Karolyn Shepherd, Individually and as Co-Successor Trustee of the Burge Family Revocable Trust, Judy Kay Stevenson, Individually and as Beneficiary of the Burge Family Revocable Trust, Jon Mark Shepherd, Individually, and Girard Securities, Inc. v. Bobby Burge, Individually and as Beneficiary of the Burge Family Revocable Trust

ACCEPTED
07-17-00295-cv
SEVENTH COURT OF APPEALS
AMARILLO, TEXAS
9/1/2017 12:20 PM
Vivian Long, Clerk
CAUSE NO. 07-17-00295-CV
COURT OF APPEALS
FILED IN
7th COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS AMARILLO, TEXAS
9/1/2017 12:20:22 PM
KAROLYN SHEPHERD, INDIVIDUALLY AND AS CO-SUCCESSOR
VIVIAN LONG
TRUSTEE OF THE BURGE FAMILY REVOCABLE TRUST, JUDY CLERKKAY
STEVENSON, INDIVIDUALLY AND AS BENEFICIARY OF THE BURGE
FAMILY REVOCABLE TRUST, JON MARK SHEPHERD, INDIVIDUALLY
AND GIRARD SECURITIES, INC.,
Appellants
v.
BOBBY BURGE, INDIVIDUALLY AND AS BENEFICIARY OF THE BURGE
FAMILY REVOCABLE FAMILY TRUST,
Appellees.
Appealed from the 72ND District Court
of Lubbock County, Texas
APPELLANT SHEPHERD’S BRIEF
KESSLER & COLLINS, P.C.
GARY S. KESSLER
State Bar No. 11358200
gsk@kesslercollins.com
DANIEL P. CALLAHAN
State Bar No. 03648700
dpc@kesslercollins.com
PHILIP G. McNICHOLAS
State Bar No. 24078987
pgm@kesslercollins.com
2100 Ross Avenue, Suite 750
Dallas, Texas 75201
(214) 379-0722 Telephone
(214) 373-4714 Facsimile
ORAL ARGUMENT NOT REQUESTED COUNSEL FOR APPELLANT
IDENTITY OF PARTIES AND COUNSEL
Appellants:
JON MARK SHEPHERD
Represented by:
Gary S. Kessler
State Bar No. 11358200
gsk@kesslercollins.com
DANIEL P. CALLAHAN
State Bar No. 03648700
dpc@kesslercollins.com
PHILIP G. McNICHOLAS
State Bar No. 24078987
KESSLER & COLLINS, P.C.
2100 Ross Avenue, Suite 750
Dallas, Texas 75201
(214) 379-0722 Telephone
(214) 373-4714 Facsimile
Other Appellant:
GIRARD SECURITIES, INC.
Represented by:
Martin S. Schnexnayder
Eron F. Reid
WINGET, SPADAFORA & SCHWARTZBERG, LLP
Two Riverway, Suite 725
Houston, Texas 77056
(713) 343-9200 Telephone
(713) 343-9201 Facsimile
Schnexnayder.m@wssllp.com
Reid.e@wssllp.com
ii
Appellees:
BOBBY BURGE, INDIVIDUALLY
AND AS BENEFICIARY OF BURGE FAMILY
REVOCABLE TRUST
Represented by:
J. Paul Manning
Field, Manning, Stone, Hawthorne & Aycock, P.C.
