Lawson v. Archer

• Decision Date: 31 July 2008
• Docket Number: No. 14-07-00429-CV.,No. 14-07-00324-CV.,14-07-00324-CV.,14-07-00429-CV.
• Citation: 267 S.W.3d 376
• Parties: Donald LAWSON, Individually and d/b/a/ V.I.P. Home Inspections and Mark Guillerman, Appellants, v. Larry ARCHER and Wife, Susan Archer, Appellees. In re Donald Lawson, Individually and d/b/a/ V.I.P. Home Inspections, and Mark Guillerman, Relators.
• Court: Texas Court of Appeals

267 S.W.3d 376

Donald LAWSON, Individually and d/b/a/ V.I.P. Home Inspections and Mark Guillerman, Appellants, v. Larry ARCHER and Wife, Susan Archer, Appellees In re Donald Lawson, Individually and d/b/a/ V.I.P. Home Inspections, and Mark Guillerman, Relators.

No. 14-07-00324-CV.

No. 14-07-00429-CV.

Court of Appeals of Texas, Houston (14th Dist.).

July 31, 2008.

Kenneth C. Kaye, League City, Walter J. Kronzer, III, Houston, for Appellants.

Daniel C. Pappas, David W. Holman, Nicole Bernadette James, Houston, for Appellees in No. 14-07-00324-CV.

Alan N. Magenheim, David W. Holman, Nicole Bernadette James, Daniel C. Pappas, Gary M. Polland, Houston, for Appellees in No. 14-07-00429-CV.

Panel consists of Justices FOWLER, FROST, and SEYMORE.

OPINION

WANDA McKEE FOWLER, Justice.

In this consolidated interlocutory appeal and petition for writ of mandamus, appellants/petitioners Donald Lawson, individually and d/b/a/ V.I.P. Home Inspections, and Mark Guillerman (collectively, "V.I.P.") challenge the trial court's order denying their motion to compel arbitration of the claim filed by appellees/real parties in interest, Larry and Susan Archer. We conclude we lack jurisdiction over the appeal and therefore dismiss it. We further conclude denial of the motion to compel arbitration is a clear abuse of discretion for which the remedy of appeal is not available and therefore conditionally grant the petition for writ of mandamus.

Factual and Procedural Background

In January 2005, the Archers purchased a house from Patricio Valdes and Gemma Joffrey-Valdes ("sellers"). Ironwood Homes, Inc., d/b/a Ironwood Custom Homes JV1, d/b/a Ironwood Custom Homes of Houston ("Ironwood") was the original builder.

Before purchasing the house, Mrs. Archer contracted with V.I.P. for a home inspection, and on December 1, 2004, the same day the inspection occurred, Mrs. Archer signed an Inspection Agreement (the "Agreement"). Guillerman, the inspector, signed for V.I.P. The fee for the inspection was $350.00, and, under the Agreement, V.I.P.'s liability and that of its agents for "for claims or damages, costs of defense and suit, attorney's fees, or expenses and payment arising out of, or in any way connected with, errors or omissions in the inspection or in the inspection report" was limited to the amount of the fee. To remove the liability limitation and receive "an inspection by a team of experts," the customer could opt to pay $5,500.00. Mrs. Archer checked the box indicating she did not want this option. The same section containing the liability limitation also provided "any suit brought against V.I.P. Inspections shall be done within 1 year of the time of inspection or be forever time barred." The Agreement was to be governed by Texas law.

A completely separate section, captioned "If We Have a Dispute," provided in its entirety:

Any matter concerning the interpretation of this document, the written inspection report, the underlying inspection or any claim based upon any of them, shall be resolved by agreement between the parties; or, failing such agreement, and before resorting to arbitration, the parties agree first to try in good faith to settle the dispute by mediation with a neutral mediator knowledgeable in and familiar with the home inspection profession, under the Construction Mediation Rules of the Construction Arbitration Services. Thereafter, any remaining unresolved controversy or claim concerning the interpretation of the document, the written inspection report, the underlying inspection or any claim based upon any of them, shall be resolved by arbitration in accordance with the parties submitting the dispute shall, by mutual agreement, appoint three neutral arbitrators knowledgeable in, and familiar with, the home inspection profession. One of the arbitrators must be a current member in good standing of the American Society of Home Inspectors with a minimum of five years full-time experience as a professional home inspector. In addition, one arbitrator must be an officer of the Texas Association of Real Estate Inspectors and another arbitrator must be a member on the Texas Real Estate Commissions Inspector Committee. The arbitrators shall follow substantive rules of law. Judgement upon the award rendered by the arbitrators may be entered in any court having jurisdiction. The prevailing party shall recover all costs and expenses, including all attorney's fees and costs and all arbitration costs and fees from the other party. As to any dispute or controversy which, under the terms hereof is hereby made subject to arbitration, no suit at law or in equity based on dispute or controversy shall be instituted by either party hereto, other than to enforce the award of the arbitrators.

