TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-18-00587-CV
Cielo Property Group, LLC; Robert Dillard, III; and Robert Gandy, IV, Appellants
v.
Branigan Mulcahy, Appellee
FROM THE 250TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-18-003429, THE HONORABLE JAN SOIFER, JUDGE PRESIDING
MEMORANDUM OPINION
In this interlocutory appeal, appellants Cielo Property Group, LLC, and its
principals Robert Dillard, III, and Robert Gandy, IV, challenge a district court’s order denying
their joint motion to compel arbitration of certain claims arising from the former employment of
Branigan Mulcahy by G&A Partners, an entity not party to this suit. We will reverse the order
denying the motion to compel arbitration and remand for further proceedings consistent with
this opinion.
BACKGROUND
In 2014, Mulcahy began working jointly for G&A Partners and Cielo Property
Group—which G&A refers to as one of its “clients”—as vice president of property acquisitions
pursuant to an employment agreement executed by Mulcahy and G&A. Cielo Property Group is
not a signatory to the employment agreement but is named as an intended beneficiary of that contract. As part of Mulcahy’s compensation package, G&A and Cielo Property Group granted
Mulcahy an interest in several properties under development through a series of LLC
membership agreements. Cielo Property Group, on behalf of itself and G&A, terminated
Mulcahy’s employment in 2018, citing alleged “failure to perform, insubordination, and
abrasiveness” as reasons for the termination. It then apparently revoked Mulcahy’s interest in
the properties.
Mulcahy sued Cielo Property Group for breach of contract, unjust enrichment,
and employment discrimination, seeking to recover unpaid compensation and the property
interests he had acquired in certain developments. He sued Dillard and Gandy for breach of
fiduciary duty. The defendants responded with a general answer and a motion to compel
arbitration, arguing that all Mulcahy’s claims are subject to the arbitration clause in Mulcahy’s
employment agreement with G&A Partners. Mulcahy disagreed, arguing that only G&A
executed that employment agreement and therefore that his claims are not subject to its
arbitration clause.
The district court held a hearing, requested additional briefing, and then denied
the motion to compel. After filing two unsuccessful requests for reconsideration of the issue, the
defendants timely perfected this appeal. See Tex. R. App. P. 28.1.
DISCUSSION
In a single issue, appellants contend the district court erred by denying their
motion to compel. A party seeking to compel arbitration must establish the existence of a valid,
enforceable arbitration agreement and that the asserted claims fall within the agreement’s scope.
Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). The party seeking arbitration has the
2 initial burden to present evidence of an arbitration agreement. Id. Once the existence of an
arbitration agreement has been established, a presumption attaches favoring arbitration. Id. The
burden then shifts to the opposing party to establish an affirmative defense or to show that the
dispute falls outside the scope of the agreement. Id. “Courts should not deny arbitration ‘unless
it can be said with positive assurance that an arbitration clause is not susceptible of an
interpretation which would cover the dispute at issue.’” Prudential Sec. Inc. v. Marshall,
909 S.W.2d 896, 899 (Tex. 1995) (orig. proceeding) (per curiam) (quoting Neal v. Hardee’s
Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990)). We construe a contract’s unambiguous
language as a matter of law. Garg v. Pham, 485 S.W.3d 91, 102 (Tex. App.—Houston [14th
Dist.] 2015, no pet.). We review the disposition of a motion to compel arbitration for an abuse of
discretion. Natgasoline LLC v. Refractory Constr. Servs., Co., 566 S.W.3d 871, 884 (Tex.
App.—Houston [14th Dist.] 2018, pet. denied). A court abuses its discretion when it acts
without regard for governing legal principles. Id.
Claims Against Cielo Property Group
In relevant part, the arbitration clause in the employment agreement provides:
To the fullest extent permitted by law, all disputes between you and G&A or between you and all Clients to which you are assigned shall be submitted to binding arbitration pursuant to the Federal Arbitration Act and the American Arbitration Association’s National Rules for the Resolution of Employment dispute.1
“All” is a maximally inclusive term. It denotes the inclusion of every possible element of a
given set and to prevent the exclusion of any one of those elements. See William of Sherwood,
1 (Emphasis added.). 3 Treatise on Syncategorematic Words 17 (N. Kretzmann trans., University of Minnesota Press
1968) (“It must be known that ‘every’ or ‘all’ signifies universality.” (translated from Latin)).