2112 Indiana Avenue
Lubbock, Texas 79410
(806) 792-0810 Telephone
(806) 792-9148 Facsimile
jpmanning@lubbocklawfirm.com
iii
TABLE OF CONTENTS
Page(s)
LIST OF ALL PARTIES AND COUNSEL ....................................................... ii
INDEX OF AUTHORITIES ................................................................. vi, vii, viii
I. STATEMENT OF THE CASE ................................................................ 1
II. STATEMENT REGARDING ORAL ARGUMENT ............................... 1
III. ISSUES PRESENTED .............................................................................. 1
IV. STATEMENT OF FACTS ........................................................................ 2
A. THE PARTIES AND BURGE’S CLAIMS ................................................ 2
B. THE ARBITRATION AGREEMENT AND THE MOTIONS TO COMPEL
ARBITRATION ................................................................................... 3
V. SUMMARY OF THE ARGUMENT ....................................................... 6
VI. ARGUMENT AND AUTHORITIES ....................................................... 6
A. JURISDICTION, ARBITRABILITY STANDARDS AND STANDARD OF
REVIEW ............................................................................................ 6
1. JURISDICTION FOR INTERLOCUTORY APPEAL ......................... 6
2. ARBITRATION STANDARDS .................................................... 7
3. STANDARD OF REVIEW........................................................... 8
B. THE TRIAL COURT ERRED IN FAILING TO COMPEL ARBITRATION OF
BURGE’S CLAIMS AGAINST GIRARD AND
SHEPHERD BECAUSE A VALID AGREEMENT TO ARBITRATE
SUCH CLAIMS EXISTED BETWEEN BURGE AND GIRARD AND
SHEPHERD ........................................................................................ 8
C. TEXAS RULES OF CONTRACT CONSTRUCTION ARE APPLICABLE
TO THE DETERMINATION OF WHETHER A VALID AGREEMENT TO
ARBITRATE EXISTED ...................................................................... 10
D. BURGE’S CLAIMS FALL WITHIN THE SCOPE OF THE ACCOUNT
DOCUMENTS’ ARBITRATION PROVISIONS ....................................... 12
iv
CONCLUSION AND PRAYER ..................................................................... ..15
CERTIFICATE OF SERVICE .......................................................................... 16
APPENDIX……………………………………………………………………17
v
INDEX OF AUTHORITIES
CASES PAGE(S)
Cases
Capital Income Properties-LXXX v. Blackmon,
843 S.W.2d 22 (Tex. 1992) ...........................................................................15
Chambers v. O'Quinn,
305 S.W.3d 141, 146 (Tex.App–Houston [1st Dist] 2009, pet denied). ..........7
Citizens Nat'l Bank v. Tex. & P. Ry. Co.,
136 Tex. 333, 150 S.W.2d 1003, 1006 (1941) ..............................................12
City of Pinehurst v. Spooner Addition Water Co.,
432 S.W.2d 515, 518 (Tex. 1968) .................................................................11
Emerald Texas, Inc. v. Peel,
920 S.W.2d 398, 404(Tex.App. – Houston [1st Dist. 1996, no pet.) .............13
In re BNP Paribas,
13-07-353-CV, 2008 WL 2208933, at *3-4 (Tex. App.—Corpus Christi
May 29, 2008, no pet.) ............................................................................ 12, 13
In re D. Wilson Const. Co.,
196 S.W.3d 774, 783 (Tex. 2006) ............................................................ 7, 12
In re FirstMerit Bank,
52 S.W.3d 749, 754 (Tex.2001) ................................................... 7, 10, 11, 14
In re J.D. Edwards World Solutions, Co.,
87 S.W.3d 546, 549 (Tex.2002) ....................................................................12
In re Merrill Lynch & Co.,
315 S.W.3d 888, 891, n. 3 (Tex. 2010) .......................................................6, 7
In re Merrill Lynch Trust Co. FSB,
235 S.W.3d 185, 190 (Tex. 2007) .................................................................13
vi
In re Mission Petroleum Carriers, Inc.,
13-04-00550-CV, 2005 WL 326848, at *2 (Tex. App.—Corpus Christi
Feb. 11, 2005, no pet.) ...................................................................................13
In re Palm Harbor Homes, Inc.,
195 S.W.3d 672, 678 (Tex. 2006) ................................................................10
In re Prudential Sec., Inc.,
159 S.W.3d 279, 283 (Tex.App.—Houston [14th Dist.] 2005,
orig. proceeding) ............................................................................................14
In re Vesta Ins. Group, Inc.,
192 S.W.3d 759, 762 (Tex. 2006) .................................................................12
Jack B. Anglin Co., Inc. v. Tipps,
842 S.W.2d 266, 268 (Tex. 1992) ........................................................ 7, 9, 13
J.M. Davidson, Inc. v. Webster,
128 S.W.3d 223, 229 (Tex. 2003) .................................................................10
Meyer v. WMCO-GP, LLC,
211 S.W.3d 302 (Tex. 2006) .........................................................................12
Myers v. Gulf Coast Minerals Mgmt. Corp.,
361 S.W.2d 193 .............................................................................................12
Pennzoil Company v. Arnold Oil Company, Inc.,
30 S.W.3d 494, 498 (Tex.App.—San Antonio 2000, orig. proceeding) .......13
Prudential Sec. Inc. v. Marshall,
909 S.W.2d 896, 900 (Tex. 1995) .......................................................... 12, 14
R & P Enters. v. LaGuarta, Garvel & Kirk, Inc.
