ACCEPTED 03-14-00782-CV 3837772 THIRD COURT OF APPEALS AUSTIN, TEXAS 1/21/2015 9:02:50 AM JEFFREY D. KYLE CLERK No. 03-14-00782-CV ____________________________ FILED IN 3rd COURT OF APPEALS IN THE THIRD COURT OF APPEALS AUSTIN, TEXAS AT AUSTIN, TEXAS 1/21/2015 9:02:50 AM ____________________________ JEFFREY D. KYLE Clerk SANTANDER CONSUMER USA, INC. Appellant, V. MARIO A. MATA, CENTROPLEX AUTOMOBILE RECOVERY, INC., BLAKE THORNTON VANDUSEN, JOHN F. THOMPSON D/B/A CENTROPLEX AUTOMOBILE RECOVERY, INC., AND REDSHIFT INVESTIGATION, INC. Appellees. ____________________________ Appealed from the rd 353 Judicial District Court Travis County, Texas Cause No. D-1-GN-13-000677 ____________________________ JOINT BRIEF OF APPELLEES ____________________________ KAREN C. BURGESS State Bar No. 00796276 STACY ROGERS SHARP State Bar No. 24052109 Email: kburgess@richardsonburgess.com Email: ssharp@richardsonburgess.com Richardson + Burgess LLP 221 West 6th Street, Suite 900 Austin, Texas 78701-3445 Telephone: (512) 482-8808 Facsimile: (512) 499-8886 ATTORNEYS FOR APPELLEES CENTROPLEX AUTOMOBILE RECOVERY, INC. AND JOHN F. THOMPSON JOHN S. KENEFICK State Bar No. 24006294 Email: jkenefick@macdonalddevin.com JOHN R. SIGETY State Bar No. 24083853 Email: jsigety@macdonalddevin.com Macdonald Devin, PC 1201 Elm Street, Suite 3800 Dallas, Texas 75270-2130 Telephone: (214) 744-3300 Facsimile: (214) 747-0942 ATTORNEYS FOR APPELLEE BLAKE THORNTON VANDUSEN ii CHRISTOPHER A. LOTZ State Bar No. 24031630 Email: clotz@lstlaw.com DAVID L. TREAT State Bar No. 20205300 Email: dlt@lstlaw.com Lindow ▪ Stephens ▪ Treat LLP One Riverwalk Place 700 North St. Mary’s Street, Suite 1700 San Antonio, Texas 78205 Telephone: (210) 227-2200 Facsimile: (210) 227-4602 ATTORNEYS FOR APPELLEE REDSHIFT INVESTIGATION INC. iii TABLE OF CONTENTS TABLE OF CONTENTS ...................................................................................... iv INDEX OF AUTHORITIES ...................................................................................v STATEMENT OF THE CASE ...............................................................................1 ISSUE PRESENTED ...............................................................................................2 STATEMENT OF FACTS ......................................................................................2 SUMMARY OF THE ARGUMENT .....................................................................4 ARGUMENT ............................................................................................................5 I. Santander and Cross-Defendants have executed no arbitration agreement. ................................................................................................5 II. Cross-Defendants cannot be compelled to arbitrate under the agreement between Mata and Santander. ..................................................................7 A. Arbitration cannot be compelled because Cross-Defendants are not parties to the Sale Contract...........................................7 B. None of the exceptions that would allow nonsignatories to be compelled to arbitration applies here. ......................................9 III. Plaintiff never served the Centroplex Defendants, so only cross-claims exist against them, and Santander agrees those are not arbitrable. .......15 IV. The Court Should Award Reasonable Fees to Cross-Defendants. ........16 PRAYER .................................................................................................................18 CERTIFICATE OF COMPLIANCE ..................................................................22 CERTIFICATE OF SERVICE ............................................................................22 APPENDIX .............................................................................................................vi iv INDEX OF AUTHORITIES Cases Bob Montgomery Chevrolet, Inc. v. Dent Zone Co., 409 S.W.3d 181 (Tex. App.— Dallas 2013, no pet.). ............................................................................................12 Bridas S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d 347 (5th Cir. 2003) .......... 10, 11, 14 Carr v. Main Carr Dev., LLC, 337 S.W.3d 489 (Tex. App.—Dallas 2011, pet. denied). ..................................................................................................................11 E. Tex. Med. Ctr. Reg’l Healthcare Sys. v. Slack, 916 F. Supp. 2d 719 (E.D. Tex. 2013) .....................................................................................................................14 Gililland v. Taylor Inv., No. 11-03-00175-CV, 2004 WL 2126755 (Tex. App.— Eastland Sep. 23, 2004, pet. denied). ............................................................. 16, 17 Hunt v. CIT Grp./Consumer Fin., Inc., 03-09-00046-CV, 2010 WL 1508082 (Tex. App.—Austin Apr. 15, 2010, pet. denied) (mem. op.) ............................ 19, 20, 21 In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (orig. proceeding) .......................................................................................................................... 6, 10 In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185 (Tex. 2007) ........... 6, 8, 14, 15 Jenkens & Gilchrist, P.C. v. Riggs, 87 S.W.3d 198 (Tex. App.