In The Court of Appeals Seventh District of Texas at Amarillo ________________________
No. 07-13-00321-CV ________________________
KENNY SCHUETTE, APPELLANT
V.
CORY COLTHARP AND TAMIE COLTHARP, APPELLEES
On Appeal from the 99TH District Court Lubbock County, Texas Trial Court No. 2013-505,846; Honorable William C. Sowder, Presiding
May 21, 2014
MEMORANDUM OPINION Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
This is an interlocutory appeal, brought pursuant to the provisions of the Texas
Civil Practice and Remedies Code, from the denial of a Plea in Abatement. See TEX.
CIV. PRAC. & REM. CODE ANN. § 171.098 (West 2011). In the underlying lawsuit the
Appellees, Cory Coltharp and Tamie Coltharp, sued Appellant, Kenny Schuette, for
breach of a written contract. Appellant sought the dismissal of that lawsuit based upon the argument that the dispute was subject to arbitration. When the trial court disagreed,
Appellant brought this appeal. We affirm.
On March 8, 2012, Appellees and Appellant entered into a contract for the
construction of a home in Slaton, Texas. The agreement of the parties was
memorialized on a three-sheet, pre-printed no-carbon-required form contract furnished
by Appellant. The first sheet was white, the second sheet was yellow and the third
sheet was pink. The parties signed the top white sheet, and their signatures were
reproduced on the yellow and pink sheets via the no carbon process. The front of each
sheet was identical; however, the back of the white sheet included the phrase, “All
disputes hereunder shall be resolved by binding arbitration in accordance with the rules
of the American Arbitration Association.” The backs of the yellow and pink sheets were
blank.
After the parties executed the contract, Appellant allowed Appellees to retain all
three sheets so that Appellees could take the contract to their bank to secure financing.
Despite considerable efforts to locate the original white sheet, the parties have been
unable to locate it. Appellant sought to establish the contents of the back of the white
sheet by producing a blank specimen of the form used. While Appellees maintain there
is a dispute concerning whether the white sheet actually contained the printed provision
in question, our disposition of this appeal renders that question inconsequential.
Therefore, for purposes of our analysis, we will assume the white sheet did include the
provisions printed on the specimen form admitted into evidence.
2 After a dispute arose concerning performance of the contract and the underlying
lawsuit was filed, Appellant sought to enforce the arbitration clause printed on the back
of the white sheet. Following a hearing where the parties testified concerning the
circumstances surrounding the execution of the contract and the present whereabouts
of the white sheet, the trial court denied Appellant’s Plea in Abatement. By the single
issue raised in this appeal Appellant posits that the trial court erred by failing to abate
the lawsuit and compel arbitration.
ANALYSIS
An appellate court reviews an interlocutory appeal of an order denying a plea in
abatement and motion to compel arbitration under an abuse of discretion standard.
Sidley Austin Brown & Wood LLP v. J.A. Green Dev. Corp., 327 S.W.3d 859, 863 (Tex.
App.—Dallas 2010, no pet.). The test for abuse of discretion is whether the trial court
acted without reference to any guiding rules and principles, or alternatively, whether the
trial court’s actions were arbitrary and unreasonable based on the circumstances of the
individual case. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.
1985).
Arbitration agreements are interpreted under traditional contract principles, In re
Olshan Foundation Repair Co., 328 S.W.3d 883, 889 (Tex. 2010), and parties to a
contract cannot circumvent arbitration provisions simply because they fail to read the
details of the contract. See In re Education Mgmt. Corp., 14 S.W.3d 418, 426 (Tex.
App.—Houston [14th Dist.] 2000, no pet.); Shearson Lehman Bros. v. Kilgore, 871
S.W.2d 925, 928-29 (Tex. App.—Corpus Christi 1994, no pet.) When a contract
3 includes an arbitration agreement and one party files suit in lieu of seeking arbitration,
the appropriate remedy is for the party favoring arbitration to file a plea in abatement
and seek to have the trial court compel arbitration. TEX. CIV. PRAC. & REM. CODE ANN. §
171.025(a) (West 2011). If the trial court finds the claim falls within the scope of the
arbitration agreement, the court has no discretion but to stay its own proceedings and
compel arbitration. Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56 (Tex. 2008).
