Robinson v. Home Owners Mgmt. Enters., Inc., 02-16-00380-CV

• Decision Date: 19 April 2018
• Docket Number: NO. 02-16-00380-CV,02-16-00380-CV
• Parties: Nathan ROBINSON and Misti Robinson, Individually and as Representatives of All Persons Similarly Situated, Appellants v. HOME OWNERS MANAGEMENT ENTERPRISES, INC. d/b/a Home of Texas and Warranty Underwriters Insurance Company, Appellee
• Court: Texas Court of Appeals

549 S.W.3d 226

Nathan ROBINSON and Misti Robinson, Individually and as Representatives of All Persons Similarly Situated, Appellants

v.HOME OWNERS MANAGEMENT ENTERPRISES, INC. d/b/a Home of Texas and Warranty Underwriters Insurance Company, Appellee

NO. 02-16-00380-CV

Court of Appeals of Texas, Fort Worth.

DELIVERED: April 19, 2018

ATTORNEYS FOR APPELLANTS: MARK A. TICER, JENNIFER W. JOHNSON, LAW OFFICE OF MARK A. TICER, DALLAS, TEXAS, EVAN LANE (VAN) SHAW, LAW OFFICES OF VAN SHAW, DALLAS, TEXAS.

ATTORNEYS FOR APPELLEE: CURT COVINGTON, LAMBERTH RATCLIFFE COVINGTON, PLLC, ROCKWALL, TEXAS, EDWARD J. BAINES, ADMITTED PRO HAC VICE, SAUL EWING LLP, BALTIMORE, MAINE.

PANEL: WALKER, MEIER, and KERR, JJ.

ELIZABETH KERR, JUSTICE

We have two issues to address: (1) whether the trial court correctly determined that the availability of class-action arbitration under the parties' contract was a gateway substantive issue for it, not the arbitrator, to decide; and (2) whether the trial court correctly ruled that the arbitration clause in question did not authorize class arbitration. We hold that the trial court was right on both issues, and so we affirm.

Background

In February 2015, Nathan and Misti Robinson—in only their individual capacities—sued Home Owners Management Enterprises, Inc. d/b/a Home of Texas (HOME) and Warranty Underwriters Insurance Company (WUIC), along with others not parties to this appeal, for failure to fix or repair defects, for poor construction, and for deficiencies in their new home. At HOME’s request, the trial court abated the case and ordered arbitration based on an arbitration agreement contained in a Limited Warranty and its associated Addendum that HOME had provided to the Robinsons.¹

Section IV.E of the Limited Warranty is entitled "Arbitration" and reads, in part:

You begin the arbitration process by giving the Administrator written notice of your request for arbitration of an Unresolved Warranty Issue. Within twenty (20) days after the Administrator’s receipt of your notice of request for arbitration, any Unresolved Warranty Issue that you have with the Warrantor shall be submitted to an independent arbitration service experienced in arbitrating residential construction matters upon which you and the Administrator agree. This binding arbitration is governed by the procedures of the Federal Arbitration Act, 9 U.S.C. 1, et seq. ... [Emphases in original.]

The Addendum contains similar language in its section IV.A: "All Unresolved Warranty Issues will be submitted to binding arbitration. The Arbitrator shall be an independent Arbitrator or arbitration service upon which you and HOME agree.

This binding arbitration is governed by the procedures of the Federal Arbitration Act, 9 U.S.C. 1 et seq ...."

Both the Limited Warranty and the Addendum define an "Unresolved Warranty Issue" similarly; we include within brackets the Addendum’s phrasing, where different:

All requests for warranty performance, demands, disputes, controversies and differences that may arise between the parties to this Limited Warranty [to this TRCC Addendum as set forth in Section III hereof] that cannot be resolved among the parties. An Unresolved Warranty Issue may be a disagreement regarding:

a. the coverages in this Limited Warranty [in this TRCC Addendum to the Limited Warranty];

b. an action performed or to be performed by any party pursuant to this Limited Warranty [to this TRCC Addendum to the Limited Warranty];

c. the cost to repair or replace any item covered by this Limited Warranty [by this TRCC Addendum to the Limited Warranty].

The Addendum adds a fourth category of disagreement: "d. any other complaint or controversy regarding this TRCC Addendum between the parties to this Addendum."

Neither the Limited Warranty nor the Addendum mentions class-based arbitration, nor does either one refer to or incorporate the rules of the American Arbitration Association or any other arbitration-industry group.

At the appointed arbitrator’s and the parties' joint request, in July 2015 the trial court ordered that arbitration of the Robinsons' claims be completed no later than February 12, 2016. By agreement among themselves, the arbitrator and the parties had arranged a property inspection for February 1 and had set aside February 2nd through 4th to arbitrate.

