Prestonwood Tradition, LP v. Jennings

Full title: PRESTONWOOD TRADITION, LP; TRADITION MANAGEMENT, LLC; PRESTONWOOD TSL, LP…

Court: Court of Appeals of Texas, Fifth District, Dallas

Date published: Aug 5, 2022

653 S.W.3d 436 (Tex. App. 2022)

Opinion

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

08-05-2022

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

David M. Macdonald, Steven R. Baggett, Jennifer Dawn Leblanc, Bryan Rutherford, Macdonald Devin Madden Kenefick Harris, P.C., Dallas, James M. Stanton, Stanton LLP, Dallas, for Appellant. Trey H. Crawford III, Michael Justin Lang, David F. Wishnew, Alexandra J. Ohlinger, Crawford, Wishnew & Lang, PLLC, Dallas, for Appellee.

Opinion by Justice Pedersen, III

David M. Macdonald, Steven R. Baggett, Jennifer Dawn Leblanc, Bryan Rutherford, Macdonald Devin Madden Kenefick Harris, P.C., Dallas, James M. Stanton, Stanton LLP, Dallas, for Appellant.

Trey H. Crawford III, Michael Justin Lang, David F. Wishnew, Alexandra J. Ohlinger, Crawford, Wishnew & Lang, PLLC, Dallas, for Appellee.

Before the En Banc Court

OPINION

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.

1 Prior to submission, we consolidated relators’ original proceeding, cause number 05-20-00619-CV, into the 05-20-00380-CV cause.

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.

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.

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 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

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.

IT IS THEREFORE ORDERED that Plaintiffs’ Motions to Stay Arbitration in each of the above-captioned matters are GRANTED , 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.

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.

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).

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 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).

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, 115 S.Ct. 1920, 131 L.Ed.2d 985 (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) ).

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, 115 S.Ct. 1920, and then citing Forest Oil Corp. v. McAllen , 268 S.W.3d 51, 61 (Tex. 2008) )).

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, 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:

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.

[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 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

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).

Thus, we must conclude appellants have established the existence of an arbitration agreement between them and appellees. Appellants have established that 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

7 Not only is further discussion unnecessary, imparting further opinion risks providing an advisory opinion when it is not our question to decide.

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.

8 We note neither appellants nor appellees rely upon Roe.

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 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:

9 Metro LLP later converted to a limited partnership, with Ladymon serving as a limited partner. Roe , 318 S.W.3d at 507–08.

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 (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 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.

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).

[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, 115 S.Ct. 1920 ). 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 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. 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 458. 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 457 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" 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

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.

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 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

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.

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.

We dismiss appellants’ petition for writ of mandamus as moot.

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.

CONCURRING OPINION

Concurring Opinion by Justice Schenck

I concur in the Court's decision and write separately to emphasize that there have been numerous recent opinions from this Court and superior courts discussing our obligations to adhere to established law concerning the prompt enforcement of arbitration agreements, and to avoid violating the governing federal law and the Constitution's Supremacy Clause. See, e.g., In re Whataburger Restaurants LLC , 645 S.W.3d 188, 198 n.41 (Tex. 2022) ; Baby Dolls Topless Saloons, Inc. v. Sotero , 649 S.W.3d 206 (Tex. App.—Dallas 2020) (mem. op.) (Whitehill, J., dissenting), rev'd , 642 S.W.3d 583 (Tex. 2022) ; Aerotek, Inc. v. Boyd , 598 S.W.3d 373, 374 (Tex. App.—Dallas 2020) (Schenck, J., dissenting), rev'd , 624 S.W.3d 199 (2021) ; In re Baby Dolls Topless Saloons, Inc. , No. 05-20-00015-CV, 2020 WL 881017, at *5 (Tex. App.—Dallas Feb. 24, 2020, orig. proceeding) (mem. op.) (Schenck, J., dissenting); RSL Funding, LLC v. Newsome , 559 S.W.3d 169, 176 (Tex. App.—Dallas 2016) (Schenck, J., dissenting), rev'd , 569 S.W.3d 116 (Tex. 2018).

I. THE U.S. SUPREME COURT HAS SPOKEN–LOUDLY AND REPEATEDLY

U.S. Supreme Court cases contain language that suggests a per se invalidation of state law limits on arbitration, in essence deeming any transaction to effectively involve commerce under the Federal Arbitration Act ("FAA" or "Act"). See AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 341, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) ("When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA."); see also Nitro-Lift Techs., LLC v. Howard, 568 U.S. 17, 22, 133 S.Ct. 500, 184 L.Ed.2d 328 (2012) (same); Kindred Nursing Ctrs. Ltd. P'ship v. Clark , ––– U.S. ––––, 137 S. Ct. 1421, 1426, 197 L.Ed.2d 806 (2017) (same); Marmet Health Care Ctr., Inc. v. Brown , 565 U.S. 530, 533, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012) (same). As a recent Harvard Law Review article reminds us,

From the republic's birth, ensuring fealty of state judges to federal commands has been a matter of constitutional concern. Article VI of the Constitution highlights the Framers’ particular interest in requiring state court compliance with federal law. Its Oaths Clause mandates that "Members of the several State Legislatures, and all executive and judicial Officers" take an oath to support the Federal Constitution. Article VI's Supremacy Clause goes a step further by singling out state judges, bluntly providing that "the Judges in every State shall be bound" by federal law.

See Note, State Courts and the Federalization of Arbitration Law , 134 HARV. L. REV. 1184, 1999 (Jan. 2021).

Section 2 of the FAA is its "primary substantive provision." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). This section provides that written agreements to arbitrate controversies arising out of an existing contract shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). That provision, together with the rest of the FAA, applies to the full reach of the federal commerce power and preempts and supplants any state law, whether labeled as a rule of substance or procedure, that would conflict with the FAA's policy and goal of enforcing agreements to resolve controversies by arbitration rather than litigation. ASW Allstate Painting & Const. Co., Inc. v. Lexington Ins. Co. , 188 F.3d 307, 311 (5th Cir. 1999). So regardless of whose law applies, state statutes (and state court decisions) that are peculiarly hostile to the arbitration process could be preempted by the FAA.

Insofar as the reach of the FAA is concerned, the U.S. Supreme Court has made clear that the Act reaches to the full limits of the congressional authority under the commerce clause. E.g., AT&T Mobility , 563 U.S. at 339, 131 S.Ct. 1740. That power, rightly or wrongly, has been held to be virtually limitless.^{1 1} It obviously includes, for example, the power to regulate the sale and leasing of real property as is involved here. See 42 U.S.C. § 604. The power to redress discrimination in a court under this law in any given case is not dependent on particularized proof of the nature of the impact on interstate commerce, but on a constitutionally minimal connection to it—and is not to be avoided by procedures aimed at making receipt of the proof particularly challenging or applied to avoid receipt of the housing agreement itself.^{2 2} See Groome Res. Ltd., L.L.C. v. Parish of Jefferson , 234 F.3d 192, 202 (5th Cir. 2000). I presume, therefore, that a court receiving a discrimination claim would apply that law where the agreement itself indicated as little as the connection to the telephone or mail systems, as this one does. See In re Profanchik , 31 S.W.3d 381, 385 (Tex. App.—Corpus Christi 2000, orig. proceeding). Erecting a contrary approach for arbitration in state court would seem problematic.

1 As I have said before, I disagree with the U.S. Supreme Court's decisions in this respect but am nevertheless obliged to adhere to them faithfully. Aerotek , 598 S.W.3d at 374.

1 I refer to Appellants / Relators collectively as the Prestonwood Entities.

2 To be clear, I would make short work of a trial court's refusal to admit into evidence the agreement containing the arbitration clause. As such a clause operates independently from the rest of the agreement and, under federal law, is enforceable separately, see Prima Paint Corp. v. Flood & Conklin Mfg. Co. , 388 U.S. 395, 402, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) and Will-Drill Res., Inc. v. Samson Res. Co. , 352 F.3d 211, 214–15 (5th Cir. 2003), I struggle to imagine a scenario where striking its receipt in a motion to compel arbitration would not amount to an abuse of discretion.

