Continuum Health Services, LLC, Dr. Dan Bartel v. Cross, Shelia

Reverse and Remand; Opinion Filed November 19. 2012.

In The
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No. 05-11-01520-CV

CONTINUUM IIEAL1’H SERVICES, LLC. DR. DAN BARTEL, PATRICK LEE. AND
MARK BYARS, Appellants

V.

SHEILA CROSS, Appellee

On Appeal from the 192nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. L)C-1 1-04055-K

MEMORANDUM OPINION
Before Justices Morris, Moseley, and Myers
Opinion By Justice Moseley

Appellants Continuum Health Services. LLC, Dr. Dan Bartel, Patrick Lee, and Mark Byars

filed this interlocutory appeal from the trial court’s denial of their motion to compel arbitration in

their dispute with appellee Sheila Cross,
1 In a single issue on appeal, appellants assert the trial court

abused its discretion by denying their motion to stay discovery and compel arbitration.
2 The

background and facts of the case are well-known to the parties; thus, we do not recite them here in

Appellants also appealed the trial court’s order granting appellec’s motion to compel appellants to respond to her request for disclosure. In
thetr appellate brief, appellants stated thc ‘no longerwish to appeal the trial court’s’ order compelling a response to appellee’s request for disclosure.
Therefore, we do not consider this issue.

2
In its order, the trial court stated: “After considering Defendants’ Motion to Compel Arbitration, the evidence, atid arguments of counsel, the
court hereby DENIES Defendants’ Motion.” The trial court did not enter any findings of fact or conclusions of law.
detail, Because all dispositive issues are settled in law, we issue this memorandum opinion. TEX.

R. App. P. 47.2(a). 47.4. We reverse the trial court’s order.

The facts relevant to this appeal are not in dispute. Cross worked as an independent

consultant to Continuum Health Services, LLC (CBS). In September 2009, Cross and the appellants

entered into an agreement, the Company Agreement of Continuum Health Services, LL.C. (a

Delaware Limited Liability Company) (Agreement), pursuant to which Cross became a managing

member of CHS and received an ownership interest in CHS. There is no dispute that Cross signed

the Agreement. In December 2010, appellants acquired Cross’ membership in CHS for $O.OO.

Cross sued appellants for quantum memit, breach of contract, promissory estoppel, breach of

fiduciary duty, conspiracy to breach fiduciary duties, and fi’aud. Appellants filed a general denial and

subsequently moved to compel arbitration pursuant to the terms of the Agreement.

While the issue presented in this appeal is whether appellants can compel Cross to arbitrate

her claims, we do not reach that question. A threshold matter we first consider is who has the

primary power to decide whether appellants can compel Cross to arbitrate her claims: a court or an

arbitrator. See Roe v. Ladyrnon, 318 S.W.3d 502, 511 (Tex. App.—Dallas 2010, no pet.).

As a general rule, whether the parties agreed to arbitrate is an issue decided by the courts

rather than an arbitrator. See Saxa inc. v. DFD Architecture, Inc., 312 S.W.3d 224, 229 (Tex.

App.—Dallas 2010, pet. denied). However, the parties may agree to submit the substantive issue

of arbitrability to arbitration. See id. (citing Howsam v. Dean Witter Reynolds, inc., 537 U.S. 79,

83 (2002)). Courts do not assume the parties “agreed to arbitrate arbitrability unless there is ‘clea[r]

and unmistakabl[e]’ evidence that they did so.” Roe, 318 S.W.3d at 513 (quoting First Options of

We offer no opinion regarding the merits of Cross’ claims against appellants, including whether appellants breached the Agreement by
acquiring Cross’ interest in CFI5 in December 2010.

—2—
Chicago. Inc. v. Kaplan. 514 U.S. 938, 944 (1995)). A “court must examine the arbitration

agreement to decide if.. whcn construed under the relevant state law, the agreement evidences a clear

and unmistakable intention that the arbitrators will have the authority to determine the scope of

arbitration.” See Saxa, 312 S.W.3d at 229 (citing ODL Sen’s. Inc. v. ConocoPhihips Ca, 264

S.W.3d 399,413 (rex. App.—Houston [1st Dist.] 2008, no pet.)).
4

Relevant to this appeal, Section 18.4(cXl) of the Agreement states:

Arbitration proceedings to resolve Disputes will be conducted under the auspices and
the commercial arbitration rules of the AAA pursuant to the Federal Arbitration
Rules of the AAA at Dallas, Dallas County. Texas. Whether such Dispute will be
subject to arbitration will likewise be determined in such arbitration as will the
determination as to whether all procedural conditions precedent to arbitration have
been satisfied.

This contract provision is clear and unmistakable evidence ofthe parties’ intent to delegate

arbitrability to the arbitrator. See Sam, Inc., 312 S.W.3d at 230; Roe, 318 S.W.3d at 514 (court

considers whether parties to dispute agreed to arbitrate issue of arbitrability). The trial court erred

by denying appellants’ motion to compel arbitration.

We reverse the trial court’s order and remand the case to the trial court for further

proceedings consistent with this opinion. Specifically, we direct the trial court to order the parties

to take their dispute—including their dispute as to arbitrability—to arbitration and thereafter abate

the case. See TEX. Civ. PRAC. & REM. CODE ANN. § 171.021(c) (West 2008).

The Agreement psovidea: “Any and all legal paooeedings to afro. this Article XVffl (ncludlng any action to conçd arbitration hetmeader
4
) will be governed by the iowa ofthe state ofDelaware.” Neither party has argued Delaware law abould be applied or that Delaware law difibra
aubatantially from that of Texas. Thus, we presume the law ofDelaware is Identical to Texas law. SeeJbhnaon v. SncturedAmt San, LLC 148
5.W.3d 711,720 (Tex. App.—Deflas 2004, no petk TaR. BvtD. 202.

-3-
 We express no opinion about whether Cross’ claims must he arbitrated that issue shall he

resolved by the arbitrator.

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JUDGMENT
CONTINUUM HEALTH SERVICES, LLC, Appeal from the 192nd Judicial District
DR. DAN I3ARTEL PATRICK LEE, AND Court of Dallas County, Texas. (Tr.Ct.No.
MARK BYARS. Appellants Cause No. DC-I 1-04055-K).
Opinion delivered by .Justice Moseley,
No. 05-1 l-01520-CV V. Justices Morris and Myers participating.

SHEILA CROSS, Appcllee

In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and this cause is REMANDED to the trial court for new trial. it is ORDERED
that appellants Continuum Health Services, LLC, Dr. Dan Bartel. Patrick Lee, and Mark Byars
recover their costs of this appeal from appellee Sheila Cross.

Judgment entered November 19, 2012.

I

JIM MOSELEY
iJJSTICE