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comparing to a summary judgment proceeding, and providing that when a trial court states the basis for its ruling, the appellant is required to attack only the stated grounds of the ruling
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No. 13-07-693-CV
Opinion delivered and filed January 18, 2008.
On Petition for Writ of Mandamus.
Before Chief Justice VALDEZ and Justices GARZA and VELA.
MEMORANDUM OPINION
This mandamus proceeding arises from the trial court's refusal to compel arbitration of the underlying action. Real Parties in Interest, Mar-Rox, Inc., Mark A. Cantu, Roxanne Pena Cantu, Law Offices of Mark Cantu, and Mark Cantu as custodian for Ayssa Celeste Cantu and Krystha Yanni Cantu (collectively "the Cantus") brought suit against International Bank of Commerce d/b/a IBC, David Guerra, Nelson Munoz, and Adrian Villarreal (collectively "IBC"), seeking to prevent foreclosure on several properties pledged as collateral by the Cantus and asserting claims for damages. IBC now seeks a writ of mandamus to compel the respondent, the Honorable Noe Gonzalez, to vacate his order denying IBC's motion to compel arbitration. For the following reasons, we conditionally grant the writ.
Presiding judge of the 370th District Court of Hidalgo County, Texas.
I. BACKGROUND
Since 1992, the Cantus have sought and obtained loans from IBC for various amounts. The Cantus have executed approximately fifty notes, deeds of trust, security agreements, and other documents (collectively the "loan documents") pursuant to which the Cantus pledged real property and accounts receivable as collateral. On June 11, 2007, various Hidalgo County taxing authorities notified IBC that tracts of real property, pledged as collateral by the Cantus for the various loans, were posted for sale at a public auction as a result of the Cantus failure to pay taxes. The public auction was scheduled for July 3, 2007.
On becoming aware of the taxing entities' intent to foreclose on the properties, IBC notified the Cantus that the failure to pay taxes and assessments on the subject real property constituted defaults under the terms of the notes and the deeds of trust. After the Cantus failed to cure these defaults, IBC accelerated the maturity of the indebtedness. IBC then instructed the trustee under the deeds of trust to post the real property for non-judicial foreclosure.
On July 2, 2007, the Cantus filed the underlying lawsuit against IBC. The Cantus alleged that on June 21, 2007, Mark Cantu entered into an oral agreement with IBC whereby the Cantus agreed to pay the taxes due on the real property in exchange for IBC's agreement to forgo accelerating the maturity of the indebtedness and to forgo foreclosure proceedings on the subject real properties. The Cantus alleged that IBC breached this agreement by presenting a forbearance agreement for the Cantus' signature that included unconscionable and oppressive terms. Additionally, the Cantus alleged fraud arising from the same oral contract. Finally, the Cantus sought injunctive relief, asking the court to enjoin IBC from foreclosing on the properties. That same day, the Cantus obtained a temporary restraining order halting the foreclosure. Before IBC answered, the Cantus amended their petition to include claims for breach of fiduciary duty, unjust enrichment based on IBC's allegedly charging excessive account-analysis fees, DTPA violations, duress, tortious interference with a business opportunity, slander of title, and libel.
One week later, IBC filed a Motion to Compel Arbitration and Stay Proceedings under the Federal Arbitration Act ("FAA") or, alternatively, under the Texas Arbitration Act ("TAA"). IBC cited standard arbitration language in all of the loan documents similar to the following:
9 U.S.C. ___ 1-16.
TEX. CIV. PRAC. REM. CODE ANN. ___ 171.001-.098 (Vernon 2005).
• Any and all controversies between the Parties, except such claims and controversies which are consumer related and involve an aggregate amount in controversy of less than ten thousand dollars ($10,000.00), shall be resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect at the time of filing, unless the Commercial Arbitration Rules conflict with this provision, and in such event, the terms of this provision shall control to the extent of the conflict.
• Arbitrable disputes include any and all controversies or claims between the Parties of whatever type or manner, including without limitation, any claim arising out of or relating to this agreement, all past, present and/or future credit facilities and/or agreements involving the Parties, any transactions between or involving the Parties and/or any aspect of any past or present relationship of the Parties, whether banking or otherwise, specifically including any alleged tort committed by any party.
• For purposes of this provision, "the Parties" means Lender [IBC] and Borrower [the Cantus], and each and all persons and entities signing this agreement or any other agreements between or among any of the Parties as part of this transaction. "The Parties" shall also include individual partners, affiliates, officers, directors, employees, agents and/or representatives of any party to such documents, and shall include any other owner and holder of this agreement.
• The Parties agree that any action regarding any controversy between the Parties shall either be brought by arbitration, as described herein, or by judicial proceedings, but shall not be pursued simultaneously in different or alternative forms. A timely written notice of intent to arbitrate pursuant to this agreement stays and/or abates any and all action in a trial court, save and except a hearing on a motion to compel arbitration and/or the entry of an order compelling arbitration and staying and/or abating the litigation pending the filing of the final award of the arbitrators. All reasonable and necessary attorney's fees and all travel costs shall be awarded to the prevailing party within ten (10) days of the signing of the order compelling arbitration.
• Any aggrieved party shall serve a written notice of intent to arbitrate to any and all opposing Parties within 360 days after dispute has arisen. A dispute is defined to have arisen only upon receipt of service of judicial process, including service of a counterclaim[.] [F]ailure to serve a written notice of intent to arbitrate within the time specified above shall be deemed a waiver of the aggrieved party's right to compel arbitration of such claim. The issue of waiver pursuant to this agreement is an arbitrable dispute.
• Active participation in pending litigation during the 360 day notice period, whether as plaintiff or defendant, is not a waiver of the right to compel arbitration. All discovery obtained in the pending litigation may be used in any subsequent arbitration proceeding.
• The Parties acknowledge that this agreement evidences a transaction involving interstate commerce in that the funds which may be advanced or committed under this agreement are derived from interstate and/or international financial markets. The Federal Arbitration Act shall govern the interpretation, enforcement, and proceedings pursuant to the arbitration clause of this agreement.
IBC argued that all the claims alleged fell within the scope of the agreements and asked the trial court to stay the proceedings and compel arbitration.
The Cantus responded by filing another amended petition. In their second amended petition, the Cantus alleged that IBC had fraudulently induced the agreements to arbitrate in the loan documents. Specifically, the Cantus alleged that prior to signing any of the notes and deeds of trust, Mark Cantu told his IBC loan officer that neither he nor his wife would sign any note or renewal or extension of the notes that contained an arbitration clause. The Cantus alleged that their loan officers represented that such clauses would be removed from the documents and that the Cantus relied on these representations to their detriment. The Cantus then responded to the motion to compel arbitration, alleging fraud in the inducement of the arbitration clauses and alleging that the arbitration clause improperly deprived them of their right to trial by jury.
