In Re Ford Motor Co.

220 S.W.3d 21, 2006 Tex. App. LEXIS 10600, 2006 WL 3613173
CourtCourt of Appeals of Texas
DecidedDecember 13, 2006
Docket04-06-00351-CV
StatusPublished
Cited by19 cases

This text of 220 S.W.3d 21 (In Re Ford Motor Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Ford Motor Co., 220 S.W.3d 21, 2006 Tex. App. LEXIS 10600, 2006 WL 3613173 (Tex. Ct. App. 2006).

Opinion

OPINION

Opinion by

SARAH B. DUNCAN, Justice.

Ford Motor Company and Gillespie Motor Company seek a writ of mandamus to compel the trial court to order the plaintiffs who were not parties to the underlying sales contract and its arbitration provision to arbitration. We conditionally grant the petition and order the trial court to compel arbitration of the nonparties’ claims.

Factual and Procedueal Background

In 2003, when Rudy Leija and his wife Maricella DeLeon bought a used 2000 Ford Expedition from Gillespie, they signed a sales contract and accompanying arbitration provision providing that “any and all controversies or claims arising out of, or in any way relating to” the “Sales Contract or the negotiation, purchase, trade in, financing, ownership, manufacture, warranties (express or implied), repair or sale/disposition of the motor vehicle which is the subject of the ... Sales Contract, whether those claims arise from or concern contract, warranty, statutory, property or common law, will be settled solely by means of final and binding arbitration.” 2

*23 In January 2005, the Expedition was involved in a rollover accident in which Leija was fatally injured. Gillespie and Ford were sued by DeLeon, individually, as representative of her husband’s estate, and on behalf of the couple’s three minor children. DeLeon’s suit was joined by Le-ija’s parents, Andres Leija and Angie Ber-mea. In their joint petition, under the caption “Breach of Warranty,” the plaintiffs allege the defendants “by and through the sale of the Ford Expedition” “expressly and impliedly warranted to ... the Plaintiffs specifically! ] that the Expedition was fit for the purposes for which it was intended”; the plaintiffs “made use” of the product and relied on the defendants’ express and implied warranties; Ford expressly represented that the vehicle met all federal safety standards; and the defendants’ breach of the express and implied warranties was the producing cause of the occurrence in question and the injuries to Leija.

Gillespie and Ford moved to stay the trial court proceedings and order all the plaintiffs to arbitrate them claims. The trial court rejected Gillespie’s and Ford’s argument that Leija’s children and parents, even though they did not sign the agreement, should be compelled to arbitrate their claims under the theory of direct benefit estoppel and ordered only DeLeon, individually and as the representative of Leija’s estate, to arbitration. Ford and Gillespie now seek a writ of mandamus to compel the trial court to order Leija’s children and parents to arbitrate their claims as well.

PROPRIETY OF MANDAMUS RELIEF

The arbitration provision signed by Gillespie, Leija, and DeLeon states the parties “acknowledge and agree that the subject of this agreement involves interstate commerce.” A “contract evidencing a transaction involving commerce” is governed by the Federal Arbitration Act. 9 U.S.C.A. § 2 (West 1999). An order refusing to compel arbitration under the Federal Arbitration Act is renewable by mandamus. In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex.2005) (orig. proceeding).

Who Decides Arbitrability?

Gillespie and Ford first argue that whether Leija’s children and parents should be ordered to arbitrate their claims is an issue that should be decided not by the trial court but by the arbitrator. We disagree.

“Under the FAA, absent unmistakable evidence that the parties intended the contrary, it is the courts rather than arbitrators that must decide ‘gateway matters’ such as ... [wjhether an arbitration agreement is binding on a nonparty....” Id. Gillespie and Ford argue the arbitration agreement at issue here contains unmistakable evidence that the parties intended the contrary because it provides that “any contests to the validity or enforceability of this Arbitration Provision ... will be determined by arbitration in accordance with the terms of this Arbitration Provision” and any dispute would be settled by “final and binding arbitration before the ... (AAA) in accordance with the rules and procedures of the AAA.” However, none of the cases cited by Ford and Gillespie to support their argument employ language similar to the language at issue here; and, although this language might be construed as Ford and Gillespie argue, we do not believe it constitutes “unmistakable evidence” that the parties intended for an arbitrator to decide whether nonparties are bound by the arbitration agreement, particularly in light of the established Texas law placing the initial burden of proving the existence of a valid *24 arbitration agreement and claims within the scope of that agreement on the party seeking to compel arbitration. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003) (holding that “[a] party attempting to compel arbitration must first establish that the dispute in question falls within the scope of a valid arbitration agreement”); In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999) (orig. proceeding) (holding that “[a] party seeking to compel arbitration must establish the existence of an arbitration agreement, and show that the claims raised fall within the scope of that agreement”), abrogated on other grounds by In re Halliburton Co., 80 S.W.3d 566 (Tex.2002) (orig. proceeding).

In the absence of “unmistakable evidence” that the parties to this arbitration agreement intended that the issue of whether Leija’s children and parents are bound by the arbitration agreement would be decided by an arbitrator, we hold the general rule requiring the trial court to decide “gateway” matters applies.

Direct Benefit Estoppel

Ford and Gillespie next argue that Leija’s children and parents are bound by the arbitration agreement under the theory of direct benefit estoppel. We agree.

“ ‘[A] litigant who sues based on a contract subjects him or herself to the contract’s terms.’ ” In re Weekley, 180 S.W.3d at 131 (quoting In re FirstMerit Bank, N.A., 52 S.W.3d 749, 755 (Tex.2001) (orig. proceeding)). A nonparty’s claim is “based on a contract” “ ‘if it seeks, through the claim, to derive a direct benefit from the contract containing the arbitration provision ].’” Id. (quoting In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 741 (Tex.2005) (orig. proceeding)). “[Wjhether a claim seeks a direct benefit from a contract containing an arbitration clause turns on the substance of the claim, not artful pleading.” Id. at 131-32. When a nonparty to an arbitration agreement fully joins a party to the arbitration agreement’s contract claims, making no distinction between the two, the nonparty “subjeet[s] [itself] to the contract’s terms, including the Arbitration Addendum.” In re First-Merit Bank, 52 S.W.3d at 755-56.

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Cite This Page — Counsel Stack

Bluebook (online)
220 S.W.3d 21, 2006 Tex. App. LEXIS 10600, 2006 WL 3613173, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-ford-motor-co-texapp-2006.