Mid-America Apartments, L.P. D/B/A Colonial Village at Willow Creek Apartments v. Travis Trojan and Cammy Null ( 2021 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-21-00204-CV
___________________________
MID-AMERICA APARTMENTS, L.P. D/B/A COLONIAL VILLAGE AT
WILLOW CREEK APARTMENTS, Appellant
V.
TRAVIS TROJAN AND CAMMY NULL, Appellees
On Appeal from County Court at Law No. 1
Tarrant County, Texas
Trial Court No. 2021-002043-1
Before Sudderth, C.J.; Kerr and Bassel, JJ.
Memorandum Opinion by Justice Bassel
MEMORANDUM OPINION
I. Introduction
In a single issue, Mid-America Apartments, L.P. d/b/a Colonial Village at
Willow Creek Apartments (Landlord) challenges the trial court’s denial of its motion
to compel the claims of Travis Trojan and Cammy Null (Tenants) to arbitration. We
sustain Landlord’s argument that Tenants’ claims fall within the scope of an
arbitration agreement in a Texas Residential Lease Agreement (Lease) that they
executed. We, however, reject Landlord’s contention that an attorney’s fee provision
in the Lease is not unconscionable; that provision conflicts with Tenants’ statutory
rights under the Texas Deceptive Trade Practices Act (DTPA). But we remedy that
flaw by severing the fee provision from the Lease and otherwise upholding the
arbitration scheme of the Lease. Thus, we conclude that the trial court erred by
refusing to compel Tenants’ claims to arbitration. Accordingly, we reverse and
remand.
II. Factual and Procedural Background
Tenants executed the Lease to rent an apartment from Landlord. Claiming that
Landlord had wrongfully entered the apartment after Tenants had defaulted on the
rent due, Tenants sued Landlord. The operative facts alleged in Tenants’ petition are
as follows:
3. On or about March 6, 2020, [Tenants] entered into a Lease
Agreement with [Landlord] for the lease of an apartment located at 2801
2
Airport Freeway in Bedford, Tarrant County, Texas. This agreement
called for a one[-]year lease of the premises in question.
4. Due largely to [the] COVID-19 pandemic quarantine, [Tenant]
Travis Trojan lost his job in December of 2020. [Tenants] were unable
to pay their rent for the month of January[] 2021. [Landlord] notified
[Tenants] that they were in default under their Lease Agreement[] and
that they should vacate the premises. However, [Landlord] did not
legally evict [Tenants] from the premises.
5. On or about February 5, 2021, [Tenant] Trojan returned to the
premises, only to find that [Landlord], through its agents, had removed
virtually every single item in the apartment. Such actions constituted a
breach of the Lease Agreement by [Landlord], as well as a criminal act.
At the time of the wrongful and illegal and criminal actions of
[Landlord], [Tenants] were entitled to lawful occupancy of the premises,
despite the fact that they were delinquent in their rent.
Predicated on these factual allegations and after describing the items of personal
property allegedly removed from the apartment, Tenants pleaded that Landlord had
violated the Texas Property Code in an unspecified manner and had also violated the
DTPA in an unspecified manner.
Landlord answered Tenants’ suit and pleaded an affirmative defense that
Tenants’ “claims [were] barred due to the existence of an enforceable arbitration
agreement.” On the day it filed its answer, Landlord also filed a motion to compel
arbitration and to dismiss all claims.
The motion to compel arbitration quoted the following arbitration provision in
the Lease: “ALL CLAIMS THAT ARISE BETWEEN YOU [(TENANTS)]
AND LANDLORD WILL BE RESOLVED THROUGH BINDING
ARBITRATION IN ACCORDANCE WITH THE FAA AND THE RULES.
3
YOU AND LANDLORD AGREE AND UNDERSTAND THAT WE
MUTUALLY CHOOSE BINDING ARBITRATION INSTEAD OF
LITIGATION TO RESOLVE ALL CLAIMS.” The motion also referenced the
expansive definition of “claim” set out in the Lease, which we will quote in detail
below.
Tenants responded to the motion with two challenges to Landlord’s assertion
that their claims were arbitrable. First, they parsed the Lease’s arbitration provision
and definition of “claim”:
The claims herein relate to [Landlord’s] theft and wrongful disposition
of [Tenants’] personal property. They do not relate to the Lease.
Indeed, the actions in question took place after the [L]ease had been
terminated. They do not relate to the “Property” which is defined in the
[L]ease as the apartment complex. . . . They do not relate to [Tenants’]
apartment or common areas[] but [to] the personal property in the
apartment (a distinction not addressed in this provision in any way).
