Meritage Homes of Texas, LLC v. Sustainable Southern Living, LLC

CourtCourt of Appeals of Texas
DecidedAugust 28, 2025
Docket09-24-00247-CV
StatusPublished

This text of Meritage Homes of Texas, LLC v. Sustainable Southern Living, LLC (Meritage Homes of Texas, LLC v. Sustainable Southern Living, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Meritage Homes of Texas, LLC v. Sustainable Southern Living, LLC, (Tex. Ct. App. 2025).

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

________________

NO. 09-24-00247-CV ________________

MERITAGE HOMES OF TEXAS, Appellant

V.

SUSTAINABLE SOUTHERN LIVING LLC, Appellee ________________________________________________________________________

On Appeal from the 457th District Court Montgomery County, Texas Trial Cause No. 23-11-17617-CV ________________________________________________________________________

MEMORANDUM OPINION

In this accelerated interlocutory appeal, Meritage Homes of Texas, LLC

(“Meritage”) challenges the trial court’s Order denying its Motion to Compel

Arbitration. See Tex. Civ. Prac. & Rem. Code Ann. § 51.016 (allowing for an

interlocutory appeal from an order denying a motion to compel arbitration). For the

reasons discussed below, we reverse the trial court’s Order denying arbitration and

remand the case to the trial court for entry of an Order compelling arbitration.

1 I. Background

In November 2023, Sustainable Southern Living, LLC (“Southern Living”)

sued Meritage for the return of earnest money following the cancellation of an

agreement to purchase a home. According to the Petition, in March 2023, Meritage

and Southern Living entered into a Purchase Agreement (“Agreement”) for the

purchase of a newly constructed home in Conroe, Texas. As part of the Agreement,

Southern Living placed $17,250.00 in escrow. The Agreement included a condition

precedent that required Southern Living to obtain lender financing within twenty-

one days of signing the Agreement. Based on the signature date, the deadline to

obtain financing was April 4, 2023.

In late March 2023, Southern Living was denied lender financing. Southern

Living sought to cancel the Agreement, as permitted under the terms. The terms of

the Agreement permitted cancellation once Southern Living (1) delivered to

Meritage documentation of denied lender financing and (2) provided Meritage with

a written cancellation within the twenty-one-day period. In accordance with the

Agreement, Southern Living informed Meritage of the denial and provided

documentation of the denial pursuant to the Agreement’s terms. Southern Living

also requested information on how to request a refund of the earnest money. On

April 5, 2023, Southern Living received and completed the “Cancellation of

Contract” request form. According to Southern Living, Meritage responded that the

2 earnest money would be refunded within four to six weeks. On May 17, 2023,

Meritage informed Southern Living that it would not refund the earnest money, but

that the Southern Living could instead use the money towards another transaction

with Meritage.

Southern Living sued Meritage and made claims for Deceptive Trade

Practices Act (“DTPA”) violations, negligent misrepresentation, breach of contract,

and common law fraud. Southern Living sought damages in the amount of

$17,000.00, which was the earnest money less the non-refundable $250.00 for

processing and administering the Agreement, and attorneys’ fees.

In December 2023, Meritage filed its Answer and generally denied the

allegations, without waiving its right to compel arbitration. That same month, the

trial court issued a docket control order that ordered discovery to be completed sixty

days before trial and set the case for trial in August 2024.

In June 2024, Meritage filed a Motion to Compel Arbitration. In the Motion,

Meritage argued that the dispute is governed by a valid agreement to arbitrate and

that Southern Living’s claims fall within the scope of the Agreement. Meritage

argued that the Agreement provides for arbitration under the Federal Arbitration Act

(“FAA”) and specifically states that “any dispute, claim, or controversy between

[Southern Living] and Meritage shall be determined by binding arbitration.”

3 Meritage stated that all Southern Living’s causes of action arise from the dispute

over the refund of earnest money under the terms of the Agreement.

That same month, Southern Living responded to Meritage’s Motion to

Compel Arbitration and argued that arbitration is barred by principles of equitable

estoppel under the terms of the Agreement. Southern Living argued that the

arbitration clause states that “[a]ny determination of the scope and applicability of

the agreement to arbitrate, however, shall be made solely by a federal court in the

state in which the Home is located.” According to Southern Living, Meritage seeks

to avoid its contract burden while enforcing its benefit by not seeking an arbitration

determination in federal court. Southern Living further argued that it disputes that

its claims are within the scope and applicability of the arbitration clause, and it

believed that a federal court must make the final determination in accordance with

the Agreement.

Next, Southern Living argued that the quoted arbitration language is a forum-

selection clause that Meritage has not made an effort to enforce and has not

established that the forum is unreasonable, unjust, or invalid. Southern Living further

argued that Meritage’s decision to compel arbitration months before trial amounts

to a waiver of the right to compel arbitration. According to Southern Living,

Meritage sought to compel arbitration seven months after the suit was filed, and only

two months prior to trial. Southern Living contended that permitting arbitration at

4 this point would force it to duplicate in arbitration the procedural and discovery

already undertaken over the past seven months.

One week later, the trial court denied Meritage’s Motion to Compel

Arbitration. This interlocutory appeal followed.

II. Standard of Review

“[A] party seeking to compel arbitration must establish the existence of a valid

arbitration agreement and show that the disputed claim falls within the scope of that

agreement.” Wagner v. Apache Corp., 627 S.W.3d 277, 282 (Tex. 2021) (citing In

re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig.

proceeding)). Once a party proves “a valid arbitration agreement exists, ‘[d]oubts

regarding an agreement’s scope are resolved in favor of arbitration because there is

a presumption favoring agreements to arbitrate under the FAA.’” Id. at 282–83

(quoting Kellogg Brown & Root, Inc., 166 S.W.3d at 737).

We review a trial court’s order denying a motion to compel arbitration for an

abuse of discretion. Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). “A

trial court abuses its discretion if it acts in an arbitrary or unreasonable manner

without reference to any guiding rules or principles.” Bowie Mem’l Hosp. v. Wright,

79 S.W.3d 48, 52 (Tex. 2002) (per curiam); see also Mobil Oil Fed. Credit Union v.

Smith, No. 09-22-00393-CV, 2024 WL 630000, at *5 (Tex. App.—Beaumont Feb.

15, 2024, no pet.) (mem. op.). In an abuse of discretion review, we should not reverse

5 because we might have decided the issue differently. See Downer v. Aquamarine

Operators, Inc., 701 S.W.2d 238, 242 (Tex. 1985); Mobil Oil Fed. Credit Union,

2024 WL 630000, at *5.

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