In re Green Tree Servicing LLC

• Citation: 275 S.W.3d 592
• Decision Date: 23 December 2008
• Docket Number: No. 06-08-00125-CV.,06-08-00125-CV.
• Parties: In re GREEN TREE SERVICING LLC, Authorized Servicing Agent for United Companies Funding.
• Court: Texas Court of Appeals

275 S.W.3d 592

In re GREEN TREE SERVICING LLC, Authorized Servicing Agent for United Companies Funding.

No. 06-08-00125-CV.

Court of Appeals of Texas, Texarkana.

Submitted: December 22, 2008.

Decided: December 23, 2008.

Richard A. McKinney, Higier, Allen & Lautin, PC, Addison, for relator.

Scott Rectenwald, Marshall, for real party in interest.

Before MORRISS, Chief Justice, CARTER and MOSELEY, JJ.

OPINION

Opinion by Justice CARTER.

Green Tree Servicing, LLC, authorized servicing agent for United Companies Funding, has filed a petition for writ of mandamus requesting this Court to order the Honorable Jim Ammerman, II, presiding judge of the County Court at Law, Harrison County¹ to 1) rescind the order denying Green Tree's plea in abatement and motion to compel arbitration, 2) enter an order compelling the parties to submit their dispute to binding arbitration, and 3) enter an order of abatement. We conclude the trial court clearly abused its discretion in denying the motion to compel arbitration; we conditionally grant the petition.

I. Facts and Procedural Background

While purchasing a Clayton Manufactured Home, Taylor Coyner entered into a Manufactured Home Retail Installment Contract and Security Agreement on or about March 16, 1996. The contract is being serviced by Green Tree. Green Tree alleged Coyner defaulted under the terms of the contract by failing to make payments pursuant to the terms of the contract and filed suit in the County Court at Law of Harrison County. Coyner filed an answer claiming he had complied with all the terms of the agreement. Coyner claims EMC Mortgage Corporation² had falsely claimed Coyner had failed to maintain insurance on the manufactured home and had attempted to charge Coyner for insurance. According to Coyner, EMC continued to allege charges for insurance even after it had been presented with proof of Coyner's insurance and admitted its original allegations were in error. Coyner raised counterclaims for breach of contract, violations of the Federal Fair Debt Collection Practices Act, and violations of the Texas Fair Debt Collection Act. Before any discovery had been conducted, Green Tree filed a plea in abatement and motion to compel arbitration. The trial court held a hearing on the motion and denied the motion.

We hold that the contract agreed to by the parties contains an arbitration clause governed by the Federal Arbitration Act (FAA); mandamus is the appropriate avenue to enforce an arbitration clause governed by the FAA; there is no support for the trial court's finding of waiver or unconscionability.

II. The Arbitration Clause Was Part of the Contract

The first issue with which we are presented is whether the contract, as agreed to by the parties, contains an arbitration clause. Coyner argues the trial court did not abuse its discretion in denying the motion to arbitrate because Coyner never agreed to the arbitration clause.

The contract contains an arbitration provision whereby the parties agreed to arbitrate all disputes and claims arising from the contract. The arbitration provision provides as follows in pertinent part:

Except as explained below, you and we understand and agree that all disputes, claims or controversies arising from or relating to this Contract (whether under case law, statutory law, or any other laws including, but not limited to, all contract, tort and property disputes) shall be resolved by binding arbitration ("Arbitration").

. . . .

EXCEPTION TO ARBITRATION: Even though you and we agree to arbitration, we may use judicial (filing a lawsuit) or non-judicial relief to enforce our security interest, or to otherwise collect the balance due on the Contract. We may begin a lawsuit to enforce our security interest, or to obtain a monetary judgment, without waiving your right or our right to compel Arbitration of any other dispute or remedy. Including the filing of a counterclaim by you in a lawsuit brought by us.