And it does not involve a relationship resulting from the [L]ease.
Rather, it involved the relationship between [Tenant Trojan] and his
personal property.
Second, Tenants claimed that the arbitration provision was unconscionable because it
provided for a broader recovery of attorney’s fees than that permitted under the
DTPA.
Landlord, in turn, responded to Tenants by arguing that the question of
whether the claims made were arbitrable fell to the arbitrator and not to the trial
court, that Tenants’ claims clearly fell with the arbitration provision and the definition
of “claim,” and that the arbitration provision was not unconscionable.
4
In a one-sentence order, the trial court denied the motion to compel
arbitration. Neither side requested findings of fact and conclusions of law. Landlord
perfected this interlocutory appeal.
III. Standard of Review
We generally review an order denying a motion to compel arbitration under an
abuse-of-discretion standard but break down that review into discrete components.
In re Labatt Food Serv., L.P., 279 S.W.3d 640, 642–43 (Tex. 2009) (orig. proceeding).
“[W]e defer to the trial court’s factual determinations that are supported by evidence
but review the trial court’s legal determinations de novo.” Rachal v. Reitz, 403 S.W.3d
840, 843 (Tex. 2013). Specifically, we review the question of the enforceability of an
arbitration agreement de novo. Id.We follow a three-step process to determine whether a claim is arbitrable: we
assess (1) whether an arbitration provision is present, (2) whether the claim falls
within the ambit of the provision, and (3) whether the party opposing arbitration has
proved a defense to enforcement. Friedman & Feiger, LLP v. Massey, Nos. 02-18-
00401-CV, 02-18-00402-CV, 2019 WL 3269325, at *3 (Tex. App.—Fort Worth July
18, 2019, pet. denied) (mem. op. on reh’g). Should we conclude that each of these
questions favors arbitration, our holding will be that the trial court abused its
discretion by failing to compel the matter to arbitration.1 Id.1
The Lease’s section entitled “Agreement to Arbitrate Disputes” provides that
claims “will be resolved through binding arbitration in accordance with the” Federal
5
When the trial court does not file findings of facts and conclusions of law, we
will uphold the refusal to compel arbitration if any viable legal theory—that was raised
by the parties—supports that decision. APC Home Health Servs., Inc. v. Martinez, 600
S.W.3d 381, 389 (Tex. App.—El Paso 2019, no pet.).
IV. Analysis
A. Tenants’ claims fall within the scope of the Lease’s arbitration
agreement.
In the second argument under its sole issue, Landlord argues that Tenants’
claims fall within the scope of the arbitration agreement.2 We agree and conclude that
the trial court erred to the extent it may have found otherwise. Tenants base their
claims on the relationship created by the Lease. They claim that Landlord’s action
constitutes a breach of the Lease. Clearly, the acts that they alleged were wrongful
related to the Lease. These allegations bring their claims within the sweeping scope of
the arbitration agreement.3
Arbitration Act (FAA). Tenants do not challenge that Act’s application. Thus, we
will review the issues in this appeal through the lens of the FAA. See 9 U.S.C.A. § 2.
2
Other than asserting that the attorney’s fee provision is unconscionable (an
assertion that we discuss below), Tenants make no argument that the arbitration
agreement is invalid.
3
We do not address Landlord’s first argument, which is that the arbitrator
rather than the trial court should have determined the scope of the arbitration
agreement. As noted in Landlord’s brief, we need not address this argument in order
to dispose of this appeal. See Tex. R. App. P. 47.1.
6
1. The principles that we apply to analyze an arbitration
agreement’s scope
Once we determine a valid arbitration agreement exists, we apply a strong
presumption in favor of arbitration. Hawk Steel Indus., Inc. v. Stafford, No. 02-19-
00040-CV, 2019 WL 3819506, at *3–5 (Tex. App.—Fort Worth Aug. 15, 2019, pet.
denied) (mem. op.) (citing J.M. Davidson v. Webster, 128 S.W.3d 223, 227 (Tex. 2003)).
Indeed, “any doubts concerning the scope of arbitrable issues should be resolved in
favor of arbitration, whether the problem at hand is the construction of the contract
language itself or an allegation of waiver, delay, or a like defense to arbitrability.”
Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018) (quoting In re Serv. Corp. Int’l,
85 S.W.3d 171, 174 (Tex. 2002) (orig. proceeding)); see also Neal v. Hardee’s Food Sys.,
Inc., 918 F.2d 34, 37 (5th Cir. 1990). We apply the traditional contract principle to the
interpretation of an arbitration provision, i.e., “[w]e give the language used its plain
grammatical meaning unless it definitely appears that the intention of the parties
would thereby be defeated.” Hawk Steel, 2019 WL 3819506, at *3.
Arbitration provisions often contain sweeping phrases, such as “relating to.”
That phrase appears in the definition of “claim” in the arbitration provision at issue
here. Use of the phrase “relating to” gives the agreement a broad scope:
Arbitration agreements containing phrases such as “relating to” are . . .
interpreted broadly. See, e.g., In re Bank One, N.A., 216 S.W.3d 825[,]
826–27 (Tex. 2007) [(orig. proceeding)] (resolving doubt as to scope of
arbitration agreement covering disputes “arising from or relating in any
way to this Agreement” in favor of coverage); 950 Corbindale, L.P. v. Kotts
Cap[.] Holdings Ltd. P’ship, 316 S.W.3d 191, 196–97 (Tex. App.—
7
Houston [14th Dist.] 2010, no pet.) (holding that broad arbitration
provision defining “disputes” as “any dispute under or related to the
partnership agreement or any document executed pursuant to the
partnership agreement or any of the transactions contemplated by the
partnership agreement shall be subject to arbitration” applied to all
claims); TMI[,] Inc. v. Brooks, 225 S.W.3d 783, 791 n.7 (Tex. App.—
Houston [14th Dist.] 2007, orig. proceeding) (holding that phrase
“arising out of and/or related to” in arbitration agreement is “broad
form in nature, evidencing the parties’ intent to be inclusive rather than
exclusive”).
In re Guggenheim Corp. Funding, LLC, 380 S.W.3d 879, 887–88 (Tex. App.—Houston
[14th Dist.] 2012, orig. proceeding) (per curiam).
The arbitration provision at issue also embraces “any . . . disputes” between the
parties in the definition of “claim.” The word “disputes” “is considered broad” and
of an expansive reach. FD Frontier Drilling, Ltd. v. Didmon, 438 S.W.3d 688, 695 (Tex.
App.—Houston [1st Dist.] 2014, pet. denied).
Turning to how we decide whether the claims at issue fall within the scope of
the arbitration provision, “we focus on the complaint’s factual allegations rather than
the legal causes of action asserted.” In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754
(Tex. 2001) (orig. proceeding). We are generous in deciding whether the necessary
interrelationship exists: “Claims generally are arbitrable when the facts alleged ‘touch
matters’ that are covered by, have a ‘significant relationship’ to, are ‘inextricably
enmeshed’ with, or are ‘factually intertwined’ with the contract that contains the
arbitration provision.” Southwinds Express Constr., LLC v. D.H. Griffin of Tex., Inc., 513
S.W.3d 66, 74 (Tex. App.—Houston [14th Dist.] 2016, no pet.). Stated from a
8
different angle, only “[i]f the facts alleged ‘stand-alone’ and are completely
independent of the contract, [is] the asserted cause of action . . . not subject to
arbitration.” Saks v. Rogers, No. 04-16-00286-CV, 2017 WL 3159712, at *7 (Tex.
App.—San Antonio July 26, 2017, pet. denied) (mem. op.).
2. Why we conclude that Tenants’ claims fall within the scope
of the Lease’s arbitration agreement
Here, the arbitration provision refers “claims” to arbitration, and the definition
of “claim” has an expansive breadth:
“Claim” . . . includes any . . . dispute . . . or controversy of every kind
and nature, whether arising in contract, tort (including, but not limited
to, personal injury, death or damage to property) or otherwise . . .
between You and Landlord arising from or relating to Your Lease . . . ,
the Apartment, the Property, use of Your Apartment and/or common
areas, as well as the relationship resulting from this Lease.[4]
When Tenants’ factual allegations are viewed in the context of the broad scope of the
arbitration agreement, those allegations “touch,” “have a significant relationship to,
are inextricably enmeshed with, or are factually intertwined with” the Lease that
contains the arbitration provision. See Southwinds Express Constr., 513 S.W.3d at 74
(internal quotation marks omitted). Tenants allege that their occupancy of the
apartment was lawful—a status tied to the provisions of the Lease. Tenants’ presence
in the apartment was a result of the existence of the Lease. Landlord’s entry into the
apartment was based on the claim that Tenants breached the Lease. Indeed, Tenants’
4
The Lease has a provision referencing “Excluded Claims” that removes from
the scope of arbitration claims for eviction, possession of the apartment, and those
less than $10,000 in value. Tenants do not argue that their claims are excluded.
