law-FAA-applicability 9 U.S.C.S. §§ 1-307 | TAA Tex. Civ. Prac. & Rem. Code Ann. § 171.001-.098
TAA vs. FAA | preemption of TAA by FAA | Appeals from suits to confirm arbitration awards in the Houston Courts of Appeals |
Houston Arbitration Cases | arbitration-non-signatory | valid and enforceable arbitration agreement | enforcing arb clause
against nonsignatory | modification of arbitration award | challenging arbitration | FAA Federal Arbitration Act | FAA-applicability 9
U.S.C.S. §§ 1-307 | TAA Tex. Civ. Prac. & Rem. Code Ann. § 171.001-.098 | confirmation of arbitration award under FAA | grounds
for vacature under the FAA | TAA vs. FAA | preemption of TAA by FAA | preemption of state TAA by Federal Arbitration Act |
Appeals from suits to confirm arbitration awards in the Houston Courts of Appeals | Houston Arbitration Cases |
"Under the FAA, absent unmistakable evidence that the parties intended the contrary, it is the courts rather
than arbitrators that must decide `gateway matters' such as . . . [w]hether an arbitration agreement is binding
on a nonparty. . . ." In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex.2005) (orig.proceeding).
"The FAA `extends to any contract affecting commerce, as far as the Commerce Clause of the United States
Constitution will reach.'" In re Nexion Health at Humble, 173 S.W.3d 67, 69 (Tex. 2005) (quoting In re L & L
Kempwood Assocs., L.P., 9 S.W.3d 125, 127 (Tex. 1999)). In this context, the term "commerce" is broadly
WHEN DOES THE FAA APPLY AND IN WHICH COURT CAN IT BE INVOKED?
The Federal Act [Federal Arbitration Act] is enforced by both state and federal courts. See Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26 n.32, 103 S. Ct. 927, 942 n.32, 74 L. Ed. 2d 765 (1983);
Palisades Acquisition XVI, LLC, No. 14-08-00108-CV, 2009 WL 1660485, at *3 (providing that the section 9 of
the Federal Act does not limit subject-matter jurisdiction to the federal courts); see also Mauldin, 2008 WL
4779614, at *5 (same). Under the unambiguous language of section 9, Congress does not confer exclusive
jurisdiction upon federal courts as to arbitration agreements that fail to specify a court in which a
party may seek rendition of judgment on the arbitration award. See 9 U.S.C.A. §9; Moses H. Cone Mem'l
Hosp., 460 U.S. at 25-26 & n.32, 103 S. Ct. at 942 & n.32; Palisades Acquisition XVI, LLC, No. 14-08-00108-
CV, 2009 WL 1660485, at *3. Therefore, section 9 does not deprive the county court at law of subject-matter
jurisdiction. FIA Card Services, NA f/k/a MBNA America Bank, NA v. Horn (Tex.App.- Houston [14th Dist.] Jun.
23, 2009)(Frost)(suit to confirm arb award under FAA permitted in county court at law, invocation of FAA not
jurisdictionally barred, exclusive jurisdiction not given to federal courts)
The language of the parties' arbitration agreement provides that “[j]udgment upon any arbitration award may
be entered in any court having jurisdiction." Under the unambiguous language of the agreement, the parties
have not specified a court in which a party may seek rendition of judgment on an arbitration award. In these
circumstances, the parties, under section 9 of the Federal Act, may seek confirmation of an award in a United
States court in and for the district within which such award was made. See id; Palisades Acquisition XVI, LLC v.
Chatman, ___ S.W.3d ___, No. 14-08-00108-CV, 2009 WL 1660485, at *2 (Tex. App.- Houston [14th Dist.]
June 16, 2009, no pet. h.); see also Mauldin v. MBNA Am. Bank, N.A., No. 02-07-00208-CV, 2008 WL
4779614, at *4 (Tex. App.- Fort Worth Oct. 30, 2008, no pet.) (mem. op.). “Under this unambiguous language,
a party may seek confirmation of the arbitration award in federal court but is not required to do so." Palisades
Acquisition XVI, LLC, 2009 WL 1660485, at *2
Applicability of FAA
Because the parties disagree, we must address whether the Federal Arbitration Act (FAA) or the Texas
Arbitration Act (TAA) applies to this arbitration agreement. See 9 U.S.C.S. §§ 1-307 (LexisNexis 2008);
Tex. Civ. Prac. & Rem. Code Ann. § 171.001-.098 (Vernon 2005).
