Sunbelt Securities Inc., the Fisher Group, Cheryl Brown, Jeanine Fisher, and Monique Mandell v. David Mark Mandell and Ray J. Black, Permanent Administrator of the Estate of William M. Mandell

Opinion issued January 31, 2023




                                      In The

                               Court of Appeals
                                     For The

                          First District of Texas
                             ————————————
                              NO. 01-21-00209-CV
                            ———————————
SUNBELT SECURITIES, INC., THE FISHER GROUP, CHERYL BROWN,
     JEANINE FISHER, AND MONIQUE MANDELL, Appellants
                                        V.
     DAVID MARK MANDELL AND RAY J. BLACK, PERMANENT
     ADMINISTRATOR OF THE ESTATE OF WILLIAM MANDELL,
                    DECEASED, Appellees


                      On Appeal from Probate Court No. 1
                             Harris County, Texas
                       Trial Court Case No. 473,747-402


                          MEMORANDUM OPINION

      Appellants Sunbelt Securities, Inc. (Sunbelt), The Fisher Group, Cheryl

Brown (Brown), Jeannine Fisher (Fisher), (collectively, the Sunbelt Appellants), and

Monique Mandell (Monique) appeal the trial court’s orders denying their motions to
compel arbitration and sustaining objections to an affidavit filed in support. After

this appeal had been filed but before submission, Monique and appellees David

Mandell (David) and Ray J. Black, permanent administrator of the Estate of William

Mandell, deceased (the Administrator), settled all of their pending claims against

each other.

      Due to the settlement between Monique, David, and the Administrator, we

dismiss Monique’s appeal as moot. The Sunbelt Appellants’ appeal is not moot, and

we affirm the trial court’s denial of the Sunbelt Appellants’ motion to compel

arbitration.

                                   Background

      The underlying action is a probate dispute involving investment funds that

were in William Mandell’s investment account at Sunbelt. In 2011, William set up

an investment account with The Fisher Group. His brokerage account application

was purportedly signed by William, along with Fisher in her capacity as “Registered

Rep,” and Patrick Smetek in his capacity as “Office Manager/Principal.” Fisher and

her colleague, Brown, do business together under the assumed name The Fisher

Group, and are agents of Sunbelt. Smetek is the founder and Chief Compliance

Officer of Sunbelt. William’s brokerage account application does not refer to or

mention Sunbelt by name, nor does it contain an arbitration clause, but it does

contain the following language:


                                         2
      Pre-Dispute Arbitration

      This account is governed by a pre-dispute arbitration clause, which
      appears on the last page of the Client Agreement, and you acknowledge
      that you have received a copy of this clause.

      According to the Sunbelt Appellants, the Client Agreement or Brokerage

Account Customer Agreement that would have applied to William’s account

contained the following arbitration provision:

      Resolving Disputes – Arbitration

      This agreement contains a pre-dispute arbitration clause. Under this
      clause, which becomes binding on all parties when you sign your
      account application, you, we, and NFS agree as follows:

      A. All parties to this agreement are giving up the right to sue each other
      in court, including the right to a trial by jury, except as provided by the
      rules of the arbitration forum in which a claim is filed.

      B. Arbitration awards are generally final and binding; a party’s ability
      to have a court reverse or modify an arbitration award is very limited.
      C. The ability of the parties to obtain documents, witness statements,
      and other discovery is generally more limited in arbitration than in court
      proceedings.

      D. The arbitrators do not have to explain the reason(s) for their award.
      E. The panel of arbitrators will typically include a minority of
      arbitrators who were or are affiliated with the securities industry.

      F. The rules of some arbitration forums may impose time limits for
      bringing a claim in arbitration. In some cases, a claim that is ineligible
      for arbitration may be brought in court.

      G. The rules of the arbitration forum in which the claim is filed, and
      any amendments thereto, shall be incorporated into this agreement.



