Full Opinion

NUMBER 13-26-00341-CV COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI – EDINBURG ENDURANCE DEALER SERVICES, LLC, Appellant, v. NARCISO CORTEZ, Appellee. ON APPEAL FROM THE COUNTY COURT AT LAW NO. 3 OF CAMERON COUNTY, TEXAS MEMORANDUM OPINION Before Chief Justice Tijerina and Justices Cron and Fonseca Memorandum Opinion by Justice Fonseca In this case arising from an extended vehicle-service warranty, appellant Endurance Dealer Services, LLC (Endurance) argues the trial court erred by denying its motion to abate and compel arbitration of claims brought by appellee Narciso Cortez. Because we agree, we reverse and remand. I. BACKGROUND On September 25, 2024, Cortez brought a small-claims suit against Endurance in justice court, alleging: [Endurance] engaged in deceptive practices with [Cortez] by using deception to coerce [him] into an insurance contract to cover repairs on his [2011] BMW 335[d]. [Endurance] did not reveal material[] facts or produce the actual contract until a claim arose months after the first payment was made. [Endurance] did not comply with the contract and took in premiums to cover car repairs, but did not cover costs. The engine showed signs of a pending catastrophic failure when taken to be serviced. [Endurance] asked to have work done at [Cortez’s] cost to satisfy burden of proof they were requesting to further process the claim [sic]. [Endurance] did not recognize the fact that the car’s engine was designed to last longer than it did and there had to be a malfunction or part failure within the engine and it could not have been “normal wear and tear.” [Endurance] used [the] term “normal wear and tear” to deny claims. The term “normal wear and tear” was explained to [Cortez] would only be applied to things like brake pads or fan belts. This term has been used to deny all claims. Cortez requested $9,148 in damages. See TEX. R. CIV. P. 500.1(a). Endurance answered the suit and filed a motion to abate and compel arbitration based on the following provision in the “Vehicle Service Contract” at issue: We reserve the right, in the interests of efficient and judicious resolution of disputes, to demand that any claim, complaint or demand initiated by You relating to the Coverage provided under this Contract be settled by an alternative dispute resolution procedure before a recognized and/or accredited third-party organization of Our choosing, including, but not limited to, arbitration, mediation, and/or conciliation, with the cost of such alternative dispute resolution to be paid entirely by Us. Should We elect to pursue alternative dispute resolution, We will provide a written Notice of Alternative Dispute Resolution to Your address, as identified on the Application Page, and You agree to promptly and voluntarily discontinue any pending complaint, demand or other proceeding and proceed with the alternative method selected by Us. (Emphasis added.) The justice court denied Endurance’s motion and, after a bench trial on November 6, 2025, it awarded Cortez the damages he requested along with costs and interest. 2 Endurance appealed for trial de novo in the county court, see TEX. R. CIV. P. 506.3, where it again moved to abate and compel arbitration. It attached to its motion a copy of the subject contract dated February 3, 2023, 1 as well as transcripts of two phone conversations Cortez had with Endurance representatives in the summer of 2023 which purportedly show his “knowledge of the nuances within the Contract.” Cortez filed a response to the motion arguing, among other things: (1) there was no “meeting of the minds” because “[t]he arbitration provision was never shown, disclosed, discussed, or made available before or at the time of signature” and he “received no contract at all at the time of purchase”; (2) the contract is procedurally unconscionable because “Endurance withheld the actual contract, withheld the arbitration clause, and did not disclose the arbitration requirement orally or in writing”; (3) “[d]epending on costs, limitations, and rights affected, the arbitration provision may also be substantively unconscionable”; and (4) “Endurance’s refusal to provide the contract for over eight months constitutes prejudicial delay and supports waiver.” He attached his own affidavit stating in part that, though he “purchased the contract” on February 3, 2023, a written copy of it was not sent to him until October 24, 2023, and he would not have agreed to it if he knew it contained an arbitration clause. Cortez requested an evidentiary hearing and stated he would “testify and provide documentary evidence showing that Endurance never provided the contract, never referenced the arbitration clause, and