Karolyn Shepherd, Individually and as Co-Successor Trustee of the Burge Family Revocable Trust, Judy Kay Stevenson, Individually and as Beneficiary of the Burge Family Revocable Trust, Jon Mark Shepherd, Individually, and Girard Securities, Inc. v. Bobby Burge, Individually and as Beneficiary of the Burge Family Revocable Trust

Opinion

ACCEPTED 07-17-00295-CV SEVENTH COURT OF APPEALS AMARILLO, TEXAS 9/5/2017 4:24 PM Vivian Long, Clerk

CAUSE NO. 07-17-00295-CV COURT OF APPEALS FILED IN 7th COURT OF APPEALS FOR THE SEVENTH DISTRICT OF TEXAS AMARILLO, TEXAS 9/5/2017 4:24:56 PM KAROLYN SHEPHERD, INDIVIDUALLY AND AS CO-SUCCESSOR VIVIAN LONG TRUSTEE OF THE BURGE FAMILY REVOCABLE TRUST, JUDY CLERK KAY STEVENSON, INDIVIDUALLY AND AS BENEFICIARY OF THE BURGE FAMILY REVOCABLE TRUST, JON MARK SHEPHERD, INDIVIDUALLY AND GIRARD SECURITIES, INC., Appellants v.

BOBBY BURGE, INDIVIDUALLY AND AS BENEFICIARY OF THE BURGE FAMILY REVOCABLE FAMILY TRUST, Appellees.

Appealed from the 72ND District Court of Lubbock County, Texas

APPELLANT GIRARD SECURITIES, INC.’S BRIEF

Martin S. Schnexnayder State Bar No. 17745610 Eron F. Reid State Bar No. 24100320 WINGET, SPADAFORA & SCHWARTZBERG, LLP Two Riverway, Suite 725 Houston, Texas 77056 (713) 343-9200 Telephone (713) 343-9201 Facsimile Schnexnayder.m@wssllp.com Reid.e@wssllp.com ORAL ARGUMENT NOT REQUESTED COUNSEL FOR APPELLANT IDENTITY OF PARTIES AND COUNSEL

Appellants:

GIRARD SECURITIES, INC.

Represented by:

Martin S. Schnexnayder State Bar No. 17745610 Eron F. Reid State Bar No. 24100320 WINGET, SPADAFORA & SCHWARTZBERG, LLP Two Riverway, Suite 725 Houston, Texas 77056 (713) 343-9200 Telephone (713) 343-9201 Facsimile Schnexnayder.m@wssllp.com Reid.e@wssllp.com

Other Appellant:

JON MARK SHEPHERD, INDIVIDUALLY

Represented by:

KESSLER & COLLINS, P.C. GARY S. KESSLER State Bar No. 11358200 gsk@kesslercollins.com DANIEL P. CALLAHAN State Bar No. 03648700 dpc@kesslercollins.com PHILIP G. McNICHOLAS State Bar No. 24078987 pgm@kesslercollins.com 2100 Ross Avenue, Suite 750 Dallas, Texas 75201 (214) 379-0722 Telephone (214) 373-4714 Facsimile ii Appellees:

BOBBY BURGE, INDIVIDUALLY AND AS BENEFICIARY OF BURGE FAMILY REVOCABLE TRUST Represented by:

J. Paul Manning Field, Manning, Stone, Hawthorne & Aycock, P.C. 2112 Indiana Avenue Lubbock, Texas 79410 (806) 792-0810 Telephone (806) 792-9148 Facsimile jpmanning@lubbocklawfirm.com

iii TABLE OF CONTENTS

Page(s)

LIST OF ALL PARTIES AND COUNSEL ....................................................... ii

INDEX OF AUTHORITIES ................................................................. vi, vii, viii

