Huan Dang v. Hung Van Tran

Affirmed and Opinion Filed June 2, 2023
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-22-00518-CV
HUAN DANG, Appellant
V.
HUNG VAN TRAN, Appellee
On Appeal from the 192nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-21-13968
MEMORANDUM OPINION
Before Justices Partida-Kipness, Nowell, and Kennedy
Opinion by Justice Partida-Kipness
In this interlocutory appeal, appellant Huan Dang (Dang) challenges the trial
court’s order denying his motion to compel arbitration. See TEX. CIV. PRAC. & REM.
CODE §§ 51.016; 171.098(a)(1). Finding no abuse of discretion, we affirm.
BACKGROUND
Dang owns and operates various restaurants in the DFW Metroplex. Between
October 10, 2017 and December 2, 2018, appellee Hung Van Tran (Tran) provided
four capital contributions totaling $500,000 to fund two of those restaurants: B Bahn
Café and Bistro B. According to Tran’s live pleading, he loaned the money to Dang,
and Dang promised to pay Tran back in full according to payment schedules set out
in four partnership agreements. Tran further maintains that Dang promised to give
Tran ownership interests in each restaurant. According to Tran, he “made
partnership loans” to Dang to fund B Bahn Café and Bistro B, and “entered into”
partnership agreements with Dang for each of the four loans.
In the underlying proceeding, Tran asserted that Dang failed to repay the full
amount of the loans, failed to issue Tran the promised partnership interests, and used
the loan money in other ventures and for Dang’s personal use. Tran brought claims
against Dang, B Bahn Café, and Bistro B for breach of contract, breach of fiduciary
duty, quantum meruit, common law fraud, statutory fraud, joint enterprise, unjust
enrichment, alter ego, and money had and received. Tran also asserted unjust
enrichment, alter ego, and money had and received claims against HD Golden
Michael B Corporation, AB Golden Corporation, LLC, Pho Golden, LLC, Fresh
Rolls and Go, LLC (collectively the corporate defendants), and Dang’s son, Brian
Dang.
I. The Partnership Agreements
According to Tran’s live pleading, he “entered into” four agreements with
Dang. Tran did not attach copies of the partnership agreements to his original
petition or first amended petition, which was his live pleading. He did, however,
describe each agreement. Tran pleaded that, on October 10, 2017, he “entered into
an initial loan agreement” with Dang “to be partners in B Banh Café” (the Café
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Agreement). In the Café Agreement, Tran agreed to loan Dang $100,000 to fund B
Bahn Café. After Dang and Tran entered into the Café Agreement, Dang sought
additional funding for what Tran described as Dang’s “Bistro B business venture.”
According to Tran’s live pleading, he agreed to loan Dang $400,000 for the Bistro
B business venture between January 2018 and December 2018. Tran and Dang
entered into three partnership agreements (collectively the Bistro B Agreements)
“that correspond to” the three additional loans Tran made to Dang. Tran pleaded that
the Bistro B Agreements were signed January 25, 2018, June 21, 2018, and
December 2, 2018.
II. The Motion to Compel Arbitration
On May 13, 2022, Dang filed a motion to compel arbitration in which he
sought to compel Tran’s claims against Dang and the corporate defendants to
arbitration. According to Dang, the Café Agreement and the January Bistro B
Agreement included valid and enforceable arbitration provisions, and the June and
December Bistro B Agreements “contemplate an arbitration award.” Dang argued
that Tran’s claims against Dang and the corporate defendants were related to the
partnership agreements and, therefore, subject to arbitration. Dang asserted that “the
events made basis to this litigation are within the scope of the arbitration agreement”
because those events involved disputes between Dang and Tran “as a result of” the
agreements.
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The only evidence submitted by Dang in support of the motion were the four
partnership agreements. The motion to compel is not certified, and Dang did not
authenticate the partnership agreements. On the contrary, the motion states that he
is not acknowledging or authenticating the Café Agreement or the January Bistro B
Agreement:
3. Without acknowledging or authenticating any document on which
another party’s pleading is founded, the pertinent documents are attach
[sic] hereto as EXHIBIT A and EXHIBIT B. Thus, a valid and
enforceable arbitration provision between Plaintiff and Defendant
exists on the face.
Dang did not even state that the exhibits were true and correct copies of the
partnership agreements.