On July 12, 2007, the parties appeared for a hearing on the Cantus' request for a temporary injunction. The Cantus argued that they needed to conduct discovery on the arbitration issues. After a discussion off the record, the trial court set a hearing on the motion to compel arbitration for August 8, 2007. The parties then agreed on the record to conduct discovery limited to the issues involved in the motion to compel arbitration.
On July 13, 2007, the Cantus filed a motion to shorten the discovery response period so that discovery would be due within ten days after service. Thereafter, on July 16, 2007, the Cantus served their First Set of Requests for Admissions on IBC's counsel. The parties then appeared in the trial court for a hearing on the Cantus' request to shorten the discovery response time. IBC was represented at the hearing by Edmundo Ramirez. The respondent was not physically present; however, the hearing was held with respondent participating by phone. The parties agreed by phone that IBC's responses would be due on July 30, 2007. No court reporter was present to record the agreement, and no written order was ever submitted to or signed by the trial court regarding the shortened discovery response period.
Apparently, there was a miscommunication between Ramirez and IBC's other attorney, Diann Bartek, who was responsible for answering the discovery. When Ramirez transmitted the discovery requests to Bartek's office, Ramirez did not advise Bartek of the agreed response date. Accordingly, she did not respond to the discovery on July 30, 2007, as agreed.
On August 8, 2007, the parties appeared for the hearing on IBC's motion to compel arbitration. That same day, the Cantus filed a brief opposing arbitration, asserting that IBC's failure to timely answer their requests for admissions required that the answers be deemed in the Cantus' favor. The requests for admissions were filed with the trial court at the hearing on the motion to compel. In the requests, IBC was asked to admit that (1) Mark Cantu advised IBC he would not sign any documents containing an arbitration clause, (2) thereafter IBC presented Mark and Roxanne Cantu with documents to sign containing arbitration clauses, and (3) that neither Mark nor Roxanne Cantu read the documents before signing them.
The parties argued extensively over whether the deemed admissions could be considered at the hearing on the motion to compel arbitration. The trial court noted that IBC's counsel had not yet moved to withdraw the admissions. As a result, the trial court indicated its intention to continue the hearing and to address the deemed admissions after IBC had an opportunity to brief the issue.
The hearing proceeded, and Mark Cantu testified to the same facts covered by the request for admissions. Mark Cantu testified that prior to signing any loan documents, he told his loan officer he would not sign any document containing an arbitration clause and that thereafter, and on many later occasions, his loan officer presented documents for his signature that included an arbitration clause. Mark Cantu testified that he did not read the documents prior to signing and that he relied on his loan officer's representation that arbitration provisions would not be included in the loan documents.
In addition to the fraud allegations, the Cantus argued in their brief and at the hearing that IBC had waived its right to compel arbitration. The Cantus presented evidence at the hearing on the motion to compel that on July 26, 2007, IBC had filed a petition in intervention in a case styled Gonzalez v. Entex Gas Marketing Co., No. 2005CVQ000954-D2, pending in the 111th District Court of Webb County, Texas (the " Entex case"). IBC's petition in intervention alleged that attorney's fees deposited in the registry of the court constituted Mark Cantu's and the Law Offices of Mark Cantu's accounts receivable, in which IBC had a security interest. The petition in intervention states that its purpose was to give notice of IBC's first priority lien on the accounts receivable and, alternatively, sought declaratory relief. The declaratory relief was sought "subject to and without waiver of [IBC's] rights to compel arbitration should a dispute, as defined in the Loan Documents, result from this filing." Additionally, the Cantus presented evidence that IBC answered an interpleader in a case styled Estate of John R. Howie, Deceased, No. 03-00005-P(B), that was previously pending in the Probate Court of Dallas County, Texas (the " Howie case").
IBC argued that its actions did not constitute a waiver. Specifically, IBC argued, among other things, that at the time of IBC's conduct in the extraneous proceedings, the Cantus had not disputed IBC's rights with respect to Mark Cantu's and the Law Offices of Mark Cantu's accounts receivables. Mark Cantu testified at the August 8 hearing that when IBC initially intervened in the Entex case, there was not a dispute as to IBC's rights to the accounts receivable. Additionally, Mark Cantu testified that when the funds were distributed in the Howie case, there was no dispute about the monies the Cantus owed to IBC.
Furthermore, IBC pointed to the "self-help" provisions in the arbitration clauses:
The parties shall have the right to invoke self-help remedies (such as set-off, notification of account debtors, seizure and/or foreclosure of collateral, and non-judicial sale of personal property and real property collateral) before, during and after any arbitration and/or request ancillary or provisional judicial remedies (such as garnishment, attachment, specific performance, receiver, injunction or restraining order, and sequestration) before or after any arbitration. The parties need not await the outcome of the arbitration before using self-help remedies. Use of self-help or ancillary and/or provisional judicial remedies shall not operate as a waiver of either party's right to compel arbitration.
After the hearing, the trial court took the matter under advisement.
On August 20, 2007, IBC formally moved to withdraw the deemed admissions resulting from its failure to timely answer the Cantus' requests for admissions. The parties also submitted additional briefing on the issues relating to the motion to compel arbitration.
On September 17, 2007, the Cantus filed their third amended petition. In this petition, the Cantus added allegations that, for the first time, sought to invalidate IBC's security agreements, claiming that the descriptions of the collateral in the security agreements were insufficient. Additionally, the Cantus added allegations relating to disputed attorney's fees in a case a styled Juan Manuel Sanchez et. al v. General Motors et al, No. 406-06-H pending in the 389th District Court, Hidalgo County, Texas (the " Sanchez case"). The Cantus alleged that the Law Offices of Mark Cantu represented the plaintiff in the Sanchez case and that pursuant to a settlement of the claims in that action, Michael Cowen and The Ammons Law Firm received attorney's fees due to the Cantus. The Cantus alleged that IBC had contacted the defendants in the Sanchez case "in an effort to enforce what it claims is a lien on Mark Cantu's share of attorney's fees, thus interfering with [that] business relationship." The Cantus further alleged that Cowen and The Ammons Law Firm were refusing to pay the money to the Cantus due to IBC's lien and had become unjustly enriched. The Cantus sought injunctive relief to prevent IBC from "proceeding with efforts to enforce what it perceives to be a valid lien on funds which are Cantus' share of attorney's fees in the cases cited and other pending cases."
