Opinion issued May 22, 2008
In=20 The
For=20 The
ROBERTO =
MELENDEZ=20
D/B/A HOU-TEX READY MIX CONCRETE & MATERIALS,=20
Appellant DAVID =
AND HELEN DE=20
LEMOS, Appellees
On =
Appeal from the=20
189th District Court Harris =
County,=20
Texas Trial =
Court Cause=20
No. 2006-44449
MEMORANDUM=20
OPINION Appellant, Roberto Melendez, =
individually=20
and d/b/a Hou-Tex Ready Mix Concrete & Materials (Hou-Tex), =
appeals a=20
traditional summary judgment and order of severance in favor of =
appellees,=20
David and Helen De Lemos. Hou-Tex sued the De Lemoses personally, =
seeking=20
payment for cement delivered to a construction site on the order =
of a=20
subcontractor to the general contractor hired by the De Lemoses to =
construct a residence. In two points of error, Hou-Tex challenges =
the=20
summary judgment on the grounds that the trial court erred by =
refusing to=20
compel arbitration and by severing Hou-Tex's and the De Lemoses' =
claims=20
from Hou-Tex's lawsuit against their general contractor. We=20
affirm.
In October 2005, the De Lemoses =
entered=20
into a written contract with Michael Randel Homes, LLC (Randel =
Homes) to=20
construct a new residence on the De Lemoses' existing home site. =
Michael=20
Landry signed the contract on behalf of Randel Homes, and both =
David and=20
Helen De Lemos signed the contract. The contract identified the De =
Lemoses=20
as owner and identified Randel Homes as contractor. The terms of =
the=20
contract included a provision by which these parties agreed (1) to =
address=20
construction-defect claims through the administrative procedures=20
established by the Texas Residential Construction Commission Act =
and (2)=20
to waive jury trial because all controversies, claims[,] or =
matters=20
in question arising out of or relating to (i) this Contract, (ii) =
any=20
breach thereof, (iii) the construction of the Residence, (iv) the =
sales=20
transaction reflected in the Contract, and/or (v) any =
representations or=20
warranties, express or implied, relating to the Property and/or =
the=20
Residence (herein referred to collecting as a "Dispute") shall =
be=20
subject to binding arbitration. (Emphasis added.) The original residence on the=20
construction site was demolished in November 2005. In the course =
of=20
construction of the new residence, Randel Homes, as general =
contractor,=20
hired a subcontractor to perform certain concrete services, who, =
in turn,=20
requested delivery of ready-mix concrete from Hou-Tex. On January =
31,=20
2006, Hou-Tex delivered 150 yards of ready-mix concrete to the=20
construction site and presented an invoice for $11,772.19 to the=20
subcontractor. The subcontractor issued a check to Hou-Tex on =
February 3,=20
2006, but the check was dishonored and returned to Hou-Tex for=20
insufficient funds. In the meantime, the De Lemoses had been =
receiving=20
notices that some subcontractors hired by Randel Homes were not =
being=20
paid. On April 3, 2006, the De Lemoses notified Randel Homes to =
stop=20
construction of the new residence, and Randel Homes abandoned the=20
project. On May 10, 2006, Hou-Tex filed =
a notice=20
of mechanics and materialmen's lien against the De Lemoses' =
residence, who=20
then filed this action as plaintiffs seeking to remove the lien on =
the=20
grounds that it was invalid for lack of compliance with several =
provisions=20
of the enabling statute, chapter 53 of the Property Code, which =
governs=20
mechanic's, contractor's, and materialmen's liens. Hou-Tex=20
then filed its first amended answer, in which it asserted =
counterclaims=20
based on alternative theories against the De Lemoses, including =
accord and=20
satisfaction, estoppel, release, and failure of consideration, all =
of=20
which Hou-Tex premised on assertions that Helen De Lemos had =
promised to=20
pay Hou-Tex's claim, and that Hou-Tex had released its lien =
against the De=20
Lemoses in exchange for that promise. Hou-Tex also supplemented =
its=20
quantum-meruit claim by claiming that the De Lemoses had been =
unjustly=20
enriched, had breached a contract to pay, and had not complied =
with=20
section 53.101 of the Property Code by retaining funds pending=20
construction. The De=20
Lemoses answered these claims by general denial and the =
affirmative=20
defense that the statute of frauds barred Hou-Tex's claims for =
payment of=20
