Opinion issued December 13, 2016
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-15-01073-CV
———————————
PATRICIA ROCHA, Appellant
V.
MARKS TRANSPORT, INC. D/B/A AUTONATION TOYOTA GULF
FREEWAY, Appellee
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2015-34045
OPINION
Plaintiff-appellant Patricia Rocha sued defendant-appellee Marks Transport,
Inc. d/b/a AutoNation Toyota Gulf Freeway (“the dealership”) over injuries she
allegedly sustained when she slipped and fell in the waiting area of the dealership.
This is an appeal from the trial court’s final judgment granting the dealership’s
motion to compel binding arbitration of Rocha’s premises liability claim and
dismissing Rocha’s suit.
Plaintiff argues that there was no basis for the trial court compel arbitration
because it was her husband, rather than her, that signed a contract with defendant
agreeing to arbitrate certain disputes. She acknowledges that an arbitration clause
can be enforced against a non-signatory through the theory of direct-benefit
estoppel, but contends that this theory does not apply here, and that, even if it did,
her claims fall outside the scope of the arbitration agreement.
The dealership concedes that it was error for the trial court to dismiss
Rocha’s claims, but argues that we are otherwise without jurisdiction to reach the
merits of Rocha’s appeal. Alternatively, it argues that the trial court’s order
compelling arbitration was correct.
We vacate the portion of the trial court’s judgment dismissing Rocha’s
claims, reverse the trial court’s order compelling arbitration of Rocha’s claims, and
remand to the trial court for further proceedings.
JURISDICTION
The dealership concedes that the portion of the trial court’s order dismissing
Rocha’s claims is incorrect. But, in both its appellee’s brief and in a separate
motion to dismiss filed here, it argues that “[w]hile this Court has jurisdiction to
review dismissal of the case in favor of [dealership], the Court does not have
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jurisdiction to review the order compelling arbitration under this Court’s well-
established precedent.” The dealership cites a string of cases in support, but relies
primarily on this Court’s decision in Brooks v. Pep Boys Automotive Supercenters,
104 S.W.3d 656 (Tex. App.—Houston [1st Dist.] 2003, no pet).
The arbitration clause in the contract between Rocha’s husband and the
dealership is governed by the Federal Arbitration Act (FAA). Brooks also
involved an arbitration clause governed by the FAA and presented a situation
indistinguishable from the one in the case. 104 S.W.3d at 658–59. In Brooks, as
here, the trial court (1) compelled arbitration of the plaintiff’s claims against the
defendant, and (2) dismissed the plaintiffs’ case. Brooks, 104 S.W.3d at 658.
On appeal, we noted that, “to the extent that the trial court dismissed [the
plaintiff’s] entire case, the trial court’s order is reviewable as an appeal from a final
judgment.” Id. at 659. We then concluded such dismissal was erroneous, because
“[i]f a trial court concludes that the parties have established an agreement to
arbitrate under the FAA and that the claims to be arbitrated are within the scope of
the agreement, a Texas trial court ‘has no discretion but to compel arbitration and
stay its proceedings pending arbitration.’” Id. at 659–60 (quoting Cantella v.
Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (emphasis added)). Accordingly, we
vacated the portion of the trial court’s judgment that dismissed the plaintiff’s case.
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Pointing out the interlocutory nature of the order compelling arbitration, we
refused, however, to address the plaintiff’s arguments that the trial court’s
compelling arbitration was erroneous. Id. at 660–61. (“An order compelling
arbitration under the FAA is neither a final disposition, nor expressly authorized by
any of the provisions of the Civil Practice and Remedies Code that permit
interlocutory appeals.”); see also J.C. Viramontes, Inc. v. Novoa, No. 08-08-
00342-CV, 2009 WL 224963, at *1 (Tex. App.—El Paso Jan. 30, 2009, no pet.)