—Dallas 2002, no pet.) .......................................................................................................................16 Keytrade USA, Inc. v. AIN Temouchent M/V, 404 F.3d 891 (5th Cir. 2005) ..........13 Kvaerner ASA v. Bank of Tokyo-Mitsubishi, Ltd., 210 F.3d 262 (4th Cir. 2000)....13 McMillan Comp. Translation Sys., 66 S.W.3d 477 (Tex. App.—Dallas 2001, no pet.) .......................................................................................................................16 One Beacon Ins. Co. v. Crowley Marine Servs., Inc., 648 F.3d 258 (5th Cir. 2011) ........................................................................................................................ 11, 12 v SEB Inc. v. Campbell, No. 03-10-00375-CV, 2011 WL 749292 (Tex. App.— Austin Mar. 2, 2011, no pet.)(mem. op). ....................................................... 16, 17 Smith v. Brown, 51 S.W.3d 376 (Tex. App.—Houston [1st Dist.] 2001, pet. denied) ...............................................................................................................................20 Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468 (1989). .....................................................................................................................6 Statutes TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a). ...................................................17 vi STATEMENT OF THE CASE Mario Mata claims he was injured during the repossession of his Chevrolet Suburban when he grasped hold of the rear bumper of the vehicle. (See CR 6 at ¶11.) Mata brings tort, contract, and DTPA claims, alleging the repossession should not have occurred because he paid off the Suburban in full. (Id. ¶¶ 10–11.) Mata financed his purchase of the Suburban through a Sale Contract he executed with Appellant–Defendant Santander’s predecessor. (See CR 71-72.) The Sale Contract had an arbitration agreement. (CR 76-80.) Mata filed suit against and served Santander, Redshift Investigation, Inc. (“Redshift”), and repossession agent Blake Vandusen. Mata did not serve the remaining named Defendants. After the limitations period expired on Mata’s claims, Santander brought Centroplex Automobile Recovery, Inc. (“Centroplex”) and Centroplex’s president, John Thompson, into the case by asserting cross- claims for contribution and indemnification against Centroplex, Thompson, Redshift, and Vandusen (collectively, “Cross-Defendants”). (CR 47-54.) Santander then moved to compel both Plaintiff and Cross-Defendants to arbitration. (CR 65.) The Cross-Defendants opposed the motion on the grounds that they had not signed an arbitration agreement with any party to the case. The trial court granted Santander’s motion to compel as to Mata and ruled that the Cross-Defendants could not be forced to arbitrate. (CR 251-55.) 1 ISSUE PRESENTED Under the Federal Arbitration Act as applied in Texas, arbitration requires consent of all parties. An auto-finance company contracted with independent repossession agents without an arbitration provision. Years later, it added an arbitration clause to its contracts with car buyers. The repossession agents never signed or saw the consumer contracts. In a car buyer’s suit against the auto company and repossession agents, can the auto-finance company compel the repossession agents to arbitration? STATEMENT OF FACTS I. The Service and Recovery Agreements Santander, under the assumed name of Drive Financial (collectively, “Santander”) contracted with Redshift’s predecessor, Bay City, (collectively, “Redshift”) to handle repossession of vehicles Santander financed. (CR 70.) This Service Agreement was executed in early December 2002 and expressly designated Redshift an independent contractor of Santander. (CR 81 at ¶ 2.) Redshift later executed a Collateral Recovery Agreement to outsource some of its repossession assignments to Centroplex. (CR 140-52.) When Santander ordered repossession of Mata’s Suburban, Redshift tasked Centroplex with the job, and Centroplex sent Mr. Vandusen to pick it up. (CR 119 at ¶ 6.) 2 It is undisputed that neither the Service Agreement nor the Recovery Agreement contains an arbitration provision. (1 RR 10; see CR 81-85; 140-52.) II. The Sale Contract between Mata and Santander Mata financed the purchase of his Chevrolet Suburban through a Sale Contract with Capitol Chevrolet (now Santander). The two parties executed the agreement for sale and financing of the vehicle on December 28, 2002. (CR 71- 72.) They amended the Sale Contract in June 2009, adding an arbitration agreement governed by the Federal Arbitration Act (“FAA”). (CR 75-80.) It is undisputed that no Cross-Defendant was party to the original or amended Sale Contract, or even saw it. (See Appellant’s Br. at 8; 1 RR 15.) III. The Arbitration Provision The Sale Contract is the only contract between any of the parties that includes an arbitration provision, and it is undisputed that none of the Cross- Defendants were party to the Sale Contract. (See Appellant’s Br. at 8.) Indeed, Santander has stipulated that the Cross-Defendants had never seen the Sale Contract before Santander brought them into this suit. (1 RR 15 (“I can stipulate that these co-defendants had never seen the contract between my client and Mr. Mata.”).) Neither the Service Agreement nor the Recovery Agreement contains a reference to the Sale Contract. (CR 81-85; 140-52.) 