The FAA applies to all suits in state or federal court when the dispute concerns a "contract evidencing a
transaction involving commerce." Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269-70 (Tex.
1992) (orig. proceeding). When there is no express agreement to arbitrate under the FAA, a party may
establish the applicability of the FAA by showing that the transaction affects or involves interstate commerce.
See Stewart Title Guar. Co. v. Mack, 945 S.W.2d 330, 333 (Tex. App.--Houston [1st Dist.] 1997, writ dism'd w.o.
j.). Under the FAA, "interstate commerce" is not limited to the interstate shipment of goods, but includes all
contracts "relating to" interstate commerce. In re FirstMerit Bank, 52 S.W.3d 749, 754 (Tex. 2001) (orig.
proceeding). Interstate commerce may be shown in several ways, including: (1) location of headquarters in
another state; (2) transportation of materials across state lines; (3) manufacture of parts in a different state;
(4) billings prepared out of state; and (5) interstate mail and phone calls in support of a contract. See Tipps,
842 S.W.2d at 270; Mack, 945 S.W.2d at 333.
Rapid Settlements, Ltd v. Green (Tex.App.- Houston [1st Dist.] Jun. 18, 2009)(Op. By Alcala) (transfer of structured settlement
rights, grounds for vacature of arbitration award entered under the Federal Arbitration Act (FAA), applicability of FAA, does the FAA
preempt the TAA?, nonexistence of arbitration agreement between the parties, when are nonsignatories bound to by arbitration
agreement? nonparties to the agreement, nonsignatories)(arbitrator exceeded his authority in issuing the award. See 9 U.S.C.S.
AFFIRM TC JUDGMENT DENYING CONFIRMATION OF ARB AWARD: Opinion by Justice Alcala
Before Justices Jennings, Alcala and Higley
01-08-00109-CV Rapid Settlements, Ltd. v. Jerry M. Green
Appeal from County Civil Court at Law No 3 of Harris County
Trial Court Judge: Hon. Linda Storey
In this case, the arbitration agreement does not expressly state whether the FAA or TAA applies. However, the record
establishes that the proposed transaction between Green and Rapid Settlements involved interstate commerce: Green is a
Florida resident who contracted with Rapid Settlements, a Texas corporation. See In re People's Choice Home Loan, Inc., 225 S.
W.3d 35, 40-41 (Tex. App.--El Paso 2005, no pet.). We hold the FAA applies because the contract involves interstate commerce
Letney further argued in her responses that arbitration pursuant to the FAA would be improper, despite the
selection of FAA arbitration in the arbitration clause, because the contract in question, for legal services in
Texas concerning a Texas-based claim, had no impact on interstate commerce. The majority of courts that
have examined this issue have upheld the right of the parties to an arbitration agreement to choose a
particular arbitration scheme (state or federal) to govern any resulting arbitration under the agreement. See,
e.g., Volt Info. Sciences, Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 479 (1988) (“[P]
arties are generally free to structure their arbitration agreements as they see fit. Just as they may limit by
contract the issues which they will arbitrate, so too may they specify by contract the rules under which that
arbitration will be conducted.”); In re Olshan Found. Repair Co., L.L.C., 277 S.W.3d 124, 130-132 (Tex. App.—
Dallas 2009, orig. proceeding) (following Volt); Ikon Office Solutions, Inc. v. Eifert, 2 S.W.3d 688, 696 (Tex.
App.—Houston [14th Dist.] 1999, orig. proceeding) (considering whether parties’ transaction affected
interstate commerce only after determining contract was silent regarding whether FAA or TAA was to apply).
