Quality Metrics Partners, LLC, Clearview Diagnostics, LLC, CGK Consulting, LLC, CGK Medical Management, LLC, CGK Medical Ventures, LLC, Brodie Flanders, Michael Morales, Michael Knall, Anthony Kim, and Christopher R. Peyton v. Greg Blasingame Capricia Larson Gabby Consulting, LLC And DX Power Moves Consulting, LLC

Court of Appeals of Texas·Decided August 26, 2019·No. 05-18-00394-CV·Published

Opinion

REVERSE and REMAND; and Opinion Filed August 26, 2019.

In The

Court of Appeals

Fifth District of Texas at Dallas No. 05-18-00394-CV

QUALITY METRICS PARTNERS, LLC, CLEARVIEW DIAGNOSTICS, LLC, CGK CONSULTING, LLC, CGK MEDICAL MANAGEMENT, LLC, CGK MEDICAL VENTURES, LLC, BRODIE FLANDERS, MICHAEL MORALES, MICHAEL KNALL, ANTHONY KIM, AND CHRISTOPHER R. PEYTON, Appellants V.

GREG BLASINGAME; CAPRICIA LARSON; GABBY CONSULTING, LLC; AND DX POWER MOVES CONSULTING, LLC, Appellees

On Appeal from the 101st Judicial District Court Dallas County, Texas

Trial Court Cause No. DC-17-03702

MEMORANDUM OPINION

Before Justices Brown, Schenck, and Pedersen, III Opinion by Justice Pedersen, III Appellants challenge the trial court’s denial of their consolidated motions to compel

arbitration of certain claims brought by appellees. In two issues, appellants contend that (i) the claims at issue fall within the scope of the agreement containing an arbitration provision, and (ii) three legal theories allow these appellants to compel arbitration of those claims. We reverse the trial court’s order denying the motion to compel, render judgment ordering all disputes between the parties to proceed to arbitration, and remand for further proceedings consistent with this opinion.

Background

This appeal involves a series of contractual relationships among the parties.

The Parties

Appellant Quality Metrics Partners, LLC (QMP) provides marketing services, including sales and client acquisition to vendors of services and products of interest to health care providers. It owns and operates a laboratory, appellant Clearview Diagnostics, LLC (Clearview), which processes blood and urine samples. Individual appellants Brodie Flanders, Michael Morales, Michael Knall, and Anthony Kim are principals of both QMP and Clearview. In this opinion, we will refer to QMP, Clearview, Flanders, Morales, Knall, and Kim as the QMP Appellants.

Individual appellant Christopher Peyton is the Chief Executive Officer of CKG Consulting, LLC1 and CGK Medical Ventures, LLC. In this opinion, we will refer to CGK, CGK Medical Ventures, LLC, and Peyton as the CGK Appellants.

Appellees Greg Blasingame and Capricia Larson are principals of DX Power Moves Consulting, LLC (DX Power) and its predecessor in interest, Gabby Consulting, LLC (Gabby). We refer to these four parties collectively as appellees.

The Agreements

On November 18, 2015, QMP and CGK entered into their Representative Marketing Agreement. In that agreement, CGK agreed to provide information to physicians and other health care professionals and health care organizations regarding specific services and products of Clearview. QMP subsequently assigned its interest in the Representative Marketing Agreement to Clearview itself. The new agreement was titled the Marketing Services Agreement, and it continued all obligations relevant to this appeal.

1 During the course of the parties’ relationship, CGK Consulting, LLC changed its name to CGK Medical Management, LLC. “CGK” shall refer here to both entities.

Appellees contend that, during that same month, they entered into an oral contract with the QMP Appellants. Appellees agreed to market QMP and Clearview’s services to appellees’ health- care-provider clients. In return, appellees would receive 40% of QMP’s and Clearview’s gross collections after processing samples provided by appellees’ clients.

And the same month, appellees contend, the QMP Appellants persuaded Gabby to enter a written agreement with CGK. That agreement, titled the Distribution Agreement, likewise provided that appellees would market Clearview’s services to appellees’ health-care clients. Under the written agreement, appellees would receive 40% of CGK’s gross collections from Clearview’s processing of appellees’ clients’ samples. The Distribution Agreement contains an arbitration provision, which states that disputes under or relating to the agreement will be submitted to arbitration.