2 The record includes two, distinct leases signed by each of the decedents except for Leah Alice Corken. The "Former Leases" were executed when each decedent first moved to The Tradition. The "Operative Leases" were executed by each decedent after each decedent had resided at The Tradition for at least two years. We base our decision on the Operative Leases because they explicitly superseded the Former Leases and any differences between the leases are irrelevant to the issues presented here. The parties submitted only a 2015 lease signed by Corken, which includes the same arbitration provisions as those in the Operative Leases signed by the other decedents.

Despite these recent U.S. Supreme Court decisions addressing the reach and preemptive effect of the FAA, our caselaw continues in many respects to unflinchingly retreat to our own past decisions concerning questions ranging from the standard of review, the role of parties in determining the governing law, and the manner and extent of proof of the relation of the particular contract to interstate commerce.

Decisions pre-dating this century often suggest an abuse of discretion standard of review applies to the trial court's decision whether to compel arbitration pursuant to an agreement to arbitrate. Freis v. Canales , 877 S.W.2d 283, 284 (Tex. 1994) (orig. proceeding). As the U.S. Supreme Court and our own supreme court have made clear, the question of enforcement of an agreement is reviewed de novo. See First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, at 941, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ; Jody James Farms, JV v. Altman Grp., Inc. , 547 S.W.3d 624, 630 (Tex. 2018).^{3 3} The question of the existence (i.e., formation) of the agreement as a question of fact under the Tipps ^{4 4} procedure and reviewed under what appears to be a clear error standard. See Aerotek , 624 S.W.3d at 204. It is thus unclear where, other than in the application of evidentiary rules addressed in relevant part above, see supra n.2, this discretion continues to obtain.

3 In Jody James Farms, JV v. Altman Group, Inc. , cited by the dissent, the Texas Supreme Court appears to recognize this albeit without directly revising the abuse of discretion mantra, holding that enforcement decisions are reviewed "de novo." 547 S.W.3d 624, 630 (Tex. 2018).

3 In their trial court pleadings, the Estate Representatives refer to the arbitration provisions found in the leases as the "alleged arbitration agreement." For ease of reference, we will refer to paragraphs 7.E, 8.A, 8.B, and 8.E as "the arbitration agreement." By doing so, however, we do not make any findings or conclusions concerning whether the Estate Representatives are parties to the leases or otherwise bound by those provisions because those questions are not presented in these proceedings.

4 Jack B. Anglin v. Tipps , 842 S.W.2d 266 (Tex. 1992). Notably, many of the early decisions citing this standard trace back to a period when review of the denial of a motion to compel arbitration was available only by mandamus, requiring proof of an abuse of discretion.

4 Tradition Management, LLC is defined as the Landlord in the leases.

Likewise, cases pre-dating the U.S. Supreme Court's decisions settling the reach and preemptive effect of the FAA that reference the parties’ agreements concerning the applicability of the Act are regularly cited in cases where there would be no potential conflict between the two acts, insofar as recognizing and upholding the parties’ agreements. E.g., Ford v. NYLCare Health Plans of the Gulf Coast, Inc. , 141 F.3d 243, 249 (5th Cir. 1998). Whether that rule survives more recent decisions of the Supreme Court concerning the scope and preemptive effect of the FAA—or whether a state procedure uniquely hostile to proof of the commitment—is far from clear. E.g., Hall St. Assocs. v. Mattel, Inc. , 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008).

Finally, as noted above, the obligation to produce and prove evidence of an agreement under the FAA as the U.S. Supreme Court has read it (i.e., to reach as far any other federal statute) is not particularly onerous. See Allied-Bruce Terminix Co., Inc. v. Dobson , 513 U.S. 265, 274, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Attaching a contract containing an arbitration clause that could be regulated by Congress pursuant to its commerce powers is enough. Erecting unique barriers and standards different from those used to determine the applicability of other federal law, would appear to be preempted. See Concepcion , 563 U.S. at 341–42, 131 S.Ct. 1740.

II. STATE COURT DECISIONS APPEARING TO EVADE OR IGNORE THESE HOLDINGS ARE COUNTERPRODUCTIVE AND UNDERMINE CONFIDENCE

As noted, I share the concerns set forth in a fairly recent Harvard Law Review article addressing the breadth of the FAA and state court actions in the face of the federalization of arbitration. See Note, 134 HARV. L. REV. at 1184. I have expressed these concerns previously and will not repeat them here beyond summarizing the author's concerns. See Aerotek , 598 S.W.3d at 379–80.

Responding to the burdens the Supreme Court's interpretations of the FAA have placed on them, some state courts continued to avoid the expansive reach of section 2 of the FAA in numerous ways including, but not limited to, (1) open defiance, (2) finding that an arbitration agreement does not involve interstate commerce, as the dissent finds in this case, (3) holding that a choice-of-law clause in an arbitration agreement incorporates state law contrary to the FAA, and (4) defining arbitration under section 2 narrowly under state law. See Note, 134 HARV. L. REV. at 1194. As the author notes, each time the Supreme Court rebukes state courts’ attempts at pushback, the state courts begin the process anew. Id. at 1202. "[S]tate court insubordination exacerbates the FAA's harms to the constitutional order while doing little to properly recalibrate the federal-state balance." Id. at 1199.

CONCLUSION

When we or others interject ourselves and impose theories aimed at obstructing arbitration, we defy our superiors, ignore the separation of powers, cause extraordinary delay in a process that is supposed to be quick, and undermine confidence in the state courts. Id. at 1205. I believe we should resist the urge to further address this area of the law.

DISSENTING OPINION

Dissenting Opinion by Justice Partida-Kipness

In what feels like a bad case of déjà vu, I must again dissent in this matter. The opinion issued today by a seven-member majority of this Court erroneously determined that the trial court abused its discretion by deciding gateway issues of arbitrability. The majority's en banc opinion makes the same errors as were made in the original panel opinion. The opinion conflicts with binding precedent and impermissibly extends the ability of corporations to bind non-signatories to arbitration agreements without court review of threshold issues. The holding further disregards the AAA's own determination that the trial court should decide gateway issues of arbitrability in this case.

This decision deprives multiple mourning families of their right to have a trial court decide threshold questions of arbitrability. And by granting en banc reconsideration, this Court has continued to further delay each party from moving past the preliminary stage of litigation. The end result is not resolution or justice, but further delay and denial of the families’ constitutional right to a trial by jury to obtain civil compensation for the death of their loved ones. Simply put, the en banc majority opinion is wrong, and I adamantly dissent.

BACKGROUND

In 2016, Leah Corken, Juanita Purdy, Glenna Day, Solomon Spring, and Joyce Abramowitz were residents of The Tradition-Prestonwood (The Tradition), a senior living community owned and operated by the Prestonwood Entities.¹ During a four-month span that year, those seniors died at The Tradition. In 2018, the Estate Representatives—representatives of the estates of Leah, Juanita, Glenna, Solomon, and Joyce—contacted the Prestonwood Entities regarding settlement of claims arising from the deaths. The parties began a mediation and, shortly thereafter, the Prestonwood Entities filed arbitration proceedings with the American Arbitration Association (AAA).

I. AAA Proceedings

The Prestonwood Entities pursued arbitration based on arbitration provisions contained in the decedents’ leases² with The Tradition, which provided in pertinent part:

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. The arbitration shall be conducted in the county where the Community is located. 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. Where a medical issue may more likely than not come before the Panel, and the Panel is three in number, one member of the Panel shall be a physician. The Panel shall follow the current Commercial Arbitration Rules of the AAA. The Panel shall have the authority to set a timetable for the arbitration and to direct discovery in all controversies. The Panel shall obey the law. The Panel shall have the authority to grant equitable relief that could be ordered by a court. The Panel shall have authority to award economic and non-economic damages (including, damages for pain and suffering and mental anguish); but shall have no authority to award punitive or exemplary damages. The Panel's award may not exceed any award that could be granted by a court. The decision of the Panel shall be final, binding upon the Parties, not subject to appeal, and any court having jurisdiction may enter a judgment on the award.

