Cypress Drilling, LLC v. Medve Energy Ventures, LLC

In The
Court of Appeals
Seventh District of Texas at Amarillo
________________________
No. 07-18-00288-CV
________________________
CYPRESS DRILLING, LLC, APPELLANT
V.
MEDVE ENERGY VENTURES, LLC, APPELLEE
On Appeal from the 415th District Court
Parker County, Texas
Trial Court No. CV18-0071; Honorable Graham Quisenberry, Presiding
October 31, 2019
MEMORANDUM OPINION
Before QUINN, C.J. and PIRTLE and PARKER, J.J.
Appellant, Cypress Drilling, LLC, appeals the trial court’s order dismissing its
petition seeking an order to compel arbitration with Appellee, Medve Energy Ventures,
LLC, based upon the trial court’s lack of subject matter jurisdiction over Cypress’s
petition.1 In a single issue, Cypress asserts that the trial court erred in denying its motion
to compel and dismissing its petition for lack of subject matter jurisdiction. We affirm the
trial court’s order.
BACKGROUND
In January 2018, Cypress filed its Original Petition and Motion to Compel
Arbitration between Cypress and Medve pursuant to a Participation Agreement executed
in 2016 by the two parties (“contract”). The contract required that “[t]he legal relations
among the parties shall be governed and construed in accordance with the laws of the
State of Louisiana.” The arbitration clause in the contract also required the following:
All disputes between the Parties hereto with respect to any provision of this
Agreement or rights and obligations of any Party hereunder (other than
disputes involving allegations of intentional fraud), which cannot be
resolved by mutual agreement, will be resolved by binding arbitration in
accordance with the Rules of the American Arbitration Association in
Lafayette, Louisiana[,] or by any other means of alternative dispute
resolution mutually agreed upon by the parties.
Cypress’s petition sought to resolve “disputes” between it and Medve regarding
their respective obligations under the contract. That is, Cypress sought a declaration that
the contract did not contain any of the requirements that Medve was seeking to impose
on Cypress under the contract. The petition neither described any disputes with Medve
nor indicated any provisions of the contract in dispute. In its motion, Cypress sought an
1 Originally appealed to the Second Court of Appeals, this appeal was transferred to this court by
the Texas Supreme Court pursuant to its docket equalization efforts. TEX. GOV’T CODE ANN. § 73.001 (West
2013). Should a conflict exist between the precedent of the Second Court of Appeals and this court on any
relevant issue, this appeal will be decided in accordance with the precedent of the transferor court. TEX. R.
APP. P. 41.3.
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order compelling the parties to arbitrate and abate the case until such time as an arbitrator
has decided any issues.
In March 2018, Medve filed a motion to dismiss Cypress’s petition for forum non
conveniens.2 In its motion, Medve asserted that Louisiana was the most convenient
forum to litigate the parties’ claims based on the contract because there was pending
litigation related to the contract between the two parties in federal court in Louisiana.
Also, in March 2018, the trial court held a hearing to decide Medve’s motion to
dismiss. At the hearing, Cypress represented that the parties had agreed to arbitrating
their dispute in Louisiana and that the dispute would be resolved in Louisiana. By its
motion, Cypress also represented that it merely sought an order to compel the parties to
arbitrate and would not be seeking a final judgment from the trial court in Texas. At the
hearing’s conclusion, the trial court interpreted Medve’s motion to dismiss as a motion
challenging the subject matter jurisdiction of the court and dismissed the case because it
lacked subject matter jurisdiction.
STANDARD OF REVIEW
We review an order denying a motion to compel arbitration under an abuse of
discretion standard. Bonded Builders Home Warranty Ass’n of Tex. v. Smith, 488 S.W.3d
468, 476 (Tex. App.—Dallas 2016, no pet.). Under this standard of review, we defer to
the trial court’s factual determinations if they are supported by the evidence, but we review
2 “Forum non conveniens” generally applies when “an appropriate forum—even though competent
under the law—may divest itself of jurisdiction if, for the convenience of the litigants and the witnesses, it
appears that the action should proceed in another forum in which the action might also have been brought.”
Black’s Law Dictionary 680-81 (8th ed. 2004). See also TEX. CIV. PRAC. & REM. CODE ANN. §71.051 (West
Supp. 2018).