The trial court entered a temporary restraining order on September 19, 2007, ordering Cowen and The Ammons Law Firm to deposit the disputed funds into the registry of the court, and it set a hearing for September 26, 2007 on the Cantus' application for a temporary injunction. In their supplemental briefing regarding the arbitration issues, the Cantus cited IBC's threatened intervention in the Sanchez case as evidence of IBC's waiver of the right to compel arbitration.
The Cantus then filed several more petitions, raising additional challenges to IBC's security interests and seeking injunctive relief. On October 31, 2007, the parties again appeared before the trial court. In addition to presenting arguments relating to the validity of the security agreements, the Cantus argued that IBC's conduct in two additional proceedings caused a waiver of IBC's right to compel arbitration. Specifically, the Cantus pointed to two interpleader actions: (1) Abrego v. Brownsville Public Utilities Board, et al, No. 2004-01-280-A, pending in the 107th District Court of Cameron County, Texas (the " Abrego case"), and (2) Hampel v. Scott, No. 05-5971-A, pending in the 28th District Court of Nueces County, Texas (the " Hampel case"). IBC answered the Abrego interpleader action on October 18, 2007, but it stated that the answer was being filed "[s]ubject to and without waiver of its rights to compel arbitration against Mark A. Cantu." In the Hampel case, IBC had not yet answered the suit but had agreed to an order that required Hampel, the interpleader plaintiff, to deposit the disputed funds into the registry of the court.
On November 2, 2007, the trial court signed an order denying IBC's motion to compel arbitration, expressly finding that "the Defendants have waived the right to invoke arbitration." In the same order, the trial court granted the Cantus' application for a temporary injunction to prevent IBC from foreclosing pursuant to six security agreements, finding that the description of the collateral in those security agreements was insufficient as a matter of law. The order stated that the terms and conditions of the order were stayed pending the completion of this mandamus proceeding, which immediately followed.
II. MANDAMUS IS THE APPROPRIATE REMEDY
Initially, we must determine whether mandamus is the appropriate remedy. The Cantus argue that this Court lacks jurisdiction to issue a writ of mandamus because IBC did not present any evidence below that the transactions at issue affected interstate commerce. IBC counters that the arbitration agreements provided that the FAA governed the transactions and that any arbitration would be pursuant to the FAA. Therefore, IBC claims it was not required to present evidence that the transactions affected interstate commerce.
A writ of mandamus is available when a Texas district court erroneously refuses to compel arbitration under the FAA. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992). A writ of mandamus issues only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no adequate remedy by appeal. In re Daisy Mfg. Co., 17 S.W.3d 654, 658 (Tex. 2000) (orig. proceeding) (per curiam). The FAA may govern a written arbitration clause enforced in Texas state court if the parties have expressly contracted for the FAA's application. Volt Info. Sci. v. Bd. of Trs., 489 U.S. 468, 479 (1989); In re AdvancePCS Health, L.P., 172 S.W.3d 603, 605-06 n. 3 (Tex. 2005) (orig. proceeding) (per curiam). When parties have designated the FAA to govern their arbitration agreement, their designation should be upheld. See In re AdvancePCS Health, L.P., 172 S.W.2d at 606 n. 3; see also In re SSP Partners, No. 13-07-031-CV, 2007 Tex. App. LEXIS 6536, at **5-6 (Tex.App.-Corpus Christi Aug. 14, 2007, orig. proceeding) (mem. op). Along with our sister courts of appeals, we have held that when the parties agree to arbitrate under the FAA, they need not demonstrate that the transaction affects interstate commerce in order to compel arbitration under the FAA. See In re Jim Walter Homes, Inc., 207 S.W.3d 888, 896 (Tex.App.-Houston [14th Dist.] 2006, orig. proceeding); In re People's Choice Home Loan, Inc., 225 S.W.3d 35, 40 (Tex.App.-El Paso 2005, orig. proceeding); In re Kellogg Brown Root, 80 S.W.3d 611, 617 (Tex.App.-Houston [1st Dist.] 2002, orig. proceeding) ("[W]hen, as here, the parties agree to arbitrate under the FAA, they are not required to establish that the transaction at issue involves or affects interstate commerce."); see also Honrubia Props., Ltd. v. Gilliland, No. 13-07-210-CV, No. 13-07-249-CV, 2007 Tex. App. LEXIS 8085, at **4-5 (Tex.App.-Corpus Christi Oct. 11, 2007, orig. proceeding) (mem. op.); Teel v. Beldon Roofing Remodeling, No. 04-06-00231-CV, 2007 Tex. App. LEXIS 3721, at **4-5 (Tex.App.-San Antonio Apr. 25, 2007, orig. proceeding).
The Cantus refer us to two cases where this Court held that the FAA did not apply because the party seeking to compel arbitration did not present evidence that the transaction affected interstate commerce. In those cases, however, the arbitration agreement did not expressly invoke the FAA. See Cappadona Elec. Mgm't v. Cameron County, 180 S.W.3d 364, 369 (Tex.App.-Corpus Christi 2005, orig. proceding); In re MONY Secs. Corp. v. Durham, 83 S.W.3d 279, 282 (Tex.App.-Corpus Christi 2002, orig. proceeding) ("The arbitration agreement in the present case does not specifically invoke either the FAA or the Texas Arbitration Act, and the trial court made no finding as to which act applies."). That is not the case here. The record shows that the arbitration agreements expressly provided for application of the FAA. Finding no reason to disregard the substantial precedent discussed above, we hold that the FAA applies, and mandamus is the appropriate remedy.
The Cantus also cite In re Valero Energy Corp., 968 S.W.2d 916, 916 (Tex. 1998) (orig. proceeding) (per curiam), for the argument that there is no jurisdictional basis for mandamus where the movant failed to establish an effect on interstate commerce. However, that case does not discuss or even mention the interstate commerce requirement.
III. PROCEDURE FOR ENFORCING ARBITRATION AGREEMENTS
Texas procedure governs the enforcement of arbitration agreements under the FAA in a Texas court. Jack B. Anglin Co., 842 S.W.2d at 268. A party seeking to compel arbitration must first file a motion to compel arbitration demonstrating (1) a valid agreement to arbitrate between the parties, and (2) the dispute is within the scope of the arbitration agreement. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753-54 (Tex. 2001) (orig. proceeding). The trial court's determination of the validity of an arbitration agreement is a legal question reviewed de novo. Id. As to the second element, however, because federal policy favors arbitration, a presumption exists favoring agreements to arbitrate under the FAA. Id. Therefore, courts must resolve any doubts about an arbitration agreement's scope in favor of arbitration. Id. Trial courts are instructed not to deny arbitration "unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute." In re Dillard Dep't Stores, Inc., 186 S.W.3d 514, 516 (Tex. 2006) (orig. proceeding) (per curiam).
