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Cielo Property Group, LLC v. Mulcahy

Court of Appeals of Texas, Third District, Austin

July 11, 2019

Cielo Property Group, LLC; Robert Dillard, III; and Robert Gandy, IV, Appellants
v.
Branigan Mulcahy, Appellee

          FROM THE 250TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-18-003429, THE HONORABLE JAN SOIFER, JUDGE PRESIDING

          Before Justices Goodwin, Baker, and Smith

          MEMORANDUM OPINION

          EDWARD SMITH, JUSTICE

         In this interlocutory appeal, appellants Cielo Property Group, LLC, and its principals Robert Dillard, III, and Robert Gandy, IV, challenge a district court's order denying their joint motion to compel arbitration of certain claims arising from the former employment of Branigan Mulcahy by G&A Partners, an entity not party to this suit. We will reverse the order denying the motion to compel arbitration and remand for further proceedings consistent with this opinion.

         BACKGROUND

         In 2014, Mulcahy began working jointly for G&A Partners and Cielo Property Group-which G&A refers to as one of its "clients"-as vice president of property acquisitions pursuant to an employment agreement executed by Mulcahy and G&A. Cielo Property Group is not a signatory to the employment agreement but is named as an intended beneficiary of that contract. As part of Mulcahy's compensation package, G&A and Cielo Property Group granted Mulcahy an interest in several properties under development through a series of LLC membership agreements. Cielo Property Group, on behalf of itself and G&A, terminated Mulcahy's employment in 2018, citing alleged "failure to perform, insubordination, and abrasiveness" as reasons for the termination. It then apparently revoked Mulcahy's interest in the properties.

         Mulcahy sued Cielo Property Group for breach of contract, unjust enrichment, and employment discrimination, seeking to recover unpaid compensation and the property interests he had acquired in certain developments. He sued Dillard and Gandy for breach of fiduciary duty. The defendants responded with a general answer and a motion to compel arbitration, arguing that all Mulcahy's claims are subject to the arbitration clause in Mulcahy's employment agreement with G&A Partners. Mulcahy disagreed, arguing that only G&A executed that employment agreement and therefore that his claims are not subject to its arbitration clause.

         The district court held a hearing, requested additional briefing, and then denied the motion to compel. After filing two unsuccessful requests for reconsideration of the issue, the defendants timely perfected this appeal. See Tex. R. App. P. 28.1.

         DISCUSSION

         In a single issue, appellants contend the district court erred by denying their motion to compel. A party seeking to compel arbitration must establish the existence of a valid, enforceable arbitration agreement and that the asserted claims fall within the agreement's scope. Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). The party seeking arbitration has the initial burden to present evidence of an arbitration agreement. Id. Once the existence of an arbitration agreement has been established, a presumption attaches favoring arbitration. Id. The burden then shifts to the opposing party to establish an affirmative defense or to show that the dispute falls outside the scope of the agreement. Id. "Courts should not deny arbitration 'unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue.'" Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995) (orig. proceeding) (per curiam) (quoting Neal v. Hardee's Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990)). We construe a contract's unambiguous language as a matter of law. Garg v. Pham, 485 S.W.3d 91, 102 (Tex. App.-Houston [14th Dist.] 2015, no pet.). We review the disposition of a motion to compel arbitration for an abuse of discretion. Natgasoline LLC v. Refractory Constr. Servs., Co., 566 S.W.3d 871, 884 (Tex. App.-Houston [14th Dist.] 2018, pet. denied). A court abuses its discretion when it acts without regard for governing legal principles. Id.

         Claims Against Cielo Property Group

In relevant part, the arbitration clause in the employment agreement provides:
To the fullest extent permitted by law, all disputes between you and G&A or between you and all Clients to which you are assigned shall be submitted to binding arbitration pursuant to the Federal Arbitration Act and the American Arbitration Association's National Rules for the Resolution of Employment dispute.[1]

         "All" is a maximally inclusive term. It denotes the inclusion of every possible element of a given set and to prevent the exclusion of any one of those elements. See William of Sherwood, Treatise on Syncategorematic Words 17 (N. Kretzmann trans., University of Minnesota Press 1968) ("It must be known that 'every' or 'all' signifies universality." (translated from Latin)). As the Supreme Court of Texas describes it, "all" denotes "'the whole number, quantity, or amount' or 'the whole of.'" RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 124 (Tex. 2015) (quoting Merriam-Webster's Dictionary and Thesaurus 23 (2014)); see also Henry, 501 S.W.3d at 115 (discussing expansive nature of "all disputes"); Pinto Tech. Ventures, L.P. v. Sheldon, 526 S.W.3d 428, 439 & n.47 (Tex. 2017) (describing the "necessarily" broad scope of the phrase "any dispute"). Thus, given the parties' stipulation that ...


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