Prestonwood Tradition, LP Tradition Management, LLC Prestonwood TSL, LP Prestonwood TSL GP, LLC v. Sherril Kerr, Individually and as the Independent and Representative

Reversed and Remanded and Opinion Filed August 5, 2022
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-20-00380-CV
No. 05-20-00387-CV
No. 05-20-00388-CV
No. 05-20-00389-CV
No. 05-20-00390-CV
PRESTONWOOD TRADITION, LP; TRADITION MANAGEMENT, LLC;
PRESTONWOOD TSL, LP; PRESTONWOOD TSL GP, LLC;
TRADITION SENIOR LIVING, L.P.; TRADITION SL, LLC; AND
JONATHAN S. PERLMAN,
Appellants / Relators
V.
MARY JO JENNINGS, INDIVIDUALLY AND AS THE INDEPENDENT
EXECUTRIX AND REPRESENTATIVE OF THE BENEFICIARIES OF
THE ESTATE OF LEAH ALICE CORKEN; LISA CULLEN,
INDIVIDUALLY; MATT CORKEN, INDIVIDUALLY; DIANNE
TANNERY, INDIVIDUALLY AND AS THE INDEPENDENT EXECUTRIX
AND REPRESENTATIVE OF THE BENEFICIARIES OF THE ESTATE
OF JUANITA PURDY; THOMAS DUCKER, INDIVIDUALLY; SHERRIL
KERR, INDIVIDUALLY AND AS THE INDEPENDENT EXECUTRIX
AND REPRESENTATIVE OF THE BENEFICIARIES OF THE ESTATE
OF GLENNA DAY; GREGORY B. DAY, INDIVIDUALLY; MARSHA
SPRING REPP AND STEPHEN SPRING, INDIVIDUALLY AND AS THE
CO-EXECUTORS AND REPRESENTATIVES OF THE BENEFICIARIES
OF THE ESTATE OF SOLOMON H. SPRING; MICHAEL SOLOMON,
MATTHEW ABRAMOWITZ, AND PAUL ABRAMOWITZ,
INDIVIDUALLY AND AS THE CO-EXECUTORS AND
REPRESENTATIVES OF THE BENEFICIARIES OF THE ESTATE OF
JOYCE ABRAMOWITZ; AND MARC ABRAMOWITZ, INDIVIDUALLY,
Appellees / Real Parties in Interest
On Appeal and Original Proceeding from the County Court at Law No. 2
Dallas County, Texas
Trial Court Cause Nos. CC-19-03747-B
CC-19-03737-B
CC-19-03754-B
CC-19-03757-B
CC-19-03745-B
OPINION
Before the En Banc Court
Opinion by Justice Pedersen, III
Appellants-relators1 bring this appeal and petition for writ of mandamus
challenging the trial court’s orders granting a stay of arbitration and denying
appellants’ plea in abatement, which sought an order for the parties to attend
arbitration. On appeal, appellants raise four issues, contending that the trial court
abused its discretion in (i) deciding the arbitrability issues, (ii) staying arbitration,
(iii) declining to order the parties to arbitration, and (iv) striking a supporting
affidavit attached to appellants’ plea in abatement. In their petition for writ of
mandamus, appellants assert the trial court abused its discretion in issuing its orders
because the claims can be arbitrated under Texas common law.
We agree with appellants and reverse the trial court’s orders. We remand the
causes with instructions to order the parties to arbitration and stay the underlying
cases pending the outcome of the arbitration. We dismiss appellants’ petition for writ
of mandamus as moot.
1
Prior to submission, we consolidated relators’ original proceeding, cause number 05-20-00619-CV,
into the 05-20-00380-CV cause.
–2–
I. BACKGROUND
A. Parties and History Before Litigation
In 2016, Leah Corken, Juanita Purdy, Glenna Day, Solomon Spring, and
Joyce Abramowitz died while they were residents of The Tradition-Prestonwood, a
senior living community owned and operated by appellants. The decedents had
signed written leases with appellants, which provide:
7. Your Rights and Responsibilities
....
E. Waiver of Jury Trial. Pursuant to the Arbitration
Agreement set forth in Section 8 below, EACH PARTY HERETO
WAIVES ITS RIGHT TO A TRIAL BY JURY AND AGREES TO
SUBMIT TO BINDING ARBITRATION in any action, proceeding or
counterclaim brought by any party against any other party.
....
8. Arbitration Agreement
A. Agreement To Arbitrate. Should a dispute arise between
us, we desire to avoid costly and time-consuming litigation. Landlord
and You agree that any claims, controversies, or disputes arising
between us and in any way related to or arising out of the relationship
created by this Agreement shall be resolved exclusively by binding
arbitration. . . . . Accordingly, neither Landlord nor You will be
permitted to pursue court action regarding these claims, controversies,
or disputes.
B. Conduct Of The Arbitration. The arbitration shall be
conducted by a panel of either one or three neutral arbitrators (the
“Panel”), said number being chosen by You. The member(s) of the
Panel shall be chosen by the American Arbitration Association
(“AAA”) or by mutual agreement between the parties. . . . . The Panel
shall follow the current Commercial Arbitration Rules of the AAA.
