Oak Creek Homes, LP and 21st Mortgage Corporation v. Joe and Brenda Moore ( 2016 )

Opinion filed November 30, 2016
In The
Eleventh Court of Appeals
__________
No. 11-15-00291-CV
__________
OAK CREEK HOMES, LP AND 21ST MORTGAGE
CORPORATION, Appellants
V.
JOE AND BRENDA MOORE, Appellees
On Appeal from the 259th District Court
Jones County, Texas
Trial Court Cause No. 022737
MEMORANDUM OPINION
This is an interlocutory appeal of the trial court’s orders in which it granted
Joe and Brenda Moore’s motion to rescind the agreed order to arbitrate and in which
it denied Oak Creek Homes, LP’s and 21st Mortgage Corporation’s motions to
compel arbitration under the Federal Arbitration Act (FAA). See 9 U.S.C. §§ 1–16;
TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West 2015). Because we hold that
we do not have jurisdiction to review either order, we dismiss this appeal for want
of jurisdiction.
According to their pleadings, the Moores purchased a manufactured home and
subsequently began to experience problems with the home to the point that it was
“arguably uninhabitable.” The home was manufactured by Oak Creek, and the
Moores financed the home through 21st Mortgage. On April 23, 2012, the Moores
sued both parties and alleged claims for breach of warranty and for violations of the
DTPA.
In the process of purchasing the home, the Moores had signed two arbitration
agreements: one with Nationwide Housing Systems L.P. dba Oak Creek Home
Center and one with 21st Mortgage. After the Moores filed the suit, 21st Mortgage
filed a motion to compel arbitration, and the parties subsequently agreed that the
dispute should be resolved in arbitration. At this point in time, Oak Creek had not
filed a motion to compel arbitration. On October 16, 2012, the trial court entered an
agreed order in which it abated the case and compelled arbitration.
During the arbitration process, the Moores claimed that a conflict of interest
had arisen due to the alleged relationship between the arbitrator and counsel for Oak
Creek. As a result, the arbitrator withdrew. Subsequently, the Moores filed a motion
to rescind the agreed order to arbitrate. On October 27, 2015, the trial court granted
the motion to rescind and scheduled the case for trial for December 15, 2015.
Oak Creek and 21st Mortgage filed a joint notice of appeal in this court in
which they sought to appeal the trial court’s October 27, 2015 order. They filed their
joint notice of appeal on November 16, 2015.
After they filed the joint notice of appeal, Oak Creek filed its first motion to
compel arbitration in the trial court, and 21st Mortgage filed a new motion to compel.
Oak Creek filed its motion to compel on December 3, 2015, and 21st Mortgage filed
its new motion to compel on December 7. Again, after Oak Creek and 21st Mortgage
had filed their joint notice of appeal, the trial court denied the motions to compel on
December 8. The trial court also granted Appellants’ joint motion to stay the lawsuit.
2
After the trial court denied the December motions to compel arbitration,
Appellants, as Relators, filed a petition for writ of mandamus in which they claimed
that the trial court abused its discretion when it denied their motions to compel. They
filed the petition for writ of mandamus on December 30, 2015. Although, in their
November 16, 2015 notice of appeal, the parties sought to appeal only from the
October 27, 2015 order in which the trial court rescinded the agreed order to
arbitrate, in their briefs, the parties challenge the trial court’s December 8, 2015
denial of their motions to compel arbitration, as well as the October 27, 2015 order.
We note that Appellants filed a motion for leave to file an amended notice of appeal
on October 3, 2016, after this case was submitted at oral argument on September 29,
2016. In their proposed amended notice of appeal, Appellants do seek to appeal the
October 27 and the December 8 orders.
On April 11, 2016, the Moores filed a motion to dismiss Appellants’
interlocutory appeal for want of jurisdiction. In their motion, the Moores allege that
this court does not have jurisdiction to hear an interlocutory appeal regarding the
denial of a motion to compel arbitration when the arbitration agreement at issue is
governed by the FAA. They contend that a party can seek an interlocutory appeal
from the ruling on a motion to compel arbitration in state court only when the
arbitration agreement is governed by the Texas General Arbitration Act (TGAA).
The Moores further contend that mandamus relief is the appropriate mechanism by
which Appellants must challenge the trial court’s rulings.
We first note that, in their joint notice of appeal, Appellants stated, “This
appeal is accelerated under Rule 28.1, as it is a statutory interlocutory appeal under
TEX. CIV. PRAC. & REM. CODE § 171.098.” Section 171.098 permits a party to appeal
from a trial court’s order in which it denied an application to compel arbitration when
the arbitration agreement at issue is governed by the TGAA. CIV. PRAC. & REM.