affirmatively 1 The motion included an unsworn declaration by Daniel Wilner, Endurance’s Litigation and Contacts Manager, attesting that Exhibit 1-A “is the agreement between [Cortez] and Endurance” and was a regularly-kept business record. See TEX. R. EVID. 806(10). Exhibit 1-A is the February 3, 2023 “Vehicle Service Contract” listing Cortez as the “purchaser” and Endurance as the “seller,” and including the arbitration clause set forth above. We note that the document is not signed by Cortez or any representative of Endurance, does not state that the parties agreed to conduct the transaction by electronic means, cf. Aerotek, Inc. v. Boyd, 624 S.W.3d 199, 205 (Tex. 2021), and does not contain any other explicit indication that the parties assented to its terms. Nonetheless, Cortez did not object to the exhibit or produce any evidence controverting Wilner’s declaration. 3 withheld the governing terms until months after the transaction.” Endurance filed a reply arguing, in part, that the doctrine of direct-benefits estoppel precludes Cortez from avoiding the arbitration clause. After a hearing on December 2, 2025, the county court signed an order denying Endurance’s motion to abate and compel on March 30, 2026. This interlocutory appeal followed. 2 II. MOTION TO COMPEL ARBITRATION A. Standard of Review and Applicable Law A party seeking to compel arbitration must establish (1) a valid arbitration agreement exists and (2) the claims fall within the scope of the agreement. Wagner v. Apache Corp., 627 S.W.3d 277, 282 (Tex. 2021); Bonsmara Nat. Beef Co. v. Hart of Tex. Cattle Feeders, LLC, 603 S.W.3d 385, 397 (Tex. 2020). “Arbitration is strongly favored.” Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494, 499 (Tex. 2015). Therefore, “once it is established that a valid arbitration agreement exists and that the claims in question are within the scope of the agreement, a presumption arises in favor of arbitrating those claims and the party opposing arbitration has the burden to prove a defense to arbitration.” Id. at 499–500; see Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018); Ellis v. Schlimmer, 337 S.W.3d 860, 862 (Tex. 2011) (noting the presumption 2 Neither party has specified whether they believe the Federal Arbitration Act (FAA) or Texas Arbitration Act (TAA) applies to this case, and the arbitration clause at issue does not mention either statute. Either way, an interlocutory appeal is authorized. See TEX. CIV. PRAC. & REM. CODE §§ 51.016 (“In a matter subject to the [FAA], a person may take an appeal . . . under the same circumstances that an appeal from a federal district court’s order or decision would be permitted by 9 U.S.C. [§] 16.”), 171.098(a)(1) (providing that “[a] party may appeal a judgment . . . denying an application to compel arbitration” under the TAA); see also 9 U.S.C. § 16(a)(1)(C) (authorizing an interlocutory appeal from an order denying a request to compel arbitration under the FAA); Sporran Kbusco, Inc. v. Cerda, 227 S.W.3d 288, 290 (Tex. App.—San Antonio 2007, pet. denied) (“A trial court’s order denying a motion to compel arbitration, if based on the TAA, is reviewable by interlocutory appeal.”). 4 in favor of arbitration is “strong”). “We review a trial court’s order denying a motion to compel arbitration for abuse of discretion.” Henry, 551 S.W.3d at 115 (citing In re Labatt Food Serv., L.P., 279 S.W.3d 640, 642–43 (Tex. 2009) (orig. proceeding)). “A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner” or “without reference to any guiding rules or principles.” In re Nitla S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002) (orig. proceeding); Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985). “We defer to the trial court’s factual determinations if they are supported by evidence but review its legal determinations de novo.” Henry, 551 S.W.3d at 115. “A trial court that refuses to compel arbitration under a valid and enforceable arbitration agreement has clearly abused its discretion.” In re Odyssey Healthcare, Inc., 310 S.W.3d 419, 422 (Tex. 2010) (orig. proceeding) (per curiam). “[A]bsent unmistakable evidence that the parties intended the contrary, it is the courts rather than arbitrators that must decide ‘gateway matters’ such as whether a valid arbitration agreement exists.” Lennar Homes of Tex. Land & Constr., Ltd. v. Whiteley, 672 S.W.3d 367, 376 (Tex. 2023) (quoting In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005)). We review these matters de novo. Id. (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003)). B. Analysis Endurance argues by one multifarious issue that the trial court erred because (1) a valid arbitration agreement exists, (2) Cortez’s claims