....

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.

....

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.

(Emphasis in original).

The Estate Representatives submitted to the AAA a consolidated answering statement, objections to the arbitrator's jurisdiction, and objections to the arbitrability of their personal injury claims. The Estate Representatives specifically objected that the TAA, not the FAA, applied to the arbitration provisions and that their claims were not arbitrable under the TAA. They also informed the AAA that they had filed declaratory judgment actions in state court seeking various declarations, including declarations that the TAA applies to the arbitration provisions, that their claims are not arbitrable, and various other declarations regarding the validity and enforceability of the arbitration provisions. The Estate Representatives asked the AAA to stay arbitration until a court had determined the proper jurisdiction and forum for their claims. Subject to their objections to the arbitrator's jurisdiction, the Estate Representatives filed counterclaims for negligent undertaking, premises liability, general negligence, and negligent hiring.

After the Estate Representatives submitted their objections and answering statements to the AAA and filed their petitions in the instant cases, the AAA notified the parties that it had "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." The Prestonwood Entities asked the AAA to reconsider its ruling. The AAA rejected the Prestonwood Entities’ request for reconsideration and affirmed that it would "not proceed until a determination by the courts [sic] is rendered as to arbitrability."

II. Trial Court Proceedings

On the same day that they filed their answering statements, objections, and counterclaims with the AAA, the Estate Representatives filed their petitions in the underlying cases. In each case, the Estate Representatives brought a declaratory judgment action and asserted the same counterclaims filed with the AAA, which included claims of negligent undertaking, premises liability, general negligence, negligent hiring, training, and supervision, and gross negligence. The Estate Representatives sought wrongful death and survival damages and exemplary damages.

The Estate Representatives also filed motions to stay the arbitration in which they challenged the validity, enforceability, and scope of the "alleged arbitration agreement"³ as to their personal injury claims. In the motions to stay arbitration, the Estate Representatives asserted the following bases for staying the AAA proceedings:

1. The TAA, not the FAA, applies to the arbitration agreement because the leases provide they are governed by Texas law and do not involve interstate commerce;

2. The arbitration agreement is invalid and unenforceable under the TAA as to their personal injury claims because it does not meet the requirements of section 171.002(c) of the civil practice and remedies code. TEX. CIV. PRAC. & REM. CODE § 171.002(c) ("A claim described by Subsection (a)(3) is subject to this chapter if: (1) each party to the claim, on the advice of counsel, agrees in writing to arbitrate; and (2) the agreement is signed by each party and each party's attorney");

3. The arbitration agreement is illusory and, therefore, invalid and unenforceable, because the leases permit the Landlord⁴ to unilaterally amend the arbitration agreement;

4. The punitive damages provision of the arbitration agreement is unconscionable;

5. If the arbitration agreement is deemed valid and enforceable, it is limited to claims against Tradition Management, LLC, the Landlord as defined in the leases; and

6. The arbitration agreement does not apply to the Estate Representatives declaratory judgment action.

Before the AAA resolved the Prestonwood Entities’ request for reconsideration, the Prestonwood Entities filed pleas in abatement in the trial court seeking abatement of the cases "until the [AAA] determines whether or not to proceed with administration of the arbitration proceedings" and, if the AAA decided to proceed, abatement of the trial court proceedings to allow the arbitration to proceed. Alternatively, if the trial court determined that it "should hear the arbitrability issues," the Prestonwood Entities asked the trial court to "abate all other matters in this proceeding until such determination is made." In support of their pleas and in response to the Estate Representatives’ motions, the Prestonwood Entities offered the affidavit of Richard Campos, controller of Tradition Management, LLC and Prestonwood Tradition, LLC, copies of the leases, copies of the various pleadings filed in the AAA proceeding, and copies of communications from the AAA concerning that proceeding. The Estate Representatives objected to and moved to strike portions of the Campos Affidavit.

In their pleas, the Prestonwood Entities asserted the following bases for abating the trial court proceedings and allowing the cases to proceed to arbitration:

1. The arbitration agreement is binding on the Estate Representatives asserting wrongful death and survival claims under Texas law and the plain terms of the leases;

2. The FAA, not the TAA, applies to the arbitration agreement;

3. The claims asserted by the Estate Representatives fall within the scope of the arbitration agreement; and

4. Alternatively, arbitration is permitted under the Texas common law.

The Prestonwood Entities supplemented their pleas in abatement after the AAA rejected the Prestonwood Entities’ request for reconsideration. In the supplemental pleas, the Prestonwood Entities stated that the supplements were "not intended to replace" the original pleas "or to serve as a response" to the motions to stay arbitration. Rather, the Prestonwood Entities asserted additional arguments in support of their pleas that (1) the FAA and the TAA require that the AAA panel, not the trial court, decide whether the claims are arbitrable, and (2) the arbitration agreements are valid and enforceable under Texas common law, regardless of whether they would be enforceable under the TAA or the FAA. The Prestonwood Entities did, however, amend their original requests for relief and prayed for the following:

a. An order referring "all matters concerning whether and to what extent the claims are arbitrable" to an AAA arbitration panel duly appointed by the AAA, and abating all discovery and other proceedings in the trial court until the AAA determines the question of arbitrability. This relief was sought pursuant to 9 U.S.C. §§ 3, 4 and TEX. CIV. PRAC. & REM. CODE § 51.016, principals of comity, and Texas common law.

b. An order staying all proceedings in the trial court other than the question of arbitrability if the trial court decides to resolve that issue rather than referring it to the AAA.

c. If the trial court resolves the question of arbitrability, the Prestonwood Entities requested a determination that the TAA does not apply to this case because of the explicit exclusion in TEX. CIV. PRAC. & REM. CODE § 171.002(a)(3), and that the claims at issue are arbitrable under either the FAA or Texas common law.

d. If the trial court or the AAA determines that the claims are arbitrable under the FAA or the Texas common

law, the Prestonwood Entities requested a stay of all trial court proceedings pending the rendition of a final award in the arbitration proceeding and an order compelling the parties to proceed with binding arbitration before the AAA under the CAR and the terms of the Operative Lease.

e. Such other and further relief of any nature to which they may be justly entitled.

The trial court heard the pleas and motions and issued a global order in all cases. In the order, the trial court granted the Estate Representatives’ motions to stay arbitration, denied the Prestonwood Entities’ pleas in abatement, sustained the Estate Representatives’ objections to the Campos Affidavit and struck the corresponding affidavit testimony, and stayed the AAA arbitration proceeding. The order did not include an explanation of the trial court's reasoning, and the trial court did not issue findings of fact or conclusions of law.

PROCEDURAL HISTORY IN THIS COURT

On March 17, 2020, the Prestonwood Entities filed a separate notice of interlocutory appeal in each underlying trial court proceeding. On March 31, 2020, this Court designated the interlocutory appeals as companion cases and permitted the parties to file consolidated briefs in those proceedings. On June 18, 2020, the Prestonwood Entities filed a petition for writ of mandamus as to each underlying trial court proceeding in which they argue the claims are subject to arbitration pursuant to Texas common law. On July 30, 2020, this Court consolidated each original proceeding into the corresponding interlocutory appeal and ordered the Estate Representatives to file a response to the petitions for writ of mandamus. The cases were submitted without oral argument on March 2, 2021.

Justice Pedersen, with Justice Goldstein participating and Justice Partida-Kipness dissenting, issued a panel opinion on October 22, 2021. See Prestonwood Tradition, LP v. Jennings , 636 S.W.3d 68 (Tex. App.—Dallas 2021, no pet.). On November 8, 2021, the Estate Representatives filed a motion for en banc reconsideration. The Court granted the Estate Representatives’ motion for en banc reconsideration on December 14, 2021, heard oral argument en banc on January 19, 2022, and requested additional jurisdictional briefing from the parties on January 24, 2022. Upon issuance of the en banc majority opinion, the Court withdraws the October 22, 2021 panel opinion and vacates the judgment of that date.