3 SUMMARY OF THE ARGUMENT The right to trial by jury requires that arbitration not be ordered against a litigant without the litigant’s consent. The Cross-Defendants have never waived this right, so the trial court correctly denied Santander’s motion to compel arbitration as to the Cross-Defendants. The relevant facts in this appeal are undisputed: The only contracts signed by any Cross-Defendant in this case contain no arbitration provision, and the Cross-Defendants neither saw nor consented to the Sale Contract between Mata and Santander that did contain an arbitration provision. Settled law requires that a party sign an arbitration agreement in order to be compelled to arbitrate, and the Cross-Defendants were not signatories to the Sale Contract. Santander seeks to circumvent this rule by citing two of the rule’s narrow exceptions—but even the case law Santander cites proves that neither exception applies. First, the “incorporation by reference” exception requires language incorporating the arbitration contract. Santander cites no provision in either the Service Agreement or Recovery Agreement that makes any reference to the Sale Contract, original or amended. Second, the “agency” exception applies only when an agent signs an arbitration agreement on behalf of a principal, and Santander does not claim that it is an agent for the Cross-Defendants. It instead 4 tries to avoid this problem by relying on a body of cases that do not involve compelling a nonsignatory to arbitration. Santander executed no arbitration agreement with the Cross- Defendants. When contracting for the outsourcing of repossession services, Santander did not even include an arbitration provision in that contract. Indeed, Santander conceded to the trial court that it could not compel arbitration as to the cross-claims in this case. Yet, after losing at the trial court, Santander now renews its meritless attempt to compel the Cross-Defendants to arbitrate. Like its trial brief, its appellate brief is void of any support in the facts or law that would allow, much less persuade, a court to order arbitration against nonparties to an arbitration agreement. The trial court correctly applied the law and facts and declined to order the Cross-Defendants to arbitrate. The holding should be affirmed, and fees should be assessed against Santander. ARGUMENT I. Santander and Cross-Defendants have executed no arbitration agreement. Because Santander and Cross-Defendants have never entered into an arbitration agreement, Santander cannot compel them to arbitration. A party seeking to compel arbitration under the FAA bears the burden of proving that: “(1) 5 there is a valid arbitration agreement, and (2) the claims raised fall within that agreement’s scope.” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). “However, the presumption arises only after the party seeking to compel arbitration proves that a valid arbitration agreement exists[.]” Id. at 737 (internal quotations omitted). Under the FAA, ordinary principles of state contract law determine whether there is a valid agreement to arbitrate, and the Texas Supreme Court has clarified that these principles mean that the FAA generally “does not require parties to arbitrate when they have not agreed to do so.” Id. at 738 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989)). This rule protects litigants’ constitutional right to trial by jury, which is shared by plaintiffs and defendants alike. TEX. CONST. art. V, § 10 (“In the trial of all causes in the District Courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury”). Cross-Defendants intend to try this case before a jury, and have at no point waived their right to do so. Santander seeks to compel Cross-Defendants to arbitration simply because it contracted with the Plaintiff to arbitrate. “But the right to a jury trial is not discretionary. . . . If the parties have not agreed to arbitration, no trial court has discretion to make them go. . . .” In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 193 (Tex. 2007). There is no arbitration agreement between Santander and 6 Cross-Defendants. Only one contract between Santander and any Cross-Defendant is in the record—the Service Agreement—and it contains no arbitration provision. If Santander sought to arbitrate suits involving repossession with its repossession contractors, it could have contracted for arbitration rights in the Service Agreement—or it could have included language expressly incorporating its sale and financing contracts. When given the opportunity, Santander chose not to include or incorporate an arbitration provision in the Service Agreement. Without an agreement to arbitrate between Santander and the Cross- Defendants, binding contract principles prevent Santander from compelling Cross- Defendants to arbitrate this suit. II. Cross-Defendants cannot be compelled to arbitrate under the agreement between Mata and Santander. Lacking an agreement to arbitrate with Cross-Defendants, Santander attempts to compel arbitration based on the Sale Contract it executed with Plaintiff. The Sale Contract is the sole document in the record that contains an arbitration agreement, but Cross-Defendants are not signatories to it. And no exception to the rule against compelling nonsignatories to arbitration applies here. A. Arbitration cannot be compelled because Cross-Defendants are not parties to the Sale Contract. Cross-Defendants cannot be bound by the arbitration agreement in the Sale Contract between Plaintiff and Santander because they did not agree to it. 7 Under the FAA, the United States Supreme Court “has repeatedly emphasized that arbitration is a matter