Energy Transfer Fuel, LP v. the Estate of Robbie Lou Souter and Tommy Rossa

IN THE
TENTH COURT OF APPEALS
No. 10-09-00361-CV
ENERGY TRANSFER FUEL, LP,
Appellant
v.
THE ESTATE OF ROBBIE LOU SOUTER
AND TOMMY ROSSA,
Appellees
From the 40th District Court
Ellis County, Texas
Trial Court No. 79169
MEMORANDUM OPINION
In this interlocutory appeal, Energy Transfer Fuel, LP (ETF) complains that the
trial court erred in denying ETF’s motion to compel arbitration. We agree and will
reverse the trial court’s ruling.
ETF has a pipeline easement on agricultural property owned by the Estate of
Robbie Lou Souter (Souter) and by Tommy Rossa. In 2008, ETF was going to install an
additional pipeline in the easement and needed to acquire temporary work space from
Souter and Rossa. ETF entered into a “Temporary Work Space and Access Agreement”
with Souter that granted ETF a temporary work space easement and access to their
properties to install the pipeline. Thereafter, Souter and Rossa’s representative, Keith
Miltberger, negotiated a twenty-four paragraph addendum to the agreement relating to
restoration of their properties. The addendum contains the following provision:
6. GRANTEE [ETF] agrees to pay for any damages, relating to
Grantee’s activities on the property owned by Grantor, incurred after the
completion of the initial construction and installation which may arise but
are not limited to crops, trees found outside the Easement and
[Temporary Work Space]. Said damages, if not mutually agreed upon[,]
to be ascertained and determined by three disinterested persons, one
thereof to be appointed by the said GRANTOR, one by the said
GRANTEE, and the third by the two so appointed, and the written award
of such three persons shall be final and conclusive.
Souter and Rossa have sued ETF for breach of the agreement and the
addendum,1 complaining that ETF did not restore their properties to the condition
required by the agreement and addendum.2 ETF moved to compel arbitration,
asserting that paragraph 6 is an arbitration agreement.3 The trial court denied the
motion, and in its sole issue, ETF asserts that the trial court erred.
In evaluating a motion to compel arbitration, a court must first
determine whether a valid arbitration agreement exists, and then whether
1 Souter and Rossa also sue for specific performance under the agreement and for declaratory judgment
relating to disputes on interpretation of the agreement.
2 In their petition, Souter and Rossa assert that ETF breached the agreement by:
Failing to restore the low water crossings;
Rendering the existing low water crossings unusable;
Creating ridges on the properties that divert water flow and cause erosion;
Failing to re-seed the properties with native grasses;
Failing to restore proper gating;
Failing to accurately and properly mark the pipelines; and
Failing to perform proper erosion control.
3ETF asserts that the Federal Arbitration Act applies because the pipeline involves interstate commerce.
See 9 U.S.C. § 2. Souter and Rossa do not disagree.
Energy Transfer Fuel, LP v. The Estate of Robbie Lou Souter and Tommy Rossa Page 2
the agreement encompasses the claims raised. Am. Std. v. Brownsville
Indep. Sch. Dist. (In re D. Wilson Constr. Co.), 196 S.W.3d 774, 781 (Tex.
2006); see In re Dillard Dep't Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (per
curiam). Whether a valid arbitration agreement exists is a legal question
subject to de novo review. Id. Although the Texas Supreme Court has
repeatedly expressed a strong presumption favoring arbitration, the
presumption arises only after the party seeking to compel arbitration
proves that a valid arbitration agreement exists. J.M. Davidson, Inc. v.
Webster, 128 S.W.3d 223, 227 (Tex. 2003) (emphasis added). 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).
Arbitration agreements are interpreted under traditional contract
principles. J.M. Davidson, 128 S.W.3d at 227. If the trial court finds a valid
agreement, the burden shifts to the party opposing arbitration to raise an
affirmative defense to enforcing arbitration. Id. Absent a defense to
enforcing the arbitration agreement, the trial court has no discretion but to
compel arbitration and stay its own proceedings. In re J.D. Edwards World
Solutions Co., 87 S.W.3d 546, 549 (Tex. 2002) (per curiam).
