Court of Appeals of Texas, Fifth District, Dallas
QUALITY METRICS PARTNERS, LLC, CLEARVIEW DIAGNOSTICS, LLC, CGK CONSULTING, LLC, CGK MEDICAL MANAGEMENT, LLC, CGK MEDICAL VENTURES, LLC, BRODIE FLANDERS, MICHAEL MORALES, MICHAEL KNALL, ANTHONY KIM, AND CHRISTOPHER R. PEYTON, Appellants
GREG BLASINGAME; CAPRICIA LARSON; GABBY CONSULTING, LLC; AND DX POWER MOVES CONSULTING, LLC, Appellees
Appeal from the 101st Judicial District Court Dallas County,
Texas Trial Court Cause No. DC-17-03702
Justices Brown, Schenck, and Pedersen, III
PEDERSEN, III, JUSTICE
challenge the trial court's denial of their consolidated
motions to compel arbitration of certain claims brought by
appellees. In two issues, appellants contend that (i) the
claims at issue fall within the scope of the agreement
containing an arbitration provision, and (ii) three legal
theories allow these appellants to compel arbitration of
those claims. We reverse the trial court's order denying
the motion to compel, render judgment ordering all disputes
between the parties to proceed to arbitration, and remand for
further proceedings consistent with this opinion.
appeal involves a series of contractual relationships among
Quality Metrics Partners, LLC (QMP) provides marketing
services, including sales and client acquisition to vendors
of services and products of interest to health care
providers. It owns and operates a laboratory, appellant
Clearview Diagnostics, LLC (Clearview), which processes blood
and urine samples. Individual appellants Brodie Flanders,
Michael Morales, Michael Knall, and Anthony Kim are
principals of both QMP and Clearview. In this opinion, we
will refer to QMP, Clearview, Flanders, Morales, Knall, and
Kim as the QMP Appellants.
appellant Christopher Peyton is the Chief Executive Officer
of CKG Consulting, LLC and CGK Medical Ventures, LLC. In this
opinion, we will refer to CGK, CGK Medical Ventures, LLC, and
Peyton as the CGK Appellants.
Greg Blasingame and Capricia Larson are principals of DX
Power Moves Consulting, LLC (DX Power) and its predecessor in
interest, Gabby Consulting, LLC (Gabby). We refer to these
four parties collectively as appellees.
November 18, 2015, QMP and CGK entered into their
Representative Marketing Agreement. In that agreement, CGK
agreed to provide information to physicians and other health
care professionals and health care organizations regarding
specific services and products of Clearview. QMP subsequently
assigned its interest in the Representative Marketing
Agreement to Clearview itself. The new agreement was titled
the Marketing Services Agreement, and it continued all
obligations relevant to this appeal.
Appellees contend that, during that same month, they entered
into an oral contract with the QMP Appellants. Appellees
agreed to market QMP and Clearview's services to
appellees' health-care-provider clients. In return,
appellees would receive 40% of QMP's and Clearview's
gross collections after processing samples provided by
same month, appellees contend, the QMP Appellants persuaded
Gabby to enter a written agreement with CGK. That agreement,
titled the Distribution Agreement, likewise provided that
appellees would market Clearview's services to
appellees' health-care clients. Under the written
agreement, appellees would receive 40% of CGK's
gross collections from Clearview's processing of
appellees' clients' samples. The Distribution
Agreement contains an arbitration provision, which states
that disputes under or relating to the agreement will be
submitted to arbitration.
year of business dealings among the parties, appellees sued
all appellants. They alleged breach of the Distribution
Agreement by CGK. And they pleaded claims against all
appellants for conversion and civil threat, violations of the
Texas Theft Liability Act, unjust enrichment/restitution,
civil conspiracy, constructive trust, fraud, negligent
misrepresentation, tortious interference with contract, and
breach of fiduciary duty. Finally, they pleaded a claim of
aiding and abetting against individual appellants Morales,
Knall, Flanders, and Kim.
answered and then filed motions to compel arbitration
pursuant to the Distribution Agreement's arbitration
later, appellees filed their First Amended Petition, which
added allegations of the existence and breach of a separate
oral agreement with the QMP Appellants. The amended petition
also claimed that the QMP Appellants had fraudulently induced
appellees to enter into that oral agreement.
motions to compel were heard together by the Associate Judge;
she ordered arbitration of all claims against all appellants.
Appellees appealed, and the trial court heard the motions de
novo. The court granted the motions except as to direct
claims against the QMP Appellants.
begin with appellants' second issue, which argues that
the QMP Appellants-who are not signatories to the
Distribution Agreement-can nevertheless compel arbitration
with appellees via any of three legal theories:
third-party-beneficiary status, intertwined estoppel, and
same-transaction agreements. Whether a claim involving a
non-signatory must be arbitrated is a "gateway
matter" for the trial court that is subject to de novo
review on appeal. Jody James Farms, JV v. Altman Grp.,
Inc., 547 S.W.3d 624, 629 (Tex. 2018).
is a creature of contract between consenting parties."
Id. Nevertheless, principles of contract law and
agency may require a party that agreed to arbitrate disputes
with one party to arbitrate with another. Id. The
parties before us agree that the Federal Arbitration Act
(FAA) and federal law generally govern their case. But the
United States Supreme Court has directed that we look to
state law to determine whether contracts are binding and
enforceable under the FAA when that state law would govern
issues of "validity, revocability, and enforceability of
contracts generally." Arthur Andersen LLP v.
Carlisle, 556 U.S. 624, 630-31 (2009). The
Carlisle Court identified a list of state law
principles that allow a contract to be enforced by or against
nonparties to the contract: assumption, piercing the
corporate veil, alter ego, incorporation by reference,
third-party beneficiary theories, waiver, and estoppel.
Id. at 631 (citing 21 Richard A. Lord, Williston
on Contracts § 57:19, p. 183 (4th ed.
2001)). Thus, "[i]f a written arbitration provision is
made enforceable against (or for the benefit of) a third
party under state contract law, the [FAA's] terms are
QMP Appellants' first argument is that they are intended
third-party beneficiaries of the Distribution Agreement.
"A third party may enforce a contract it did not sign
when the parties to the contract entered the agreement with
the clear and express intention of directly benefitting the
third party." Tawes v. Barnes, 340 S.W.3d 419,
425 (Tex. 2011). We determine whether the contracting parties
intended to benefit a third party directly by looking to the
contract's language, construed as a whole. First Bank
v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017). We are
assisted in this effort by a relatively unusual example of
contract drafting. The Distribution Agreement contains a
clause specifically acknowledging that it intends such
The Distributor is aware that CGK acts as an independent
contractor for multiple Service Providers. The services that
the Distributor will be providing for CGK are also intended
to benefit such Service Providers. As a result, the
Distributor acknowledges that the Service Providers shall be
considered to be a third party beneficiary of this Agreement.
Consequently, the protections and benefits to CGK under this
Agreement shall also be afforded to the Service Providers.
clause identifies a category of parties-service
providers-that are entitled to the protections and benefits
of the Distribution Agreement. Certainly one of those
protections or benefits is the right to compel arbitration in
a dispute relating to the agreement. In re NEXT Fin.
Group, Inc., 271 S.W.3d 263, 267 (Tex. 2008) (intended
third-party beneficiary may compel arbitration in accordance
with terms of agreement).
term "service providers," however, is not defined
within the Distribution Agreement, and the parties disagree
as to who is included within its ambit. Appellees argue that
no QMP Appellant is specifically identified as a service
provider, and they contend that-as between the QMP Appellants
and CGK-if one is a service provider it would be CGK, who
provides marketing services for those appellants. These
arguments are unavailing. First, a third-party beneficiary
need not be identified by name; identification of a class or
category of parties is sufficient. Freeman v. Harleton
Oil & Gas, Inc., 528 S.W.3d 708, 746 (Tex.
App.-Texarkana 2017, pet. denied). And second, we cannot
interpret the contract in a manner that would make a
signatory (CGK) its own third-party
contend that Clearview is a service provider under the
Distribution Agreement. They contend further that QMP (as
Clearview's predecessor in interest) and Morales, Knall,
Flanders, and Kim (as agents of QMP and Clearview) are also
service providers. Our primary concern in addressing
appellants' arguments is to ascertain the true intention
of the parties as it is expressed in the agreement. See
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). To that
end, we "examine and consider the entire writing in an
effort to harmonize and give effect to all the provisions of
a contract so that none will be rendered meaningless."
begin with the third-party provision itself. This section
affirms that appellees were aware at the time the agreement
was made "that CGK acts as an independent contractor for
multiple Service Providers." The agreements between CGK
on the one hand, and QMP and Clearview on the other, state
specifically that their relationship is one of independent
contractor. And while it is true that CGK has provided
marketing services for QMP and Clearview, it is equally true
that Clearview provides laboratory services to CGK's
clients. Indeed, those laboratory services are the source of
the revenue within all of the contractual relationships
implicated in this appeal. The third-party provision declares
that "[t]he services that [appellees] will be providing
for CGK are also intended to benefit such Service
Providers." Certainly appellees' marketing services
are intended to benefit Clearview directly and QMP, its
owner, indirectly. It is difficult to posit what other
parties would be benefitted by appellees' efforts;
appellees point out in another context that the Distribution
Agreement was not exclusive, ...