Mandamus Relief Granted in Home Construction Dispute: Arbitration Clauses Upheld, Study Guides, Projects, Research of Law

Download Mandamus Relief Granted in Home Construction Dispute: Arbitration Clauses Upheld and more Study Guides, Projects, Research Law in PDF only on Docsity! IN THE SUPREME COURT OF TEXAS 444444444444 NO. 03-1080 444444444444 IN RE U.S. HOME CORPORATION, LENNAR CORPORATION, DAVID GARCIA, FABIAN DIAZ AND SHELDON MOORE, RELATORS 4444444444444444444444444444444444444444444444444444 ON PETITION FOR WRIT OF MANDAMUS 4444444444444444444444444444444444444444444444444444 PER CURIAM Two couples brought claims on behalf of themselves and others similarly situated alleging their homes were built without shower pans. They concede their contracts contained broad arbitration clauses governed by the Federal Arbitration Act, and do not dispute that their claims fall within the scope of those clauses. Instead, they raise seven contract defenses to enforcement, five of which the trial court cited in refusing to compel arbitration. As there is no evidence to support any of the seven grounds, we conditionally grant mandamus relief. See In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005) (“Mandamus relief is proper to enforce arbitration agreements governed by the FAA.”). In the sales contracts Luis and Norma Cano and Mark and Gloria Schlatter signed with U.S. Home Corporation, the parties agreed to mediate and arbitrate all controversies that might arise related to the agreement: Any controversy or claim arising under or related to this Agreement . . . shall be determined by mediation or by binding arbitration as provided by the Federal The individual defendants are David Garcia, Fabian Diaz, and Sheldon Moore. The plaintiffs also sued Bill1 Armstrong and Adalberto Gutierrez, neither of which has apparently answered, and thus are not parties in this proceeding. 2 Arbitration Act (9 U.S.C. Sections 1–14) and similar state statutes and not by a court of law. The claim will first be mediated in accordance with the Commercial or Construction Industry Arbitration Rules, as appropriate, of the American Arbitration Association. If not resolved by mediation, the claim will be settled in accordance with the Commercial or Construction Industry Arbitration Rules, as appropriate, of the American Arbitration Association . . . . Written warranties for both homes also provided for arbitration (but not mediation) of any disputes about whether warranty repairs were necessary. Several years after closing, the buyers asserted that a shower in each home had no pan or lining, and alleged claims for repairs, mold remediation, medical bills, and mental anguish. Finding U.S. Home’s remediation plan inadequate, they filed suit in Cameron County against U.S. Home, Lennar Corporation, and three U.S. Home employees. The defendants moved to compel arbitration,1 and the plaintiffs moved to certify their class claims. The trial court denied the former and granted the latter in a half-day hearing. First, the trial court found the arbitration clauses were contracts of adhesion and thus procedurally unconscionable. “Adhesion contracts are not automatically unconscionable, and there is nothing per se unconscionable about arbitration agreements.” In re AdvancePCS Health L.P., 172 S.W.3d 603, 608 (Tex. 2005) (per curiam); see also In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 678 (Tex. 2006). Here, the plaintiffs proved only that U.S. Home refused to contract with them unless they agreed to arbitration. This is not enough. Palm Harbor, 195 S.W.3d at 678–79; 5 1115–16 (2d Cir. 1977) (holding contract that provided “parties may submit to arbitration . . . upon written request of either party” did not make arbitration optional). U.S. Home having done so, the Canos could not opt out thereafter. Additionally, on appeal the plaintiffs argue they do not have to arbitrate with the individual defendants, as only U.S. Home signed the agreement. Assuming this argument can be raised for the first time on appeal, we find it without merit. None of these individuals had a duty to supply shower pans but for the plaintiffs’ contracts with U.S. Home. “[A] litigant who sues based on a contract subjects him or herself to the contract’s terms.” In re FirstMerit Bank, N.A., 52 S.W.3d 749, 755 (Tex. 2001). As the nonsignatories’ liability arises from and must be determined by reference to the parties’ contract rather than general obligations imposed by law, the suit is subject to the contract’s arbitration provisions. In re Weekley Homes, L.P., 180 S.W.3d 127, 131–32 (Tex. 2005); see also In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 762 (Tex. 2006) (“When contracting parties agree to arbitrate all disputes ‘under or with respect to’ a contract (as they did here), they generally intend to include disputes about their agents’ actions . . . .”). Finally, the defendants request that we reverse the trial court’s class certification order as well, pointing out that the United States Supreme Court has expressly held an arbitration clause covering “all disputes relating to a contract” includes disputes about class certification. See Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 451 (2003). As the certification order is apparently pending but abated in the Thirteenth Court of Appeals, we decline the invitation as premature. Accordingly, without hearing oral argument, TEX. R. APP. P. 52.8(c), we conditionally grant relators’ petition for writ of mandamus and direct the trial court to grant their motion to compel 6 arbitration. We are confident the court will comply promptly, and our writ will issue only if it does not. OPINION DELIVERED: October 12, 2007