....
E. Waiver Of Jury Trial. Any claim, controversy, or dispute
between the parties for which arbitration is not allowed by law shall be
brought in an appropriate court before a judge. Both You and Landlord
waive your rights to a trial by jury.
–3–
F. Applicability To Related Parties. You and Your
Authorized Representative agree that this Agreement, in particular this
Section 8, shall be binding upon them personally. This Agreement shall
be binding upon and inure to the benefit of all persons whose claim is
derived through or on behalf of You, including that of the [sic] Your
family, heirs, guardian, executor, administrator and assigns. This
Agreement shall be binding upon and inure to the benefit of Landlord,
Tradition Management, LLC, and its subsidiaries and their respective
directors, officers, employees, representatives, or agents.
THIS AGREEMENT CONTAINS BOTH AN ARBITRATION
PROVISION AND A WAIVER OF JURY TRIAL, WHICH MAY
BE ENFORCED BY THE PARTIES.
9. MISCELLANEOUS
....
G. Governing Law. Except as noted above, this Agreement
shall be governed by and construed under the laws of the State of Texas.
(emphases in original).
Appellees-real parties in interest are individuals and representatives of the
estates of the decedents who sought to resolve claims against appellants related to
the decedents’ deaths. The parties attended mediation, and appellants invoked the
above arbitration agreements. On June 17, 2019, appellants filed arbitration actions
with the AAA. On June 25, 2019, appellees responded to the arbitration action before
the AAA and filed five separate suits in Dallas County Court.
B. Procedural History of Litigation
Appellees sued appellants—both individually as wrongful death beneficiaries
and as executors of the respective estates—for (i) declaratory judgment;
(ii) negligent undertaking; (iii) premises liability; (iv) general negligence; and
(v) negligent hiring, training, and supervision. The claims for declaratory judgment
sought a declaration that appellees’ claims were not subject to arbitration. Appellees
–4–
further moved to stay the arbitrations in each case. Appellants answered in the trial
court and filed pleas in abatement in each case, requesting that the trial court abate
the cases so that arbitration could proceed.
The record does not indicate that an arbitrator or arbitration panel was ever
selected. However, on June 28, 2019, the AAA responded to the arbitration
communications as follows:
Upon review of the parties’ contentions, the AAA has made an
administrative determination that it will not proceed with the
administration of the submissions unless the parties mutually agree, or
until the issue of arbitrability is decided by the Dallas County, Texas
Court (“Court”).
The parties submitted arguments and attached evidence in support of their
respective motions and responses regarding arbitration. Appellees objected to and
moved to strike an affidavit from appellants. On September 30, 2019, the trial court
heard the arbitration motions. Regarding the AAA’s administrative determination,
the trial court stated, “I don’t think that’s an end all be all on the outcome.” After the
hearing, the parties submitted further arguments and authorities related to the
arbitration dispute; appellants responded to appellees’ objections to their affidavit.
On February 28, 2020, the trial court granted appellees’ requests for stay of
arbitration and denied appellants’ requests for abatement.2
IT IS THEREFORE ORDERED that Plaintiffs’ Motions to Stay
Arbitration in each of the above-captioned matters are GRANTED,
2
At the time of the September 30, 2019 hearing, the Salomon/Abramowitz and Repp/Spring cases had
not been transferred into the trial court. However, both of those cases were transferred to the trial court,
along with the other three cases, before the trial court’s February 28, 2020 order.
–5–
and the arbitration proceeding with the American Arbitration
Association that is currently pending between Plaintiffs and Defendants
is STAYED.
IT IS FURTHER ORDERED that Defendant’s Pleas in
Abatement in each of the above-captioned matters are DENIED [.]
These interlocutory appeals followed. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 171.098. Appellants further petitioned for writs of mandamus. We have
consolidated each original proceeding into the corresponding interlocutory appeal.
II. ISSUES RAISED
On appeal, appellants raise four issues to our Court:
1. The trial court abused its discretion when it decided the arbitrability
issues, because federal and Texas law require that determination of
arbitrability issues be referred to the arbitrator, and the Leases
specifically provide for AAA arbitration.
2. To the extent the trial court based its decision to stay the arbitrations
on the Texas Arbitration Act, such decision was an abuse of
discretion because the FAA, not the TAA, applies.
3. The trial court abused its discretion when it declined to order the
parties to AAA arbitration, because the uncontroverted evidence
established Appellants were entitled to arbitration under the FAA.
4. The trial court abused its discretion when it struck the affidavit
supporting of Appellants’ pleas in abatement, as Appellees failed to
timely object and their objections are without legal basis.
On petition for writ of mandamus and apart from asserting they have no
adequate remedy at law, appellants raise one issue to our Court:
1. If this Court holds the statutory arbitration schemes argued in such
appeals do not apply, the trial court nevertheless abused its
discretion in issuing such Order because the claims can be arbitrated
under Texas common law.
–6–
Because our resolution of appellants’ first issue obviates the need to discuss
the remaining issues, we limit our discussion accordingly. See TEX. R. APP. P. 47.1
(“The court of appeals must hand down a written opinion that is as brief as
practicable but that addresses every issue raised and necessary to final disposition of
the appeal.”).