"A party seeking to compel arbitration must establish the existence of a valid arbitration agreement and show that the claims in dispute fall within the scope of that agreement." In re Bath Junkie Franchise, Inc., 246 S.W.3d 356, 363 (Tex. App.-Beaumont 2008, orig. proceeding). Arbitration cannot be compelled without an agreement to arbitrate. Valero Energy Corp. v. Teco Pipeline Co., 2 S.W.3d 576, 586 (Tex.App.-Houston [14th Dist.] 1999, no pet.). When determining whether the parties agreed to an arbitration provision subject to the FAA, we apply state-law principles governing the formation of contracts. In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 676 (Tex.2006); In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 738 (Tex.2005); Bath Junkie, 246 S.W.3d at 363; see First Options v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). When interpreting a contract, our primary objective is to ascertain and give effect to the intent of the parties as expressed in the contract. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex.2006). "Unless a party clearly agreed to arbitrate and be bound by the arbitrator's decision, courts do not compel arbitration." In re Premont Indep. Sch. Dist., 225 S.W.3d 329, 333 (Tex.App.-San Antonio 2007, orig. proceeding).

We will interpret the terms of the contract based on "the plain, ordinary and generally accepted meaning attributed to the term or word." Pratt-Shaw v. Pilgrim's Pride Corp., 122 S.W.3d 825, 833 (Tex.App.-Dallas 2003, pet. denied). If a written instrument's text can be given a definite legal meaning, the contract is not ambiguous and must be construed as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). If the language of a contract is subject to two or more reasonable interpretations, it is ambiguous. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex.1995); see Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex.2003). Whether a contract is ambiguous is a question of law for the court. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118 (Tex. 1996). Neither party argues the contract is ambiguous.

Parties form a binding contract when the following elements are present: (1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) a meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding.

KW Constr. v. Stephens & Sons Concrete Contrs., Inc., 165 S.W.3d 874, 883 (Tex. App.-Texarkana 2005, pet. denied); Buxani v. Nussbaum, 940 S.W.2d 350, 352 (Tex App.-San Antonio 1997, no writ). Coyner essentially argues because he was not aware of the arbitration clause, there was not a meeting of the minds and an acceptance in strict compliance with the terms of the offer.

A unilateral mistake will not normally void a contract. See Johnson v. Conner, 260 S.W.3d 575, 581 (Tex.App.-Tyler 2008, no pet.); Ledig v. Duke Energy Corp., 193 S.W.3d 167, 175 (Tex. App.-Houston [1st Dist.] 2006, no pet.). Equity may permit rescission based on a unilateral mistake only when

(1) the mistake is of so great a consequence that to enforce the contract would be unconscionable; (2) the mistake relates to a material feature of the contract; (3) the mistake occurred despite ordinary care; and (4) the parties can be placed in status quo, i.e., the rescission must not prejudice the other party except for the loss of the bargain.

Cigna Ins. Co. v. Rubalcada, 960 S.W.2d 408, 412 (Tex.App.-Houston [1st Dist.] 1998, no pet.). Coyner has failed to establish that his unilateral mistake permits rescission of the contract.

Under the general rule, every person who has the capacity to enter into a contract is held to know what words were used in the contract, to know their meaning, and to understand their legal effect. Indem. Ins. Co. of N. Am. v. W.L. Macatee & Sons, 129 Tex. 166, 101 S.W.2d 553, 556 (1937); Amouri v. Sw. Toyota, Inc., 20 S.W.3d 165, 169 (Tex.App.-Texarkana 2000, pet. denied). The arbitration provision was clear and unambiguous and subject to Coyner's review before signing. The parties to a contract have an obligation to protect themselves by reading what they sign. Cendant Mobility Servs. Corp. v. Falconer, 135 S.W.3d 349, 354 (Tex.App.-Texarkana 2004, no pet.). Unless one party's false representations about the contract's content induced another party to contract, the parties may not excuse themselves from the consequences of failing to read the contract in its entirety. Id. at 354; Amouri, 20 S.W.3d at 169; see Palm Harbor Homes, Inc., 195 S.W.3d at 676.

There is no allegation that the relator committed fraud or made false representations concerning the contract's content. Coyner's failure to read the contract does not modify the terms of the contract. Green Tree established the existence of a valid arbitration agreement, and Coyner does not contest that the claims in dispute fall within the scope of the arbitration agreement.

III. The Agreement Is Governed by the FAA

Arbitration clauses may be enforced under Texas common law, the Texas Arbitration Act, or the FAA. With a few exceptions not applicable to this proceeding, the FAA applies to all contracts "evidencing a transaction involving commerce." Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269-70 (Tex.1992). The FAA "preempts state statutes to the extent they are inconsistent with that Act." Id. at 272. The FAA defines "commerce" as:

commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation, but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate...