Valerus Compression Services, LP and Valerus Services Company, LLC v. William Austin

Opinion issued November 21, 2013.

In The

Court of Appeals
For The

First District of Texas

NO. 01-13-00266-CV

VALERUS COMPRESSION SERVICES, LP AND VALERUS SERVICES
COMPANY, LLC, Appellants

V.
WILLIAM AUSTIN, Appellee

On Appeal from the 295th District Court
Harris County, Texas
Trial Court Cause No. 2012-66317

and

NO. 01-13-00507-CV

VALERUS COMPRESSION SERVICES, LP AND VALERUS SERVICES
 COMPANY, LLC, Appellants
V.

WILLIAM AUSTIN, Appellee

On Appeal from the 295th District Court
Harris County, Texas
Trial Court Cause No. 2012-66317

OPINION
The underlying dispute concerns the propriety of the forced redemption of

William Austin’s partnership interests in Valerus Compression Services, L.P. by

Valerus Compression Services, L.P. and Valerus Services Company, LLC

(collectively “Valerus”). In two interlocutory appeals, Valerus challenges the trial

court’s orders (1) denying Valerus’s motion to compel arbitration of Austin’s

claims and (2) granting Austin’s motion to stay the parallel arbitration proceeding

brought by Valerus. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.098(a) (West

2011). 1 We conclude that the trial court erred by denying Valerus’s motion to

compel arbitration and granting Austin’s motion to stay arbitration and,

accordingly, we reverse and remand.

1
The parties agree that the Texas Arbitration Act governs. See TEX. CIV. PRAC. &
REM. CODE ANN. §§ 171.001–171.098 (West 2011).
2
 Background

Valerus hired William Austin to serve as its CFO in 2009. Shortly

thereafter, in connection with a recapitalization, Austin purchased partnership

interests in Valerus Compression Services, LP. The partnership interests were

governed by a Partnership Agreement. The Partnership Agreement requires that

all disputes “arising out of or in connection with this Agreement” be resolved by

arbitration.

In April 2010, the parties executed a Separation Agreement and General

Release of Claims (“Separation Agreement”) reflecting the termination of Austin’s

employment with Valerus. The Separation Agreement provided, among other

things, that Valerus would provide Austin severance payments and continued

health coverage under specified terms. The Separation Agreement also addressed

Austin’s partnership interests. It states, in Section 4, in relevant part:

Executive’s Rights Regarding Employee Partnership Interests. The
Parties acknowledge and agree that the termination of Executive’s
employment entitled Executive to certain benefits pursuant to Section
5.8 of the Employment Agreement. Accordingly, Executive shall
have the right to retain all or any part of Executive’s Partnership
Interests (as defined in the Partnership Agreement), without any
forced redemption by the Partnership or its designees under the
Partnership Agreement; provided, however, that Executive may,
within six (6) months and one day following the Separation Date,
request that the Partnership exercise its unilateral right under the
Partnership Agreement to redeem or purchase all or any part of
Executive’s Employee Partnership Interests (as defined in the
3
 Partnership Agreement) for the price set forth in Section 13.02(a) of
the Partnership Agreement; provided further, however, that the
Partnership shall not be required to comply with any such request and
shall retain discretion as to whether to exercise such right upon
Executive’s request. As used herein the term “Partnership
Agremeent” has the same meaning as contained in the Employment
Agreement.
The Separation Agreement contains another provision that fixes venue and

incorporates a fee-shifting agreement. In relevant part, it states:

Venue for any action that may be brought by any Party involving the
enforcement of this Agreement or any rights, duties or obligations
under this Agreement shall be brought exclusively in the state or
federal courts (as applicable) sitting in Houston, Texas. Executive
consents and waives any objection to personal jurisdiction and venue
in those courts for any such action. The Parties acknowledge and
agree that Sections 4.7(b) and 4.7(c) of the Employment Agreement
are hereby incorporated in this Agreement by reference such that if
Executive shall obtain any money judgment or otherwise prevail with
respect to any arbitration or litigation brought by Executive or the
Company to enforce or interpret any provision in this Agreement, the
Company, to the fullest extent permitted by applicable law, shall
reimburse Executive for all of Executive’s reasonable legal fees and
expenses incurred in such arbitration or litigation.
The Separation Agreement also contained the following merger clause:

This Agreement contains the entire agreement of the Parties with
respect to the subject matter hereof, this Agreement supersedes all
prior and contemporaneous agreements and understandings, oral or
written, between the Parties hereto concerning the subject matter
hereof. This Agreement may be amended, waived or terminated only
by a written instrument executed by all Parties hereto.
In December 2011, Austin began working as an Executive Vice President

and CFO of Exterran Energy Corporation. Valerus notified Austin that his
4
employment violated the non-competition provision in the Partnership Agreement,

permitting Valerus to forcibly redeem Austin’s partnership interests, and Valerus

redeemed the partnership interests based on the formula set forth in section 13.02

of the Partnership Agreement. In response, on November 6, 2012, Austin sued

Valerus in state district court in Houston, seeking a declaratory judgment that

(1) the Separation Agreement remains in full force and effect; (2) Austin is not in

breach of the Separation Agreement or the Partnership Agreement; (3) Austin is

entitled to retain ownership of his partnership interests; (4) Valerus must reissue

Austin’s Certificates 288-B and 225-C; and (5) Valerus must return the certificates

to Austin in accordance with the Separation Agreement. Austin also alleged

Valerus had converted his partnership interests and breached the Separation

Agreement. He sought specific performance, the return of the certificates

evidencing his ownership in Valerus Compression Services, LP.

On December 3, 2012, Valerus moved to compel arbitration and abate the

trial court proceedings, arguing that the arbitration provision in the Partnership

Agreement requires Austin to arbitrate his claims. On the same day, Valerus also

initiated an arbitration proceeding with the American Arbitration Association

(“AAA”), requesting declaratory relief under the Partnership Agreement. Valerus

requested a declaration that (1) Austin was a “Breaching Party” and that an

5
Expulsion Event occurred under the Partnership Agreement, (2) Valerus had the

unilateral option under Section 13.01(c) of the Partnership Agreement to redeem

Austin’s partnership interests for the amount set forth in Section 13.02(a)(ii) of the

Partnership Agreement, (3) the total redemption price of Austin’s vested

partnership interests under Section 13.01(c) is $10,697.67, and (4) the restrictions

on competition under Section 8.03(f) of the Partnership Agreement are reasonable

and enforceable under Texas law.

Austin opposed the motion to compel arbitration, contending that the venue

and merger provisions in the Separation Agreement operate to revoke or extinguish

the arbitration provision in the Partnership Agreement with respect to the subject

matter of the suit: the forcible redemption of his partnership interests. The trial

court denied Valerus’s motion on March 8, 2013, and Valerus appealed.

On March 7, 2013, the day before the trial court signed the order denying the

motion to compel arbitration, and three months after Valerus initiated the

arbitration proceeding, Austin filed an emergency motion to stay the arbitration.

The trial court granted the emergency motion pending further briefing. On

March 28, 2013, Austin filed a motion to continue the stay, arguing that Valerus’s

claims were not arbitrable because the Separation Agreement governed and

controlled disputes regarding forced redemption of partnership interests and did

6
not contain an arbitration provision. Austin also argued that the arbitration should

be stayed to avoid inconsistent rulings and unnecessary expense. The trial court

granted the stay, and Valerus appealed from that order as well.2

Discussion

I. Did the trial court err in denying Valerus’s motion to compel arbitration?

We first consider Valerus’s contention that the trial court erred in denying its

motion to compel arbitration of Austin’s claims.

A. Standard of Review and Substantive Law

Section 171.098 of the Texas Civil Practice and Remedies Code permits the

interlocutory appeal of an order denying a motion to compel arbitration. TEX. CIV.

PRAC. & REM. CODE ANN. § 171.098 (West Supp. 2013). We review interlocutory

appeals of orders denying motions to compel arbitration for an abuse of discretion,

deferring to the trial court’s factual determinations if they are supported by the

evidence and reviewing questions of law de novo. Cleveland Constr., Inc. v. Levco

Constr., Inc., 359 S.W.3d 843, 851–52 (Tex. App.—Houston [1st Dist.] 2012, pet.

dism’d).

A party moving to compel arbitration must establish (1) the existence of a

valid, enforceable arbitration agreement and (2) that the claims asserted fall within

2
Because the issues in the two appeals overlap, we will dispose of both appeals in
this single opinion.
7
the scope of that agreement. In re Provine, 312 S.W.3d 824, 828–29 (Tex. App.—

Houston [1st Dist.] 2009, orig. proceeding). Whether a valid arbitration agreement

exists is a legal question. In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex.

2006). In interpreting the parties’ agreement, we apply ordinary contract

principles. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003).

We examine and consider the entire writing in an effort to harmonize and give

effect to all the provisions of the contract so that none will be rendered

meaningless. Id. at 229. No single provision taken alone will be given controlling

effect. Id.

Once an arbitration agreement is established, “a court should not deny

arbitration unless it can be said with positive assurance that an arbitration clause is

not susceptible of an interpretation which would cover the dispute at issue.” In re

D. Wilson Constr. Co., 196 S.W.3d at 783 (internal citations omitted). If a valid

arbitration agreement exists, “courts should resolve any doubts as to the

agreement’s scope, waiver, and other issues unrelated to its validity in favor of

arbitration.” Ellis v. Schlimmer, 337 S.W.3d 860, 862 (Tex. 2011). To be subject

to arbitration, the “allegations need only be factually intertwined with arbitrable

claims or otherwise touch upon the subject matter of the agreement containing the

arbitration provision.” In re B.P. Am. Prod. Co., 97 S.W.3d 366, 370 (Tex. App.—

8
Houston [14th Dist.] 2003, orig. proceeding).

If a party seeking arbitration carries its initial burden to prove the existence

of an agreement to arbitrate, then a strong presumption favoring arbitration arises,

and the burden shifts to the party opposing arbitration to prove an affirmative

defense to the agreement. J.M. Davidson, Inc., 128 S.W.3d at 227. “Once the trial

court concludes that the arbitration agreement encompasses the claims, and that the

party opposing arbitration has failed to prove its defenses, the trial court has no

discretion but to compel arbitration and stay its own proceedings.” In re

FirstMerit Bank, N.A., 52 S.W.3d 749, 753–54 (Tex. 2001).

B. Analysis

In its first appeal, Valerus contends that the trial court erred in denying its

motion to compel arbitration because the Partnership Agreement contains a valid,

enforceable arbitration agreement and Austin’s claims fall within the scope of that

agreement. Valerus further argues that none of Austin’s defenses are meritorious:

specifically, Valerus argues that the Separation Agreement did not revoke or

extinguish the arbitration provision in the Partnership Agreement, that Valerus did

not waive its right to arbitrate, and that Valerus is not estopped from compelling

arbitration. We address these issues in turn.

9
 1. Did the Separation Agreement revoke the arbitration agreement
with respect to claims regarding forcible redemption?
The arbitration provision in the Partnership Agreement provides that all

disputes “arising out of or in connection with this Agreement” shall be resolved by

arbitration.3 Austin acknowledges that he agreed to this arbitration provision in the

Partnership Agreement, but contends that the Separation Agreement revoked or

extinguished the arbitration provision with respect to any dispute regarding

forcible redemption of his partnership interests. Specifically, Austin asserts that

“[t]he Separation Agreement bars forced redemption and expressly states that

disputes involving forced redemption must be brought exclusively in court.”

Austin’s argument is based on three provisions of the Separation Agreement.

Austin first argues that Section 4 of the Separation Agreement grants him an

3
The Partnership Agreement’s arbitration provision has been amended. The
Second Amended and Restated Agreement of Limited Partnership, which was in
place at the time that Austin began his employment at Valerus and is the version
relied on by Austin, says that the parties “agree to submit to arbitration” “[a]ll
disputes arising out of or in connection with this Agreement,” and that the
arbitrator’s decision will be “final, nonappealable, and binding.” The Fifth
Amended version, which is the current version of the agreement and which
Valerus contends is the operative agreement, says “all claims, counterclaims,
demands, causes of action, disputes, controversies, and other matters in question
arising out of or in connection with this Agreement . . . shall be resolved by
mandatory and binding arbitration.” Austin contends that the partnership lacked
authority to amend the Partnership Agreement and, therefore, he is not be bound
by the provision in the Fifth Amended Partnership Agreement. But Valerus
contends, and we agree, that the outcome would be the same under either
provision.
10
unqualified right to “‘retain all or any part of [his partnership interests] without any

forced redemption by [Valerus] under the Partnership Agreement.’” He argues

that the purpose of each of his claims is to enforce this right. Austin then points to

the venue provision in the Separation Agreement, which provides that “[v]enue for

any action that may be brought by any Party involving the enforcement of this

Agreement or any rights, duties or obligations under this Agreement shall be

brought exclusively in the state or federal courts (as applicable) sitting in Houston,

Texas.” This language, Austin contends, mandates that his claims be brought in a

Houston court, and nowhere else. He argues that this is confirmed by the

Separation Agreement’s merger provision, which states “[t]his Agreement contains

the entire agreement of the Parties with respect to the subject matter hereof.”

Austin argues that the “subject matter hereof” is forced redemption of partnership

interests, the subject of his claims.

Austin asserts that “magic words” are not necessary to revoke an arbitration

provision, and that, when read together, these three provisions of the Separation

Agreement—Section 4, and the venue and merger provisions—operate to revoke

or supersede the Partnership Agreement’s arbitration agreement with respect to

claims involving forced redemption. In support of his argument, Austin relies

upon TransCore Holdings, Inc. v. Rayner, 104 S.W.3d 317 (Tex. App.—Dallas

11
2003, pet. denied). In TransCore, the Dallas Court of Appeals concluded that a

Termination Agreement precluded the enforcement of an arbitration provision in

an earlier Stock Purchase Agreement. Id. at 323. But Austin’s reliance on

TransCore is unavailing because the Termination Agreement in that case contained

a broad and unconditional release of all previous agreements that is absent here. It

provided:

Except as to the promises made in this letter and except as otherwise
provided for in this letter, Viastar and TransCore, on the one hand,
and you [Rayner] on the other hand, hereby fully, forever, irrevocably
and unconditionally release, remise, settle and discharge one another
from any and all manner of claims, charges, complaints, debts,
liabilities, demands, actions, causes of action, suits, rights, covenants,
contracts, controversies, agreements, promises, omissions, damages,
obligations and expenses of any kind, including attorneys’ fees,
whether known or unknown, which they had, now have, or hereafter
may have against each other arising prior to the date of this letter
whether or not pursuant to the terms and conditions set forth in any
prior agreements between yourself, Viastar, affiliated companies and
its parent, provided however that nothing contained in this letter shall
release or discharge you from any obligations with respect to claims
[the] Viastar and/or TransCore has, now have, or hereafter may have
against you under or pursuant to Sections 7, 8, and 9 of the
Employment Agreement date May 12, 2000.

Id. at 320–21 (Emphasis added). Accordingly, the TransCore court concluded

that, because the earlier agreement was no longer in effect, TransCore could not

rely upon the arbitration agreement in it to compel arbitration. Id. at 320–23.

The Separation Agreement in this case does not contain analogous language

12
expressly extinguishing the Partnership Agreement or its arbitration provision. On

the contrary, here, both parties agree that the Partnership Agreement, including the

arbitration provision, is still in effect and applies at least to some claims, and the

only dispute is whether the arbitration provision applies to the particular claims

Austin has asserted.

While we agree with Austin that no “magic words” are required, an

agreement to supersede or revoke an earlier arbitration agreement must do so in

unequivocal terms such that the subsequent agreement cannot be harmonized with

the arbitration provision. See J.M. Davidson, Inc., 128 S.W.3d at 227;

Transwestern Pipeline Co. v. Horizon Oil & Gas Co., 809 S.W.2d 589, 591 (Tex.

App.—Dallas 1991, writ dism’d w.o.j.). Here, Austin points to a portion of the

venue provision in the Separation Agreement that fixes venue in Houston courts as

support for his claim that the Separation Agreement revoked the arbitration

agreement. But the venue clause continues:

The Parties acknowledge and agree that Sections 4.7(b) and 4.7(c) of
the Employment Agreement are hereby incorporated in this
Agreement by reference such that if Executive shall obtain any money
judgment or otherwise prevail with respect to any arbitration or
litigation brought by Executive or the Company to enforce or
interpret any provision in this Agreement, the Company, to the fullest
extent permitted by applicable law, shall reimburse Executive for all
of Executive’s reasonable legal fees and expenses incurred in such
arbitration or litigation.

13
(emphasis added). 4 Thus, the venue provision expressly contemplates that both

arbitration and litigation proceedings may be initiated to enforce the provisions of

the Separation Agreement, i.e., that the arbitration agreement in the Partnership

Agreement survived the execution of the Separation Agreement, even with respect

to claims to enforce or interpret the Separation Agreement.

The mere presence of venue and merger provisions does not invalidate an

arbitration agreement when the provisions can be harmonized with the agreement

to arbitrate. See Phytel, Inc. v. Smiley, No. 05-12-00607-CV, 2013 WL 1397085,

at *3 (Tex. App.—Dallas Apr. 5, 2013, no pet.) (mem. op.); In re Bath Junkie

Franchise, Inc., 246 S.W.3d 356, 365 (Tex. App.—Beaumont 2008, no pet.);

Coody Custom Homes LLC v. Howe, No. 10-06-00098-CV, 2007 WL 1374136, at

*2 (Tex. App.—Beaumont May 9, 2007, no pet.) (mem. op.); Kirby Highland

Lakes Surgery Ctr., L.L.P. v. Kirby, 183 S.W.3d 891, 901 (Tex. App.—Austin

2006, no pet.); New Concept Constr. Co. v. Kirbyville Consol. Indep. Sch. Dist.,

119 S.W.3d 468, 470 (Tex. App.—Beaumont 2003, pet. denied); Valero Energy

Corp. v. Teco Pipeline Corp., 2 S.W.3d 576, 587 (Tex. App.—Houston [14th

Dist.] 1999, no pet.); see also In re Winter Park Constr., Inc., 30 S.W.3d 576, 578

(Tex. App.—Texarkana 2000, orig. proceeding). Here, the venue provision can be

4
The Employment Agreement is not included in the appellate record.

14
harmonized with the arbitration provision, because it can be construed to fix venue

in Houston courts in the event that arbitration is waived or for proceedings to

enforce an arbitration award. See Coody Custom Homes LLC, 2007 WL 1374136,

at *2; New Concept Constr. Co., 119 S.W.3d at 470.

Because the venue clause expressly contemplates that both litigation and

arbitration proceedings may be brought to enforce the Separation Agreement, and

can be harmonized with the arbitration provision, we hold that the Separation

Agreement does not abrogate partnership arbitral rights with respect to forcible

redemption of partnership interests. See J.M. Davidson, Inc., 128 S.W.3d at 227;

Transwestern Pipeline Co., 809 S.W.2d at 591.

Accordingly, we sustain Valerus’s first issue.

2. Are Austin’s claims within the scope of the arbitration
agreement?

If a valid arbitration agreement exists, “courts should resolve any doubts as

to the agreement’s scope, waiver, and other issues unrelated to its validity in favor

of arbitration.” Ellis, 337 S.W.3d at 862. In determining whether the claims fall

within an arbitration agreement’s scope, a court focuses on the facts alleged, not on

the causes of action asserted. Hou–Scape, Inc. v. Lloyd, 945 S.W.2d 202, 205

(Tex. App.—Houston [1st Dist.] 1997, orig. proceeding). To be subject to

arbitration, the “allegations need only be factually intertwined with arbitrable
15
claims or otherwise touch upon the subject matter of the agreement containing the

arbitration provision.” In re B.P. Am. Prod. Co., 97 S.W.3d at 370.

Here, the parties agreed to arbitrate all disputes “arising out of or in

connection with” the Partnership Agreement. Valerus contends that Austin’s

claims fall within the scope of that agreement. Specifically, Valerus contends that

some of Austin’s claims are directly premised on the Partnership Agreement, and

that none of them may be decided without reference to the Partnership Agreement.

See Enter. Field Servs., LLC v. TOC-Rocky Mountain, Inc., 405 S.W.3d 767, 773–

74 (Tex. App.—Houston [1st Dist.] 2013, pet. denied); In re B.P. Am. Prod. Co.,

97 S.W.3d at 370. Austin responds that even if a valid arbitration agreement

exists, his claims do not fall within its scope, because his claims are based solely

upon the rights conferred upon him by the Separation Agreement, which he

contends is “the only agreement that governs this dispute.”

We conclude that Austin’s claims fall within the scope of the arbitration

provision. Adjudicating Austin’s claims will require interpretation of the

Partnership Agreement’s terms. The Partnership Agreement states the terms under

which partnership interests may be forcibly redeemed, prohibits competition by

owners of partnership interests, and otherwise governs the partnership. Indeed,

despite his contention that the Separation Agreement is the only agreement that

16
governs this dispute, Austin’s petition expressly requests a declaration that he has

not breached the Partnership Agreement, and all of his claims relate to his

partnership interests. The allegations in Austin’s petition thus are “factually

intertwined with arbitrable claims or otherwise touch on the subject matter of the

agreement containing the arbitration provision.” Enter. Field Servs., 405 S.W.3d

at 773 (quoting In re B.P. America Prod. Co., 97 S.W.3d at 370); see Ellis, 337

S.W.3d at 861–62 (courts are required to resolve all doubts regarding the scope of

arbitration agreement in favor of arbitrability once court has determined that a

valid arbitration agreement exists); Cotton Commercial USA, Inc. v. Clear Creek

Indep. Sch. Dist., 387 S.W.3d 99, 108 (Tex. App.—Houston [14th Dist.] 2012, no

pet.) (claim not subject to arbitration only if “the facts alleged in support of the

claim stand alone, are completely independent of the contract, and the claim could

be maintained without reference to the contract”); see also Richmont Holdings, Inc.

v. Superior Recharge Sys., L.L.C., 392 S.W.3d 633, 635 (Tex. 2013) (noting that

dispute touching upon two agreements, one of which contained arbitration clause,

was subject to arbitration). Accordingly, we conclude that Austin’s claims fall

within the scope of the arbitration clause in the Partnership Agreement.

17
 We sustain Valerus’s second issue.5

3. Austin’s defenses

Once a valid arbitration agreement has been established, a presumption

attaches favoring arbitration and the burden shifts to the party resisting arbitration

to establish a defense to enforcing arbitration. See In re AdvancePCS Health L.P.,

172 S.W.3d 603, 607 (Tex. 2005) (orig. proceeding); In re Hartigan, 107 S.W.3d

684, 687–88 (Tex. App.—San Antonio 2003, orig. proceeding [mand. denied]).

Austin raises the defenses of waiver and estoppel. He contends that Valerus

waived the right to arbitrate by entering in to the Separation Agreement and that

Valerus should be estopped from enforcing the arbitration agreement for the same

reason. But Austin’s waiver and estoppel arguments are premised on his argument

that the express language of the Separation Agreement revoked the arbitration

agreement with respect to Austin’s claims regarding forced redemption. Because

we have rejected the premise of Austin’s contention, Austin’s waiver and estoppel

defenses fail.