As the Supreme Court of Texas describes it, “all” denotes “‘the whole number, quantity, or
amount’ or ‘the whole of.’” RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 124 (Tex. 2015)
(quoting Merriam-Webster’s Dictionary and Thesaurus 23 (2014)); see also Henry, 501 S.W.3d
at 115 (discussing expansive nature of “all disputes”); Pinto Tech. Ventures, L.P. v. Sheldon,
526 S.W.3d 428, 439 & n.47 (Tex. 2017) (describing the “necessarily” broad scope of the phrase
“any dispute”). Thus, given the parties’ stipulation that Cielo Property Group is a “Client[] to
which [Mulcahy was] assigned,” the employment agreement requires arbitration of Mulcahy’s
claims against Cielo Property Group.
Mulcahy disagrees, raising a host of arguments to avoid the otherwise
straightforward consequence of this unambiguous language. He first contends the employment
agreement and its arbitration clause are void for lack of consideration on G&A’s part. Lack of
consideration occurs when the alleged contract fails to impose obligations on both parties. See
City of The Colony v. North Tex. Mun. Water Dist., 272 S.W.3d 699, 733 (Tex. App.—Fort
Worth 2008, pet. dism’d). The employment agreement imposes dozens of obligations on G&A
that inure to Mulcahy’s benefit. Mulcahy appears to argue that these obligations cannot serve as
G&A’s consideration because the obligations were in fact undertaken and satisfied by Cielo
Property Group. But a challenge to the adequacy of consideration is evaluated by reference to
the contract’s inception—not its execution. See id. (differentiating between lack of and failure of
consideration). And regardless, ensuring that “clients” like Cielo Property Group would fulfill
some of G&A’s contractual responsibilities is one of the obligations G&A undertook through
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-18-00587-CV
Cielo Property Group, LLC; Robert Dillard, III; and Robert Gandy, IV, Appellants
v.
Branigan Mulcahy, Appellee
FROM THE 250TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-18-003429, THE HONORABLE JAN SOIFER, JUDGE PRESIDING
MEMORANDUM OPINION
In this interlocutory appeal, appellants Cielo Property Group, LLC, and its
principals Robert Dillard, III, and Robert Gandy, IV, challenge a district court’s order denying
their joint motion to compel arbitration of certain claims arising from the former employment of
Branigan Mulcahy by G&A Partners, an entity not party to this suit. We will reverse the order
denying the motion to compel arbitration and remand for further proceedings consistent with
this opinion.
BACKGROUND
In 2014, Mulcahy began working jointly for G&A Partners and Cielo Property
Group—which G&A refers to as one of its “clients”—as vice president of property acquisitions
pursuant to an employment agreement executed by Mulcahy and G&A. Cielo Property Group is
not a signatory to the employment agreement but is named as an intended beneficiary of that contract. As part of Mulcahy’s compensation package, G&A and Cielo Property Group granted
Mulcahy an interest in several properties under development through a series of LLC
membership agreements. Cielo Property Group, on behalf of itself and G&A, terminated
Mulcahy’s employment in 2018, citing alleged “failure to perform, insubordination, and
abrasiveness” as reasons for the termination. It then apparently revoked Mulcahy’s interest in
the properties.
Mulcahy sued Cielo Property Group for breach of contract, unjust enrichment,
and employment discrimination, seeking to recover unpaid compensation and the property
interests he had acquired in certain developments. He sued Dillard and Gandy for breach of
fiduciary duty. The defendants responded with a general answer and a motion to compel
arbitration, arguing that all Mulcahy’s claims are subject to the arbitration clause in Mulcahy’s
employment agreement with G&A Partners. Mulcahy disagreed, arguing that only G&A
executed that employment agreement and therefore that his claims are not subject to its
arbitration clause.
