Bob Thompson Homes, Inc. v. Peters, Rick & Anne Peters

f
AFFIRMED; Opinion filed April 28,1999
In The
Court of Appeals
Jfiftfj IHstrttt nf tttexas at Uallas
No. 05-97-00674-CV
BOB THOMPSON HOMES, INC., Appellant
V.
RICK PETERS AND ANNE PETERS, Appellees
On Appeal from the 199th District Court
Collin County, Texas
Trial Court Cause No. 199-139-97
OPINION
Before Justices Lagarde, Moseley, and Bridges
Opinion By Justice Lagarde
Bob Thompson Homes, Inc. (Thompson) appeals an interlocutory order denying its motion
to compel arbitration. In one point oferror, itasserts that the trial court erred in denying arbitration
because its contract with appellees Rick and Anne Peters (collectively Peters) requires arbitration
of any dispute arising out of the contract. We affirm the trial court's order.
On March 3, 1994, Thompson and Peters signed acontract, under which Thompson would
construct a single-family residence for Peters. The contract designated Caperton/Johnson as the
architect. The contract was a form contract, provided by Thompson. The form contained the
following provision:
All claims or disputes between the Contractor [Thompson] and the
Owner [Peters] arising out of or relating to the Contract Documents, or the
breach thereof, shall be decided by arbitration in accordance with the
Construction Industry Arbitration Rules of the American Arbitration
Association currently in effect unless the parties mutually agree otherwise
and subjectto an initial presentation of the claim or dispute to the Architect
as required under Paragraph 15.5. Notice of the demand for arbitration shall
be filed in writing with the other party to this Agreement and with the
American Arbitration Association and shall be made within a reasonable time
after the dispute has arisen. The award rendered by the arbitrator or
arbitrators shall be final andjudgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof. . . . The
agreement herein among the parties to the Agreement and any other written
agreement to arbitrate referred to herein shall be specifically enforceable
under applicable law in any court having jurisdiction thereof.
Before Peters signed the form contract, however, Thompson crossed this provision out and Rick
Peters initialed the strike-out to indicate his assent. In an affidavit later filed with the court,
Thompson explained that the deletions "represent changes that [Thompson] has made to this
standard form and incorporated in essentially all contracts with its customers through the date of the
Peters contract. These standard changes were made by [Thompson] in the initial draft submitted
to Peters and represent [Thompson's] changes."1
As construction progressed, Peters became dissatisfied with Thompson's performance.
Peters complained of major plumbing leaks, faulty electrical wiring, improper and defective
installation of fixtures, appliances, and carpeting, and the like. When Thompson did not remedy
the defects to Peters's satisfaction, Peters stopped making the contracted installment payments.
Thompson sued Peters for payment. Peters counterclaimed for various claims in contract and in tort.
Neitherpartyarguedin itsbriefthat the contractat issuecontainedany ambiguity. Afteroralargument.Thompson submitteda letterbrief
arguingthat if there is any ambiguity,it must be resolvedin favor of arbitration because of the publicpolicyfavoringarbitration. It analogizesthe
argumentto the principlethat, when the languageof an insurance policy is ambiguous, the construction that affords coverage will be adopted. We
donotagreewithThompson'sconclusion. Where an ambiguity existsin a contract, the contractlanguage willbe construed strictly againstthe party
who drafted it. since the drafter is responsible for the language used. Gonzalez v.XfissionAm, Ins. Co., 795 S.W.2d 734,737 (Tex. 1990). Because
insurersare almostinvariably, if not always,the draftersof their policies,the specificrule about insurancepoliciesissimplya corollaryof the more
generalrule. Inthiscase,Thompsondraftedthe formcontract,andThompson,not Peters,struckout the generalarbitration clause. Thereis no reason
we should not apply the general contract principle and construe the effect of striking out the general arbitration clause against Thompson.
-2-
Thompson moved the trial court to compel arbitration; Peters objected to arbitration.
