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Gary Zars Holding, LLC v. Wilder

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

June 21, 2018

GARY ZARS HOLDING, LLC AND GARY ZARS POOLS & PATIO, LLC, Appellants,
v.
DAREN WILDER AND DIANNE WILDER, Appellees.

          On appeal from the 343rd District Court of Live Oak County, Texas.

          Before Chief Justice Valdez and Justices Rodriguez and Benavides

          MEMORANDUM OPINION

          NELDA V. RODRIGUEZ Justice

         Appellants Gary Zars Holding, LLC and Gary Zars Pools & Patio, LLC (collectively, "Gary") appeal the denial of their motion to compel arbitration. By one issue, Gary asserts that appellees Daren and Dianne Wilder's fraud defense is not a valid basis to avoid arbitration. We reverse and remand.

          I. Background

         In 2015, the parties entered a written contract whereby Gary agreed to build an in-ground pool for the Wilders in exchange for the total price of $37, 000. In 2016, the Wilders filed suit against Gary for breach of contract, fraudulent inducement, violation of the DTPA, and attorney's fees.

         Gary filed a general denial and a motion to compel arbitration. Attached to Gary's motion was a copy of the parties' agreement ("the contract"). On the front, the contract recited the specifications for the Wilders' swimming pool, as well as various services necessary to complete construction. The front page of the contract also stated, "The general conditions to this agreement are on the back." On the back, the contract provided a list of twenty "General Conditions, " one of which stated the following: "Any controversy or claim arising out of or relating to this contract or breach thereof or any claim whatsoever with Gary's including claims under the DTPA shall be settled by an onsite, binding Arbitration in accordance with the BBB Arbitration Rules."

         The Wilders filed a response resisting arbitration. They asserted that Gary had fraudulently induced them to agree to the arbitration clause, along with other grounds for resisting arbitration which are not at issue on appeal.

         At the hearing, both parties proffered the contract to the trial court as a two-sided document. However, the trial court heard testimony from Daren that, throughout the process of negotiating the contract, Gary's sales representative consistently referred him to a one-sided document that was "blank on the back, " which Daren reviewed with his wife Dianne. Daren testified that as the salesman walked him through the contract, he only discussed the terms listed on the front, and he "kept emphasizing that whatever was on the front of this document was the contract." Daren explained that when the negotiation was complete, the salesman then transcribed various specifications from the one-sided document onto another document, but he never disclosed that this second document had two sides. Instead, the salesman simply "put his finger on the document above where the signature line is and told me to sign." After Daren signed, Gary's salesman gave him a duplicate copy of the contract, but Daren testified that he did not notice the terms on the back, including the arbitration clause. Instead, Daren testified that he first became aware of the arbitration clause when Gary filed its motion to compel arbitration. On cross-examination, however, Daren conceded that just inches above his signature on the first page of the contract was a notice that the "general conditions to this agreement are on the back."

         At the conclusion of the hearing, the trial court denied Gary's motion to compel. Gary appeals.

         II. Discussion

         By its sole issue, Gary argues that it met its initial burden to establish the existence of a valid arbitration agreement and that the Wilders' fraud defense does not offer valid grounds for avoiding arbitration.

         A. Standard of Review and General Applicable Law

         We review an order denying a motion to compel arbitration under an abuse of discretion standard. In re Labatt Food Serv., LP, 279 S.W.3d 640, 642-43 (Tex. 2009) (orig. proceeding). Under that standard, we defer to the trial court's factual determinations if they are supported by the record, but we review the trial court's legal determinations de novo. Id. at ...


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