(mem. op.) (“An order compelling arbitration is not a final order, nor is it an order
from which an interlocutory appeal can be taken.”). Instead, we vacated the
portion of the trial court’s order dismissing the plaintiff’s claims and dismissed his
appeal “to the extent he challenges the portion of the trial court’s order that
compelled arbitration.” Brooks, 104 S.W.3d at 661. The dealership argues that,
under Brooks we should vacate the portion of the court’s judgment dismissing
Rocha’s claims and remand without considering whether the trial court’s
compelling arbitration was erroneous.
While Brooks io on point and has not been expressly overruled, it is at odds
with a more recent Texas Supreme Court opinion not cited by either party or by
cases following Brooks. In Childers v. Advanced Foundation Repair, L.P., the
supreme court reversed a court of appeals’s judgment dismissing an appeal for lack
of jurisdiction. 193 S.W.3d 897, 897–98 (Tex. 2006) (per curiam). As in this case
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and in Brooks, the trial court in that case had (1) compelled arbitration of the
plaintiff’s claims under the FAA, and (2) dismissed the plaintiff’s claims. Id. at
897. The court of appeals held it was without jurisdiction over an appeal from the
trial court’s judgment, characterizing the trial court’s judgment as an interlocutory
order reviewable only by mandamus. Childers v. Advanced Foundation Repairs,
221 S.W.3d 90, 93 (Tex. App.—Corpus Christi 2005, rev’d by 193 S.W.3d 897
(Tex. 2006). The supreme court reversed the court of appeals’ judgment, holding
that the trial court’s order compelling arbitration and dismissing the plaintiff’s
claims was final, and “remand[ing] to the court of appeals to consider the merits”
of the plaintiff’s appeal. Childers, 193 S.W.3d at 898. On remand, the court of
appeals addressed the merits of the plaintiff’s argument that the trial court erred in
compelling arbitration and affirmed the trial court’s order. Childers v. Advanced
Foundation Repairs, L.P., No. 13-04-00193-CV, 2007 WL 2019755, at *3 (Tex.
App.—Corpus Christi July 12, 2007, no pet.) (mem. op.).
Childers and the cases following it are controlling here. Thus, while we
agree with both parties that it was error for the trial court to dismiss Rocha’s
claims, we deny the dealership’s motion to dismiss Rocha’s challenge to the trial
court’s order compelling arbitration. See, e.g., In re Gulf Expl., LLC, 289 S.W.3d
836, 838 (Tex. 2009) (orig. proceeding) (“We too have adopted this rule: “Courts
may review an order compelling arbitration if the order also dismisses the
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underlying litigation so it is final rather than interlocutory.”); Small v. Specialty
Contractors, Inc., 310 S.W.3d 639, 642 (Tex. App.—Dallas 2010, no pet.)
(“Courts may review an order compelling arbitration if the order also dismisses the
entire case and is therefore a final, rather than interlocutory, order.”).
ARBITRATION
Rocha’s June 12, 2015 Original Petition recites the following as the facts
giving rise to her premises liability claim against the dealership:
Plaintiff was a customer getting her car serviced at AutoNation
Toyota Gulf Freeway, located at 12111 Gulf Freeway, Building B,
Houston, Harris County, Texas. Plaintiff was in the waiting area, on
her way to the ladies bathroom when she slipped and fell due to a
liquid substance on the floor. Said premises at all times material
hereto was owned, operated and/or maintained by Defendants. As a
result of this incident, Plaintiff suffered personal injuries.
In the dealership’s answer, it states: “Upon information and belief, an
Arbitration Agreement exists between Plaintiff and Defendant and the claims
asserted by Plaintiff are within the scope of that agreement.” The dealership also
filed a motion to compel arbitration and for stay or dismissal of litigation. In that
motion, the dealership contended that Rocha’s claims were subject to arbitration
through an arbitration clause contained within the sales and finance contract
entered into between Rocha’s husband, Jose, and the dealership when Jose
purchased a vehicle from the dealership. That clause provides:
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1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY
DISPUTE BETWEEN US DECIDED BY ARBITRATION AND
NOT IN COURT OR BY JURY TRIAL.
