AN Luxury Imports, Ltd. D/B/A BMW of Dallas, Inc., AN Luxury Imports GP, LLC, and United States Warranty Corp. v. D. Scott Southall ( 2015 )

ACCEPTED
01-15-00194-cv
FIRST COURT OF APPEALS
HOUSTON, TEXAS
6/4/2015 3:32:13 PM
CHRISTOPHER PRINE
CLERK
NO. 01-15-00194-CV
IN THE COURT OF APPEALS
FIRST DISTRICT OF TEXAS FILED IN
1st COURT OF APPEALS
HOUSTON, TEXAS HOUSTON, TEXAS
6/4/2015 3:32:13 PM
CHRISTOPHER A. PRINE
AN LUXURY IMPORTS, L.T.D. d/b/a BMW OF DALLAS, AN Clerk
LUXURY
IMPORTS GP., LLC and UNITED STATES WARRANTY CORP.
APPELLANTS
TRIAL COURT NO. 2014-33551
VS.
D. SCOTT SOUTHALL
APPELLEE
On Appeal from the 295th District Court
Of Harris County, Texas
APPELLANTS’ REPLY BRIEF
JOHNSON, DeLUCA, KURISKY & GOULD, P.C.
1221 Lamar Street, Suite 1000
Houston, Texas 77057
(713) 652-2525 – Telephone
(713) 652-5130 – Facsimile
GEORGE A. KURISKY, JR.
SBT No.: 11767700
DANIEL J. KASPRZAK
SBT No.: 11105300
MARK A. BANKSTON
SBT No.: 24001430
ATTORNEYS FOR APPELLANTS
IDENTITIES OF PARTIES AND COUNSEL
The following is a complete list of names and addresses of all parties to the
trial court proceeding and their counsel:
Appellants: AN Luxury Imports, Ltd d/b/a BMW of Dallas
AN Luxury Imports GP, LLC
United States Warranty Corp.
Appellants’ Counsel: George A. Kurisky, Jr.
Daniel J. Kasprzak
Mark A. Bankston
Johnson DeLuca Kurisky & Gould P.C.
1221 Lamar Street
Suite 1000
Houston, Texas 77010
Appellee: D. Scott Southall
Appellee’s Counsel Victor S. Elgohary
6406 Arcadia Bend Ct.
Houston, Texas 77041
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INDEX OF AUTHORITIES
CASES
Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) ...............................2
Cunningham v. Fleetwood Homes of George, Inc., 253 F.3d 611
(11th Cir. 2001) ...................................................................................................3, 4
Dean Witter Reynolds v. Byrd, 470 U.S. 213, 217 (1985).........................................3
Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312
(Tex.2005) (per curiam) ...........................................................................................2
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003) .......................1, 2
Jones v. General Motors, Corp., 640 F. Supp. 2d 1124 (D. Ariz. 2009) ...................4
Kaye/Bassman Intern. Corp. v. Help Desk Now, Inc., 321 S.W.3d 806, 813
(Tex. App.—Dallas 2010, pet. denied) ....................................................................2
Patriot Mfg., Inc. v. Jackson, 929 So. 2d 997 (Ala. 2005) ........................................4
Walton v. Rose Mobile Homes, LLC, 298 F.3d 470 (5th Cir. 2002) ....................4, 5
STATUTES
MAGNUSON-MOSS WARRANTY ACT 15 U.S.C. §§ 2301 .......................................4, 5
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REPLY
Appellee’s argument that the agreements at issue in this case give the courts
sole and exclusive jurisdiction over a dispute arising under these agreements is
without merit. In making this argument, Appellee ignores the following language
in the Sale Agreement, which incorporates the Arbitration Agreement by reference:
“If you have signed an arbitration agreement, it is incorporated into and made
a part of this agreement for all purposes” and “If You have executed an
Arbitration Agreement in conjunction with this Agreement such Arbitration
Agreement shall be incorporated herein by reference and made a part of this
Agreement.” (Cl. R. a pp. 30 and 31) (emphasis added). Upon reading all of the
Sale Agreement and all of Paragraph 17, therein, it is apparent that Southall and
BMW of Dallas did not intend to give the courts of the State of Texas (in the
county most convenient for Southall) exclusive jurisdiction over disputes arising
from Southall’s Purchase Contract.