III. STANDARD OF REVIEW
“Arbitration agreements can be enforced under either statutory provisions or
the common law.” Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d
494, 499 (Tex. 2015) (citing L. H. Lacy Co. v. City of Lubbock, 559 S.W.2d 348,
351 (Tex. 1977)).3 We review a trial court’s order on a motion to stay arbitration for
an abuse of discretion. Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018)
(citing In re Labatt Food Serv., L.P., 279 S.W.3d 640, 642–43 (Tex. 2009) (orig.
proceeding)). We review the trial court’s legal determinations de novo. In re Labatt
Food Serv., 279 S.W.3d at 643.
3
“[A] dual system of arbitration has existed in Texas, and the statutory method has been viewed as
cumulative of the common law.” L. H. Lacy Co., 559 S.W.2d at 351.
–7–
IV. DISCUSSION
Issue One: Whether the Trial Court Abused Its Discretion When It Decided the
Arbitrability Issues
i. Decedents’ Agreement to Arbitrate
“[W]hen a party seeks to compel arbitration based on a contract, the first
question is whether there is a contract between the parties at all.” HomeAdvisor, Inc.
v. Waddell, No. 05-19-00669-CV, 2020 WL 2988565, at *3 (Tex. App.—Dallas
June 4, 2020, no pet.) (mem. op.) (citing Arnold v. HomeAway, Inc., 890 F.3d 546,
550 (5th Cir. 2018)).
Under Texas law, a binding contract requires: (1) an offer;
(2) acceptance in strict compliance with the terms of the offer; (3) a
meeting of the minds (mutual assent); (4) each party’s consent to the
terms; and (5) execution and delivery of the contract with intent that it
be mutual and binding.
HomeAdvisor, 2020 WL 2988565, at *3 (citation omitted).
Here, it is undisputed that decedents agreed to the leases by signature. Each
lease shows the decedent agreed to arbitrate and expressly bound “all persons whose
claim is derived through or on behalf of [decedent], including that of the [decedent’s]
family, heirs, guardian, executor, administrator and assigns.” In Texas, the death of
a natural person does not ordinarily extinguish his or her contracts. Solomon v.
Greenblatt, 812 S.W.2d 7, 17 (Tex. App.—Dallas 1991, no writ) (citation omitted).
–8–
Appellees have brought claims that derive from the decedents’ allegedly
wrongful deaths. See TEX. CIV. PRAC. & REM. CODE ANN. § 71.004. In In re Labatt
Food Service, the Texas Supreme Court explained:
While it is true that damages for a wrongful death action are for the
exclusive benefit of the beneficiaries and are meant to compensate them
for their own personal loss, the cause of action is still entirely derivative
of the decedent’s rights. TEX. CIV. PRAC. & REM. CODE §§ 71.003(a),
.004(a); Russell, 841 S.W.2d at 347. Thus, regardless of the fact that
[decedent]’s beneficiaries are seeking compensation for their own
personal loss, they still stand in [decedent]’s legal shoes and are bound
by [his or her] agreement.
279 S.W.3d at 646. Thus, regarding appellees’ wrongful death claims, they are
bound by the decedents’ agreements. See In re Golden Peanut Co., L.L.C., 298
S.W.3d 629, 631 (Tex. 2009) (orig. proceeding) (per curiam) (wrongful death
beneficiaries are bound by decedent’s pre-death arbitration agreement “because,
under Texas law, the wrongful death cause of action is entirely derivative of the
decedent’s rights”); Arredondo v. Dugger, 347 S.W.3d 757, 764 (Tex. App.—Dallas
2011), aff’d on other grounds, 408 S.W.3d 825 (Tex. 2013) (“A statutory wrongful
death claim is wholly derivative of the decedent’s claim and is subject to any defense
that would have been available against the decedent had they survived.”).
In addition, appellees asserted survival claims that derive from the decedent’s
rights. See TEX. CIV. PRAC. & REM. CODE ANN. § 71.021. “The purpose of the
survival statute is to continue a decedent’s cause of action beyond death to redress
the decedent’s estate for decedent’s injuries.” Stevenson v. Ford Motor Co., 608
–9–
S.W.3d 109, 131 (Tex. App.—Dallas 2020, no pet. h.). “The survival action, as it is
sometimes called, is wholly derivative of the decedent’s rights.” Russell v. Ingersoll-
Rand Co., 841 S.W.2d 343, 345 (Tex. 1992) (explaining that if decedent’s action for
injuries would have been barred by limitations had it been asserted immediately prior
to his death, survival action and wrongful death actions based on same alleged wrong
are likewise barred); see also Brown v. Shwarts, 968 S.W.2d 331, 334 (Tex. 1998)
(explaining parents’ survival action “as wholly derivative of [child]’s, the injury is
that which he suffered, and the damages are those he sustained while he was alive”).