a third-party debt. The De Lemoses responded to Hou-Tex's =
objections to=20
their original motion for summary judgment, but also filed an =
additional=20
motion, seeking final summary judgment as a matter of law on the =
following=20
grounds: (1) the Hou-Tex lien was invalid because it had not been =
properly=20
perfected; (2) but the lien issue was moot regardless because =
Hou-Tex had=20
released the lien; (3) the De Lemoses were not personally liable =
to=20
Hou-Tex because (4) they had no contract with Hou-Tex, and (5) =
they did=20
not promise to pay Hou-Tex; (6) any alleged promise by the De =
Lemoses to=20
pay the Randel Homes debt was barred by the statute of frauds; and =
(7)=20
Hou-Tex had no cause of action for the De Lemoses' alleged failure =
to=20
retain funds under the Property Code because any obligation to =
retain=20
ended 30 days after they terminated their contract with Randel =
Homes,=20
which had simultaneously abandoned construction, and Hou-Tex did =
not=20
assert its lien until after the 30 days had expired. The trial=20
court signed an interlocutory summary judgment order that =
dismissed=20
Hou-Tex's claims against the De Lemoses. Five days later, Hou-Tex =
sought=20
leave to add Randel Homes as a third-party defendant and necessary =
party=20
to Hou-Tex's invoking the arbitration clause of its contract with =
the De=20
Lemoses. Afer the trial court granted the requested leave, Hou-Tex =
filed a=20
motion for leave to vacate the summary judgment and or to compel =
mediation=20
or arbitration. After conducting a hearing, the trial court =
rendered=20
summary judgment in favor of the De Lemoses by ordering that =
Hou-Tex take=20
nothing on its claims from them, pending severance of those =
claims, and=20
then severed those claims, thus rendering the summary judgment =
final.=20
See Diversified Fin. Sys., Inc. v. Hill, Heard, O'Neal, =
Gilstrap &=20
Goetz, P.C., 63 S.W.3d 795, 795 (Tex. 2001) (citing =
Farmer v. Ben=20
Keith Co., 907 S.W.2d 495, 496 (Tex. 1995) ("As a rule, the =
severance=20
of an interlocutory judgment into a separate cause makes it=20
final.")
Hou-Tex's=20
first point of error challenges the trial court's refusal to =
compel=20
arbitration of its claims against the De Lemoses pursuant to the=20
provisions of their contract with Randel Homes. We first address=20
preliminary issues concerning our jurisdiction and the standard of =
review=20
before proceeding to the merits of this issue. Because the=20
trial court severed the issues between Hou-Tex and the De Lemoses, =
thus=20
rendering final the summary judgment rendered in favor of the De =
Lemoses,=20
our jurisdiction in this case derives from section 51.012 of the =
Civil=20
Practice and Remedies Code, which governs appeals from final =
judgments of=20
district and county courts. See Tex. Civ. Prac. & =
Rem. Code=20
Ann. =A7 51.012 (Vernon 1997); City of Dallas v. =
Jennings, 142=20
S.W.3d 310, 316 (Tex. 2004) ("A judgment that finally disposes of =
all=20
remaining parties and claims, based on the record in the case, is =
final,=20
regardless of its language.") (quoting Lehmann v. Har-Con =
Corp.,=20
39 S.W.3d 191, 200 (Tex. 2001)); cf., Tex. Civ. Prac. =
& Rem.=20
Code Ann. =A7 171.098(a)(1) (Vernon 2005) (authorizing =
interlocutory appeal=20
of proceedings brought pursuant to Texas Arbitration Act); In =
re=20
Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005) =
(recognizing=20
propriety of mandamus relief to enforce arbitration agreements =
governed by=20
Federal Arbitration Act). We review=20
summary judgments de novo pursuant to well-settled standards. =
See=20
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. =
2005).=20
The party seeking summary judgment under rule 166a(c) must =
demonstrate=20
that there is no genuine issue as to any material fact and that it =
is=20
entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c);=20
Browning v. Prostok, 165 S.W.3d 336, 344 (Tex. 2005). =
When, as=20
here, the order granting summary judgment does not specify which =
of the=20
several grounds asserted formed the basis of the trial court's =
rendition,=20
we may affirm the summary judgment if any theory presented to the =
trial=20
court and preserved for appellate review is meritorious. See =
id.;=20
W. Inv., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005).=20