of consent, not coercion.” In re Merrill Lynch Trust, 235 S.W.3d at 187 (internal citations omitted). The FAA “does not require parties to arbitrate when they have not agreed to do so.” Id. The mere fact that some parties must arbitrate has never permitted the court to steer the remaining parties into arbitration, too. See id. Where a plaintiff asserted claims against both a company’s employees and its corporate affiliates and all defendants moved to compel arbitration, the Texas Supreme Court held that claims against the former could be compelled, but that the claims against the affiliates could not. Id. at 187. Recognizing the inefficiency that is “inherent in resolving these related issues in two different places,” the Court nonetheless ruled that “interdependent” conduct of corporate defendants was not sufficient for compelling arbitration. Id. at 192. Despite their relationship, “a contract with one corporation—including a contract to arbitrate disputes—is generally not a contract with any other corporate affiliates.” Id. at 191.1 The Texas Supreme Court has thus refused to create an exception simply for convenience’s sake. See id. at 192 (“efficiency and convenience cannot override either a signatory’s arbitration agreement or a nonsignatory’s right to a 1 As described in Section B(2), the case at bar lacks an additional key requirement for arbitration: consent. Cross-Defendants are not nonsignatories seeking to enforce an arbitration agreement; they are nonsignatories that Santander seeks to compel to arbitration without their consent. 8 jury trial.”). Santander has now conceded that the Cross-Defendants were not parties to the Sale Contract. (Appellant’s Br. at 8.) It has even stipulated that Cross-Defendants had never seen the Sale Contract before this lawsuit commenced. (1 RR 15.) The Cross-Defendants cannot be forced to arbitrate based on an agreement between two outside parties, especially when Cross-Defendants did not even know that agreement existed. B. None of the exceptions that would allow nonsignatories to be compelled to arbitration applies here. There are six exceptions to the rule that nonsignatories cannot be bound to an arbitration agreement—none of which apply here. These exceptions are: (1) incorporation by reference, (2) assumption, (3) agency, (4) alter ego, (5) equitable estoppel, and (6) third-party beneficiary. Kellogg Brown & Root, 166 S.W.3d at 739 (citing Bridas S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d 347, 356 (5th Cir. 2003)). On appeal, Santander argues that two of these exceptions apply. But the Cross-Defendants did not sign a contract incorporating the Sale Contract by reference, and the agency exception to compelling nonsignatory arbitration is inapposite. 1. Santander waived the incorporation-by-reference exception and, in any event, the exception does not apply to the Agreements here. Santander raises the “incorporation by reference” doctrine for the first time on appeal. Despite Cross-Defendants’ briefing enumerating the six 9 exceptions above, Santander never invoked the incorporation exception to the trial court, either in its briefing or at the hearing. Accordingly, the trial court had no opportunity to rule on this basis, and the ground for appeal is waived. See TEX. R. APP. P. 33.1(a)(1); e.g. Bridas, 345 F.3d at 356 (holding party failed to preserve incorporation-by-reference and assumption arguments); Carr v. Main Carr Dev., LLC, 337 S.W.3d 489, 494 (Tex. App.—Dallas 2011, pet. denied)(when considering nonsignatory exception to arbitration, holding that “[b]ecause Carr did not raise the agency issue in the court below, it has not been preserved for our review.”) The incorporation-by-reference exception, even if preserved, would not apply. Cross-Defendants executed no agreement that incorporated the Sale Contract between Plaintiff and Santander, or that incorporated any other arbitration agreement. Terms are incorporated by reference only if “it is clear that the parties to the agreement had knowledge of and assented to the incorporated terms.” One Beacon Ins. Co. v. Crowley Marine Servs., Inc., 648 F.3d 258, 268 (5th Cir. 2011). “The language in the signed document must show the parties intended for the other document to become part of the agreement.” Bob Montgomery Chevrolet, Inc. v. Dent Zone Cos., 409 S.W.3d 181, 189 (Tex. App.—Dallas 2013, no pet.). But Santander stipulates that the Cross-Defendants had never seen the Sale Contract. (1 RR 15.) They could not possibly have “ha[d] knowledge of” or “assent[ed]” to 10 the Sale’s Contract terms, see One Beacon Ins. Co., 648 F.3d at 268, and Santander has not argued that they did. (Cf. 1 RR 17) (describing Cross-Defendant’s knowledge as “irrelevant”). Neither the Service Agreement nor the Recovery Agreement contains the barest mention of the Sale Contract, so the Agreements’ “language” cannot even arguably “show the parties intended for the [Sale Contract] to become part of” those Agreements. See Bob Montgomery Chevrolet, Inc., 409 S.W.3d at 189. The provisions Santander quotes from the Service and Recovery Agreements do not, explicitly or implicitly, incorporate or even reference the Sale Contract. The Service Agreement’s quoted provisions specify an intent to perform recovery services for Santander’s accounts, and the Recovery Agreement’s quoted provisions state the intent for Centroplex to receive recovery assignments from Redshift. (See Appellant’s Br. at 15.) In