2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR
RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE
OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY
HAVE AGAINST US INCLUDING ANY RIGHT TO CLASS
ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL
ARBITRATIONS.
3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION
ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT,
AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE
IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.
Any claim or dispute, whether in contract, tort, statute or otherwise
(including the interpretation and scope of this Arbitration Clause, and
the arbitrability of the claim or dispute), between you and us or our
employees, agents, successors or assigns, which arises out of or
relates to your credit application, purchase or condition of this vehicle,
this contract or any resulting transaction or relationship (including any
such relationship with third parties who do not sign this contract)
shall, at your or our election, be resolved by neutral, binding
arbitration and not a court action.
....
Any arbitration under this Arbitration Clause shall be governed by the
Federal Arbitration Act (9 U.S.C. § 1 et. al.) and not by any state law
concerning arbitration
....
The dealership’s motion was accompanied by the dealership’s General
Manager’s affidavit. It authenticated the attached copy of the sales contract
between Jose and the dealership as a business record, stated that he was
“personally acquainted with the facts herein stated and they are true and correct”
and that:
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4. AutoNation Toyota is a retailer of new and used vehicles in
Houston, Texas. On or about June 1 of 2012, AutoNation Toyota
sold the Vehicle to Plaintiffs husband, which transaction is set
forth in the Contract. In connection with the Contract, the parties
executed an Arbitration Agreement. The Arbitration Agreement
specifically stales that the transaction is subject to the Federal
Arbitration Act (“FAA”). Plaintiff is not a signatory to the
Arbitration Agreement.
5. Pursuant to the Arbitration Agreement, Jose Rocha, Jr. agreed
“Either you or we may choose to have any dispute between us
decided by arbitration and not in court or by-jury trial.” Pursuant to
the Arbitration Agreement, claims subject to arbitration include
“Any claim or dispute, whether in contract, tort, statute or
otherwise (including the interpretation and scope of this
Arbitration Clause, and the arbitrability of the claim or dispute),
between you and us or our employees, agents, successors or
assigns, which arises out of or relates to your credit application,
purchase or condition of this vehicle, this contract or any resulting
transaction or relationship (including any such relationship with
third parties who do not sign this contract) shall, at your or our
election, be resolved by neutral, binding arbitration and not a court
action.
6. On or about June 12, 2015, Plaintiff filed a lawsuit against
AutoNation Toyota containing claims that arose from transactions
or relationships that resulted from Jose Rocha, Jr.’s purchase of the
Vehicle and the Contract. These claims specifically fall within the
defined claims under the Arbitration Agreement.
Rocha responded to the dealership’s motion to compel arbitration by arguing
that (1) her claims do not fall within the scope of the arbitration agreement, and (2)
direct-benefit estoppel does not apply to claims not covered by an arbitration
agreement.
The dealership responded by producing additional evidence: (1) a recording
of Rocha referring to her husband’s vehicle as “my car,” and (2) a receipt
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identifying Jose as the customer having work performed on his vehicle on the day
of Rocha’s slip-and-fall injury and indicating it was warranty-covered work on a
broken seat belt. The trial court granted the dealership’s motion to compel, and
dismissed Rocha’s claims.
A. Standard of Review and Applicable Law
“Generally, we review a trial court’s decision to grant or deny a motion to
compel arbitration under an abuse of discretion standard.” Enter. Field Servs., LLC
v. TOC–Rocky Mountain, Inc., 405 S.W.3d 767, 773 (Tex. App.—Houston [1st
Dist.] 2013, pet. denied). Under this standard, we defer to a trial court’s factual
determinations if they are supported by evidence, but we review a trial court’s
legal determinations de novo. In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643
(Tex. 2009) (orig. proceeding). Whether a valid arbitration agreement exists and
whether the arbitration agreement is ambiguous are questions of law that we
review de novo. In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006)
(orig. proceeding).