§ 171.098(a)(1) (West 2011); TMI, Inc. v. Brooks, 225 S.W.3d 783, 790–91 (Tex.
3
App.—Houston [14th Dist.] 2007, pet. denied). The arbitration agreements at issue
here are governed by the FAA, not the TGAA. Therefore, Section 171.098 is not
applicable in this case.
Although this appeal is not governed by Section 171.098, the Moores are
incorrect in their assertion that a party cannot seek an interlocutory appeal when the
arbitration agreement at issue is governed by the FAA. Section 51.016 was enacted
in 2009 to allow an appellate court to hear an interlocutory appeal that concerned a
trial court’s order in which it denied a motion to compel arbitration when the FAA
governs the arbitration agreement. CIV. PRAC. & REM. § 51.016; see also 9 U.S.C.
§ 16(a)(1)(B), (C). Therefore, generally, we would have jurisdiction to hear
Appellants’ appeal as to whether the trial court erred when it denied their motions to
compel arbitration. However, Appellants did not attempt to file a notice of appeal
in which they sought to appeal from the trial court’s order in which it denied their
motions to compel until after this case was submitted. When Appellants filed their
initial notice of appeal in this court, they had not yet filed their December 2015
motions to compel in the trial court. In their November 16, 2015 joint notice of
appeal, Appellants stated that they sought to appeal from the trial court’s October 27,
2015 order in which the trial court granted the Moores’ motion to rescind the agreed
order to arbitrate. Appellants did not attempt to file a notice of appeal as to the trial
court’s December 8, 2015 order in which it denied Appellants’ motions to compel
until October 3, 2016, four days after we heard oral arguments in this case.
Rule 25.1(d)(2) of the Texas Rules of Appellate Procedure requires an
appellant to state the date of the judgment or order that appellant is appealing. An
appellant may amend the notice of appeal to correct a defect or an omission at any
time before the appellant files his brief and with leave of the appellate court after
appellant files his brief. TEX. R. APP. P. 25.1(g). However, Rule 25 does not allow
an appellant to amend a notice of appeal in which the appellant challenges one
4
particular interlocutory order to a challenge of an entirely different, separate
interlocutory order. Rainbow Grp., Ltd. v. Wagoner, 219 S.W.3d 485, 492 (Tex.
App.—Austin 2007, no pet.); see also Dewalt v. State, 417 S.W.3d 678, 688–91 &
n.51 (Tex. App.—Austin 2013, pet. ref’d) (dismissing appeal for want of jurisdiction
because appellant attempted to amend notice of appeal to include appeal of
subsequent judgment nunc pro tunc where such notice was not amendable and the
notice was filed too late to invoke jurisdiction over the subsequent judgment);
Perez v. Perez, No. 09-06-521-CV, 2007 WL 5187895, at *6–7 (Tex. App.—
Beaumont May 22, 2008, pet. denied) (mem. op.) (holding appellate court did not
have jurisdiction to consider appellant’s challenge to a post-trial petition to modify
the parent-child relationship where appellant stated in his notice of appeal that he
was only appealing from the final divorce decree); Thomas v. Thomas, No. 14-02-
01286-CV, 2003 WL 1088220, at *2 (Tex. App.—Houston [14th Dist.] Mar. 13,
2003, no pet.) (per curiam) (mem. op.) (dismissing appeal for want of jurisdiction
where appellant indicated in her notice of appeal that she was appealing from a
different order than that which she later claimed to be appealing from and both orders
were final and appealable orders that required notices of appeal).
Here, Appellants waited until after oral argument to file a motion for leave to
file an amended notice of appeal to include the December order. Although
Rule 25.1(g) permits this court to grant an appellant leave to amend the notice of
appeal after an appellant has filed his brief, we decline to grant Appellants leave
under the circumstances of this case where Appellants waited until after the case was
submitted to seek leave to amend their notice of appeal. Appellants’ motion for
leave to file an amended notice of appeal is denied. Therefore, the question of
whether an improperly amended notice of appeal was timely filed and could serve
as a new notice of appeal is not before us. Instead of filing a subsequent notice of
appeal in December 2015 as to the trial court’s order denying their motions to
5
compel, Appellants filed a petition for writ of mandamus in this court on
December 30, 2015.