9
petition alleges that Landlord’s “actions constituted a breach of the Lease.”
Landlord’s entry certainly related to the apartment.
Tenants attempt to divorce their claims from the reach of the definition of
“claim” by arguing that
[t]he claims herein relate to [Landlord’s] theft and wrongful disposition
of [Tenants’] personal property. They do not relate to the Lease.
Indeed, the actions in question took place after the [L]ease had been
terminated. They do not relate to the “Property” which is defined in the
[L]ease as the apartment complex. They do not relate to [Tenants’]
apartment or common areas[] but instead [to] personal property in the
apartment (a distinction not addressed in this provision in any way).
And it does not involve a relationship resulting from the [L]ease.
Rather, it involved the relationship between [Tenant Trojan] and his
personal property.
This argument lacks any rationale to back up its conclusory statements—an
understandable failing as the statements do not accord with reality. Again, Landlord’s
taking possession of Tenants’ personal property related to the Lease; Tenants’ claim
that their presence was lawful is tied to the Lease, and Tenants themselves claim that
Landlord’s act was a breach of the Lease. The very core of Tenants’ allegations in
their petition is tied to the Lease. Also, given that the definition of “claims” is
inclusive by referencing claims related to the apartment, it is beyond our
understanding how Landlord’s removing items from the apartment is not related to
the apartment, and Tenants offer no explanation how that action is not related other
than it involved personal property. And the statement regarding what the claim
involved—“the relationship between [Tenant Trojan] and his personal property”—is
10
also indecipherable. The suit did not involve only Tenants and their personal
property; it involved the acts of Landlord in relation to Tenants that impacted their
rights in the personal property. The document that defined that relationship is the
Lease, and claims relating to the Lease are subject to arbitration.
B. The Lease’s attorney’s fee provision is unconscionable, but we
may remedy that flaw by severing the provision from the
remainder of the arbitration agreement.5
In its third argument under its sole issue, Landlord argues that the trial court
erred to the extent that its denial of the motion to compel arbitration was based on
Tenants’ assertion that the agreement is unconscionable. Tenants claim that the
arbitration provision of the Lease is unconscionable because it creates exposure for
attorney’s fees should they not prevail in their claim that is broader than the remedy
provision of the DTPA. There is a conflict between the allocation of fees specified in
the Lease and the DTPA. The Lease makes no attempt to follow the statutory
dictates for a contract to waive DTPA remedies: the attorney’s fee section in the
arbitration provision of the Lease is invalid. The remedy to address this failing is not
to invalidate the Lease’s arbitration scheme in total; instead, we sever the offending
fee section from the agreement so that the trial court can order arbitration to proceed.
5
Again, we do not address Landlord’s first argument, which is that this question
is one for the arbitrator rather than the trial court. See Tex. R. App. P. 47.1.
11
1. Why we conclude that the fee provision is unconscionable
The conflict underlying Tenants’ claim of unconscionability results from
Section 24.6 of the Lease, which provides that the prevailing party shall recover
attorney’s fees, and the fact that the DTPA provides for an award of attorney’s fees to
a defendant only if it is predicated on a finding “that an action under this section was
groundless in fact or law or brought in bad faith, or brought for the purpose of
harassment.” See Tex. Bus. & Com. Code Ann. § 17.50(c). Landlord does not argue
that Lease Section 24.6 and Business and Commerce Code Section 17.50(c) can be
reconciled.
Even though the parties’ arbitration agreement is governed by the FAA, we
apply Texas law to determine whether the arbitration agreement is unconscionable.6
6
The Texas Supreme Court has described the interplay of federal and state law
on the question of unconscionability as follows:
Although the Federal Arbitration Act preempts state law that conflicts
with its objectives, Southland Corp. v. Keating, 465 U.S. 1, 10–17, 104 S. Ct.
852, [858–61] (1984), state law remains relevant to declare an arbitration
agreement itself unenforceable on “such grounds as exist in law or in
equity for the revocation of any contract.” 9 U.S.C.[A.] § 2 (the saving
clause). “This saving clause permits agreements to arbitrate to be
invalidated by ‘generally applicable contract defenses, such as fraud,
duress, or unconscionability,’ but not by defenses that apply only to
arbitration or that derive their meaning from the fact that an agreement
to arbitrate is at issue.” AT & T Mobility LLC v. Concepcion, [563 U.S.