596 S.W.2d 517. 518 (Tex. 1980) .................................................................10
Sidley Austin Brown & Wood, LLP v. J.A. Green Dev. Corp.,
327 S.W.3d 859, 862-63 (Tex. App.—Dallas 2010, no pet.) ..........................8
Spence & Howe Construction Co. v. Gulf Oil Corp.,
365 S.W.2d 631 (Tex. Sup. 1963) .................................................................11
vii
Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005) .................................................................10
Valero Energy Corp. v. Wagner & Brown,
777 S.W.2d 564, 566 (Tex. App. – El Paso 1989, writ denied) ............. 10, 13
Wee Tots Pediatrics, P.A. v. Morohunfola,
268 S.W.3d 784 (Tex. App.—Fort Worth 2008, no pet.) .............................14
STATUTES
TEX. CIV. PRAC. & REM. CODE §51.016.................................................................1, 6
TEX.CIV.PRAC. & REM. CODE §171.021(a) ................................................................8
TEX. CIV. PRAC. & REM. CODE §171.023(b) .............................................................9
TEX. CIV. PRAC. & REM. CODE §171.025 ..................................................................8
TEX.CIV.PRAC. & REM. CODE § 171.098 ...............................................................1, 6
9 U.S.C. §1 .................................................................................................................6
9 U.S.C. §3 .................................................................................................................8
9 U.S.C. §16(a)(1)(A)-(C) .........................................................................................6
OTHER
Texas Arbitration Act (Chpt. 171 of the Business & Commerce Code) ...................8
viii
TO THE HONORABLE COURT OF APPEALS:
COMES NOW Appellant Jon Mark Shepherd (“Shepherd”) and files this
Appellant’s Brief and would respectfully show the Court as follows:
I. STATEMENT OF CASE.
Appellee Bobby Burge (“Burge”) has filed suit against several Defendants
and asserts causes of action related to, among other things, two brokerage accounts
that had been opened with Girard Securities, Inc. (“Girard”), a registered broker-
dealer. Shepherd was a registered representative of Girard.
Appellants Shepherd and Girard both moved to compel arbitration of the
claims asserted against them pursuant to the arbitration agreements contained in
the account opening documents and to stay proceedings in the Trial Court pending
the completion of arbitration. The trial court denied those motions. Appellants file
this interlocutory appeal pursuant to Sections 51.016 and/or 171.098 of the Texas
Civil Practice and Remedies Code.
II. STATEMENT REGARDING ORAL ARGUMENT
The issues in this appeal are straightforward, and the facts are not
complicated. Shepherd does not think oral argument is necessary, but will
participate if one takes place.
1
III. ISSUE PRESENTED.
Did the Trial Court commit reversible error when it denied the Motions to
Compel Arbitration because a valid agreement to arbitrate Burges’ claims
against Shepherd and Girard existed?
IV. STATEMENT OF FACTS.
A. THE PARTIES AND BURGE’S CLAIMS.
Burge filed suit on September 21, 2016 in the 72nd District Court of Lubbock
County [C.R. 6]. Burge alleges that he is the brother of Defendants Karolyn
Shepherd and Judy Kay Stevenson (the “Sisters”). Burge further alleges that he
and his Sisters were the beneficiaries of trusts set up by their parents. Burge sued
his Sisters, Shepard, and Girard alleging that he had been cheated out of money
and/or property that had been placed in trust for him by his parents. Burge alleged,
inter alia, causes of action for fraud, unjust enrichment, conversion, breach of
fiduciary duty, theft liability, and conspiracy against all Defendants. See,
Plaintiff’s Original Petition, C.R. 6 – 19.
