In The
Court of Appeals
Seventh District of Texas at Amarillo
________________________
No. 07-12-00218-CV
________________________
WELLS FARGO FINANCIAL TEXAS, INC., APPELLANT
V.
ANITA VALERO AND EVA SHIELLS, GUARDIANS OF
THE PERSON AND ESTATE OF ABDENAGO VALERO,
APPELLEES
On Appeal from the 121st District Court
Yoakum County, Texas
Trial Court No. 9168, Honorable Kelly G. Moore, Presiding
August 21, 2013
MEMORANDUM OPINION
Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ
This is an accelerated appeal from an order denying an application to compel
arbitration. 1 Appellant, Wells Fargo Financial Texas, Inc., contends the trial court erred
1
See TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (W EST SUPP. 2012); In re Merrill Lynch & Co., Inc., 315
S.W.3d 888, 891 n.3 (Tex. 2010).
by refusing to compel arbitration and stay the trial court proceedings. 2 In support, Wells
Fargo asserts Appellees, Anita Valero and Eva Shiells, Guardians of the Person and
Estate of Abdenago Valero failed to establish (1) the Valeros’ incapacity when the
arbitration agreement was executed; (2) the parties’ dispute falls within the “foreclosure
action” exception in the arbitration clause; and (3) Wells Fargo waived its right to
arbitration. Because we find that the parties’ dispute falls within an exception to their
agreement to arbitrate, we affirm the trial court’s denial of the motion to compel
arbitration.
Background
In July 2010, Wells Fargo filed its Original Petition to collect a mortgage debt
owed by Abdenago and Anita Valero and enforce its security interest in the Valeros’
residence. Because Abdenago’s estate was [when] placed in guardianship, Wells
Fargo sought to obtain a judgment against his estate. See TEX. PROB. CODE ANN. §§
800, 801, 804, 817, 832-34 (W EST 2003); TEX. PROP. CODE ANN. 51.002 (W EST 2012).
In its Original Petition, Wells Fargo sought an order authorizing a public sale of the
residence. The Guardians filed an answer and counterclaimed against Wells Fargo
seeking actual and exemplary damages for alleged exploitation and abuse of the elderly
as well as predatory lending practices.
In September 2011, Wells Fargo filed its Motion to Compel Arbitration premised
on an arbitration clause that contains the following exclusion:
2
See TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.098(a)(1), 171.025 (W EST 2011).
2
If your loan is made pursuant to Section 50(a)(6), Article XVI of the Texas
Constitution, our sole remedy is to initiate judicial foreclosure and any
claims or defenses asserted in the foreclosure action will not be subject to
arbitration. However, if you initiate a separate lawsuit against us, we may
elect to submit such claim(s) to arbitration.
(Emphasis added.)
Throughout its Motion to Compel, Wells Fargo referred to its Original Petition as
an action to “foreclose” on the residence via a “judicial foreclosure.” Wells Fargo also
represented the Valeros’ loan “was a home equity loan pursuant to Section 50(a)(6),
Article XVI of the Texas Constitution, which requires judicial foreclosure.”
In April 2012, the trial court held a hearing and subsequently issued an order
denying Wells Fargo’s motion. This appeal followed. We address Wells Fargo’s
second issue first because we find it dispositive.
STANDARD OF REVIEW
In an accelerated appeal of an interlocutory order denying a motion to compel
arbitration, we apply an abuse of discretion standard of review. See Carr v. Main Carr
Development, LLC, 337 S.W.3d 489, 494 (Tex.App.—Dallas 2011, pet. denied) (citing
Sidley Austin Brown & Wood, LLP v. J.A. Green Development Corp., 327 S.W.3d 859,
862-63 (Tex.App.—Dallas 2010, no pet.)). Under this standard, we defer to the trial
court’s factual determinations if they are supported by the evidence, but we review its
legal determinations de novo. Id. Whether an arbitration agreement is enforceable is
subject to de novo review. Carr, 337 S.W.3d at 494 (citing In re Labatt Food Service,
L.P., 279 S.W.3d 640, 643 (Tex. 2009)). See Dalton Contractors, Inc. v. Bryan Autumn
Woods, Ltd., 60 S.W.3d 351, 352-53 (Tex.App.—Houston [1st Dist.] 2001, no pet.) (de
3
novo review is appropriate when the legal interpretation of an arbitration clause is at
issue).
Disputes regarding the interpretation of an arbitration agreement are governed by
traditional principles of contract construction. J.M. Davidson, Inc. v. Webster, 128
S.W.3d 223, 227-28 (Tex. 2003) (collected cases cited therein). We examine the plain
language of the arbitration clause in context and give the language its plain grammatical
meaning in order to ascertain the intent of the parties. Wachovia Securities, LLC v.