Once the party seeking to compel arbitration demonstrates an agreement to arbitrate that governs the claims at issue, the burden shifts to the party opposing arbitration to establish a defense to arbitration. In re RLS Legal Solutions, LLC, 221 S.W.3d 629, 630 (Tex. 2007) (orig. proceeding) (per curiam); In re Jebbia, 26 S.W.3d 753, 756 (Tex.App.-Houston [14th Dist.] 2000, orig. proceeding). If the non-movant fails to present a valid defense to arbitration, the trial court has no discretion to deny arbitration. See In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (orig. proceeding) (per curiam); Cantella Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (orig. proceeding) (per curiam).
VI. WAIVER
The Respondent refused to enforce the arbitration clauses, expressly finding that IBC waived its right to compel arbitration. The Cantus argue that IBC's participation in other lawsuits involving the loan documents at issue waived IBC's right to arbitration. We disagree.
A. The law governing waiver
Whether a party has waived its right to arbitration under the FAA is a question of law, which we review de novo. See In re Bruce Terminix Co., 988 S.W.2d 702, 703-04 (Tex. 1998) (orig. proceeding) (per curiam); Southwind Group, Inc. v. Landwehr, 188 S.W.3d 730, 735 (Tex.App.-Eastland 2006, orig. proceeding). There is a strong presumption against waiver. In re Bank One, N.A., 216 S.W.3d 825, 827 (Tex. 2007) (orig. proceeding) (per curiam); In re D. Wilson Constr. Co., 196 S.W.3d 774, 783 (Tex. 2006) (orig. proceeding). Thus, the party asserting waiver bears a heavy burden. In re Bruce Terminix Co., 988 S.W.2d at 704-05; Southwind Group, Inc., 188 S.W.3d at 735.
Waiver must be intentional. In re Bank One, N.A., 216 S.W.3d at 827. To demonstrate waiver, the party opposing arbitration bears a heavy burden to show that (1) the movant substantially invoked the judicial process, and (2) the party opposing arbitration suffered prejudice thereby. In re Bruce Terminix Co., 988 S.W.2d at 704; EZ Pawn v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996) (orig. proceeding) (per curiam).
"A party does not waive arbitration merely by delay; instead, the party urging waiver must establish that any delay resulted in prejudice." Southwind Group, Inc., 188 S.W.3d at 735. Courts analyzing whether the party opposing arbitration has suffered prejudice typically focus on two inquiries: (1) whether the movant obtained access to information not discoverable in arbitration, and (2) whether the party opposing arbitration incurred costs and fees due to the movant's actions or delay. Id. at 737. If the party opposing arbitration argues that it has incurred costs and fees, it must present evidence of those expenses and explain why those expenses would not have been incurred in arbitration. Id.
B. Application
At the outset, we must note that the Cantus do not contend that IBC's conduct in the trial court below waived its right to arbitrationCnor could they. The Cantus sued IBC, who immediately answered and moved to compel arbitration. IBC has continuously and repeatedly sought arbitration despite the substantial activity in the case below by the Cantus. IBC has not acted inconsistently with its right to compel arbitration in the litigation below.
Rather than pointing to actions taken in the instant case, the Cantus point to actions taken in cases pending in other trial courts wherein IBC has either (1) intervened to preserve its rights to attorney's fees due and owing to Mark Cantu and the Law Offices of Mark Cantu pursuant to security agreements in which Cantu pledged his accounts receivable, or (2) responded to interpleader actions in which such fees were deposited into the registry of the trial court. The Cantus allege that IBC substantially invoked the judicial process in these other cases, resulting in a waiver of IBC's right to arbitrate the dispute now under review.
The Cantus do not dispute that they were required to demonstrate prejudice in order to obtain a finding of waiver. In support of their prejudice argument, they claim that IBC's actions forced them to litigate the validity of IBC's liens in multiple venues, including seeking a temporary injunction in the present case to prevent IBC from foreclosing on the collateral. Additionally, they claim that IBC was paid "huge sums of money" in the Howie case and that money belonging to the Cantus has been "tied up" in the other cases.
1. Substantial invocation by intervention in the Entex case
The Cantus argue that in the Entex case, IBC intervened to collect attorney's fees owed to Mark Cantu and the Law Offices of Mark Cantu. IBC's petition in intervention alleged that attorney's fees deposited in the registry of the court constituted Mark Cantu's and the Law Offices of Mark Cantu's accounts receivable, in which IBC had a security interest. The petition in intervention states that its purpose is to give notice of IBC's first priority lien on the accounts receivable and, alternatively, seeks declaratory relief. The declaratory relief is sought "subject to and without waiver of [IBC's] rights to compel arbitration should a dispute, as defined in the Loan Documents, result from this filing." IBC's petition in intervention was filed on July 26, 2007, after the underlying lawsuit was filed and before the Cantus filed their third amended petition which, for the first time, asserted that IBC's liens were invalid.
The FAA's purpose is to ensure enforcement of privately made agreements to arbitrate, not merely to promote the expeditious resolution of claims. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985); In re Greenpoint Credit, L.L.C., No. 04-04-00794-CV, 2004 Tex. App. LEXIS 11594, at *6 (Tex.App.-San Antonio Dec. 29, 2004, orig. proceeding) (mem. op.). In this case, the contracts explicitly spelled out the conduct that would not constitute a waiver of the right to arbitrate:
Any aggrieved party shall serve a written notice of intent to arbitrate to any and all opposing Parties within 360 days after dispute has arisen. . . . [F]ailure to serve a written notice of intent to arbitrate within the time specified above shall be deemed a waiver of the aggrieved party's right to compel arbitration of such claim.
. . .
Active participation in pending litigation during the 360 day notice period, whether as plaintiff or defendant, is not a waiver of the right to compel arbitration. All discovery obtained in the pending litigation may be used in any subsequent arbitration proceeding.
In addition, a dispute was defined "to have arisen only upon receipt of service of judicial process, including service of a counterclaim."
We are required to enforce arbitration contracts as written, even with regard to acts that are alleged to have waived the right to arbitrate. See In re Oakwood Homes, 987 S.W.2d at 574 (looking to terms of the contract to determine if failure to initiate arbitration constituted a waiver); In re Centex Home Equity Co., LLC, No. 04-04-00585-CV, 2004 Tex. App. LEXIS 11476, at *13 (Tex.App. BSan Antonio Dec. 22, 2004, orig. proceeding) (mem. op) (holding that creditor did waive arbitration by delay, relying on arbitration clause's definition of "dispute" to hold that neither prior foreclosure action by creditor nor did debtors' action to set aside foreclosure implicated arbitration clause).
