Ellis v. Schlimmer, No. 10-0243 (Tex. Apr. 1, 2011) (per curiam)(FAA vs TAA, preemption issue)
In this case, the court of appeals dismissed an interlocutory appeal of the trial court’s order denying the
defendants’ motion to compel arbitration for want of jurisdiction because the movants failed to establish
that the Federal Arbitration Act did not apply. ___ S.W.3d ___, ___. We reverse and remand to the
court of appeals to consider the appeal’s merits. * * *
In this case, while Ellis and Pacesetter did not specifically invoke the TAA in their motion to compel
arbitration, their counsel specifically referred to it in the hearing on the motion. The burden was on the
Schlimmers to show that some Texas state law or statutory requirement would prevent enforcement of
the arbitration agreement under the TAA so that the FAA would preempt the Texas act. They did not
raise any such defenses, nor did they question the agreement’s existence. Instead, they argued merely
that the agreement did not cover the dispute, and that Ellis and Pacesetter had waived the right to
arbitration or were estopped from enforcing it.
The court of appeals’ decision erroneously placed the burden to establish the absence of any defenses
to arbitration on Ellis and Pacesetter. Under these circumstances, its decision is contrary to the strong
policy favoring arbitration. Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56 (Tex. 2008). Accordingly,
under Rule 59.1 of the Texas Rules of Appellate Procedure, without hearing oral argument, we reverse
the court of appeals’ judgment and remand to that court to allow it to consider the appeal’s merits.
VERONICA ELLIS AND PACESETTER BUILDERS, INC. D/B/A COLDWELL BANKER PACESETTER STEEL REALTORS v. DR.
RON AND TANA SCHLIMMER; from Nueces County; 13th district (13-09-00426-CV, ___ SW3d ___, 01-28-10)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing oral argument, the
Court reverses the court of appeals' judgment and remands the case to that court.
Per Curiam Opinion [4-page opinion in pdf]
View Electronic Briefs in Case No. 10-0243 ELLIS v. DR. RON AND TANA SCHLIMMER
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Ellis v. Schlimmer (Tex. 2011)(per curiam opinion)
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PER CURIAM
In this case, the court of appeals dismissed an interlocutory appeal of the trial court’s order denying the
defendants’ motion to compel arbitration for want of jurisdiction because the movants failed to establish that the
Federal Arbitration Act did not apply. ___ S.W.3d ___, ___. We reverse and remand to the court of appeals to
consider the appeal’s merits.1
In 2006, Ron and Tana Schlimmer purchased a house in Corpus Christi from Veronica Ellis. Coldwell
Banker Pacesetter Steel Realtors (“Pacesetter”) was the broker in the transaction and Ellis, who worked for
Pacesetter, was the home’s listing agent. After purchasing the home, the Schlimmers allegedly discovered
various undisclosed defects. The Schlimmers sued Pacesetter and Ellis, alleging claims for fraud, breach of
contract, negligent misrepresentation, and violations of the Deceptive Trade Practices Act. Ellis filed a third-party
complaint against the builder from whom she purchased the house originally. Ellis’s third-party claim was later
severed and the Schlimmers’ lawsuit was set for trial. Ellis and Pacesetter initiated discovery and proceeded with
the lawsuit until five months before the trial setting, when their lawyers purportedly discovered a mandatory
arbitration clause in the Schlimmers’ real estate contract with Ellis. The clause provided:
Should there be any disagreement between seller and buyer that can not be resolved through mediation, both
buyer and seller agree to submit this disagreement to binding arbitration with a mutually agreeable arbitrator.
Pacesetter and Ellis then filed a motion to abate and compel arbitration. The Schlimmers claimed waiver and
estoppel and argued that the language of the agreement did not cover the dispute between the parties.
The trial court denied the motion, and Pacesetter and Ellis filed an interlocutory appeal under section
171.098(a)(1) of the Civil Practice and Remedies Code, a provision of the Texas Arbitration Act. Although the
Schlimmers did not contest its jurisdiction, the court of appeals sua sponte dismissed the interlocutory appeal.
According to the court, Pacesetter and Ellis’s motion to compel failed to invoke either the TAA or the FAA. ___ S.
W.3d at ___. It reasoned that since the trial court did not decide which statute applied and an interlocutory
appeal is only authorized under the TAA, there was no evidence an appeal was authorized. Id. at ___.
Consequently, the court dismissed the appeal for want of jurisdiction. Id. at ___.
A party attempting to compel arbitration must first establish the existence of a valid arbitration agreement. J.
M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); Tex. Civ. Prac. & Rem. Code § 171.021(a).
Once the party seeking arbitration does so, a strong presumption favoring arbitration arises, and the burden
shifts to the party opposing arbitration to raise an affirmative defense to the agreement’s enforcement. Id.
Further, courts should resolve any doubts as to the agreement’s scope, waiver, and other issues unrelated to its
validity in favor of arbitration. See In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008). If a trial court
denies a motion to compel arbitration, appellate review may be available under both the TAA and the FAA so
long as the TAA is not preempted. In re D.R. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006). The TAA is
preempted only when it or other state law would not allow enforcement of an arbitration agreement that the FAA
would enforce. Id. at 779-80.
In this case, while Ellis and Pacesetter did not specifically invoke the TAA in their motion to compel
arbitration, their counsel specifically referred to it in the hearing on the motion. The burden was on the
Schlimmers to show that some Texas state law or statutory requirement would prevent enforcement of the
arbitration agreement under the TAA so that the FAA would preempt the Texas act. They did not raise any such
defenses, nor did they question the agreement’s existence. Instead, they argued merely that the agreement did
not cover the dispute, and that Ellis and Pacesetter had waived the right to arbitration or were estopped from
enforcing it.
The court of appeals’ decision erroneously placed the burden to establish the absence of any defenses to
arbitration on Ellis and Pacesetter. Under these circumstances, its decision is contrary to the strong policy
favoring arbitration. Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56 (Tex. 2008). Accordingly, under Rule 59.1 of
the Texas Rules of Appellate Procedure, without hearing oral argument, we reverse the court of appeals’
judgment and remand to that court to allow it to consider the appeal’s merits.
OPINION DELIVERED: April 1, 2011
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1 We have jurisdiction over this interlocutory appeal because we are called upon to decide whether the court of appeals correctly
determined that it lacked jurisdiction. See Klein v. Hernandez, 315 S.W.3d 1, 3 (Tex. 2010).
Also see: Texas Causes of Action | 2011 Texas Supreme Court Opinions | 2011 Tex Sup Ct Per Curiams