“A defendant can raise the same defenses in the survivorship action that it could
assert against the injured person.” Waters ex rel. Walton v. Del-Ky, Inc., 844 S.W.2d
250, 254 (Tex. App.—Dallas 1992, no writ). Arbitration and award is an affirmative
defense, which appellants (i) have raised against appellees and (ii) could have
asserted against the decedents. See TEX. R. CIV. P. 94; see, e.g., Nabors Drilling
USA, LP v. Pena, 385 S.W.3d 103, 109 (Tex. App.—San Antonio 2012, pet. denied)
(explaining decedent’s family’s wrongful death and survival actions against
employer were subject to arbitration agreement between decedent and employer); In
re Jindal Saw Ltd., 264 S.W.3d 755, 766–67 (Tex. App.—Houston [1st Dist.] 2008,
orig. proceeding), (explaining that decedent’s arbitration agreement with his
employer stating to bind his “heirs, beneficiaries and assigns” bound decedent’s
widow to the arbitration agreement) mand. granted, 289 S.W.3d 827 (Tex. 2009)
(per curiam).
–10–
As appellees’ survival actions arise from the decedents’ rights—brought on
behalf of the decedents—those claims are subject to the decedents’ arbitration
agreements. See Waters ex rel. Walton, 844 S.W.2d at 254. Furthermore, as Section
8.F. indicates, the leases expressly anticipated such a result. Thus, regarding
appellees’ survival actions, they are bound by the decedents’ agreements.
Accordingly, we must conclude that appellees are bound by the decedents’
arbitration agreements in the leases.
ii. Arbitrability
A trial court generally determines the arbitrability of an arbitration agreement,
unless the parties clearly and unmistakably provide otherwise. First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).4 “Where the parties’ contract
clearly and unmistakably delegates the arbitrability question to the arbitrator, the
court possesses no power to decide the arbitrability issue.” HomeAdvisor, 2020 WL
2988565, at *5 (citing Robinson v. Home Owners Mgmt. Enters., Inc., 590 S.W.3d
518, 532 (Tex. 2019)).
Appellants assert that the language in the leases incorporated (i) “any claims,
controversies, or disputes” and (ii) the AAA’s Commercial Arbitration Rules by
reference, such that arbitrability is an issue for the arbitrator to decide. In response,
4
See also RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 120 (Tex. 2018) (“The U.S. Supreme
Court has explained that there are three types of disagreements in the arbitration context: (1) the merits of
the dispute; (2) whether the merits are arbitrable; and (3) who decides the second question. . . . The default
rule for the third question is that arbitrability is a threshold matter for the court to decide.” (first citing First
Options, 514 U.S. at 942, and then citing Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 61 (Tex. 2008))).
–11–
appellees, without authority, assert that the threshold question of arbitrability
necessitates a determination of whether the FAA or the TAA applies. Appellees
incorrectly rely on RSL Funding, LLC v. Newsome to assert that the trial court—and
not the arbitrator—must determine that threshold issue before any jurisdiction or
authority can even arguably be delegated to an arbitrator. 569 S.W.3d 116, 121–24
(Tex. 2018).
To the contrary, in RSL Funding, the Texas Supreme Court explained:
Arbitrators are competent to decide any legal or factual dispute the
parties agree to arbitrate.
....
[A]s parties have a right to contract as they see fit, they may agree to
arbitral delegation clauses that send gateway issues such as arbitrability
to the arbitrator.
....
[W]e have held that parties may contract to arbitrate issues even when
the law vests some related exclusive power in a court.
....
Here, the courts below have not questioned the validity of parties’
arbitration clause. We thus have no choice but to send this dispute to
arbitration for the arbitrator to at least decide arbitrability.
569 S.W.3d at 121–23 (internal citations omitted, emphasis added).5 In
HomeAdvisor, we addressed arbitrability of a contract that incorporated the AAA’s
Commercial Arbitration Rules:
[A]rbitration procedures specified that any arbitration would be
administered by the AAA and governed by the AAA’s Commercial
Arbitration Rules. The AAA rules expressly delegate the issue of
arbitrability to the arbitrator. This Court and many others have held that
5
We note the arbitration provision in RSL Funding did not involve the AAA or incorporate its
Commercial Arbitration Rules. See generally RSL Funding, 569 S.W.3d at 119.
–12–
a bilateral agreement to arbitrate under the AAA rules constitutes clear
and unmistakable evidence of the parties’ intent to delegate the issue of
arbitrability to the arbitrator. Arnold, 890 F.3d at 553; Saxa Inc. v. DFD
Architecture Inc., 312 S.W.3d 224, 229-30 (Tex. App.—Dallas 2010,
pet. denied).
2020 WL 2988565, at *5.
As in HomeAdvisor, the record here shows the decedents’ leases, which were
bilateral agreements, included an arbitration provision that clearly informed, with
emphasized text, the decedents that (i) they were waiving their right to jury trial and
(ii) their rights would be determined by a panel of either one or three neutral
arbitrators. However, no arbitrator was selected. The scope of the arbitration
provisions expressly included that “any claims, controversies, or disputes arising
between us and in any way related to or arising out of the relationship created by this
Agreement shall be resolved exclusively by binding arbitration.” As in
HomeAdvisor, the arbitration provisions in the leases specify that any arbitration
would be administered by the AAA and governed by the AAA’s Commercial
Arbitration Rules.6
Thus, we must conclude appellants have established the existence of an
arbitration agreement between them and appellees. Appellants have established that
6
The record includes the AAA’s Commercial Arbitration Rule R-7, which provides, in part:
The arbitrator shall have the power to rule on his or her own jurisdiction, including any
objections with respect to the existence, scope, or validity of the arbitration agreement or
to the arbitrability of any claim or counterclaim.
