Court of Appeals of Texas, Fifth District, Dallas
Appeal from the 101st Judicial District Court Dallas County,
Texas Trial Court Cause No. DC-17-13535
Justices Whitehill, Schenck, and Osborne
J. SCHENCK JUSTICE.
Saba Pecan, LP ("San Saba") appeals the trial
court's denial of its motion to compel arbitration. For
the reasons discussed below, we affirm the trial court's
order. Because all issues are settled in law, we issue this
memorandum opinion. Tex.R.App.P. 47.4.
Saba is a family-owned business that grows, processes, and
sells pecans with its principal operations in San Saba,
Texas. Appellee Give and Go Prepared Foods Corp. ("Give
& Go") is a Canadian manufacturer of bakery goods
supplied to retailers. For several years, Give & Go
sourced pecan halves and small pieces from San Saba without
major incident. In October 2016, Give & Go issued
purchase orders to San Saba for a total of 672 cases of pecan
pieces to be shipped between October 2016 and February 2017.
In December 2016, San Saba issued invoices, which had several
conditions printed on the back, including Condition 11, which
contained a provision to arbitrate certain disputes, claims
or controversies as detailed below.
Saba shipped the ordered pecan pieces between October 2016
and February 2017, and during this time, Give & Go
incorporated the pecan pieces into a variety of finished
consumer products. During January 2017, Give & Go
discovered weevil larvae in two lots of pecan pieces from San
Saba. As a result, Give & Go put a hold on the remaining
cases of pecan pieces from San Saba and disposed of all
finished product in stock involving the implicated lot
numbers. However, upon discovery of the issue, some of the
other cases of the finished product involving the implicated
lot of San Saba pecan pieces had already been distributed to
Give & Go's customers. After receiving customer
complaints involving pecan weevil larvae in finished product
made from at least one San Saba lot number, Give & Go
recalled much of its products.
October 2017, Give & Go filed suit against San Saba and
another supplier of pecan pieces for breach of contract,
money had and received, negligence, and violations of the
Texas Deceptive Trade Practices Act. In response, San Saba
filed a motion to transfer venue from Dallas County to San
Saba County, which the trial court later denied in May 2018.
December 2018, San Saba filed a motion to compel arbitration
pursuant to Condition 11, in which it argued that "[b]y
excepting quality disputes from the Dallas, Texas location,
the provision specifically allows quality dispute arbitration
to occur at other locations . . . where more is known about
the pecan industry." On January 10, 2019, Give & Go
filed its first amended petition against San Saba, which
eliminated its claim for violations of the DTPA and added
claims for gross negligence, breach of express warranty,
breach of implied warranty of merchantability, breach of
implied warranty of fitness, common-law fraud, fraud by
nondisclosure, negligent misrepresentation, and strict
liability. On January 2, 2019, the trial court conducted a
hearing on the motion to compel. On January 28, 2019, the
trial court signed an order denying the motion to compel
without any separate findings of fact or conclusions of law.
San Saba timely requested findings of fact and conclusions of
law, but the trial court did not file any.
court's determinations of whether a claim falls within
the scope of an arbitration agreement and whether a party
waived its right to arbitrate are questions of law, which we
review de novo. See Henry v. Cash Biz, LP, 551
S.W.3d 111, 115 (Tex. 2018).
Federal Arbitration Act ("FAA") generally governs
arbitration provisions in contracts involving interstate
commerce as is the case here. See In re Rubiola, 334
S.W.3d 220, 223 (Tex. 2011). A party seeking to compel
arbitration under the FAA must establish that (1) there is a
valid arbitration clause, and (2) the claims in dispute fall
within that agreement's scope. Id.
third issue, San Saba argues the claims fall within the
arbitration provision's scope.In deciding questions of
scope, we focus on the factual allegations and not on the
legal causes of action asserted. See Henry, 551
S.W.3d at 115. In determining whether parties have agreed to
arbitrate a certain matter under the FAA, we apply the
contract law of the particular state that governs the
agreement. See Tittle v. Enron Corp., 463 F.3d 410,
419 (5th Cir. 2006) (citations omitted). In Texas, contract
terms are given their plain, ordinary, and generally accepted
meanings unless the contract itself shows them to be used in
a technical or different sense. See Valence Operating Co.
v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005).
& Go's original and amended petitions allege San Saba
supplied Give & Go with pecan pieces containing weevil
larvae, such that the supplied pecan pieces were not
merchantable and were unfit for human consumption in
violation of the agreements between the parties. Give &
Go alleges that because San Saba failed to provide pecan
pieces fit for human consumption, San Saba now holds money
that belongs to Give & Go in equity and good conscience.
Further, Give & Go alleges San Saba failed to exercise
reasonable care in the handling, processing, inspection, and
packing of the pecan pieces. Give & Go alleges San Saba
made misrepresentations about the quality and characteristics
of the pecan pieces by representing they were selling pecan
pieces that were merchantable and fit for use in finished
products intended for human consumption. Give & Go also
alleges San Saba failed to disclose that they were selling