APPELLATE JURISDICTION

"Unless a statute authorizes an interlocutory appeal, appellate courts generally only have jurisdiction over final judgments." CMH Homes v. Perez , 340 S.W.3d 444, 447 (Tex. 2011). Under the TAA, a trial court's order denying an application to compel arbitration made under section 171.021 or an order granting an application to stay arbitration made under section 171.023 may be challenged by interlocutory appeal. TEX. CIV. PRAC. & REM. CODE § 171.098(a)(1)–(2). Here, by granting the motions to stay and denying the pleas in abatement, the trial court concluded that the TAA, not the FAA or Texas common law, applies to the arbitration agreement and determined that the arbitration agreement is invalid and unenforceable under the TAA. We, therefore, have jurisdiction to review the trial court's interlocutory order. See, e.g., Citizens Nat'l Bank v. Bryce , 271 S.W.3d 347, 353 (Tex. App.—Tyler 2008, no pet.) (when a trial court's denial of a motion to compel arbitration is based on the TAA, the order is subject to interlocutory appeal under TEX. CIV. PRAC. & REM. CODE § 171.098 ).⁵

5 As discussed below, I would conclude the trial court was correct in determining that the TAA applies here. A determination that either the FAA or the Texas common law applied, however, would not deprive this Court of jurisdiction over these consolidated proceedings. For purposes of the Prestonwood Entities’ arguments under the FAA, section 51.016 provides a court of appeals jurisdiction over an interlocutory appeal challenging an order refusing to stay trial court proceedings subject to arbitration or an order denying a motion to compel arbitration. Tex. Civ. Prac. & Rem. Code § 51.016 ; 9 U.S.C. § 16(a)(1)(A)–(B) ; W. Dairy Transp., LLC v. Vasquez , 457 S.W.3d 458, 462–63 (Tex. App.—El Paso 2014, no pet.). Under common law standards, the trial court's ruling could be challenged by means of an original proceeding seeking mandamus relief. Royston, Rayzor, Vickery, & Williams, LLP v. Lopez , 467 S.W.3d 494, 499 (Tex. 2015).

STANDARD OF REVIEW

Arbitration agreements can be enforced under either statutory provisions or the common law. Royston, Rayzor, Vickery, & Williams, LLP , 467 S.W.3d at 499. We review a trial court's ruling on a motion to stay arbitration for an abuse of discretion, reviewing questions of law de novo and factual determinations under a no-evidence standard of review. Henry v. Cash Biz, LP , 551 S.W.3d 111, 115 (Tex. 2018) ; Sidley Austin Brown & Wood, L.L.P. v. J.A. Green Dev. Corp. , 327 S.W.3d 859, 863 (Tex. App.—Dallas 2010, no pet.) ; Trafigura Pte. Ltd. v. CNA Metals Ltd. , 526 S.W.3d 612, 615 (Tex. App.—Houston [14th Dist.] 2017, no pet.). Because the trial court did not enter findings of fact or conclusions of law to explain its ruling on the parties’ pleas and motions, we must uphold the trial court's decision on any appropriate legal theory urged below. Bonded Builders Home Warranty Ass'n. of Tex. v. Rockoff , 509 S.W.3d 523, 531–32 (Tex. App.—El Paso 2016, no pet.) ; Lakeway Homes, Inc. v. White , No. 05-15-01455-CV, 2016 WL 3453559, at *3 (Tex. App.—Dallas June 23, 2016, no pet.) ; Ridge Nat. Res. LLC v. Double Eagle Royalty, L.P. , 564 S.W.3d 105, 118 (Tex. App.—El Paso 2018, no pet).

As the parties seeking arbitration, the Prestonwood Entities were required to establish the existence of a valid arbitration agreement and claims falling within the scope of the agreement. ALLCAPCORP, Ltd. Co. v. Sloan , No. 05-20-00200-CV, 2020 WL 6054339, at *2–3 (Tex. App.—Dallas Oct. 14, 2020, no pet.) (mem. op.) (citing In re Kellogg Brown & Root, Inc. , 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding) ); J.M. Davidson, Inc. v. Webster , 128 S.W.3d 223, 227 (Tex. 2003) ("A party attempting to compel arbitration must first establish that the dispute in question falls within the scope of a valid arbitration agreement."). "If the other party resists arbitration, the trial court must determine whether a valid agreement to arbitrate exists." J.M. Davidson , 128 S.W.3d at 227. "If the trial court finds a valid agreement, the burden shifts to the party opposing arbitration to raise an affirmative defense to enforcing arbitration." Id. A court has no discretion and must compel arbitration if it is established that there is a valid arbitration agreement and the claims raised fall within the scope of that agreement. ACE Cash Express, Inc. v. Cox , No. 05-15-01425-CV, 2016 WL 4205850, at *6 (Tex. App.—Dallas Aug. 9, 2016, no pet.) (mem. op.) (citing Pilot Travel Ctrs., LLC v. McCray , 416 S.W.3d 168, 177 (Tex. App.—Dallas 2013, no pet.) ); Seven Hills Commercial, LLC v. Mirabal Custom Homes, Inc. , 442 S.W.3d 706, 714–16 (Tex. App.—Dallas 2014, pet. denied).

ANALYSIS

In four appellate issues, the Prestonwood Entities contend the trial court erred in staying arbitration and denying their request to order the parties to arbitration. Specifically, they assert the trial court abused its discretion by (1) deciding whether the Estate Representatives’ claims are arbitrable; (2) determining the TAA applied to the arbitration agreements; (3) disregarding the "uncontroverted evidence" establishing that the Estate Representatives’ claims are arbitrable under the FAA; and (4) striking the affidavit offered in support of their pleas in abatement. In their petitions for writ of mandamus, the Prestonwood Entities argue in the alternative that the trial court abused its discretion in denying arbitration under the common law, and that they have no adequate remedy by appeal because they will be forced to defend five separate lawsuits instead of one arbitration proceeding.

I. Determination of Arbitrability

In their first issue, the Prestonwood Entities assert that the trial court impermissibly determined questions of arbitrability by staying the AAA proceedings and denying their pleas in abatement rather than submitting those questions to the AAA. The en banc majority agrees with the Prestonwood Entities on this point. I do not.

Arbitration is "simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration." Robinson v. Home Owners Mgmt. Enters., Inc. , 590 S.W.3d 518, 525–26 (Tex. 2019) (quoting First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ). Arbitration is governed by two fundamental principles: arbitration agreements are contracts that must be enforced according to their terms, and a party cannot be compelled to arbitrate any dispute absent an agreement to do so. Id.

Although arbitration is favored under both state and federal law, "arbitrators wield only the authority they are [contractually] given." Lamps Plus, Inc. v. Varela , ––– U.S. ––––, 139 S. Ct. 1407, 1416, 203 L.Ed.2d 636 (2019). Indeed, the federal policy favoring arbitration "is about treating arbitration contracts like all others, not about fostering arbitration." Morgan v. Sundance, Inc. , ––– U.S. ––––, 142 S. Ct. 1708, 1713, 212 L.Ed.2d 753 (2022). To ensure parties are not forced to arbitrate matters outside their agreement, a substantive question of arbitrability—i.e., whether the parties have actually agreed to submit a particular dispute to arbitration—"is an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise." Howsam v. Dean Witter Reynolds , 537 U.S. 79, 83-84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (quoting AT & T Techs. Inc. v. Commc'ns Workers of Am. , 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ); Jody James Farms, JV v. Altman Grp., Inc. , 547 S.W.3d 624, 632 (Tex. 2018) (recognizing presumption favoring judicial determination of arbitrability).