Despite the deletion of the arbitration clause, Thompson contended that other provisions, taken
together, meant that, in the event ofadispute between the parties, the architect, Caperton/Johnson,
would serve as arbitrator. It relied principally on three provisions:
In case of a dispute between Owner and Contractor as to whether any part of an
application for payment should be paid, Architect shall make the final decision on
the amount that should be paid.
The Architect will interpret and decide matters concerning performance under and
requirements of the Contract Documents on written request of either the Owner or
Contractor. The Architect will make initial decisions on all claims, disputes orother
matters in question between the Owner and Contractor. The Architect's decisions
in matters relating to aesthetic effect will be final if consistent with the intent
expressed in the Contract Documents.
The Architect will have authority to reject Work which does not conform to the
Contract Documents.
Because the architect was given this authority, Thompson concludes that the contract contemplated
Caperton/Johnson as arbitrator.
Peters responds that the striking ofthe formal arbitration clause means that he did not agree
to the arbitration process. At most, he argues, the contract gave Caperton/Johnson the authority to
decide the amount that should be paid ifthe parties disagreed whether any amount ofan application
for payment should bepaid. Inquestions ofperformance under the contract, Caperton/Johnson had
the authority to make "initial decisions on all claims, disputes orother matters in question"; Peters,
stressing the word "initial," contends that Caperton/Johnson was explicitly given authority to make
final decisions only in matters relating to aesthetic effect. While Caperton/Johnson had the authority
to reject work that did not conform to the contract between the parties, Peters asserts that nothing
in the contract gave Caperton/Johnson the exclusive right to do so.
Peters also argued thatCaperton/Johnson would notbe animpartial arbitrator, because it and
Thompson enjoyed a long professional relationship andThompson often used Caperton/Johnson as
its architect. In response, Thompson cites authority for the proposition that an engineer, working
on a project, may be delegated the authority to actas an arbitrator. City ofSan Antonio v. McKenzie
Constr. Co., 150 S.W.2d 989, 995-96 (Tex. 1941). Butin thatcase thesupreme court emphasized
the critical language: the engineer"shall determine all questions in relation to said work, and the
construction thereof. He shall in all cases decide every question which may arise relative to the
execution of this contract on the part of said Contractor." City ofSan Antonio, 150 S.W.2d at 996.
We do not dispute that parties to a contract can designate another party to the same contract as an
arbitrator, if they chooseto do so. Caperton/Johnson is not disqualified from being an arbitrator in
the Peters' home building contract simply because it is the architect on the project. The real issue
is whether the contract in this case gave Caperton/Johnson the authority to make final, binding
decisions in any matter except claims for payment or matters relating to aesthetic effect.
Arbitration is a creature of contract, and a clause requiring arbitration will be interpreted
under contract principles. Belmont Contractors, Inc., v. LyondellPetrochemicalCo., 896 S.W.2d
352, 357 (Tex. App.-Houston [1st Dist] 1995, no writ). Thompson argued to the trial court that its
"intent was to create an agreement whereby disputes such as the one between [Thompson] and
[Peters] would be referred to the Architect for final resolution." Yet the parties' objective, not
subjective, intent controls. Hasty, Inc., v. Inwood BuckhornJoint Venture, 908 S.W.2d 494, 499
(Tex. App.-Dallas 1995, writ denied). We do not ask about the subjective intent of the parties.
Hasty, Inc., 908 S.W.2d at 499. Circumstances surrounding the execution of a contract should be
considered, but the circumstances are merely an aid in the construction of the contract's language.
-4-
Moreover, the circumstances to be considered are not the parties' statements ofwhat they intended
the contract to mean. KM Continental Offshore Prod Co. v. ACFPetroleum Co., 746 S.W.2d 23 8,
241 (Tex. App.-Houston [1st Dist] 1987, writ denied). We may consider all the circumstances
before and contemporaneous with the execution of a contract, "other than oral statements by the
parties of what they intended it to mean." City ofPinehurst v. Spooner Addition Water Co., 432
S.W.2d 515, 518 (Tex. 1968) (emphasis added). Thompson's subjective intent, therefore, is of no
assistance.
