COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS
§ IN RE: No. 08-18-00030-CV § WESTERN DAIRY TRANSPORT, AN ORIGINAL PROCEEDING L.L.C. AND JORGE HERNANDEZ, § IN MANDAMUS Relators. §
§
OPINION
Western Dairy Transport, L.L.C., and Jorge Hernandez (Relators) have filed a mandamus
petition against the Honorable Francisco X. Dominguez, Judge of the 205th District Court of El
Paso County, Texas, seeking mandamus relief from Respondent’s order granting motions to
compel discovery filed by Evelyn L. Lopez, individually and as next friend of H.B.Q. and X.I.Q.,
minor children, and on behalf of the Estate of Marcos R. Quinones, Norma Quinones, and Raul
Quinones (Plaintiffs). We deny mandamus relief.
FACTUAL AND PROCEDURAL SUMMARY
Western Dairy is an authorized motor carrier located in Cabool, Missouri. On April 24,
2015, Western Dairy signed an Independent Contractor Agreement with Jorge Hernandez, a
resident of El Paso, Texas, and owner of a commercial truck. By terms of their agreement,
Hernandez leased his truck and provided a commercial driver to Western Dairy pursuant to
applicable federal leasing regulations; while Western Dairy in turn arranged for shipments. Throughout the term of the agreement, Hernandez’s truck would be identified as being operated
by Western Dairy. On the same day Hernandez signed the agreement, he hired Marcos Quinones,
also a resident of El Paso, to work as a driver.
Among other terms, the Independent Contractor Agreement included a forum-selection
clause stating as follows:
GOVERNING LAW AND CHOICE OF FORUM. This Agreement is to be governed by the laws of the United States and of the State of Missouri, without resort to the choice-of-law rules thereof, and CARRIER and CONTRACTOR hereby consent to the jurisdiction of the state and federal courts of Missouri. The parties further agree that any claim or dispute arising from or in connection with this Agreement or otherwise with respect to the overall relationship between the parties, whether under federal, state, local, or foreign law, shall be brought exclusively in state or federal courts located in Missouri.
On January 5, 2016, while Quinones drove the truck owned by Hernandez that was then
operated under the authority of Western Dairy, he was injured and ultimately died in a trucking
accident that occurred on Interstate 10 in San Antonio, Texas. At the time of his death, Quinones
was survived by his wife, two children, and his parents, all of whom were residents of El Paso,
Texas. Joined together as Plaintiffs, Quinones’ heirs filed a negligence and wrongful death suit
against Hernandez and Western Dairy in the 205th District Court of El Paso County, Texas. In
their original petition, Plaintiffs alleged that Hernandez was a resident of Texas, and Western Dairy
was a Delaware Corporation doing business in Texas.1
Soon after filing general denials, Hernandez and Western Dairy jointly filed a motion to
dismiss Plaintiffs’ suit based on their assertion that the forum-selection clause contained in the
independent contractor agreement, entered with each other, was enforceable against Plaintiffs’
suit, and thereby, required that it be brought in Missouri. Along with their motion, Western Dairy
1 Plaintiffs later amended their petition to include a claim for failure to provide workers’ compensation benefits, breach of contract, insurance code violations, breach of the duty of good faith and fair dealing, economic duress, and fraudulent and negligent misrepresentation.
2 and Hernandez attached affidavits from Hernandez himself, from an insurance claims
representative, and from a Western Dairy representative. Hernandez’s affidavit asserted he
informed Quinones about his agreement with Western Dairy including discussion of insurance
benefits and about government registration and authorizations required to operate the truck.
Among other things, the affidavit of Western Dairy’s representative asserted, “Western Dairy
complied with all required federal and Texas state registration and authorization requirements in
order to operate Hernandez’s truck interstate and within Texas[.]”
The next week, Plaintiffs filed discovery motions in which they sought to compel
depositions of Hernandez and Western Dairy’s designated representative asserting they had not
yet been able to be scheduled by agreement. The deposition notice served on Western Dairy’s
representative included a subpoena duces tecum requesting sixty-nine items of information.
Plaintiffs also sought to compel responses to interrogatories and requests for production of
documents. Days later, Plaintiffs filed a motion for continuance of the motion to dismiss
requesting time for completion of “reasonable discovery” to “prepare a response.” Hernandez and
Western Dairy jointly filed responses to Plaintiffs’ motions to compel discovery asserting that
discovery was not appropriate or necessary until the court ruled on their pending motion to dismiss.
Rather than object on substantive grounds (e.g., requests being irrelevant, overly broad, or vague),
Hernandez and Western Dairy “reserved” these objections arguing that Plaintiffs had sought
discovery on the merits which was not allowed before disposition of the pending motion to dismiss.
The trial court issued an order setting separate hearings for the pending discovery motions
followed by a second hearing for the motion to dismiss based on the forum-selection clause.
Within its order setting hearings, the trial court also stated that “without reaching the merits of
[Relators’] Motion to Dismiss or Plaintiffs’ motions to compel discovery and depositions, it
3 appears to the Court that, at a minimum, Plaintiffs are immediately entitled to discovery related to
the limited issue of the enforceability or validity of the forum-selection clause and [Relators’]
Motion to Dismiss.”
After Plaintiffs issued a second round of deposition notices, Western Dairy and Hernandez
filed motions to quash claiming the discovery sought exceeded the court’s prior ruling. Although
the parties later conferred, they were unable to reach an agreement on their dispute over discovery.
