Dish Network L.L.C. v. James Brenner

NUMBERS 13-12-00564-CV AND 13-12-00620-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

DISH NETWORK L.L.C., Appellant,

v.

JAMES BRENNER, Appellee.

On appeal from the County Court at Law No. 7
of Hidalgo County, Texas.

MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Rodriguez and Longoria
Memorandum Opinion by Justice Rodriguez
This is an interlocutory appeal from the trial court’s order denying the motion to

compel arbitration filed by appellant DISH Network L.L.C. (DISH Network). See TEX.

CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2011) (enacting a law authorizing
interlocutory appeals under the Federal Arbitration Act (FAA) in Texas courts). By a

single issue, DISH Network contends that the trial court abused its discretion when it

refused to compel arbitration. We reverse and remand.

I. BACKGROUND

On August 15, 2005, DISH Network hired appellee James Brenner to work as a

customer service representative. That same day, Brenner signed a document that was

titled Mandatory Arbitration of Disputes—Waiver of Rights Agreement (Arbitration

Agreement). The August 15 Arbitration Agreement, which was on EchoStar letterhead,

was between James Brenner and “EchoStar Communications Corporation and all of its

affiliates (the term ‘affiliates’ means companies controlling, controlled by[,] or under

common control with, EchoStar Communications Corporation) (EchoStar

Communications Corporation and its affiliates are individually and collectively referred to

herein as ‘EchoStar’).” Erin Adame, who worked in DISH Network’s Human Resources

Department, averred in her affidavit attached to DISH Network’s motion to compel

arbitration that “DISH Network is controlled by or under common control with DISH

Network Corporation (f/k/a EchoStar Communications Corporation) and is considered an

affiliate, as are the other named entities, Echosphere L.L.C., and DISH Network Service

L.L.C.”

The Arbitration Agreement states, in relevant part, the following:

This [Arbitration Agreement] made [August 15, 2005], is between
EchoStar Communications Corporation and all of its affiliates (the term
“affiliates” means companies controlling, controlled by or under common
control with, EchoStar Communications Corporation) (EchoStar
Communications Corporation and its affiliates are individually and
collectively referred to herein as “EchoStar”) and James Brenner

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 (“Employee”). In consideration of the Employee’s employment by
EchoStar (and/or any of its affiliates) as good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Employee and EchoStar agree that any claim, controversy and/or dispute
between them, arising out of and/or in any way related to Employee’s
application for employment, employment and/or termination of
employment, whenever and wherever brought, shall be resolved by
arbitration. The Employee agrees that this Agreement is governed by the
Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and is fully enforceable.

Brenner signed the Arbitration Agreement; DISH Network did not.

On June 27, 2011, Brenner filed this employment discrimination suit under the

Texas Commission on Human Rights Act (TCHRA). Brenner claimed that DISH

Network terminated his employment because of his race and color. DISH Network filed

a motion to compel arbitration, arguing, among other things, that: (1) under the FAA, a

valid and enforceable arbitration agreement existed; and (2) Brenner’s claims fell within

the scope of the Arbitration Agreement. Brenner responded that the Arbitration

Agreement was not valid because: (1) it was illusory because DISH Network retained

the unilateral right to change its terms; (2) it was indefinite because of its alleged right to

modify or revoke the Arbitration Agreement; and (3) it barred class or collective actions

“[i]n the event that [the American Arbitration Association (AAA)] rules prevent collective or

class action arbitrations.” On August 22, 2012, after hearing the parties’ arguments on

DISH Network’s arbitration motion, the trial court orally granted the motion to compel

arbitration. However, before the hearing ended, the trial court sua sponte raised the

issue of whether both parties signed the Arbitration Agreement. It is undisputed that

Brenner signed the Arbitration Agreement, and counsel for DISH Network agreed, at the

hearing, that his client did not. After receiving this information, the trial court reasoned

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that, in its opinion, “there was never a meeting of the minds,” and instead of ordering

arbitration, the trial court stated that it was “going to order this [case] to mediation.”

Without providing a basis for its ruling, the trial court generally denied DISH

Network’s motion to arbitrate by an August 27, 2012 written order and by a subsequent

written order dated September 12, 2012. The September order appears duplicative of

the August order. Out of an abundance of caution, DISH Network filed two notices of

appeal, one from each of the orders. This Court assigned separate cause numbers and

later consolidated the appeals for purposes of the record and briefing. We will now

address the appeals in one opinion.

II. CAPACITY

Brenner first challenges DISH Network’s capacity to seek arbitration, which he

describes as a form of affirmative relief. See Austin Nursing Ctr., Inc. v. Lovato, 171

S.W.3d 845, 847 (Tex. 2005) (citing Nootsie, Ltd. v. Williamson County Appraisal Dist.,

925 S.W.2d 659, 661 (Tex. 1996) (explaining that a party has capacity when it has the

legal authority to act, regardless of whether it has a justiciable interest in the

controversy)). Relying on section 171.253 of the Texas Tax Code, Brenner asserts that

because DISH Network “has not satisfied all franchise tax requirements,” it “cannot

affirmatively seek to enforce its arbitration clause in this [C]ourt as its corporate formalities

have not been maintained and its ability to function as a corporation appeared to have

been forfeited and these privileges are not in good standing.” See TEX. TAX CODE ANN.

§ 171.253 (West 2008 ) (“In a suit against a corporation on a cause of action arising

before the forfeiture of the corporate privileges of the corporation, affirmative relief may

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not be granted to the corporation unless its corporate privileges are revived under this

chapter.”).

In support of its argument, Brenner relies on a January 26, 2013 DISH Network

Certificate of Account Status from the Texas Comptroller of Public Accounts, which sets

out that DISH Network “is not in good standing as it has not satisfied all franchise tax

requirements.” In response, DISH Network contends that its corporate privileges are not

forfeited as evidenced by a copy of a February 20, 2013 Certificate of Account Status

from the Texas Comptroller, which confirms that DISH Network “is in good standing” with

the Texas Comptroller “having no franchise tax reports or payments due at this time.”

In this circumstance, the facts in the certificates of account status are relevant;

therefore, it is appropriate for us to take judicial notice of the certificates from the Texas

Comptroller, and we will do so. See SEI Bus. Sys., Inc. v. Bank One Tex., N.A., 803

S.W.2d 838, 841 (Tex. App.—Dallas 1991, no writ) ("As a general rule, appellate courts

take judicial notice of facts outside the record only to determine jurisdiction over an

appeal or to resolve matters ancillary to decisions which are mandated by law . . . ."); see

also Freedom Communs., Inc. v. Coronado, 372 S.W.3d 621, 624 (Tex. 2012) (per

curiam) (concluding that because facts in a plea agreement were relevant, it was

appropriate to take judicial notice of them). Also, once a corporation revives its

corporate privileges through the payment of any delinquent taxes or filing of any

delinquent reports, the corporation’s good standing and corporate privileges relate back

and permit it to defend itself and seek affirmative relief in Texas courts. See Bluebonnet

Farms, Inc. v. Gibraltar Sav. Ass’n, 618 S.W.2d 81, 85 (Tex. App.—Houston [1st Dist.]

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1980, writ ref’d n.r.e.); see also TEX. TAX CODE ANN. § 171.253.

Assuming without deciding that Brenner has not waived this capacity issue, see

TEX. R. CIV. P. 93(2) (requiring a party to file a verified pleading if he contends that the

plaintiff lacks the capacity to sue unless the truth of such matter appears of record),

because the most current certificate before this Court establishes that DISH Network is in

good standing with the Texas Comptroller, we conclude that it has the capacity to seek

arbitration. Brenner’s contention based on forfeiture of corporate privileges is moot.

We overrule this capacity issue.

III. THE ARBITRATION AGREEMENT

A. Standard of Review and Applicable Law

In general, we review a trial court's denial of a motion to compel arbitration under

an abuse of discretion standard. In re Labatt Food Serv., 279 S.W.3d 640, 642–43 (Tex.

2009). A trial court abuses its discretion when it acts arbitrarily or unreasonably and

without reference to any guiding rules or principles. Downer v. Aquamarine Operators,

Inc., 701 S.W.2d 238, 241–42 (Tex. 1985). Under this abuse of discretion standard, we

defer to the trial court on factual determinations, but review legal issues de novo. In re

Labatt Food Serv., 279 S.W.3d at 642–43. Whether an agreement imposes a duty on

the parties to arbitrate a dispute is a legal question that we review de novo. In re D.

Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006) (orig. proceeding); J.M. Davidson,

Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003).

"In evaluating a motion to compel arbitration, a court must determine first whether

a valid arbitration agreement exists, and then whether the agreement encompasses the

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claims raised." In re D. Wilson Constr. Co., 196 S.W.3d at 781; see In re Kellogg Brown

& Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). The party moving to

compel arbitration bears the burden to show a valid agreement to arbitrate. J.M.

Davidson, Inc., 128 S.W.3d at 227. Once a party establishes the existence of an

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

agreement, the trial court must compel arbitration and stay its own proceedings unless

the party opposing arbitration proves a defense precluding enforcement. In re C & H

News Co., 133 S.W.3d 642, 645 (Tex. App.—Corpus Christi 2003, orig. proceeding).

B. The Validity of the Arbitration Agreement

By its sole issue, DISH Network contends that the trial court abused its discretion

when it denied DISH Network’s request for arbitration because: (1) DISH Network

established the existence of a valid arbitration agreement signed by Brenner; (2) DISH

Network’s signature was not required to establish a valid agreement to arbitrate; (3) the

agreement is not illusory; (4) it does not lack consideration; (5) it is not indefinite; (6) it

does not bar class or collective actions; and (7) it did not expire upon Brenner’s

termination.

1. Did DISH Network satisfy its burden to show a valid agreement to
arbitrate?

DISH Network first contends that it met its burden of establishing that there was a

valid agreement to arbitrate. See J.M. Davidson, Inc., 128 S.W.3d at 227. DISH

Network presented the trial court with a copy of the Arbitration Agreement, authenticated

by the affidavit of DISH Network’s Human Resources Representative, Erin Adame. See

In re Jim Walters Homes, 207 S.W.3d 888, 897 (Tex. App.—Houston [1st Dist.] 2006,

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orig. proceeding) (finding that the submission of an authenticated copy of the agreement

containing the arbitration clause satisfied the movant’s initial burden); Wachovia Sec.

LLC v. Emery, 186 S.W.3d 107, 113 (Tex. App.—Houston [1st Dist.] 2005, no pet.)

(same); In re Consenco Fin. Serv. Corp., 19 S.W.3d 562, 569 (Tex. App.—Waco 2000,

orig. proceeding) (holding that a copy of the arbitration agreement attached to the motion

to compel established the existence of an agreement to arbitrate). Brenner’s signature

appears on the Arbitration Agreement, which is evidence that he agreed to arbitrate any

claims or disputes that arose out of his employment with DISH Network. See In re Big 8

Food Stores, Ltd., 166 S.W.3d 869, 876 (Tex. App.—El Paso 2005, orig. proceeding) (“A

party’s signature on a written contract is ‘strong evidence’ that the party unconditionally

assented to its terms.”); In re Bunzl USA, Inc., 155 S.W.3d 202, 209 (Tex. App.—El Paso

2004, orig. proceeding) (same). The Arbitration Agreement also provided “that any

claim, controversy and/or dispute between [the parties], arising out of and/or in any way

related to [Brenner’s] application for employment, employment and/or termination of

employment” would be “resolved by arbitration.”

Based on the above, we conclude that DISH Network’s submission of the

authenticated Arbitration Agreement signed by Brenner satisfied DISH Network’s burden

of showing the existence of an arbitration agreement that governs Brenner’s termination

claims. If the trial court denied DISH Network’s motion to compel arbitration on the basis

that DISH Network had not established its initial burden, it abused its discretion. In re

Labatt Food Serv., 279 S.W.3d at 642–43; see Downer, 701 S.W.2d at 241–42.

Having concluded that DISH Network met its burden, Brenner, the party opposing

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arbitration, must have established a ground, which would preclude enforcement of the

Arbitration Agreement. See In re C & H News Co., 133 S.W.3d at 645. Our review of

the grounds asserted in the trial court follows.

2. Was DISH Network’s signature required?

The trial court denied DISH Network’s motion to arbitrate, at least in part, on the

basis that DISH Network’s signature did not appear on the Arbitration Agreement. Yet a

signature is not required to prove a party’s acceptance of an arbitration agreement under

the FAA. See In re Macy’s Tex., Inc., 291 S.W.3d 418, 418 (Tex. 2009) (orig.

proceeding) (per curiam) (“[T]he FAA contains no requirements for the form or specificity

of arbitration agreements except that they be in writing; it does not even require that they

be signed.”); In re Advance PCS Health, L.P., 172 S.W.3d 603, 606 (Tex. 2005) (orig.

proceeding) (per curiam) (“But neither the FAA nor Texas law requires that arbitration

clauses be signed, so long as they are written and agreed to by the parties.”); see also

Paramount Rehab & Health/PHCC v. Matthews, No. 04-10-00194-CV, 2010 Tex. App.

LEXIS 5935, at *7–8 (Tex. App.—San Antonio July 28, 2010, no pet.) (mem. op.)

(reasoning that, because the FAA does not require an arbitration agreement to be signed

by the parties, “[t]he absence of [the defendant employer’s] signature from the arbitration

documents is thus inconsequential”); In re Brown & Root, Inc., No. 05-98-00689-CV,

1998 Tex. App. LEXIS 3676, at *3 (Tex. App.—Dallas June 18, 1998, orig. proceeding)

(op. and order) (noting that the defendant employer’s signature is immaterial because

“[t]he FAA does not require the arbitration agreement be signed, just that it be in writing”)

(citing 9 U.S.C. § 2 (1970)); Valero Ref., Inc. v. MT Lauberhorn, 813 F.2d 60, 64 (5th Cir.

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1987); Shearson Lehman v. McKay, 763 S.W.2d 934, 937 (Tex. App.—San Antonio

1989, no writ.)). In addition, a non-signing party may be bound to a written arbitration

agreement if that party intended to be bound by the agreement. See In re Bunzl, USA,

Inc., 155 S.W.3d at 209; see also Brown & Root, 1998 Tex. App. LEXIS at *3–4 (setting

aside the lack of a signature, the defendant employer “clearly agreed to be bound by the

arbitration agreement”).

The undisputed evidence establishes that DISH Network intended to be bound by

the Arbitration Agreement. As in Brown & Root, DISH Network drafted the Arbitration

Agreement, which set out that Brenner and EchoStar (now DISH Network) agreed,

among other things, that any claim arising out of Brenner’s termination would be resolved

by arbitration. See 1998 Tex. App. LEXIS at *4. The agreement specifically set out that

the company agreed to resolve Brenner’s termination claim through arbitration. See id.

DISH Network required all employees to sign the Arbitration Agreement prior to working

at the company. See id. The Arbitration Agreement was printed on EchoStar’s

letterhead. Finally, DISH Network, through its motion, requested that the agreement be

enforced. See id.

Reviewing this question de novo, we conclude that the trial court erred if it denied

DISH Network’s motion to compel arbitration on the basis that it did not sign the

Arbitration Agreement and, thus, the agreement was not valid. See In re D. Wilson

Constr. Co., 196 S.W.3d at 781; J.M. Davidson, Inc., 128 S.W.3d at 227. The evidence

before the trial court established that DISH Network, the non-signing party, assented to

the terms of the Arbitration Agreement. Therefore, acting without reference to any

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guiding rules or principles, the trial court abused its discretion if it denied DISH Network’s

motion to compel arbitration in this regard. See Downer, 701 S.W.2d at 241–42.

3. Is the Arbitration Agreement illusory?

Brenner argued to the trial court that the Arbitration Agreement was not valid

because it was illusory. DISH Network contends that this argument fails because there

is no language in the Arbitration Agreement that gives DISH Network a unilateral right to

change or revoke the agreement to arbitrate—language which would arguably make the

agreement illusory. See In re 24R, Inc., 324 S.W.3d 564, 567 (Tex. 2010) (orig.

proceeding) (per curiam) (holding that an arbitration agreement is not illusory if it does not

contain any provisions that permit one party to unilaterally modify or rescind the

arbitration agreement). We agree that the Arbitration Agreement contains no such

language, and Brenner does not complain about any of the Arbitration Agreement’s

provisions, or lack thereof.

Instead, Brenner argues that the Arbitration Agreement is illusory because DISH

Network did not sign the document, and, by not signing the document, DISH Network

reserved for itself the same flexibility as the general contractor in Simmons & Simmons

Construction Company v. W.L. Rea d.b.a. W.L. Rea Construction Company. See 155

Tex. 353, 358, 286 S.W.2d 415, 418 (Tex. 1955). Relying on Rea, Brenner reasons as

follows: because DISH Network did not sign the Arbitration Agreement, if it chose to

enforce the Arbitration Agreement, it could “feign that its agreement was implicit”; but, if it

desired to avoid an arbitration, “it need only to invoke the Rea case as proof that no

binding agreement was formed due to its failure or refusal to indicate its assent on the

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document’s face.” See id.

Rea, however, is distinguishable. Rea involved a breach of contract claim

brought by a subcontractor against a contractor. See 155 Tex. at 354–55, 286 S.W.2d at

416. As in this case, one of the parties, the contractor, did not sign the document,

although the contract, unlike the Arbitration Agreement, provided a place for its signature.

See id. However, unlike the present case, the Rea Court concluded, in part, that the

contractor did not accept the contract after the sub-contractor signed it. See 155 Tex. at

359, 286 S.W.2d at 419.

We have already concluded that the evidence in this case established that DISH

Network, the non-signing party, assented to the terms of the Arbitration Agreement—that

it intended to be bound by the agreement, even absent its signature. So Brenner’s

reliance on Rea is misplaced. He provides no other authority to support his contention

that the Arbitration Agreement is illusory because it was not signed by DISH Network, and

we find none. We, therefore, conclude that the trial court abused its discretion if it

considered this argument as a basis for its denial of DISH Network’s motion to compel

arbitration.

4. Does the Arbitration Agreement lack consideration?

DISH Network also notes that, in his opposition and response to DISH Network’s

motion to compel arbitration filed in the trial court, Brenner conflated his argument that the

Arbitration Agreement is illusory with his argument that the Arbitration Agreement lacks

consideration. Regarding any lack-of-consideration argument, it is well-settled in Texas

that “[a] mutual agreement to arbitrate claims provides sufficient consideration for an

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arbitration agreement.” Sun Fab Indus. Contracting Inc. v. Lujan, 361 S.W.3d 147, 152

(Tex. App.—El Paso 2011, no pet.) (citing In re U.S. Home Corp., 236 S.W.3d 761, 764

(Tex. 2007) (orig. proceeding) (per curiam)); see In re Tenet Healthcare, Ltd., 84 S.W.3d

760, 767 (Tex. App.—Houston [1st Dist.] 2002, orig. proceeding) (holding arbitration

agreement was supported by consideration where “the parties’ agreement created

mutual promises by both to forego their right to a jury trial”); In re Alamo Lumber Co., 23

S.W.3d 577, 579–80 (Tex. App.—San Antonio 2000, orig. proceeding) (“Since the parties

surrendered their rights to trial by jury, these mutual promises supply valid

consideration.”).

In this case, the Arbitration Agreement specifies the following: “the Employee and

EchoStar agree that any claim, controversy and/or dispute between them, arising out of

and/or in any way related to Employee’s application for employment, employment and/or

termination of employment, whenever and wherever brought, shall be resolved by

arbitration.” This mutual agreement to arbitrate is valid consideration. Brenner’s

argument, if any, that the Arbitration Agreement is not valid because it lacks consideration

is not supported by the record or by authority. Again, the trial court abused its discretion

if it considered this argument as a basis for its denial of the motion to compel arbitration.

5. Is the Arbitration Agreement indefinite?

Brenner also argued in his trial court opposition papers that the Arbitration

Agreement is not enforceable because it fails for indefiniteness, an argument again

premised on DISH Network’s alleged retention of the right to modify or revoke the

Arbitration Agreement. Brenner claims that “[t]he ultimate problem occasioned by DISH

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Network’s implicit reservation of rights is that it retains unfettered discretion to change any

aspect of the ‘agreement,’” a right that from the beginning renders every aspect inherently

indefinite. We have already determined that there is no evidence that the Arbitration

Agreement is subject to change by DISH Network; therefore, Brenner’s premise for this

argument fails. And the trial court abused its discretion if it considered this as a basis for

its denial of DISH Network’s motion to compel arbitration.