See, e.g., Saxa Inc. v. DFD Architecture Inc., 312 S.W.3d 224, 228 (Tex. App.—Dallas 2010, pet. denied)
(discussing AAA rules); PER Group, L.P. v. Dava Oncology, L.P., 294 S.W.3d 378, 386 (Tex. App.—
Dallas 2009, no pet.) (discussing Commercial Arbitration Rule R-7).
–13–
all defenses to arbitration, including validity of the arbitration provision, were
delegated to the arbitrator. The record shows no arbitrator decided arbitrability.
Accordingly, the trial court erred in granting appellees’ motions to stay arbitration
and in denying appellants’ pleas in abatement. See HomeAdvisor, 2020 WL
2988565, at *5. We resolve appellants’ first issue in their favor. Because of our
resolution of this issue, we pretermit further discussion and do not reach the
remaining issues on appeal and the sole issue on petition for writ of mandamus.7
V. THE DISSENT
The Dissent asserts that our adjudication of the issues in this case conflicts
with our prior opinion in Roe v. Ladymon, 318 S.W.3d 502, 513 (Tex. App.—Dallas
2010, no pet.).8 Relying on Roe, the Dissent opines that, because appellees did not
individually sign the decedents’ leases, appellees (i) were non-signatories to the
contract (ii) without clear and unmistakable evidence that they authorized an
arbitrator to decide the gateway question of arbitrability.
In Roe, we considered who had the primary power to decide whether
appellants there could compel appellees to arbitrate claims: a court or an arbitrator.
See Roe, 318 S.W.3d at 511. Roe contracted with Metro LLP to renovate her home,
and Ladymon signed the contract “in his capacity as a partner of Metro LLP.” Id. at
7
Not only is further discussion unnecessary, imparting further opinion risks providing an advisory
opinion when it is not our question to decide.
8
We note neither appellants nor appellees rely upon Roe.
–14–
507.9 This contract included an arbitration provision. Id. Unsatisfied with the
remodeling work, Roe demanded arbitration against both Metro LLP and Ladymon.
Id. at 508. The parties attended arbitration, and the arbitrator ultimately signed an
award in favor of Roe against Metro LLP and Ladymon—jointly and severally liable
for Roe’s damages. Id. at 509. The trial court confirmed the arbitration award but
stated the following as to the award against Ladymon, individually:
Defendant Ladymon timely and properly objected to the arbitrator
regarding the arbitrator’s lack of jurisdiction over him in a personal
capacity. Furthermore, whether or not Defendant Ladymon was
personally liable for the debts of defendant [Metro LLP] is a separate
issue from whether or not Defendant Ladymon was bound by the
arbitration clause.
Id. at 509. The trial court further held
that the arbitrator exceeded his authority in rendering an award against
Ladymon individually, stating: “The arbitrator was without jurisdiction
and the determination of the arbitrator’s jurisdiction is a matter of
arbitrability under First Options of Chicago, Inc. v. Kaplan, 514 U.S.
938, 115 S. Ct. 1920 [131 L.Ed.2d 985] (1995) and is exclusively
reserved to this Court.”
Id. In first addressing the applicability of an arbitration agreement, we explained:
Disputes about the scope of an arbitration agreement are resolved in
favor of arbitration. However, this presumption favoring arbitration
arises only after the party seeking to compel arbitration proves that a
valid arbitration agreement exists.
Like other contracts, nonparties are normally not bound by arbitration
agreements between others. But just as other contracts can become
binding on nonparties, principles of contract law and agency may bind
9
Metro LLP later converted to a limited partnership, with Ladymon serving as a limited partner. Roe,
318 S.W.3d at 507–08.
–15–
a non-signatory to an arbitration agreement. Thus non-signatories to a
contract containing an arbitration clause may be required to arbitrate if
rules of law or equity would bind them to the contract generally. See In
re Labatt Food Serv., L.P., 279 S.W.3d 640, 644 (Tex. 2009); see also
In re Weekley Homes, L.P., 180 S.W.3d 127, 131 (Tex. 2005) (“Indeed,
if Texas law would bind a nonparty to a contract generally, the FAA
would appear to preempt an exception for arbitration clauses alone.”)
Id. at 511 (internal citations and quotations omitted).10 In Roe, we further discussed
whether a non-signatory to an arbitration agreement could be required to arbitrate.
[A] court should decide whether an arbitration contract binds a person
who did not sign the contract.
