IN THE SUPREME COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

═════════_= 52;══

No. 04-0252

═════════_= 52;══

Alton J. Meyer, = Meyer=20 Acquisition Corp.,

and Ford Motor = Company,=20 Petitioners,

WMCO-GP, LLC and = Bullock=20 Motor Company, Respondents

═════════_= 52;══════════= ══════════ = 552;══════════= ;══════════&#= 9552;

On Petition for Review from = the

Court of Appeals for the Ninth = District of=20 Texas

═════════_= 52;══════════= ══════════ = 552;══════════= ;══════════&#= 9552;

Argued March 23,=20 2005

Justice Hecht delivered the = opinion of=20 the Court, in which Chief = Justice=20 Jefferson, Justice Wainwright, Justice Brister, Justice Medina, Justice = Green,=20 Justice Johnson, and Justice=20 Willett joined.

Justice O=92Neill filed a = dissenting=20 opinion.

A = person who=20 has agreed to arbitrate disputes with one party may in some cases be = required to=20 arbitrate related disputes with others.[1] This is such a case. A motor = vehicle=20 manufacturer exercised its right of first refusal to acquire its = dealer=92s=20 business and transferred the right to its assignee, preempting the = dealer=92s=20 agreement to sell the business to another. The jilted buyer sued the=20 manufacturer and its assignee for interfering with the proposed contract = of=20 sale. Although the defendants had no contract with the jilted buyer, = they=20 demanded arbitration based on the buyer=92s agreement to arbitrate = disputes with=20 the dealer. The trial court refused to compel arbitration, and a divided = court=20 of appeals affirmed.[2] We reverse.

Ford Motor=20 Co.=92s agreement with its dealer, Bullock Motor Co., gave Ford an = assignable=20 right of first refusal to acquire Bullock=92s business should Bullock = want to sell=20 to another. The dealership agreement provided that Ford could =93discuss = the terms=20 of [any proposed sale] with any potential Assignee, as long as such = information=20 is treated confidentially.=94 Bullock contracted to sell the dealership = to=20 WMCO-GP, LLC. Their purchase and sale agreement (=93PSA=94) acknowledged = Ford=92s=20 right of first refusal and, if Ford exercised that right, allowed = Bullock to=20 terminate the agreement. Ford exercised its right and assigned it to = Alton J.=20 Meyer and Meyer Acquisition Corp. (collectively =93Meyer=94), and = Bullock=20 accordingly sold its business to Meyer.

WMCO sued=20 Bullock, Meyer, and Ford. WMCO sought a declaration that Ford=92s right = of first=20 refusal was void because, in violation of the dealership agreement, = assignee=20 Meyer had disclosed WMCO=92s confidential information to third parties. = WMCO also=20 claimed damages against Meyer for tortious interference with the PSA and = against=20 Meyer and Ford for conspiring to violate the Texas Motor Vehicle = Commission=20 Code.[3] WMCO asserted that although = Bullock=20 had breached the PSA, it was joined only as a necessary party because it = would=20 have performed the PSA but for Ford=92s exercise of its right of first=20 refusal.

Meyer and=20 Ford moved to compel arbitration based on WMCO=92s agreement to the = following=20 provision in the PSA, to which they, of course, were not parties = themselves:

Any controversy between the parties to this = Agreement=20 involving the construction or application of any of the terms, = covenants, or=20 conditions of this Agreement, shall . . . be submitted to = binding=20 arbitration, and such arbitration shall comply with and be governed by = the=20 provisions of the Texas General Arbitration Act=20 . . . .

Meyer and Ford=20 argued that because WMCO had made this agreement with Bullock, WMCO was=20 equitably estopped from refusing to arbitrate with them. Bullock did not = join in=20 the motions. Although the dealership agreement between Bullock and Ford = also=20 provided for arbitration and was raised in the trial court, Meyer and = Ford=20 conceded, for purposes of this appeal, that the dealership agreement = would not=20 apply to WMCO.[4] Nor do they rely on the = Federal=20 Arbitration Act;[5] they assert only the Texas = General=20 Arbitration Act.[6]

The = trial=20 court denied the motion, and a divided court of appeals affirmed.[7] We granted Meyer=92s and = Ford=92s=20 petitions for review.[8]