The district court held a hearing, requested additional briefing, and then denied
the motion to compel. After filing two unsuccessful requests for reconsideration of the issue, the
defendants timely perfected this appeal. See Tex. R. App. P. 28.1.
DISCUSSION
In a single issue, appellants contend the district court erred by denying their
motion to compel. A party seeking to compel arbitration must establish the existence of a valid,
enforceable arbitration agreement and that the asserted claims fall within the agreement’s scope.
Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). The party seeking arbitration has the
2 initial burden to present evidence of an arbitration agreement. Id. Once the existence of an
arbitration agreement has been established, a presumption attaches favoring arbitration. Id. The
burden then shifts to the opposing party to establish an affirmative defense or to show that the
dispute falls outside the scope of the agreement. Id. “Courts should not deny arbitration ‘unless
it can be said with positive assurance that an arbitration clause is not susceptible of an
interpretation which would cover the dispute at issue.’” Prudential Sec. Inc. v. Marshall,
909 S.W.2d 896, 899 (Tex. 1995) (orig. proceeding) (per curiam) (quoting Neal v. Hardee’s
Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990)). We construe a contract’s unambiguous
language as a matter of law. Garg v. Pham, 485 S.W.3d 91, 102 (Tex. App.—Houston [14th
Dist.] 2015, no pet.). We review the disposition of a motion to compel arbitration for an abuse of
discretion. Natgasoline LLC v. Refractory Constr. Servs., Co., 566 S.W.3d 871, 884 (Tex.
App.—Houston [14th Dist.] 2018, pet. denied). A court abuses its discretion when it acts
without regard for governing legal principles. Id.
Claims Against Cielo Property Group
In relevant part, the arbitration clause in the employment agreement provides:
To the fullest extent permitted by law, all disputes between you and G&A or between you and all Clients to which you are assigned shall be submitted to binding arbitration pursuant to the Federal Arbitration Act and the American Arbitration Association’s National Rules for the Resolution of Employment dispute.1
“All” is a maximally inclusive term. It denotes the inclusion of every possible element of a
given set and to prevent the exclusion of any one of those elements. See William of Sherwood,
1 (Emphasis added.). 3 Treatise on Syncategorematic Words 17 (N. Kretzmann trans., University of Minnesota Press
1968) (“It must be known that ‘every’ or ‘all’ signifies universality.” (translated from Latin)).
As the Supreme Court of Texas describes it, “all” denotes “‘the whole number, quantity, or
amount’ or ‘the whole of.’” RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 124 (Tex. 2015)
(quoting Merriam-Webster’s Dictionary and Thesaurus 23 (2014)); see also Henry, 501 S.W.3d
at 115 (discussing expansive nature of “all disputes”); Pinto Tech. Ventures, L.P. v. Sheldon,
526 S.W.3d 428, 439 & n.47 (Tex. 2017) (describing the “necessarily” broad scope of the phrase
“any dispute”). Thus, given the parties’ stipulation that Cielo Property Group is a “Client[] to
which [Mulcahy was] assigned,” the employment agreement requires arbitration of Mulcahy’s
claims against Cielo Property Group.
Mulcahy disagrees, raising a host of arguments to avoid the otherwise
straightforward consequence of this unambiguous language. He first contends the employment
agreement and its arbitration clause are void for lack of consideration on G&A’s part. Lack of
consideration occurs when the alleged contract fails to impose obligations on both parties. See
City of The Colony v. North Tex. Mun. Water Dist., 272 S.W.3d 699, 733 (Tex. App.—Fort
Worth 2008, pet. dism’d). The employment agreement imposes dozens of obligations on G&A
that inure to Mulcahy’s benefit. Mulcahy appears to argue that these obligations cannot serve as
G&A’s consideration because the obligations were in fact undertaken and satisfied by Cielo
Property Group. But a challenge to the adequacy of consideration is evaluated by reference to
the contract’s inception—not its execution. See id. (differentiating between lack of and failure of
consideration). And regardless, ensuring that “clients” like Cielo Property Group would fulfill
some of G&A’s contractual responsibilities is one of the obligations G&A undertook through
the contract.