I. STATEMENT OF THE CASE .................................................................1

II. STATEMENT REGARDING ORAL ARGUMENT ................................1

III. ADOPTION OF APPELLANT JON MARK SHEPHERD’S BRIEF ......2

IV. ISSUES PRESENTED ...............................................................................2

V. STATEMENT OF FACTS .........................................................................2

A. THE PARTIES AND BURGE’S CLAIMS .................................................2 B. THE ARBITRATION AGREEMENT AND THE MOTIONS TO COMPEL ARBITRATION ....................................................................................3

VI. SUMMARY OF THE ARGUMENT ........................................................6

VII. ARGUMENT AND AUTHORITIES ........................................................6

A. JURISDICTION, ARBITRABILITY STANDARDS AND STANDARD OF REVIEW .............................................................................................6 1. JURISDICTION FOR INTERLOCUTORY APPEAL ..........................6 2. ARBITRATION STANDARDS .....................................................7 3. STANDARD OF REVIEW............................................................8 B. THE TRIAL COURT ERRED IN FAILING TO COMPEL ARBITRATION OF BURGE’S CLAIMS AGAINST GIRARD AND SHEPHERD BECAUSE A VALID AGREEMENT TO ARBITRATE SUCH CLAIMS EXISTED BETWEEN BURGE AND GIRARD AND SHEPHERD .........................................................................................8 C. TEXAS RULES OF CONTRACT CONSTRUCTION ARE APPLICABLE TO THE DETERMINATION OF WHETHER A VALID AGREEMENT TO ARBITRATE EXISTED ...................................................................... 10

iv D. BURGE’S CLAIMS FALL WITHIN THE SCOPE OF THE ACCOUNT DOCUMENTS’ ARBITRATION PROVISIONS ....................................... 12

CONCLUSION AND PRAYER ..................................................................... ..15

CERTIFICATE OF SERVICE .......................................................................... 16

APPENDIX……………………………………………………………………17

v INDEX OF AUTHORITIES

CASES PAGE(S)

Cases

Capital Income Properties-LXXX v. Blackmon, 843 S.W.2d 22 (Tex. 1992) ...........................................................................15

Chambers v. O'Quinn, 305 S.W.3d 141, 146 (Tex.App–Houston [1st Dist] 2009, pet denied). ..........7

Citizens Nat'l Bank v. Tex. & P. Ry. Co., 136 Tex. 333, 150 S.W.2d 1003, 1006 (1941) ..............................................12

City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 6=515, 518 (Tex. 1968) .............................................................11

Emerald Texas, Inc. v. Peel, 920 S.W.2d 398, 404(Tex.App. – Houston [1st Dist. 1996, no pet.) .............13

In re BNP Paribas, 13-07-353-CV, 2008 WL 2208933, at *3-4 (Tex. App.—Corpus Christi May 29, 2008, no pet.) ............................................................................ 12, 13

In re D. Wilson Const. Co., 196 S.W.3d 774, 783 (Tex. 2006) .............................................................7, 12

In re FirstMerit Bank, 52 S.W.3d 749, 754 (Tex.2001) ................................................... 7, 10, 11, 14

In re J.D. Edwards World Solutions, Co., 87 S.W.3d 546, 549 (Tex.2002) ....................................................................12

In re Merrill Lynch & Co., 315 S.W.3d 888, 891, n. 3 (Tex. 2010) .......................................................6, 7

In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 190 (Tex. 2007) .................................................................13

vi In re Mission Petroleum Carriers, Inc., 13-04-00550-CV, 2005 WL 326848, at *2 (Tex. App.—Corpus Christi Feb. 11, 2005, no pet.) ...................................................................................13

In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006) ................................................................10

In re Prudential Sec., Inc., 159 S.W.3d 279, 283 (Tex.App.—Houston [14th Dist.] 2005, orig. proceeding) ............................................................................................14

In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 762 (Tex. 2006) .................................................................12

In re D. Wilson Const.Co., 196 S.W.3d 774, 781 (Tex. 2006) ............................................................... 12

Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 268 (Tex. 1992) ........................................................ 7, 9, 13

J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003) .................................................................10