On July 27, 2017, the trial court held a hearing on these discovery motions. At the hearing, the
court stated, “we’re limiting the number of people that are going to be deposed and we’re limiting
the number of documents that are going to be gathered.” The court then indicated it would order
the deposition of Hernandez and a representative of Western Dairy, and additionally, it would
require production of the driver qualification file required by the applicable Federal Motor Carrier
Act and other related items. Following the hearing, the parties submitted proposed orders, but
none was signed as they continued to disagree about the order’s language.
At a second hearing held on January 17, 2018, the trial court first heard argument then gave
guidance to resolving the parties’ ongoing dispute. The trial court indicated it would allow
discovery at a minimum to include the driver qualification file of Quinones stating it was statutorily
required to be maintained. The trial court instructed Plaintiffs to circulate a proposed order for
Western Dairy and Hernandez to review and provide “some kind of response.” The court indicated
it would then issue its discovery ruling and set a hearing on the motion to dismiss, at least forty-
five days later, to allow the parties to incorporate discovery responses in their arguments. The
court also stated, “if there are complications or delays, we’ll – I’ll take that into account.”
Eventually, on February 15, 2018, the court signed an order compelling discovery from
Hernandez and Western Dairy. On this order, the signature line of the attorney representing both
4 Hernandez and Western Dairy indicated he had approved as to form only with an explanation
provided in an end note.2
Hernandez and Western Dairy then filed their petition for mandamus relief and this
proceeding followed.
DISCUSSION
In their first issue, Relators contend the trial court abused its discretion in ordering them to
respond to certain discovery before the court ruled on their motion to dismiss based on a forum-
selection clause. Characterizing the discovery as “merits-based,” Relators assert the trial court’s
order requires them to answer discovery that is “simply not allowed at this juncture.” In their
second issue, Relators contend the burden fell on Plaintiffs to make a showing of necessity for
limited discovery before the discovery sought could be compelled by the court. Viewing these
issues as interrelated, we consider them together.
Mandamus Standard of Review
Mandamus will issue to correct a discovery order if the order constitutes a clear abuse of
discretion and there is no adequate remedy by appeal. In re Colonial Pipeline Co., 968 S.W.2d
938, 941 (Tex. 1998) (orig. proceeding). A trial court abuses its discretion if 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. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379,
382 (Tex. 2005) (orig. proceeding).
Forum-Selection Clauses
2 The explanation stated that “Defendants disagree with ordering any merits-based discovery in this case before disposition of their pending motion to dismiss, this proposed order in Defendants’ estimation reflects the Court’s order or apparent intention as expressed at the January 17, 2018 and the July 27, 2017 hearings. Therefore, these files are ordered produced in this proposed order. Defendants agree only as to the form of the order but disagree and should not be construed as concurring with the content and result.”
5 Forum-selection clauses are contractual provisions whereby parties agree in advance to
submit their disputes for resolution within a particular jurisdiction. See Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 n.14 (1985); Pinto Tech. Ventures, L.P. v. Sheldon, 526 S.W.3d 428,
436 (Tex. 2017). As a general proposition, a forum-selection clause may be enforced only by and
against a party to the agreement containing the clause. Pinto Tech., 526 S.W.3d at 443 (citing In
re Rubiola, 334 S.W.3d 220, 224 (Tex. 2011) (orig. proceeding) (addressing whether a
nonsignatory of an arbitration clause can compel arbitration against a party to the clause)).
Enforcement of these clauses depends on the contract’s language, as courts are required to “give
effect to the parties’ intent as expressed in the four corners of the [agreement].” Pinto Tech., 526
S.W.3d at 432. Forum-selection clauses are generally enforceable in Texas subject to public-
policy constraints. Id.
Regardless of general enforceability, disagreements sometimes arise over who may be
bound to a forum-selection clause or whether claims alleged in a lawsuit fall under the scope of
such a clause. Id. at 437. In resolving disputes, courts are not only guided by federal law, but also
by drawing analogies to arbitration cases based on the recognition that clauses requiring arbitration
are “a specialized kind of forum-selection clause.” Id. (quoting Scherk v. Alberto-Culver Co., 417
U.S. 506, 519 (1974)); In re AIU Ins. Co., 148 S.W.3d 109, 115 (Tex. 2004) (orig. proceeding).
As to both arbitration and forum clauses, nonsignatories may be bound only under recognized
contract or agency principles. Carlile Bancshares, Inc. v. Armstrong, No. 02-14-00014-CV, 2014
WL 3891658, at *7 (Tex.App.—Fort Worth Aug. 7, 2014, no pet.) (citing Hellenic Inv. Fund, Inc.
v. Det Norske Veritas, 464 F.3d 514, 517 (5th Cir. 2006); In re Kellogg Brown & Root, Inc., 166
S.W.3d 732, 739 (Tex. 2005) (orig. proceeding) (recognizing contract and agency theories that
may bind non-signatories to arbitration agreements)). Because forum-selection clauses are
6 creatures of contract, the Texas Supreme Court noted that “the circumstances in which
nonsignatories can be bound to a forum-selection clause are rare.” Pinto Tech., 526 S.W.3d at
443. As a case of first impression, the parties in this mandamus proceeding rely heavily on
guidance from cases involving motions to compel arbitration. We follow suit.