A party seeking to compel arbitration must establish (1) the existence of a
valid, enforceable arbitration agreement and (2) that the claims at issue fall within
that agreement’s scope. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737
(Tex. 2005) (orig. proceeding). If the movant establishes that an arbitration
agreement governs the dispute, the burden shifts to the party opposing arbitration
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to establish a defense to the arbitration agreement. In re Provine, 312 S.W.3d 824,
829 (Tex. App.—Houston [1st Dist.] 2009, orig. proceeding) (citing In re
Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (orig.
proceeding)). Once the movant establishes a valid arbitration agreement
encompassing the claims at issue, a trial court has no discretion to deny the motion
to compel arbitration unless the opposing party proves a defense to arbitration. Id.
(citing In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753–54 (Tex. 2001) (orig.
Proceeding)).
Because state and federal policies favor arbitration, courts must resolve any
doubts about an arbitration agreement’s scope in favor of arbitration. In re
FirstMerit Bank, 52 S.W.3d at 753. 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.
America Prod. Co., 97 S.W.3d 366, 371 (Tex. App.—Houston [14th Dist.] 2003,
orig. proceeding).
“Generally, only signatories to an arbitration agreement are bound by the
agreement.” Elgohary v. Herrera, 405 S.W.3d 785, 790 (Tex. App.—Houston [1st
Dist.] 2013, no pet.). “While non-signatories to an arbitration agreement can be
bound to arbitrate under principles of contract and agency law, such issues—
dealing as they do with non-signatories—are gateway ‘issues of arbitrability’ that
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the courts are primarily responsible for deciding—not the arbitrator.” Id. at 791
(citing Roe v. Ladymon, 318 S.W.3d 502, 515 (Tex. App.—Dallas 2010, no pet.);
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S. Ct. 588, 592
(2002)).
The doctrine of direct-benefits estoppel requires a non-signatory to arbitrate
a claim “if it seeks, through the claim, to derive a direct benefit from the contract
containing the arbitration provision.” In re Vesta Ins. Grp., Inc., 192 S.W.3d 759,
761 (Tex. 2006) (orig. proceeding) (citing In re Kellogg Brown & Root, Inc., 166
S.W.3d 732, 741 (Tex.2005)). “While the boundaries of direct-benefits estoppel
are not always clear, non-signatories generally must arbitrate claims if liability
arises from a contract with an arbitration clause, but not if liability arises from
general obligations imposed by law.” Weekley, 180 S.W.3d at 130, 134. The
doctrine also applies if a party “deliberately seeks and obtains substantial benefits
from the contract” containing the arbitration clause. Id. at 132.
B. Analysis
In arguing that the trial court’s granting of its motion to compel arbitration
was correct, the dealership relies exclusively on the supreme court’s decision in
Weekley. In that case, addressing an issue of first impression, the supreme court
held that—on the facts presented—a non-signatory to a contract containing an
11
arbitration clause could be compelled through the theory of direct-benefits estoppel
to arbitrate a personal-injury claim. Weekley, 180 S.W.3d at 129.
In Weekley, Forsting (a 78-year-old widower with “an assortment of health
problems”) contracted with Weekley to construct a 4,000 square-foot house for the
purpose of living in the house with his only child, Von Bargen, and her husband
and three children. Id. It was Von Bargen and her husband, rather than Forsting,
that paid the deposit, signed the letter of intent as “purchasers,” selected the floor
plan, negotiated issues with Weekly before and after construction, and made the
custom design choices. Id. Only Forsting, however, executed the various
financing and closing documents, including a Real Estate Purchase Agreement
containing an arbitration clause:
Any claim, dispute or cause of action between Purchaser and Seller. . .
, whether sounding in contract, tort, or otherwise, shall be resolved by
binding arbitration. . . . . Such claims, disputes or causes of action
include, but are not limited to, those arising out of or relating to. . . the
design, construction, preparation, maintenance or repair of the
Property.
Id.
Although Forsting signed the purchase agreement in his individual capacity,
his intent was to purchase the property as agent for a family trust for which he and
Von Bargen and were the only trustees, and Von Bargen was the only beneficiary.