Meyer v. WMCO-GP, LLC, 211 S.W.3d 302 (Tex. 2006) .........................................................................12

Myers v. Gulf Coast Minerals Mgmt. Corp., 365 S.W.2d 631 (Tex. Sup. 1963) .................................................................12

Pennzoil Company v. Arnold OSil Company, Inc., 30 S.W.3d 494, 498 (Tex.App.—San Antonio 2000, orig. proceeding) .......13

Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 900 (Tex. 1995) .......................................................... 12, 14

R & P Enters. v. LaGuarta, Garvel & Kirk, Inc. 596 S.W.2d 517. 518 (Tex. 1980) .................................................................10

Sidley Austin Brown & Wood, LLP v. J.A. Green Dev. Corp., 327 S.W.3d 859, 862-63 (Tex. App.—Dallas 2010, no pet.) ..........................8

vii Spence & Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (Tex. Sup. 1963) .................................................................11

Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005) .................................................................10

Valero Energy Corp. v. Wagner & Brown, 777 S.W.2d 564, 566 (Tex. App. – El Paso 1989, writ denied) ............. 10, 13

Wee Tots Pediatrics, P.A. v. Morohunfola, 268 S.W.3d 784 (Tex. App.—Fort Worth 2008, no pet.) .............................14

STATUTES

TEX. CIV. PRAC. & REM. CODE §51.016.................................................................1, 6 TEX.CIV.PRAC. & REM. CODE §171.021(a) ................................................................8 TEX. CIV. PRAC. & REM. CODE §171.023(b) .............................................................9 TEX. CIV. PRAC. & REM. CODE §171.025 ..................................................................8 TEX.CIV.PRAC. & REM. CODE § 171.098 ...............................................................1, 6

9 U.S.C. §1 .................................................................................................................6 9 U.S.C. §3 .................................................................................................................8 9 U.S.C. §16(a)(1)(A)-(C) .........................................................................................6

OTHER

Texas Arbitration Act (Chpt. 171 of the Business & Commerce Code) ...................8

viii TO THE HONORABLE COURT OF APPEALS:

COMES NOW Appellant Girard Securities, Inc. (“Girard”) and files this

Appellant’s Brief and would respectfully show the Court as follows:

I. STATEMENT OF CASE.

Appellee Bobby Burge (“Burge”) has filed suit against several Defendants

and asserts causes of action related to, among other things, two brokerage accounts

that had been opened with Girard, a registered broker-dealer. Jon Mark Shepherd

(“Shepherd”) was a registered representative of Girard.

Appellants Girard and Shepherd both moved to compel arbitration of the

claims asserted against them pursuant to the arbitration agreements contained in

the account opening documents and to stay proceedings in the Trial Court pending

the completion of arbitration. The trial court denied those motions. Appellants file

this interlocutory appeal pursuant to Sections 51.016 and/or 171.098 of the Texas

Civil Practice and Remedies Code.

II. STATEMENT REGARDING ORAL ARGUMENT

The issues in this appeal are straightforward, and the facts are not

complicated. Girard does not think oral argument is necessary, but will participate

if one takes place.

1 III. ADOPTION OF APPELLANT JON MARK SHEPHERD’S BRIEF

In the interests of time and judicial economy, and in accordance with Rule

9.7 TRAP, Appellant Girard Securities, Inc. adopts by reference the entirety of

Appellant Jon Mark Shepherd’s Brief. The legal arguments presented to the court

by Shepherd apply similarly to Girard.

IV. ISSUE PRESENTED.

Did the Trial Court commit reversible error when it denied the Motions to Compel Arbitration because a valid agreement to arbitrate Burges’ claims against Shepherd and Girard existed?