Burden-Shifting Framework
Texas courts use a burden-shifting framework in deciding whether a trial court is required
to compel a party to arbitration. To compel arbitration, a party must: (1) establish the existence of
a valid arbitration agreement; and (2) show that the claims asserted are within the scope of the
agreement. In re AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex. 2005) (orig. proceeding);
Delfingen US-Texas, L.P. v. Valenzuela, 407 S.W.3d 791, 797 (Tex.App.—El Paso 2013, no pet.).
Determining whether there is a valid agreement is a question of state contract law and is a
gateway matter for the court. Jody James Farms, JV v. Altman Group, Inc., 547 S.W.3d 624, 631
(Tex. 2018); In re Morgan Stanley & Co., Inc., 293 S.W.3d 182, 187 (Tex. 2009) (orig.
proceeding); see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (holding
that, when deciding whether the parties agreed to arbitrate, “courts generally ... should apply
ordinary state-law principles that govern the formation of contracts”). When parties have not
agreed to submit the arbitrability question itself to arbitration, “then the court should decide that
question just as it would decide any other question that the parties did not submit to arbitration,
namely, independently.” First Options of Chicago, Inc., 514 U.S. at 943. “[A]rbitration is simply
a matter of contract between the parties; it is a way to resolve those disputes-but only those
disputes-that the parties have agreed to submit to arbitration.” Id.
Courts should not assume that the parties agreed to arbitrate arbitrability unless there is
“clear and unmistakable evidence” of an agreement to do so. Id. at 944. Neither federal law nor
7 Texas jurisprudence recognize a presumption in favor of arbitration when determining initially
whether a valid arbitration agreement in fact exists. J.M. Davidson, Inc. v. Webster, 128 S.W.3d
223, 227 (Tex. 2003); see also Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.
2002) (federal policy favoring arbitration does not apply to the determination of whether there is
a valid agreement to arbitrate; instead, ordinary contract principles are applied). The initial burden
of establishing an agreement’s existence is evidentiary and runs with the party seeking to compel
its enforcement. United Rentals, Inc. v. Smith, 445 S.W.3d 808, 812 (Tex.App.—El Paso 2014, no
pet.) (“An employer attempting to enforce an arbitration agreement must show the agreement
meets all requisite contract elements.”).
Although courts may express a strong presumption favoring arbitration, “the presumption
arises only after the party seeking to compel arbitration proves that a valid arbitration agreement
exists.” J.M. Davidson, 128 S.W.3d at 227 (citing Prudential Secs., Inc. v. Marshall, 909 S.W.2d
896, 898 (Tex. 1995)); Wright v. Hernandez, 469 S.W.3d 744, 751 (Tex.App.—El Paso 2015, no
pet.) (“[W]hen we are called upon to decide whether the parties have agreed to arbitrate, we do not
resolve doubts or indulge a presumption in favor of arbitration, because no party may be forced to
submit to arbitration in the absence of sufficient showing that the parties entered into a valid and
binding arbitration agreement.”). Arbitration cannot be ordered in the absence of a binding
agreement. Freis v. Canales, 877 S.W.2d 283, 284 (Tex. 1994) (per curiam) (citing United
Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960)); see 9
U.S.C. § 2; TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.001, 171.021. Accordingly, the first
analytical step requires the party moving to compel arbitration to adequately “show the agreement
meets all requisite contract elements.” J.M. Davidson, 128 S.W.3d at 228.
8 When a party does not contest the existence of an arbitration agreement, or its existence
has been otherwise established, the second step of the analysis requires a determination of whether
the parties’ dispute falls within the agreement’s scope. In re Kellogg Brown & Root, Inc., 166
S.W.3d at 737. When courts are called on to decide if disputed claims fall within the scope of an
arbitration clause under either the Federal Arbitration Act or the Texas Arbitration Act, the Texas
Arbitration Act controls that determination. Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266,
268–69 (Tex. 1992) (citing TEX. REV. CIV. STAT. ANN. art 225, redesignated as TEX. CIV. PRAC.
& REM. CODE ANN. §§ 171.002–171.020 by Acts 1995, 74th Leg., ch. 588, § 1, eff. Sept. 1, 1995).
For a determination of scope, the jurisdiction of the trial court is invoked in support of the
arbitration proceeding itself. TEX. CIV. PRAC. & REM. CODE ANN. § 171.086 (a–c). For example,
a party may file an application for a court order to effect service of process, id., § 171.086(a)(1),
to invoke in rem jurisdiction over an ancillary proceeding, id., § 171.086(a)(2), to restrain or enjoin
the destruction of the subject matter of the controversy, or evidence needed for the arbitration, id.,
§ 171.086(a)(3), or to obtain an order for a deposition for discovery, for perpetuation of testimony,
or for evidence needed before the arbitration proceedings begin. Id., § 171.086(a)(4). Under these
circumstances, pre-arbitration discovery of the merits of the case is not permitted by the Texas
Arbitration Act because liability ultimately must be decided during the arbitration itself. In re
Houston Pipe Line Co., 311 S.W.3d 449, 450 (Tex. 2009) (orig. proceeding) (citing Tipps, 842
S.W.2d at 268). Instead, discovery is limited to information regarding the scope of an arbitration
provision or other issues of arbitrability. Id. at 451 (citing TEX. CIV. PRAC. & REM. CODE ANN. §§
171.023(b), 171.086(a)(4), (6)). A party opposing arbitration is entitled to pre-arbitration discovery
on a defense, if and only if, he or she shows, or provides a colorable basis or reason to believe, that
9 the discovery requested is material in establishing the defense. In re VNA, Inc., 403 S.W.3d 483,
487 (Tex.App.—El Paso 2013, no pet.) (orig. proceeding).