While non-signatories to an arbitration agreement can be bound to
arbitrate under principles of contract and agency law, such issues—
dealing as they do with non-signatories—are gateway “issues of
arbitrability” that the courts are primarily responsible for deciding—
not the arbitrator. And only if the non-signatory has “clearly and
unmistakably agreed” to submit that issue to arbitration will the courts
be bound to a deferential review of the arbitrator’s decision that the
non-signatory is bound by the arbitration agreement.
Id. at 515 (internal citations omitted). We concluded Roe had not shown that
Ladymon “‘clearly agreed to have the arbitrator [ ] decide (i.e., to arbitrate) the
question of arbitrability.’” Id. at 517 (quoting First Options, 514 U.S. at 946). We
rejected the argument that Ladymon’s execution of the contract on behalf of Metro
LLP was evidence that “he clearly and unmistakably agreed the arbitrator could
10
Unlike the contract claims in Roe, In re Labatt Food Services and In re Weekley Homes involved
wrongful death and personal injury. In re Labatt Food Serv., 279 S.W.3d at 649 (holding “the arbitration
provision in an agreement between a decedent and his employer requires the employee’s wrongful death
beneficiaries to arbitrate their wrongful death claims against the employer even though they did not sign
the agreement”); In re Weekley Homes, L.P., 180 S.W.3d 127, 135 (Tex. 2005) (orig. proceeding)
(recognizing that a “nonparty may be compelled to arbitrate if it deliberately seeks and obtains substantial
benefits from the contract itself” in discussion of a personal injury claim where claimant demanded
compliance with the contract).
–16–
decide whether he is bound to arbitrate claims against him individually.” Id. at 516(emphasis added).
The Dissent opines that appellees in this case are in the same position as
Ladymon in Roe because “both are non-contracting parties because they did not sign
the leases.” See id. at 517. The result of the Dissent’s rule suggests that nonparties
to a contract containing an arbitration provision can never be bound by arbitration
agreements they did not individually sign—an argument the Texas Supreme Court
has repeatedly rejected. See In re Labatt Food Serv., 279 S.W.3d at 644; see also In
re Weekley Homes, L.P., 180 S.W.3d 127, 131 (Tex. 2005) (orig. proceeding). Here,
appellees’ positions in the instant case are distinguishable from that of Ladymon in
Roe.
Unlike Roe—in which neither Metro LLP nor Ladymon agreed to subject
Ladymon to the contract—the decedents here agreed to arbitrate and explicitly bind
“all persons whose claim is derived through or on behalf of [decedent], including
that of the [decedent’s] family, heirs, guardian, executor, administrator and assigns”
to the leases. Unlike Ladymon—who sought to avoid liability under a contract he
was not a party to—appellees’ claims of wrongful death and survival action derive
from the respective decedents, who each agreed to arbitration. Appellees have
asserted claims that can only be raised (i) by stepping into the decedents’ legal shoes
or (ii) by the decedents—as appellees have done on behalf of the decedents’ estates.
See In re Labatt Food Serv., 279 S.W.3d at 646; Stevenson, 608 S.W.3d at 131.
–17–
Therefore, Ladymon’s position in Roe as a non-signatory to an agreement is not
comparable to appellees’ positions in this case. As we conclude above, appellees are
subject to the decedents’ agreements.
The Dissent also misapplies Texas law concerning delegation of arbitrability
decisions to the arbitrator. As noted above, it is undisputed that the decedents’ lease
agreements incorporate the AAA’s Commercial Rules and thus should be read to
call for the arbitrator to determine arbitrability. The Dissent carefully outlines the
law of arbitrability, concluding its analysis with the statement: “I agree that under
ordinary circumstances, incorporation of the Commercial Rules in an arbitration
agreement signifies that the agreement calls for the arbitrator to determine
arbitrability.” Dissent at 18. The Dissent supports this conclusion by citing eight
cases—three from our Court, three from different sister courts, and two from the
Fifth Circuit. Dissent at 18 and n.6.
But these are no “ordinary circumstances,” according to the Dissent, and all
of that cited authority does not lead to the same conclusion in our case. Indeed, this
case is unique, according to the Dissent, because “none of these cases involved a
situation such as here where the AAA deferred the arbitrability determination to the
state court . . . . [and] these cases did not involve parties disputing arbitration who
were non-signatories to the agreement.” The Dissent crafts an interesting and
creative argument from this premise, but it cites to no Texas rule, case, or statute
that supports such a newly created exemption from the widely adopted “ordinary”
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rule. Neither of the factors pointed to by the Dissent supports such a departure from
settled law. See Lubbock Cty., Tex. v. Trammel’s Lubbock Bail Bonds, 80 S.W.3d
580, 585 (Tex. 2002) (“It is not the function of a court of appeals to abrogate or
modify established precedent. . . . That function lies solely with [the Texas Supreme]
Court.” (internal citation omitted)).
The Dissent places great weight on the AAA’s deferring to the trial court on
arbitrability, but that weight is misplaced. The only decisions of the AAA that carry
any legal weight are substantive ones made pursuant to an agreement by parties to
arbitrate. “[Arbitrators] have no independent source of jurisdiction apart from the
parties’ consent.” Americo Life, Inc. v. Myer, 440 S.W.3d 18, 21–22 (Tex. 2014)
(citing I.S. Joseph Co. v. Mich. Sugar Co., 803 F.2d 396, 399 (8th Cir.1986)), Hann
v. Vintage Estate Homes, LLC, No. 05-21-00103-CV, 2022 WL 1222828, at *4 (Tex.