The phrase "question of arbitrability" refers to the "narrow circumstance where contracting parties would likely have expected a court to have decided the gateway matter." Howsam , 537 U.S. at 83, 123 S.Ct. 588. Referring gateway matters to the court "avoids the risk of forcing parties to arbitrate a matter they may well not have agreed to arbitrate." Id. These "gateway matters" include whether the parties agreed to arbitrate and whether a claim or dispute is encompassed in the agreement to arbitrate. G.T. Leach Builders, LLC v. Sapphire V.P., LP , 458 S.W.3d 502, 520–21 (Tex. 2015) (questions of substantive arbitrability, which concern the existence, enforceability, and scope of an agreement to arbitrate, are usually decided by the trial court.); McGehee v. Bowman , 339 S.W.3d 820, 824 (Tex. App.—Dallas 2011, no pet.) ; Saxa Inc. v. DFD Architecture, Inc. , 312 S.W.3d 224, 229 (Tex. App.—Dallas 2010, pet. denied) (whether the parties agreed to arbitrate is generally an issue decided by the courts rather than an arbitrator).

The parties may, however, agree to submit arbitrability issues to arbitration. Saxa , 312 S.W.3d at 229 (citing Howsam , 537 U.S. at 83, 123 S.Ct. 588 ). But courts do not assume the parties "agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence that they did so." Roe v. Ladymon , 318 S.W.3d 502, 513 (Tex. App.—Dallas 2010, no pet.) (quoting First Options , 514 U.S. at 944, 115 S.Ct. 1920 ); McGehee , 339 S.W.3d at 825–26 (if the parties clearly and unmistakably provide that the arbitrator is to decide the questions of substantive arbitrability, then the trial court must permit the arbitrator to decide those issues). A "court must examine the arbitration agreement to decide if, when construed under the relevant state law, the agreement evidences a clear and unmistakable intention that the arbitrators will have the authority to determine the scope of arbitration." Saxa , 312 S.W.3d at 229 (citing ODL Servs. Inc. v. ConocoPhillips Co. , 264 S.W.3d 399, 413 (Tex. App.—Houston [1st Dist.] 2008, no pet.) ). For example, the parties’ agreement to a broad arbitration clause that expressly incorporates rules empowering the arbitrator to decide substantive arbitrability may provide clear and unmistakable evidence of the parties’ intent to delegate the issues of substantive arbitrability to the arbitrator. See Saxa , 312 S.W.3d at 230 ; see also Swearingen v. Swearingen , No. 05-15-01199-CV, 2016 WL 3902747, at *3–4 (Tex. App.—Dallas July 14, 2016, no pet.) (mem. op.) ; Schlumberger Tech. Corp. v. Baker Hughes Inc. , 355 S.W.3d 791, 802–03 (Tex. App.—Houston [1st Dist.] 2011, no pet.).

Here, Paragraph 8.B of the Operative Leases provides that "The Panel shall follow the current Commercial Arbitration Rules of the AAA." Rule R–7(a) of the AAA's Commercial Arbitration Rules (the Commercial Rules) gives an arbitrator "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." The Prestonwood Entities argue that by invoking the AAA and its Commercial Rules in the arbitration agreements, the parties clearly and unmistakably agreed to submit arbitrability issues to the arbitrator.

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. See, e.g., Holifield v. Barclay Props., Ltd. , No. 05-21-00239-CV, 2021 WL 4549498, at *3 (Tex. App.—Dallas Oct. 5, 2021, pet. filed) (mem. op.) (stating general rule that "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.").⁶ This general rule and the cases following it are not dispositive here, however, because they are distinguishable in at least two ways. First, none of these cases involved a situation such as here where the AAA deferred the arbitrability determination to the state court. Second, these cases did not involve parties disputing arbitration who were non-signatories to the agreement.

6 Each of the following cases cites the general rule that express incorporation of rules empowering the arbitrator to decide arbitrability constitutes clear and unmistakable evidence of the parties’ intent to delegate issues of arbitrability to the arbitrator. See also HomeAdvisor, Inc. v. Waddell , No. 05-19-00669-CV, 2020 WL 2988565, at *5 (Tex. App.—Dallas June 4, 2020, no pet.) (mem. op.) ; Trafigura Pte. Ltd. v. CNA Metals Ltd. , 526 S.W.3d 612, 616–18 (Tex. App.—Houston [14th Dist.] 2017, no pet.) ; Gilbert v. Rain & Hail Ins. , No. 02-16-00277-CV, 2017 WL 710702, at *4 (Tex. App.—Fort Worth Feb. 23, 2017, pet. denied) (mem. op.) ; Schlumberger Tech. Corp. v. Baker Hughes Inc. , 355 S.W.3d 791, 803 (Tex. App.—Houston [1st Dist.] 2011, no pet.) ; Saxa Inc. v. DFD Architecture Inc. , 312 S.W.3d 224, 229–31 (Tex. App.—Dallas 2010, pet. denied) Petrofac, Inc. v. DynMcDermott Petroleum Operations Co. , 687 F.3d 671, 675 (5th Cir. 2012) ; Crawford Prof'l Drugs, Inc. v. CVS Caremark Corp. , 748 F.3d 249, 262-63 (5th Cir. 2014).

A. AAA's refusal to determine arbitrability

This case is unique because the AAA refused to determine the question of arbitrability. While the parties were attempting to informally resolve their disputes, the Prestonwood Entities filed arbitration actions with the AAA under its Commercial Rules as provided in the leases. During this process, the Estate Representatives requested that the AAA stay all proceedings pending a determination of proper jurisdiction for all claims and counterclaims in this dispute by a court of competent jurisdiction. Over the Prestonwood Entities’ objections, the AAA granted the Estate Representatives’ request and stayed the proceedings. The Prestonwood Entities challenged that administrative stay under the AAA's administrative processes but were unsuccessful in having the stay lifted.

In fact, the record before us indicates that the AAA declined three times to proceed with administration, writing each time that in order to proceed, it required either mutual agreement by the parties or adjudication of arbitrability by a Dallas County Texas Court. First, on June 28, 2019, the AAA through Rod Toben wrote:

The AAA is in receipt of the parties’ communications submitted in response to the AAA's June 19, 2019 request for clarification regarding separate submissions for dispute resolution regarding prospective Claimants ... and prospective Respondents ....

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").

Then, on August 8, 2019, the AAA re-asserted its position:

The AAA is in receipt of the parties’ communications submitted in response to the attached email dated June 28, 2019. After review of the filings, the AAA has determined the administration of these matters will not proceed until determination by the courts is rendered as to arbitrability.

Finally, on August 28, 2019, the AAA again chose not to change its decision:

The AAA has reviewed the latest filing from Mr. Macdonald dated August 14, 2019 (sic) and August 15, 2019, as well as, the email response from Mr. Crawford dated August 19, 2019. The determination of the AAA, as communicated to counsel on June 28, 2019 (sic) and August 8, 2019, remains as stated.

Despite the AAA's unwavering decision, the Prestonwood Entities assert that the AAA did not make a substantive decision that the AAA does not have jurisdiction or that the claims are not arbitrable because Rule R–7 of the Commercial Rules "expressly provides that such issues can be only decided by a properly constituted Panel." A plain reading of Rule 7 and other applicable rules renders this argument unavailing.

Rule R–7, titled "Jurisdiction," provides:

(a) 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.

(b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.

(c) A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award.

Am. Arbitration Ass'n, Commercial Arbitration Rules & Mediation Procedures, R–7: Jurisdiction (eff. Oct. 1, 2013), available at adr.org/commercial.

Rule R–7 provides the arbitrator with the power to determine his or her own jurisdiction. Id. ; see also Super Starr Int'l, LLC v. Fresh Tex Produce, LLC , No. 13-17-00184-CV, 2017 WL 4054395, at *4 (Tex. App.—Corpus Christi–Edinburg Sept. 14, 2017, no pet.) (mem. op.). The rule further gives the arbitrator the power to consider and determine any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim. Rule R–7 does not, however, provide that issues of jurisdiction or arbitrability can be decided "only" by a properly constituted panel. On the contrary, the only exclusive grant of authority regarding administration under the commercial rules is given to the AAA under Rule R–1(A) and Rule R–2. Rule R–1(A) provides in part that "Any disputes regarding which AAA rules shall apply shall be decided by the AAA." Am. Arbitration Ass'n, Commercial Arbitration Rules & Mediation Procedures, R–1: Agreement of Parties (eff. Oct. 1, 2013), available at adr.org/commercial. Similarly, Rule R–2 provides that "Arbitrations administered under these rules shall only be administered by the AAA or by an individual or organization authorized by the AAA to do so." Id. at R-2: AAA and Delegation of Duties. Under these rules, I would conclude the AAA has the sole authority to determine which of its rules apply to a given dispute and who shall administer a particular proceeding.