In order to be entitled to mandamus relief, a party must show that the trial
court committed a clear abuse of discretion and that the party does not have an
adequate remedy by appeal. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992)
(orig. proceeding). Because Appellants had an adequate remedy through an
interlocutory appeal under Section 51.016 by which they could have timely
challenged the trial court’s order in which it denied their motions to compel
arbitration, we have on this day denied Appellants’ petition for writ of mandamus in
Cause No. 11-15-00334-CV. See In re Santander Consumer USA, Inc., 445 S.W.3d
216, 217, 220–23 (Tex. App.—Houston [1st Dist.] 2013, orig. proceeding) (holding
that relator failed to show that it did not have an adequate remedy by appeal where
Section 51.016 provided relator with an avenue to seek immediate review of the trial
court’s order by which it denied relator’s motion to compel—by filing an
interlocutory appeal—even when relator failed to pursue the interlocutory appeal);
see also In re Hart of Tex. Cattle Feeders, LLC, No. 07-16-00194-CV, 2016 WL
3180436, at *2 (Tex. App.—Amarillo June 2, 2016, orig. proceeding) (mem. op.)
(denying petition for writ of mandamus where relator had an adequate remedy under
Section 51.016 to pursue an interlocutory appeal of the trial court’s order in which
it denied its motion to compel arbitration); In re Rent-a-Center, No. 14-15-00450-
CV, 2015 WL 3979089, at *1 (Tex. App.—Houston [14th Dist.] June 30, 2015, orig.
proceeding) (per curiam) (mem. op.) (same); In re Smart Call, LLC, No. 14-13-
00225-CV, 2013 WL 1197900, at *1–2 (Tex. App.—Houston [14th Dist.] Mar. 26,
2013, orig. proceeding) (per curiam) (mem. op.) (same). See generally In re Arroyo,
988 S.W.2d 737, 739 (Tex. 1998) (holding that the amended Rules of Appellate
Procedure provided an adequate appellate remedy that was functionally identical to
6
mandamus review previously used to review an order in which the trial court
sustained a challenge to an affidavit of indigence).
Furthermore, although not raised by either party, we decline to treat
Appellants’ November 16, 2015 notice as a premature notice of appeal of the trial
court’s December 8 order under the same rationale that a party cannot amend a
previously filed notice of appeal to reflect that the party is actually appealing a
different order entirely. To do so would be to allow Appellants to file a notice of
appeal prior to the time that they even filed their December 2015 motions to compel
and prior to the time at which the trial court heard and decided those motions. See
TEX. R. APP. P. 27.1(a); Ganesan v. Reeves, 236 S.W.3d 816, 817 (Tex. App.—Waco
2007, pet. denied) (explaining that Rule 27.1 does not allow a party to file a notice
of appeal as an appellate placeholder in anticipation of an appeal that may occur
somewhere in the indefinite future and that to do so would cause too many
uncertainties in the appellate process and timetable). In fact, we had already received
the clerk’s record in the interlocutory appeal prior to the dates on which Appellants
filed their motions to compel in the trial court. This is not a situation in which the
trial court had made a final ruling on a motion or in a bench trial but had not yet
entered a final and appealable order or judgment.
Because Appellants failed to timely file a notice of appeal as to the trial court’s
December 8, 2015 order in which it denied their motions to compel and because we
have denied Appellants’ motion for leave, Appellants have failed to invoke the
jurisdiction of this court over their interlocutory appeal. Therefore, we hold that we
do not have jurisdiction to entertain Appellants’ challenges to the trial court’s
December 8, 2015 order.
We now turn to whether we have jurisdiction to hear Appellants’ interlocutory
appeal of the trial court’s October 27, 2015 order in which it rescinded the agreed
order to arbitrate and set the case for trial. Section 51.016 provides that a party may
7
appeal an interlocutory order under the same circumstances that an appeal from a
federal district court’s order would be permitted by 9 U.S.C. § 16. CIV. PRAC. &
REM. § 51.016. Section 16 provides, in relevant part, that an appeal may be taken
from an order in which the trial court denies a petition to order arbitration to proceed
or in which the trial court denies an application to compel arbitration in situations
where one party has refused to arbitrate under a written agreement whether the
agreement is domestic or foreign. 9 U.S.C. § 16(a)(1)(B), (C). The Supreme Court
of Texas has explained that we are to “strictly apply statutes granting interlocutory
appeals because they are a narrow exception to the general rule that interlocutory
orders are not immediately appealable.” CMH Homes v. Perez, 340 S.W.3d 444,
447 (Tex. 2011). “In considering the scope of section 16’s jurisdictional grant, we
first determine the nature of the order being appealed.” Id. at 449.