Id. The purpose of the trust was to effectuate the transfer of the property to Von
12
Bargen upon Forsting’s death. Id. Forsting transferred the property into the family
trust shortly after the purchase. Id.
According to a petition filed against Weekly by Forsting, Von Bargen, and
the family trust, numerous problems arose with the house after completion. Id.
When the family moved out of the home so Weekley could perform some repairs,
Von Bargen is the one who requested and received reimbursement. Id. She
acknowledged handling “almost . . . all matters related to the house, the problems
and the warranty work and even the negotiations.” Id. In their petition, Forsting
and the family trust asserted claims for negligence, breach of contract, statutory
violations, and breach of warranty. Id. Von Bargen sued only for personal injuries,
alleging Weekley’s negligent repairs caused her to develop asthma. Id.
The trial court granted Weekley’s motion to compel arbitration under the
FAA as to claims by Forsting and the family trust, but denied it as to Von Bargen’s
personal-injury claim because she was not a signatory to the purchase contract
containing the arbitration agreement. Id. The supreme court granted Weekley’s
request for mandamus relief, holding that the trial court erred in failing to compel
arbitration of Von Bargen’s claim. Id. at 129–30.
The supreme court noted that Von Bargen advocated for a rule that would
bind non-signatories to a contract with an arbitration clause only if the non-
signatory brought contract claims; in contrast, Weekly argued for a broad
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application to any claim that “arises from or relates to” the contract containing the
arbitration clause. Id. at 131. The supreme court noted it had adopted an
“approach between these two extremes, holding that a nonparty may be compelled
to arbitrate ‘if it seeks, through the claim, to derive a direct benefit from the
contract containing the arbitration provisions.’” Id. (quoting Kellogg, 166 S.W.3d
at 741).
Applying this standard, the court held that holding Von Bargen to the
contract’s arbitration obligation was warranted on these facts:
Here, Von Bargen has not merely resided in the home. Claiming the
authority of the Purchase Agreement, she directed how Weekley
should construct many of its features, repeatedly demanded extensive
repairs to “our home,” personally requested and received financial
reimbursement for expenses “I incurred” while those repairs were
made, and conducted settlement negotiations with Weekley
(apparently never consummated) about moving the family to a new
home. Having obtained these substantial actions from Weekley by
demanding compliance with provisions of the contract, Von Bargen
cannot equitably object to the arbitration clause attached to them.
In addition to these benefits, Forsting and the Trust have sued
Weekley on claims which are explicitly based on the contract. Under
Texas law, a suit involving a trust generally must be brought by or
against the trustee, and can be binding on the beneficiaries whether
they join it or not. Although Von Bargen did not purport to sue as
either trustee or beneficiary, she was both, and any recovery will inure
to her direct benefit as the sole beneficiary and equitable titleholder of
the home. As one Texas court has noted, if a trustee’s agreement to
arbitrate can be avoided by simply having the beneficiaries bring suit,
“the strong state policy favoring arbitration would be effectively
thwarted.”
....
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Direct-benefits estoppel requires a colorable claim to the benefits; a
meddlesome stranger cannot compel arbitration by merely pleading a
claim that quotes someone else’s contract. . . . . [W]e agree with the
federal courts that when a nonparty consistently and knowingly insists
that others treat it as a party, it cannot later “turn[ ] its back on the
portions of the contract, such as an arbitration clause, that it finds
distasteful.” A nonparty cannot both have his contract and defeat it
too.
While Von Bargen never based her personal injury claim on the
contract, her prior exercise of other contractual rights and her
equitable entitlement to other contractual benefits prevents her from
avoiding the arbitration clause here . . . .
Id. at 133 (citations omitted).
The dealership argues that “the facts of this case are analogous to those in
Weekly Homes” because Rocha is Jose’s wife and brought Jose’s car to the
dealership for warranty work, “taking advantage of the contractual relationship
between her husband and AutoNation Toyota.” It also urges us to take her
referring to Jose’s vehicle as “my car” is a judicial admission. The dealership
contends that under direct-benefits estoppel, Rocha “cannot demand AutoNation
Toyota’s compliance with contractual obligations to repair the Vehicle under
warranty and then seek to avoid the Arbitration Clause simply because she did not
sign it.”