V. STATEMENT OF FACTS.

A. THE PARTIES AND BURGE’S CLAIMS.

Burge filed suit on September 21, 2016 in the 72nd District Court of Lubbock

County [C.R. 6]. Burge alleges that he is the brother of Defendants Karolyn

Shepherd and Judy Kay Stevenson (the “Sisters”). Burge further alleges that he

and his Sisters were the beneficiaries of trusts set up by their parents. Burge sued

his Sisters, Shepard, and Girard alleging that he had been cheated out of money

and/or property that had been placed in trust for him by his parents. Burge alleged,

inter alia, causes of action for fraud, unjust enrichment, conversion, breach of

fiduciary duty, theft liability, and conspiracy against all Defendants. See,

Plaintiff’s Original Petition, C.R. 6 – 19.

2 Girard is a registered broker-dealer and Shepherd was a registered

representative affiliated with Girard [C.R. 140]. There were two accounts at

Girard that are relevant to this appeal, both of which were opened in November of

2011: (1) a Premiere Select IRA account, opened by Alice Burge (“Mother”) (the

“IRA Account”); and (2) a Joint Tenant with Rights of Survivorship Account,

opened by Burge, his Mother, and his Sisters (“Joint Tenant Account”) [C.R. 140-

141].

Burge alleged that he had beneficial interests in both accounts, and they

were wrongfully closed and their assets were “moved” to other accounts in which

he had no interest. In effect, he alleges that the Defendants stole money from him

by emptying those accounts for the benefit of his Sisters [POP ¶¶3.08, 3.09, C.R.

8]. Burge also alleges theft of real property [POP ¶3.10, C.R. 9]. He alleges that

all Defendants (including Shepherd and Girard) acted together as part of a “. . .

plan to cut [Burge] out of his inheritance” [POP ¶3.13 C.R. 8].

B. THE ARBITRATION AGREEMENT AND THE MOTIONS TO COMPEL ARBITRATION

Girard filed a Motion to Compel Arbitration on March 30, and relied on the

account opening documents for the IRA Account. See, Girard’s Motion at C.R.

126 – 130 and Exhibit A thereto at S.C.R. 4-24. Shepherd filed a Motion to

Compel Arbitration on May 4 which relied on account opening documents for both

3 the IRA Account and the Joint Account. See, Shepherd’s Motion, his Affidavit in

support, and Exhibits A and B thereto at C.R. 131 – 183.

Included in the account opening documents for the Joint Account attached to

Shepherd’s affidavit were documents entitled “Brokerage Access Form” [C.R. 172

- 176] and “Statement of Investment Selection” [C.R. 181 – 182]. Burge signed

both of those documents. See, C.R. 176 and 182 (in Appendix). Printed in a

conspicuous box just above Burge’s signature on both of those pages (the copy at

C.R. 182 is more legible) was the following language (emphasis added):

I represent that I have read the terms and conditions concerning this account and agree to be bound by such terms and conditions as currently in effect and as may be amended from time to time. I acknowledge receipt of the margin disclosure statement and the disclosure of credit terms on transactions, this account is governed by a pre- dispute arbitration clause, which is found on the last page of the customer agreement. I acknowledge receipt of the pre-dispute arbitration clause.

Shepherd signed both documents just below Burge. See, CR 176, 182.

The Customer Agreement was included in the account opening documents

for the IRA Account attached to Shepherd’s Affidavit. See, C.R. 156 – 162. It

was also included in Exhibit A to Girard’ Motion [S.C.R. 18 - 24]. The pre-dispute

arbitration agreement was included in that Customer Agreement and provides as

follows:

“By signing an arbitration agreement, the parties agree as follows: 4 (A) All parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.

* * *

All controversies that may arise between me, You1 and NFS concerning any subject matter, issue or circumstance whatsoever including, but not limited to, controversies concerning any account, order or transaction, or the continuation, performance, interpretation or breach of this or any other agreement between me, You and NFS whether entered into or arising before, on or after the date this account is opened) shall be determined by arbitration in accordance with the rules then prevailing of the Financial Industry Regulatory Authority (FINRA) or any United States securities self- regulatory organization or United States securities exchange of which the person, entity or entities against whom the claim is made Is a member, as I may designate." [C.R. 161]

Thus, this arbitration clause was referenced in the account opening

documents for both accounts, and was in the record in two places in connection

with the Motions to Compel Arbitration – in Exhibit A to Girard’s Motion, and in

Exhibit B to Shepherd’s Affidavit filed with his Motion. Burge’s signature was on

two separate documents right under an acknowledgement that he had received the

arbitration clause and was subject to it [C.R. 176 and 182]. Shepherd signed the

same pages, thus creating a binding agreement to arbitrate.