With a determination of scope, there is a reversal of the presumption not favoring
arbitration given that the arbitration agreement itself has already been established. When courts
are determining whether a claim falls within the scope of an arbitration agreement, doubts are
resolved in favor of arbitration. First Options of Chicago, Inc., 514 U.S. at 944–45 (with respect
to the question of scope, the law reverses the presumption); see Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985) (“‘[A]ny doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration’”) (quoting Moses H. Cone Memorial
Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983)).
Nonsignatory Involvement
The Texas Supreme Court cautioned that the involvement of a nonsignatory is an important
distinction when deciding whether parties agreed to arbitrate because a party cannot be forced to
arbitration absent a binding agreement to do so. Jody James Farms, 547 S.W.3d at 632 (citing
United Steelworkers of America, 363 U.S. at 582) (“[A]rbitration is a matter of contract and a party
cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”).
The critical question the court must focus on is whether a binding arbitration agreement exists
between the party compelling arbitration and the party who is a nonsignatory. Jody James Farms,
547 S.W.3d at 632. A contract that is silent on a matter cannot speak to that matter with
unmistakable clarity, so an agreement silent about arbitrating claims against nonsignatories does
not unmistakably mandate arbitration of arbitrability in such cases. Id. (citing First Options of
Chicago, Inc., 514 U.S. at 944). In disputes with nonsignatories, compelled arbitration cannot
precede a judicial determination that an agreement to arbitration exists. Id., at 633.
10 Analysis
Although this mandamus proceeding concerns a discovery dispute, the context of the case
at large necessarily impacts our analytical process. Relators contend the trial court abused its
discretion in determining whether the discovery sought was permitted before it ruled on the merits
of the motion to dismiss based on the forum agreement they had entered with each other. Relators
also contend the trial court abused its discretion in failing to shift the burden onto Plaintiffs to
show “a colorable basis or reason to believe that the discovery requested [was] material in
establishing the enforceability of the forum-selection clause.” As to both of Relators’ issues, we
disagree.
Because the presence of nonsignatories fully calls into question whether the forum-
selection clause is binding on Plaintiffs, we frame the threshold issue firmly on the first step of the
analysis. As a gateway matter, the trial court must decide whether a binding agreement exists
between Plaintiffs, as nonsignatories, and Relators, as parties, pursuant to contract and agency
principles. See Hellenic Investment Fund, Inc., 464 F.3d at 517–18 (“Ordinary principles of
contract and agency law may be called upon to bind a nonsignatory to an agreement whose terms
have not clearly done so.”). Because the existence of a binding agreement with nonsignatories
remains in dispute, the jurisdiction of the trial court in this instance was not invoked in support of
an existing agreement to determine scope or matters of arbitrability, but rather, independently to
resolve a gateway matter committed to the court. See Jody James Farms, 547 S.W.3d at 631; J.M.
Davidson, 128 S.W.3d at 228. State law governing the validity, revocability, and enforceability
of contracts generally controls this determination. Jody James Farms, 547 S.W.3d at 631.
Accordingly, we conclude that the initial burden remains on Relators to establish the forum
11 agreement is binding on Plaintiffs before any presumption in favor of the agreement would
thereafter apply. See J.M. Davidson, 128 S.W.3d at 227.
Relators rely on a line of arbitration cases including In re Houston Pipe Line, 311 S.W.3d
449, 451 (Tex. 2009) (orig. proceeding) and In re ReadyOne Indus., Inc., 400 S.W.3d 164, 168
(Tex.App.—El Paso 2013, orig. proceeding), to support their contention that discovery on the
merits of the case is not allowed before disposition of their motion. Relators contend the only
discovery allowed prior to the court’s ruling on the pending motion is discovery limited to
circumstances where the court lacks sufficient information regarding the scope of the forum-
selection clause or other issues of enforceability. Relators claim that the burden falls on the party
opposing the forum-selection clause to show a colorable basis or reason to believe that the
discovery requested is material in establishing the enforceability of the forum-selection clause.
For this second proposition, Relators rely on In re VNA, Inc., 403 S.W.3d at 486-88; In re
ReadyOne Indus., Inc., 400 S.W.3d at 169, 172-73; and In re ReadyOne Industries, Inc., 394
S.W.3d 680, 684, 686-88 (Tex.App.—El Paso 2012, orig. proceeding). Because these cases all
pertain to a scope determination or other affirmative defense, they involve the second step of the
analysis, not the first. Thus, we disagree with Relators’ assertion that they are controlling or
persuasive in this instance.