We sustain Valerus’s third issue.

5
Although we have determined that a valid arbitration agreement exists and that
Austin’s claims are subject to arbitration, we express no opinion regarding the
merits of Austin’s claims.
18
 4. Abatement of Lawsuit

“Once the trial court concludes that the arbitration agreement encompasses

the claims, and that the party opposing arbitration has failed to prove its defenses,

the trial court has no discretion but to compel arbitration and stay its own

proceedings.” In re FirstMerit Bank, N.A., 52 S.W.3d at 753–54. Because we hold

that there is a valid arbitration agreement which encompasses Austin’s claims, and

because Valerus has not waived its right to compel arbitration and is not estopped

from exercising its right to compel arbitration, the trial court proceedings should

have been abated and arbitration compelled. Id.

We sustain Valerus’s fourth issue.

II. Did the trial court err in granting Austin’s motion to stay arbitration?

We now turn to Valerus’s second appeal, in which it contends that the trial

court erred in granting Austin’s motion to stay the arbitration.

A. Standard of Review

Section 171.098 of the Texas Civil Practice and Remedies Code permits the

interlocutory appeal of an order staying arbitration. TEX. CIV. PRAC. & REM. CODE

ANN. § 171.098 (West Supp. 2013). A party moving to stay arbitration must show

that there is not an agreement to arbitrate. See id. § 171.023 (West 2011). We

apply a no-evidence standard of review to orders granting motions to stay

19
arbitration. ODL Servs., Inc. v. ConocoPhillips Co., 264 S.W.3d 399, 417 n.7

(Tex. App.—Houston [1st Dist.] 2008, no pet.).

B. Analysis

In its first issue, Valerus contends the Partnership Agreement contains a

valid, enforceable arbitration agreement and its claims for declaratory relief under

the Partnership Agreement fall within the scope of that agreement. In its second

issue, Valerus contends that the Separation Agreement did not revoke or extinguish

the arbitration provision in the Partnership Agreement.

In response, Austin argues that the Separation Agreement revoked the

arbitration agreement with respect to disputes regarding the forcible redemption of

Austin’s partnership interests, that the dispute regarding forcible redemption of his

shares is outside the scope of the arbitration provision, and that he did not waive

his right to object to arbitration because he participated subject to his objection that

arbitration was not the appropriate forum.

In the arbitration, Valerus seeks declarations that (1) Austin was a

“Breaching Party” and that an Expulsion Event occurred under the Partnership

Agreement, (2) Valerus had the unilateral option under Section 13.01(c) of the

Partnership Agreement to redeem Austin’s partnership interests for the prices set

forth in Section 13.02(a)(ii) of the Partnership Agreement, (3) the total redemption

20
price of Austin’s vested partnership interest under Section 13.01(c) is $10,697.67,

and (4) the restrictions on competition under Section 8.03(f) of the Partnership

Agreement are reasonable and enforceable under Texas law. Austin concedes that

“there is no distinction” between his claims and Valerus’s claims, because both are

“flip-sides of the forced redemption issue” and are “mirror-images of one another.”

Having already decided that the Separation Agreement did not abrogate

partnership arbitral rights with respect to forcible redemption of Austin’s

partnership interests, and that Austin’s claims fall within the scope of the

arbitration provision, we agree that Valerus’s claims also fall within the arbitration

agreement’s scope, and we sustain Valerus’s first and second issues. Accordingly,

we hold that the trial court erred in staying the arbitration. See TEX. CIV. PRAC. &

REM. CODE ANN. § 171.023 (party moving to stay arbitration must show that there

is not an agreement to arbitrate). Because our resolution of Valerus’s first two

issues requires reversal, we do not reach Valerus’s remaining issues.

21
 Conclusion

We reverse the trial court’s order denying Valerus’s motion to compel

arbitration and the order staying the arbitration proceeding and remand for further

proceedings compelling arbitration.

Rebeca Huddle
Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.

22