Girard is a registered broker-dealer and Shepherd was a registered
representative affiliated with Girard [C.R. 140]. There were two accounts at
Girard that are relevant to this appeal, both of which were opened in November of
2011: (1) a Premiere Select IRA account, opened by Alice Burge (“Mother”) (the
“IRA Account”); and (2) a Joint Tenant with Rights of Survivorship Account,
2
opened by Burge, his Mother, and his Sisters (“Joint Tenant Account”) [C.R. 140-
141].
Burge alleged that he had beneficial interests in both accounts, and they
were wrongfully closed and their assets were “moved” to other accounts in which
he had no interest. In effect, he alleges that the Defendants stole money from him
by emptying those accounts for the benefit of his Sisters [POP ¶¶3.08, 3.09, C.R.
8]. Burge also alleges theft of real property [POP ¶3.10, C.R. 9]. He alleges that
all Defendants (including Shepherd and Girard) acted together as part of a “. . .
plan to cut [Burge] out of his inheritance” [POP ¶3.13 C.R. 8].
B. THE ARBITRATION AGREEMENT AND THE MOTIONS TO COMPEL
ARBITRATION
Girard filed a Motion to Compel Arbitration on March 30, and relied on the
account opening documents for the IRA Account. See, Girard’s Motion at C.R.
126 – 130 and Exhibit A thereto at S.C.R. 4-24. Shepherd filed a Motion to
Compel Arbitration on May 4 which relied on account opening documents for both
the IRA Account and the Joint Account. See, Shepherd’s Motion, his Affidavit in
support, and Exhibits A and B thereto at C.R. 131 – 183.
Included in the account opening documents for the Joint Account attached to
Shepherd’s affidavit were documents entitled “Brokerage Access Form” [C.R. 172
- 176] and “Statement of Investment Selection” [C.R. 181 – 182]. Burge signed
both of those documents. See, C.R. 176 and 182 (in Appendix). Printed in a
3
conspicuous box just above Burge’s signature on both of those pages (the copy at
C.R. 182 is more legible) was the following language (emphasis added):
I represent that I have read the terms and conditions
concerning this account and agree to be bound by such
terms and conditions as currently in effect and as may be
amended from time to time. I acknowledge receipt of the
margin disclosure statement and the disclosure of credit
terms on transactions, this account is governed by a pre-
dispute arbitration clause, which is found on the last
page of the customer agreement. I acknowledge receipt
of the pre-dispute arbitration clause.
Shepherd signed both documents just below Burge. See, CR 176, 182.
The Customer Agreement was included in the account opening documents
for the IRA Account attached to Shepherd’s Affidavit. See, C.R. 156 – 162. It
was also included in Exhibit A to Girard’ Motion [S.C.R. 18 - 24]. The pre-dispute
arbitration agreement was included in that Customer Agreement and provides as
follows:
“By signing an arbitration agreement, the parties agree as
follows:
(A) All parties to this agreement are giving up the right
to sue each other in court, including the right to a trial by
jury, except as provided by the rules of the arbitration
forum in which a claim is filed.
* * *
4
All controversies that may arise between me, You1 and
NFS concerning any subject matter, issue or
circumstance whatsoever including, but not limited to,
controversies concerning any account, order or
transaction, or the continuation, performance,
interpretation or breach of this or any other agreement
between me, You and NFS whether entered into or
arising before, on or after the date this account is opened)
shall be determined by arbitration in accordance with the
rules then prevailing of the Financial Industry Regulatory
Authority (FINRA) or any United States securities self-
regulatory organization or United States securities
exchange of which the person, entity or entities against
whom the claim is made Is a member, as I may
designate." [C.R. 161]
Thus, this arbitration clause was referenced in the account opening
documents for both accounts, and was in the record in two places in connection
with the Motions to Compel Arbitration – in Exhibit A to Girard’s Motion, and in
Exhibit B to Shepherd’s Affidavit filed with his Motion. Burge’s signature was on
two separate documents right under an acknowledgement that he had received the
arbitration clause and was subject to it [C.R. 176 and 182]. Shepherd signed the
same pages, thus creating a binding agreement to arbitrate.