Even if there were conflicting language in the Sale Agreement and the
Arbitration Agreement, which Defendants dispute, the Court must ascertain the
true intentions of the parties as expressed in the written instruments. See J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). The Court must
consider the entire writing and attempt to harmonize and give effect to all the
provisions of the contract by analyzing the provisions with reference to the whole
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agreement. Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex.
2005) (per curiam); J.M. Davidson, 128 S.W.3d at 229. When the provisions of a
contract appear to conflict, courts attempt to harmonize the provisions and assume
the parties intended every provision to have some effect. Kaye/Bassman Intern.
Corp. v. Help Desk Now, Inc., 321 S.W.3d 806, 813 (Tex. App.—Dallas 2010, pet.
denied). Courts must resolve any doubts about an agreement to arbitrate in favor
of arbitration. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996). The
plain language of the Sale Agreement and the Arbitration make it clear that the
parties intended there to be one contract for the sale of the Vehicle – not several
separate contracts that can be interpreted apart from one another (as Southall
urges).
Appellee’s representation to the Court in his Brief that U.S. Warranty did
not file an answer with the State Court is mistaken. Although omitted from the
record, U.S. Warranty filed Defendant’s Original Answer Subject to Arbitration
and Special Exceptions on August 25, 2014. Appellee admits that U.S. Warranty
joined in the Motion to Compel Arbitration. Further, Appellee did not secure a
default judgment against U.S. Warranty because U.S. Warranty answered the
lawsuit.
U.S. Warranty is not a signatory to the Arbitration Agreement. (Cl. R. at p.
32). The claims asserted by Southall against U.S. Warranty are factually
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intertwined with the claims asserted against BMW of Dallas and ANLI. In fact,
the claims are identical. Additionally, the Warranty Agreement, Arbitration
Agreement and the Sale Agreement were all signed as components of one
transaction and must be read together. Southall agreed to arbitrate his claims
against U.S. Warranty. Moreover, Southall seeks to assert rights and retain
benefits under the Warranty Agreement and Sale Agreement, but wishes to avoid
application of the Arbitration Agreement. Southall is equitably estopped from
avoiding arbitration.
Even if the claims against U.S. Warranty cannot be compelled to arbitration,
the Court must order the claims against BMW of Dallas and ANLI to arbitration.
The Supreme Court of the United States made it clear that the Federal Arbitration
Act requires arbitrable claims to be compelled to arbitration, even where the result
would be “the possibly inefficient maintenance of separate proceedings in different
forums.” Dean Witter Reynolds v. Byrd, 470 U.S. 213, 217 (1985). Therefore, the
trial court’s order denying arbitration of the Southall’s claims must be reversed. If
the parties or this Court wish to avoid piecemeal litigation, this Court can order all
claims asserted against the collective Defendants to be arbitrated together.
Appellee’s reliance on Cunningham v. Fleetwood Homes of George, Inc.,
253 F.3d 611 (11th Cir. 2001) is misplaced. In Cunningham, buyers of a new
mobile home sued the seller and manufacturer, alleging, inter alia, claims of fraud,
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breach of contract, negligence and breach of express and implied warranties. Id. at
613. As part of the sales transaction, the buyers executed an arbitration agreement
with the seller. Id. Both the seller and manufacturer moved to compel arbitration.
Id. The district court signed an order compelling all claims except alleged
violations of the Magnuson-Moss Warranty Act, 15 U.SC. §§ 2301 et seq. to
arbitration. Id. The manufacturer appealed and the Eleventh Circuit held that the
manufacturer could not utilize its third-party beneficiary status under the
arbitration agreement between the buyer and seller to compel arbitration of the
Magnuson-Moss warranty claims. Id. at 623-24. The facts in Cunningham are
analogous to the instant case because BMW of Dallas is both the seller of the
Vehicle and a party to the Arbitration Agreement, while U.S. Warranty is a third-
party beneficiary of the Arbitration Agreement. The holding in Cunningham1
supports Appellants’ position that the arbitrable claims must be compelled to
arbitration because the Eleventh Circuit affirmed the decision of the trial court.