It is undisputed that IBC intervened in the Entex case on July 26, 2007. Mark Cantu testified that prior to IBC's intervention in the Entex case, there had not been a dispute as to IBC's rights in the funds involved therein. In fact, the Cantus did not formally attack IBC's liens in the underlying lawsuit until much later, on September 17, 2007, when they filed their third amended petition in this case. Even if we assume that the Cantus original petition in this case on July 2, 2007 started a "dispute" as to IBC's right to the account receivable in the Entex case, a year has not passed since the Cantus initiated this lawsuit. Under the terms of the agreements, therefore, IBC could not have waived its right to compel arbitration by participating, at least initially, in the Entex case. By the agreements' terms, IBC was within its rights to participate in the Entex case during the 360-day notice period without causing a waiver of the right to arbitrate. See In re Oakwood Homes, 987 S.W.2d at 574; In re Centex Home Equity Co., LLC, 2004 Tex. App. LEXIS 11476, at *13.
Alternatively, the parties have not cited, nor have we located, a case expressly discussing waiver when a movant for arbitration has intervened in an entirely separate action. Several courts have held, however, that a party does not necessarily waive its contractual right to arbitration of a particular dispute by participating in other litigation related to the same contract. See Valero Energy Corp. v. Teco Pipeline Co., 2 S.W.3d 576, 594 (Tex.App.-Houston [14th Dist.] 1999, no pet.) (citing Lawrence v. Comprehensive Bus. Servs. Co., 833 F.2d 1159, 1165 (5th Cir. 1987); Transwestern Pipeline Co. v. Horizon Oil Gas Co., 809 S.W.2d 589, 593 (Tex.App.-Dallas 1992, writ dism'd w.o.j.)). "It has long been the law in this state that even though a party may have once waived a contract right in the past, it may enforce that right in the future by giving notice of its intention to do so." Id.
This Court has recognized that actions taken in other litigation are generally not considered evidence of waiver of the right to arbitrate, and we have only looked to conduct in other proceedings when that conduct appeared to be part of the litigation strategy in the underlying matter that would be inconsistent with the right to arbitrate. See In re Christus Spohn Health Sys. Corp., 231 S.W.3d 475, 481 (Tex.App.-Corpus Christi 2007, orig. proceeding). For example, in In re Christus Spohn Health System, the relators appeared in a related criminal action and sought a contempt order against the real parties in interest's counsel, expressly stating in their motion for contempt that they intended to use that contempt order in the underlying civil proceeding to suppress the use of improperly obtained evidence. Id. Those circumstances are not present here, where the record does not indicate that IBC's actions in the Entex case were part of a litigation strategy in the underlying matter inconsistent with the right to arbitrate.
Furthermore, we are hesitant to hold that a party waives the right to arbitrate by taking actions that are designed merely to preserve the status quo. IBC cites a case from the Tyler Court of Appeals, which, while not binding on this Court, is very instructive. In Structured Capital Resources Corp. v. Arctic Cold Storage, LLC, the Tyler Court of Appeals held that a plaintiff had not waived its right to arbitration by filing a petition requesting that the trial court order the defendant to place disputed funds into the registry of the court, so as to prevent the defendant from dissipating the disputed funds. 237 S.W.3d 890, 894-95 (Tex.App.-Tyler 2007, orig. proceeding). The court held that the plaintiff's intent, whether the ultimate issue of ownership of the funds was tried to a court or an arbitration panel, was to preserve the status quo while ownership was being determined. Id. The act of requesting an order protecting the status quo, the court held, was not inconsistent with a later demand for arbitration. Id. Accordingly, the plaintiff did not substantially invoke the judicial process in a manner sufficient to cause a waiver of the right to arbitrate. Id. While not binding on this Court, we find this case highly instructive.
The Cantus argue that this case has no precedential value because it is unreported, citing Texas Rule of Appellate Procedure 47.7. In the time since the briefs were filed, however, it has been released for publication in the Southwest Reports. We note, however, that the Cantus misread rule 47.7, which must be read in conjunction with Texas Rule of Appellate Procedure 47.2Cin civil cases, courts of appeals are now prohibited from designating opinions "do not publish." TEX. R. APP. P. 47.2(a)-(b). This case certainly carries precedential value for the Tyler district, and the Cantus have provided no reason to ignore it. Finding it persuasive, we follow the holding. See also Southwest Indus. Import Export v. Wilmod Co., 524 F.2d 468, 469-70 (5th Cir. 1975) (engaging in self-help remedies does not waive the right to arbitration).
IBC intervened in the Entex case to preserve the status quoCIBC is not required to sit by idly and watch its collateral disappear for fear that it may waive its right to arbitrate any dispute that should later arise with respect to its right to the collateral. In fact, the parties expressly agreed that IBC is entitled to exercise self-help remedies without waiving its right to arbitration. Similar clauses allowing parties to protect the status quo have been held enforceable by the courts. See, e.g., RGI, Inc. v. Tucker Assocs., Inc., 858 F.2d 227, 230 (5th Cir. 1988); Lawrence v. Comprehensive Bus. Servs. Co., 833 F.2d 1159, 1163 (5th Cir. 1987); see also In re Greenpoint Credit, L.L.C., 2004 Tex. App. LEXIS 11594, at *6. Although the Cantus now apparently contest whether IBC has a valid security interest in the accounts receivable and could properly intervene in the Entex and Sanchez cases, that issue is not properly before us and has no bearing on whether such a dispute must be compelled to arbitration.
Finally, IBC did not unconditionally inject itself into the Entex case. See, e.g., Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497-98 (5th Cir. 1986) (finding waiver where plaintiff unconditionally filed suit, waited eight months to assert right to arbitrate, did not pursue arbitration until after plaintiff's case was dismissed for want of prosecution three years later, and filed multiple other lawsuits forcing defendants to litigate in several forums); see also Practicehwy.com, Inc. v. Albany IFV Fertility Gynecology, PLLC, No. 05-06-00222-CV, 2006 Tex. App. LEXIS 8956, at *9 (Tex.App.-Dallas Oct. 18, 2006, no pet.) (mem. op.) (plaintiff did not waive right to arbitrate even though it unconditionally filed suitCplaintiff gave notice of its intent to arbitrate on the date it filed suit); cf. Vireo v. Cates, 953 S.W.2d 489, 491 (Tex.App.-Austin 1997, pet. denied) ("A plaintiff who sues on an arbitrable claim unconditionally, without having initiated arbitration of the claim or demanding specific performance of the arbitration agreement, creates in the defendant a right of electionCthe defendant may insist or not upon arbitration, as he chooses.") (emphasis added). IBC's petition in intervention specifically reserves the right to arbitrate any dispute that should arise as to its entitlement to the accounts receivable.
