ANNE GARDNER, Justice.
Appellant Anthony Aldridge appeals from the trial court's denial of his motion to compel arbitration in a suit brought against him and others by Appellee Thrift Financial Marketing, LLC (Thrift), a Delaware Limited Liability Company. Aldridge, a former "Member" of Thrift, contends that, pursuant to an arbitration agreement contained in the formation agreement creating Thrift, he may compel arbitration of the claims asserted against him by Thrift because those claims arise from acts he allegedly undertook while still a Member of Thrift. Because the Agreement excludes former Members from the class of persons entitled to compel arbitration, we affirm the trial court's order.
Aldridge and Sue Harvison formed Thrift in 2008 when they entered into the Limited Liability Company Agreement of Thrift Financial Marketing, LLC (Company Agreement). From Thrift's inception through September 30, 2011, Harvison and Aldridge, who executed the Company Agreement as the "initial Members of the Company," were also Thrift's only two Managers as well as its only two Members.
The Company Agreement, which contains the operative provisions for management, membership rights, and other matters pertaining to the governance and operation of Thrift, also contains an arbitration agreement that states in relevant part as follows:
The Company Agreement expressly defines "Member" as follows:
As alleged in the parties' pleadings and set forth in affidavits, Harvison and Aldridge formed Thrift to handle leads provided to it by Cendera Funding, Inc. (Cendera), a lending company for residential mortgage loans. Thrift's business plan contemplated the use of a call center owned and operated by Thrift, to refine and solicit such leads for Cendera from raw data provided to Thrift by Cendera. According to Thrift, its call center operations allowed it to identify the most promising prospective customers seeking mortgage loans on single-family residences, who would then be referred to Cendera loan officers. Effective September 30, 2008, shortly after Thrift had been formed, Thrift and Cendera entered into a marketing service agreement that provided for Thrift to handle the leads and payment by Cendera for Thrift's services and for Cendera to recruit and train loan officers to be employed by Cendera but located at Thrift's offices. When Thrift received the leads, Thrift personnel would call the potential borrower and invite that person to speak to one of Cendera's loan officers. If the lead matured into a loan, Cendera paid Thrift.
Aldridge, a licensed mortgage banker, became employed as a loan officer for Cendera and recruited other loan officers to be employed by Cendera and to work from Thrift's offices. According to Aldridge, Thrift was aware of and consented to Aldridge's employment with Cendera, and Cendera was aware of and consented to Aldridge's relationship with Thrift.
Thrift contends that, by late spring of 2011, profits derived from Cendera's branch office at Thrift's offices had increased dramatically; Thrift contends that Brian Collins
On October 6, 2011, Thrift filed this lawsuit against Aldridge, Cendera, and Collins,
Aldridge raises three issues. He argues generally in his first issue that the trial court erred when it refused to compel arbitration. He contends in his second issue that Thrift may be compelled to arbitrate pursuant to the arbitration provision in the Company Agreement even though Thrift itself is a nonsignatory to that agreement, and he asserts in his third issue that, although he is no longer a Member of Thrift, he may nevertheless compel arbitration pursuant to the Company Agreement because Thrift's claims arise from conduct that allegedly occurred while he was still a Member. We address Aldridge's third issue first.
The parties agree that the Federal Arbitration Act (FAA) applies to this proceeding. See 9 U.S.C.A. §§ 1-16 (West 2009). Section 51.016 of the Texas Civil Practice and Remedies Code permits the interlocutory appeal of an order denying a motion to compel arbitration under the FAA. Tex. Civ. Prac. & Rem.Code Ann. § 51.016 (West Supp.2012).
The FAA provides, in relevant part:
9 U.S.C. § 2. "The FAA reflects the fundamental principle that arbitration is a matter of contract." Rent-A-Center, W., Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010). Section 2 of the FAA has been described as reflecting both a "liberal federal policy favoring arbitration" and the "fundamental principle that arbitration is a matter of contract." AT & T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011) (citing Rent-A-Center, 130 S.Ct. at 2776; Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983)). "The FAA thereby places arbitration agreements on an equal footing with other contracts, and requires courts to enforce them according to their terms." Rent-A-Center, 130 S.Ct. at 2776 (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 1207, 163 L.Ed.2d 1038 (2006), and Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 1255, 103 L.Ed.2d 488 (1989)).
The Company Agreement contains a choice-of-law provision that states that it is to be "governed by and construed in
A trial court's determination regarding the validity of an agreement to arbitrate is a question of law which we review de novo.
Under the FAA, a party seeking to compel arbitration must satisfy a twopronged burden of proof in that it must first demonstrate the existence of a valid agreement to arbitrate the dispute and then prove that the claims asserted are within the scope of the agreement. In re Dillard Dep't Stores, Inc., 186 S.W.3d 514, 515 (Tex.2006) (orig. proceeding) (per curiam); AdvancePCS Health L.P., 172 S.W.3d at 605. If the party seeking arbitration carries its initial burden, the burden shifts to the opposite party to present evidence of an affirmative defense. AdvancePCS Health L.P., 172 S.W.3d at 607.