Proceedings Below

After a year of business dealings among the parties, appellees sued all appellants. They alleged breach of the Distribution Agreement by CGK. And they pleaded claims against all appellants for conversion and civil threat, violations of the Texas Theft Liability Act, unjust enrichment/restitution, civil conspiracy, constructive trust, fraud, negligent misrepresentation, tortious interference with contract, and breach of fiduciary duty. Finally, they pleaded a claim of aiding and abetting against individual appellants Morales, Knall, Flanders, and Kim.

Appellants answered and then filed motions to compel arbitration pursuant to the Distribution Agreement’s arbitration provision.

Days later, appellees filed their First Amended Petition, which added allegations of the existence and breach of a separate oral agreement with the QMP Appellants. The amended petition also claimed that the QMP Appellants had fraudulently induced appellees to enter into that oral agreement.

The motions to compel were heard together by the Associate Judge; she ordered arbitration of all claims against all appellants. Appellees appealed, and the trial court heard the motions de novo. The court granted the motions except as to direct claims against the QMP Appellants.

This appeal followed.

Non-Signatories Compelling Arbitration We begin with appellants’ second issue, which argues that the QMP Appellants—who are not signatories to the Distribution Agreement—can nevertheless compel arbitration with appellees via any of three legal theories: third-party-beneficiary status, intertwined estoppel, and same- transaction agreements. Whether a claim involving a non-signatory must be arbitrated is a “gateway matter” for the trial court that is subject to de novo review on appeal. Jody James Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 629 (Tex. 2018).

“Arbitration is a creature of contract between consenting parties.” Id. Nevertheless, principles of contract law and agency may require a party that agreed to arbitrate disputes with one party to arbitrate with another. Id. The parties before us agree that the Federal Arbitration Act (FAA) and federal law generally govern their case. But the United States Supreme Court has directed that we look to state law to determine whether contracts are binding and enforceable under the FAA when that state law would govern issues of “validity, revocability, and enforceability of contracts generally.” Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630–31 (2009). The Carlisle Court identified a list of state law principles that allow a contract to be enforced by or against nonparties to the contract: assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver, and estoppel. Id. at 631 (citing 21 Richard A. Lord, Williston on Contracts § 57:19, p. 183 (4th ed. 2001)). Thus, “[i]f a written arbitration provision is made enforceable against (or for the benefit of) a third party under state contract law, the [FAA’s] terms are fulfilled.” Id.

The QMP Appellants’ first argument is that they are intended third-party beneficiaries of the Distribution Agreement. “A third party may enforce a contract it did not sign when the parties to the contract entered the agreement with the clear and express intention of directly benefitting the third party.” Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011). We determine whether the contracting parties intended to benefit a third party directly by looking to the contract’s language, construed as a whole. First Bank v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017). We are assisted in this effort by a relatively unusual example of contract drafting. The Distribution Agreement contains a clause specifically acknowledging that it intends such beneficiaries:

THIRD-PARTY BENEFICIARY

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Quality Metrics Partners, LLC, Clearview Diagnostics, LLC, CGK Consulting, LLC, CGK Medical Management, LLC, CGK Medical Ventures, LLC, Brodie Flanders, Michael Morales, Michael Knall, Anthony Kim, and Christopher R. Peyton v. Greg Blasingame Capricia Larson Gabby Consulting, LLC And DX Power Moves Consulting, LLC, (Tex. Ct. App. 2019).

Quality Metrics Partners, LLC, Clearview Diagnostics, LLC, CGK Consulting, LLC, CGK Medical Management, LLC, CGK Medical Ventures, LLC, Brodie Flanders, Michael Morales, Michael Knall, Anthony Kim, and Christopher R. Peyton v. Greg Blasingame Capricia Larson Gabby Consulting, LLC And DX Power Moves Consulting, LLC (Quality Metrics Partners, LLC, Clearview Diagnostics, LLC, CGK Consulting, LLC, CGK Medical Management, LLC, CGK Medical Ventures, LLC, Brodie Flanders, Michael Morales, Michael Knall, Anthony Kim, and Christopher R. Peyton v. Greg Blasingame Capricia Larson Gabby Consulting, LLC And DX Power Moves Consulting, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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