Door Knobs, Factual Disputes & Arbitration

This morning, the Texas Supreme Court issued an opinion compelling arbitration of certain claims asserted by the Brownsville Independent School District against an air conditioning company relating to the construction of a school. The Court starts its opinion by clarifying the relationship between the FAA and the TAA in Texas courts. So long as state law does not conflict with the FAA to the extent state law would preclude arbitration (such as in the personal injury context), the FAA does not pre-empt the TAA; rather the two statutes concurrently apply. Thus, in many cases either mandamus or interlocutory appeal could be an appropriate means to immediately challenge a trial court refusal to compel arbitration.

That procedural discussion out of the way, the Court makes short shrift of the District’s arguments that no arbitration agreements existed in the construction contracts. The Court was also not persuaded by a BISD argument that a separate contractual provision rendered the agreement to arbitrate ambiguous. The contract contained the following provision:

Except as otherwise provided in this Contract, any dispute concerning a question of fact arising out of or related to the Contract, which is not disposed of by agreement shall be decided by BISD. . . . The decision of BISD shall be final and conclusive

According to the District, this clause, read along with the arbitration clause, rendered the arbitration clause ambiguous, but the Court did not buy it (even though the Court of Appeals had in fact been persuaded). According to the Court, the unusual clause would only apply to disputes like “were the doorknobs solid brass or only brass plate,” and not to the kind of dispute the contractor wanted to arbitrate.

In Re D. Wilson Construction Company, et al., ___ S.W.3d ___ (Tex. 2006) (Cause No. 05-0326).

Technorati Tags:
arbitration, ADR, Texas Supreme Court, law