                                          3
      All controversies that may arise between me, You and NFS concerning
      any subject matter, issue or circumstance whatsoever (including, but
      not limited to, controversies concerning any account, order or
      transaction, or the continuation, performance, interpretation or breach
      of this or any other agreement between me, You and NFS whether
      entered into or arising before, on or after the date this account is
      opened) shall be determined by arbitration in accordance with the rules
      then prevailing of the Financial Industry Regulatory Authority
      (FINRA) or any United States securities self-regulatory organization or
      United States securities exchange of which the person, entity or entitles
      against whom the claim is made is a member, as I may designate. If I
      designate the rules of a United States self-regulatory organization or
      United States securities exchange and those rules fail to be applied for
      any reason, then I shall designate the prevailing rules of any other
      United States securities self-regulatory organization or United States
      securities exchange of which the person, entity or entities against whom
      the claim is made is a member. If I do not notify You in writing of my
      designation within five (5) days after such failure or after I receive from
      You a written demand for arbitration, then I authorize You and/or NFS
      to make such designation on my behalf. The designation of the rules of
      a United States self-regulatory organization or United States securities
      exchange is not integral to the underlying agreement to arbitrate. I
      understand that judgment upon any arbitration award may be entered in
      any court of competent jurisdiction.
      This Brokerage Account Customer Agreement included definitions for “us,”

“we”, and “our”—i.e., “your broker/dealer”—, and “account owner,” “you” and

“your”—i.e., “the owner(s) indicated on the account application.” It did not,

however, define “me,” “I,” or “broker/dealer.” William named Monique, his wife,

as the transfer-on-death (TOD) beneficiary for his account.

       Around 2017, David, William’s son, opened his own investment account at

Sunbelt. David’s brokerage account application, like William’s, was signed by

Fisher in her capacity as “Registered Rep,” and “Smetek” in his capacity as “Office

                                          4
Manager/Principal.” Similar to William’s, David’s account application did not

contain an arbitration clause, but included the following language: “You

acknowledge that this account is governed by a pre-dispute arbitration clause, which

appears on the last page of the Brokerage Account Customer Agreement, and that

you have read the pre-dispute arbitration clause.” According to the Sunbelt

Appellants, the Brokerage Account Customer Agreement that would have applied to

David’s account included the following arbitration provision:

      Resolving Disputes – Arbitration

      This agreement contains a pre-dispute arbitration clause. Under this
      clause, which becomes binding on all parties when you sign your
      account application, You, your Broker/Dealer, and NFS agree as
      follows:

      A. All parties to this agreement are giving up the right to sue each other
      in court, including the right to a trial by jury, except as provided by the
      rules of the arbitration forum in which a claim is filed.

      B. Arbitration awards are generally final and binding; a party's ability
      to have a court reverse or modify an arbitration award is very limited.
      C. The ability of the parties to obtain documents, witness statements,
      and other discovery is generally more limited in arbitration than in court
      proceedings.
      D. The arbitrators do not have to explain the reason(s) for their award
      unless, in an eligible case, a joint request for an explained decision has
      been submitted by all parties to the panel at least 20 days prior to the
      first scheduled hearing date.

      E. The panel of arbitrators will typically include a minority of
      arbitrators who were or are affiliated with the securities industry.



                                          5
      F. The rules of some arbitration forums may impose time limits for
      bringing a claim in arbitration. In some cases, a claim that is ineligible
      for arbitration may be brought in court.

      G. The rules of the arbitration forum in which the claim is filed, and
      any amendments thereto, shall be incorporated into this agreement.
      All controversies that may arise between me, my Broker/Dealer and
      NFS concerning any subject matter, issue or circumstance whatsoever
      (including, but not limited to, controversies concerning any account,
      order or transaction, National Financial Services LLC, Member NYSE,
      SIPC or the continuation, performance, interpretation or breach of this
      or any other agreement between me, my Broker/Dealer and NFS
      whether entered into or arising before, on or after the date this account
      is opened) shall be determined by arbitration in accordance with the
      rules then prevailing of the Financial Industry Regulatory Authority
      (FINRA) or any United States securities self-regulatory organization or
      United States securities exchange of which the person, entity or entities
      against whom the claim is made is a member, as I may designate. If I
      designate the rules of a United States self-regulatory organization or
      United States securities exchange and those rules fail to be applied for
      any reason, then I shall designate the prevailing rules of any other
      United States securities self-regulatory organization or United States
      securities exchange of which the person, entity or entities against whom
      the claim is made is a member. If I do not notify you in writing of my
      designation within five (5) days after such failure or after I receive from
      you a written demand for arbitration, then I authorize you and/or NFS
      to make such designation on my behalf. The designation of the rules of
      a United States self-regulatory organization or United States securities
      exchange is not integral to the underlying agreement to arbitrate. I
      understand that judgment upon any arbitration award may be entered in
      any court of competent jurisdiction.