Here, under the authority granted in Commercial Rules R–1 and R–2, the AAA declined to administer the cases until either the parties agreed to proceed in the AAA, or a court of competent jurisdiction ruled on the issue of arbitrability. The AAA, in other words, authorized the state court to make preliminary decisions of arbitrability. Nothing in the plain language of Rule R–7 prohibits the AAA from doing this, and Rules R–1 and R–2 authorize it. The AAA made a choice not to decide arbitrability. But it was still a choice, and we should respect it. E.g. ¸Jean–Paul Sartre, Existentialism Is a Humanism 44 (Carol Macomber trans., Yale University Press 2007) ("[W]hat is impossible is not to choose. I can always choose, but I must also realize that, if I decide not to choose, that still constitutes a choice."); cf. Hubbard v. Hollywood Park Realty Enters., Inc. , 1991 WL 3151, at *10 (Del. Ch. Jan. 14, 1991) ("From a semantic and even legal viewpoint, ‘inaction’ and ‘action’ may be substantive equivalents, different only in form."). By asking us to compel the AAA to assign an arbitration panel to determine arbitrability despite the AAA's decision that, unless and until certain conditions are met, none of its rules will apply in this case, the Prestonwood Entities impliedly request that we divest the AAA of its authority to interpret its own rules and determine its own jurisdiction. This we cannot do. Indeed, the guiding principles of law provided in Schein, Saxa , Home Advisor , and Phillips require us to decline the Prestonwood Entities’ request. By concluding otherwise, the en banc majority violates the well-established principle that a court cannot imply contract terms to favor arbitration. See, e.g., Morgan , 142 S.Ct. at 1713–14.

Accordingly, I would conclude that, in the face of the AAA declining to proceed until certain conditions are met and deferring to Dallas County courts to determine the issue of arbitrability, the trial court properly moved to decide the question of arbitrability.

B. The Estate Representatives are non-signatories who did not agree to arbitration.

The Prestonwood Entities also maintain that Paragraph 8.B constitutes clear and unmistakable evidence that the Estate Representatives agreed to submit questions of arbitrability to the arbitrator and, therefore, this Court should require the trial court to abate its proceedings and send the case back to the AAA. The en banc majority agrees with them. As discussed above, however, I conclude this argument fails because such a holding requires this Court to disregard the AAA's unequivocal refusal to determine arbitrability. The conclusion is also faulty because it overlooks that the Estate Representatives are non-signatories to the Operative Leases. As such, the inclusion of Paragraph 8.B is not evidence that the Estate Representatives agreed to arbitrate or to do so under AAA rules, much less clear and unmistakable evidence that the Estate Representatives, as non-contracting parties, authorized an arbitrator to decide those gateway matters. See Roe v. Ladymon , 318 S.W.3d 502 (Tex. App.—Dallas 2010, no pet.).

In Roe , Metro LLP and Roe were the parties to a construction contract with an arbitration provision. 318 S.W.3d at 507. Ladymon signed the contract as Metro's partner but did not sign in his individual capacity. Id. The arbitration agreement incorporated the AAA's Construction Industry Arbitration Rules, which included Rule R–8, a provision similar to Rule 7 of the Commercial Arbitration Rules. Id. at 507, 517. Roe was dissatisfied with Metro's construction services and demanded arbitration against both Metro and Ladymon. Id. at 508. Ladymon objected to arbitration, asserting the arbitration provision did not apply to him because he did not sign an agreement to arbitrate in his individual capacity. Id. Roe argued that Rule R–8 required that the question of whether Ladymon was subject to the arbitration provision be submitted to the arbitrator. Id. at 517.

This Court disagreed, noting that "the entities who agreed to arbitrate under the AAA rules are Metro LLP and Roe, not Ladymon" and, as such, "the terms of the contracting parties’ agreement to arbitrate is not evidence that a non-contracting party—here Ladymon—agreed to arbitrate or to do so under AAA rules, much less clear and unmistakable evidence of such an agreement." Roe , 318 S.W.3d at 517 (citing First Options , 514 U.S. at 946–47, 115 S.Ct. 1920 ). We concluded that we could not "say that Ladymon clearly and unmistakably agreed to submit gateway issues to an arbitrator simply because Roe and Metro LLP agreed to arbitrate in accordance with rules selected by the AAA." Id.

I would apply the same analysis here. Just as in Roe , the parties seeking to avoid arbitration—the Estate Representatives—are non-contracting parties because they did not sign the leases. See Roe , 318 S.W.3d at 517. As such, the language in the leases stating that the arbitration panel "shall follow the current Commercial Arbitration Rules of the AAA" is not evidence that the Estate Representatives agreed to arbitrate or to do so under AAA rules, much less clear and unmistakable evidence that the Estate Representatives, as non-contracting parties, authorized an arbitrator to decide those gateway matters. See, e.g., Elgohary v. Herrera , 405 S.W.3d 785, 791–92 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (applying Roe and concluding that agreement to arbitrate under AAA rules was not clear and unmistakable evidence that a non-contracting party agreed to arbitrate under AAA rules).

Whether the arbitration agreement binds the Estate Representatives as non-signatories is for the courts to decide, unless there is "clear and [un]mistakable evidence" that the Estate Representatives agreed the arbitrator would make that decision. See Roe , 318 S.W.3d at 518 (first citing Howsam , 537 U.S. at 84, 123 S.Ct. 588, and then citing First Options , 514 U.S. at 944, 115 S.Ct. 1920 ). On this record, the Prestonwood Entities have not shown that the Estate Representatives "clearly agreed to have the arbitrator [ ] decide (i.e., to arbitrate) the question of arbitrability." See First Options , 514 U.S. at 946, 115 S.Ct. 1920. Because the non-contracting parties (here the Estate Representatives) "did not clearly agree to submit the question of arbitrability to arbitration, the [trial court] was correct in finding that the arbitrability of the dispute was subject to independent review by the courts." See id. at 947, 115 S.Ct. 1920. Accordingly, the trial court correctly concluded the arbitrability of the dispute was subject to its de novo determination. See Roe , 318 S.W.3d at 518 ; see also Jody James Farms , 547 S.W.3d at 633 ("Given the absence of clear and unmistakable evidence that Jody James agreed to arbitrate arbitrability in disputes with non-signatories, compelled arbitration cannot precede a judicial determination that an agreement to arbitrate exists. The trial court was therefore charged with determining whether a valid agreement to arbitrate exists between Jody James and the Agency before any issue may be referred to arbitration.").

The facts of this case are unique because of the Estate Representatives’ status as non-signatories and the AAA's decision to defer the arbitrability determination to the state court. And under these facts, the mere incorporation of the Commercial Rules into the Agreement should not be considered clear and unmistakable evidence of an agreement to arbitrate arbitrability for disputes between the Prestonwood Entities and non-signatory, third parties. See, e.g., Jody James Farms , 547 S.W.3d at 631–33 ; see also Roe , 318 S.W.3d at 518. The majority dismisses my analysis as no more than "an interesting and creative argument" and exaggerates the potential impact on future cases. The majority's conclusion, however, directly conflicts with Texas law. See Jody James Farms , 547 S.W.3d at 631–33. In Jody James Farms , the Texas Supreme Court held "an arbitration agreement's mere incorporation of the AAA rules" does not show "clear intent to arbitrate arbitrability" when the dispute is "between a party to the arbitration agreement and a non-signatory." Id. at 632. Whereas the majority views the Estate Representatives’ non-signatory status as irrelevant, in Jody James Farms the supreme court stated that non-signatory status "is an important distinction" in this analysis:

The involvement of a non-signatory is an important distinction because a party cannot be forced to arbitrate absent a binding agreement to do so. The question is not whether Jody James agreed to arbitrate with someone, but whether a binding arbitration agreement exists between Jody James and the Agency. What might seem like a chicken-and-egg problem is resolved by application of the presumption favoring a judicial determination. A contract that is silent on a matter cannot speak to that matter with unmistakable clarity, so an agreement silent about arbitrating claims against non-signatories does not unmistakably mandate arbitration of arbitrability in such cases.