stark contrast, the agreements in the two cases Santander relies upon do contain incorporation provisions. In the first case, the nonsignatory’s contract specified that “all terms and conditions, liberties and exceptions . . . including the Law and Arbitration Clause, are herewith incorporated.” Keytrade USA, Inc. v. AIN Temouchent M/V, 404 F.3d 891, 896– 97 (5th Cir. 2005) (emphasis added). In the second case, the nonsignatory’s contract explicitly “guaranteed . . . each and every obligation” and adopted “the same rights and remedies” as under the specific contract containing the arbitration 11 provision. See Kvaerner ASA v. Bank of Tokyo-Mitsubishi, Ltd., 210 F.3d 262, 264–65 (4th Cir. 2000). In both cases, the nonsignatory’s contract explicitly incorporated the contract containing the arbitration provision by name. The Agreements Cross-Defendants signed are not even arguably analogous to the contracts in Keytrade or Kvaerner. No intent to incorporate the Sale Contract is reflected in this record. The incorporation-by-reference exception was not preserved for appeal and, in any event, is inapplicable here. 2. Santander’s use of the agency exception has no basis in law or fact. Santander cannot—and does not—argue that it was an agent of Cross- Defendants, so the agency exception does not apply. And none of the authority cited by Santander involved compelling a nonsignatory to arbitration, so its novel reverse-agency theory, even if adopted, would not change the result here. a. The agency exception would only apply if Santander were an agent of Cross-Defendants, which it has not alleged to be. The agency exception binds a nonsignatory only when a party to the arbitration agreement signed as the agent of the nonsignatory. See Bridas, 345 F.3d at 356–57. The authority to bind the nonsignatory must exist at the time of signing. See id. at 358. An ongoing relationship is not sufficient; Santander “has the burden of proving [the signatory] signed the Agreement as an agent of [the nonsignatory] and not for themselves alone.” See, e.g., E. Tex. Med. Ctr. Reg’l 12 Healthcare Sys. v. Slack, 916 F. Supp. 2d 719, 722 (E.D. Tex. 2013) (“Defendants . . . argue that [the nonsignatory] has an agency relationship [because it is] a wholly owned subsidiary [of the signatory]. A corporate relationship alone, however, is generally not sufficient to bind a non-signatory to an arbitration agreement.”) To satisfy the agency exception, Santander would have to show that, while executing the sale and financing of Mata’s vehicle, Santander signed the Sale Contract as an agent of one of the past or future entities handling repossession services for Santander’s vehicles. Santander had no authority to bind any of the Cross-Defendants while financing Mata’s vehicle. Accordingly, even Santander does not argue that it acted as an agent for Cross-Defendants. b. Santander’s authority is inapposite. Instead, in an attempt to shoehorn this case into the one doctrine that it preserved for appeal, Santander makes a mirror-image agency argument. Santander’s inverted logic urges that its vicarious liability for Cross-Defendants’ conduct made Cross-Defendants “agents” of Santander for purposes of the nonsignatory arbitration exception. But agency law has never overridden the constitutional requirement that all parties consent to arbitration. Whether Cross- Defendants acted as agents of Santander when repossessing the Suburban in 2011 cannot retroactively and forcibly make Cross-Defendants parties to an arbitration 13 agreement executed two years earlier. “If the parties have not agreed to arbitration, no trial court has discretion to make them go.” Merrill Lynch Trust, 235 S.W.3d at 192. Santander cites several nonbinding cases in an attempt to advance its agency argument. But none of these cases even involves compelling a nonsignatory to arbitration. Instead, Santander’s cases all involve the reverse—a nonsignatory who seeks to invoke an arbitration agreement.2 SEB and Gililland, for example, both held a nonsignatory employee of its signatory employer could compel arbitration against the other signatory to the agreement. SEB, 2011 WL 749292 at *4; Gililland, 2004 WL 2126755 at *3–4. They did not hold that the employee could be forced to arbitrate against his will. See id. “Arbitration agreements apply to nonsignatories only in rare circumstances.” Bridas, 345 F.3d at 358. If an arbitration agreement applied to every nonsignatory who contracted to perform services for a signatory company, the exception would swallow the rule. And it plainly would not satisfy the basic 2 See SEB Inc. v. Campbell, No. 03-10-00375-CV, 2011 WL 749292, *4 (Tex. App.—Austin Mar. 2, 2011, no pet.)(mem. op); Jenkens & Gilchrist, P.C. v. Riggs, 87 S.W.3d 198, 202–03 (Tex. App.—Dallas 2002, no pet.); McMillan Comp. Translation Sys., 66 S.W.3d 477, 481 (Tex. App.—Dallas 2001, no pet.) (holding agents of signatory “were entitled to the benefit of the arbitration agreement for these claims”); Gililland v. Taylor Inv., No. 11-03-00175-CV, 2004 WL 2126755, *3–4 (Tex. App.—Eastland Sep. 23, 2004, pet. denied). Moreover, Jenkens & Gilchrist held the law firm seeking to enforce its client’s agreement was not an “agent” of its client because the firm was an independent contractor. 87 S.W.3d at 202. Similarly, in the case at bar, the sole contract Santander executed with any of the Cross-Defendants expressly designated Redshift an independent contractor. (CR 81.) 