in Re Trendmaker Development Company and TMI, Inc. D/B/A Trendmaker Homes

• Court: Court of Appeals of Texas
• Decided: July 29, 2004
• Docket: 09-04-00110-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

____________________

NO. 09-04-110 CV

NO. 09-04-064 CV

IN RE TRENDMAKER DEVELOPMENT COMPANY AND TMI, INC.,

d/b/a TRENDMAKER HOMES, Relators

and

TRENDMAKER DEVELOPMENT COMPANY, CENTENNIAL HOMES, INC.,

d/b/a TRENDMAKER HOMES AND TMI, INC. d/b/a

TRENDMAKER DEVELOPMENT, Appellants

V.

TIMOTHY JONES AND KEENAN JONES, Appellees

Original Proceeding

On Appeal from the 284^th District Court

Montgomery County, Texas

Trial Cause No. 03-06-04092-CV

MEMORANDUM OPINION

When plaintiffs Timothy and Keenan Jones bought their house, they and Weekley Homes entered into a purchase agreement containing an arbitration provision. After flooding damaged their house, plaintiffs sued Weekley Homes, Trendmaker Development Company, and others. Trendmaker was the developer of Crighton Ridge, the subdivision in which the property is located.

The arbitration agreement provides, in part, as follows:

Any claim, dispute or cause of action between Purchaser and Seller (including any claim or cause of action by Purchaser against Seller's subcontractors or the developer of the Property), whether sounding in contract, tort, or otherwise, shall be resolved by binding arbitration. (emphasis added).

Weekley Homes filed a motion to compel arbitration of plaintiffs' claims. Trendmaker joined in that motion, urging that the Joneses' claims against Trendmaker must be arbitrated because Trendmaker was the developer and is a third party beneficiary of the arbitration agreement.

Plaintiffs did not contest Weekley Homes' motion, but they did contest Trendmaker's. The trial judge granted Weekley Homes' motion and denied Trendmaker's motion. Trendmaker filed this mandamus petition asking for an order compelling arbitration. We conditionally grant the petition.

Once a party seeking arbitration establishes (1) a valid arbitration agreement exists under the Federal Arbitration Act and (2) the claims raised are within the agreement's scope, a court has no discretion but to compel arbitration and stay its proceedings pending arbitration. See Capital Income Properties - LXXX v. Blackmon, 843 S.W.2d 22, 23 (Tex. 1992); Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996). The parties agree the FAA applies. But the plaintiffs argue the contract identifies two separate classes of developers -- the developer of the property and the developer of the subdivision. Plaintiffs say Weekley Homes is the property developer, while Trendmaker is the subdivision developer. Plaintiffs argue the "developer of the property" is specifically designated in the arbitration clause as being entitled to arbitration, but the developer of the subdivision is not. Plaintiffs say Trendmaker, being the subdivision developer, cannot compel arbitration.

The primary concern in contract construction is to give effect to the parties' intent as expressed in the contract. See Lenape Resources Corp. v. Tennessee Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex. 1996). If possible, no contract provision should be read in a way that renders the provision meaningless. See Blaylock v. American Guarantee Bank Liab. Ins. Co., 632 S.W.2d 719, 722 (Tex. 1982). A court generally gives words in a written contract their plain, ordinary, and generally accepted meaning unless doing so would be contrary to the clearly manifested intent of the parties. See Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996).

The question is whether the "developer of the property" is the same as the "developer of the subdivision." The contract is clear. Paragraph 10(D) of the contract informs the purchaser that the Seller (Weekley) has relied on written information from, among others, "professional engineers and the developer of the subdivision, in which the Property is located[.]" Paragraph 10(D) is a notice and liability-limiting provision. The Seller informs the Purchaser that the Seller has relied on information from third parties, including the "developer of the subdivision in which the Property is located," concerning matters about which the third parties have special knowledge. And "Seller does not warrant the accuracy or completeness of the information[.]" This provision does not create any ambiguity concerning the meaning of "developer of the property." To the contrary, the provision is consistent with the plain meaning of the term in the arbitration clause.

As the subdivision developer, Trendmaker necessarily is a developer of the property within the subdivision. The property subject to arbitration is property within the subdivision and therefore property developed by Trendmaker. Under the plain language of the contract, Trendmaker is entitled to arbitration.

Were we to read both the terms "Seller" and "developer of the property" to mean Weekley Homes, the latter term would be used in a duplicative way and add nothing to the meaning of the contract, because Weekley Homes is already included as "Seller." It is unlikely the parties intended the terms to be redundant. And we are not persuaded that the parties intended "developer of the property" to mean solely the "builder"; we believe the parties would have used the word "builder" if that was the intent. We read "developer of the property" as including and referencing the developer of the subdivision in which the property is located.

If the parties to a contract agree to confer a contractual benefit of arbitration on a third party, the third party beneficiary may compel arbitration. In re Rolland, 96 S.W.3d 339, 344 (Tex. App.--Austin 2001, orig. proceeding) (citing Hoffman v. Deloitte & Touche, L.L.P., 143 F.Supp.2d 995, 1004-05 (N.D. Ill. 2001)) ("If parties to a contract agree to confer certain contractual benefits on a third party, that third party may invoke the contract's arbitration clause."); see also In re Prudential Ins. Co. of America Sales Practice Litig., 133 F.3d 225, 229-30 (3d Cir. 1998). Here, the plaintiffs signed a contract agreeing to arbitrate their claims against the developer of the property. As a developer of the property, Trendmaker is entitled to compel arbitration of the claims.

Because we grant the requested relief under the Federal Arbitration Act in this mandamus proceeding, the alternative appeal under the Texas Arbitration Act is dismissed. We conditionally grant the writ of mandamus. The trial court is directed to vacate the order denying arbitration and to enter an appropriate order compelling arbitration. Writ will issue only if the trial court fails to follow this direction.

WRIT CONDITIONALLY GRANTED; APPEAL DISMISSED.

_________________________________

DAVID B. GAULTNEY

Justice

Submitted on June 17, 2004

Opinion Delivered July 29, 2004

Before McKeithen, C.J., Burgess and Gaultney, JJ.