In response, Tran first asserted that Dang had not proven the existence of an
arbitration agreement or the scope of the purported arbitration provisions. Tran also
stated that “no arbitration agreement Exists [sic] and the claims at issue do not fall
within the Arbitration Clause.”
Tran further maintained the arbitration provisions were either invalid or
inapplicable to the claims asserted in the litigation. To that end, Tran asserted that
neither the June nor December Bistro B agreements included an arbitration provision
and, as such, claims related to those agreements were not subject to arbitration. Tran
further argued that any claims related to the Bistro B Agreements were not subject
to arbitration because the December Bistro B Agreement, which did not include an
arbitration provision, included a merger clause and, therefore, superseded the prior
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Bistro B agreements and governed all claims related to Bistro B. As for the claims
related to B Bahn Café, Tran contended the Café Agreement and an arbitration
provision in the Café Agreement were invalid. Specifically, Tran argued the
arbitration provision conflicted with provisions that the agreement expired after six
months, and that Tran would take over B Bahn Café “without any further
negotiation” if Dang failed to repay Tran during those six months. He also stated
that the arbitration clause “would not be triggered due to the Partnership Agreements
language and [Tran’s] reliance that he would take over B Banh Café ‘without any
further negotiation.’”
Tran next asserted that his extra-contractual claims were not subject to
arbitration, and the corporate defendants were not subject to the arbitration
provisions because they were not signatories to the Café Agreement or the January
Café Agreement. Tran also contended he could revoke the arbitration provisions at
any time. Finally, Tran argued that Dang waived any purported right to arbitrate by
substantially invoking the judicial process, and that arbitration is prejudicial to Tran.
On May 26, 2022, the trial court heard arguments from counsel on the motion
to compel, denied the motion on the record at the hearing, and signed an order
denying the motion.1 No party requested the trial court to issue findings of fact and
1
On the day of the hearing, Dang filed a reply in support of the motion to compel arbitration. The trial
judge stated on the record that she had not read Dang’s reply. The judge’s signature on the order includes
a time stamp of “2:05:16 PM.” The docket sheet shows the hearing was scheduled to begin at 1:30 p.m.
We, therefore, presume the trial court did not consider Dang’s reply when making its decision.
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conclusions of law, and none were issued. Dang appeals the order denying the
motion to compel arbitration pursuant to the Federal Arbitration Act (FAA), and the
Texas General Arbitration Act (TGAA). See TEX. CIV. PRAC. & REM. CODE §§
51.016, 171.098.
STANDARD OF REVIEW
We review the denial of a motion to compel arbitration for an abuse of
discretion, deferring to the trial court on factual determinations that are supported by
the evidence and reviewing legal determinations de novo. Henry v. Cash Biz, LP,
551 S.W.3d 111, 115 (Tex. 2018). The trial court did not issue findings of fact or
conclusions of law to explain its denial of the motion to compel arbitration. We must,
therefore, uphold the trial court’s decision on any appropriate legal theory urged
below. Scott + Reid Gen. Contractors, Inc. v. Stanton, No. 05-22-00400-CV, 2022
WL 5434185, at *2 (Tex. App.—Dallas Oct. 7, 2022, pet. filed) (mem. op.) (citing
Bonded Builders Home Warranty Ass’n of Tex. v. Rockoff, 509 S.W.3d 523, 531–32
(Tex. App.—El Paso 2016, no pet.)). We review the trial court's decision in light of
the grounds presented below by Tran because he was the party resisting arbitration.
See Fee, Smith, Sharp & Vitullo, LLP v. Strunk, No. 05-21-00003-CV, 2021 WL
4472608, at *3 (Tex. App.—Dallas Sept. 30, 2021, pet. denied) (mem. op.) (first
citing Cardwell v. Whataburger Rests., L.L.C., 484 S.W.3d 426, 428 (Tex. 2016);
and then citing Ridge Nat. Res. LLC v. Double Eagle Royalty, L.P., 564 S.W.3d 105,
118 (Tex. App.—El Paso 2018, no pet.)).
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APPLICABLE LAW
Arbitration “is a matter of contract and a party cannot be required to submit
to arbitration any dispute which he has not agreed so to submit.” Seven Hills
Commercial, LLC v. Mirabal Custom Homes, Inc., 442 S.W.3d 706, 714 (Tex.