14 consent requirement of an arbitration agreement. See In re Merrill Lynch Trust, 235 S.W.3d at 187. No case has so curtailed the right to jury trial. The agency exception only operates to compel a party to arbitration when the signatory was acting, at the time of signing, as an agent of a principal. Because Santander plainly—and undisputedly—did not sign the Sale Contract on behalf of the Cross-Defendants, the exception does not apply. There is nothing in the record showing that Cross-Defendants intended to consent to arbitration. They cannot now be compelled to arbitrate this suit under either of the two proffered exceptions. III. Plaintiff never served the Centroplex Defendants, so only cross-claims exist against them, and Santander agrees those are not arbitrable. Centroplex and Thompson (collectively, “the Centroplex Defendants”) cannot be compelled to arbitration because, even if the Court accepted Santander’s novel arguments, there are no arbitrable claims against them. Santander concedes that the cross-claims in this case cannot be compelled to arbitration. (1 RR 7 (“I don’t believe that my client can compel arbitration as to the cross-claims. It’s only those claims that are asserted by the plaintiff against all of the defendants.”).) Its motion to compel therefore never sought to compel the cross-claims to arbitration. (CR 65 (moving to compel only Plaintiff’s claims against the Defendants); 1 RR 34 (“If we were seeking to have the cross-claims arbitrated, yes, then that would be at issue today.”).) 15 As to the Centroplex Defendants, though, cross-claims are the only claims pending because Plaintiff has never served the Centroplex Defendants with any claims against them. The limitations period has passed in this case. The repossession Plaintiff complains of occurred on February 23, 2011, (CR 6 at ¶ 11,) so the two-year statute of limitations for personal injury expired on February 23, 2013. See TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a). The record reflects that Plaintiff has never served the Centroplex Defendants with any claims, and Santander waited until after limitations expired to serve the Centroplex Defendants with its claims. There are not now, and never will be, claims by Plaintiff against the Centroplex Defendants in this case. The cross-claims are the only live claims against the Centroplex Defendants, and Santander correctly chose not move to compel the cross-claims to arbitration because of the lack of any arbitration agreement between Santander and the Cross-Defendants. For all the reasons above, and specifically because there are no arbitrable claims by or against the Centroplex Defendants, the trial court’s ruling as to the Centroplex Defendants should be affirmed. IV. The Court Should Award Reasonable Fees to Cross-Defendants. The frivolous nature of this appeal warrants, at a minimum, a fee award. The rules provide for damages when “the court of appeals determines that an appeal is frivolous.” TEX. R. APP. P. 45. To determine whether to award 16 damages, this Court considers whether the appellant has “reasonable grounds to believe the case could be reversed.” Hunt v. CIT Grp./Consumer Fin., Inc., 03-09- 00046-CV, 2010 WL 1508082, at *8 (Tex. App.—Austin Apr. 15, 2010, pet. denied) (mem. op.) (citing Smith v. Brown, 51 S.W.3d 376, 381 (Tex. App.— Houston [1st Dist.] 2001, pet. denied)). Santander has no reasonable basis for curtailing the Cross- Defendants’ federal Seventh Amendment and state constitutional rights to jury in this case, particularly as to the Centroplex Defendants. Santander’s appeal lacks a single basis in law or fact for overturning the trial court’s decision. The relevant facts are undisputed and only one of two briefed issues was preserved for appeal. The sole preserved issue is whether Cross-Defendants, though nonsignatories, can be compelled to arbitrate on the basis of agency. On this issue, Santander fails to cite a single case that involves compelling a nonsignatory to arbitration, and cites no binding authority at all. See Hunt, 2010 WL 1508082 at *8 (awarding fees as damages because of appellant’s “unsupported factual statements (and misstatements), repeated failures to preserve error for appeal, and the absence of legal merit in his arguments.”). A reasonable attorney could not fail to conclude that the trial court’s ruling would be upheld. See id; Smith, 51 S.W.3d at 381 (awarding $5000 in fees because “[n]o reasonable attorney could fail to conclude this court would uphold 17 the trial court’s summary judgment”). Indeed, Santander’s counsel conceded on the record to the trial court that it could not compel the cross-claims to arbitration, (1 RR 7), yet it persisted in arguing the motion to the trial court and then pursuing the issue on appeal. Cross-Defendants have had to spend unnecessary time and expense defending against, first, Santander’s groundless motion, and now its meritless appeal. Santander has thus unnecessarily forced the Cross-Defendants to expend considerable resources—all to simply defend their constitutional right to be heard in court. Consequently, Cross-Defendants seek as damages an award of attorneys’ fees and costs associated with those efforts, and have attached an affidavit establishing the amount of reasonable and necessary fees. See TEX. R. APP. P. 45; Hunt, 2010 WL 1508082, at *9 (identifying attorneys’ fees as the typical damages award and noting that “proof by affidavit is a proper method of establishing the appropriate sanction for the filing of a frivolous appeal”). A fee award is appropriate as damages in this case because of the objectively groundless nature of this appeal. PRAYER For the foregoing reasons, Cross-Defendants Centroplex Automobile Recovery, Inc., John F. Thompson, Redshift Investigation, Inc., and Blake 18 Vandusen respectfully request that this Court affirm the trial court’s holding that denied Santander’s Motion to Compel Arbitration and Stay of Case. Cross- Defendants further ask this Court to impose damages upon Santander for this frivolous appeal based on the attached affidavit for reasonable attorneys’ fees, and grant the Cross-Defendants any additional relief, at law or in equity, to which they are entitled. 