In re Greenpoint Credit, L.L.C.--Appeal from 79th Judicial District Court of Jim Wells County

No. 04-04-00794-CV

IN RE GREENPOINT CREDIT, L.L.C.

Original Mandamus Proceeding (1)

Opinion by: Sandee Bryan Marion, Justice

Sitting: Alma L. L pez, Chief Justice

Catherine Stone, Justice

Sandee Bryan Marion, Justice

Delivered and Filed: December 29, 2004

PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED

Real party in interest, Cindy Torres, purchased a manufactured home from relator, Greenpoint Credit, L.L.C., pursuant to a contract for purchase. When Torres became delinquent in her payments, Greenpoint filed suit for judicial foreclosure or payment in the amount of the indebtedness, plus attorney's fees. Torres answered and filed counterclaims against Greenpoint. Greenpoint moved to compel arbitration of Torres' counterclaims pursuant to an agreement to arbitrate contained within the contract for purchase. Following a hearing, the trial court denied the motion to compel arbitration. We conclude the trial court erred in denying the motion to compel arbitration; therefore, we conditionally grant the writ of mandamus. (2)

ANALYSIS

In her objection to Greenpoint's motion to compel arbitration, Torres did not deny the existence of the arbitration agreement. Instead, she based her objection on three grounds: (1) her counterclaims against Greenpoint are not within the scope of the agreement; (2) Greenpoint waived its right to arbitration by substantially invoking the judicial process; and (3) she was not given the opportunity to read the agreement, therefore, it is unconscionable. At the hearing on the motion to compel, Torres argued Greenpoint invoked the judicial process because it filed suit against her; she hired an attorney; she filed an answer and counterclaim; and she has been subjected to two continuances. At the conclusion of the hearing, the trial court stated it would deny the motion "for the sole reason that . . . [Greenpoint] invoked the judicial process." (3)

Public policy favors the resolution of disputes through arbitration; therefore, there is a strong presumption against waiver. In re Bruce Terminix Co., 988 S.W.2d 702, 704 (Tex. 1998) (orig. proceeding). The party seeking to avoid arbitration bears a heavy burden to prove waiver, and any doubts regarding waiver are resolved in favor of arbitration. Associated Glass, Ltd. v. Eye Ten Oaks Inv., Ltd., 147 S.W.3d 507, 514 (Tex. App.--San Antonio 2004, orig. proceeding). A party has waived arbitration if (1) the party has substantially invoked the judicial process; and (2) the opposing party has suffered prejudice as a result. See Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898-99 (Tex. 1995) (orig. proceeding); Associated Glass, 147 S.W.3d at 514.

Greenpoint asserts it did not waive its right to seek arbitration of Torres' counterclaims because its claim for judicial foreclosure was specifically excluded from the agreement to arbitrate. The agreement provides as follows:

Self-Help, Foreclosure, and Provisional Remedies. The provisions of this paragraph shall not limit any rights that you or I may have to exercise self-help remedies such as set-off or repossession, to foreclose by power of sale or judicially against or sell any collateral or security, or to obtain any provisional or ancillary remedies from a court of competent jurisdiction before, after or during the pendency of any arbitration under subparagraph (b) above. Neither the obtaining nor the exercise of any such remedy shall serve as a waiver of the right of either of you or me to demand that the related or any other dispute or controversy be determined by arbitration as provided above.

The policy favoring arbitration embodied in the FAA cannot trump the express agreement of the parties to exclude matters from arbitration. Volt Info. Sci., Inc. v. Board of Trustees, 489 U.S. 468, 478 (1989); Catholic Diocese v. A.G. Edwards & Sons, Inc., 919 F.2d 1054, 1056-57 (5th Cir. 1990). While the FAA leaves no place for discretion by a district court and directs instead that district courts shall require parties to proceed to arbitration, any ordered arbitration should encompass only those issues as to which an arbitration agreement has been signed. The purpose of the FAA is not to promote expeditious resolution of claims, but to ensure enforcement of privately made agreements to arbitrate. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985). We agree with Greenpoint that it did not substantially invoke the judicial process when it filed suit for judicial foreclosure because such a remedy was excluded from arbitration. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 757-58 (Tex. 2001) (holding that arbitration agreement's excepting claims protecting the bank's security interest, such as allowing bank to seek judicial relief to enforce its security agreement, recover the buyers' monetary loan obligation, and foreclose, was not unconscionable). Therefore, Greenpoint did not waive its right to arbitration of Torres' counterclaims.

Greenpoint established the existence of an arbitration agreement and Torres failed to establish any viable defenses to the arbitration provision. Therefore, the trial court erred by refusing to compel arbitration. The writ is CONDITIONALLY GRANTED. Tex. R. App. P. 52.8(c). The Honorable Richard C. Terrell is ORDERED to withdraw his October 4, 2004 "Order" denying Greenpoint L.L.C.'s motion to compel arbitration. If he does not do so within ten days of this order, we will issue the writ.

Sandee Bryan Marion, Justice

1. This proceeding arises out of Cause No. 03-02-41069, styled Greenpoint Credit, L.L.C. v. Cindy Torres, filed in the 79th Judicial District Court, Jim Wells County, Texas, the Honorable Richard C. Terrell, presiding.

2. The arbitration provision at issue here states "this Contract touches and concerns interstate commerce, [therefore] an arbitration under this Contract shall be conducted in accordance with the United State Arbitration Act . . . ." Mandamus is the proper means to review an order denying a motion to compel arbitration under the Federal Arbitration Act ("FAA"). In re American Homestar of Lancaster, Inc., 50 S.W.3d 480, 483 (Tex. 2001). Neither Cindy Torres, the real party in interest, nor the respondent filed responses to the petition for writ of mandamus.

3. Torres did not present any evidence in support of her arguments that her counterclaims were not within the scope of the arbitration agreement or that the agreement was unconscionable. However, we note that the arbitration agreement is broad and requires arbitration of "[a]ny controversy or claim . . . arising out of or relating to this Contract or any agreements or instruments relating to or delivered in connection with this Contract, including any claim based on or arising from an alleged tort . . . " Torres' allegations that Greenpoint violated the Texas Deceptive Trade Practices Act and the Texas Debt Collection Act in its attempt to collect the indebtedness she owed on the home, and that Greenpoint's unlawful debt collection practices caused her mental anguish and destroyed her credit and standing in the community clearly arise out of or relate to the contract for purchase of the manufactured home. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754-55 (Tex. 2001).