In Atlas Gulf-Coast, Inc. v. Stanford, 299 S.W.3d 356, 358 (Tex. App.—
Houston [14th Dist.] 2009, no pet.), the Fourteenth Court of Appeals was confronted
with whether the court had jurisdiction to review the trial court’s order in which it
granted appellees’ motion to set aside an agreed arbitration order. The TGAA
governed the arbitration agreement in question. Atlas Gulf-Coast, 299 S.W.3d at
358. In its review of the TGAA, the court found that the TGAA allowed for an
interlocutory appeal from an order denying an application to compel arbitration and
that, at a minimum, the appellant was required to have filed a motion to compel
arbitration in order for the appellate court to have jurisdiction over such an appeal.
Id. at 359. Atlas argued that the order in which the trial court set aside the agreed
arbitration order effectively prevented arbitration and, thus, had the same effect as
an order in which a trial court denies a motion to compel arbitration. Id. The
Fourteenth Court disagreed and explained that “Atlas’s interpretation would allow
interlocutory jurisdiction over any decision that had the effect of stopping
arbitration, which is clearly broader than the statute’s mandate and inconsistent with
8
prior case law.” Id. Because Atlas never filed a motion to compel arbitration, the
court dismissed the appeal for want of jurisdiction. Id. at 360.
A similar situation exists here, at least as to Oak Creek. Although the FAA,
and not the TGAA, governs the arbitration agreements at issue in this case, the FAA
similarly allows appeals from orders in which a trial court has denied a petition to
order arbitration or from orders in which a trial court has denied an application to
compel arbitration. See 9 U.S.C. § 16(a)(1)(B), (C). Thus, we agree with the
rationale in Atlas Gulf-Coast, and we hold that, in order to be entitled to an
interlocutory appeal, at a minimum, an appellant is required to have filed in the trial
court a petition, application, or motion in which the party sought to compel
arbitration. See Atlas Gulf-Coast, 299 S.W.3d at 359.
In its October 16, 2012 agreed order, the trial court states that it considered
“Oak Creek Home LP’s Motion to Compel Arbitration.” However, the record before
us reveals that no such motion was before the trial court at that time. Oak Creek
acknowledged that it never filed a motion to compel prior to the agreed order to
arbitrate because the Moores agreed to go to arbitration and, thus, it was unnecessary
for Oak Creek to do so. Oak Creek did claim in their original answer that the sales
contract for the manufactured home mandated that any and all disputes that arose
out of or related to the home were subject to binding arbitration. However, Oak
Creek did not file a motion to compel arbitration until December 3, 2015, five weeks
after the trial court rescinded the agreed order to arbitrate and over two weeks after
Appellants filed their November 2015 notice of appeal in this court. In its motion to
compel, Oak Creek expressly stated, “This Motion to Compel Arbitration is being
filed to cure any possible jurisdictional issues related to the arbitration of this matter
and the pending interlocutory appeal of this Court’s October 27, 2015 Order.” Oak
Creek also acknowledged in its motion to compel that the trial court had not yet
9
formally ruled on a motion to compel arbitration, including the motion to compel
filed by 21st Mortgage in 2012.
Accordingly, Oak Creek could not bring an interlocutory appeal until after it
filed its motion to compel arbitration on December 3, 2015, and after the trial court
ruled on its motion on December 8, 2015. See, e.g., Ground Force Constr., LLC v.
Coastline Homes, LLC, No. 14-13-00649-CV, 2014 WL 2158160, at *3 (Tex.
App.—Houston [14th Dist.] May 22, 2014, no pet.) (mem. op.) (declining to
interpret an order in which the trial court denied summary judgment as an order in
which the trial court denied the motion to compel and holding that appellant could
not bring an interlocutory appeal until after the trial court signed an order by which
it denied appellant’s motion to compel). Because Oak Creek did not file a motion
to compel arbitration until after the trial court entered its October 27, 2015 order, we
hold that we do not have jurisdiction to review the October 27, 2015 order as it
pertains to Oak Creek.
We must now determine whether we have jurisdiction to review the
October 27, 2015 order as it pertains to 21st Mortgage. 21st Mortgage did file a
motion to compel arbitration prior to the trial court’s order in which it rescinded the
agreed order to arbitrate, as well as after the trial court entered its October 27, 2015
order. 21st Mortgage filed its first motion to compel on October 9, 2012, and its
second motion to compel on December 7, 2015.
If we are to strictly apply Section 51.016 and the express language of the FAA,
we do not have jurisdiction to review the October 27, 2015 order as it applies to 21st
Mortgage. In the October 27, 2015 order, the trial court granted the Moores’ motion
to rescind the order to arbitrate and set the case for trial for December 15, 2015.