First, in In re Houston Pipe Line, the existence of an arbitration agreement between two
principal parties to a gas purchase agreement, Houston Pipe Line and O’Connor, was not an issue
disputed by the parties. In re Houston Pipe Line, 311 S.W.3d at 450. Alleging price manipulation,
O’Connor filed suit in that case against Houston Pipe Line and three others who were themselves
not signatories to the purchase agreement. Id. The interests of the nonsignatories aligned with
Houston Pipe Line and together they sought to compel arbitration against O’Connor. Id. As
12 described by the intermediate appellate court, O’Connor invoked the jurisdiction of the trial court
to request injunctive relief and pre-arbitration discovery. Houston Pipe Line Co., L.P. v. O'Connor
& Hewitt, Ltd., 269 S.W.3d 90, 94 (Tex.App.—Corpus Christi 2008), subsequent mandamus
proceeding sub nom. In re Houston Pipe Line Co., 311 S.W.3d 449 (Tex. 2009) (orig. proceeding).
The Texas Supreme Court characterized O’Connor’s resistance to arbitration as “attacking the
scope of the arbitration provision,” not questioning whether it was binding or properly formed. In
re Houston Pipe Line Co., 311 S.W.3d at 450.
Given an absence of a dispute on the formation of the arbitration agreement, the Supreme
Court noted the trial court’s role explaining, “[w]hen a party disputes the scope of an arbitration
provision or raises a defense to the provision, the trial court, not the arbitrator, must decide the
issues.” Id. at 451. Under such circumstances, “[p]re-arbitration discovery is expressly authorized
under the Texas Arbitration Act when a trial court cannot fairly and properly make its decision on
the motion to compel because it lacks sufficient information regarding the scope of an arbitration
provision or other issues of arbitrability.” Id. (citing TEX. CIV. PRAC. & REM. CODE ANN. §§
171.023(b), 171.086(a)(4), (6)). Finding that the Texas Arbitration Act governed the proceeding,
the Supreme Court concluded that O’Connor’s requested discovery was overbroad and beyond the
issues raised in the motion to compel. Id. at 452.
Similarly, in In re ReadyOne Indus., Inc., 400 S.W.3d at 167, the case also did not involve
a nonsignatory being compelled to arbitration as the employer seeking arbitration provided a
document titled “Receipt and Arbitration Acknowledgment,” written in Spanish, which was
purportedly signed by the employee. Id. With the existence of an arbitration agreement
established by prima facie proof, the burden shifted to the employee resisting arbitration to
establish a “colorable basis or reason to believe that discovery would be material in establishing
13 that the arbitration agreement was invalid and unenforceable because [of being] fraudulently
induced to sign the arbitration agreement.” Id. at 169.
Finally, in In re VNA, Inc., 403 S.W.3d at 485, the employee resisting arbitration who
admittedly signed an agreement containing an arbitration clause, argued not that the agreement did
not exist, but that it was substantively unconscionable. Adhering to the presumption of favoring
arbitration, we granted mandamus relief after concluding that the employee who was resisting
arbitration had failed to provide a colorable or reasonable basis for believing discovery would
materially aid her in establishing her defense to the validity of the agreement. Id. at 485-86.
Unlike the line of cases cited by Relators, the forum-selection agreement here has not yet
been established as binding on Plaintiffs. Thus, we hold that state law governing the validity,
revocability, and enforceability of contracts generally controls this gateway determination of
whether nonsignatory plaintiffs are bound by the terms of the forum-selection clause. See Jody
James Farms, 547 S.W.3d at 631; J.M. Davidson, 128 S.W.3d at 228. In its current posture, the
burden remains on Relators to establish the existence of a binding forum agreement with Plaintiffs.
See United Rentals, 445 S.W.3d at 812. Accordingly, the trial court decides this question
independently, without a presumption, just as it would decide any other question where parties
have not yet agreed. See First Options of Chicago, Inc., 514 U.S. at 943; see also J.M. Davidson,
Inc., 128 S.W.3d at 227; Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir. 2002)
(federal policy favoring arbitration does not apply to the determination of whether there is a valid
agreement to arbitrate; instead, ordinary contract principles are applied). As confirmed by the
Texas Supreme Court, the Texas Arbitration Act is not jurisdictional and operates simply to
facilitate arbitration agreements. Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 96–97 (Tex. 2011).
14 Without a binding agreement, we hold that the pre-arbitration discovery limits imposed by the
Texas Arbitration Act are not yet applicable.
For these reasons, we disagree with Relators’ assertion that the statutory provision of the
Texas Arbitration Act requires a limitation on pre-arbitration discovery at this juncture of the
proceedings below. Neither Houston Pipe Line nor the other line of cases relied on by Relators
stand for the proposition that parties who have not yet been shown to have entered into a binding
contract are obligated nonetheless. See In re Houston Pipe Line, 311 S.W.3d at 451; TEX. CIV.
PRAC. & REM. CODE ANN. § 171.086(a)(4). Passing over the question of whether there is a valid
and binding agreement with nonsignatory Plaintiffs, Relators shift the initial burden required to
establish the existence of a binding agreement to the nonsignatory parties as if those parties carry
the initial burden. Neither the plain text of the Texas Arbitration Act, nor the line of cases cited
by Relators, support this extension of the pre-arbitration discovery limitation to a case involving a
disputed forum-selection clause being asserted against nonsignatories.
Discovery Order at Issue
Relators also contend the trial court clearly abused its discretion by ordering discovery that
it characterized as “merits-based discovery” before the court ruled on their motion to dismiss.
Plaintiffs counter that the trial court’s discovery order shows that the orders compelling production
of documents and two depositions “are linked to issues related to [Relators’] Motion to Dismiss.”