2. Substantial invocation by threatened intervention in the Sanchez case
With regard to the Sanchez case, the Cantus argue that IBC threatened intervention. The record does not demonstrate that IBC has taken any formal action to intervene in the Sanchez case.
IBC's threatened intervention in the Sanchez case is not a substantial invocation of the judicial process. It is undisputed that the threatened interventions occurred on August 28, 2007 and on September 6, 2007, well before the Cantus amended their petition to challenge IBC's rights to the accounts receivable. Even if we assume that the Cantus' original petition in the underlying litigation on July 2, 2007 started the "dispute" as to IBC's rights to the accounts receivable, the 360-day notice period has not yet passed, and IBC is allowed under the terms of the arbitration agreement to participate in that litigation without causing a waiver of its right to compel arbitration. See In re Oakwood Homes, 987 S.W.2d at 574; In re Centex Home Equity Co., LLC, 2004 Tex. App. LEXIS 11476, at *13. Additionally, "pre-litigation efforts to negotiate can never be viewed as delay; to hold otherwise would undermine any efforts to resolve a dispute short of trial." Nationwide of Bryan, Inc. v. Dyer, 969 S.W.2d 518, 522 (Tex.App.-Austin 1998, no pet.); see also Neatherlin Homes, Inc. v. Love, Nos. 13-06-328-CV 13-06-411-CV, 2007 Tex. App. LEXIS 1788, at * 27 (Tex.App.-Corpus Christi Mar. 8, 2007, orig. proceeding) (mem. op). IBC was within its rights to attempt to resolve its dispute with the Cantus by notifying the Cantus of its right to intervene in the Sanchez case without waiving a right to compel arbitration. See id. Under these circumstances, we cannot agree that IBC substantially invoked the judicial process and acted inconsistently with its right to arbitrate the dispute by its conduct in the Sanchez case. Id. 3. Substantial invocation by responding to interpleader actions
The Cantus point to three cases in which attorney's fees were deposited into a court's registry as part of an interpleader action: the Howie case, the Abrego case, and the Hampel case. In all three cases, IBC was named as an interpleader defendant with an alleged interest in the funds deposited in the registry of the court.
First, we note that IBC answered the interpleader action in the Abrego case on October 18, 2007Cagain, this is within the 360-day notice period. IBC was entitled under the terms of the agreements to answer this interpleader within the notice period without causing a waiver of the right to arbitrate.
Furthermore, as a general proposition, merely responding to an action as a defendant in order to prevent a default judgment is not a substantial invocation of the judicial process sufficient to support a waiver finding. See Transwestern Pipeline Co., 809 S.W.2d at 593. Thus, the mere act of responding to an interpleader action is not evidence of a waiver of the right to compel arbitration. Id. The record does not reflect that IBC took any action in the Abrego case other than merely answering the petition in intervention and asserting relevant defenses, including res judicata and collateral estoppel. Moreover, IBC's answer in the Abrego case stated it was "subject to and without waiver of [IBC's] rights to compel arbitration. . . ." Thus, IBC's actions in the Abrego case were not inconsistent with its right to compel arbitration of the underlying dispute. Id.; see also discussion at Part VI.B.1.
With respect to the Howie case, the Cantus allege that IBC answered the interpleader action but also moved for summary judgment, thereby substantially invoking the judicial process. However, as IBC points out and as discussed above, the arbitration agreements between the parties provide that the right to arbitrate arises "after a dispute has arisen." IBC argues that, because the Cantus had never contested IBC's right to the accounts receivable, there was no dispute between them at the time of the Howie case. Therefore, IBC's right to arbitration had not yet arisen and could not be waived. We agree. The Howie case was an interpleader action filed by the law firm of Slack Davis, LLP on July 31, 2006, nearly a year before the Cantus filed the underlying lawsuit in this case, based on allegedly conflicting claims asserted by the executor of John R. Howie's estate, Mark Cantu, and IBC. IBC answered the interpleader, and the funds were distributed to IBC pursuant to a settlement agreement before the Cantus filed the instant lawsuit. IBC argues that at the time the Howie case was settled, the Cantus had never disputed IBC's security interest in Mark Cantu's and the Law Offices of Mark Cantu's accounts receivable. In fact, at the hearing on the motion to compel arbitration in this case, Mark Cantu explicitly testified that at the time the funds were distributed in the Howie case by agreement, there had been no dispute as to IBC's rights in the accounts receivable.
Given that the right to arbitrate did not arise until a dispute existed between the parties, and there is no evidence in the record that the Cantus contested IBC's rights to the accounts receivable in the Howie case, there is no evidence that IBC acted inconsistently with its right to arbitrate. See In re Oakwood Homes, 987 S.W.2d at 574; In re Centex Home Equity Co., LLC, 2004 Tex. App. LEXIS 11476, at *13 (holding that creditor did waive arbitration by delay, relying on arbitration clause's definition of "dispute" to hold that neither prior foreclosure action by creditor nor did debtors' action to set aside foreclosure implicated arbitration clause). Thus, even though IBC moved for summary disposition of the Howie case, IBC's right to arbitration had not yet arisen. Moreover, that motion was never ruled upon, and the Cantus voluntarily agreed to settle the case. Under these circumstances, we cannot find that IBC acted inconsistently with its right to arbitrate.
Finally, in the Hampel case, IBC was also an interpleader defendant. That action was filed on October 26, 2007. According to the Cantus, IBC is currently contesting the disposition of attorney's fees paid into the registry of the court, but IBC has not yet answered the interpleader action. Yet again, IBC is still within the 360-day notice period and is entitled under the terms of the arbitration clause to participate in that litigation.
IBC apparently agreed to an order in the Hampel case requiring the plaintiff to deposit the funds into the registry of the court and discharging the plaintiff from the suit.
We cannot agree that IBC waived its right to compel arbitration by merely agreeing to an order requiring the deposit of the disputed funds into the court's registry. Again, IBC was entitled to seek relief to preserve the status quo. Structured Capital Resources Corp., 237 S.W.3d at 895.