1 “You” is defined as the broker – dealer. See C.R. 156.

5 All of these documents had been on file for almost a month when Burge

filed a Response to both Motions on May 30 [C.R. 185 – 204]. In support of his

Response, Burge filed his own Affidavit [C.R. 206 – 207]. Notably -- Burge did

not deny executing the Joint Account documents and did not deny agreeing to

the arbitration clause in the documents that were referenced directly above his

signature on the “Brokerage Access Form” and “Statement of Investment

Selection” documents.

VI. SUMMARY OF THE ARGUMENT.

The terms of the arbitration agreement and the evidence that Burge had

agreed to it were not controverted. Since Burge’s claims indisputably involve a

controversy with Shepherd and Girard relating to the IRA Account and/or the Joint

Account, those claims fall within the scope of the arbitration agreement.

Appellants timely moved to compel arbitration in this proceeding and, based on the

applicable facts and law, the trial court committed reversible error by denying

Appellants’ motions to compel arbitration and otherwise stay the proceedings in

the Trial Court pending arbitration.

VII. ARGUMENT AND AUTHORITIES.

A. JURISDICTION, ARBITRABILITY STANDARDS AND STANDARD OF REVIEW.

1. Jurisdiction for Interlocutory Appeal.

6 A person may take an interlocutory appeal to the Court of Appeals from an

order of a District Court denying a motion to compel arbitration whether the

motion relies on the Federal Arbitration Act (9 U.S.C. §1, et seq.) or the Texas

Arbitration Act (chapter 171 of the Business & Commerce Code). See, TEX. CIV.

PRAC. & REM. CODE §51.016, 171.098; 9 U.S.C. §16(a)(1)(A)-(C). See also, In re

Merrill Lynch & Co., 315 S.W.3d 888, 891, n. 3 (Tex. 2010). Shepherd moved to

compel arbitration under both the federal and state statutes [C.R. 133, 137] as did

Girard [C.R. 126].

2. Arbitration Standards.

In determining whether to compel arbitration, the court must decide: (1)

whether a valid, enforceable arbitration agreement exists, and (2) if so, whether the

claims asserted fall within the scope of that agreement. In re D. Wilson Constr.

Co., 196 S.W.3d 774, 781 (Tex. 2006); Chambers v. O’Quinn, 305 S.W.3d 141,

146 (Tex.App.—Houston, [1st Dist] 2009, pet. denied). The first question is a

question of fact. Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 268 (Tex.

1992). The party seeking to compel arbitration has the initial burden to establish

his right to the remedy under the first prong; that is, to establish that a valid

arbitration agreement exists.

Once a party seeking to compel arbitration establishes an agreement to

arbitrate, the court must then determine whether the arbitration agreement covers

7 the nonmovant's claims. Like other questions of contract construction, that is a

question of law. In re FirstMerit Bank, 52 S.W.3d 749, 753-54 (Tex. 2001).

When a movant establishes the existence of an agreement, and that the

agreement applies to the dispute, the trial court has no discretion but to compel

arbitration and stay its own proceedings. In re FirstMerit Bank, at 754;

TEX.CIV.PRAC. & REM CODE §171.025 (“The court shall stay a proceeding that

involves an issue subject to arbitration . . . .”) A trial court “shall order the parties

to arbitrate” upon a showing of an agreement to arbitrate. Tex.Civ.Prac. & Rem.

Code §171.021(a). Section 3 of the FAA (9 U.S.C. §3) similarly provides

(emphasis added):

If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending . . . shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement . . . .

3. Standard of Review.

Appeals of orders denying arbitration under the both the federal and state

statutes are subject to a no-evidence standard for the trial court’s factual

determinations, and a de novo standard for legal determinations. This standard is

the same as the abuse of discretion standard of review that is applied to

8 interlocutory appeals under the FAA. Sidley Austin Brown & Wood, LLP v. J.A.

Green Dev. Corp., 327 S.W.3d 859, 862-63 (Tex. App.—Dallas 2010, no pet.).

B. THE TRIAL COURT ERRED IN FAILING TO COMPEL ARBITRATION OF BURGE’S CLAIMS AGAINST GIRARD AND SHEPHERD BECAUSE A VALID AGREEMENT TO ARBITRATE SUCH CLAIMS EXISTED BETWEEN BURGE AND GIRARD AND SHEPHERD.

As noted previously, the first step in determining whether parties should be

compelled to arbitrate a dispute is to consider whether the parties agreed to

arbitrate. Texas law controls the resolution of that issue under both the federal and

state statutes. “When Texas courts are called on to decide if disputed claims fall

within the scope of an arbitration clause under the Federal Act, Texas procedure

controls that determination.” Anglin, 842 S.W.2d at 268. The existence of an

arbitration agreement is a question of fact, which is to be resolved “summarily”.

Tex.Civ.Prac. & Rem. Code §171.023(b). Such a summary resolution should be

made on the basis of affidavits whenever possible. If the movant meets his burden

with affidavits, then the burden shifts to the opponent to controvert it by affidavits.

Anglin, 842 S.W.2d at 268.

Issues of fact that are controverted in the affidavits may then need to be

resolved by an evidentiary hearing. As the Supreme Court wrote in Anglin Co., 842

S.W.2d at 269: “[T]he trial court may summarily decide whether to compel

arbitration on the basis of affidavits, pleadings, discovery, and stipulations.

However, if the material facts necessary to determine the issue are controverted, by 9 an opposing affidavit or otherwise admissible evidence, the trial court must

conduct an evidentiary hearing to determine the disputed material facts.”

Here, Burge did not controvert any of the evidence submitted by Shepherd

or Girard that he had agreed to the arbitration provision in the Customer

Agreement. Burge did not even object to any of that evidence. There was no

disputed issue of fact for the Trial Court to resolve – the only evidence in front of

the Trial Court was that that an agreement to arbitrate existed between Burge on

the one hand and Girard / Shepherd on the other.

The only other issue in front of the trial court was– Does that agreement

cover the claims against Shepherd and Girard? As demonstrated below, the answer

is clearly “yes”.

C. TEXAS RULES OF CONTRACT CONSTRUCTION ARE APPLICABLE TO THE DETERMINATION OF WHETHER A VALID AGREEMENT TO ARBITRATE EXISTED.

Construction of the scope of arbitration agreement is a question of law. In re

FirstMerit Bank, 52 S.W.3d 749, 754 (Tex. 2001). Texas Courts generally apply

state-law principles governing the formation of contracts to claims under the FAA

as well as the Texas Arbitration Act. In re Palm Harbor Homes, Inc., 195 S.W.3d

672, 678 (Tex.2006). In construing a written contract, the primary concern of the

court is to ascertain the true intentions of the parties as expressed in the instrument.

Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005); J.M.

10 Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003); R & P Enters. v.

LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980). To achieve this

objective, we must examine and consider the entire writing in an effort to

harmonize and give effect to all the provisions of the contract so that none will be

rendered meaningless. Valence Operating Co. v. Dorsett, 164 S.W.3d at 661; R &

P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d at 518.

A strong presumption favoring arbitration arises after the party seeking to

compel arbitration proves that a valid arbitration agreement exists. Texas Courts

must resolve any doubts about an arbitration agreement’s scope in favor of

arbitration. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001).

