Dallas Appeals Court Holds Arbitration Agreement Not Altered

The Dallas Court of Appeals has held that a letter which sought clarification regarding whether the other party to a contract wished to proceed with arbitration as provided for in the contract or whether a claim should be filed before a state district court did not alter the arbitration agreement.

In Minkoff v. Hicks, No. 05-10-00606-CV (Tex. App. — Dallas, Oct. 21, 2010), Peter Minkoff entered into a contract to build a residence for Jeffrey Hicks and Lisa Winston (appellees) in July 2002. The contract contained a provision which required arbitration for any dispute arising under the contract and provided the parties with seven days from the notice of any dispute to select an arbitrator. On December 11, 2009, appellees informed Minkoff in writing that they were terminating the contract. On January 20, 2010, Minkoff replied with a letter stating that he tendered performance and the parties owed him $97,000. Minkoff additionally stated that he would settle for $75,000, but also provided the appellees with the option to select an arbitrator in lieu of his settlement offer. Appellees responded by arguing that Minkoff waived his right to seek arbitration by failing to select an arbitrator within seven days of their December 11^th letter. Minkoff sent another letter to appellees on January 28^th which stated that he intended to pursue his claim and asking that appellees notify him whether they wished to proceed with arbitration or for him to file a claim before a state district court. Appellees did not respond to Minkoff’s letter and instead brought suit against him in Dallas County Court seeking declaratory relief and damages. Minkoff responded and sought an order to compel arbitration. The county court requested a briefing regarding whether Minkoff’s January 28^th letter “constituted an offer such that there was a novation or modification [of] the contract when appellees sued in state court.” Appellees argued that the January 28^th letter constituted an offer to modify the contract which they accepted by filing in county court. The court agreed and refused Minkoff’s motion to compel arbitration. Minkoff appealed.

On appeal, the Dallas Appeals Court held that Minkoff’s letter did not alter the arbitration agreement and that the county court erred by denying his motion to compel arbitration. First, the Appeals Court determined that the letter did not constitute an offer but was a request for information from appellees. Minkoff’s letter did not suggest any intention to waive any of his rights under the contract nor was there any clear terms of an offer. Second, even assuming an offer, it was not clear to the court how appellees filing a lawsuit constituted an acceptance as the letter clearly intimated that Minkoff himself would pursue his asserted rights by either seeking arbitration or bringing suit in a district court, rather than a county court. Finally, the Dallas court held that no a “meeting of the minds” occurred.

Because appellees failed to meet their evidentiary burden to establish the arbitration agreement was modified, the Dallas Court of Appeals reversed and remanded the case.

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