6. Does the Arbitration Agreement bar class or collective actions?

Brenner also argued to the trial court that the Arbitration Agreement is invalid

because it purportedly bars class and collective actions. Brenner generally relies on the

AAA Employment Arbitration Rules. Yet Brenner does not refer us to any specific

provision of the AAA’s Rule that supports his argument, and we find none. Brenner also

acknowledges that his case does not involve a collective or class action and is a single

plaintiff discrimination case, making this argument premature. So the trial court abused

its discretion if it considered this as a basis for its denial of the motion to compel

arbitration.

7. Did the Arbitration Agreement expire upon Brenner’s termination?

Brenner also claimed in the trial court that the Arbitration Agreement expired upon

his termination because it was a covenant within a larger employment agreement. We

disagree. Assuming without deciding that the Arbitration Agreement in this case was

such a covenant, Texas law provides that an arbitration agreement survives termination

of employment, even absent a savings clause. See Cleveland Const., Inc. v. Levco

Const., Inc., 359 S.W.3d 843, 854 (Tex. App.—Houston [1st Dist.] pet. dism’d) (holding

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that “a savings clause was not required for the arbitration provision . . . to survive any

termination”); see also Henry v. Gonzalez, 18 S.W.3d 684, 690 (Tex. App.—San Antonio

2000, pet. dism’d) (“[A]n arbitration agreement contained within a contract survives the

termination of the contract as a whole.”). In addition, the Arbitration Agreement survived

Brenner’s termination by its specific agreement to arbitrate any claim related to his

“employment and/or termination of employment, whenever and wherever brought.” To

the extent the trial court relied on this claim as a basis for its denial of the motion to

arbitrate, we conclude that it abused its discretion.

C. Scope of the Agreement

In his response brief on appeal, Brenner challenges the scope of the Arbitration

Agreement. He argues that its scope involves claims “between Brenner and EchoStar

Communications Corporation and its affiliates” and not claims between Brenner and his

now existing employer, DISH Network, LLC. Brenner contends that because DISH

Network is a distinct corporate form from EchoStar, it is not an affiliate of EchoStar under

the terms of the Arbitration Agreement, and therefore, the claims in this case fall outside

the scope of the Arbitration Agreement.

But the Arbitration Agreement does provide that it is between Brenner and

“EchoStar Communications Corporation and all of its affiliates (the term ‘affiliates’ means

companies controlling, controlled by or under common control with, EchoStar

Communications Corporation).” Through DISH Network’s supporting affidavit, Adame

averred “DISH Network is controlled by or under common control with DISH Network

Corporation (f/k/a EchoStar Communications Corporation) and is considered an affiliate,

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as are the other named entities, Echosphere L.L.C., and DISH Network Service L.L.C.”

Brenner does not challenge this portion of Adame’s affidavit.

Because we must resolve any doubts about an arbitration agreement’s scope in

favor of arbitration, we conclude that Brenner’s claims against DISH Network, L.L.C. fall

within the scope of the Arbitration Agreement. See In re FirstMerit Bank, 52 S.W.3d 749,

753 (Tex. 2001) (orig. proceeding). The trial court abused its discretion if it denied DISH

Network’s motion to compel arbitration on this basis.

D. Summary

Having concluded that DISH Network established the existence of an arbitration

agreement and that the claim falls within the scope of the agreement, and that Brenner

did not successfully challenge the Arbitration Agreement by proving a ground or defense

precluding its enforcement, see In re C & H News Co., 133 S.W.3d at 645, we sustain

DISH Network’s sole issue.

IV. CONCLUSION

We reverse the order denying DISH Network’s motion to compel arbitration and

motion to abate the proceedings pending arbitration and remand to the trial court to enter

an order consistent with this opinion.

NELDA V. RODRIGUEZ
Justice

Delivered and filed the
27th day of June, 2013.

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