Therefore, the appealing party must generally demonstrate that =
none of the=20
proposed grounds is sufficient to support the judgment. See=20
Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995);=20
Ellis v. Precision Engine Rebuilders, Inc., 68 S.W.3d =
894, 898=20
(Tex. App.--Houston [1st Dist.] 2002, no pet.). When the=20
appealing party does not challenge a ground on which the movant =
sought=20
summary judgment in the trial court, settled summary-judgment =
principles=20
demand that we affirm--without considering whether the summary =
judgment=20
was rendered properly or improperly on the unchallenged =
ground--given that=20
we may not reverse without properly assigned error. See=20
Star-Telegram, Inc., 915 S.W.2d at 473; see also =
Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. =
1970)=20
(affirming summary judgment because "it may have been based on a =
ground=20
not specifically challenged" on appeal and "there was no general=20
assignment that the trial court erred in granting summary =
judgment.")=20
(supporting citations omitted); Vawter v. Garvey, 786 =
S.W.2d 263,=20
264 (Tex. 1990) (proscribing reversal of =
summary=20
judgment without properly assigned error); Wilchester W. =
Concerned=20
Homeowners LDEF, Inc. v. Wilchester W. Fund, Inc., 177 S.W.3d =
552,=20
563, 566 (Tex. App.--Houston [1st Dist.] 2005, pet. denied) =
(applying=20
stated standard to affirm on unchallenged grounds). Hou-Tex=20
attacks only the trial court's having implicitly rejected =
Hou-Tex's motion=20
to compel arbitration. Hou-Tex does not challenge the summary =
judgment on=20
any of the six alternative grounds on which the De Lemoses relied. =
Had the=20
trial court granted Hou-Tex's motions to stay and to compel, =
arbitration=20
would have ensued, rather than rendition of summary judgment in =
favor of=20
the De Lemoses. By rendering summary judgment in favor of the De =
Lemoses,=20
therefore, the trial court ruled on the merits of their motion and =
necessarily, albeit impliedly, rejected Hou-Tex's motions to =
compel=20
arbitration and to stay pending outcome of arbitration. We =
therefore=20
address this challenge to the summary judgment. B.=20
Whether Contract between De Lemoses and Randel Homes Compels =
Arbitration=20
of Claims by Nonsignatory Hou-Tex 1.=20
General Principles As the=20
party attempting to compel arbitration, Hou-Tex had to establish =
at the=20
outset that its dispute falls within the scope of a valid =
arbitration=20
agreement. See In re Merrill Lynch Trust Co., =
235 S.W.3d=20
185, 187 (Tex. 2007); J.M. Davidson, Inc. v. Webster, 128 =
S.W.3d=20
223, 227 (Tex. 2003). When, as here, the opponent objects to =
arbitration,=20
the trial court determines as a matter of law whether an agreement =
to=20
arbitrate exists. J.M. Davidson, Inc. v. Webster, 128 =
S.W.3d 223,=20
227. This is a question of state contract law that we review de =
novo.=20
See In re Merrill Lynch, 235 S.W.3d at 187; J.M.=20
Davidson, 128 S.W.3d at 227 (citing First Options of =
Chicago,=20
Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 1924 =
(1995)=20
(holding that courts "generally . . . should apply ordinary =
state-law=20
principles that govern the formation of contracts" in determining =
whether=20
parties have agreed to arbitrate)). If the=20
parties have agreed, and if the agreement encompasses the dispute, =
then=20
the law favors arbitration. In re Merrill Lynch, 235 =
S.W.3d at=20
187. But the parties must have agreed. See id. at 192.=20
Arbitration agreements are thus "'as enforceable as other =
contracts'";=20
they are not, however, "'more'" enforceable than other contracts. =
Id.=20
(quoting Prima Paint Corp. v. Flood & Conklin Mfg. =
Co.,=20
388 U.S. 395, 404 n.12, 87 S. Ct. 1801, 1806 n.12 (1967)). =
"[U]nder both=20
Texas and federal law, arbitrability turns on the substance of a =
claim,=20
not artful pleading." Id. at 190. The dispositive inquiry =
then,=20
is whether the parties have agreed to arbitration: if they have =
not, no=20
trial court has discretion to compel that they arbitrate; if they =
have, no=20
trial court has discretion "to let one wriggle out." Id. =
at=20
193. It is=20
undisputed that Hou-Tex is neither a signatory nor party to the =
contract=20
between the De Lemoses and Randel Homes. Nonsignatories, or =
"nonparties,"=20
to an agreement containing an arbitration clause may be bound by =