App.—Dallas 2014, pet. denied) (quoting Roe v. Ladymon, 318 S.W.3d 502, 511
(Tex. App.—Dallas 2010, no pet.)). A party seeking to compel arbitration must
establish that a valid arbitration agreement exists and that the claims asserted are
within the scope of the agreement. Id. at 715 (citing In re D. Wilson Constr. Co., 196
S.W.3d 774, 781 (Tex. 2006) (orig. proceeding)).
The initial evidentiary burden for proving the existence of an arbitration
agreement runs with the movant. United Rentals v. Smith, 445 S.W.3d 808, 812 (Tex.
App.—El Paso 2014, no pet.). This evidentiary burden encompasses threshold
evidentiary issues such as authenticity and evidence of mutual assent. So, for
example, if the movant cannot authenticate an agreement before the trial court, then
it has not met its threshold evidentiary burden. See United Rentals, 445 S.W.3d at
814 (movant failed to prove prima facie case because the authenticating affidavit did
not certify that the attached agreement was a true and correct copy or that it was
complete).
Both the Federal Arbitration Act and the Texas Arbitration Act require the
existence of an agreement to arbitrate to be proven to the court before the court must
compel arbitration. RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 124 (Tex.
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2018) (first citing 9 U.S.C.A. § 4, and then citing TEX. CIV. PRAC. & REM. CODE
ANN. § 171.021(b)); see also Wagner v. Apache Corp., 627 S.W.3d 277, 284 (Tex.
2021) (explaining that the presumption in favor of arbitration arises after the party
seeking to compel arbitration proves that a valid arbitration agreement exists);
Aerotek, Inc. v. Boyd, 624 S.W.3d 199, 204 (Tex. 2021) (“To compel arbitration, a
party must prove that a valid arbitration agreement exists.”); In re Palm Harbor
Homes, Inc., 195 S.W.3d 672, 676 (Tex. 2006) (orig. proceeding) (“In determining
validity of agreements to arbitrate which are subject to the FAA, we generally apply
state-law principles governing the formation of contracts.”).
Whether a valid agreement to arbitrate exists is a question of law subject to de
novo review. See Baby Dolls Topless Saloons, Inc. v. Sotero, 642 S.W.3d 583, 586
(Tex. 2022) (acknowledging that challenges claiming that a contract “never came
into being” are decided by the court); see also Brand FX, LLC v. Rhine, 458 S.W.3d
195, 203 (Tex. App.—Fort Worth 2015, no pet.); see generally Transcor Astra Grp.
S.A. v. Petrobras Am. Inc., 650 S.W.3d 462, 480 (Tex. 2022) (“Because the parties
here dispute whether their arbitration agreement continued to exist after the 2012
settlement agreement, we agree with the trial court and court of appeals that courts
must decide that issue.”).
ANALYSIS
Dang brings two issues on appeal. First, Dang contends the trial court abused
its discretion by denying the motion to compel arbitration as to the claims asserted
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against Dang and the corporate defendants. Second, Dang maintains the trial court
abused its discretion by failing to either dismiss or abate Tran’s claims in favor of
arbitration.
After reviewing the record, we conclude the trial court did not abuse its
discretion by denying Dang’s motion to compel arbitration. As a matter of law,
Dang’s attachment of unauthenticated exhibits to his motion, without more, was
insufficient to meet his initial evidentiary burden to prove the existence of a valid,
enforceable arbitration agreement.
I. Dang’s Threshold Evidentiary Burden
“As a threshold matter, a party seeking to compel arbitration must establish
the existence of a valid arbitration agreement and the existence of a dispute within
the scope of the agreement.” Rachal v. Reitz, 403 S.W.3d 840, 843 (Tex. 2013).
Dang was required to put forth competent, prima facie evidence of the arbitration
agreement itself. Dang’s only evidence in support of the motion to compel
arbitration was unsworn and unauthenticated copies of the four partnership
agreements. Dang does not discuss on appeal how he met this burden in the trial
court. For the reasons discussed below, we conclude that he failed to meet this initial
evidentiary burden.
A. Unauthenticated documents constitute no evidence
Arbitration agreements are creatures of contract. Ladymon v. Lewis, No. 05-
16-00776-CV, 2017 WL 3097652, at *4 (Tex. App.—Dallas July 21, 2017, no pet.)