4 Mulcahy next argues that, as a third-party non-signatory, Cielo Property Group
cannot avail itself of the arbitration clause in the employment agreement. He emphasizes
language elsewhere in the employment agreement that indicates, “This agreement relates only to
your employment with G&A.” But “under certain circumstances a party to an arbitration
agreement may be compelled to arbitrate claims with a nonparty . . . .” In re Palm Harbor
Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006) (citing In re Vesta Ins., 192 S.W.3d 759, 761
(Tex. 2006) (per curiam)). These circumstances are generally satisfied “if the parties to the
contract intended to secure a benefit to that third party and entered into the contract directly for
the third party’s benefit” and “the controversy arises from a contract containing an arbitration
clause.” See id. at 677–78. Here, the employment agreement expressly provides, “You are
co-employed by G&A Partners and Client to perform services for Client.”2 It continues,
“Clients will be co-employers and third[-]party beneficiaries of this Agreement.”3 That status
as third-party beneficiary is borne out by this record. Because it is clear that the parties to the
employment agreement intended to confer a benefit upon Cielo Property Group and entered into
that contract to that end, Vesta Ins., 192 S.W.3d at 761, Cielo Property Group is bound by the
Finally, there is no genuine dispute that each of Mulcahy’s claims against Cielo
Property Group arises from the employment agreement. Mulcahy argues that the clause does not
appear in the LLC membership agreements that conferred the property rights underlying one of
his claims of breach of contract and that this claim therefore does not fall within the scope of the
arbitration clause. But the arbitration clause applies to “all disputes” between Mulcahy and
2 (Emphasis added.). 3 (Emphasis added.). 5 G&A or Cielo Property Group. Moreover, Mulcahy’s property interest, if any, only exists as
part of the compensation afforded by the employment agreement and incorporated by reference
in that contract. That agreement imbues G&A with sole and exclusive authority over wages and
“any other kind of compensation,” which G&A effected through its relationship with Cielo
Property Group. Thus, the circumstances reflected in this record allow Cielo Property Group to
enforce the clause and compel Mulcahy to arbitrate all claims against it. Palm Harbor Homes,
195 S.W.3d at 677–78; Marshall, 909 S.W.2d at 899.
Claims Against Dillard and Gandy
For essentially the same reasons, Mulcahy’s claims against Dillard and Gandy are
also subject to the arbitration clause. “Texas law favors the joint resolution of multiple claims to
prevent multiple determinations of the same matter.” Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266,
271 (Tex. 1992); Marshall, 909 S.W.2d at 900. A court must submit the ancillary causes to
arbitration if they are factually intertwined with the arbitrable causes. Marshall, 909 S.W.2d at
900. To determine whether claims are factually intertwined, “we focus on the factual allegations
[in] the complaint, rather than the legal causes of action asserted.” Id. Here, Mulcahy alleges,
“Defendants Dillard and Gandy breached their fiduciary duties of loyalty and utmost good faith,
self-dealing, and fair and honest dealing when they caused Cielo Property Group to terminate
Plaintiff in order to acquire more ownership interests in viable property deals for themselves.” In
other words, his claim of breach of fiduciary duty is predicated on the same factual allegations
underlying his claim of breach of contract against the LLC. The claims against Dillard and
Gandy must therefore be resolved alongside the claims against Cielo Property Group
through arbitration.
6 After reviewing the record, we conclude all of Mulcahy’s claims in this action must
be arbitrated and the district court should have granted the motion to compel arbitration. The
court acted without regard for governing legal principles when in concluding otherwise. See
Natgasoline, 566 S.W.3d at 884. We therefore sustain appellants’ sole issue on appeal.
CONCLUSION
Having concluded that the district court abused its discretion by denying the
motion to compel arbitration, we reverse that order and remand for further proceedings
consistent with this opinion. See Tex. Civ. Prac. & Rem. Code § 171.025(a); Tex. R. App.
P. 43.2(d).
__________________________________________ Edward Smith, Justice
Before Justices Goodwin, Baker, and Smith
Reversed and Remanded
Filed: July 11, 2019