All of these documents had been on file for almost a month when Burge
filed a Response to both Motions on May 30 [C.R. 185 – 204]. In support of his
Response, Burge filed his own Affidavit [C.R. 206 – 207]. Notably -- Burge did
not deny executing the Joint Account documents and did not deny agreeing to
1
“You” is defined as the broker – dealer. See C.R. 156.
5
the arbitration clause in the documents that were referenced directly above his
signature on the “Brokerage Access Form” and “Statement of Investment
Selection” documents.
V. SUMMARY OF THE ARGUMENT.
The terms of the arbitration agreement and the evidence that Burge had
agreed to it were not controverted. Since Burge’s claims indisputably involve a
controversy with Shepherd and Girard relating to the IRA Account and/or the Joint
Account, those claims fall within the scope of the arbitration agreement.
Appellants timely moved to compel arbitration in this proceeding and, based on the
applicable facts and law, the trial court committed reversible error by denying
Appellants’ motions to compel arbitration and otherwise stay the proceedings in
the Trial Court pending arbitration.
VI. ARGUMENT AND AUTHORITIES.
A. JURISDICTION, ARBITRABILITY STANDARDS AND STANDARD OF
REVIEW.
1. Jurisdiction for Interlocutory Appeal.
A person may take an interlocutory appeal to the Court of Appeals from an
order of a District Court denying a motion to compel arbitration whether the
motion relies on the Federal Arbitration Act (9 U.S.C. §1, et seq.) or the Texas
Arbitration Act (chapter 171 of the Business & Commerce Code). See, TEX. CIV.
PRAC. & REM. CODE §51.016, 171.098; 9 U.S.C. §16(a)(1)(A)-(C). See also, In re
6
Merrill Lynch & Co., 315 S.W.3d 888, 891, n. 3 (Tex. 2010). Shepherd moved to
compel arbitration under both the federal and state statutes [C.R. 133, 137] as did
Girard [C.R. 126].
2. Arbitration Standards.
In determining whether to compel arbitration, the court must decide: (1)
whether a valid, enforceable arbitration agreement exists, and (2) if so, whether the
claims asserted fall within the scope of that agreement. In re D. Wilson Constr.
Co., 196 S.W.3d 774, 781 (Tex. 2006); Chambers v. O’Quinn, 305 S.W.3d 141,
146 (Tex.App.—Houston, [1st Dist] 2009, pet. denied). The first question is a
question of fact. Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 268 (Tex.
1992). The party seeking to compel arbitration has the initial burden to establish
his right to the remedy under the first prong; that is, to establish that a valid
arbitration agreement exists.
Once a party seeking to compel arbitration establishes an agreement to
arbitrate, the court must then determine whether the arbitration agreement covers
the nonmovant's claims. Like other questions of contract construction, that is a
question of law. In re FirstMerit Bank, 52 S.W.3d 749, 753-54 (Tex. 2001).
When a movant establishes the existence of an agreement, and that the
agreement applies to the dispute, the trial court has no discretion but to compel
arbitration and stay its own proceedings. In re FirstMerit Bank, at 754;
7
TEX.CIV.PRAC. & REM CODE §171.025 (“The court shall stay a proceeding that
involves an issue subject to arbitration . . . .”) A trial court “shall order the parties
to arbitrate” upon a showing of an agreement to arbitrate. Tex.Civ.Prac. & Rem.
Code §171.021(a). Section 3 of the FAA (9 U.S.C. §3) similarly provides
(emphasis added):
If any suit or proceeding be brought in any of the courts
of the United States upon any issue referable to
arbitration under an agreement in writing for such
arbitration, the court in which such suit is pending . . .
shall on application of one of the parties stay the trial of
the action until such arbitration has been had in
accordance with the terms of the agreement . . . .