19 Respectfully submitted, RICHARDSON + BURGESS LLP 221 West 6th Street, Suite 900 Austin, Texas 78701-3445 Telephone: (512) 482-8808 Facsimile: (512) 499-8886 Email: kburgess@richardsonburgess.com Email: ssharp@richardsonburgess.com /s/ Stacy Rogers Sharp By: ______________________________ Karen C. Burgess State Bar No. 00796276 Stacy Rogers Sharp State Bar No. 24052109 ATTORNEYS FOR APPELLEES CENTROPLEX AUTOMOBILE RECOVERY, INC. AND JOHN F. THOMPSON MACDONALD DEVIN, PC 1201 Elm Street, Suite 3800 Dallas, Texas 75270-2130 Telephone: (214) 744-3300 Facsimile: (214) 747-0942 Email: jkenefick@macdonalddevin.com Email: jsigety@macdonalddevin.com /s/ John S. Kenefick By: ______________________________ John S. Kenefick State Bar No. 24006294 John R. Sigety State Bar No. 24083853 ATTORNEYS FOR APPELLEE BLAKE THORNTON VANDUSEN 20 LINDOW ▪ STEPHENS ▪ TREAT LLP One Riverwalk Place 700 North St. Mary’s Street, Suite 1700 San Antonio, Texas 78205 Telephone: (210) 227-2200 Facsimile: (210) 227-4602 Email: clotz@lstlaw.com Email: dlt@lstlaw.com /s/ Christopher A. Lotz By: ______________________________ Christopher A. Lotz State Bar No. 24031630 David L. Treat State Bar No. 20205300 ATTORNEYS FOR APPELLEE REDSHIFT INVESTIGATION INC. 21 CERTIFICATE OF COMPLIANCE I certify that this document was produced on a computer using Microsoft Word 2010 and contains 3,670 words, as determined by the computer software’s word-count function, excluding the sections of the document listed in TEX. R. APP. P. 9.4(i)(1). /s/ Stacy Rogers Sharp _________________________________ Stacy Rogers Sharp CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing instrument has been served upon the following parties either electronically through an electronic filing manager or in the alternative served by fax prior to 5:00 p.m., in person, by mail, commercial delivery service, or email, on this 20th day of January, 2015, as follows: Donald L. Turbyfill Deborah C. S. Riherd Vicki W. Hart Devlin, Naylor & Turbyfill, PLLC 4801 Woodway Drive, Suite 420-West Houston, Texas 77056-1884 Facsimile: (713) 586-7053 ATTORNEYS FOR APPELLANT SANTANDER CONSUMER USA, INC. Mario A. Mata Mario A. Mata, PLLC 111 Congress Avenue, Suite 400 Austin, Texas 78701-4143 Facsimile: (214) 276-7305 APPELLEE, pro se /s/ Stacy Rogers Sharp _________________________________ Stacy Rogers Sharp 22 No. 03-14-00782-CV ____________________________ IN THE THIRD COURT OF APPEALS AT AUSTIN, TEXAS ____________________________ SANTANDER CONSUMER USA, INC. Appellant, V. MARIO A. MATA, CENTROPLEX AUTOMOBILE RECOVERY, INC., BLAKE THORNTON VANDUSEN, JOHN F. THOMPSON D/B/A CENTROPLEX AUTOMOBILE RECOVERY, INC., AND REDSHIFT INVESTIGATION, INC. Appellees. ____________________________ Appealed from the rd 353 Judicial District Court Travis County, Texas Cause No. D-1-GN-13-000677 ____________________________ APPELLEES’ APPENDIX ____________________________ LIST OF DOCUMENTS TEX. CIV. PRAC. & REM. CODE ANN. § 16.003(a) .............................................TAB 1 Service Agreement ............................................................................................TAB 2 Collateral Recovery Agreement ........................................................................TAB 3 Affidavit of Karen C. Burgess ..........................................................................TAB 4 vi TAB 1 § 16.003. Two-Year Limitations Period, TX CIV PRAC & REM § 16.003 Vernon's Texas Statutes and Codes Annotated Civil Practice and Remedies Code (Refs & Annos) Title 2. Trial, Judgment, and Appeal Subtitle B. Trial Matters Chapter 16. Limitations Subchapter A. Limitations of Personal Actions (Refs & Annos) V.T.C.A., Civil Practice & Remedies Code § 16.003 § 16.003. Two-Year Limitations Period Effective: September 1, 2005 Currentness (a) Except as provided by Sections 16.010, 16.0031, and 16.0045, a person must bring suit for trespass for injury to the estate or to the property of another, conversion of personal property, taking or detaining the personal property of another, personal injury, forcible entry and detainer, and forcible detainer not later than two years after the day the cause of action accrues. (b) A person must bring suit not later than two years after the day the cause of action accrues in an action for injury resulting in death. The cause of action accrues on the death of the injured person. Credits Acts 1985, 69th Leg., ch. 959, § 1, eff. Sept. 1, 1985. Amended by Acts 1995, 74th Leg., ch. 739, § 2, eff. June 15, 1995; Acts 1997, 75th Leg., ch. 26, § 2, eff. May 1, 1997; Acts 2005, 79th Leg., ch. 97, § 3, eff. Sept. 1, 2005. Editors' Notes REVISOR'S NOTE 2002 Main Volume (1) The revised law omits the reference to firms and public and private corporations in the source law. The Code Construction Act (V.A.C.S. Article 5429b-2) includes business entities and governmental entities within the definition of “person.” (2) The revised law omits the source law material that provides for suits to be brought within two years of the effective date of V.A.C.S. Article 5526a (March 7, 1934) because the two-year period has expired. Notes of Decisions (2559) V. T. C. A., Civil Practice & Remedies Code § 16.003, TX CIV PRAC & REM § 16.003 Current through the end of the 2013 Third Called Session of the 83rd Legislature End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 TAB 2 ,·~vv.J.uh.m..li.'"n"'' • Agerioy .a·J~re~~s.