Id. By dismissing these distinguishing factors as irrelevant, the en banc majority opinion conflicts with binding authority and disregards the presumption favoring judicial determination. Moreover, the opinion deprives non-signatories of the opportunity to have a court determine threshold questions of arbitrability and impermissibly subjects non-signatories to the presumptions generally applied to signatories despite the non-signatories’ unique status under Texas law. For the foregoing reasons, I would overrule the Prestonwood Entities’ first issue.

II. Applicability of the TAA rather than the FAA

Having concluded the trial court did not abuse its discretion by determining gateway issues of arbitrability, I would move on to consider the Prestonwood Entities’ remaining issues in which they argue the FAA, rather than the TAA, applies to the arbitration agreement and requires the trial court to compel arbitration.

In the trial court and on appeal, the Estate Representatives maintain the arbitration agreement is governed by the TAA, rather than the FAA. As a result, the Estate Representatives contend the arbitration provision is not enforceable as to their personal injury claims because they did not agree in writing to arbitrate and neither they nor any party's attorney signed the agreement. See TEX. CIV. PRAC. & REM. CODE § 171.002(a)(3), (c) (the TAA does not apply to a claim for personal injury unless: "(1) each party to the claim, on the advice of counsel, agrees in writing to arbitrate; and (2) the agreement is signed by each party and each party's attorney"). The Prestonwood Entities, in contrast, urge that the FAA controls because the transaction involves interstate commerce and TAA's exclusion of personal injury claims interferes with the enforceability of the arbitration agreement, thus precluding application of the TAA and requiring application of the FAA. We disagree with this notion, and we agree with the Estate Representatives.

To compel arbitration, a party must prove that a valid arbitration agreement exists. Henry , 551 S.W.3d at 115. Whether an agreement is valid and enforceable necessarily requires the court to determine what law governs the agreement. The FAA "preempts state statutes to the extent they are inconsistent with that Act." In re D. Wilson Constr. Co. , 196 S.W.3d 774, 779–80 (Tex. 2006) (orig. proceeding) ; see Royce Homes, L.P. v. Bates , 315 S.W.3d 77, 85 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (FAA preempts all otherwise applicable inconsistent state laws, including any inconsistent provisions of the TAA, under the Supremacy Clause of the United States Constitution). The FAA, however, is not triggered in every case. "The FAA only preempts the TAA if: ‘(1) the agreement is in writing, (2) it involves interstate commerce, (3) it can withstand scrutiny under traditional contract defenses [under state law], and (4) state law affects the enforceability of the agreement.’ " In re D. Wilson Const. Co. , 196 S.W.3d at 780 (quoting In re Nexion Health at Humble, Inc. , 173 S.W.3d 67, 69 (Tex. 2005) (orig. proceeding) (per curiam) (construing 9 U.S.C. § 2 )). Here, if the FAA is triggered it preempts the TAA because the two statutes are inconsistent. See In re Nexion Health at Humble , 173 S.W.3d at 69 ("The TAA interferes with the enforceability of the arbitration agreement by adding an additional requirement—the signature of a party's counsel—to arbitration agreements in personal injury cases.") (citing TEX. CIV. PRAC. & REM. CODE § 171.002(a)(3), (c) ). With these rules in mind, we must first determine if the agreement specifies what law applies.

The arbitration agreements in question reference neither the FAA nor the TAA. They merely note that the leases "shall be governed by and construed under the laws of the State of Texas" and the arbitration "shall be conducted in the county where the [The Tradition] is located." In such cases, a choice-of-law clause will not be construed to select the TAA to the exclusion of the FAA unless the clause "specifically exclude[s] the application of federal law." In re L & L Kempwood Assocs., L.P. , 9 S.W.3d 125, 127–28 (Tex. 1999) (orig. proceeding) (per curiam). Although a general choice-of-law clause such as the one in the Leases does not specifically exclude the application of federal law, application of the FAA is not automatic. See Roehrs v. FSI Holdings, Inc. , 246 S.W.3d 796, 803 (Tex. App.—Dallas 2008, pet. denied) (similar choice-of-law clause did not specifically exclude application of FAA) (citing Dewey v. Wegner , 138 S.W.3d 591, 596 & n. 5 (Tex. App.—Houston [14th Dist.] 2004, no pet.) ). Rather, the FAA must be triggered to apply and, even then, the TAA will also apply to the extent it is consistent with the FAA. See Fredericksburg Care Co., L.P. v. Perez , 461 S.W.3d 513, 517 (Tex. 2015) ("The FAA applies to arbitration clauses in contracts that affect interstate commerce."); see also In re D. Wilson Constr. Co. , 196 S.W.3d at 779–80 (the FAA "preempts state statutes to the extent they are inconsistent with that Act."); see also Royce Homes, L.P. , 315 S.W.3d at 85 (applying FAA where contract involved interstate commerce and recognizing TAA also applies to the extent it is consistent with the FAA). As discussed below, however, I would conclude the FAA is not triggered under the facts of this case because the agreement does not involve interstate commerce and, therefore, the FAA does not apply.

For the FAA to preempt the TAA, the agreement must involve interstate commerce and "state law must refuse to enforce [the] arbitration agreement that the FAA would enforce, either because (1) the TAA has expressly exempted the agreement from coverage, or (2) the TAA has imposed an enforceability requirement not found in the FAA." In re D. Wilson Constr. Co. , 196 S.W.3d at 780 (citations omitted); see Nafta Traders, Inc. v. Quinn , 339 S.W.3d 84, 97–98 (Tex. 2011) ; Fredericksburg Care Co. , 461 S.W.3d at 517 ; Jack B. Anglin Co., Inc. v. Tipps , 842 S.W.2d 266, 269–70 (Tex. 1992) (stating that the FAA "applies to all suits in state and federal court when the dispute concerns a contract evidencing a transaction involving commerce") (citing Perry v. Thomas , 482 U.S. 483, 489, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) ). The parties disagree on whether the agreements involve interstate commerce, and that issue is dispositive here.

The term "commerce" has been broadly defined and includes contracts relating to interstate commerce. In re Gardner Zemke Co. , 978 S.W.2d 624, 626 (Tex. App.—El Paso 1998, orig. proceeding). Under the FAA there is no requirement that the effect on interstate commerce be substantial; however, it requires that commerce be involved or affected in the transaction that is the subject of the arbitration agreement. In re L & L Kempwood Assocs. , 9 S.W.3d at 127 ; In re Merrill Lynch Trust Co. FSB , 123 S.W.3d 549, 553 (Tex. App.—San Antonio 2003, orig. proceeding).

"Interstate commerce" in this context is not limited to the actual shipment of goods across state lines but includes all contracts "relating to" interstate commerce. In re First Merit Bank , 52 S.W.3d 749, 754 (Tex. 2001) (orig. proceeding). Interstate commerce may be shown in a variety of ways, including: (1) location of headquarters in another state; (2) transportation of materials across state lines; (3) manufacture of parts in a different state; (4) billings prepared out of state; and (5) interstate mail and phone calls in support of a contract. Lopez v. Casa Pontiac GMC Buick, Inc. , No. 14-11-00001-CV, 2011 WL 5926683, at *3 (Tex. App.—Houston [14th Dist.] Nov. 29, 2011, no pet.) (mem. op.) (citing Jack B. Anglin , 842 S.W.2d at 270 ).

