that [the liquor store] would not be vacating the Tenant Space in deciding to purchase such Property."

Predicated on the described allegations, the Buyer sued the Real Estate Agents under the real estate fraud provision of the Texas Business and Commerce Code.SeeTex. Bus. & Comm. Code Ann. § 27.01.That cause of action turned on the contentions that

[the Agents] benefited from the sale of the Property to [the Buyer] by not disclosing that a third[ ]party's representations were false.[The Agents] failed to disclose to [the Buyer] after an express request for fulldisclosure as to whether the largest tenant at the Property (based on rent paid) would remain at the Property and was not planning to vacate the Property.[The Agents'] silence was calculated to avoid losing a sale upon which [the Agents] were to earn commissions.Particularly as prior prospective purchasers had pulled out of any sale for similar, related concerns.[The Buyer] relied and/or reasonably relied on [the Agents'] conduct as [the Agents'] nondisclosure indicated that [the liquor store] was remaining at the Property.

Though phrased with slight differences, the Buyer's petition also alleged a cause of action against the Real Estate Agents for fraud by nondisclosure on the same basis as the statutory fraud claim.The pleading of this cause of action included the allegations that "[b]y failing to provide such disclosures, [the Agents] intended to induce [the Buyer] into purchasing the Property."As discussed below, we construe these causes of action to be, in essence, claims that the Buyer was fraudulently induced to purchase the shopping center.

III.Procedural Background

The Real Estate Agents answered the Buyer's suit and several months later moved to compel arbitration.The motion to compel arbitration asserted that although the Real Estate Agents were not signatories of the Purchase Agreement, various theories permitted them to invoke the arbitration provision contained in the Purchase Agreement, including agency and third-party beneficiary status.The motion attached a declaration that authenticated a copy of the Purchase Agreement and included it as an exhibit.The motion also relied on various allegations from the Buyer's first amended petition.

The Buyer filed a response that challenged the legal arguments relied on by the Real Estate Agents.The Buyer did not challenge the authenticity of the copy...