The dealership also argues that the arbitration clause is broad enough to
cover Rocha’s claims. It relies on the following clause: “Any claim or dispute,
whether in contract, tort, statute or otherwise . . . which arises out of or relates to . .
. this contract or any resulting transaction or relationship (including any subsequent
15
relationship with third-parties who do not sign this contract) shall . . . . be resolved
by neutral, binding arbitration.” (emphasis added). Because her tort claim is based
on injuries sustained on the dealership’s premises while Jose’s vehicle was being
serviced, the dealership insists that her claim falls within the scope of the clause.
Rocha responds that “in stark contrast to the plaintiff in Weekley, here,
Rocha’s claims are not in any way derived from her husband’s contract with the
dealership, but instead through a common tort law claim.” She relies upon the
supreme court’s admonishment that “although a non-signatory’s claim may relate
to a contract containing an arbitration provision, that relationship does not, in itself,
bind the non-signatory to the arbitration provision.” (citing Kellogg, 166 S.W.3d at
741). Rocha contends that she “sustained personal injuries as a direct and
proximate result of a dangerous condition of the premises,” rather than any defect
or dangerous condition related to the vehicle or its repairs. And, finally, she points
out that “the often invoked ‘policy in favor of arbitration agreements’ does not
apply when a court is a examining the threshold question of whether an arbitration
agreement exists.” (citing Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S.
287, 302, 130 S. Ct. 2847, 2859 (2010); Morrison v. Amway Corp., 517 F.3d 248,
254 (5th Cir. 2008); In re Morgan Stanley & Co., 293 S.W.3d 182, 185 (Tex.
2009).
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We agree with Rocha that her personal-injury claim and its relationship to
her husband’s contract with the dealership is distinguishable from the plaintiff’s
personal-injury claim and its relationship with the home construction contract
presented in Weekley. As the supreme court in Weekley explained,
Under both Texas and federal law, whether a claim seeks a direct
benefit from a contract containing an arbitration clause turns on the
substance of the claim, not artful pleading. Claims must be brought on
the contract (and arbitrated) if liability arises solely from the contract
or must be determined by reference to it. On the other hand, claims
can be brought in tort (and in court) if liability arises from general
obligations imposed by law.
Weekley, 180 S.W.3d at 132. Under this formulation, Rocha is not bound through
direct-benefits estoppel because her complaint that hazardous conditions existed on
the dealership’s premises does not involve a duty or liability arising from her
husband’s purchase contract, liability will not be determined by reference to that
contract, and the claim arises from general obligations to keep premises safe.
This is not to say that there are not circumstances under which a tort claim
by a non-signatory to an arbitration agreement arising from general duties and
obligations under the law (rather than a contract) is nonetheless subject to
arbitration through the theory of direct-benefits estoppel. Indeed, the supreme
court in Weekley held the non-signatory plaintiff bound by her father’s obligation
to arbitrate claims even though the plaintiff brought a personal-injury tort claim
and did not sue under the contract containing the arbitration clause. 180 S.W.3d at
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133. The court began by noting that “[w]hile Weekley’s duty to perform those
repairs [upon which the plaintiff’s personal injury claim was based] arose from
[her father’s] Purchase Agreement, a contractor performing repairs has an
independent duty under Texas tort law not to injure bystanders by its activities, or
by premises conditions it leaves behind.” Id. at 132. It explained, however, that—
for purposes of direct-benefit estoppel—“a nonparty may seek or obtain direct
benefits from a contract by means other than a lawsuit,” and, in “some cases, a
nonparty may be compelled to arbitrate if it deliberately seeks and obtains
substantial benefits from the contract itself. “ Id.
Given all the factors that went into the Weekley court’s decision compelling
arbitration of the non-signatory plaintiff’s tort claim demonstrates that applying
direct-benefits estoppel to compel arbitration of a tort claim that does not rely
upon—or require reference to—the contract containing the arbitration clause is the
exception, not the rule. And Rocha’s is not such an exceptional claim.
