American Standard and the Trane Company, et al. v. Brownsville Independent School District--Appeal from 357th District Court of Cameron County

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

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NUMBER 13-04-184-CV

AMERICAN STANDARD AND

THE TRANE COMPANY, ET AL., Appellants,

v.

BROWNSVILLE INDEPENDENT

SCHOOL DISTRICT, Appellee.

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On appeal from the 357th District Court

of Cameron County, Texas.

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NUMBER 13-04-333-CV

IN RE: D. WILSON CONSTRUCTION COMPANY, ET AL.

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On Petition for Writ of Mandamus.

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MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Hinojosa and Rodriguez

Memorandum Opinion by Justice Rodriguez

This is an arbitration case that involves matters related to the construction of Besteiro Middle School and Aiken Elementary School located in Brownsville, Texas. American Standard and The Trane Company (Trane), a sub-subcontractor, filed suit against Brownsville Independent School District (BISD) seeking a temporary injunction to preserve evidence in a personal injury lawsuit filed in another court; that suit involves damages related to the construction of the schools in question. BISD counterclaimed for defects and damages and filed third-party actions against various parties, including general contractors, subcontractors and sub-subcontractors. Trane and the third-party defendants filed motions to compel arbitration and for dismissal or abatement of the suit pending arbitration. // The Honorable Leonel Alejandro, presiding judge of the 357th District Court, Cameron County, Texas, having reviewed the motions, responses, replies, and the argument of counsel, denied the motions. // Trane and the third-party defendants now challenge the trial court's ruling. We dismiss the interlocutory appeal for want of jurisdiction and deny the petition for writ of mandamus.

On June 29, 2004, in cause number 13-04-184-CV, appellants, American Standard and The Trane Company, D. Wilson Construction Company, Sechrist-Hall Company, Stotler Construction Company, Wrightway Construction, Inc., Rio Mechanical, Inc., Zamora Engineering, Inc., Mac's Insulation, Inc. and Victoria Air Conditioning LTD., appealed the trial court's order denying their motions to compel arbitration. // On June 29, 2004, relators, D. Wilson Construction Company, American Standard and The Trane Company, Sechrist-Hall Company, Stotler Construction Company, Wrightway Construction, Inc., Rio Mechanical, Inc., Victoria Air Conditioning LTD., Zamora Engineering, Inc., and Mac's Insulation, Inc., filed a petition for writ of mandamus in cause number 13-04-333-CV, requesting this Court to direct respondent to vacate his order of March 23, 2004, denying relators' motions to compel arbitration and for dismissal or abatement of the suit pending arbitration, and to enter an order compelling BISD to arbitrate its disputes and relators' claims and stay the underlying suit.

BISD responded requesting the appeal be dismissed for want of jurisdiction because the arbitration provision is governed by the Federal Arbitration Act (FAA). In the mandamus proceeding, BISD asked this Court to deny the petition because the contracts contain no arbitration language or contain language that is ambiguous as to the agreement to arbitrate and, alternately, because Trane and Stotler Construction Company waived their rights to arbitrate by their inconsistent actions; Trane by filing this action and a cross-claim against BISD in the personal injury lawsuit, and Stotler Construction Company by filing a cross-claim against BISD in the personal injury lawsuit.

Given the nature of these petitions for writ of mandamus and the related interlocutory appeal, on July 9, 2004, this Court granted relators/appellants' motion to consolidate the cases. We now render a decision disposing of both simultaneously. In re Valero Energy Corp., 968 S.W.2d 916, 916-17 (Tex. 1998) (orig. proceeding) ("[T]he better course of action for a court of appeals confronted with an interlocutory appeal and a mandamus proceeding seeking to compel arbitration would be to consolidate the two proceedings and render a decision disposing of both simultaneously . . . .").

Interlocutory appeal is appropriate to review an order denying arbitration under the Texas Arbitration Act (TAA). See Tex. Civ. Prac. & Rem. Code Ann. 171.021, 171.098(a)(1) (Vernon Supp. 2004-2005). Mandamus is appropriate to review an order denying arbitration when the FAA applies. In re Valero, 968 S.W.2d at 916 (citing Jack B. Anglin Co. v. Tipps, 842 S.W.2d 255, 272 (Tex. 1992) (orig. proceeding)); In re MONY Secs. Corp. v. Durham, 83 S.W.3d 279, 282 (Tex. App. Corpus Christi 2002, combined appeal and orig. proceeding). We conclude that the arbitration provisions at issue evidence a "transaction involving commerce" and are subject to the FAA. // See In re MONY, 83 S.W.3d at 282-83. Thus, mandamus is the appropriate vehicle for relief. See id. Accordingly, we DISMISS the interlocutory appeal in cause number 13-04-641-CV for want of jurisdiction. See id. at 283.