We agree with Plaintiffs.
The Texas Rules of Civil Procedure, and the federal rules upon which they are based,
mandate a flexible approach to discovery. Walker v. Packer, 827 S.W.2d 833, 838 (Tex. 1992).
“[T]he ultimate purpose of discovery is to seek the truth, so that disputes may be decided by what
the facts reveal, not by what facts are concealed.” Jampole v. Touchy, 673 S.W.2d 569, 573 (Tex.
15 1984), disapproved of by Walker v. Packer, 827 S.W.2d 833 (Tex. 1992); see also Tom L. Scott,
Inc. v. McIlhany, 798 S.W.2d 556, 559 (Tex. 1990); Garcia v. Peeples, 734 S.W.2d 343, 347 (Tex.
1987). Ordinarily, the scope of discovery is largely within the trial court’s discretion. In re
Colonial Pipeline Co., 968 S.W.2d at 941; Dillard Dept. Stores, Inc. v. Hall, 909 S.W.2d 491, 492
(Tex. 1995). A trial court abuses its discretion when it acts in an unreasonable or arbitrary manner
or, stated differently, when it acts without reference to guiding rules and principles. In re Colonial
Pipeline Co., 968 S.W.2d at 941.
Texas’s procedural rules define the general scope of discovery as permitting any
unprivileged information that is relevant to the subject of the action, even if it would be
inadmissible at trial, as long as the information sought is “reasonably calculated to lead to the
discovery of admissible evidence.” TEX. R. CIV. P. 192.3(a). The scope of discovery may be
limited, however, if the trial court determines that (a) the discovery sought is unreasonably
cumulative or duplicative, or (b) the burden or expense of the proposed discovery outweighs its
likely benefit, taking into account the needs of the case, the amount in controversy, the parties’
resources, the importance of the issues at stake in the litigation, and the importance of the proposed
discovery in resolving the issues. TEX. R. CIV. P. 192.4. Here, the parties’ disagreement includes
two principal issues: (1) whether the forum-selection clause is binding on Plaintiffs as
nonsignatories; and if so, (2) whether Plaintiffs’ claims fall within the scope of the provision.
Relators contend that Plaintiffs are bound by the forum-selection clause under principles
of direct benefits estoppel or third-party beneficiary status.3 Direct-benefits estoppel applies when
a nonsignatory “knowingly exploits the agreement containing the arbitration clause.” Bridas
3 Here and below, Relators rely on three cases: In re Kellogg Brown & Root, Inc., 166 S.W.3d at 739; Loya v. Loya, 507 S.W.3d 871, 877 (Tex.App.—Houston [1st Dist.] 2016, no pet.); In re Citgo Petroleum Corp., 248 S.W.3d 769, 775–77 (Tex.App.—Beaumont 2008, orig. proceeding).
16 S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347, 361–62 (5th Cir. 2003) (quoting E.I. DuPont
de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 199 (3d
Cir. 2001)). The doctrine is invoked if “non-signatories who, during the life of the contract, have
embraced the contract despite their non-signatory status but then, during litigation, attempt to
repudiate the arbitration clause in the contract.” Hellenic, 464 F.3d 517–18; see also Carr v. Main
Carr Dev., LLC, 337 S.W.3d 489, 497 (Tex.App.—Dallas 2011, pet. denied). Direct-benefits
estoppel has been applied to enforce forum-selection clauses against nonsignatories seeking to sue
on the contract containing the forum-selection clause. See, e.g., Hellenic, 464 F.3d at 520.
Additionally, it has also been recognized that a nonparty may seek or obtain direct benefits from a
contract by means other than a lawsuit. In re Weekley Homes, L.P., 180 S.W.3d 127, 132 (Tex.
2005) (orig. proceeding) (nonsignatory compelled to arbitration). A contract may be exploited by
a nonsignatory knowingly seeking and obtaining direct and substantial benefits from the
performance of the contract. Noble Drilling Services, Inc. v. Certex USA, Inc., 620 F.3d 469, 473
(5th Cir. 2010); Fleetwood Enterprises, Inc., 280 F.3d at 1074; In re Weekley Homes, L.P., 180
S.W.3d at 131–33.
Pursuant to a third-party beneficiary theory, a nonsignatory to a contract containing a
forum-selection clause may be bound by the clause if he or she is deemed a third -party beneficiary
of the contract. In re Citgo Petroleum Corp., 248 S.W.3d at 775–77. Contracts may be enforced
by third-party beneficiaries so long as “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.” Jody James
Farms, 547 S.W.3d at 635. Neither general beneficence, nor indirect or incidental benefits,
establish the necessary level of intent. Id.
17 After reviewing our record, we hold that the discovery ordered by the court related to
establishing or defending against theories asserted by Relators and fell squarely within the trial
court’s discretion. TEX. R. CIV. P. 192.3(a). The direct benefits estoppel theory alone puts the
performance of the Independent Contractor Agreement at issue along with benefits provided to
Plaintiffs pursuant to that agreement. See Hellenic, 464 F.3d 517–18; In re Weekley Homes, L.P.,
180 S.W.3d at 132. Beyond these matters, additional information is relevant to the enforcement
of an agreed-forum of Missouri given that courts may refuse to enforce forum-selection clauses
for public-policy constraints including fraud or overreaching, contravention of public policy of the
forum where the suit was brought, considerations of whether the clause is unreasonable or unjust,
or recognition that enforcement would result in serious inconvenience. See Pinto Tech., 526
S.W.3d at 432 n.1 (citing In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 231–32 (Tex. 2008) (orig.
proceeding); In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding)
(internal citation omitted)).
