Opinion
No. 06-05-00125-CV
Submitted: November 7, 2005.
Decided: November 8, 2005.
Original Mandamus Proceeding.
Before MORRISS, C.J., ROSS and CARTER, JJ.
MEMORANDUM OPINION
Farmpro, Inc., has filed a petition for a writ of mandamus requesting that this Court order the Honorable Jimmy L. White, Judge of the 76th Judicial District of Texas, to strike the portion of his order requiring arbitration to be held in Dallas. Benjamin D. Dalton and Kathy Dalton entered into a contract with Farmpro, Inc., under which Farmpro would construct some chicken houses for the Daltons. On December 17, 2004, the Daltons brought suit in the 76th Judicial District Court of Morris County, Texas, against Farmpro for breach of contract, misrepresentation, breach of warranty, and violations of the Texas Deceptive Trade Practices Act. The trial court granted Farmpro's motion to compel arbitration pursuant to the contract, but required arbitration to be held in Dallas County, Texas, rather than in Amarillo as per the contract. We conditionally grant the petition.
Mandamus issues only when the mandamus record establishes (1) a clear abuse of discretion or the violation of a duty imposed by law (which is often described as a "ministerial" act), and (2) the absence of a clear and adequate remedy at law. In re Daisy Mfg. Co., 17 S.W.3d 654, 658 (Tex. 2000); Cantu v. Longoria, 878 S.W.2d 131, 132 (Tex. 1994); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). Mandamus is an extraordinary remedy that will issue only to correct a clear abuse of discretion or, in the absence of another statutory remedy, when the trial court fails to observe a mandatory provision conferring a right or forbidding a particular action. Abor v. Black, 695 S.W.2d 564, 567 (Tex. 1985) (orig. proceeding).
A trial court clearly abuses its discretion if "it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." Walker, 827 S.W.2d at 839. A clear failure by the trial court to apply the law correctly is an abuse of discretion. Id. at 840. "Arbitration is a creature of contract and a clause requiring arbitration will be interpreted under contract principles." Belmont Constructors, Inc. v. Lyondell Petrochemical Co., 896 S.W.2d 352, 357 (Tex.App.-Houston [1st Dist.] 1995, no writ). The contract in this case provided in pertinent part as follows:
6.1 Arbitration. All claims or disputes between Contractor [Farmpro] and Owner [Dalton] 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 in writing.
Paragraph 6.2 of the contract provides that "[u]nless otherwise mutually agreed by the parties, the place of the arbitration proceedings shall be in the [C]ity of Amarillo, Texas." The plain language of a contract governs, unless such a reading would defeat the intention of the parties. Lyons v. Montgomery, 701 S.W.2d 641, 643 (Tex. 1985). Thus, the contract provides that arbitration shall occur in Amarillo, Texas, unless otherwise agreed.
Further, if the Daltons wish to contest the location of arbitration, the contest must be submitted to the American Arbitration Association (AAA). Clint R. Latham, attorney for Farmpro, states in his affidavit in support of Farmpro's petition for writ of mandamaus that R-11 of Construction Industry Arbitration Rules of the AAA contains the following provision:
The parties may mutually agree on the locale where the arbitration is to be held. If any party requests that the hearing be held in a specific locale and the other party files no objection thereto within fifteen calender days after notice of the request has been sent to it by the AAA, the locale shall be the one requested. If a party objects to the locale requested by the other party, the AAA shall have the power to determine the locale, and its decision shall be final and binding.
When a contract provided that the rules of the AAA should govern the arbitration, the Tyler Court of Appeals has held that a trial court clearly abused its discretion by appointing an arbitrator, rather than following the selection process set forth in the AAA rules. In re Nat'l Health Ins. Co., 109 S.W.3d 552, 556 (Tex.App.-Tyler 2002, orig. proceeding). Once the parties specify which rules govern the arbitration, they are bound by those rules unless grounds for revocation of the contract in law or in equity arise. See id.; cf. D. Wilson Constr. Co. v. McAllen Indep. Sch. Dist., 848 S.W.2d 226, 228 (Tex.App.-Corpus Christi 1992, writ dism'd w.o.j.). The trial court has no discretion to modify or contravene the specified rules. See In re Nat'l Health Ins. Co., 109 S.W.3d at 556. Absent a finding that the contract is unenforceable, the trial court had no discretion to require arbitration at a location different than that specified in the contract or to decide a contest over the location of arbitration. Because the contract provides that the rules of the AAA govern the arbitration, any contest over the location must be submitted to the AAA.
For all the reasons stated above, the petition for writ of mandamus is conditionally granted. The portion of the trial court's order requiring arbitration to be held in Dallas County constitutes a clear abuse of discretion. Further, the parties have no adequate remedy by appeal.
Texas procedure allows appeals of interlocutory orders only if permitted by statute. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992). While an interlocutory appeal may be taken from the denial of a motion to arbitrate, no interlocutory appeal is available for the granting of a motion to arbitrate. See Tex. Civ. Prac. Rem. Code Ann. § 171.098 (Vernon 2005).