~~?:?perty in accordancewithapplicable state. laws. 4S8684!B. 09803765 Redshift 083 148 III. Impounds a. Vehicles located at Tow Company with bailout fees must be approved before pickup. b. It is always appreciated if bailout fees can be fronted for prompt recovery, . however if agents policies do not comply then RSI will next day air bailout amount. c. All authorized fees are required to have a bailout receipt that matches the amount approved and billed. IV. Keys a. Regular keys are included in the standard repossession fee, unless agents key charge is pre~approved. Security keys are only made with client's approval. b. Keys charges of any kind will not be paid ifnot pre-approved. V. Mileage a. Mileage can only be paid if pre-approved with name and date or representative in writing; email is an acceptable fonnat. VI. Finders Fees a. Finders fees are sometimes an effective way to recover a vehicle however they can only be approved by the client. · b. Finders fee.s will not be paid if not pre-approved VII. Releasing Vehicles a. Agent can only release/redeem a vehicle to the debtor with written permission from RSI or its client. · VIII. Transport and Storage a. RSI will send transpoti instructions. {See line XL Fee Schedule for rates). b. If vehicle is on agent's lot for more than 30 days without instructions to trnnsport or hold then agent must notify RSI in an email of stored vehicle. Email address: info{a)Jedshi ftinvesti gation.com. c. Storage agent approves 10 free days of storage to all clients. d. Storage fee to client is $8.00 per day starting on the (11) eleventh day. i. Exception L VW Credit/Audi Financial is $7.00 per day starting on the (11) eleventh day. IX. Closing Assignments a. Only when approved by RSl- most assignments are on a contingent basis however if close fee has been approved the amount is $75.00 unless pre-approved for a higher amount. b. If you have reached a dead end and want to close the assignment it still must be approved by RSI or client. · c. If not authorized then the assignment can only be suspended in your system and RSI will advise when the client has authorized the close for billing. d. Close fees of any kind will not be paid if not approved. X. Accounting Procedures a. Invoice RSI immediately following the repossession within 24 hours. Invoices should be sent either fax or scanned and emailed. DO NOT MAIL INVOICES. i. Fax number: 707-452-8650 ii. Email address: info@redshiftinvestigation.com 45868417.3 09803765 A-2 Redshift 084 149 b. lnyoices should. include: RSI.accountnwnber•. full debtor name; vehicle information, and last.six.ofVIN#. · · c. Subini.t Invoices :ih a tirtiely.m~~er. AnY invoice sent oyer 9.0 days from the time of~pqssession cannot and willnot be paid. XI. Fee Schedtile: a. Standar:tfRepossession F.ee .............................. $350.00 L Exceptions · 1. Carmax ................ ~ ........................ $·325.00 2, VW Credit/Aqdi Finan,ciaJ., .:~ .....•..$325. .00 b. Close Fee ......... "'" .............. ·.·.·~·~~.··· .......~ . ~ ··11:·· '·~ ~ .... :.:.~ ~·~C<:>ntingent · i •. '!;!';.• i. Exceptions · L VW Credit/Audi Pinimqial .................. $75.00 2. Pre-approved.Close·Fee..................more than $75.00 c. Transpe>I1!Delivery Fee......... ~ ........ , .................pre-approved only .i. Exceptions . I.. Carmax (within 50 miles) ...............up to $75.00 2. Carmax (oyer 50 miles)....•.....~ .• 1 ..... ,pre~~pp:rQv~d only d.. Miletige Fee.................................... ;, ............. pre-approved only .e. Key_ Fee . ".~· •:•· ".~ ......... a, .. ~ ..... •·.t: ~ -:;.,:., !' ..• ,.~ ~····" olio, ................. ·pre-approved Otily ••• . . . . . . . . II' . . . . . . . . • f.. Finders: Fee ............................................ ·~ .~ ......pre-approved only 4S868417.3098Q3765 A:-3 Redshift 085 150 Exhibit B Notification Report Recovery Company: Client: Debtor: Recovered by: _ _ _ _ _ Recovery Address: _ _ _ _--"-_ _ _ _ _ _ __ Recovery Date: Account#: ----~--------- W/0# -------- Year:_____ Make:_______ Model:_ _ _ _ _ _ _ _ __ Color: _ _ _ _ _ Runs:_ _ _ _ _ _ _..,... Keys:_ _ _ _ _ _ _ _ _ __ Tags: License:_ _ _ _ _ _ _ Property in Vehicle: _ _ _ _ __ Tow Dolly Agency:_ _ _ _ _ _ _ _ _ _ _ _ _ _ Phone: _ _ _ _ _ _ _ _ __ Notification Date & Time: Badge#:_ _ _ _ _ _ _ _ __ Storage ,_,v.._,.... ~'"·----------------···----------- Notes:_ _ _ _~-----------,---~------------- 458684173 09803765 B-1 Redshift 086 151 get_fi le_secure.php https:/iwww.masterqueue.com/get_file:_secure.php"type=osa&id=JO... lN. WJTNESS WHEREOF, \he Parties hereto hava executed this .Agreement / My Commission Expires ~,.,~r,;;,\~~ . . :- September 22, 2015 AFFIDAVIT OF KAREN C. BURGESS Page 2