are within the scope of that agreement, and (3) Cortez has not established any defense to enforcement. As part of its first sub-issue, Endurance contends Cortez is equitably estopped from denying the 5 agreement’s validity because he directly sought and received benefits from it. See, e.g., Taylor Morrison of Tex., Inc. v. Ha, 660 S.W.3d 529, 533 (Tex. 2023). Finally, Endurance contends in the alternative that the county court should have held an evidentiary hearing before ruling on its motion. See Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992) (“[T]he trial court may summarily decide whether to compel arbitration on the basis of affidavits, pleadings, discovery, and stipulations. However, if the material facts necessary to determine the issue are controverted, by an opposing affidavit or otherwise admissible evidence, the trial court must conduct an evidentiary hearing to determine the disputed material facts.”); see In re Weeks Marine, Inc., 242 S.W.3d 849, 862 (Tex. App.—Houston [14th Dist.] 2007, orig. proceeding) (“When faced with conflicting affidavits, . . . a trial court may not adjudicate defenses to enforceability of an arbitration agreement without an evidentiary hearing.”). 3 As noted above, Endurance attached a copy of a “Vehicle Service Contract” bearing Cortez’s name and vehicle information to its motion to compel, along with a declaration by its corporate representative stating that this “is the agreement between [Cortez] and Endurance.” On appeal, Cortez presents only one argument for why the agreement is unenforceable—namely, because he was not provided a copy of it until several months after he entered into it. 4 He states in his brief, without reference to authority or the record, that he “purchased the [subject] warranty via the telephone and no specific terms or restrictions were provided to [him] at the time of the sale or within a 3 The record reflects that the county court did take limited testimony from Cortez at the December 2, 2025 hearing. 4 Cortez does not argue on appeal that the agreement is procedurally or substantively unconscionable. 6 reasonable time after the sale.” He argues that “[a]bsent evidence of sufficient notice of the Vehicle Service Contract, the arbitration provisions are unenforceable as a matter of law as there could be no meeting of the minds.” See David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (“A meeting of the minds is necessary to form a binding contract.”); Bandera County v. Hollingsworth, 419 S.W.3d 639, 645 (Tex. App.—San Antonio 2013, no pet.) (“‘Meeting of the minds’ describes the mutual understanding and assent to the agreement regarding the subject matter and the essential terms of the contract.”). But as Endurance observes, it was not necessary for the contract to be physically delivered to Cortez in order for it to be enforceable. See, e.g., Templeman v. Closs, 212 S.W. 187, 189 (Tex. App.—Galveston 1919, no writ) (“The general rule as to delivery of written instruments does not require that a copy or duplicate of a mutual agreement be delivered to each of the parties in order to render the agreement effective.”); see also Domingo v. Mitchell, 257 S.W.3d 34, 40 (Tex. App.—Amarillo 2008, pet. denied) (noting “a ‘meeting of the minds’ is not an independent element of a valid contract” but “is merely a mutuality subpart of the offer and acceptance elements”). Moreover, though Cortez asserts on appeal that he did not assent to the arbitration clause, he did not state that in his affidavit, and there is no other competent evidence to that effect. Instead, Cortez acknowledged in his affidavit that Endurance “sent the contract to [him] on October 24, 2023,” eight months before he filed one of the warranty claims giving rise to his breach of contract action. 5 Cortez averred he “would not have agreed to the contract and cancelled the contract immediately” if he knew there was an arbitration 5 The justice court records include a copy of a mechanic’s work order indicating that Cortez made a claim on his warranty on June 10, 2024, which Endurance denied. 