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Houston Aeronautical Heritage Society, Inc. v. Graves

Court of Appeals of Texas, First District

December 10, 2013


On Appeal from the 334th District Court Harris County, Texas Trial Court Case No. 2011-63921

Panel consists of Justices Jennings, Sharp, and Brown.


Harvey Brown Justice

This appeal involves a dispute over the governance of the Houston Aeronautical Heritage Society, Inc. (HAHS), a Texas non-profit corporation formed for the purpose of the preservation and restoration of the City of Houston's original air terminal at Hobby Airport. The trial court rendered judgment against HAHS and in favor of some of its corporate directors—John Graves, Harper Trammell, Oscar Nipper, Marjorie Evans, A.J. High, and Bernard Morris (collectively, the "Graves group")—and the administrator for its civil air museum—Megan Lickliter-Mundon. In four issues, HAHS contends that the trial court erred in (1) denying a motion to compel arbitration, (2) dismissing HAHS's declaratory-judgment claim, (3) granting a traditional summary judgment for the Graves group on its declaratory-judgment counterclaim, and (4) granting a no-evidence summary judgment for the Graves group on HAHS's tort and contract claims. We affirm in part, reverse in part, and remand.


The operation and governance of HAHS through its Board of Directors has been the subject of multiple lawsuits and appellate proceedings.[1] At the time the underlying lawsuit commenced, the HAHS Board had nine directors: George Coats, Kristen Coats, Gary Evans, A.J. High, Oscar Nipper, Harper Trammell, Marjorie Evans, John Graves, and Bernard Morris. These nine directors splintered into two groups competing for control of HAHS. The first group included George Coats, Kristen Coats, and Gary Evans. The second group included the six members of the Graves group.

George and Kristen Coats and Gary Evans have a long history with HAHS. George Coats founded HAHS and volunteered on a full-time basis as president and chairman of the HAHS Board for thirteen years. He performed pro-bono legal services, including "advocacy, negotiation, drafting contracts, dispute resolution, litigation, [and] risk management, " and secured funding for the organization through his personal and professional relationships. Kristen Coats, who is married to George Coats, served as a director and the HAHS treasurer. She also maintained the HAHS website and coordinated corporate fundraisers. Gary Evans co-founded HAHS, served as its vice president, and volunteered as a pilot and pro-bono legal counsel. Collectively, the Coatses and Evans contributed more than $100, 000 in services to HAHS.

The Coatses and Evans attribute the split within the HAHS Board to John Graves. Graves, a director and the HAHS museum collections manager, "began a correspondence course with a university in the United Kingdom with the stated goal of obtaining a master's degree in museum studies." Graves received permission to "interview the [HAHS] board members as part of his research for his master's thesis" on the condition that he would make his thesis available to HAHS when complete. As alleged by the Coatses and Evans, the HAHS Board "descended into acrimony and chaos" almost immediately after Graves began his interviews. Graves's thesis was critical of HAHS's governance. Believing the thesis posed an "imminent threat of harm" to HAHS, Evans acted unilaterally to terminate Graves from his positions as director and collections manager.

The Lawsuit

In October 2011, the Graves group called a special board meeting for the purpose of nominating, electing, and installing new officers and directors. All six directors in the Graves group signed the special meeting notice. The Coatses and Evans, who were aware that they might be ousted at the special meeting, filed a lawsuit seeking to enjoin the special meeting; to have the trial court declare the rights and responsibilities of the current HAHS officers and directors and the terms of HAHS's governance; and to recover damages against the Graves group under a variety of tort and contract theories, including breach of fiduciary duty, breach of contract, tortious interference, conspiracy, defamation, and business disparagement. The lawsuit was filed in HAHS's name only and not by any of the directors in his or her individual capacity.

The Graves group answered the lawsuit and filed a declaratory-judgment counterclaim seeking determinations that (1) the bylaws attached to its counterclaim were the "current applicable and effective bylaws that govern the affairs of HAHS"; (2) the members of the Graves group were all current members of the HAHS Board; and (3) the October 2011 special meeting was a validly called meeting at which officer and director elections could take place.

