law-arbitration-no-agreement-to-arbitrate FAA

“Arbitration agreements are interpreted under traditional contract principles.”
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). “In construing a
written contract, the primary concern of the court is to ascertain the true intentions of
the parties as expressed in the instrument.” Coker v. Coker, 650 S.W.2d 391, 393
(Tex. 1983). “To achieve this objective, courts should examine and consider the
entire writing in an effort to harmonize and give effect to all the provisions of the
contract so that none will be rendered meaningless.” Id. (emphasis supplied). “No
single provision taken alone will be given controlling effect; rather, all the provisions
must be considered with reference to the whole instrument.” Id. “Texas courts
generally apply Texas procedural law even while applying the parties’ contractual
choice of law for substantive matters.” Nexen, Inc. v. Gulf Interstate Eng’g Co., 224
S.W.3d 412, 417 (Tex. App.—Houston [1st Dist.] 2006, no pet.). “When the only
evidence before the court is the uncontroverted opinions of a foreign law expert, a
court generally will accept those opinions as true as long as they are reasonable and
consistent with the text of the law.” Ahumada v. Dow Chemical Co., 992 S.W.2d
555, 559 (Tex. App.—Houston [14th Dist.] 1999, pet. denied).
In re Aramco Services Co (Tex.App.- Houston [1st Dist.] Mar. 19, 2010)(Sharp)
arbitration mandamus) (choice of law and forum and language for arbitration and notices)
Justice Sharp      
Before Justices Keyes, Sharp and Massengale    
01-09-00624-CV In re Aramco Services Company    
Appeal from 334th District Court of Harris County
Trial Court Judge:
Hon Sharon McCally  
In light of our conclusion that the trial court could not be the “Authority”
empowered to appoint arbitrators pursuant to the parties’ agreement, we do not reach
the question concerning the empanelment of non-Muslim arbitrators.


Stewart & Stevenson, L.L.C. v. Galveston Party Boats, Inc. (Tex.App.- Houston [1st Dist.] Nov. 5,2009)(Keyes)
consolidated interlocutory appeal and petition for writ of mandamus challenging the trial court’s order denying
a motion to compel arbitration)(court of appeals dismisses the interlocutory appeal for lack of jurisdiction and
denies the petition for writ of mandamus) (
no valid underlying agreement to arbitrate dispute) (FAA vs. TAA)
DISMISS APPEAL 9/5: Opinion by
Justice Keyes      
Before Justices Keyes, Hanks and Bland    
01-09-00030-CV  Stewart & Stevenson, L.L.C., and MTU Detroit Diesel, Inc. v. Galveston Party Boats, Inc., and
Boat Service of Galveston    
Appeal from 405th District Court of Galveston County
Trial Court Judge:  Hon. Wayne J. Mallia

No Agreement to Arbitrate

In its first issue, Rapid asserts the trial court erred in vacating the arbitrator's award because Transamerica did
not establish one of the
exclusive grounds to vacate an arbitrator's award under the FAA. See 9 U.S.C.
S. § 10. Transamerica responds that the
arbitrator exceeded his authority by purporting to bind Transamerica.
Transamerica explains that it never agreed to arbitrate its disputes with Rapid and therefore cannot be bound
by the arbitrator's order.
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.
§ 10(a)(4).
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  
The court of appeals reviews de novo a trial court's decision to confirm or vacate an arbitration award under the FAA. Myer v.
Americo Life, Inc., 232 S.W.3d 401, 407 (Tex. App.--Dallas 2007, no pet.). A district court may
vacate an award under the
only if (1) the award was procured by fraud, corruption, or undue means; (2) there was evidence of
partiality or corruption among the arbitrators; (3) the arbitrators were guilty of misconduct that prejudiced the
rights of a party; or (4) the arbitrators exceeded their powers. 9 U.S.C.S. § 10(a). Transamerica invokes the
fourth ground for vacatur, asserting the arbitrator had no authority to bind Transamerica because the arbitrator
lacked jurisdiction over Transamerica.

It goes without saying that a contract cannot bind a nonparty." EEOC v. Waffle House, Inc., 534 U.S.
279, 294, 122 S. Ct. 754, 764 (2002). "[A] duty to arbitrate can arise only by agreement." United Steel, Paper &
Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union v. TriMas Corp., 531 F.3d 531, 535
(7th Cir. 2008) (citing United Steelworkers of Am. v. Warrior & Gulf, 363 U.S. 574, 582, 80 S. Ct. 1347, 1352

gateway dispute about whether the parties are bound by a given arbitration clause raises a 'question of
arbitrability' for a court to decide." Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S. Ct. 588, 592
(2002); see also AT&T Techs., Inc. v. Communc'ns Workers of Am., 475 U.S. 643, 649, 106 S. Ct. 1415, 1418
(1986); TriMas Corp., 531 F.3d at 535; Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 219 (5th Cir.
2003) (holding that "where a party attacks the very existence of an agreement, as opposed to its continued
validity or enforcement, the courts must first resolve that dispute"). 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).

It is undisputed that Transamerica did not agree to arbitrate with Rapid and Green. We must therefore consider
whether Transamerica might be bound as a

According to principles of contract and agency law, arbitration agreements may bind nonsignatories under any
of six theories: (1) incorporation by reference; (2) assumption; (3) agency; (4) alter ego; (5) equitable estoppel;
and (6) third party beneficiary. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005).
Transamerica does not fall into any of those six categories, and Rapid does not contend it does. We therefore
conclude Transamerica was not bound to arbitrate.

Rapid implies that whether Transamerica agreed to arbitrate is irrelevant because Transamerica has no
cognizable interest in the arbitration. However, the SSPA itself defines Transamerica as an "interested party."
See Transamerica Occidental Life Ins. Co. v. Rapid Settlements Ltd., No. 01-07-00137-CV, 2008 WL 5263265,
at *5 (Tex. App.--Houston [1st Dist.] Dec. 18, 2008, no pet.) (mem. op.) (citing Tex. Civ. Prac. & Rem. Code
Ann. §§ 141.002(7), .006). Two additional considerations support Transamerica's status as an interested party:

First, the SSPA provides that no structured settlement obligor or annuity issuer . . . can be required . . . to make
any payment to any transferee absent court approval of the transfer. This provision gives [the obligor] an
interest sufficient to contest any attempt to force it to make payments, in the absence of court approval, to
anyone other than the original payee. Second, if [the obligor] were to make payments to the wrong payee, it
could become subject to double liability. This potential liability gives [the obligor] a justiciable interest in any
attempt to transfer the right to receive structured payments absent court approval.

Transamerica, 2008 WL 5263265, at *5 (internal citations omitted). Because the SSPA acknowledges
Transamerica as an interested party, and because the arbitrator's award could potentially subject
Transamerica to double liability, Transamerica does have an interest in the outcome of the arbitration

Transamerica was not bound to arbitrate, yet the arbitrator's award purports to bind Transamerica by ordering
it to redirect structured settlement payments. We conclude the
arbitrator exceeded his authority in issuing
the award. See 9 U.S.C.S. § 10(a)(4). We hold the trial court did not err by vacating the arbitrator's award
because the arbitrator exceeded his powers in issuing an award against a party not subject to arbitration. See
id. § 10. We overrule Rapid's first issue.