This Brokerage Account Customer Agreement included definitions for “us,” “we”,

and “our”—i.e., “your broker/dealer”—, and “account owner,” “you” and “your”—

i.e., “the owner(s) indicated on the account application.” It did not, however, define

“me,” “I,” or “broker/dealer.” Neither David’s account application nor the

                                          6
Brokerage Account Customer Agreement mentioned Sunbelt either generally or

specifically as “broker/dealer.” According to Sunbelt, David closed his account and

Sunbelt wrote off the remaining balance of $0.48 in December 2017.

      According to David, he and William were estranged for a substantial part of

their lives. William murdered David’s mother in 1972 and David sued William in

1995 for alleged mismanagement of his mother’s estate. See Mandell v. Mandell,

 (Tex. App.—Houston [14th Dist.] 2007, no pet.). David and

William repaired their relationship over the years, becoming particularly close in the

last few years of William’s life. In early January 2019, William was admitted to

Memorial Hermann, where he stayed until his death.

      On January 23, 2019, Sunbelt received a fax purporting to be from William,

who was still in the hospital, requesting that Sunbelt and Fisher transfer all securities

and cash from William’s account to David’s account. At the time of the alleged

transfer request, David was not a customer of Sunbelt. Because the alleged fax raised

questions with Sunbelt’s compliance department, Sunbelt did not honor the alleged

request at that time and placed a temporary hold on William’s account. After

receiving a call from David regarding the requested transfer on January 24, Smetek

informed David that Sunbelt could not accept the fax instructions and that David

would need to obtain a court order instructing Sunbelt to transfer the funds to him.




                                           7
      On January 30, 2019, William died. Monique, the TOD beneficiary for

William’s account, produced the necessary documents and transfer request to

transfer the funds and securities in William’s account to her own personal account.

Between January 24, 2019 and March 25, 2019, David took no action to prevent

Sunbelt from honoring William’s designation of Monique as the TOD beneficiary.

Accordingly, on March 25, the assets in William’s account were transferred to

Monique’s account.

      David filed the underlying suit against the Sunbelt Appellants and Monique1

in probate court on December 23, 2019. The relevant petition for purposes of this

appeal is David’s third amended petition, in which David asserted claims against the

Sunbelt Appellants for breach of fiduciary duty, conspiracy, tortious interference

with contract, negligent misrepresentation, fraud, and promissory estoppel based on,

among other things, the Sunbelt Appellants’ failure to transfer the assets in

William’s account to David upon receipt of the notarized letter. David also asserted

similar causes of action related to William’s account against Monique for

conspiracy, aiding and abetting the breach of fiduciary duty, tortious interference

with contract, conversion, and fraud, as well as other causes of action against

Monique related to other real property not associated with William’s account at issue



1
      David also sued Leonard Mandell, William’s brother. Leonard is not a party to this
      appeal.
                                           8
here. The permanent administrator of William’s estate, Ray J. Black, intervened

claiming the suit affected assets of William’s estate.

      The Sunbelt Appellants and Monique moved to compel arbitration “to a

FINRA [Financial Industry Regulatory Authority] arbitrator in accordance with

FINRA arbitration rules” based on the arbitration agreements contained in the

Brokerage Account Customer Agreements purportedly applicable to William and

David’s accounts. In support of their motion to compel arbitration, the Sunbelt

Appellants submitted the affidavit of Smetek, along with various supporting

documents, including account statements from William’s and David’s accounts, the

account applications for William’s and David’s accounts, and the Brokerage

Account Customer Agreements for William’s and David’s accounts. David and the

Administrator opposed the motions to compel and objected to portions of Smetek’s

affidavit on the grounds of lack of personal knowledge, hearsay, speculation,

conclusory statements, and inadequate authentication.

      The trial court conducted two hearings on the motions to compel arbitration

on March 8, 2021 and March 26, 2021. On April 9, 2021, the trial court signed three

orders; one order globally sustained all the objections to Smetek’s affidavit, and the

other two orders denied the Sunbelt Appellants’ and Monique’s motions to compel

arbitration.




                                          9
      On April 16, 2021, the Sunbelt Appellants filed a motion for clarification of

the evidentiary rulings or, in the alternative, for reconsideration of the evidentiary

rulings. After hearing the motion for reconsideration on April 26, 2021, the trial

court signed an amended order on the objections to the affidavit of Patrick Smetek.

The amended order states the specific affidavit paragraph numbers and grounds for

which the objections were sustained or overruled. This interlocutory appeal

followed.