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the trial court’s legal determinations de novo. In re Labatt Food Serv., L.P., 279 S.W.3d
640, 643 (Tex. 2009) (orig. proceeding). We also view the evidence in the light most
favorable to the trial court’s ruling and defer to the trial court’s resolution of conflicting
evidence. INEOS Group, Ltd. v. Chevron Phillips Chem. Co., LP, 312 S.W.3d 843, 848
(Tex. App.—Houston [1st Dist.] 2009, no pet.). When written findings of fact are not
requested or filed, as here, we affirm the ruling if it can be upheld on any legal theory
reasonably supported by the evidence; Tex. Dep’t of Pub. Safety v. Wilmoth, 83 S.W.3d
929, 931 (Tex. App.—Amarillo 2002, no pet.) (citing In re W.E.R., 669 S.W.2d 716, 717
(Tex. 1984) (per curiam)), and we reverse a trial court for abusing its discretion only when
we determine the court acted in an unreasonable or arbitrary manner, meaning that it
acted without reference to any guiding rules and principles. Jackson v. Bell, 484 S.W.3d
161, 166 (Tex. App.—Amarillo 2015, no pet.) (citing Downer v. Aquamarine Operators,
Inc., 701 S.W.3d 238, 241-42 (Tex. 1985)).
Subject matter jurisdiction is essential for a court to have the authority to resolve a
case. Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638-39 (Tex. 1999). Whether a trial
court has subject matter jurisdiction is a threshold inquiry that can be addressed by the
court sua sponte and at any time. Montenegro v. Ocwen Loan Servicing, LLC, 419
S.W.3d 561, 567 (Tex. App.—Amarillo 2013, pet. denied) (citing Mayhew v. Town of
Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998)). Review of subject matter jurisdiction is a
question of law, and we review questions of law de novo. Montenegro, 419 S.W.3d at
567 (citing Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004)).
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ANALYSIS
Jurisdiction to enforce an arbitration agreement and render judgment on an
arbitration award is conferred on Texas Courts by “[t]he making of an agreement
described by Section 171.001 that provides for or authorizes an arbitration in this state.”
See TEX. CIV. PRAC. & REM. CODE ANN. § 171.081 (West 2019) (emphasis added).3 The
jurisdiction of the trial court is invoked by filing an application with the clerk of the court
for an order including a judgment or decree. See TEX. CIV. PRAC. & REM. CODE ANN. §
171.082 (West 2019).
Here, the arbitration agreement does not provide for or authorize an arbitration in
this state. Rather, the contract authorizes an arbitration in Louisiana and the parties
represented at the hearing that they fully intended to arbitrate their differences in
Louisiana. Neither did Cypress invoke the jurisdiction of the trial court by filing an
application for an order including a judgment or decree. Instead, at the hearing, Cypress
represented that it did not seek a declaration, judgment, or decree from the trial court. It
simply sought an order compelling the parties to arbitrate. Accordingly, the trial court
lacked subject matter jurisdiction over the suit and Cypress’s petition failed to invoke the
jurisdiction of the trial court. See TEX. PRAC. & REM. CODE ANN, §§ 171.081, 171.082
(West 2019). See also Brooks v. Northglen Ass’n, 141 S.W.3d 158, 163-64 (Tex. 2004)
(“A judicial decision reached without a case or controversy is an advisory opinion which
is barred by the separation of powers provision of the Texas Constitution.”).
3 A written agreement to arbitrate is valid and enforceable if the agreement is to arbitrate a
controversy that (1) exists at the time of the agreement or (2) arises between the parties after the date of
the agreement. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.001 (West 2019).
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Even if there were subject matter jurisdiction in the trial court, however, we could
not say that the trial court would have abused its discretion if it had granted Medve’s
motion to dismiss Cypress’s petition because Cypress did not allege in its petition and
there was no evidence at the hearing that either party refused to arbitrate in accordance
with their agreement.4 Accordingly, we find that the trial court did not abuse its discretion
by granting Medve’s motion and dismissing Cypress’s petition for lack of subject matter
jurisdiction.
CONCLUSION
We affirm the trial court’s order dismissing Cypress Drilling, LLC’s petition.
Patrick A. Pirtle
Justice
4 A court shall order the parties to arbitrate on application of a party showing (1) an agreement to
arbitrate and (2) the opposing party’s refusal to arbitrate. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.082
(West 2019) (emphasis added).
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