Finally, to determine whether an arbitration agreement covers a party’s claims, a

court must focus on the Petition’s factual allegations, not the legal causes of action

asserted. Id., at 754.

One general principle of contract construction is that the parties to an

instrument intend every clause to have some effect and in some measure to

evidence their agreement. City of Pinehurst v. Spooner Addition Water Co., 432

S.W.2d 515, 518 (Tex. 1968) (citing the Restatement of the Law of Contracts §

230 (1932) with approval). As said in the Restatement, § 230, supra, "[the]

standard of interpretation … is the meaning that would be attached to the

integration by a reasonably intelligent person acquainted with all operative usages

11 and knowing all the circumstances prior to and contemporaneous with the making

of the integration.” Id. Where a question relating to the construction of a contract

is presented, as here, the Courts are to take the wording of the instrument, consider

the same in the light of the surrounding circumstances, and apply the pertinent

rules of construction thereto in order to settle the meaning of the contract. Spence

& Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (Tex. Sup.1963).

Finally, no single provision taken alone will be given controlling effect; rather, all

the provisions must be considered with reference to the whole instrument. Myers v.

Gulf Coast Minerals Mgmt. Corp., 361 S.W.2d 193, 196 (Tex.1962); Citizens Nat'l

Bank v. Tex. & P. Ry. Co., 136 Tex. 333, 150 S.W.2d 1003, 1006 (1941).

D. BURGE’S CLAIMS FALL WITHIN THE SCOPE OF THE ACCOUNT DOCUMENTS’ ARBITRATION PROVISIONS.

Once Appellants established the existence of a valid arbitration agreement,

the burden shifted to Burge to defeat enforcement of that agreement. In re J.D.

Edwards World Solutions, Co., 87 S.W.3d 546, 549 (Tex.2002) (per curiam). The

Texas Supreme Court has held that the burden is on the party resisting arbitration

“to show that their claims fell outside the scope of the arbitration agreement.”

Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 900 (Tex. 1995). “A court

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.” In re D. Wilson Const. Co., 196 S.W.3d 774, 783 (Tex. 2006) 12 (quoting Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995))

(emphasis in original) (internal citations omitted).

Indeed, arbitration agreements even cover disputes involving parties who did

not sign the agreement when their rights arise from or directly relate to the

agreement. See In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 762 (Tex. 2006);

Meyer v. WMCO-GP, LLC, 211 S.W.3d 302 (Tex. 2006); see, e.g., In re BNP

Paribas, 13-07-353-CV, 2008 WL 2208933, at *3-4 (Tex. App.—Corpus Christi

May 29, 2008, no pet.).

Actions against individual employees for conduct which in substance arises

in the course of employment are subject to arbitration agreements with their

employers. See, e.g., In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 190

(Tex. 2007) (“Because the plaintiffs’ claims against Medina are in substance

claims against Merrill Lynch, they must abide by their agreement to arbitrate those

claims.”).

Burge’s claims against Girard arise out of and/or relate to the IRA Account

and the Joint Account and otherwise satisfy the various criteria of an arbitrable

claim. Generally, if the facts alleged “touch matters,” “have a significant

relationship” to, or are “factually intertwined” with the contract that is subject to

the arbitration agreement, the claim is arbitrable. In re Mission Petroleum

Carriers, Inc., 13-04-00550-CV, 2005 WL 326848, at *2 (Tex. App.—Corpus

13 Christi Feb. 11, 2005, no pet.) (Federal Act) (quoting Pennzoil Company v. Arnold

Oil Company, Inc., 30 S.W.3d 494, 498 (Tex.App.—San Antonio 2000, orig.

proceeding); Emerald Texas, Inc. v. Peel, 920 S.W.2d 398, 404(Tex.App. –

Houston [1st Dist. 1996, no pet.) (Texas Act), citing Valero Energy Corp. v.

Wagner & Brown, 777 S.W.2d 564, 566 (Tex. App. – El Paso 1989, writ denied).