the=20
provisions of the clause "when the rules of law or equity would =
bind them=20
to the contract generally." In re Weekley Homes, 180 =
S.W.3d at=20
129. Federal arbitration law recognizes several theories of =
contract and=20
agency law that authorize binding a nonsignatory to an arbitration =
agreement. See In re Kellogg Brown & Root, Inc., 166 =
S.W.3d=20
732, 739 (Tex. 2005). For a nonsignatory like Hou-Tex, a "contract =
theory"=20
must tie the nonsignatory to the arbitration provisions sought to =
be=20
enforced. See In re Merrill Lynch, 235 S.W.3d at 187, =
194.=20
Hou-Tex's contentions in this case invoke the two following,=20
contract-based theories in seeking to compel arbitration with the =
De=20
Lemoses: that the De Lemoses were equitably estopped from =
contesting=20
applicability of the arbitration clause in its contract with =
Randel Homes=20
to Hou-Tex's claims, or, alternatively, that Hou-Tex was a =
third-party=20
beneficiary of that contract. See id. at 193 (addressing=20
equitable estoppel theory of enforcement); In re Palm Harbor =
Homes,=20
Inc., 195 S.W.3d 672, 677 (Tex. 2006) (addressing third-party =
beneficiary theory of enforcement). 2.=20
Equitable, or "Direct Benefits," Estoppel Hou-Tex=20
contends that the De Lemoses cannot deny, as against Hou-Tex, the=20
enforceability of the arbitration clause in their agreement with =
Randel=20
Homes. When a nonsignatory to a contract that contains an =
arbitration=20
provision sues on the contract and seeks a direct benefit from the =
contract, but claims that the arbitration provision does not =
apply, the=20
nonsignatory is estopped to deny enforceability of the arbitration =
provision of the contract that the signatory seeks to enforce. =
See In=20
re U.S. Home Corp., 236 S.W.3d 761, 765 (Tex. 2007); In =
re=20
Merrill Lynch, 235 S.W.3d at 192; In re Weekley =
Homes, 180=20
S.W.3d at 131-32; In re Kellogg Brown & Root, 166 =
S.W.3d at=20
739; see also Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 307 =
(Tex.=20
2006) ("When a party's right to recover and its damages depend on =
the=20
agreement containing the arbitration provision, the party is =
relying on=20
the agreement for its claims."); In re FirstMerit Bank, =
52 S.W.3d=20
749, 755 (Tex. 2001) (holding that a litigant who sues based on a =
contract=20
subjects himself to the contract's terms ). The=20
preceding cases, which bound a nonsignatory to an arbitration =
clause=20
contained in the contract based on the doctrine of direct-benefits =
estoppel, are not applicable here. The supreme court does not =
apply=20
direct-benefits estoppel when the claimed benefits are =
"insubstantial" or=20
"indirect." In re Weekley Homes, 180 S.W.3d at 134. =
Neither does=20
the doctrine apply to bind a nonsignatory to a contract with an=20
arbitration provision if the claim merely "relates" to the =
contract.=20
In re Kellogg Brown & Root, Inc., 166 S.W.3d =
at 741.=20
Claims by a nonsignatory that "can stand independently of the =
underlying=20
contract" should generally not be arbitrated. Id. at =
739-40.=20
In=20
Kellogg Brown & Root, a signatory to a =
fabrication=20
contract containing an arbitration clause sought to compel =
Kellogg, Brown=20
& Root (KBR) to arbitrate its quantum meruit claim against =
that party,=20
on the grounds that KBR's claims for "labor and services were =
linked=20
inextricably" to the fabrication contract. Id. at 740. =
Because=20
KBR provided its labor and services pursuant to a different =
contract and=20
sought its benefits from that contract, and thus sought no benefit =
from=20
the fabrication contract, the supreme court rejected the =
claimant's=20
reliance on the doctrine of direct-benefit estoppel in seeking to =
compel=20
KBR to arbitrate its claim. Id. at 741. The same=20
analysis defeats Hou-Tex's reliance on the doctrine in this case. =
Despite=20
the tangential relationship between Hou-Tex's quantum meruit =
claims to the=20
construction contract between Randel Homes and the De Lemoses, =
Hou-Tex=20
claims no direct benefit under that contract--beyond its =
arbitration=20
clause. Much like the fabrication contract in Kellogg =
Brown=20
& Root, see id., the contract here disclaimed =
any=20
"agent, employee, servant, or representative" relationship between =
any=20
subcontractors, like Hou-Tex, and either Randel Homes or the De =