3. Standard of Review.
Appeals of orders denying arbitration under the both the federal and state
statutes are subject to a no-evidence standard for the trial court’s factual
determinations, and a de novo standard for legal determinations. This standard is
the same as the abuse of discretion standard of review that is applied to
interlocutory appeals under the FAA. Sidley Austin Brown & Wood, LLP v. J.A.
Green Dev. Corp., 327 S.W.3d 859, 862-63 (Tex. App.—Dallas 2010, no pet.).
B. THE TRIAL COURT ERRED IN FAILING TO COMPEL ARBITRATION OF
BURGE’S CLAIMS AGAINST GIRARD AND SHEPHERD BECAUSE A
VALID AGREEMENT TO ARBITRATE SUCH CLAIMS EXISTED
BETWEEN BURGE AND GIRARD AND SHEPHERD.
As noted previously, the first step in determining whether parties should be
compelled to arbitrate a dispute is to consider whether the parties agreed to
8
arbitrate. Texas law controls the resolution of that issue under both the federal and
state statutes. “When Texas courts are called on to decide if disputed claims fall
within the scope of an arbitration clause under the Federal Act, Texas procedure
controls that determination.” Anglin, 842 S.W.2d at 268. The existence of an
arbitration agreement is a question of fact, which is to be resolved “summarily”.
Tex.Civ.Prac. & Rem. Code §171.023(b). Such a summary resolution should be
made on the basis of affidavits whenever possible. If the movant meets his burden
with affidavits, then the burden shifts to the opponent to controvert it by affidavits.
Anglin, 842 S.W.2d at 268.
Issues of fact that are controverted in the affidavits may then need to be
resolved by an evidentiary hearing. As the Supreme Court wrote in Anglin Co., 842
S.W.2d at 269: “[T]he trial court may summarily decide whether to compel
arbitration on the basis of affidavits, pleadings, discovery, and stipulations.
However, if the material facts necessary to determine the issue are controverted, by
an opposing affidavit or otherwise admissible evidence, the trial court must
conduct an evidentiary hearing to determine the disputed material facts.”
Here, Burge did not controvert any of the evidence submitted by Shepherd
or Girard that he had agreed to the arbitration provision in the Customer
Agreement. Burge did not even object to any of that evidence. There was no
disputed issue of fact for the Trial Court to resolve – the only evidence in front of
9
the Trial Court was that that an agreement to arbitrate existed between Burge on
the one hand and Girard / Shepherd on the other.
The only other issue in front of the trial court was– Does that agreement
cover the claims against Shepherd and Girard? As demonstrated below, the answer
is clearly “yes”.
C. Texas Rules of Contract Construction are Applicable to the
Determination of Whether A Valid Agreement to Arbitrate
Existed.
Construction of the scope of arbitration agreement is a question of law. In re
FirstMerit Bank, 52 S.W.3d 749, 754 (Tex. 2001). Texas Courts generally apply
state-law principles governing the formation of contracts to claims under the FAA
as well as the Texas Arbitration Act. In re Palm Harbor Homes, Inc., 195 S.W.3d
672, 678 (Tex.2006). 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.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005); J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003); R & P Enters. v.
LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980). To achieve this
objective, we must 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. Valence Operating Co. v. Dorsett, 164 S.W.3d at 661; R &
P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d at 518.
10
A strong presumption favoring arbitration arises after the party seeking to
compel arbitration proves that a valid arbitration agreement exists. Texas Courts
must resolve any doubts about an arbitration agreement’s scope in favor of
arbitration. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001).
Finally, to determine whether an arbitration agreement covers a party’s claims, a
court must focus on the Petition’s factual allegations, not the legal causes of action
asserted. Id., at 754.