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(mem. op.). When a party seeks to compel arbitration, the party must first establish
its right to that contract remedy. VSR Fin. Servs. Inc. v. McLendon, 409 S.W.3d 817,
827 (Tex. App.—Dallas 2013, no pet.). The burden of establishing an arbitration
agreement’s existence is generally evidentiary. Id. at 828. “It is axiomatic that a party
seeking to prove its right to enforce a contractual remedy of arbitration must submit
competent, prima facie evidence of the arbitration agreement itself.” Constant v.
Gillespie, No. 05-20-00734-CV, 2022 WL 1564555, at *5–7 (Tex. App.—Dallas
May 18, 2022, no pet.) (mem. op.).
A party can satisfy its evidentiary burden to prove an arbitration agreement’s
existence by submitting authenticated copies of an agreement containing an
arbitration clause. Dish Network L.L.C. v. Alexander, No. 13-20-00240-CV, 2021
WL 3085763, at *3 (Tex. App.—Corpus Christi–Edinburg July 22, 2021, pet.
denied) (mem. op.); see also Heritage Numismatic Auctions, Inc. v. Stiel, No. 05-16-
00299-CV, 2016 WL 7321437, at *2 (Tex. App.—Dallas Dec. 16, 2016, no pet.)
(mem. op.) (“Before documents may be used as evidence, they must be authenticated
as genuine.”). To satisfy the authentication requirement, the proponent must produce
evidence sufficient to support a finding that the item is what the proponent claims it
is. TEX. R. EVID. 901(a). The testimony of a witness with knowledge is one way to
prove authenticity. Kyäni, Inc. v. HD Walz II Enters., Inc., No. 05-17-00486-CV,
2018 WL 3545072, at *4 (Tex. App.—Dallas July 24, 2018, no pet.) (mem. op.)
(citing TEX. R. EVID. 901(b)(1)). Thus, in a summary proceeding, “[a] properly
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sworn affidavit stating that the attached documents are true and correct copies of the
original authenticates the copies so they may be considered as evidence.” See id.(citing In re Estate of Guerrero, 465 S.W.3d 693, 704 (Tex. App.—Houston [14th
Dist.] 2015, pet. denied)).
Here, Dang attached the purported partnership agreements as exhibits to his
motion to compel arbitration. But he did not submit any affidavits from a witness to
authenticate any of his exhibits. He did not even assert in the motion that the attached
copies were “true and correct.” “Simply attaching a document to a motion does not
make the document admissible as evidence, dispense with proper foundational
evidentiary requirements, or relieve a litigant of complying with other admissibility
requirements.” LocumTenens.com, LLC v. Hanna, No. 14-18-00739-CV, 2020 WL
897362, at *3 (Tex. App.—Houston [14th Dist.] Feb. 25, 2020, no pet.) (mem. op.)
(citing In re Estate of Guerrero, 465 S.W.3d at 704); see also Gruber v. CACV of
Colo., LLC, No. 05-07-00379-CV, 2008 WL 867459, at *2 (Tex. App.—Dallas Apr.
2, 2008, no pet.) (mem. op.) (same). We conclude that, as a matter of law, Dang’s
mere attachment of the agreements as exhibits to his motion, without more,
submitted no evidence of a valid arbitration agreement to the trial court. See In re
Estate of Guerrero, 465 S.W.3d at 705, 706–08 (a document submitted as evidence
in a motion-to-compel-arbitration context contains a substantive defect that renders
it incompetent if there was a complete failure to authenticate the document).
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B. Preservation of error
The record does not show that Tran objected in the trial court to Dang’s copies
of the agreements on the basis that they were not authenticated. And there is no
ruling in the record on any such objection. However, Tran did argue in his response
to the motion to compel that Dang had not proven the existence of an arbitration
agreement or the scope of the purported arbitration provisions. Tran also stated in
his response to the motion to compel that “no arbitration agreement Exists [sic] and
the claims at issue do not fall within the Arbitration Clause.” Although Tran did not
use the term “authentication” when making his arguments, we conclude his
arguments raised that issue sufficiently to provide Dang fair notice of the challenge
to authentication. See, e.g., Tabe v. Tex. Inpatient Consultants, LLLP, 555 S.W.3d
382, 387 (Tex. App.—Houston [1st Dist.] 2018, pet. denied) (failure of affidavit to
use the term “condition precedent” did not deprive party of fair notice that opposing
party denied the completion of credentialing as a condition precedent to
employment); see also Port of Houston Auth. of Harris Cnty. v. Zachry Constr.