333, 339], 131 S. Ct. 1740, 1746 . . . (2011) (quoting D[r.]’s Assoc[s.], Inc. v.
Casarotto, 517 U.S. 681, 687, 116 S. Ct. 1652, [1656] (1996)). In
determining the arbitration agreement’s validity then, a court may not
construe the agreement differently from how it would construe contracts
generally under state law, nor may a court rely on the uniqueness of an
12
We determine an arbitration agreement’s validity by applying standard contract
principles while favoring arbitration and render an agreement to arbitrate invalid only
when it contains substantively unconscionable material terms. Casa Ford, Inc. v.
Armendariz, No. 08-20-00084-CV, 2021 WL 3721718, at *2 (Tex. App.—El Paso
Aug. 23, 2021, no pet. h.) (first citing J.M. Davidson, Inc., 128 S.W.3d at 227–28; and
then citing Wright v. Hernandez, 469 S.W.3d 744, 756 (Tex. App.—El Paso 2015, no
pet.)).
The party asserting that the arbitration agreement is unconscionable bears the
burden of proving the defense; “[t]he burden of proving such a ground—such as
fraud, unconscionability[,] or voidness under public policy—falls on the party
opposing the contract.” Poly-America, 262 S.W.3d at 348. We apply the concept of
substantive unconscionability to ensure that parties are not unfairly deprived of the
ability to “vindicate” statutory rights provided to them simply because they are in an
arbitral forum. In re Olshan Found. Repair Co., 328 S.W.3d 883, 892 (Tex. 2010) (orig.
proceeding).
arbitration agreement as a basis for a state-law holding that enforcement
would be unconscionable. Perry v. Thomas, 482 U.S. 483, 492 [n.9], 107 S.
Ct. 2520, [2527 n.9] (1987). But if the circumstances would render any
contract unconscionable under Texas law, they are appropriate to
invalidate the agreement to arbitrate as well. In re Poly-America[, L.P.],
262 S.W.3d 337, 348 (Tex. 2008) [(orig. proceeding)].
Venture Cotton Coop. v. Freeman, 435 S.W.3d 222, 227 (Tex. 2014).
13
The Texas Supreme Court has dealt with the question of whether a clause in an
arbitration provision at odds with the DTPA is substantively unconscionable. See
Venture Cotton, 435 S.W.3d at 227. The court’s holding relied on the principle noted
above that the purpose of arbitration provisions is to select a forum to resolve a
dispute and not to alter the substantive rights of the parties:
When parties agree to arbitrate a statutory claim, “a party does not
forego the substantive rights afforded by the statute; it only submits to
their resolution in an arbitral, rather than a judicial, forum.” Mitsubishi
Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 628, 105 S. Ct.
3346, [3354] (1985). Thus, in Poly-America, we observed that arbitration
agreements typically function simply as forum-selection clauses rather
than statutory waivers and generalized that “[a]n arbitration agreement
covering statutory claims is valid so long as ‘the arbitration agreement
does not waive substantive rights and remedies of the statute and the
arbitration procedures are fair so that the employee may effectively
vindicate his statutory rights.’” . . . 262 S.W.3d at 352 (quoting In re
Halliburton, 80 S.W.3d [566,] 572 [(Tex. 2002) (orig. proceeding)]).
Id. at 229.
Venture Cotton went on to note that in the context of the DTPA, that statute’s
remedies can be waived. Id. at 230. But for a waiver to be effective, the waiver must
follow the DTPA’s detailed instructions in Section 17.42 on how to effect that waiver.
Id. (citing Tex. Bus. & Com. Code Ann. § 17.42). The arbitration provision in Venture
Cotton lacked the statutorily mandated waiver wording that “must be ‘conspicuous and
in bold-face type of at least 10 points in size,’ identified by a specific heading
indicating the waiver, and include language substantially similar to the form the statute
provides.” Id. (citing and quoting Tex. Bus. & Com. Code Ann. § 17.42(c)(1), (2), (3)).
14
Thus, the provision of the arbitration agreement in Venture Cotton attempting to
modify the DTPA remedies was contrary to public policy and was invalid. Id.; see also
21st Mortg. Corp. v. Moore, No. 11-17-00167-CV, 2019 WL 150953, at *7–8 (Tex.
App.—Eastland Jan. 10, 2019, no pet.) (mem. op.) (applying Venture Cotton to hold
that arbitration agreement’s fees provision altering DTPA fee award scheme without
required waiver language was unconscionable).