4. Prejudice
Nor do we find on this record that the Cantus were prejudiced by IBC's actions. First, the Cantus argue that IBC's actions have required them to litigate the validity of the liens in multiple venues. However, IBC did not initiate any of these ancillary proceedings. Rather, IBC either intervened in already pending cases or was brought in as an interpleader defendant. Specifically with regard to the Entex and Sanchez cases, the record does not demonstrate that the courts in those cases have addressed the validity of the security agreements. Furthermore, the record shows that before IBC intervened in the Entex case, the law firm of Guerra Moore Ltd., LLP. had appeared in the Entex case and asserted a right to the attorney's fees owed to Mark Cantu and the Law Offices of Mark Cantu. Thus, a dispute was already pending regarding ownership of the fees in that case prior to any involvement by IBC. The Cantus have presented no evidence that they expended any money or suffered any harm in addition to that already being incurred as a result of Guerra Moore's involvement in the suit. Additionally, the Cantus did not admit any evidence of attorney's fees expended that allocated these costs to IBC's conduct.
Second, the Cantus complain that they have been prejudiced because substantial sums of money are tied up in the registry of several courts as a result of disputes to the attorney's fees involved in those cases. Again, IBC did not initiate any of these proceedings. Thus, the Cantus cannot complain that IBC's conduct caused this alleged harm.
Third, the Cantus complain that IBC received money from the Howie case. According to IBC, those funds were paid to IBC pursuant to a settlement agreement, and the Cantus never disputed IBC's entitlement to those funds. The Cantus likewise cannot now complain that they were prejudiced by a settlement agreement to which they agreed voluntarily without ever disputing IBC's entitlement to the funds.
Finally, the Cantus argue that they were forced to file an application for a temporary injunction in the present lawsuit to prevent foreclosure on certain real property. This is not evidence of prejudice that could support a waiver finding. See Nationwide of Bryan, Inc., 969 S.W.3d at 522 ("Filing suit to avoid losing the right to sue does not demonstrate prejudice."). The Cantus' filing of an application for a temporary injunction is not the result of IBC's invocation of the judicial process inconsistent with a right to arbitration. Rather, it is the result of their own challenge to the validity of IBC's security interests. See Transwestern Pipeline Co., 809 S.W.2d at 593 (plaintiff's alleged prejudice resulted from its own decision to initiate suit) ; see also Practicehwy.com, Inc., 2006 Tex. App. LEXIS 8956, at *10 (refusing to find prejudice because attorney's fees expended were "self inflicted"). Accordingly, the trial court erred in finding a waiver of IBC's right to compel arbitration.
V. THE CANTUS' OTHER DEFENSES TO ARBITRATION
IBC filed a motion to compel arbitration alleging that a valid agreement to arbitrate governed the claims at issue. The trial court refused to compel arbitration based on its determination that IBC waived its arbitration rights. Thus, IBC's petition for writ of mandamus attacks this finding but does not address the other challenges the Cantus raised in the trial court.
The Cantus alleged below that the arbitration clauses were fraudulently induced, that the Cantus never assented to these clauses, and that the arbitration provisions improperly denied them the right to trial by jury. In response to IBC's petition, the Cantus argue that by failing to attack these potential grounds in its petition for writ of mandamus, IBC has waived any challenge to the trial court's ruling. IBC argues that it was not required to challenge these other potential grounds to refuse arbitration, citing summary judgment cases wherein courts refused to consider grounds supporting summary judgment not expressly ruled on by the trial court. See State Farm Fire Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993); Carr v. Mobile Video Tapes, Inc., 893 S.W.2d 613, 620 (Tex.App.-Corpus Christi 1994, no writ). Nevertheless, IBC briefed these additional issues in its reply brief.
Neither IBC nor the Cantus cite to an opinion in an original proceeding in which these summary judgment precedents have been applied. Initially, we note that all the cases cited by the Cantus involved situations where the trial court did not state a basis for its ruling. See, e.g., Williams v. United Pentecostal Church Int'l, 115 S.W.3d 612, 614 (Tex.App.-Beaumont 2003, no pet.). In those circumstances, the appellant is required to attack all possible grounds for the order or judgment or risk waiver of its complaints. Id. The same result does not obtain when the trial court states the basis for its ruling. In those circumstances, the appellant is only required to attack the stated grounds for the ruling, and the court of appeals will usually decline to address the alternative bases for the trial court's order and will remand to the trial court for consideration of the additional grounds. See, e.g., State Farm Fire Cas. Co., 858 S.W.2d at 380.
That is not to say that the court of appeals is without discretion to consider the alternate grounds if the parties raise them for review and if the record is well developed with regard to the alternate grounds. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 624 (Tex. 1996). In the interest of judicial economy, a court of appeals is expressly authorized to rule on grounds presented to the trial court but not expressly ruled upon that could nevertheless support the trial court's order. Id. at 626. Given that the Cantus and IBC briefed the fraud and mutual assent issues in great detail below, and the fraud issue consumed most of the trial court's time and efforts at the hearing on the motion to compel arbitration, we will address those issues now at the Cantus' invitation, in the interest of judicial economy. See id. Because of the unique procedural posture of this case and because IBC briefed the issues in its reply brief, we decline to hold that IBC waived its challenge to the trial court's order, and we will address the parties' arguments.
A. Fraudulent inducement
The trial court spent significant time and effort addressing the parties' arguments regarding the deemed admissions, ultimately concluding that those admissions could not be withdrawn. IBC asks this Court to hold that the trial court abused its discretion in considering the admissions. We need not decide the issue, however, because even considering the admissions and the testimony at the hearing on the motion to compel, the evidence does not demonstrate a valid defense to arbitration.
Both the admissions and the testimony demonstrate that in 1992 before Mark and Roxanne Cantu signed the first of the fifty loan documents, Mark Cantu told his loan officer that he would not sign any document containing an arbitration clause. According to Mark Cantu, his loan officer told him that he would remove the arbitration clause from the loan documents. Many of the loan documents, however, included both a merger clause and a "no oral agreements" clause. For example, as early as March 25, 1994, Mark and Roxanne Cantu signed a renewal, extension, and/or modification agreement that contained an arbitration clause and a notice that stated the following directly above the signature lines:
(a) THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(b) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Mark and Roxanne Cantu signed many other documents over the years that followed that contained an arbitration clause and also included the same language directly above the signature line where both Mark and Roxanne Cantu signed.
Mark and Roxanne Cantu signed additional renewals and/or extensions containing an arbitration clause and the "no oral agreements" language on at least ten other occasions between August 29, 2000 and November 28, 2005. Additionally, they signed real estate lien notes containing an arbitration clause and the "no oral agreements" language on at least seven other occasions between July 13, 1999 and April 27, 2007. Finally, Mark and Roxanne Cantu signed documents entitled "deed of trust, assignment of rents, security agreement and financing statement" containing an arbitration clause and the same "no oral agreements" language on at least nine other occasions between July 13, 1999 and April 27, 2007.