One general principle of contract construction is that the parties to an
instrument intend every clause to have some effect and in some measure to
evidence their agreement. City of Pinehurst v. Spooner Addition Water Co., 432
S.W.2d 515, 518 (Tex. 1968) (citing the Restatement of the Law of Contracts §
230 (1932) with approval). As said in the Restatement, § 230, supra, "[the]
standard of interpretation … is the meaning that would be attached to the
integration by a reasonably intelligent person acquainted with all operative usages
and knowing all the circumstances prior to and contemporaneous with the making
of the integration.” Id. Where a question relating to the construction of a contract
is presented, as here, the Courts are to take the wording of the instrument, consider
the same in the light of the surrounding circumstances, and apply the pertinent
rules of construction thereto in order to settle the meaning of the contract. Spence
& Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631 (Tex. Sup.1963).
11
Finally, no single provision taken alone will be given controlling effect; rather, all
the provisions must be considered with reference to the whole instrument. Myers v.
Gulf Coast Minerals Mgmt. Corp., 361 S.W.2d 193, 196 (Tex.1962); Citizens Nat'l
Bank v. Tex. & P. Ry. Co., 136 Tex. 333, 150 S.W.2d 1003, 1006 (1941).
D. Burge’s Claims Fall Within the Scope of the Account Documents’
Arbitration Provisions.
Once Appellants established the existence of a valid arbitration agreement,
the burden shifted to Burge to defeat enforcement of that agreement. In re J.D.
Edwards World Solutions, Co., 87 S.W.3d 546, 549 (Tex.2002) (per curiam). The
Texas Supreme Court has held that the burden is on the party resisting arbitration
“to show that their claims fell outside the scope of the arbitration agreement.”
Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 900 (Tex. 1995). “A court
should not deny arbitration unless it can be said with positive assurance that an
arbitration clause is not susceptible of an interpretation which would cover the
dispute at issue.” In re D. Wilson Const. Co., 196 S.W.3d 774, 783 (Tex. 2006)
(quoting Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995))
(emphasis in original) (internal citations omitted).
Indeed, arbitration agreements even cover disputes involving parties who did
not sign the agreement when their rights arise from or directly relate to the
agreement. See In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 762 (Tex. 2006);
Meyer v. WMCO-GP, LLC, 211 S.W.3d 302 (Tex. 2006); see, e.g., In re BNP
12
Paribas, 13-07-353-CV, 2008 WL 2208933, at *3-4 (Tex. App.—Corpus Christi
May 29, 2008, no pet.).
Actions against individual employees for conduct which in substance arises
in the course of employment are subject to arbitration agreements with their
employers. See, e.g., In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 190
(Tex. 2007) (“Because the plaintiffs’ claims against Medina are in substance
claims against Merrill Lynch, they must abide by their agreement to arbitrate those
claims.”).
Burge’s claims against Shepherd arise out of and/or relate to the IRA
Account and the Joint Account and otherwise satisfy the various criteria of an
arbitrable claim. Generally, if the facts alleged “touch matters,” “have a significant
relationship” to, or are “factually intertwined” with the contract that is subject to
the arbitration agreement, the claim is arbitrable. In re Mission Petroleum
Carriers, Inc., 13-04-00550-CV, 2005 WL 326848, at *2 (Tex. App.—Corpus
Christi Feb. 11, 2005, no pet.) (Federal Act) (quoting Pennzoil Company v. Arnold
Oil Company, Inc., 30 S.W.3d 494, 498 (Tex.App.—San Antonio 2000, orig.
proceeding); Emerald Texas, Inc. v. Peel, 920 S.W.2d 398, 404(Tex.App. –
Houston [1st Dist. 1996, no pet.) (Texas Act), citing Valero Energy Corp. v.
Wagner & Brown, 777 S.W.2d 564, 566 (Tex. App. – El Paso 1989, writ denied).
13
The Court must focus on the factual allegations of the Plaintiff’s Petition,
rather than the legal causes of action asserted. In re FirstMerit Bank, 52 S.W.3d
749, 754 (Tex. 2001). The Court should consider whether the facts alleged are
intertwined with the contract containing the arbitration clause. Jack B. Anglin Co.,
842 S.W.2d at 271. To fall within the scope of an arbitration provision, the
allegations need only be factually intertwined with arbitrable claims or otherwise
touch upon the subject matter of the agreement containing the arbitration
provision. In re Prudential Sec., Inc., 159 S.W.3d 279, 283 (Tex.App.—Houston
[14th Dist.] 2005, orig. proceeding) (emphasis added).