On January 8, 2016—fewer than thirty days before the scheduled arbitration and almost a year after they had sued HOME—the Robinsons submitted to the arbitrator their "First Supplement to Plaintiffs' First Amended Statement of Claims as Representatives of All Persons Similarly Situated as to [HOME]." Through this supplement, the Robinsons sought for the first time to add class-action allegations against HOME over its alleged practice of wrongly requiring homeowners to execute overbroad releases as a condition of HOME’s performing repairs on covered claims. This allegation was unrelated to and independent of the Robinsons' claims regarding defective construction of their own house.

Eleven days later, on January 19, HOME objected and moved to strike the Robinsons' new class allegations. Although with his later January 28 order the arbitrator declined to strike the Robinsons' supplemental claims, the arbitrator did bifurcate those claims from the Robinsons' individual construction-related claims already set for February 2, 2016.

In early March 2016, after completing the arbitration but before the arbitrator issued his decision, HOME asked the trial court, "per the suggestion of the Arbitrator," to clarify the "scope of the issues subject to" the court’s July 2015 arbitration order or, alternatively, to strike the Robinsons' class claims. A little more than two weeks later, the arbitrator ruled entirely in the Robinsons' favor on their individual claims.

Having been awarded their costs of repairs, expert fees, arbitration costs, and contract-related attorney’s fees in arbitration, the Robinsons returned to the trial court in April 2016 with a "Statement of Claims, Individually and as Representatives of All Persons Similarly Situated," reiterating their complaints about HOME’s demanding overbroad releases before making covered repairs. And in an about-face from their earlier resistance to arbitration, the Robinsons now asserted that HOME was bound to arbitrate the class claims.

In moving the trial court to deny the Robinsons' demand for class arbitration and to strike or dismiss their new statement of claims, HOME argued as an overarching matter that the parties "never agreed to the unusual and impractical dispute resolution mechanism of class arbitration." After conducting a nonevidentiary hearing, the trial court found the following:

1. The question of whether the parties agreed to class arbitration is a question of arbitrability for this Court.

2. The Parties did not "clearly and unmistakably" provide that the arbitrator is to decide issues of arbitrability; thus, this Court shall determine the issue of class arbitrability.

3. The Court determines and finds that the Warranty Agreement between the Parties does not permit class arbitration.

As a result, the trial court granted HOME’s motion in part, ordering that "[t]his matter shall not be referred to class arbitration."² The Robinsons appealed this interlocutory order in accordance with Texas Civil Practice & Remedies Code section 51.016, which gives us jurisdiction.³

Discussion

Standard of review

The Robinsons frame two issues for us: (1) "Did the trial court abuse its discretion by deciding the question of arbitrability of [their] class claims rather than the arbitrator?" and (2) "Did the trial court abuse its discretion by determining the class claims are not arbitrable?" With these characterizations, the Robinsons correctly acknowledge that we review for abuse of discretion orders denying arbitration. Denar Rests., LLC v. King , No. 02-13-00142-CV, 2014 WL 2430854, at *2 (Tex. App.—Fort Worth May 30, 2014, no pet.) (mem. op.); D.R. Horton–Texas, Ltd. v. Drogseth , No. 02-12-00435-CV, 2013 WL 3377121, at *1 (Tex. App.—Fort Worth July 3, 2013, no pet.) (mem. op.); Cleveland Constr., Inc. v. Levco Constr., Inc. , 359 S.W.3d 843, 851 (Tex. App.—Houston [1st Dist.] 2012, pet. dism'd). As part of our evaluation, we defer to any factual determinations that are supported by the record but review legal questions de novo. See, e.g. , Denar Rests. , 2014 WL 2430854, at *2. The trial court here did not conduct an evidentiary hearing, nor did it enter findings of fact and conclusions of law, and so for all practical purposes, our review is de novo. If we conclude that the trial court "refuse[d] to compel arbitration under a valid and enforceable arbitration agreement," then it "clearly abused its discretion." In re Odyssey Healthcare, Inc. , 310 S.W.3d 419, 422 (Tex.) (orig. proceeding), cert. denied , 562 U.S. 895, 131 S.Ct. 319, 178 L.Ed.2d 145 (2010).

For the reasons that follow, we find no error in the trial court’s decisions.

General principles concerning arbitration agreements

In disputes that are subject to the Federal Arbitration Act, courts universally agree with certain principles:

• Agreements, such as this one, that are governed by the FAA are considered "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C.A. § 2 (West 2009).

• As an "overarching principle," then, "arbitration is a matter of contract." See, e.g. , Am. Exp. Co. v. Italian Colors Rest. , 570 U.S. 228, 233, 133 S.Ct. 2304, 2309, 186 L.Ed.2d 417 (2013) (citing Rent–A–Center, W., Inc. v. Jackson , 561 U.S. 63, 67, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010) ).

• From basic contract notions it thus follows that arbitration "is a matter of consent, not coercion." Stolt–Nielsen S.A. v. AnimalFeeds Int'l Corp. , 559 U.S. 662, 681, 130 S.Ct. 1758, 1773, 176 L.Ed.2d 605 (2010) (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ. , 489 U.S. 468, 479, 109 S.Ct. 1248, 1256, 103 L.Ed.2d 488 (1

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