Contrary to Relators’ assertion of “merits-based” requests, the discovery order at issue here
recites that it is ordering discovery based on a finding that the discovery requested by Plaintiffs is
reasonably calculated to lead to the discovery of admissible evidence for the claims made the basis
of “[Relators] matter pending before this Court.” This reference clearly limits discovery to the
pending motion to dismiss, not to the underlying case itself. See TEX. R. CIV. P. 192.4. The trial
court exercised its discretion by limiting discovery to “[Relators’] basis to require Plaintiffs and
the claim to be brought in Missouri instead of Texas[.]”
Specifically, the discovery order included the following finding:
The Court finds the requests for production are reasonably calculated to lead to the discovery of admissible evidence on the agreement, that the Driver Qualification files of Marcos Quinones and Jorge Hernandez need to be produced, and discovery is appropriate on [Relators’] basis to require Plaintiffs and the claim to be brought
18 in Missouri instead of Texas, the employment of Marcos Quinones, the hiring of Marcos Quinones with Defendants, the agreements with Marcos Quinones and Plaintiffs with Defendants, the representations made to Marcos Quinones and Plaintiffs, the information provided or made available to Marcos Quinones and Plaintiffs, the records and documents required to be kept pursuant to the Federal Motor Carrier Safety Regulations that relate to Marcos Quinones and the vehicle and mission he was involved with at the time of this incident, how [Relators] have addressed other similar incidents of drivers who were injured or killed and the insurance claim involving Great American Insurance Company.
The following thirty-one requests for production of documents were thereafter ordered by the court
“to the extent they were not already provided by [Relators]:”
l. The Driver Qualification file for Plaintiff Marcos R. Quinones as required by Federal Motor Carrier Regulations Part 391.51.
2. The Driver Qualification file for Defendant Jorge Hernandez as required by Federal Motor Carrier Regulations Part 391.51.
3. All contracts, agreements, correspondence, and emails with MARCOS R. QUINONES involving choice of venue in Missouri.
4. All contracts, agreements, correspondence, and emails with JORGE HERNANDEZ involving choice of venue in Missouri.
5. All driving logs and records of MARCOS R. QUINONES showing he was driving in the State of Missouri at any time.
6. Bills of lading, trip records, invoices and load documents and description and any contracts therein for the trip MARCOS R. QUINONES was making at the time of this incident whether any portion was in Missouri.
7. Dispatcher’s records, time records and driving logs concerning the trip MARCOS R. QUINONES was making at the time of this incident whether any portion was in Missouri.
8. All ownership documents on the tractor and trailer in question including the title to the tractor and trailer.
9. Any computer records on the truck, including Qualcomm, Peoplenet, GPS records, emails, black box/speed records and other electronic recorded information for the trip in question.
10. Western Dairy Transport, LLC’s DOT permit.
19 11. Jorge Hernandez’s DOT permit and CDL license.
12. Western Dairy Transport, LLC’s Transportation license issued by Texas and Missouri.
13. Jorge Hernandez’s Transportation license issued by Texas and Missouri.
14. All purchase, inspection, maintenance and repair records for the tractor and trailer, its wheels and tires, particularly any records in Missouri.
15. Any physical examinations and medical examination performed of Plaintiff Marcos R. Quinones, particularly in Missouri.
16. Any agreement, contract or employment agreement regarding your relationship with Jorge Hernandez, particularly in Missouri.
l7. All contracts, agreements, emails, correspondence with Great American Insurance Company on the Insurance involving Marcos R. Quinones particularly showing Marcos R. Quinones was at any time in Missouri, including payment, receipts, rebates and any other consideration exchanged by you.
18. Plaintiff’s complete claim file (including electronic file) on the policy of insurance with Great American lnsurance Company (GAIC) from the date of first application to present particularly showing Marcos R. Quinones was in Missouri at any time.
19. Plaintiff’s complete underwriting file on the policy of insurance with Great American Insurance Company (GAIC) from the date of first application to present particularly showing Marcos R. Quinones was in Missouri at any time.
20. All payments, rebates, commissions and other consideration between GAIC and Western Dairy on the insurance policy involving Marcos R. Quinones particularly showing Marcos R. Quinones was in Missouri at any time.
21. All licenses and authorizations of this Defendant to do insurance business in Texas.
22. Plaintiff’s complete insurance file on Marcos R. Quinones and Quinones Family, including but not limited to any and all documents, correspondence (including those with GAIC and its attorneys), notes, memoranda, or other materials and computer records relating to Quinones Family particularly showing Marcos R. Quinones was in Missouri at any time.
23. All documents justifying non-payment of the insurance claim for the death of Marcos Quinones.
20 24. A Certified copy of the complete insurance policy with GAIC, including declaration sheet, binder and application on the insurance policy made the basis of this claim particularly showing Marcos R. Quinones was in Missouri at any time.
25. Your entire claim file, including correspondence and electronic documents, pertaining to the insurance benefit dispute of Quinones Family claim.
26. All statements made by any witness, party and Quinones Family particularly showing Marcos R. Quinones was in Missouri at any time.
