Alliance Auto Auction of Dallas, Inc. v. Lone Star Cleburne Autoplex, Inc. (Per Curiam)
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The Supreme Court reversed the trial court's denial of Defendant's motion to compel arbitration, holding that remand was required for reconsideration in light of this Court's holdings in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694 (Tex. 2023).
Lone Star Cleburne Autoplex filed this suit asserting that Alliance Auto Auctions of Dallas conspired with two of Lone Star's employees in order to embezzle money from Lone Star. Alliance moved to compel arbitration based on arbitration clauses contained in authorization agreements between Lone Star and a company Alliance used to verify and authorize car dealerships to buy and sell in the company's auctions. In opposing the motion Lone Star asserted that its claims fell outside the scope of the arbitration agreement. The trial court denied Alliance's motion to compel. The court of appeals affirmed. The Supreme Court reversed, holding that because the court of appeals decided this case without addressing arguments rejected in TotalEnergies, remand was required.
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Supreme Court of Texas No. 22-0191 Alliance Auto Auction of Dallas, Inc., Petitioner, v. Lone Star Cleburne Autoplex, Inc., Respondent On Petition for Review from the Court of Appeals for the Tenth District of Texas PER CURIAM Lone Star Cleburne Autoplex filed this suit asserting that Alliance Auto Auctions of Dallas conspired with two of Lone Star’s employees to embezzle money from Lone Star. Alliance moved to stay the suit and compel arbitration, relying on arbitration clauses contained in authorization agreements between Lone Star and AuctionACCESS, a company Alliance used to verify and authorize car dealerships to buy and sell in Alliance’s auctions. Alliance asserted that it can enforce the arbitration clauses as a third-party beneficiary of those agreements. Lone Star opposed the motion, contending its claims fall outside the scope of the arbitration agreement. The arbitration agreement is set forth in the terms and conditions incorporated into the authorization agreements. It requires that any controversy or claim related to the authorization agreements be resolved by binding arbitration “under the rules of the alternative dispute resolution (ADR) firm selected by the parties. If the parties are unable to agree to an ADR firm, the mediation/arbitration will be conducted under the rules and supervision of the American Arbitration Association (AAA).” The terms and conditions also include a clause designating any auction company that utilizes AuctionACCESS’s system (such as Alliance) as a third-party beneficiary of the agreement, permitting Alliance, “[a]t [its] election, and in [its] sole discretion, . . . to avail itself of any provision or protection in this Agreement.” The trial court denied Alliance’s motion to compel arbitration, and the court of appeals affirmed. ___ S.W.3d ___, 2022 WL 229511, at *1 (Tex. App.—Waco Jan. 26, 2022). Alliance argued on appeal that the trial court should not have determined whether Lone Star’s claims are subject to arbitration because the parties agreed that the arbitration would be conducted under the AAA rules, and those rules delegate such arbitrability issues to the arbitrator. The court of appeals did not address that argument, instead holding that the “question of whether a case should be sent to arbitration is a gateway issue that courts must decide at the outset of litigation.” Id. After Alliance filed its petition for review in this Court, we issued our decision in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694 (Tex. 2023). Contrary to the court of appeals’ broad holding here, we held in TotalEnergies that, “as a general rule, an 2 agreement to arbitrate in accordance with the AAA or similar rules constitutes a clear and unmistakable agreement that the arbitrator must decide whether the parties’ disputes must be resolved through arbitration.” Id. at 708. Moreover, “the fact that the parties’ arbitration agreement may cover only some disputes while carving out others does not affect the fact that the delegation agreement clearly and unmistakably requires the arbitrator to decide whether the present disputes must be resolved through arbitration.” Id. at 719. In light of our holdings in TotalEnergies, the court of appeals’ holding in this case— that arbitrability is always a “gateway issue that courts must decide at the outset of litigation”—is incorrect. Lone Star contends, however, that at least two features of this arbitration agreement distinguish it from the agreement we addressed in TotalEnergies and prevent this case from falling within the general rule we announced there. Specifically, Lone Star notes that (1) the parties here agreed to arbitrate under the AAA rules only if they are unable to agree on a different ADR firm and (2) Alliance is not a party to the arbitration agreement but is instead a third-party beneficiary that may, or may not, elect to invoke the arbitration agreement. Lone Star contends that these unique provisions prevent the agreement from “clearly and unmistakably” delegating arbitrability issues to the arbitrator. As noted, the court of appeals decided this case without addressing these arguments based on a broad rule that we later rejected in TotalEnergies. Accordingly, we grant Alliance’s petition for review, and, without hearing oral argument, see TEX. R. APP. P. 59.1, we reverse 3 the court of appeals’ judgment and remand the case to that court to consider Lone Star’s arguments, along with any other issues the parties raised that the court did not reach, in light of our holdings in TotalEnergies. OPINION DELIVERED: September 1, 2023 4
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