In support of their contention that the FAA controls, the Prestonwood Entities produced the Campos affidavit. In his affidavit, Campos cited numerous alleged facts to demonstrate that the general operation of The Tradition community involves interstate commerce. Specifically, Campos alleged:

• The Tradition paid "almost $3 million ... to out-of-state vendors of goods and services" from 2014 to 2018;

• Many vendors are "located from coast to coast and border to border," and many in-state vendors sell goods "manufactured, grown, assembled or prepared outside the State of Texas";

• The Prestonwood Entities use "telephone, mail, email and overnight delivery service" to contact "out-of-state vendors, potential residents and contact persons for ... residents";

• The Tradition advertises employment and residency openings on its website and online "job board[s]";

• The Prestonwood Entities use interstate direct mail advertising and online advertising purchased through "third-party vendors";

• Some of The Tradition's residents relocated to the community from out of state, and some of the residents’ "designated family members" are located in other states; and

• Some of the items The Tradition uses in meal preparation "can only be obtained through interstate or foreign commerce."

The Estate Representatives objected to and moved to strike these portions of the Campos affidavit on multiple grounds. The trial court sustained the Estate Representatives’ objections and struck the corresponding affidavit testimony. The remaining evidence in the record does not address the Prestonwood Entities’ purported interstate commerce activities at all, much less activities purportedly conducted to fulfill the leases. Before addressing the applicability of the FAA, we must, therefore, determine whether the trial court abused its discretion by sustaining the objections to Campos's affidavit testimony.

The Prestonwood Entities contend the trial court erred by striking the Campos testimony because the objections were untimely filed just one business day before the hearing, the trial court abused its discretion in ruling on the objections without a hearing on the objections, and the objections were meritless, "scatter-shot complaints." The Prestonwood Entities failed to preserve error for review of this issue, however, because they did not seek a continuance of the hearing or file a response to the objections before the court ruled. See Cunningham v. Anglin , No. 05-12-00039-CV, 2014 WL 3778907, at *3 (Tex. App.—Dallas July 31, 2014, pet. denied) (mem. op.) (although a trial court should not sustain late-filed objections without giving the other party an opportunity to amend, "the other party should ask the trial court for a continuance for time to respond to the objections" and failing to do so waives error on appeal); Webster v. Allstate Ins. Co. , 833 S.W.2d 747, 750 (Tex. App.—Houston [1st Dist.] 1991, no writ.) (same). Further, the record reflects that the Prestonwood Entities did not address the objections in the hearing. At the opening of the hearing, counsel for the Prestonwood Entities indicated that they would address the objections during the hearing. When the Prestonwood Entities argued points addressed in the Campos affidavit during the hearing, counsel for the Estate Representatives reissued the objections. The Prestonwood Entities did not respond or offer any argument in defense of the objections. Consequently, they have failed to preserve error for review. I would overrule their fourth issue concerning the striking of the Campos testimony.

Without the Campos testimony, the remaining record will not support the Prestonwood Entities’ contention that the FAA applies here because there is no evidence that the leases evidence a transaction involving interstate commerce. See 9 U.S.C. § 2. Without such evidence, the Prestonwood Entities’ assertion that the FAA controls the arbitration agreement fails as a matter of law. See Allied-Bruce Terminix Cos., Inc. v. Dobson , 513 U.S. 265, 281, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (the transaction evidenced by the contract must in fact involve interstate commerce); Eastland v. Camp Mystic, Inc. , Nos. 04-08-00675-CV, 04-08-00741-CV, 2009 WL 260523, at *3 (Tex. App.—San Antonio Feb. 4, 2009, pet. denied) (mem. op.) (lease between two Texas entities for real property on which one party operated a summer camp did not evidence a transaction involving interstate commerce).

Moreover, under this record I would conclude interstate commerce is not implicated here. All parties involved in the suit are Texas residents, the leases were signed in Texas, the leases were to be performed in Texas only, the leased premises are located in Texas, the leases are governed by Texas law, and the underlying dispute does not relate in any way to interstate commerce. The agreements, therefore, cannot be governed by the FAA. Accordingly, we conclude the trial court did not abuse its discretion by denying the Prestonwood Entities’ motion to compel arbitration under the FAA and by staying the AAA proceeding. I would overrule their third issue.

III. Enforceability of the Arbitration Agreements under the TAA

As discussed above, by granting the motions to stay arbitration and denying the pleas in abatement, the trial court necessarily determined that the TAA governed the arbitration agreements but those agreements were nonetheless unenforceable under the TAA. The Estate Representatives provided multiple bases in support of their argument that the arbitration agreements were invalid and unenforceable, including the agreements were illusory, unconscionable, and did not comply with signature requirements set out in the Act related to personal injury claims. Because the trial court did not enter findings of fact or conclusions of law to explain its ruling, we must uphold the trial court's decision on any appropriate legal theory urged below. Rockoff , 509 S.W.3d at 531–32 ; Lakeway Homes , 2016 WL 3453559, at *3.

A written agreement to arbitrate is valid and enforceable under the TAA if the agreement is to arbitrate a controversy that: (1) exists at the time of the agreement; or (2) arises between the parties after the date of the agreement. TEX. CIV. PRAC. & REM. CODE § 171.001. The TAA controls the dispute where, as here, the contract does not relate to interstate commerce and was executed between Texas residents in Texas, to be performed in Texas. Therefore, I would hold that the TAA controls this dispute. See, e.g., Chambers v. O'Quinn , 305 S.W.3d 141, 150 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (TAA controlled dispute despite contract's references to both FAA and TAA where contract did not relate to interstate commerce); see also In re Godt , 28 S.W.3d 732, 738–39 (Tex. App.—Corpus Christi–Edinburg 2000, orig. proceeding) (same).

However, when a party's claim is for personal injury, an arbitration agreement is unenforceable as to the personal injury claim unless: "(1) each party to the claim, on the advice of counsel, agrees in writing to arbitrate; and (2) the agreement is signed by each party and each party's attorney." TEX. CIV. PRAC. & REM. CODE § 171.002(a)(3), (c). It is undisputed that the leases at issue here are not signed by the Estate Representatives in their individual capacities, or by the decedents’ attorneys, the Estate Representatives’ attorneys, or the Prestonwood Entities’ attorneys. As a result, the arbitration agreements are unenforceable. Accordingly, we conclude the trial court could reasonably determine the TAA governs the arbitration agreements but renders those agreements unenforceable to the personal injury claims asserted here. See, e.g., In re Godt , 28 S.W.3d at 738–39 (concluding TAA controlled dispute and holding that the arbitration agreement is unenforceable under the TAA because it did not meet the requirements of section 171.002(c) ). I would overrule the Prestonwood Entities’ second issue.

IV. The Original Proceedings

Finally, I would address the Prestonwood Entities’ petitions for writ of mandamus. To be entitled to mandamus relief, a relator must show the trial court has clearly abused its discretion and relator has no adequate appellate remedy. In re Prudential Ins. Co. , 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding). Mandamus is the appropriate procedure by which we may review a trial court's ruling on a motion to compel arbitration under the common law. In re Swift Transp. Co. , 311 S.W.3d 484, 491 (Tex. App.—El Paso 2009, orig. proceeding) ; In re Paris Packaging , 136 S.W.3d 723, 727 & n. 7 (Tex. App.—Texarkana 2004).

The Prestonwood Entities contend the trial court abused its discretion in staying arbitration "because the claims should be arbitrated under Texas common law." However, it is my conclusion that, under the TAA, the trial court did not err in staying the AAA proceedings and denying the pleas in abatement. Therefore, no discussion of whether the order was permissible under the common law is necessary. See Miller v. Brewer , 118 S.W.3d 896, 899 (Tex. App.—Amarillo 2003, no pet.) (discussion of whether order was permissible under the FAA or common law unnecessary because court concluded order was permissible under the TAA). I would deny the petitions for writ of mandamus.

CONCLUSION

For these reasons, and for the second time, I would conclude the trial court did not abuse its discretion by granting the motions to stay arbitration and denying the pleas in abatement.

Because the majority continues to reach the opposite conclusion, I dissent again.