Lemoses=20
and further identified all subcontractors as independent =
contractors. The=20
benefit Hou-Tex seeks through its quantum meruit claims in this =
case, like=20
the benefits KBR sought in Kellogg Brown & =
Root,=20
seek payment for services rendered pursuant to a different =
contract,=20
specifically, Hou-Tex's contract with the subcontractor that =
requested=20
delivery of the cement mix and later defaulted on payment. See =
id. That obligation stands alone and is, therefore, separate =
from the=20
De Lemoses' construction contract with Randel Homes, as that =
contract=20
expressly states. See id. Hou-Tex's claims deriving from =
chapter=20
53 of the Property Code likewise stand alone and seek no benefit =
from the=20
De Lemoses' contract with Randel Homes. See id. =
For these=20
reasons, we hold that the trial court's implied rejection of =
Hou-Tex's=20
equitable estoppel claims asserted against the De Lemoses was =
correct as a=20
matter of law, and, therefore, that the trial court properly =
rejected=20
Hou-Tex's motions to compel and to stay arbitration in rendering =
summary=20
judgment for the De Lemoses. 3.=20
Third-Party Beneficiary A =
stranger=20
to a contract may enforce the contract as a third-party =
beneficiary if the=20
parties to the contract intended to secure a benefit to that third =
party=20
and entered into the contract directly for the third party's =
benefit.=20
In re Palm Harbor Homes, Inc., 195 S.W.3d at 677 (citing=20
Stine v. Stewart, 80 S.W.3d 586, 589 (Tex. 2002); MCI =
Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, =
651 (Tex.=20
1999)). The third party in Palm Harbor Homes sought to =
compel=20
arbitration on the grounds that the agreement inured to the =
benefit of the=20
manufacturer of the home in question. Id. By the express =
terms of=20
the agreement, therefore, the parties to the agreement entered =
into it, at=20
least in part, directly for the third party manufacturer's =
benefit, who=20
properly claimed third-party beneficiary status. See=20
id. In=20
contrast, nothing in the construction contract between the De =
Lemoses and=20
Randel Homes in this case can be construed to inure to Hou-Tex's =
benefit.=20
Indeed, as addressed above, that contract disclaims any "agent, =
employee,=20
servant, or representative" relationship on which a third-party=20
beneficiary claim might be premised. We therefore hold that the =
trial=20
court's implied rejection of Hou-Tex's third-party beneficiary =
contentions=20
asserted against the De Lemoses was correct as a matter of law, =
and,=20
therefore, that the trial court properly rejected Hou-Tex's =
motions to=20
compel and to stay arbitration in rendering summary judgment for =
the De=20
Lemoses We overrule=20
Hou-Tex's first point of error.
Hou-Tex's=20
second point of error purports to challenge rendition of summary =
judgment=20
in favor of the De Lemoses on the narrow ground that they are =
"necessary=20
parties" to resolution of its dispute, by virtue of the trial =
court's=20
having granted Hou-Tex leave to add Randel Homes as a third-party=20
defendant. Hou-Tex provides neither authorities nor citations to =
the=20
record to support its contentions, as required by Tex. R. App. P. =
38.1(h),=20
and has therefore waived any error. Holloway-Houston, Inc. v. =
Gulf=20
Coast Bank & Trust Co., 224 S.W.3d 353, 361 n.3 (Tex.=20
App.--Houston [1st Dist.] 2006, no pet.). We overrule=20
Hou-Tex's second point of error.
We affirm the judgment of the =
trial=20
court. Sherry Radack Chief Justice Panel consists of Chief Justice =
Radack=20
and Justices Alcala and Bland.=20
1. Other provisions of this "arbitration =
clause"=20
required that the owner and contractor attempt to resolve their =
dispute=20
"through informal discussions" and to submit the dispute to =
non-binding=20
mediation. Binding arbitration, however, was owner's and =
contractor's=20
final recourse.=20
2. The De Lemoses later negotiated with a =
different=20
contractor to complete construction of the new residence.=20
3. It is undisputed that Hou-Tex filed its =
mechanic's=20
and materialmen's lien more than 30 days after Randel Homes =
abandoned the=20
construction contract and, thus, after the deadline imposed by =
section=20
53.103(2) of the Property Code. 4. See Tex. Prop. Code Ann. =A7 =
53.101 (Vernon=20
2007).