Therefore, because it is undisputed the clause in question in this case provides for
mandatory arbitration and that the trial court denied arbitration, the question becomes
“Did the trial court err in determining that the arbitration provision in question was not a
part of the contract between the parties?” In that regard, whether or not a particular
provision is a part of the agreement between the parties is a question of the intent of the
parties. Domingo v. Mitchell, 257 S.W.3d 34, 40 (Tex. App.—Amarillo 2008, pet.
denied).
For an enforceable contract to exist there must be an offer, an acceptance, and
the exchange of consideration. Id. at 39. The essential details of the proposed contract
must be included in the agreement, and the parties must actually agree to those details.
Id. Where a dispute arises as to the details of the agreement, a fact issue is created as
to the intent of the parties. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.
2003).
Here, Appellant contends the white copy of the agreement (including the
arbitration agreement as established by the unsigned specimen of the document used)
is the agreement of the parties; whereas Appellees contend the yellow and pink copies
of the agreement (not including such a provision) reflects the true agreement of the
4 parties. Because it is undisputed that the yellow and pink copies, the only signed
copies actually produced, do not contain the arbitration provision, a factual dispute
exists between the parties as to the essential details of the contract, i.e., whether there
was a meeting of the minds of the parties that the arbitration provision was a part of the
agreement.
A review of the front page of the white, yellow and pink copies of the contract
reveals that Appellant offered to “furnish material and labor - complete in accordance
with the above specifications . . . .” (Emphasis added.) At the same time the contract
provides “[t]he above prices, specifications and conditions are satisfactory and hereby
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In The Court of Appeals Seventh District of Texas at Amarillo ________________________
No. 07-13-00321-CV ________________________
KENNY SCHUETTE, APPELLANT
V.
CORY COLTHARP AND TAMIE COLTHARP, APPELLEES
On Appeal from the 99TH District Court Lubbock County, Texas Trial Court No. 2013-505,846; Honorable William C. Sowder, Presiding
May 21, 2014
MEMORANDUM OPINION Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
This is an interlocutory appeal, brought pursuant to the provisions of the Texas
Civil Practice and Remedies Code, from the denial of a Plea in Abatement. See TEX.
CIV. PRAC. & REM. CODE ANN. § 171.098 (West 2011). In the underlying lawsuit the
Appellees, Cory Coltharp and Tamie Coltharp, sued Appellant, Kenny Schuette, for
breach of a written contract. Appellant sought the dismissal of that lawsuit based upon the argument that the dispute was subject to arbitration. When the trial court disagreed,
Appellant brought this appeal. We affirm.
On March 8, 2012, Appellees and Appellant entered into a contract for the
construction of a home in Slaton, Texas. The agreement of the parties was
memorialized on a three-sheet, pre-printed no-carbon-required form contract furnished
by Appellant. The first sheet was white, the second sheet was yellow and the third
sheet was pink. The parties signed the top white sheet, and their signatures were
reproduced on the yellow and pink sheets via the no carbon process. The front of each
sheet was identical; however, the back of the white sheet included the phrase, “All
disputes hereunder shall be resolved by binding arbitration in accordance with the rules
of the American Arbitration Association.” The backs of the yellow and pink sheets were
blank.
After the parties executed the contract, Appellant allowed Appellees to retain all
three sheets so that Appellees could take the contract to their bank to secure financing.
Despite considerable efforts to locate the original white sheet, the parties have been
unable to locate it. Appellant sought to establish the contents of the back of the white
sheet by producing a blank specimen of the form used. While Appellees maintain there
is a dispute concerning whether the white sheet actually contained the printed provision
in question, our disposition of this appeal renders that question inconsequential.
Therefore, for purposes of our analysis, we will assume the white sheet did include the
provisions printed on the specimen form admitted into evidence.
2 After a dispute arose concerning performance of the contract and the underlying
lawsuit was filed, Appellant sought to enforce the arbitration clause printed on the back
of the white sheet. Following a hearing where the parties testified concerning the
circumstances surrounding the execution of the contract and the present whereabouts
of the white sheet, the trial court denied Appellant’s Plea in Abatement. By the single
issue raised in this appeal Appellant posits that the trial court erred by failing to abate
the lawsuit and compel arbitration.