27. Any and all documents with information on the amount of premiums paid by Decedent on the GAIC policy of insurance particularly showing Marcos R. Quinones was in Missouri at any time.
28. Any and all documents on the premiums paid on the insurance policy involving Marcos R. Quinones, showing the person or entity that paid this policy particularly showing Marcos R. Quinones was in Missouri at any time.
29. Any and all documents including applications, and insurance applications and all documents signed by Marcos Quinones particularly showing Marcos R. Quinones was in Missouri at any time.
30. Any and all documents and communications with anyone concerning the GAIC policy as it relates to Marcos Quinones, including electronic communications, including all communications with GAIC and any attorneys representing GAIC or Jorge Hernandez, its agents, representatives and insurers, particularly showing Marcos R. Quinones was in Missouri at any time.
31. Any and all documents the entire file on the GAIC policy as it relates to Marcos Quinones and Jorge Hernandez, including Western Dairy’s information relating to them, particularly showing Marcos R. Quinones was in Missouri at any time.
Additionally, the trial court ordered Relators to produce two witnesses for deposition, Jorge
Hernandez and Western Dairy’s company representative. The order also confirmed that
compliance with the order would not operate as a waiver of Relators’ claim that the case should
be heard in Missouri.
As the party objecting to discovery, we hold that the burden fell on Relators to show that
the discovery ordered was patently irrelevant or duplicative. See Walker, 827 S.W.2d at 843.
Rather than make those objections, Relators chose to argue that no discovery at all was permitted,
21 or if permitted, that the burden fell on Plaintiffs to establish that the discovery was necessary. As
stated above, given that it has not yet been established whether the forum-selection clause is
binding on Plaintiffs, we conclude that Relators’ argument wrongly reverses the burden applicable
to this gateway matter committed to the court. See Jody James Farms, 547 S.W.3d at 631.
Contrary to Relators’ assertions, we also conclude that reasonable limitations were
imposed by the trial court within its discretion taking into account the needs of the case. See TEX.
R. CIV. P. 192.4(b). Document production was restricted to matters about contacts with Missouri
and other issues having to do with the performance of the contract generally and the benefits
received by Plaintiffs. The production of documents ordered was significantly narrowed from the
original requests. Only two depositions were permitted in total for the witnesses who submitted
affidavits attached to the motion to dismiss and no subpoena duces tecum was included for either
witness.
The dissent cites to In re DISH Network, In re Copart, In re VNA, and the In re ReadyOne
line of cases, as establishing that the party seeking pre-arbitration discovery has the burden to show
that the discovery is necessary to the scope of a motion to compel arbitration, and that the party
moving to compel arbitration does not have the burden to make a colorable showing that the
arbitration agreement is enforceable before it can insist that discovery be limited. We conclude
that these cases are distinguishable from the scenario presented by this mandamus proceeding.
In In re DISH Network, 563 S.W.3d 433, 436 (Tex.App.—El Paso 2018, orig. proceeding),
the case dealt with the enforceability of an arbitration agreement signed by an employer and
employee. Likewise, in In re Copart, 563 S.W.3d 427, 432 (Tex.App.—El Paso 2018, orig.
proceeding), the plaintiff in an employment discrimination case sought to take a deposition as part
of pre-arbitration discovery under TEX. CIV. PRAC. & REM. CODE ANN. § 171.086(a)(4) and (6),
22 which deposition the defendant later challenged in a mandamus proceeding. As discussed earlier,
the case of In re VNA, 403 S.W.3d at 485–86, concerned the assertion of an affirmative defense
by a party to an arbitration agreement. Finally, in the In re ReadyOne line of cases, the plaintiffs
who sued for negligence sought discovery to support a variety of defenses to arbitration
agreements that had been signed. See In re ReadyOne Industries, Inc., 400 S.W.3d at 168–73; In
re ReadyOne Industries, Inc., 394 S.W.3d at 686-88; In re ReadyOne Industries, 420 S.W.3d 179,
186-87 (Tex.App.—El Paso 2012, orig. proceeding). In sum, none of these cases involve an initial
question of whether an agreement is binding on nonsignatories.
Finally, the record indicates the trial court’s orders on discovery were motivated by a desire
to resolve the merits of whether Relators’ forum-selection clause was binding on Plaintiffs based
on contract and agency principles as well as constraints of public policy. Guided heavily by
existing case law stating that arbitration and forum-selection clauses are to be treated analogously,
we hold that the trial court did not order merits-based discovery that was not reasonably related to
the pending motion to dismiss, but rather, the court ordered discovery that was tailored to aid in
its decision regarding issues raised within Relators’ motion to dismiss. See Pinto Tech., 526
S.W.3d at 436–37; see also In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016)
(orig. proceeding); In re AIU Ins. Co., 148 S.W.3d at 116.
Because Relators failed to meet their burden to establish that the trial court clearly abused
its discretion, we conclude that Relators failed to show in this instance that they are entitled to
mandamus relief. See In re Colonial Pipeline Co., 968 S.W.2d at 941. Accordingly, we deny
Relators’ petition for writ of mandamus.
GINA M. PALAFOX, Justice March 22, 2019
23 Before Rodriguez, J., Palafox, J., and Larsen, J. (Senior Judge) Rodriguez, J., dissenting Larsen, J. (Senior Judge), sitting by assignment