IN THE SUPREME = COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 03-1080

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In Re = U.S. = Home=20 Corporation, Lennar Corporation,

David Garcia, = Fabian Diaz=20 and Sheldon Moore, Relators

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On Petition for Writ of = Mandamus

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PER = CURIAM

=20 Two couples brought claims on behalf of themselves and others = similarly situated alleging their homes were built without shower pans. = They=20 concede their contracts contained broad arbitration clauses governed by = the=20 Federal Arbitration Act, and do not dispute that their claims fall = within the=20 scope of those clauses. Instead, they raise seven contract defenses to=20 enforcement, five of which the trial court cited in refusing to compel=20 arbitration. As there is no evidence to support any of the seven = grounds, we=20 conditionally grant mandamus relief. See In re Weekley Homes, L.P., 180 S.W.3d 127, 130 = (Tex. 2005) = (=93Mandamus=20 relief is proper to enforce arbitration agreements governed by the = FAA.=94).

=20 In the sales contracts Luis and Norma Cano and Mark and Gloria = Schlatter signed with U.S. Home Corporation, the = parties=20 agreed to mediate and arbitrate all controversies that might = arise=20 related to the agreement:

Any=20 controversy or claim arising under or related to this Agreement . . . = shall be=20 determined by mediation or by binding arbitration as provided by the = Federal=20 Arbitration Act (9 U.S.C. Sections 1=9614) and similar state statutes = and not by a=20 court of law. The claim will first be mediated in accordance with the = Commercial=20 or Construction Industry Arbitration Rules, as appropriate, of the = American=20 Arbitration Association. If not resolved by mediation, the claim will be = settled=20 in accordance with the Commercial or Construction Industry Arbitration = Rules, as=20 appropriate, of the American Arbitration Association . . . .

Written=20 warranties for both homes also provided for arbitration (but not = mediation) of=20 any disputes about whether warranty repairs were necessary.

=20 Several years after closing, the buyers asserted that a shower in = each=20 home had no pan or lining, and alleged claims for repairs, mold = remediation,=20 medical bills, and mental anguish. Finding U.S. Home=92s remediation = plan=20 inadequate, they filed suit in Cameron County against U.S. Home, Lennar Corporation, and three U.S. Home = employees.[1] The defendants moved to compel=20 arbitration, and the plaintiffs moved to certify their class claims. The = trial=20 court denied the former and granted the latter in a half-day = hearing.

=20 First, the trial court found the arbitration clauses were = contracts of=20 adhesion and thus procedurally unconscionable. =93Adhesion contracts are = not=20 automatically unconscionable, and there is nothing per se unconscionable = about=20 arbitration agreements.=94 In re AdvancePCS Health=20 L.P., 172 S.W.3d 603, 608 (Tex. = 2005) (per=20 curiam); see also In re Palm Harbor = Homes,=20 Inc., 195 S.W.3d 672, 678 (Tex. 2006). Here, the plaintiffs = proved only=20 that U.S. Home refused to contract with them unless they agreed to = arbitration.=20 This is not enough. Palm=20 Harbor, 195 S.W.3d at = 678=9679; AdvancePCS, 172 S.W.3d at 608; In re = Halliburton=20 Co., 80 S.W.3d 566, 572 (Tex. = 2002); In=20 re FirstMerit Bank, N.A., 52 S.W.3d 749, = 758=20 (Tex.=20 2001). =

=20 Second, the trial court found the arbitration agreements were = procured by=20 fraud. The plaintiffs pointed to no evidence of misrepresentations, = scienter, or reliance, instead arguing only that = the=20 arbitration clause was on the back of their single-sheet contract. As = they=20 concede no one prevented them from reading both sides, this is not = fraud. Like=20 any other contract clause, a party cannot avoid an arbitration clause by = simply=20 failing to read it. In re Merrill Lynch Trust Co. FSB, ___ S.W.3d = ___,=20 ___ (Tex. 2007); AdvancePCS, 172 S.W.3d at 608; EZ Pawn = Corp. v.=20 Mancias, 934 S.W.2d 87, 90 (Tex. = 1996).

=20 Third, the trial court found the arbitration clauses were not = supported=20 by mutual consideration. As both parties agreed to arbitration, this is = again=20 simply wrong. Palm Harbor, 195 S.W.3d=20 at 676; AdvancePCS, 172 S.W.3d = at 607.=20 The plaintiffs point to two contractual provisions allowing U.S. Home to = terminate the agreement if their home was damaged before closing, or if = the=20 buyers failed to pay. Neither of these provisions allowed U.S. Home to = cancel=20 the contracts at will, or to opt out of arbitration if there was a = dispute=20 regarding whether it had properly done so. See=20 Halliburton, 80 S.W.3d at 569 (noting that even if employer = terminated=20 contract, it would be bound to arbitrate resulting disputes). =

=20 Fourth, the trial court found arbitration would be unduly = burdensome and=20 costly. To sustain such a defense, both the United States Supreme Court = and this=20 Court require specific evidence that a party will actually be charged = excessive=20 arbitration fees. Green Tree Fin. Corp.-Ala.=20 v. Randolph, 531 U.S.=20 79, 90=9691 (2000); FirstMerit = Bank, 52 S.W.3d at 757. Here, the plaintiffs presented no = evidence=20 other than a schedule of the American Arbitration Association=92s usual = fees. This=20 is not enough. Green Tree, 531 U.S. at = 90=20 n.6; FirstMerit Bank, = 52 S.W.3d=20 at 757.