7 clause, but he was aware of the clause on October 24, 2023, at the latest, see EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996) (per curiam) (“We presume a party . . . who has the opportunity to read an arbitration agreement and signs it, knows its contents.”), and yet it is undisputed that he never exercised his contractual right to cancel. In any event, we agree with Endurance that, even if there was no initial “meeting of the minds,” Cortez is estopped from now challenging the agreement’s validity because he sought and received direct benefits under it. Under the doctrine of “direct-benefits estoppel,” a non-signatory plaintiff who has sought the benefits of a contract is “estopped from simultaneously attempting to avoid the contract’s burdens, such as the obligation to arbitrate disputes.” Taylor Morrison of Tex., Inc., 660 S.W.3d at 533 (quoting In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005) (orig. proceeding)); In re FirstMerit Bank, N.A., 52 S.W.3d 749, 755 (Tex. 2001) (“[A] litigant who sues based on a contract subjects him or herself to the contract’s terms.”). The non-signatory may seek the benefits of a contract “either by suing based on the contract, or by conduct that ‘deliberately seeks and obtains substantial benefits from the contract itself.’” Taylor Morrison of Tex., Inc., 660 S.W.3d at 533 (first citing In re FirstMerit Bank, N.A., 52 S.W.3d at 755; and then quoting In re Weekley Homes, L.P., 180 S.W.3d at 132). “If a non[-]signatory seeks the benefits of a contract with an arbitration clause, then the non[-]signatory must arbitrate all claims that fall within the scope of that arbitration clause.” Id. Here, Cortez alleged in his small-claims petition that Endurance: (1) deceptively “coerce[d]” him into entering into the subject contract; and (2) “did not comply with the contract” by failing to “cover costs” on grounds that the damages at issue were attributable to “normal wear and tear.” The petition did not specify the precise causes of action being 8 raised, but Cortez acknowledges on appeal that the petition raised claims for both “deceptive practices and breach of contract.” See Lennar Homes, 672 S.W.3d at 377 (“When the alleged liability arises from the contract or must be determined by reference to it, equity prevents the non-signatory plaintiff from avoiding an arbitration clause that was part of that contract.” (internal alterations omitted)); In re Weekley Homes, 180 S.W.3d at 131–32 (“[W]hether a claim seeks a direct benefit from a contract containing an arbitration clause turns on the substance of the claim, not artful pleading.”). Importantly, the petition was filed eleven months after Cortez, by his own admission, was given a written copy of the contract containing the arbitration clause. 6 Endurance argues that, even after receiving a written copy of the agreement, “Cortez continued to receive benefits under [it] by making claims to Endurance and receiving reimbursement for covered repairs to his vehicle.” See In re Weekley Homes, L.P., 180 S.W.3d at 132 (noting “a nonparty may seek or obtain direct benefits from a contract by means other than a lawsuit” and “a nonparty may be compelled to arbitrate if it deliberately seeks and obtains substantial benefits from the contract itself”). 7 Cortez conceded in the factual allegations in his small-claims petition that he made “claims” on the warranty which were “den[ied]” by Endurance—in other words, he sought direct benefits from the contract. And it is undisputed Cortez continued paying monthly 6 In his small-claims petition, Cortez refers to the written contract as “the actual contract” which Endurance allegedly breached. He has never argued, nor is there any evidence, that his earlier phone conversation with Endurance constituted a separately-enforceable oral agreement lacking an arbitration clause. 7 Endurance contends on appeal that Cortez “ma[d]e multiple claims under the [Vehicle Service Contract] for repairs to his vehicle, including at least one claim that Endurance paid.” In support, it cites only its reply to Cortez’s response filed in the trial court, which made the same factual allegation without reference to any evidence. We note that Cortez has never disputed that Endurance accepted at least one of his claims and paid for repairs pursuant to the warranty. 9 premiums, as required by the written contract, even after being made aware of the arbitration clause. For the foregoing reasons, Cortez is precluded from challenging the validity of the agreement in this proceeding. See Taylor Morrison of Tex., Inc., 660 S.W.3d at 533. It is undisputed that the claims he raises in his suit “relat[e] to the Coverage provided under [the contract]” and therefore fall within the scope of the arbitration clause. See Wagner, 627 S.W.3d at 282. Finally, Cortez has not raised any meritorious defense to enforcement. See Henry, 551 S.W.3d at 115. Accordingly, the trial court abused its discretion by failing to grant Endurance’s motion to abate and compel arbitration. See In re Odyssey Healthcare, Inc., 310 S.W.3d at 422. Endurance’s issue is sustained. III. CONCLUSION We reverse the trial court’s judgment and remand for further proceedings consistent with this memorandum opinion. YSMAEL D. FONSECA Justice Delivered and filed on the 12th day of November, 2026. 10