The Court must focus on the factual allegations of the Plaintiff’s Petition,

rather than the legal causes of action asserted. In re FirstMerit Bank, 52 S.W.3d

749, 754 (Tex. 2001). The Court should consider whether the facts alleged are

intertwined with the contract containing the arbitration clause. Jack B. Anglin Co.,

842 S.W.2d at 271. To fall within the scope of an arbitration provision, the

allegations need only be factually intertwined with arbitrable claims or otherwise

touch upon the subject matter of the agreement containing the arbitration

provision. In re Prudential Sec., Inc., 159 S.W.3d 279, 283 (Tex.App.—Houston

[14th Dist.] 2005, orig. proceeding) (emphasis added).

Under the broad language of the arbitration provision contained in the

account opening documents – encompassing any controversy or dispute between

the parties concerning the IRA Account or the Joint Account -- it simply cannot be

said with positive assurance that the arbitration provision in the Customer

Agreement does not cover Burge’s claims against Shepherd and Girard. See, e.g.,

Wee Tots Pediatrics, P.A. v. Morohunfola, 268 S.W.3d 784 (Tex. App.—Fort

14 Worth 2008, no pet.) (construing broad arbitration provision in employment

agreement covering any disputes between the parties in any manner relating to the

agreement to require arbitration in absence of exclusionary language). Clearly,

Burge’s claims, which include allegations of a scheme on the part of all

Defendants to deprive Burge of his inheritance by, among other things, emptying

the IRA Account and Joint Account, are within the scope of the arbitration

provision.

Further, it is clear that the arbitration provision is not limited to, nor was

intended to be limited to, claims for breach of the account agreements. See Capital

Income Properties-LXXX v. Blackmon, 843 S.W.2d 22 (Tex. 1992) (per curiam)

(holding that arbitration provision governing claims that “arise out of and relate to”

a limited partnership agreement compelled arbitration of claims of breach of

fiduciary duty and fraudulent inducement to invest in partnership). Thus, each of

Burge’s claims, which relate to a “. . . plan to cut [Burge] out of his inheritance”

[POP ¶3.13 C.R. 8] must be arbitrated.

Burge failed to offer any evidence to contradict any of Appellants’ evidence.

He failed to offer an interpretation of the arbitration agreement that plausibly

denied the arbitrability of this dispute. Burge’s only evidence addressed his

Mother’s mental state which is not relevant. See, C.R. 206 – 207. He failed to

address, let alone carry, his burden of proof.

15 CONCLUSION AND PRAYER

Shepherd and Girard entered into a valid and binding agreement to arbitrate

all controversies or disputes concerning any transaction in the IRA Account or the

Joint Account. Burge’s claims concern those accounts. The Trial Court’s order

should be reversed, Burge should be ordered to arbitrate his claims against

Shepherd and Girard, and Cause No. 2016-522,595, pending in the 72nd District

Court of Lubbock County should be stayed pending resolution of that arbitration.

Respectfully submitted,

WINGET, SPADAFORA & SCHWARTZBERG, LLP

By: /s/ Eron F. Reid Martin S. Schnexnayder State Bar No. 17745610 Eron F. Reid State Bar No. 24100320 Two Riverway, Suite 725 Houston, Texas 77056 (713) 343-9200 Telephone (713) 343-9201 Facsimile Schnexnayder.m@wssllp.com Reid.e@wssllp.com

COUNSEL FOR APPELLANT GIRARD SECURITIES, INC.

16 CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing document was served via electronic service through Texas.gov or by email to all counsel of record on this _5th_day of September, 2017 in accordance with the Texas Rules of Appellate Procedure.

/s/ Eron F. Reid ERON F. REID

CERTIFICATE OF COMPLIANCE

I hereby certify that the foregoing document has a word count of 3,379 which complies with the maximum length limits of the Texas Rules of Appellate Procedure.

/s/ Eron F. Reid ERON F. REID

There are no additional documents to be added in an Appendix, other than

those attached as an Appendix to the briefs of the other parties in this appeal.