=20 Fifth, the trial court found that mediation was a condition = precedent to=20 arbitration, and the former having yet to occur the latter could not be=20 compelled. But while the parties=92 agreements clearly contemplated = mediation=20 before arbitration, there is no indication they intended to dispense = with=20 arbitration if mediation did not occur first. To the contrary, the = warranty=20 agreements that form part of the same transaction require arbitration = without=20 any mention of mediation, indicating the parties intended to arbitrate=20 regardless. The plaintiffs allege no damage from U.S. Home=92s failure = to invoke=20 mediation first, and are hardly in a position to do so as (1) they too = did not=20 bother with mediation before seeking class certification, and (2) they = concede=20 mediation has taken place while this case was under review. Although the = plaintiffs could have asked the trial court to delay arbitration pending = mediation, there was no basis for asking the trial court to cancel it=20 entirely.

=20 On appeal, the plaintiffs claim arbitration was not mandatory = because=20 while the sales agreements required arbitration, the Canos=92 warranty book said only that either party = =93may=20 request=94 arbitration. We disagree that this renders the contracts = ambiguous. We=20 must construe the parties=92 contracts together if we can, rather than = allowing=20 one to cancel the other as the plaintiffs suggest. In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 = (Tex. 2005) = (per curiam) (holding series of agreements must be = construed=20 together in determining whether parties agreed to arbitration). While = the=20 warranty=92s clause allowed either party to request arbitration, nothing = in it=20 suggests arbitration was optional if either did; to the contrary, the = clause=20 constituted a binding promise to arbitrate if either party requested it. = See=20 Local 771, I.A.T.S.E., AFL-CIO v. RKO Gen., Inc. WOR Div., 546 F.2d = 1107,=20 1115=9616 (2d Cir. 1977) (holding contract that provided =93parties may = submit to=20 arbitration . . . upon written request of either party=94 did not make = arbitration=20 optional). U.S. Home having done so, the Canos could=20 not opt out thereafter.

=20 Additionally, on appeal the plaintiffs argue they do not have to=20 arbitrate with the individual defendants, as only U.S. Home signed the=20 agreement. Assuming this argument can be raised for the first time on = appeal, we=20 find it without merit. None of these individuals had a duty to supply = shower=20 pans but for the plaintiffs=92 contracts with U.S. Home. =93[A] litigant = who sues=20 based on a contract subjects him or herself to the contract=92s = terms.=94 In re FirstMerit Bank, = N.A., 52=20 S.W.3d 749, 755 (Tex. 2001). As the nonsignatories=92 liability arises from and must = be determined=20 by reference to the parties=92 contract rather than general obligations = imposed by=20 law, the suit is subject to the contract=92s arbitration provisions. = In re=20 Weekley Homes, L.P., 180 S.W.3d 127, = 131=9632=20 (Tex. 2005); see also In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 762 = (Tex. 2006) = (=93When=20 contracting parties agree to arbitrate all disputes =91under or with = respect to=92 a=20 contract (as they did here), they generally intend to include disputes = about=20 their agents=92 actions . . . .=94).

=20 Finally, the defendants request that we reverse the trial = court=92s class=20 certification order as well, pointing out that the United States Supreme = Court=20 has expressly held an arbitration clause covering =93all disputes = relating to a=20 contract=94 includes disputes about class certification. See=20 Green Tree Fin. Corp. v. Bazzle, 539=20 U.S. 444, 451 = (2003). As the=20 certification order is apparently pending but abated in the Thirteenth = Court of=20 Appeals, we decline the invitation as premature.

=20 Accordingly, without hearing oral argument, = Tex. R. App. P. 52.8(c), we = conditionally=20 grant relators=92 petition for writ of = mandamus and=20 direct the trial court to grant their motion to compel arbitration. We = are=20 confident the court will comply promptly, and our writ will issue only = if it=20 does not.

OPINION=20 DELIVERED: October 12, 2007

^[1]=20 The individual defendants are David Garcia, Fabian Diaz, and Sheldon = Moore. The=20 plaintiffs also sued Bill Armstrong and Adalberto=20 Gutierrez, neither of which has apparently answered, = and thus are not parties in this=20 proceeding.