According to Mrs. Archer, Guillerman was rushed, and so he told her only the cost of the inspection and instructed her where to sign the Agreement. Mrs. Archer claimed Guillerman did not advise her of the terms or provisions in the Agreement, nor did he give her an opportunity to review the Agreement.

After the Archers closed on the house, they allegedly began experiencing problems with the home, so they contacted the builder, Ironwood. Ironwood chose a forensic engineer to inspect the Archers' home, and the forensic engineer found several architectural and functional problems. The Archers requested that Ironwood remedy the construction-related problems, but Ironwood refused.

On October 2, 2006, the Archers sued Ironwood, V.I.P., and the sellers. On November 2, 2006, V.I.P. filed both its original answer and a motion to abate or stay litigation and compel arbitration. In response, the Archers filed an opposition to the motion to abate or stay litigation and compel arbitration. The trial court subsequently denied V.I.P.'s motion, and V.I.P. filed a notice of appeal in the trial court and a petition for writ of mandamus in this court.

Analysis of the Issues

In both the appeal and the petition for writ of mandamus, V.I.P. raises a single issue challenging the trial court's denial of its motion to abate or stay litigation and compel arbitration.¹ Before we decide this issue, however, we must decide whether, and by what procedural vehicle, we have jurisdiction to review the trial court's action.

1. Appeal or Mandamus

When the Federal Arbitration Act (FAA) applies or when neither the TGAA nor the FAA applies, mandamus is the appropriate procedure. D.R. Horton, Inc. v. Brooks, 207 S.W.3d 862, 866 (Tex.App.-Houston [14th Dist.] 2006, no pet.) (stating mandamus appropriate for party seeking relief from denial of arbitration under the FAA); In re Paris Packaging, Inc., 136 S.W.3d 723, 727 & n. 7 (Tex.App.-Texarkana 2004, orig. proceeding) (holding mandamus appropriate in situation in which neither TGAA nor FAA applied).

The TGAA does not apply to "an agreement for the acquisition by one or more individuals of property, services, money, or credit in which the total consideration to be furnished by the individual is not more than $50,000" unless "(1) the parties to the agreement agree in writing to arbitrate; and (2) the agreement is signed by each party and each party's attorney." TEX. CIV. PRAC. & REM.CODE § 171.002(a)(2), (b).² The Agreement in the present case set a fee of $350.00 for in the inspection service. No attorneys signed the Agreement. The TGAA therefore does not apply.

The FAA "extends to any contract affecting commerce, as far as the Commerce Clause of the United States Constitution will reach." In re Nexion Health at Humble, Inc., 173 S.W.3d 67, 69 (Tex.2005) (per curiam). "Commerce, as defined in the FAA, `means commerce among the several States....'" 9 U.S.C.A. § 1 (1999). When the arbitration agreement is silent regarding the application of the TGAA or the FAA, the question of whether the transaction affects interstate commerce, and thus whether the FAA governs, is one of fact. In re Educ. Mgmt. Corp., 14 S.W.3d 418, 422 (Tex. App.-Houston [14th Dist.] 2000, orig. proceeding).

In the present case, the parties reside and do business in Texas. They executed the Agreement in Texas. The inspected property is in Texas. The Agreement provides, "This agreement shall be governed by the laws of the State of Texas." In short, the FAA does not apply, and neither party seriously argues it does.³

Thus, neither the TGAA nor the FAA applies. Mandamus is therefore the appropriate procedure by which we may review the trial court's denial of the motion to compel arbitration. See In re Paris Packaging, 136 S.W.3d at 727 & n. 7.⁴ We dismiss the appeal.

2. Standard for Mandamus Relief

To be entitled to the requested mandamus relief, V.I.P. must show that the trial court's order is a clear abuse of discretion and that V.I.P. has no adequate remedy by appeal. See In re Ford Motor Co., 165 S.W.3d 315, 317 (Tex.2005) (per curiam). A trial court abuses its discretion when it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law, or if it clearly fails to correctly analyze or apply the law. Id. The relator has the burden to establish the trial court abused its discretion. See id. A trial court's wrongful refusal to compel a party's contractual right to arbitration warrants mandamus relief. See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 138 (Tex.2004) (in context of case involving contractual waiver of jury trial, stating court has granted mandamus relief for trial court's wrongful refusal to compel arbitration).

3. Review of the Order Denying the Motion to Compel Arbitration

A party seeking to compel arbitration must establish (1) an arbitration agreement exists and (2) the asserted claims fall within the scope of that agreement. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex.2001); In re Jim Walter Homes, Inc., 207 S.W.3d 888, 896-97 (Tex.App.-Houston [14th Dist.] 2006, orig. proceeding).⁵ In the present case, the parties agree an arbitration agreement exists and the...