"Mandamus will issue only to correct a clear abuse of discretion when there is no adequate remedy by appeal." In re Redondo, 47 S.W.3d 655, 658 (Tex. App. Corpus Christi 2001, orig. proceeding). "A trial court abuses its discretion when it does not follow guiding rules and principles and reaches an arbitrary and unreasonable decision." Id.

A party seeking to compel arbitration must (1) establish the existence of an arbitration agreement and (2) show that the claims asserted fall within the scope of that agreement. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (orig. proceeding); In re C & H News Co., 133 S.W.3d 642, 645 (Tex. App. Corpus Christi 2003, orig. proceeding). The trial court's determination of the arbitration agreement's validity is a legal question subject to de novo review. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); In re Kellogg Brown & Root, 80 S.W.3d 611, 615 (Tex. App. Houston [1st Dist.] 2002, orig. proceeding).

In the instant case, BISD entered into a construction contract with D. Wilson Construction Company for the construction of Besteiro Middle School and with Stotler Construction Company for the construction of Aiken Elementary School. Appellees contend there is no arbitration language in either the D. Wilson Construction Company or the Stotler Construction Company general construction contracts with BISD. Moreover, appellees assert, and the trial court apparently determined, that the contract's arbitration provision, if any, was ambiguous.

The D. Wilson Construction Company contract and the Stotler Construction Company contract do not contain specific arbitration language. The contracts do, however, generally provide that the contractors "shall do everything required by [each company's respective] Contract, the General Conditions of the Contract, Special Conditions, Addenda, the Specifications, and the Drawings." The Stotler Construction Company contract also sets out that BISD's "Supplementary Conditions" are enumerated in the Project Manual.

The above-referenced general conditions document is AIA Document A201 which contains paragraph 4.5, titled Arbitration. Subparagraph 4.5.1 identifies controversies and claims subject to arbitration. However, BISD's supplementary conditions specifically modified, changed, deleted from or added to subparagraph 4.5.1.

Article 4.5.1.1 of the supplementary conditions provides:

Except as otherwise provided in this Contract, any dispute concerning a question of fact arising under this contract, which is not disposed of by agreement shall be decided by the Owner who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Owner shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the owner a written appeal addressed to the Superintendent, Brownsville Independent School District. If the decision on the appeal is adverse, the Contractor may within 30 days make further appeal to the Board of Trustees of the Brownsville Independent School District whose decision shall be final and conclusive. In connection with any opportunity to be heard and to offer evidence in support of this appeal to a person or persons.

The supplementary conditions also provide that "[w]here a portion of the general conditions is modified or deleted by these supplementary conditions, the unaltered portions of the general conditions shall remain in effect."

Assuming without determining that the contracts contain arbitration language, the supplementary conditions create ambiguity. See In re Oakwood Mobile Homes, Inc., 987 S.W.2d at 573; In re C & H News Co., 133 S.W.3d at 645. This Court concludes the trial court did not abuse its discretion by denying the motions to compel arbitration filed by appellants. See In re Oakwood Mobile Homes, 987 S.W.2d at 573; see also Jack B. Anglin, 842 S.W.2d at 271; Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). Therefore, having reviewed the petition for writ of mandamus, the response, and other documents on file, this Court is of the opinion that the petition for writ of mandamus should be denied. //

The petition for writ of mandamus filed by relators, D. Wilson Construction Company, American Standard and The Trane Company, Sechrist-Hall Company, Stotler Construction Company, Wrightway Construction, Inc., Rio Mechanical, Inc., Victoria Air Conditioning LTD., Zamora Engineering, Inc., and Mac's Insulation, Inc., in cause number 13-04-333-CV is hereby DENIED. Furthermore, all motions previously carried with this case are, hereby, denied as moot.

NELDA V. RODRIGUEZ

Justice

Memorandum Opinion delivered and

filed this 10th day of February, 2005.