Here, the arbitration provision in question clearly specified arbitration under the FAA; accordingly, the trial
court erred if it denied the motion to compel because the transaction in question had no impact on interstate
Pham v. Letney (Tex.App.- Houston [1st Dist.] March 4, 2010)(Hedges) (arbitration agreement in legal services
contract between lawyer and client enforced by mandamus, interlocutory appeal of order denying motion to
compel arbitration dismissed, FAA applied, TAA would be preempted)
INTERLOCUTORY APPEAL DISMISSED: Opinion by Chief Justice Hedges
Before Chief Justice Hedges, Justices Seymore and Justice Sullivan
14-08-01153-CV Steven Tuan Pham v. Shelly Letney
Appeal from 215th District Court of Harris County
Trial Court Judge: Levi James Benton
Dissenting Opinion by Justice Seymore in Pham v. Letney
(In consideration of the unique relationship between attorney and client, Justice Seymore writes dissenting
opinion to express his concern about mandatory arbitration provisions in attorney-client agreements)
In re Tuam Pham (pdf) (Tex.App.- Houston [1st Dist.] March 4, 2010)(Hedges)
MOTION OR WRIT GRANTED: Opinion by Chief Justice Adele Hedges
Before Chief Justice Hedges, Justices Seymore and Sullivan
14-09-00387-CV In Re Steven Tuam Pham
Appeal from 215th District Court of Harris County
Dissenting Opinion by Justice Seymore In re Tuam Pham (pdf)
When a party asserts a right to arbitrate under the FAA, the question of whether the dispute is subject to
arbitration is determined under federal law. Prudential Secs. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex.
1995). As a matter of federal law, any doubts concerning the scope of arbitrable issues are resolved in favor
of arbitration, whether pertaining to the construction of the contract or a defense to arbitration. See In re Serv.
Corp. Int’l, 85 S.W.3d 171, 174 (Tex. 2002). In determining whether to compel arbitration, a court must decide
two issues: (1) whether a valid, enforceable arbitration agreement exists and, (2) if so, whether the claims
asserted fall within the scope of the agreement. In re Tenet Healthcare, Ltd., 84 S.W.3d 760, 765 (Tex. App.—
Houston [1st Dist.] 2002, orig. proceeding) (citing In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573
(Tex. 1999)). A court has no discretion and must compel arbitration if the answer to both questions is
affirmative. In re Tenet Healthcare, Ltd., 84 S.W.3d at 765. “An order to arbitrate should not be denied unless
it can be said with positive assurance that the arbitration clause is not susceptible of an interpretation that
covers the asserted dispute.” Hou-Scape, Inc. v. The Honorable Russell Lloyd, 945 S.W.2d 202, 205 (Tex. App.
—Houston [1st Dist.] 1997, no writ) (citing United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574,
582–83, 80 S. Ct. 1347, 1353 (1960)). To determine if a claim falls within the scope of an arbitration
agreement, we focus on the facts alleged, not the causes of action asserted. Hou-Scape, 945 S.W.2d at 205.
In re Halliburton Co. (Tex.App.- Houston [1st Dist.] Jul. 2, 2009)(Sharp) (arbitration mandamus) (FAA: trial
court should have granted motion to compel arbitration in employment dispute)
GRANT PETITION FOR WRIT OF MANDAMUS: Opinion by Justice Sharp
Before Chief Justice Radack, Justices Taft and Sharp
01-09-00150-CV In re Halliburton Company
Appeal from 133rd District Court of Harris County
Trial Court Judge: Jaclanel M. McFarland
ODL Services, Inc. v. Conoco Phillips Co. (Tex.App.- Houston [1st Dist.] Aug. 14, 2008)(Taft)
(arbitration, whether FAA applies, arbitrability, motion to stay arbitration, challenge to findings of fact)
AFFIRM TC JUDGMENT: Opinion by Justice Taft
Before Justices Taft, Jennings and Bland
01-08-00020-CV ODL Services , Inc. v. Conoco Phillips Company
Appeal from 295th District Court of Harris County
Trial Court Judge: Hon. Tracy Christopher
Under the FAA, state law governs the question of whether a litigant has agreed to
arbitrate. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45, 115 S. Ct. 1920, 1924 (1995); In re
Weekley Homes, L.P., 180 S.W.3d 127, 130-31 (Tex. 2005).
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