The Fifth Circuit held in Walton v. Rose Mobile Homes, LLC, 298 F.3d 470
(5th Cir. 2002) that the Magnuson-Moss Warranty Act does not preclude binding
arbitration of claims pursuant to a valid binding arbitration agreement, which
courts must enforce pursuant to the FAA. The Walton case also concerned a
1
The Supreme Court of Alabama declined to follow Cunningham in holding that
arbitration agreements are not required to be contained within written warranties to be
enforceable. Patriot Mfg., Inc. v. Jackson, 929 So. 2d 997 (Ala. 2005). See also Jones v.
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dispute between buyers of a mobile home and the manufacturer and retail seller.
Id. at 471-472. The buyers in Walton made the same arguments urged here by
Southall. Id. at 472-473. The district court ordered all claims, including those
against the retail seller, except for the Magnuson Moss warranty claims, to
arbitration. Id. The Fifth Circuit concluded that the manufacturer’s warranty
included an arbitration agreement and ordered the Magnuson Moss Warranty
claims to arbitration as well. Id. at 479. Because the arbitrable claims against
BMW of Dallas and U.S. Warranty must be compelled to arbitration, the Court
should reverse the order of the trial court in this case.
CONCLUSION
The trial court’s order denying arbitration should be reversed because
Southall and BMW of Dallas agreed to submit disputes, such as the instant case, to
arbitration and Southall’s claims in this case are within the scope of the Arbitration
Agreement. Southall’s claims against U.S. Warranty fall within the scope of the
Arbitration Agreement because the Arbitration Agreement expressly provides that
claims against third party are subject to arbitration if they arise as a result of
Southall’s dealings with BMW of Dallas. Additionally, Southall’s claims against
U.S. Warranty are factually intertwined with his claims against BMW of Dallas.
Even if Southall’s claims against U.S. Warranty cannot be compelled to arbitration
General Motors, Corp., 640 F. Supp. 2d 1124 (D. Ariz. 2009) (holding that vehicle purchaser’s
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(and they can), the arbitrable claims must be compelled to arbitration even if the
result is piecemeal litigation.
PRAYER
WHEREFORE, PREMISES CONSIDERED, AN LUXURY IMPORTS,
L.T.D. d/b/a BMW OF DALLAS, AN LUXURY IMPORTS GP., LLC and
UNITED STATES WARRANTY CORP. respectfully pray that this Court reverse
the Order of the trial court denying arbitration dated February 9, 2015, and grant
Defendants such and further relief, both general and special, at law or in equity, to
which it may show itself to be justly entitled.
Respectfully submitted,
JOHNSON DELUCA KURISKY & GOULD, P.C.
By: /s/ George A. Kurisky, Jr.
GEORGE A. KURISKY, JR.
SBT No: 11767700
DANIEL J. KASPRZAK
Texas Bar No. 11105300
MARK A. BANKSTON
SBT No.: 24001430
4 Houston Center
1221 Lamar Street, Suite 1000
Houston, Texas 77010
(713) 652-2525 - Telephone
(713) 652-5130 - Facsimile
ATTORNEYS FOR APPELLANTS
claims under the Magnuson-Moss Warranty Act were not exempt from arbitration)
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CERTIFICATE OF COMPLIANCE
As required by Rule 9.4, Texas Rules of Appellate Procedure, the
undersigned certifies that this brief contains 1,284 words, exclusive of the portions
described in Rule 9.4(i)(1).
/s/George A. Kurisky, Jr.
George A. Kurisky, Jr.
CERTIFICATE OF SERVICE
I certify that on the 4th day of June, 2015, a true and correct copy of the
foregoing document was forwarded as indicated to all counsel of record listed
below:
Via email: victor@vselgohary.com
and U.S. Mail
Victor S. Elgohary
6406 Arcadia Bend Ct.
Houston, Texas 77041
Counsel for Plaintiff, D. Scot Southall
/s/ Mark A. Bankston
Mark A. Bankston
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