United States District Court, E.D. Texas, Sherman Division
XOME HOLDINGS LLC f/k/a SOLUTIONSTAR HOLDINGS LLC, A DELAWARE LLMITED LIABILITY COMPANY
PETER DERBONNE and ERIC SWENSON
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE.
before the Court is Xome Holdings LLC's Motion to Compel
Arbitration (Dkt. #24). The Court, having considered the
relevant pleadings, finds the motion is granted.
Holdings LLC (“Xome”) is a Delaware limited
liability company headquartered in Lewisville, Texas, and has
offices in four other states and in India. Xome provides
technology and data enhanced solutions to homebuyers, home
sellers, real estate agents, and mortgage origination and
servicing companies. Peter Derbonne and Eric Swenson
(“Defendants”) are former executives of Title365
Company (“Title365”), a national title insurance
and settlement services provider. On January 1, 2015, Xome
acquired Title365's parent company, Experience 1, Inc.
Following this acquisition, Title365 became a wholly owned
subsidiary of Xome.
up to this acquisition, Defendants negotiated their
employment agreements with Xome over the course of a month.
Defendants and their counsel exchanged at least four drafts
of their employment agreements with Xome until the parties
executed a final agreement on November 21, 2014, effective
January 1, 2015. In the General section of the employment
agreement, the parties agreed to an arbitration clause. The
relevant portion provides:
[T]he parties agree that any and all disputes that may arise
in connection with, arising out of or relating to this
Agreement, or any dispute that relates in any way, in whole
or in part, to [Defendants'] services to the Company, the
termination of such services or any other dispute by and
between the parties hereto arising from such relationship
shall be submitted to binding arbitration in Dallas, Texas
according to the National Employment Dispute Resolution Rules
and procedures of the American Arbitration Association.
(Dkt. #24, Exhibit 1 to Exhibit B at p. 13).
11, 2016, Defendants filed a complaint against Xome in the
California Superior Court for the County of Orange (the
“California Case”) for breach of contract,
failure to pay wages, wrongful termination, and other claims
related to their employment. On July 22, 2016, Xome filed a
Complaint to Compel Arbitration Pursuant to Respondents'
Arbitration Agreements (Dkt. #1). The only named Plaintiff is
the Delaware LLC Xome and the only named defendants are
California citizens Peter Derbonne and Eric
Swenson. On August 1, 2016, Xome filed an ex parte
application to stay the California Case. On August 3, 2016,
the California Superior Court for the County of Orange
granted the stay until this Court rules on the motion to
compel arbitration (Dkt. #7, Exhibit I). On September 13,
2016, Defendants filed a Motion to Dismiss Petition to Compel
Arbitration (Dkt. #7), challenging this Court's
jurisdiction. On December 29, 2016, the Magistrate Judge
issued a Report and Recommendation denying the motion to
dismiss (Dkt. #21). On January 27, 2017, the Court issued a
Memorandum Adopting the Report and Recommendation (Dkt. #22).
On March 24, 2017, Xome filed this Motion to Compel
Arbitration (Dkt. #24). On April 7, 2017, Defendants filed a
response (Dkt. #25). On April 14, 2017, Xome filed a reply
Federal Arbitration Act (“FAA”) expresses a
strong national policy favoring arbitration of disputes, and
all doubts concerning the arbitrability of claims should be
resolved in favor of arbitration.” Wash. Mut. Fin.
Group, LLC v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004).
The FAA, “leaves no place for the exercise of
discretion by a district court, but instead mandates that
district courts shall direct the parties to proceed to
arbitration on issues as to which an arbitration agreement
has been signed.” Dean Witter Reynolds, Inc. v.
Byrd, 470 U.S. 213, 218 (1985).
considering a motion to compel arbitration, the Court must
address two questions. Graves v. BP America, Inc.,
568 F.3d 221, 222 (5th Cir. 2009) (citing Fleetwood
Enterprises Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th
Cir. 2002)). “First, whether there is a valid agreement
to arbitrate, and second, whether the dispute in question
falls within the scope of the arbitration agreement.”
Id. Concerning the first question of contract
validity, the Court should apply “ordinary state-law
principles that govern the formation of contracts.”
Id., 568 F.3d at 222 (citing First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). The
second question of scope is answered “by applying the
‘federal substantive law of arbitrability . . . .'
” Id. (quoting Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626
Court must first determine whether there is a valid agreement
to arbitrate applying ordinary state-law principles that
govern the formation of contracts. Graves, 568 F.3d
at 222. “In applying state law, however, due regard
must be given to the federal policy favoring
arbitration.” Webb v. Investacorp, Inc., 89
F.3d 252, 258 (5th Cir. 1996). “In determining whether
the parties agree to arbitrate a certain matter, courts apply
the contract law of the particular state that governs the
agreement.” Wash. Mut. Fin. Grp., LLC v.
Bailey, 364 F.3d 260, 264 (5th Cir. 2004). Here, the
employment agreement explicitly states, in all caps, the
parties agree to “irrevocably submit to the exclusive
jurisdiction of the state and federal courts located in
Denton County in the State of Texas for the purposes of any
suit, action or other proceeding arising out of th[e]
agreement[s] for which recourse to the Courts is provided for
under [the] agreement[s] or applicable law.” (Dkt. #24,
Exhibit 1 to Exhibit B at p. 13). The Court finds Texas
contract law applies.
argues that the employment agreements expressly and
unambiguously require the parties to arbitrate “any and
all disputes that may arise in connection with, arising out
of or relating to this Agreement . . . the termination of
[Defendants'] service [to Xome], ” and “any
and all claims that may arise . . . under . . . state labor
statutes and regulations.” (Dkt. #24, Exhibit 1 to
Exhibit B at 13). Defendants argue that the ...