      After this Court notified the parties that the case was set for submission by

oral argument, the Sunbelt Appellants filed a letter notifying this Court that a

settlement had been reached between Monique and David and the Administrator. In

that letter, the Sunbelt Appellants stated that they were writing to inform this Court

of the settlement and to give this Court “an opportunity to take whatever action it

deems appropriate to determine whether the underlying claims in the trial court and,

as a consequence the arbitration controversy in the appellate court, have been

rendered moot by settlement.” In response, this Court requested supplemental

briefing on the settlement and whether the settlement mooted the appeals. All parties

filed supplemental briefing and confirmed that Monique and David and the

Administrator had settled their claims and, thus, Monique’s appeal was moot. The

Sunbelt Appellants and Monique also contend that the settlement moots David’s

claims against the Sunbelt Appellants, and thus, their appeal, while David and the


                                         10
Administrator contend that his claims against the Sunbelt Appellants remain. The

Sunbelt Appellants also filed a motion to compel production of the settlement

agreement, which this Court denied.

      Accordingly, before addressing the merits of the Sunbelt Appellants’ and

Monique’s appeals, we consider the threshold question of mootness.

                                      Mootness

      Appellate courts are not to decide moot controversies, a rule rooted in

constitutional prohibitions against rendering advisory opinions. See Nat’l Collegiate

Athletic Ass’n v. Jones, 

 (Tex. 1999); see also Valley Baptist Med.

Ctr. v. Gonzalez, 

 (Tex. 2000) (per curiam) (“Under article II,

section 1 of the Texas Constitution, courts have no jurisdiction to issue advisory

opinions.”). A case becomes moot if there ceases to be an actual controversy between

the parties at any stage of the litigation. Jones, 

; see Robinson v. Alief

I.S.D., 

 (Tex. App.—Houston [14th Dist.] 2009, pet. denied).

If a judgment can have no practical effect on an existing controversy, the case

becomes moot, and any opinion issued on the merits in the appeal would constitute

an impermissible advisory opinion. Thompson v. Ricardo, 

(Tex. App.—Houston [14th Dist.] 2008, no pet.). A case becomes moot if, during

the appeal, either of the opposing sides of the litigation ceases to have a legally

cognizable interest in the appeal’s outcome. See Jones, 

.


                                          11
A.    Monique’s Appeal

      In their supplemental briefing related to the settlement, Monique, David, and

the Administrator each state that there has been a settlement of their underlying

claims against each other. Despite admitting in her briefing that, due to the

settlement, her appeal was moot (and arguing that Sunbelt’s appeal was moot as

well), counsel for Monique contended at oral argument that the terms of the

settlement agreement had not been fulfilled, and that she filed a motion to enforce

the settlement agreement with the trial court within 30 days of the entry of the

February 2022 dismissal orders, and therefore, her appeal in this case is not moot.

The record before this Court does not include any motion to enforce the settlement

agreement, any order on such motion, or any other information indicating that the

settlement agreement was not complied with or that any party had revoked or

attempted to revoke their consent to settlement. Rather, the supplemental clerk’s

record filed shortly before oral argument only contains the agreed motions to dismiss

filed by Monique and David, as well as the trial court’s February 3 and 7 orders

dismissing all claims between Monique and David, with prejudice.2



2
      We also note that Monique’s supplemental brief, in which she argued that “the
      settlement . . . mooted the controversy between David and Monique” and prayed
      that this Court find that “this appeal has been rendered moot in its entirety by way
      of the settlement agreement,” was filed approximately seven months after she
      contends her motion to enforce the settlement agreement was filed. Yet she makes
      no mention of the motion to enforce in her supplemental brief, nor did she request
      that a copy of the motion to enforce be included in a supplemental clerk’s record.
                                           12
       The existence of an actual controversy is essential to the exercise of appellate

jurisdiction. See, e.g., Valley Baptist Med. Ctr., 

. “Appellate courts

are prohibited from deciding moot controversies.” Jones, 

; see City

of Farmers Branch v. Ramos, 

 (Tex. App.—Dallas 2007, no

pet.) (noting that court may only decide issues presenting “a live controversy at the

time of the decision”). If a controversy ceases to exist or the parties lack a legally

cognizable interest in the outcome at any stage, the case becomes moot. See Allstate

Ins. Co. v. Hallman, 

 (Tex. 2005); Williams v. Lara, 

 (Tex. 2001) (noting that “a controversy must exist between the parties at

every stage of the legal proceedings, including the appeal”). “[C]ourts have an

obligation to take into account intervening events that may render a lawsuit moot.”