Finally, Thompson points out that state lawstrongly favors arbitration. Courts mustresolve
anydoubts about an agreement to arbitrate infavor of arbitration. Cantella &Co. v. Goodwin, 924
S.W.2d 943, 944 (Tex. 1996) (percuriam). Once a party seeking to compel arbitration establishes
that an agreement toarbitrate exists and that the claims raised are within the agreement's scope, the
trial court has no discretion but to compel arbitration. Goodwin, 924 S.W.2d at 944. We do not
disagree with these principles. Yet"[although doubts regarding the scope of an arbitration clause
are to be resolved in favor of arbitration, there must be an initial showing by the party seeking
arbitration that the parties agreed to arbitration." Solis v. Evans, 951 S.W.2d 44, 51 (Tex.
App.-Corpus Christi 1997, orig. proceeding). Arbitration cannot be ordered in the absence of such
an agreement. Freis v. Canales, 877 S.W.2d 283, 284 (Tex. 1994) (per curiam).
Turning to thecontract inthis case, we see thatCaperton/Johnson did not have theauthority
to make final decisions concerning Thompson's performance; therefore, Caperton/Johnson could
not resolve the dispute that arose between the parties in this case through the process of binding
arbitration. In matters of performance, Caperton/Johnson was explicitly given authority to make
only initial decisions; the contract is completely silent on who will make the final decisions.
Therefore, the contract does not prevent Peters from seeking afinal, and binding, decision from a
court oflaw. To the contrary, ifthe contract itself does not give anyone the authority to make a
final and binding decision, a court is the only entity left that can make a final decision and enforce
it.
We conclude that Thompson did not meet its burden ofinitially showing that the parties
agreed to arbitration. Accordingly, we affirm the trial court's order denying Thompson's motion
to compel arbitration.
OjlS
Do Not Publish
Tex. R. App. P. 47
970674F.U05
3-aiaciU
(Baurt at Appeals
JTfftl| jBtstrtrt of Gkxas at lallas
No. 05-97-00674-CV
BOB THOMPSON HOMES, INC., Appeal from the 199th District Court of
Appellant Collin County, Texas. (Tr.Ct.No. 199-139-
97).
Opinion delivered by Justice Lagarde,
Justices Moseley and Bridges participating.
RICK PETERS AND ANNE PETERS,
Appellees
JUDGMENT
In accordance with this Court's opinion of this date, the judgment of the trial court
is AFFIRMED. It is ORDERED that appellees Rick Peters and Anne Peters recover their
costs of this appeal from appellant Bob Thompson Homes, Inc. and from the cash deposit
in lieu of cost bond. After all costs have been paid, the clerk of the district court is directed
to release the balance, if any, of the cash deposit to McManemin & Smith, P.C., as counsel
for appellant Bob Thompson Homes, Inc.
Judgment entered April 28, 1999.
SUE LAGARDE
JUSTICE
Fifth Court of Appeals
Case Party & Attorney Address List
Page: 1
Date Printed: 04/28/1999
Case Number: 05-97-00674-CV Date Filed: 04/24/1997
Style: Bob Thompson Homes, Inc.
v.
Peters, Rick & Anne Peters
Trial Judge: Roach, John R.
Trial Court Reporter:
Trial Court: 199TH DISTRICT COURT Trial County: COLLIN
ANT Daniel P. Callahan
ATT 003648700
Godwin & Carlton, SMITH, PC.
1600 PLAZA OF THE AMERICAS
600 N. PEARL STREET, LB. 175
Dallas, TX 75201
Phone 214/953-1321
Fax 214/953-0695
APE Bruce H. White
ATT 021288850
Dixon Dixon & Jessup Ltd, Lip
1445 Ross Ave Ste 5500
Dallas, Tx 75202-2801
Phone 214/754-0155
Fax / -
Author of opinion Justice Lagarde
Trial Court Judge Roach
Rehear denied
**THIS OPINION IS RELEASED FOR PUBLICATION YES / NO