LDF Constr., Inc. v. Bryan, No. 10-08-00315-CV, 2010 WL 1052863, at *2 (Tex. App.—
Waco Mar. 10, 2010, no pet. h.).
Souter and Rossa assert that the provision is not an arbitration provision because
it is not specifically identified as an “arbitration” agreement. We disagree. An
arbitration agreement does not have to be in any particular form. Manes v. Dallas Baptist
College, 638 S.W.2d 143, 145 (Tex. App.—Dallas 1982, writ ref’d n.r.e.). An agreement in
any form is only arbitration if it meets the definition of “arbitration.” In re Anaheim
Angels Baseball Club, Inc., 993 S.W.2d 875, 879-80 (Tex. App.—El Paso 1999, orig.
proceeding). Arbitration has been defined as
a contractual proceeding by which the parties to a controversy or dispute,
in order to obtain a speedy and inexpensive final disposition of matters
involved, voluntarily select arbitrators or judges of their own choice, and
by consent submit the controversy to such tribunal for determination in
Energy Transfer Fuel, LP v. The Estate of Robbie Lou Souter and Tommy Rossa Page 3
substitution for the tribunals provided by the ordinary processes of the
law.
Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 268 (Tex. 1992). Another definition is:
A method of dispute resolution involving one or more neutral third
parties who are usu. agreed to by the disputing parties and whose
decision is binding.
BLACK’S LAW DICTIONARY 119 (9th ed. 2009).
The provision at issue is an arbitration agreement.
Souter and Rossa next assert that the provision only covers the issue of damages
and that therefore liability can be litigated. We disagree.
To determine whether an arbitration agreement covers a party’s claims, a court
must focus on the complaint’s factual allegations, not the legal causes of action asserted.
FirstMerit Bank, 52 S.W.3d at 754. We are to construe arbitration clauses broadly, and
when a contract contains an arbitration clause, there is a presumption of arbitrability.
See AT & T Tech., Inc. v. Communications Workers of Am., 475 U.S. 643, 650, 106 S. Ct. 1415,
1419, 89 L. Ed. 2d 648 (1986). Any doubts as to arbitrability are to be resolved in favor of
coverage. FirstMerit Bank, 52 S.W.3d at 754. Likewise, we resolve any doubts about the
scope of the arbitration agreement in favor of coverage. Id. In fact, the policy in favor
of enforcing arbitration agreements is so compelling that a court should not deny
arbitration unless it can be said with positive assurance that an arbitration clause is not
susceptible of an interpretation covering the dispute at issue. Prudential Sec., Inc. v.
Marshall, 909 S.W.2d 896, 899 (Tex. 1995).
Generally, if the facts alleged “touch matters” that are covered by, have a
Energy Transfer Fuel, LP v. The Estate of Robbie Lou Souter and Tommy Rossa Page 4
“significant relationship” to, are “inextricably enmeshed” with, or are “factually
intertwined” with the contract that contains the arbitration agreement, the claims are
arbitrable. Pennzoil Co. v. Arnold Oil Co., 30 S.W.3d 494, 498 (Tex. App.—San Antonio
2000, orig. proceeding). In other words, to come within the scope of the arbitration
provision, a party’s allegations need only be factually intertwined with arbitrable claims
or otherwise touch upon the subject matter of the agreement containing the arbitration
provision. See Prudential, 909 S.W.2d at 900; Jack B. Anglin Co., 842 S.W.2d at 271.
In their petition, Souter and Rossa plead that the whole purpose of the
addendum was to add requirements governing ETF’s actions on the properties and the
restoration of the properties’ surface. Their factual allegations regarding surface
damage caused and not remediated by ETF pertain to both liability and damages,
which are factually intertwined. Therefore, we hold that all the claims against ETF are
within the scope of the arbitration agreement and sustain ETF’s sole issue. We reverse
the trial court’s order denying ETF’s motion to compel arbitration and remand this case
for the entry of an order compelling the parties to arbitration and for further
proceedings consistent with this opinion.
REX D. DAVIS
Justice
Energy Transfer Fuel, LP v. The Estate of Robbie Lou Souter and Tommy Rossa Page 5
Before Chief Justice Gray,
Justice Reyna, and
Justice Davis
Reversed and remanded
Opinion delivered and filed April 21, 2010
[CV06]
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