Here, neither Section 24.6 of the Lease dealing with attorney’s fees nor any
other provision in the arbitration agreement meets the statutory standards to waive a
remedy under the DTPA. Nor does the Landlord cite us to any provision that
properly effects a waiver. Thus, applying the principle of Venture Cotton, we conclude
that Section 24.6, to the extent that it impacts Tenants’ rights under the DTPA, is
contrary to Texas public policy and is invalid.
Landlord attempts to rely on a different holding in Venture Cotton to save
Section 24.6 from the claim of unconscionability. Landlord cites Venture Cotton’s
holding that an arbitration provision allocating fees in a fashion different than the
general attorney’s fee statute in Chapter 38 of the Civil Practice and Remedies Code is
not unconscionable per se. 435 S.W.3d at 231–33. The supreme court noted that
parties are free to contract for attorney’s fees as they see fit. Id. at 231. The court also
would not engage in speculation about the provision’s effect and refused to conclude
that it was per se unconscionable. Id. at 233. In our view, this holding addresses a
different question than whether an arbitration agreement may waive the fee allocation
15
provision of the DTPA without meeting the DTPA’s requirements for effecting the
waiver. It is that holding—rather than the one referenced by Landlord—that
controls.
2. Why we conclude that the attorney’s fee provision can be
severed from the remainder of the arbitration agreement
without doing violence to the agreement’s essential purpose
But our conclusion that the attorney’s fee provision is unconscionable does not
invalidate the parties’ agreement to arbitrate. The Texas Supreme Court has examined
the circumstances under which it would sever an unconscionable provision from an
arbitration agreement but otherwise allow arbitration to proceed. See id. at 230–31.
As noted above, Venture Cotton invalidated the portion of an arbitration agreement
that modified the parties’ DTPA remedies. Id. at 230. In deciding whether to sever
the offending fee provision from the arbitration agreement or to invalidate the entire
agreement to arbitrate, the court’s decision turned on whether the offending provision
underlay the essential purpose of the arbitration agreement:
In Poly-America[,] we noted that “[a]n illegal or unconscionable provision
of a contract may generally be severed so long as it does not constitute
the essential purpose of the agreement.” . . . 262 S.W.3d at 360. In
determining an agreement’s essential purpose, the issue is “whether or
not [the] parties would have entered into the agreement absent the
unenforceable provisions.” Id. Quite clearly, the arbitration agreement’s
essential purpose here was to provide for a speedy and efficient
resolution of disputes to ensure timely performance under the contract.
The agreement’s collateral effect on statutory rights and remedies
appears to be a peripheral concern to this essential purpose.
Id.
16
Here, Landlord both urged the trial court and urges us to sever the attorney’s
fee provision should it be found unconscionable. Tenants do not argue that severing
the attorney’s fee provision fails to remedy their complaint. Nor do we see any
indication that the parties would never have entered into the arbitration agreement if
it did not contain the fee provision that we conclude is unconscionable. To the
contrary, the Lease provides that if a provision of the arbitration agreement is found
to be invalid, it will not invalidate the remainder of the arbitration agreement.7 And,
logically, Tenants would have been more likely and not less to enter into arbitration
with an arbitration agreement that did not adversely affect their rights under the
DTPA. Thus, we conclude that Section 24.6 of the Lease and its impact on Tenants’
rights under the DTPA can be severed from the arbitration provision of the Lease
without impacting the essential purpose of the arbitration scheme.
V. Conclusion
We sustain Landlord’s sole issue based on its second argument. We first
conclude that Tenants’ claims fall with the scope of the arbitration agreement. Next,
we conclude that the attorney’s fee provision of the arbitration agreement found in
7
The Lease provides,
24.5 Survival. The provisions of this Section 24 will survive termination
of this Lease, as well as voluntary payment in full of [Tenants’] account,
any debt collection proceeding by or between [Tenants] and Landlord,
and any bankruptcy by [Tenants] or Landlord. If any portion of this
Section 24 is deemed invalid or unenforceable for any reason, it will not
invalidate the remaining portions of this Section 24 or the Lease, each of
which will be enforceable regardless of such invalidity.
17
Section 24.6 is unconscionable, but we remedy that flaw by severing the provision
from the remainder of the arbitration agreement. Therefore, we reverse the trial
court’s order denying Landlord’s motion to compel arbitration and remand this case
to the trial court for the court to enter an order in which it compels the parties to
arbitration and in which it stays all proceedings in the trial court until the conclusion
of such arbitration.
/s/ Dabney Bassel
Dabney Bassel
Justice
Delivered: October 28, 2021
18