App.—Dallas Apr. 26, 2022, no pet. h.).11
When the parties agree to have the arbitrator decide arbitrability, as they did
in this case, then the AAA lacks discretion to require something different.
“Arbitration is a matter of contract, and that which the parties agree must be
arbitrated shall be arbitrated.” Jody James Farms, JV v. Altman Grp., Inc., 547
S.W.3d 624, 631 (Tex. 2018). The Dissent appears to accept that the AAA can
11
The AAA’s communications to these parties acknowledge that its decision to defer ruling absent
agreement of the parties or a court order is an “administrative” one. It is undisputed that no arbitrator (or
panel of arbitrators) has made a substantive arbitrability decision because no arbitrator (or panel) has been
selected through AAA rules.
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authorize a trial court to perform an action the parties delegated to an arbitrator, but
it offers no legal authority for that proposition. By acquiescing to this administrative
decision, the Dissent appears to be treating the AAA as if it were a governmental
agency, granting deference to its administrative decisions. See, e.g., Combined
Specialty Ins. Co. v. Deese, 266 S.W.3d 653, 661 (Tex. App.—Dallas 2008, no pet.)
(we defer to agency’s interpretation of its own rules as long as interpretation is
reasonable). But the AAA is not a governmental agency, and its refusal to comply
with the parties’ agreement is not a decision that deserves deference. Nor is that
decision one that supports making an exception to a long-settled judicial principle.12
VI. CONCLUSION
We reverse the trial court’s orders granting a stay of arbitration and denying
appellants’ plea in abatement. We remand the causes with instructions to order the
parties to arbitration and to stay the underlying causes pending the outcome of the
arbitrations.
12
I note that under our original panel opinion, the trial court could have addressed the AAA’s
administrative decision by issuing an order stating, correctly, that the arbitrability issues were for the
arbitrator and that the AAA should proceed with the arbitrations as agreed.
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We dismiss appellants’ petition for writ of mandamus as moot.
/Bill Pedersen, III//
BILL PEDERSEN, III
JUSTICE
Opinion of the Court by Pedersen, J., joined by Myers, Schenck, Osborne,
Reichek, Goldstein, and Smith, JJ.
Schenck, J., concurring.
Partida-Kipness, J., dissenting, joined by Burns, C.J., and Molberg, Nowell,
Carlyle, and Garcia, JJ.
200380F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PRESTONWOOD TRADITION, On Appeal from the County Court at
LP; TRADITION MANAGEMENT, Law No. 2, Dallas County, Texas
LLC; PRESTONWOOD TSL, LP; Trial Court Cause No. CC-19-03747-
PRESTONWOOD TSL GP, LLC, B.
TRADITION SENIOR LIVING, Opinion of the En Banc Court
L.P.; TRADITION SL, LLC; AND delivered by Justice Pedersen, III.
JONATHAN S. PERLMAN,
Appellants
No. 05-20-00380-CV V.
MARY JO JENNINGS,
INDIVIDUALLY AND AS THE
INDEPENDENT EXECUTRIX
AND REPRESENTATIVE OF THE
BENEFICIARIES OF THE ESTATE
OF LEAH ALICE CORKEN; LISA
CULLEN, INDIVIDUALLY; AND
MATT CORKEN, INDIVIDUALLY
Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.
It is ORDERED that appellants PRESTONWOOD TRADITION, LP;
TRADITION MANAGEMENT, LLC; PRESTONWOOD TSL, LP;
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PRESTONWOOD TSL GP, LLC, TRADITION SENIOR LIVING, L.P.;
TRADITION SL, LLC; AND JONATHAN S. PERLMAN recover their costs of this
appeal from appellee Mary Jo Jennings, Individually and as the Independent
Executrix and Representative of the Beneficiaries of the Estate of Leah Alice
Corken; appellee Lisa Cullen, Individually; and appellee Matt Corken, Individually.
Judgment entered this 5th day of August, 2022.
–23–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PRESTONWOOD TRADITION, On Appeal from the County Court at
LP; TRADITION MANAGEMENT, Law No. 2, Dallas County, Texas
LLC; PRESTONWOOD TSL, LP; Trial Court Cause No. CC-19-03737-
PRESTONWOOD TSL GP, LLC, B.
TRADITION SENIOR LIVING, Opinion of the En Banc Court
L.P.; TRADITION SL, LLC; AND delivered by Justice Pedersen, III.
JONATHAN S. PERLMAN,
Appellants
No. 05-20-00387-CV V.
DIANNE TANNERY,
INDIVIDUALLY AND AS THE
INDEPENDENT EXECUTRIX
AND REPRESENTATIVE OF THE
BENEFICIARIES OF THE ESTATE
OF JUANITA PURDY; AND
THOMAS DUCKER,
INDIVIDUALLY Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.