On the parties' agreement, the trial court enjoined the October 2011 special meeting pending trial on the merits. HAHS then moved to compel arbitration under its bylaws. The trial court denied the motion.

After some time for discovery, the Graves group moved for a traditional summary judgment on its declaratory-judgment counterclaim and for a no-evidence summary judgment on HAHS's contract and tort claims. The trial court granted the Graves group's summary judgment motions and rendered a final judgment declaring that (1) HAHS take nothing on any of its claims against the Graves group; (2) the bylaws presented by the Graves group were the "current, applicable, and effective bylaws that govern[ed] the affairs of [HAHS]"; (3) all of the members of the Graves group were members of the HAHS Board; and (4) the October 2011 special meeting was a meeting authorized by HAHS's bylaws at which officer and director elections could have taken place. The final judgment also dismissed HAHS's declaratory-judgment claim and dissolved the agreed temporary injunction.

What occurred after the trial court rendered its judgment is, in pertinent part, undisputed; the parties' disagreement is over the legal consequence of the post-judgment events. Two separate special meetings were called with two different results. First, the Graves group noticed a special directors meeting for April 20, 2012, at which a majority of the Board voted to remove the Coatses and Evans from their officer and director positions, to elect new officers, and to amend the bylaws. Then, Evans noticed a special members meeting for the following day. The purported result of the second meeting on April 21 was the election of a new board consisting of Stephen Holmes, Debbie Holmes, Clinton Holmes, Dana Atkinson, Gregory Evans, Christopher Gilbert, Amy Rogers, Tyler Hall, and Jerry Smith. We refer to the group purporting to be directors of HAHS as a result of the April 21 special members meeting as the "Holmes group."

The Graves group challenged the validity of the April 21 meeting and sought injunctive relief to enforce the trial court's judgment. The trial court granted the relief and entered an order affirming that the special meeting noticed in October 2011 "was a validly noticed special meeting of the HAHS Board of Directors during which officer and director elections could have taken place" and ruling that the special meeting held on April 20 was consistent with the final judgment. The trial court enjoined "Messrs. Coats and Evans, and persons acting at the direction or in concert with them, including Steve Holmes, Debbie Holmes, Jerry Smith, Dana Atkinson, Greg Evans, Penny Evans, and Clinton Holmes . . . and each of their respective agents, employees, servants, and attorneys . . . from undertaking any actions based on the purported election of directors at the April 21 [ ] special meeting of members."

Stephen Holmes and Dana Atkinson―purportedly as directors elected at the April 21 special meeting―appealed the trial court's final judgment on HAHS's behalf.[2] The appeal is brought in HAHS's name only and not on behalf of any current or former director in his or her individual capacity.

Motion to Compel Arbitration

In its first issue, the Holmes group contends that the trial court erred in denying HAHS's motion to compel arbitration. The Graves group does not dispute that the HAHS bylaws contained a valid arbitration clause, [3] but responds that HAHS's claims fell outside the scope of that clause. The Graves group alternatively argues that HAHS waived its right to arbitrate by substantially invoking the litigation process. We do not reach the waiver issue because we agree that HAHS's claims were beyond the arbitration clause's scope.

A. Legal standards

It is not enough for a party demanding arbitration to show that a valid arbitration clause exists; the party must also show that its claims fall within the scope of the clause. Rachal v. Reitz, 403 S.W.3d 840, 843 (Tex. 2013); In re AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex. 2005) (per curiam). Whether an arbitration clause encompasses a claim is a matter of contract interpretation and a question of law for the court. Kline v. O'Quinn, 874 S.W.2d 776, 782 (Tex. App.—Houston [14th Dist.] 1994, writ denied). In making this legal determination, we focus on the movant's factual allegations rather than the causes of action asserted. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754 (Tex. 2001) (orig. proceeding); Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 271 (Tex. 1992). Any doubts as to which claims fall within the scope of an arbitration clause must be resolved in favor of arbitration. Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995).

B. Denial of motion to compel arbitration was not abuse of discretion

Given the parties' agreement as to the existence of a valid arbitration clause, the only matter presented for our review is whether the arbitration clause covers the claims asserted in this litigation. The arbitration clause, which appears in that ...

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