ANALYSIS
An appellate court reviews an interlocutory appeal of an order denying a plea in
abatement and motion to compel arbitration under an abuse of discretion standard.
Sidley Austin Brown & Wood LLP v. J.A. Green Dev. Corp., 327 S.W.3d 859, 863 (Tex.
App.—Dallas 2010, no pet.). The test for abuse of discretion is whether the trial court
acted without reference to any guiding rules and principles, or alternatively, whether the
trial court’s actions were arbitrary and unreasonable based on the circumstances of the
individual case. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.
1985).
Arbitration agreements are interpreted under traditional contract principles, In re
Olshan Foundation Repair Co., 328 S.W.3d 883, 889 (Tex. 2010), and parties to a
contract cannot circumvent arbitration provisions simply because they fail to read the
details of the contract. See In re Education Mgmt. Corp., 14 S.W.3d 418, 426 (Tex.
App.—Houston [14th Dist.] 2000, no pet.); Shearson Lehman Bros. v. Kilgore, 871
S.W.2d 925, 928-29 (Tex. App.—Corpus Christi 1994, no pet.) When a contract
3 includes an arbitration agreement and one party files suit in lieu of seeking arbitration,
the appropriate remedy is for the party favoring arbitration to file a plea in abatement
and seek to have the trial court compel arbitration. TEX. CIV. PRAC. & REM. CODE ANN. §
171.025(a) (West 2011). If the trial court finds the claim falls within the scope of the
arbitration agreement, the court has no discretion but to stay its own proceedings and
compel arbitration. Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56 (Tex. 2008).
Therefore, because it is undisputed the clause in question in this case provides for
mandatory arbitration and that the trial court denied arbitration, the question becomes
“Did the trial court err in determining that the arbitration provision in question was not a
part of the contract between the parties?” In that regard, whether or not a particular
provision is a part of the agreement between the parties is a question of the intent of the
parties. Domingo v. Mitchell, 257 S.W.3d 34, 40 (Tex. App.—Amarillo 2008, pet.
denied).
For an enforceable contract to exist there must be an offer, an acceptance, and
the exchange of consideration. Id. at 39. The essential details of the proposed contract
must be included in the agreement, and the parties must actually agree to those details.
Id. Where a dispute arises as to the details of the agreement, a fact issue is created as
to the intent of the parties. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.
2003).
Here, Appellant contends the white copy of the agreement (including the
arbitration agreement as established by the unsigned specimen of the document used)
is the agreement of the parties; whereas Appellees contend the yellow and pink copies
of the agreement (not including such a provision) reflects the true agreement of the
4 parties. Because it is undisputed that the yellow and pink copies, the only signed
copies actually produced, do not contain the arbitration provision, a factual dispute
exists between the parties as to the essential details of the contract, i.e., whether there
was a meeting of the minds of the parties that the arbitration provision was a part of the
agreement.
A review of the front page of the white, yellow and pink copies of the contract
reveals that Appellant offered to “furnish material and labor - complete in accordance
with the above specifications . . . .” (Emphasis added.) At the same time the contract
provides “[t]he above prices, specifications and conditions are satisfactory and hereby
accepted.” (Emphasis added.) No reference is ever made to the back of the white
sheet and in the absence of any testimony concerning the parties being directed to look
between the individual sheets, the trial court did not abuse its discretion in determining
that Appellees did not agree to provisions that were otherwise hidden. In other words,
because the back of the last page of the form (the pink sheet) contained no other terms,
it is reasonable to assume the parties did not reach an agreement containing any terms
other than those contained on the front of each page.
Here the trial court found that the intent of the parties did not include the
arbitration provision in question and that, as a result, the provision was not a part of the
contract between the parties. Under the facts of this case, we find the trial court did not
abuse its discretion in reaching that conclusion and consequently, in denying
Appellant’s motion to abate. Appellant’s issue is overruled.
5 CONCLUSION
The order of the trial court denying Appellant’s Plea in Abatement is affirmed.
Patrick A. Pirtle Justice