An agreement to arbitrate is a contract, the relation of the parties is contractual, and the rights and liabilities of the parties are controlled by the law of contracts. See AT & T Mobility LLC, 131 S.Ct. at 1748-49, 1752-53 (arbitration is a creature of contract; a person can be compelled to arbitrate a dispute only if, to the extent that, and in the manner which, he has agreed to do so). Since arbitration is generally a matter of contract, the FAA requires courts to honor parties' expectations. 9 U.S.C.A. § 1 et seq.; AT & T Mobility LLC, 131 S.Ct. at 1752-53; In re Bunzl USA, Inc., 155 S.W.3d 202, 209 (Tex.App.-El Paso 2004, orig. proceeding) ("[A] party cannot be compelled to arbitrate a dispute unless he has agreed to do so.").
When deciding whether parties agreed to arbitrate, courts should apply ordinary state law principles regarding the
Aldridge contends that he has a right under the Company Agreement to compel arbitration of Thrift's claims against him, contrary to Thrift's argument in the trial court that, because he is no longer a member of Thrift, he can no longer compel arbitration. Aldridge acknowledges that he voluntarily relinquished his position and resigned as a Member of Thrift before Thrift filed this lawsuit and before he filed his motion to compel arbitration. But he argues that his resignation does not prevent him from compelling arbitration of Thrift's claims now because there is no dispute that Thrift's claims are based on acts that allegedly occurred while Aldridge was a Member and Manager of Thrift. Aldridge characterizes Thrift's argument as "nothing more than the Company Agreement is written in the present tense" and argues that nothing in the Company Agreement "prohibits or divests" a former Member from seeking arbitration of disputes arising from or relating to acts taken by that individual while he was a Member.
The agreement to arbitrate provides that "any Member or Members (each a `
To the contrary, and regardless of whether the alleged conduct occurred or the dispute arose while a person was a Member, the definition of the term "Member" set forth in the Company Agreement expressly "excludes any Person who has ceased to be a Member." [Emphasis added.] That definition is contained in a list of defined terms in a preceding section of the contract that provides that "[w]hen used in this [Company] Agreement, the following terms shall have the respective meanings assigned to them...."
Aldridge does not directly address the exclusion of former Members from the definition of "Member" in the Company Agreement. His response is that he may nevertheless compel arbitration because "an arbitration agreement contained within a contract survives the termination or repudiation of the contract as a whole" and that his alleged acts occurred while he was still a Member of Thrift. Aldridge supports his argument by citing several cases. See Ambulance Billings Sys., Inc. v. Gemini Ambulance Servs., Inc., 103 S.W.3d 507, 512-14 (Tex.App.-San Antonio 2003, no pet.); In re Koch Indus., Inc., 49 S.W.3d 439, 445 (Tex.App.-San Antonio 2001, orig. proceeding); Henry v. Gonzalez, 18 S.W.3d 684, 690 (Tex.App.-San Antonio 2000, pet. dism'd by agr.); Dallas Cardiology Assocs., P.A. v. Mallick, 978 S.W.2d 209, 213 (Tex. App.-Texarkana 1998, pet. denied); Pepe Int'l Dev. Co. v. Pub Brewing Co., 915 S.W.2d 925, 932 (Tex.App.-Houston [1st Dist.] 1996, no writ); Miller v. Puritan Fashions Corp., 516 S.W.2d 234, 238 (Tex.Civ.App.-Waco 1974, writ ref'd n.r.e.).
Those cases are distinguishable for at least two reasons. First, the issue in those cases involved whether an abandonment, repudiation, or termination of the contract containing an arbitration provision rendered the arbitration provision unenforceable. See Ambulance Billings Sys., Inc., 103 S.W.3d at 510, 512-14 (involving whether settlement agreement of contract dispute rendered arbitration agreement no longer in effect); Koch Indus., Inc., 49 S.W.3d at 444-45 (opposing parties contended arbitration provision was unenforceable because easement had been abandoned); Henry, 18 S.W.3d at 690 (involving issue of whether termination of attorney-client contract also terminated arbitration clause); Dallas Cardiology, 978 S.W.2d at 213 (finding any potential breach of contract did not render arbitration clause unenforceable); Pepe Int'l, 915 S.W.2d at 932 (holding cancellation of underlying contracts did not invalidate arbitration clauses).
We hold that the trial court did not err by denying Aldridge's motion to compel arbitration because Aldridge does not have the contractual right under the Company Agreement to compel arbitration of Thrift's claims against him. We therefore overrule Aldridge's third issue.
Aldridge contends in his second issue that Thrift may be compelled to arbitrate its claims even though it did not separately sign the Company Agreement. Within his second issue, Aldridge argues that Thrift's claims in this lawsuit are subject to arbitration because Thrift is bound by the Company Agreement; because Thrift artfully pleaded claims actually belonging to Harvison, the only remaining Member of Thrift, in an attempt to avoid arbitration; because direct benefits estoppel requires arbitration of Thrift's claims; and because Thrift's claims fall within the scope of the arbitration provision.
Those remaining arguments, however, each assume that Aldridge has the contractual right under the Company Agreement to compel arbitration. Because we have held above that Aldridge does not have a right to compel arbitration given the express contractual language and his voluntary resignation as a Member, that issue is dispositive of the appeal, and it is unnecessary for us to reach Aldridge's first or second issue. See Tex.R.App. P. 47.1 ("The court of appeals must hand down a written opinion that ... addresses every issue raised and necessary to final disposition of the appeal.").
Having overruled Aldridge's third issue, and finding it unnecessary to reach his general first issue or his second issue, we affirm the trial court's order denying Aldridge's motion to compel arbitration.