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Spruce Lending, Inc. v. Garcia

Court of Appeals of Texas, Fourth District, San Antonio

April 3, 2019

SPRUCE LENDING, INC., Appellant
v.
Marcos GARCIA, Appellee

          From the County Court at Law No. 3, Bexar County, Texas Trial Court No. 2018CV04617 Honorable David J. Rodriguez, Judge Presiding

          Sitting: Patricia O. Alvarez, Justice, Luz Elena D. Chapa, Justice Liza A. Rodriguez, Justice

          MEMORANDUM OPINION

          Patricia O. Alvarez, Justice

         In the dispute underlying this interlocutory appeal, Appellant Spruce Lending, Inc. moved to compel arbitration of Appellee Marcos Garcia's claims pertaining to a home solar system installation which Spruce financed. The trial court denied Spruce's motion, and Spruce appeals.

         Because Garcia challenged the contract as a whole, and the arbitration agreement directs such questions to arbitration, the trial court erred by denying Spruce's motion to compel arbitration. We reverse the trial court's order and remand this cause to the trial court.

         Background

         A sales representative for Rodeo Solar, LLC dba New Sun Energies contacted Marcos Garcia at his home regarding the purchase of a solar panel system for Garcia's home. Garcia chose to contract with Rodeo Solar for the solar panel system; he executed an installation contract with Rodeo Solar and a financing agreement with Spruce. After problems arose with the installation, Garcia sued Rodeo Solar and Spruce.

         Spruce answered and asserted that its financing agreement with Garcia includes a valid arbitration provision which compels arbitration of any dispute or argument concerning the validity of the contract. The arbitration provision of the financing agreement expressly states that the agreement is governed by the Federal Arbitration Act (FAA), and neither party argues otherwise. Although Garcia argued that there was, in effect, no agreement to arbitrate because the installation contract and financing agreement failed to comply with consumer protection statutes, and the contracts were void as a matter of law, [1] Spruce moved to compel arbitration.

         The trial court denied Spruce's motion, and Spruce filed this interlocutory appeal. Before we address the parties' arguments, we briefly recite the applicable law and standards of review.

         Applicable Law, Standards of Review

         "A party seeking to compel arbitration [under the FAA] must establish the existence of a valid arbitration agreement and that the claims at issue fall within the scope of that agreement." Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018); accord In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011) (orig. proceeding).

         We determine whether a valid agreement to arbitrate exists by applying "ordinary principles of state contract law." In re Rubiola, 334 S.W.3d at 224; accord J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003).

         If a party produces a contract that includes an arbitration agreement, and the contract contains each essential element, the party has met its burden to establish a valid arbitration agreement. See J.M. Davidson, 128 S.W.3d at 227-28; Specialty Select Care Ctr. of San Antonio, L.L.C. v. Owen, 499 S.W.3d 37, 43 (Tex. App.-San Antonio 2016, no pet.) (quoting Speedemissions, Inc. v. Bear Gate, L.P., 404 S.W.3d 34, 43 (Tex. App.-Houston [1st Dist.] 2013, no pet.)) ("Under Texas law, '[t]he elements needed to form a valid and binding contract are (1) an offer; (2) acceptance in strict compliance with the offer's terms; (3) a meeting of the minds; (4) consent by both parties; (5) execution and delivery; and (6) consideration.'").

         We determine whether a claim falls within the scope of an arbitration agreement by examining the facts alleged in the plaintiff's petition and the terms of the arbitration agreement. See RSL Funding, LLC v. Pippins, 499 S.W.3d 423, 431 (Tex. 2016) (citing In re Rubiola, 334 S.W.3d at 225). If the arbitration agreement includes the type of claim or challenge the alleged facts raised, the issue is within the agreement's scope. See In ...


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