As = a rule,=20 arbitration of a claim cannot be compelled unless it falls within the = scope of a=20 valid arbitration agreement.[9] But sometimes a person who = is not a=20 party to the agreement can compel arbitration with one who is,[10] and vice versa.[11] We have held that a person = who seeks=20 by his claim =93to derive a direct benefit from the contract containing = the=20 arbitration provision=94 may be equitably estopped from refusing = arbitration.[12] The court of appeals came = to this=20 same conclusion based largely on Grigson v. Creative Artists Agency,=20 L.L.C., in which the United States Court of Appeals for the Fifth = Circuit=20 quoted the Eleventh Circuit=92s decision in MS Dealer Service Corp. = v.=20 Franklin, stating:

Existing case law demonstrates that equitable = estoppel allows=20 a nonsignatory to compel arbitration in two different circumstances. = First,=20 equitable estoppel applies when the signatory to a written agreement = containing=20 an arbitration clause must rely on the terms of the written agreement in = asserting its claims against the nonsignatory. When each of a = signatory=92s claims=20 against a nonsignatory makes reference to or presumes the existence of = the=20 written agreement, the signatory=92s claims arise out of and relate = directly to=20 the written agreement, and arbitration is appropriate. Second, = application of=20 equitable estoppel is warranted when the signatory to the contract = containing an=20 arbitration clause raises allegations of substantially interdependent = and=20 concerted misconduct by both the nonsignatory and one or more of the = signatories=20 to the contract. Otherwise the arbitration proceedings between the two=20 signatories would be rendered meaningless and the federal policy in = favor of=20 arbitration effectively thwarted.[13]

Grigson, like = the present=20 case, was a suit by a signatory to an arbitration agreement against a=20 non-signatory.[14] In essence, the Fifth = Circuit=20 explained, the claimant cannot

=93have it both ways=94: it cannot, on the one hand, = seek to hold=20 the non-signatory liable pursuant to duties imposed by the agreement, = which=20 contains an arbitration provision, but, on the other hand, deny = arbitration=92s=20 applicability because the defendant is a non-signatory.[15]

Having=20 derived from Grigson a substantially correct statement of Texas = law, the=20 court of appeals misapplied it to this case. First, the court concluded = that=20 WMCO could not be required to arbitrate claims other than those = described in the=20 arbitration provision of the PSA =97 =93controvers[ies] between the = parties to this=20 Agreement involving the construction or application of any of the terms, = covenants, or conditions of this Agreement=94.[16] WMCO=92s claims were = against=20 non-parties Meyer and Ford and did not, the court determined, involve = the=20 construction or application of the PSA.[17] Had the PSA broadly = required=20 arbitration of =93all disputes=94 in just so many words instead of = describing=20 particular claims and parties, the court reasoned, equitable estoppel = would=20 apply.[18]

We = agree that=20 an arbitration provision may limit the application of equitable = estoppel. For=20 example, if Bullock and WMCO, the parties to the PSA, had agreed to = arbitrate=20 only very specific disputes that might arise between the two of them =97 = whether=20 specific vehicles were included in inventory, for example =97 and = nothing else,=20 one could hardly argue that WMCO would be equitably estopped from = drawing the=20 same line for disputes with non-parties. Equitable estoppel cannot give=20 non-parties a greater right to arbitration than the parties themselves = have. But=20 the text of the arbitration provision here is not so restrictive. The = phrase=20 =93between the parties,=94 without more, suggests only that Bullock and = WMCO meant=20 to ensure that the agreement applied to disputes between them, not that = they=20 intended to preclude the application of equitable estoppel. A similar = provision=20 in MS Dealer, expressly naming the car seller and buyer, did not = prevent=20 that court from applying equitable estoppel to compel arbitration of = tort claims=20 against a non-signatory service corporation.[19] And while =93all = disputes=94 might be=20 broader than disputes =93involving the construction or application of = any of the=20 terms, covenants, or conditions=94 of the PSA, the latter category = easily includes=20 WMCO=92s claims, which all construe or apply the condition of the PSA = that Bullock=20 could terminate if Ford exercised its right of first refusal. The = arbitration=20 provision does not exclude WMCO=92s claims.