Although it could be argued that the effect of the trial court’s October 27, 2015 order
was to order the parties to proceed to trial instead of arbitration, the order does not
expressly deny 21st Mortgage’s motion to compel arbitration that it filed in October
10
2012. See CMH Homes, 340 S.W.3d at 449 (“While it may be argued that by
appointing an arbitrator the order implicitly compels the parties to arbitration, the
order does not explicitly grant Perez’s motion to compel and does not explicitly
compel the parties to arbitrate their dispute.”). In addition, neither during the hearing
on the motion to rescind, nor in their responses to the motion to rescind, did
Appellants argue that the trial court should grant the 2012 motion to compel.
Instead, Appellants asked the trial court to deny the Moores’ motion to rescind the
agreed order.
When courts of appeals have strictly construed Section 51.016, they have held
that parties are not permitted to seek an interlocutory appeal of an order by which a
trial court indirectly prevents arbitration but in which it does not specifically deny a
motion to compel arbitration. For example, the Eighth Court of Appeals has held
that it did not have jurisdiction to review a trial court’s order in which it deferred
ruling on a motion to compel arbitration even when the trial court permitted
discovery. See ReadyOne Indus., Inc. v. Guillen-Chavez, 394 S.W.3d 724, 726–28
(Tex. App.—El Paso 2012, no pet.) (dismissing the appeal for want of jurisdiction
where appellant sought to appeal from an order in which the trial court permitted
arbitration-related discovery and expressly postponed its ruling on the motion to
compel until after such discovery was completed). The First Court has held that it
did not have jurisdiction where, in the order from which the appellant appealed, the
trial court denied the appellant’s request to stay or to abate the proceedings in the
trial court until after arbitration was completed. Walker Sand, Inc. v. Baytown
Asphalt Materials, Ltd., 95 S.W.3d 511, 515–16 (Tex. App.—Houston [1st Dist.]
2002, no pet.). The court explained that the appellant’s motion that the trial court
denied was not an application to compel arbitration but was instead a request to stay
the trial court’s proceedings. Id.
11
Several courts of appeals have also determined that they did not have
jurisdiction to review the denial of a motion to reconsider a trial court’s order in
which it denied a motion to compel arbitration. See Nazareth Hall Nursing Ctr. v.
Castro, 374 S.W.3d 590, 591–92 (Tex. App.—El Paso 2012, no pet.) (relying on
cases from the Fourth, Sixth, and Ninth Courts of Appeals to support its holding that
it did not have jurisdiction over the appellant’s appeal of a motion to reconsider
where the appellant did not timely pursue an interlocutory appeal from the actual
order in which the trial court denied the motion to compel arbitration).
In Beldon Roofing Company, the Thirteenth Court was called upon to
determine whether the appellant’s notice of appeal was untimely. The trial court had
entered an order the year prior to the time that the appellant filed its notice of appeal.
In that order, the trial court dismissed claims brought by the appellant against the
appellee, and it also realigned the parties. Beldon Roofing Co. v. Sunchase IV
Homeowners’ Ass’n, Inc., 494 S.W.3d 231, 235–36 (Tex. App.—Corpus Christi
2015, no pet.). The appellee argued that the effect of the prior order was to deny
arbitration under the FAA and, thus, that the appellant’s notice of appeal was
untimely filed. Id. at 236–37. The court explained that to accept the appellee’s
argument “would permit interlocutory jurisdiction over any order denying a motion
that had the effect of delaying or preventing arbitration regardless of the relief
actually requested in the motion.” Id. at 237.
The same can be said here. The trial court heard and ruled on the Moores’
2015 motion to rescind the agreed order to arbitrate, not 21st Mortgage’s 2012
motion to compel arbitration. While the two motions could have been heard
together, they were not heard together, nor did 21st Mortgage ever urge the trial
court to rule on its motion. Although Appellants argued that the arbitration
agreements were binding and enforceable, the specific relief that Appellants
requested in their responses to the Moores’ motion was not for the trial court to grant
12
a motion to compel but was for the trial court to deny the Moores’ motion to rescind
the agreed order. Because we are to strictly construe statutes authorizing
interlocutory appeals and because the trial court did not expressly consider and deny
21st Mortgage’s 2012 motion to compel in its 2015 order granting the Moores’
motion to rescind, we hold that we do not have jurisdiction under Section 51.016 to
review the trial court’s October 27, 2015 order.
Furthermore, we note that we cannot review this order as part of Appellants’
petition for writ of mandamus in Cause No. 11-15-00334-CV because Appellants
did not challenge the October 27, 2015 order in that proceeding. Appellants
challenged only the denial of their December 2015 motions to compel.
Accordingly, we dismiss this appeal for want of jurisdiction.
JIM R. WRIGHT
CHIEF JUSTICE
November 30, 2016
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
13