Under the broad language of the arbitration provision contained in the
account opening documents – encompassing any controversy or dispute between
the parties concerning the IRA Account or the Joint Account -- it simply cannot be
said with positive assurance that the arbitration provision in the Customer
Agreement does not cover Burge’s claims against Shepherd and Girard. See, e.g.,
Wee Tots Pediatrics, P.A. v. Morohunfola, 268 S.W.3d 784 (Tex. App.—Fort
Worth 2008, no pet.) (construing broad arbitration provision in employment
agreement covering any disputes between the parties in any manner relating to the
agreement to require arbitration in absence of exclusionary language). Clearly,
Burge’s claims, which include allegations of a scheme on the part of all
Defendants to deprive Burge of his inheritance by, among other things, emptying
14
the IRA Account and Joint Account, are within the scope of the arbitration
provision.
Further, it is clear that the arbitration provision is not limited to, nor was
intended to be limited to, claims for breach of the account agreements. See Capital
Income Properties-LXXX v. Blackmon, 843 S.W.2d 22 (Tex. 1992) (per curiam)
(holding that arbitration provision governing claims that “arise out of and relate to”
a limited partnership agreement compelled arbitration of claims of breach of
fiduciary duty and fraudulent inducement to invest in partnership). Thus, each of
Burge’s claims, which relate to a “. . . plan to cut [Burge] out of his inheritance”
[POP ¶3.13 C.R. 8] must be arbitrated.
Burge failed to offer any evidence to contradict any of Appellants’ evidence.
He failed to offer an interpretation of the arbitration agreement that plausibly
denied the arbitrability of this dispute. Burge’s only evidence addressed his
Mother’s mental state which is not relevant. See, C.R. 206 – 207. He failed to
address, let alone carry, his burden of proof.
CONCLUSION AND PRAYER
Shepherd and Girard entered into a valid and binding agreement to arbitrate
all controversies or disputes concerning any transaction in the IRA Account or the
Joint Account. Burge’s claims concern those accounts. The Trial Court’s order
should be reversed, Burge should be ordered to arbitrate his claims against
15
Shepherd and Girard, and Cause No. 2016-522,595, pending in the 72nd District
Court of Lubbock County should be stayed pending resolution of that arbitration.
Respectfully submitted,
KESSLER & COLLINS,
A Professional Corporation
By: /s/ Daniel P. Callahan
GARY S. KESSLER
State Bar No. 11358200
gsk@kesslercollins.com
DANIEL P. CALLAHAN
State Bar No. 03648700
dpc@kesslercollins.com
PHILIP G. McNICHOLAS
State Bar No. 24078987
pgm@kesslercollins.com
2100 Ross Avenue, Suite 750
Dallas, Texas 75201
(214) 379-0722 Telephone
(214) 373-4714 Facsimile
COUNSEL FOR APPELLANT
JON MARK SHEPHERD
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document was
served via electronic service through Texas.gov or by email to all counsel of record
on this 1st day of September, 2017 in accordance with the Texas Rules of Appellate
Procedure.
/s/ Daniel P. Callahan
DANIEL P. CALLAHAN
16
CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), I hereby certify that
this brief contains 3,487 words, excluding the words not included in the word
count pursuant to Texas Rule of Appellate Procedure 9.4(i)(1). This is a computer
generated document created in Microsoft Word, using 14-point typeface for all
text, except for footnotes which are in 12-point typeface. In making this certificate
of compliance, I am relying on the word count provided by the software used to
prepare this document.
/s/ Daniel P. Callahan
DANIEL P. CALLAHAN
17
APPENDIX
1. July 18, 20172 Order Denying Motion to Compel Arbitration…………Tab 1
2. Contract Provisions Central to Appeal………………………………… Tab 2
18
TAB 1
APP_000001
APP_000002
TAB 2
APP_000003
APP_000004
APP_000005