The = court of=20 appeals gave a second reason for not applying equitable estoppel: = WMCO=92s claims=20 against Meyer and Ford did not rely on the terms of the PSA but merely=20 =93touch[ed] upon=94 or =93related to=94 it.[20] But this does not defeat = the=20 application of equitable estoppel. WMCO=92s claim against Bullock for = breach of=20 the PSA relies squarely on the PSA. WMCO=92s other claims against Meyer = and Ford=20 also all depend on the existence of the PSA. If Bullock properly = terminated the=20 PSA, based on Ford=92s exercise of its right of first refusal, then = there would be=20 no claim for tortious interference, no need to decide whether Ford = validly=20 exercised the right of first refusal, and no need to decide whether = Meyer and=20 Ford conspired to violate statutes protecting dealers from certain = actions by=20 manufacturers. WMCO concedes that if the PSA was preempted by Ford=92s = exercise of=20 its right of first refusal, then WMCO has no rights against Meyer and = Ford for=20 the court to declare, there was no contract to interfere with, and Meyer = and=20 Ford could not have violated state law. WMCO further concedes that its = damages=20 cannot be calculated without reference to the PSA. When a party=92s = right to=20 recover and its damages depend on the agreement containing the = arbitration=20 provision, the party is relying on the agreement for its claims.[21]

Finally, the=20 court concluded that WMCO=92s claims against Meyer and Ford were not = intertwined=20 with claims against Bullock.[22] This is simply wrong. = WMCO=92s claims=20 against Meyer and Ford are not only intertwined with its claims against = Bullock,=20 they have the same tap root: WMCO=92s assertion that Ford lost its right = of first=20 refusal. If WMCO is correct in this assertion it is clearly entitled to = the=20 declaration it seeks. Moreover, only if WMCO is correct could Bullock = have=20 improperly terminated the PSA and breached it; and thus only if WMCO is = correct=20 could the PSA still remain in effect, despite Bullock=92s termination of = it, such=20 that Meyer could have tortiously interfered with it or WMCO have any = basis for=20 its state law claims. WMCO stresses that it has made Bullock a nominal = party=20 only and that Bullock is willing to sell to whoever is entitled to buy. = But the=20 interdependence of WMCO=92s claims against Bullock, Meyer, and Ford is = not removed=20 by Bullock=92s complacency. WMCO is trying to have it both ways: it is = asserting=20 rights that it would not have but for the PSA, but refusing to honor its = agreement to arbitrate disputes over those rights.[23]

WMCO also=20 argues that the trial court had discretion not to apply equitable = estoppel, even=20 if it could be applied in the same circumstances. We disagree. =93A = trial court=20 has no =91discretion=92 in determining what the law is or applying the = law to the=20 facts.=94 [24]

The = trial=20 court should have granted Meyer=92s and Ford=92s motions to compel = arbitration.=20 Accordingly, we reverse the judgment of the court of appeals and remand = the case=20 to the trial court for further proceedings consistent with this = opinion.

&n= bsp; &nb= sp; &nbs= p; = ; = &= nbsp; &n= bsp; =20

Nathan L. Hecht

Justice

Opinion=20 delivered: December 22, 2006

^[1] In re Vesta Ins. Group, Inc., 192 = S.W.3d 759,=20 762 (Tex. 2006) (per curiam) (holding that a party to an arbitration = agreement=20 must arbitrate tortious interference claims against the other party=92s = agents and=20 affiliates).

^[2] 126 S.W.3d 313, 320 (Tex. App.=97Beaumont=20 2004).

^[3] Specifically, WMCO alleged that Meyer and = Ford had=20 conspired to violate what was then Tex.=20 Rev. Civ. Stat. Ann. art. 4413(36), =A7 5.02(b)(8), now codified = as Tex. Occ. Code = =A7 2301.458, which=20 makes it unlawful for a motor vehicle manufacturer to fail to give = effect to or=20 attempt to prevent the sale or transfer of a dealer, dealership or = franchise=20 except in certain circumstances, and art. 4413(36), =A7 5.02(b)(3), (5), = now=20 codified as Tex. Occ. = Code=20 =A7 2301.453, .455, which makes it unlawful, notwithstanding the = terms of any=20 franchise agreement, for a manufacturer to terminate a franchise unless = certain=20 statutory requirements are met.

^[4] 126 S.W.3d at 319.

^[5] See 9 U.S.C. = =A7=A7 1-16.