The dealership insists that because Rocha referred to the vehicle her husband
purchased as “my car,” she has judicially admitted that she was the primary driver
and, thus, a beneficiary of the contract between her husband and the dealership.
Without regard for whether the record supports this inference, Weekley would not
bind her to the arbitration clause in her husband’s contract merely because she
drives the car. In fact, the Weekley court took pains to point out that the plaintiff in
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that case “had not merely resided in the home.” Id. at 133. In addition, she (1)
claimed authority under her father’s purchase contract, (2) directed Weekly on
custom features and “repeatedly demanded extensive repairs, (2) “personally
requested and received” reimbursements from Weekley, and (3) conducted
settlement negotiations with Weekley. Id. In addition, the supreme court noted
that plaintiff’s father and the family trust sued “on claims which are explicitly
based on the contract.” Id. Given that the plaintiff is co-trustee and sole
beneficiary of the family trust, the court expressed concern that allowing her to
avoid an arbitration clause that the trust was bound by when she was the sole
beneficiary of the trust would allow policies favoring arbitration to be thwarted.
Id. at 135.
Nonetheless, the court cautioned that direct-benefit estoppel does not “apply
when the benefits alleged are insubstantial or indirect,”; rather a non-signatory
must seek “substantial and direct benefits from the contract.” Id. at 134. It was the
plaintiff’s “prior exercise of other contractual rights and her equitable entitlement
to other contractual benefits” in Weekley that prevented her from avoiding the
arbitration clause. Id.
While the dealership makes much of the fact that Rocha was only at the
dealership because warranty work was being performed on her husband’s vehicle,
the dealership’s duty to keep its premises safe (1) is unrelated to whether someone
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brings in their own car or another person’s car for repair, and (2) is unrelated to
whether the repair work is paid for or is free (pursuant to a warranty provided by
that dealership or by a manufacturer’s warranty on a vehicle purchased at that
dealership or a different dealership). In EnGlobal U.S.. Inc. v. Gatlin, the court
rejected the argument that direct-benefits estoppel applied to compel arbitration of
plaintiff’s premises liability claim against a company whose control over the
premises was pursuant to a contract containing a TAA arbitration clause. 449
S.W.3d 269, 280 (Tex. App.—Beaumont 2014, no pet.) The court reasoned that a
non-signatory to a contract “cannot be compelled to arbitrate on the sole ground
that, but for the contract containing the arbitration provision, [the plaintiff] would
have no basis to sue” in tort. Id. (citing Kellogg, 166 S.W.3d at 740). The Gatlin
court also rejected the argument that the plaintiff’s negligent-undertaking claim
was subject to arbitration for similar reasons. Id. at 282 (“The fact that the [non-
signatory plaintiff’s] negligent undertaking claim may ‘relate to’ the MSA
[containing the arbitration clause] in the sense that [the defendant] would not have
performed the undertaking but for the MSA does not, in itself, bind [the plaintiff]
to the arbitration clause in the MSA.”).
The dealership cites no cases other than Weekley in support of its claim that
Rocha’s personal injury claim is subject to arbitration. And our own research has
not revealed any cases applying direct-benefits estoppel to compel arbitration of a
20
non-signatory’s personal injury claim that has such an attenuated and gratuitous
connection to the contract under which the defendant seeks to compel arbitration.
The trial court abused its discretion by concluding Rocha was bound by the
arbitration clause. Thus we need not reach the issue of whether her personal injury
claim would fall within the scope of the arbitration clause were she bound by it.
CONCLUSION
We deny the dealership’s motion to dismiss the portion of Rocha’s appeal
challenging the trial court’s order compelling arbitration. We vacate the trial
court’s dismissal of Rocha’s claims, reverse the trial court’s order compelling
Rocha to arbitrate her claims, and remand the cause to the trial court for further
proceedings.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Jennings and Bland.
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