Corp., 513 S.W.3d 543, 571 (Tex. App.—Houston [14th Dist.] 2016, pet. denied)
(allegations in pleading provided opposing party of notice that it faced a claim
concerning apparent authority despite failure to use the term “apparent authority”).
Regardless, Tran was not required to preserve this objection in the trial court.
The complete absence of authentication, as in this case, is a substantive defect that
can be raised for the first time on appeal by a party or sua sponte by the reviewing
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court. Guerrero, 465 S.W.3d at 706–08 (appellee raised lack of authentication for
first time on appeal); Constant, 2022 WL 1564555, at *7 (same); LocumTenens.com,
LLC, 2020 WL 897362, at *2, 3 (appellate court raised complete absence of
authentication sua sponte on appeal); HighMount Expl. & Prod. LLC v. Harrison
Interests, Ltd., 503 S.W.3d 557, 567–68 (Tex. App.—Houston [14th Dist.] 2016, no
pet.) (same in summary judgment context).
Because Dang did not authenticate the partnership agreements attached to its
motion to compel arbitration, there is no competent evidence of an agreement to
arbitrate. See Constant, 2022 WL 1564555, at *7; see also In re Estate of Guerrero,
465 S.W.3d at 705; LocumTenens.com, LLC, 2020 WL 897362, at *2, 3.
Accordingly, we conclude the trial court did not abuse its discretion in denying
Dang’s motion to compel arbitration because Dang failed to meet his burden to
establish the existence of an arbitration agreement. See Dimension Homes, Inc. v.
Lewis, No. 14-20-00316-CV, 2022 WL 906086, at *4 (Tex. App.—Houston [14th
Dist.] Mar. 29, 2022, no pet.) (mem. op.) (citing In re Estate of Guerrero, 465
S.W.3d at 705); see also Constant, 2022 WL 1564555, at *5–7.
Because this ground is meritorious and the trial court did not specify on which
ground its decision rested, we affirm the order denying the motion to compel on this
ground. We decline to address the remaining arguments raised in the briefs regarding
Dang’s first issue because doing so is unnecessary to the resolution of this appeal.
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See United Rentals, Inc. v. Smith, 445 S.W.3d 808, 814 (Tex. App.—El Paso 2014,
no pet.) (citing TEX. R. APP. P. 47.1).
II. Failure to Dismiss or Abate
In his second appellate issue, Dang asserts that the trial court erred in not
either staying or dismissing the litigation. Citing the Federal Arbitration Act, the
Texas General Arbitration Act, and case law interpreting those statutes, Dang
maintains a trial court is required to stay or dismiss the litigation when compelling
litigants to arbitrate. Because Dang has not shown that the trial court erred in refusing
to compel arbitration, Dang also has not shown that the trial court erred in refusing
to stay the litigation. See LocumTenens.com, LLC, 2020 WL 897362, at *3. Thus,
we overrule the second issue.
CONCLUSION
The evidence presented by Dang in support of the motion to compel was not
authenticated and, therefore, constituted no evidence to support the relief requested.
The trial court’s denial of the motion to compel can be upheld on that basis alone.
Accordingly, we overrule Dang’s appellate issues and affirm the trial court’s order
denying the motion to compel arbitration.
/Robbie Partida-Kipness/
ROBBIE PARTIDA-KIPNESS
JUSTICE
220515F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
HUAN DANG, Appellant On Appeal from the 192nd Judicial
District Court, Dallas County, Texas
No. 05-22-00518-CV V. Trial Court Cause No. DC-21-13968.
Opinion delivered by Justice Partida-
HUNG VAN TRAN, Appellee Kipness. Justices Nowell and
Kennedy participating.
In accordance with this Court’s opinion of this date, the trial court’s order
denying the motion to compel arbitration is AFFIRMED.
It is ORDERED that appellee HUNG VAN TRAN recover his costs of this
appeal from appellant HUAN DANG.
Judgment entered this 2nd day of June 2023.
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