^[6] See Tex.=20 Civ. Prac. & Rem. Code =A7=A7 171.001-.098.

^[7] 126 S.W.3d at 315, 320 (McKeithen, C.J.; = Gaultney, J.,=20 dissenting); see Tex. = Civ. Prac.=20 & Rem. Code =A7 171.098(a)(1) (=93A party may appeal a = judgment or=20 decree entered under this chapter or an order . . . denying an = application to compel arbitration = . . . .=94).

^[8] 48 Tex. Sup. Ct. J. 384 (Feb 11, 2005). = Because there=20 was a dissent in the court of appeals, we have jurisdiction over this=20 interlocutory appeal. See Tex.=20 Gov=92t Code =A7 22.225(b)(3) (disallowing a petition for review = in an=20 interlocutory appeal), and (c) (except when, e.g., there was an = appealable trial=20 court judgment and =93the justices of the courts of appeals disagree[d] = on a=20 question of law material to the decision=94).

^[9] Tex. Civ. Prac.=20 & Rem. Code =A7 171.021(a)(1) (=93A court shall order = the parties to=20 arbitrate on application of a party showing . . . an agreement = to=20 arbitrate . . . .=94); J.M. Davidson, Inc. v. = Webster, 128=20 S.W.3d 223, 227 (Tex. 2003) (=93A party attempting to compel arbitration = must=20 first establish that the dispute in question falls within the scope of a = valid=20 arbitration agreement.=94) (citing In re Oakwood Mobile Homes, = Inc., 987=20 S.W.2d 571, 573 (Tex. 1999) (per curiam) (stating the same rule under = the=20 Federal Arbitration Act)).

^[10] In re Vesta Ins. Group, Inc., 192 = S.W.3d 759,=20 761-762 (Tex. 2006) (per curiam).

^[11] In re Weekley Homes, L.P., 180 S.W.3d = 127,=20 131-135 (Tex. 2005); In re Kellogg Brown & Root, Inc., 166 = S.W.3d=20 732, 738 (Tex. 2005); In re FirstMerit Bank, N.A., 52 S.W.3d 749, = 755-756=20 (Tex. 2001).

^[12] In re Vesta Ins. Group, 192 S.W.3d at = 761-762;=20 In re Kellogg Brown & Root, 166 S.W.3d at 741; see = In re=20 Weekley Homes, 180 S.W.3d at 131; In re FirstMerit, 52 S.W.3d = at=20 755-756.

^[13] 210 F.3d 524, 527 (5th Cir.), cert. = denied, 531=20 U.S. 1013 (2000) (quoting MS Dealer Serv. Corp. v. Franklin, 177 = F.3d=20 942, 947 (11th Cir. 1999) (internal citations and quotation marks = omitted))=20 (added emphasis omitted), discussed at 126 S.W.3d at = 316-318.

^[14] 210 F.3d at 526.

^[15] Id. at 528 (citing MS Dealer, = 177 F.3d at=20 947).

^[16] 126 S.W.3d at 319.

^[17] Id. at 319-320.

^[18] See id. at 319.

^[19] MS Dealer, 177 F.3d at 944 (=93[The] = arbitration=20 clause[] provid[es] that =91buyer hereby acknowledges and agrees that = all disputes=20 and controversies of every kind and nature between buyer and Jim = Burke=20 Motors, Inc. arising out of or in connection with the purchase of = this=20 vehicle will be resolved by arbitration . . . .=92=94) = (emphasis=20 added).

^[20] 126 S.W.3d at 319.

^[21] See In re Vesta Ins. Group, Inc., 192 = S.W.3d=20 759, 762 (Tex. 2006) (per curiam) (holding that tortious interference = claims by=20 one signatory to an arbitration agreement against agents or affiliates = of the=20 other signatory arise more from the contract than general law and are = thus=20 subject to arbitration).

^[22] 126 S.W.3d at 320.

^[23] Cf. Grigson, 210 F.3d at = 527-528 (stating=20 that equitable estoppel is =93much more readily applicable=94 when = claims both=20 directly rely on the agreement containing the arbitration provision and = are also=20 intertwined with claims against a party to the = agreement).

^[24] Walker v. Packer, 827 S.W.2d = 833, 840=20 (Tex. 1992).