Additionally, Mark and Roxanne Cantu both signed a single-page document entitled "NOTICE NO ORAL AGREEMENTS" on multiple occasions. That document states:
Mark and Roxanne Cantu signed ANotice No Oral "greements" documents on at least four other occasions between August 20, 1997 and November 28, 2005. Additionally, Mark and Roxanne Cantu signed an "Extension and/or Modification Agreement Commercial Indebtedness" document, which consisted of a single page and included the same language.
For good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, we agree as follows:
If the amount involved in your Loan Agreements exceed $50,000 in value, then Texas law requires that you be notified of the following:
THE WRITTEN LOAN AGREEMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
The "Loan Agreements" referred to above include any one or more promises, promissory notes, agreements, undertakings, security agreements, deeds of trust or other documents, or commitment, or any combination of those actions or documents which you may have signed or received relating to your transaction with the International Bank of Commerce.
The Cantus allege that they did not read any of the loan documents before signing and did not know that the loan documents contained arbitration clauses until this litigation ensued. These allegations, particularly in light of the merger and "no oral agreements" language, do not amount to fraud in the inducement of the arbitration agreements. See TMI, Inc. v. Brooks, 225 S.W.3d 783, 795 (Tex.App.-Houston [14th Dist.] 2007, pet. denied); In re GTE Mobilenet of S. Tex. Ltd. P'ship, 123 S.W.3d 795, 799-800 (Tex.App.-Beaumont 2003, orig. proceeding). A party claiming fraud must prove actual and justifiable reliance on a misrepresentation. TMI, Inc., 225 S.W.3d at 795; see In re GTE Mobilenet of S. Tex. Ltd. P'ship, 123 S.W.3d at 799-800. On these facts, we cannot conclude that the Cantus actually and justifiably relied on IBC's prior representations.
Courts have consistently held that parties "must exercise reasonable diligence for the protection of his or her own interests, and a failure to do so is not excused by mere confidence in the honesty and integrity of the other party." TMI, Inc., 225 S.W.3d at 795. This rule has been consistently applied in the arbitration contextCthe Texas Supreme Court has repeatedly held that a party is bound to an arbitration clause in a contract that party signed even if the party never actually read, saw, or was informed of the arbitration clause. In re U.S. Home Corp., 236 S.W.3d 761, 764 (Tex. 2007) (orig. proceeding) (per curiam); In re AdvancePCS Health L.P., 172 S.W.3d at 608; EZ Pawn Corp., 934 S.W.2d at 90. The law presumes that a party has read what he or she has signed. EZ Pawn Corp., 934 S.W.2d at 90. For this reason, among others, "reliance upon an oral representation that is directly contradicted by the express, unambiguous terms of a written agreement between the parties is not justified as a matter of law." TMI, Inc., 225 S.W.3d at 795.
Although the Cantus allege that they never read the loan documents and did not discover until recently that the loan documents contained arbitration clauses, these allegations make no difference under existing law. The Cantus allege that they relied on a prior oral representation, which is directly contrary to the merger and "no oral agreements" clauses in the loan documents. As a matter of law, the Cantus could not reasonably rely on prior oral representations contrary to the direct, clear, and unambiguous language in the fifty documents they signed and then claim not to be bound by that language merely because they did not read the documents. Accordingly, the trial court could not have properly denied arbitration on the ground that the arbitration clauses were fraudulently induced.
B. Lack of mutual assent
The Cantus claim that the arbitration clauses were not supported by mutual assent because the Cantus relied on IBC's prior oral representation that the loan documents would not include arbitration clauses. We disagree.
"When an unambiguous writing has been entered into between the parties, the courts will give effect to the intention of the parties as expressed or as is apparent in the writing." Barker v. Roelke, 105 S.W.3d 75, 83 (Tex.App.-Eastland 2003, pet. denied). A court may not consider parol evidence of the parties' intent that is not expressed in a written contract unless it first finds that the agreement is ambiguous. In re GTE Mobilenet of S. Tex. Ltd. P'ship, 123 S.W.3d at 799-800. If parties are allowed to vary the express terms of an agreement by pointing to parol evidence of earlier representations, particularly when a merger and "no oral agreements" clause is present, contracts would become "nothing more than . . . scrap[s] of paper." Id. at 799 (quoting Howeth v. Davenport, 311 S.W.2d 480, 482 (Tex.Civ.App.-San Antonio 1958, writ ref'd n.r.e.)).
Because there has been no allegation that the arbitration clauses in the loan documents are ambiguous, the Cantus' testimony and the deemed admissions relating to IBC's prior representations are parol evidence that could not have been properly considered. Id. The Cantus signed an agreement containing an arbitration clause, albeit without reading the document, and the evidence of their assent to that provision is established by the contract itself. In re U.S. Home Corp., 2007 Tex. LEXIS 915, at *4; Barker, 105 S.W.3d at 83. "Like any other contract clause, a party cannot avoid an arbitration clause by simply failing to read it." In re U.S. Home Corp., 2007 Tex. LEXIS 915, at *3-4. Accordingly, the trial court could not have properly denied arbitration based on the Cantus' mutual assent argument.
C. Loss of right to trial by jury
Finally, the Cantus argued below that the arbitration clauses were too broad and denied them the right to a jury trial. Even broad arbitration provisions, however, must be enforced "unless it can be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Jabri v. Qaddura, 108 S.W.3d 404, 411 (Tex.App.-Fort Worth 2003, no pet.). Moreover, the Texas Supreme Court has expressly held that parties may agree to waive the right to trial by jury. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 131-33 (Tex. 2004). The motion to compel arbitration could not have properly been denied on this ground.
VI. CONCLUSION
In conclusion, IBC demonstrated a valid arbitration agreement governed by the FAA covering the underlying claims, and the Cantus did not raise a valid defense to arbitration. Therefore, the trial court had no discretion to refuse to compel arbitration. The parties have not briefed whether the trial court properly issued a temporary injunction in spite of the arbitration clause. An interlocutory appeal has been filed by IBC in cause number 13-07-696-CV. Our finding that the trial court erred by denying IBC's motion to compel arbitration does not, by itself, require reversal of the temporary injunction, which is subject to interlocutory appeal. GTE Mobilenet of S. Tex. Ltd. P'ship v. Cellular Max, Inc., 123 S.W.3d 801, 802-03 (Tex.App.-Beaumont 2003, pet. dism'd by agr.); In re GTE Mobilenet of S. Tex. Ltd. P'ship, 123 S.W.3d at 797. Rather, we must consider the validity of the temporary injunction in the interlocutory appeal.
We are confident that the trial court will comply with our holding today. Accordingly, we conditionally grant the petition for writ of mandamus. The writ will not issue unless the trial court fails to comply with this opinion.