It is ORDERED that appellants PRESTONWOOD TRADITION, LP;
TRADITION MANAGEMENT, LLC; PRESTONWOOD TSL, LP;
PRESTONWOOD TSL GP, LLC, TRADITION SENIOR LIVING, L.P.;
TRADITION SL, LLC; AND JONATHAN S. PERLMAN recover their costs of this
appeal from appellee Dianne Tannery, Individually and as the Independent
–24–
Executrix and Representative of the Beneficiaries of the Estate of Juanita Purdy; and
appellee Thomas Ducker, Individually.
Judgment entered this 5th day of August, 2022.
–25–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PRESTONWOOD TRADITION, On Appeal from the County Court at
LP; TRADITION MANAGEMENT, Law No. 2, Dallas County, Texas
LLC; PRESTONWOOD TSL, LP; Trial Court Cause No. CC-19-03754-
PRESTONWOOD TSL GP, LLC, B.
TRADITION SENIOR LIVING, Opinion of the En Banc Court
L.P.; TRADITION SL, LLC; AND delivered by Justice Pedersen, III.
JONATHAN S. PERLMAN,
Appellants
No. 05-20-00388-CV V.
SHERRIL KERR, INDIVIDUALLY
AND AS THE INDEPENDENT
EXECUTRIX AND
REPRESENTATIVE OF THE
BENEFICIARIES OF THE ESTATE
OF GLENNA DAY; AND
GREGORY B. DAY,
INDIVIDUALLY, Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.
It is ORDERED that appellants PRESTONWOOD TRADITION, LP;
TRADITION MANAGEMENT, LLC; PRESTONWOOD TSL, LP;
PRESTONWOOD TSL GP, LLC, TRADITION SENIOR LIVING, L.P.;
TRADITION SL, LLC; AND JONATHAN S. PERLMAN recover their costs of this
appeal from appellee Sherril Kerr, Individually and as the Independent Executrix
–26–
and Representative of the Beneficiaries of the Estate of Glenna Day; and appellee
Gregory B. Day, Individually.
Judgment entered this 5th day of August, 2022.
–27–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PRESTONWOOD TRADITION, On Appeal from the County Court at
LP; TRADITION MANAGEMENT, Law No. 2, Dallas County, Texas
LLC; PRESTONWOOD TSL, LP; Trial Court Cause No. CC-19-03757-
PRESTONWOOD TSL GP, LLC, B.
TRADITION SENIOR LIVING, Opinion of the En Banc Court
L.P.; TRADITION SL, LLC; AND delivered by Justice Pedersen, III.
JONATHAN S. PERLMAN,
Appellants
No. 05-20-00389-CV V.
MARSHA SPRING REPP AND
STEVEN SPRING,
INDIVIDUALLY AND AS THE
CO-EXECUTORS AND
REPRESENTATIVES OF THE
BENEFICIARIES OF THE ESTATE
OF SOLOMON H. SPRING,
Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.
It is ORDERED that appellants PRESTONWOOD TRADITION, LP;
TRADITION MANAGEMENT, LLC; PRESTONWOOD TSL, LP;
PRESTONWOOD TSL GP, LLC, TRADITION SENIOR LIVING, L.P.;
TRADITION SL, LLC; AND JONATHAN S. PERLMAN recover their costs of this
appeal from appellees Marsha Spring Repp and Steven Spring, Individually and as
–28–
the Co-Executors and Representatives of the Beneficiaries of the Estate of Solomon
H. Spring.
Judgment entered this 5th day of August 2022.
–29–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PRESTONWOOD TRADITION, On Appeal from the County Court at
LP; TRADITION MANAGEMENT, Law No. 2, Dallas County, Texas
LLC; PRESTONWOOD TSL, LP; Trial Court Cause No. CC-19-03745-
PRESTONWOOD TSL GP, LLC, B.
TRADITION SENIOR LIVING, Opinion of the En Banc Court
L.P.; TRADITION SL, LLC; AND delivered by Justice Pedersen, III.
JONATHAN S. PERLMAN,
Appellants
No. 05-20-00390-CV V.
MICHAEL SOLOMON,
MATTHEW ABRAMOWITZ, AND
PAUL ABRAMOWITZ,
INDIVIDUALLY AND AS THE
CO-EXECUTORS AND
REPRESENTATIVES OF THE
BENEFICIARIES OF THE ESTATE
OF JOYCE ABRAMOWITZ; AND
MARC ABRAMOWITZ,
INDIVIDUALLY, Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial
court is REVERSED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.
It is ORDERED that appellants PRESTONWOOD TRADITION, LP;
TRADITION MANAGEMENT, LLC; PRESTONWOOD TSL, LP;
PRESTONWOOD TSL GP, LLC, TRADITION SENIOR LIVING, L.P.;
TRADITION SL, LLC; AND JONATHAN S. PERLMAN recover their costs of this
–30–
appeal from appellees Michael Solomon, Matthew Abramowitz, and Paul
Abramowitz, Individually and as the Co-Executors and Representatives of the
Beneficiaries of the Estate of Joyce Abramowitz, and Marc Abramowitz,
Individually.
Judgment entered this 5th day of August, 2022.
–31–