Mims, 312 S.W.3d 243, 247 (Tex.App.—Dallas 2010, no pet.) (citing Jenkins & Gilchrist
v. Riggs, 87 S.W.3d 198, 201 (Tex.App.—Dallas 2002, no pet.)). Although the
language of the agreement must clearly indicate an intent to arbitrate; Aldridge v. Thrift
Financial Marketing, LLC, 376 S.W.3d 877, 882 (Tex.App.—Fort Worth 2012, no pet.),
courts must resolve any doubts about the scope of an arbitration agreement in favor of
arbitration because there is a presumption favoring such agreements. Ellis v. Ron, 337
S.W.3d 860, 861-62 (Tex. 2011); In re Kellogg Brown & Root, Inc., 166 S.W.3d 732,
737-38 (Tex. 2005). However, although arbitration should not be denied unless it can
be said with “positive assurance” that the arbitration clause cannot be interpreted so as
to encompass the dispute in question; In re Dillard Dep’t Stores, Inc., 186 S.W.3d 514,
516 (Tex. 2006) (per curiam), the strong policy favoring arbitration cannot serve to
stretch a contractual clause beyond the scope intended by the parties or allow
modification of unambiguous meaning of the arbitration clause. See Osornia v.
AmeriMex Motor & Controls, Inc., 367 S.W.3d 707, 712 (Tex.App.—Houston [14th Dist.]
2012, no pet.); IKON Office Solutions, Inc. v. Eifert, 2 S.W.3d 688, 697 (Tex.App.—
Houston [14th Dist.] 1999, no pet.).
4
MOTION TO COMPEL
When considering a motion to compel arbitration, a court must determine (1)
whether a valid agreement exists, and (2) whether the disputed claim falls within the
agreement’s scope. In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011) (original
proceeding). The parties do not dispute whether their arbitration agreement is valid.
Thus, we are constrained to consider whether the agreement encompasses Wells
Fargo’s cause of action. Hawthorne Townhomes, L.P. v. Branch, 282 S.W.3d 131, 139
(Tex.App.—Dallas 2009, no pet.) (citing In re D. Wilson Constr. Co., 196 S.W.3d 774,
781 (Tex. 2006) (orig. proceeding)).
Wells Fargo does not dispute whether the Valeros’ home equity loan was made
pursuant to Section 50(a)(6), Article XVI of the Texas Constitution. Accordingly, if Wells
Fargo’s action is a “foreclosure action,” “any claims or defenses asserted . . . will not be
subject to arbitration.” The term “foreclosure” used either in its common usage;
Webster’s Third New International Dictionary 888 (4th Ed. 1976) (“a legal proceeding
that bars or extinguishes a mortgagor’s right of redeeming a mortgaged estate”), or its
legal usage; Black’s Law Dictionary 674 (8th Ed. 2004) (“a legal proceeding to terminate
a mortgagor’s interest in property, instituted by the lender (the mortgagee) either to gain
title or force a sale in order to satisfy the unpaid debt secured by the property”),
accurately describes Wells Fargo’s suit against the Guardians. See Pratt-Shaw v.
Pilgrim’s Pride Corp., 122 S.W.3d 825, 833 (Tex.App.—Dallas 2003, pet. denied) (if a
term in an arbitration agreement is undefined, courts may resort to external references
such as dictionaries for the term’s meaning). Moreover, the term “claims” is unqualified
and commonly understood to mean “an authoritative or challenging request” or “a
5
demand of a right or supposed right.” Webster’s Third New International Dictionary 414
(4th Ed. 1976). Like Wells Fargo’s pleadings before the trial court, we also interpret its
action as a “foreclosure action” and are “positively assured” the agreement’s exclusion
clause applies to Wells Fargo’s and the Guardians’ claims or defenses asserted here.
Wells Fargo contends that establishing a claim under section 799 of the Texas
Probate Code is a proceeding separate and distinct from a “foreclosure” or sale under
section 800. See TEX. PROB. CODE ANN. §§ 799, 800 (W EST 2003). This hyper-
technical division of a “proceeding” under the Probate Code amounts to hair-splitting.
The relevant provisions are all part of the “Claims Procedures,” Subpart G of the
Probate Code. Section 817 provides that, after a creditor’s claim is approved, the
creditor may apply for an order that the property be sold. See id. at § 817. No
additional “proceeding” is described or required. Further, the term “foreclosure action”
in the arbitration agreement’s exclusionary clause is unqualified and both the common
and legal definitions of “foreclosure” describe Wells Fargo’s suit regardless of how one
may parse the Probate Code’s claims procedure. Even though the Probate Code
requires an intermediate procedural step of obtaining a final and appealable order
establishing Wells Fargo’s claim, this is still a “foreclosure action” because the ultimate
relief sought is the enforcement of that claim via the forced sale of the residence in
question.
Accordingly, we find the trial court did not abuse its discretion by denying Wells
Fargo’s Motion To Compel and overrule Well Fargo’s second issue. Our ruling
pretermits Wells Fargo’s remaining issues. See TEX. R. APP. P. 47.1.
6
CONCLUSION
The trial court’s order is affirmed.
Patrick A. Pirtle
Justice
7