Heckman v. Williamson Cnty., 

, 166–67 (Tex. 2012). If a proceeding

becomes moot, the court must dismiss the proceeding for want of jurisdiction. See

.

       Based on the record before us, which reflects that Monique, David, and the

Administrator have settled the underlying claims and all claims pending between

those parties, including the claims between these parties related to the Sunbelt

accounts at issue in this appeal, have been dismissed by the trial court below, we



       Rather, as noted above, she argued that the settlement and dismissal of the claims
       between herself and David and the Administrator mooted her appeal.
                                           13
hold that a live controversy has ceased to exist between these parties and Monique’s

appeal is moot. Accordingly, we dismiss Monique’s appeal for lack of jurisdiction.

See TEX. R. APP. P. 42.3(a); 43.2(f).

B.    The Sunbelt Appellants’ Appeal

      A separate issue is whether the Sunbelt Appellants’ appeal is also moot based

on the settlement between Monique, David, and the Administrator. The Sunbelt

Appellants contend that although David has not produced the settlement agreement,

his counsel stated in email communications related to the settlement that “David

disclaims any interest he has in the funds that are or have been in Monique’s

possession in Sunbelt Accounts xxx8186 (William Mandell) and xxx0104 (Monique

Mandell).” The Sunbelt Appellants argue that David received settlement

consideration far greater than the amount necessary to satisfy his claimed interest in

the accounts and that, absent allocation evidence from David, receipt by David of

any further sum in this action would result in a double recovery in violation of the

one satisfaction rule. Monique likewise contends that the entire proceeding is moot

based on the settlement because David’s claims against the Sunbelt Appellants are

based on his claimed entitlement to the funds in William’s Sunbelt account, but by

disclaiming any interest he had in the funds, David “cannot now claim that he is

entitled to them.” Thus, based on David’s “express waiver to any rights in the




                                         14
property made the subject of David’s claims,” Monique argues that his claims

against the Sunbelt Appellants are untenable and the entire appeal is moot.

      In contrast, David asserts that the only settlement was between David, the

Administrator, and Monique, and that the trial court’s orders dismissing his claims

against Monique expressly reserved his claims against the Sunbelt Appellants. David

also contends that the settlement agreement between himself and Monique could not

release the Sunbelt Appellants for their separate tortious conduct.

      1.     One Satisfaction Rule

      “Under the one satisfaction rule, a plaintiff is entitled to only one recovery for

any damages suffered.” Sky View at Las Palmas, LLC v. Mendez, 

,

106–07 (Tex. 2018) (quoting Crown Life Ins. Co. v. Casteel, 

(Tex. 2000)); see also Stewart Title Guar. Co. v. Sterling, 

 (Tex.

1991) (“The one satisfaction rule applies to prevent a plaintiff from obtaining more

than one recovery for the same injury.”). The Texas Supreme Court first articulated

the one-satisfaction principle in Bradshaw v. Baylor University:

      It is a rule of general acceptation that an injured party is entitled to but
      one satisfaction for the injuries sustained by him. That rule is in no
      sense modified by the circumstance that more than one wrongdoer
      contributed to bring about his injuries. There being but one injury, there
      can, in justice, be but one satisfaction for that injury.

 (1935), overruled in part by Duncan v. Cessna Aircraft Co., 

 (Tex. 1984). In Stewart Title, the Texas Supreme Court clarified


                                          15
that the fundamental consideration in applying the one-satisfaction rule is whether

the plaintiff has suffered a single, indivisible injury—not the causes of action the

plaintiff asserts: “There can be but one recovery for one injury, and the fact that more

than one defendant may have caused the injury or that there may be more than one

theory of liability, does not modify this rule.” 

. Thus, the rule applies

both “when the defendants commit the same act as well as when defendants commit

technically differing acts which result in a single injury.” 

. In First Title Co.

of Waco v. Garrett, the Court explained the rule’s rationale as it applies to settlement

credits for nonsettling defendants:

      [T]he plaintiff should not receive a windfall by recovering an amount
      in court that covers the plaintiff’s entire damages, but to which a settling
      defendant has already partially contributed. The plaintiff would
      otherwise be recovering an amount greater than the trier of fact has
      determined would fully compensate for the injury.

 (Tex. 1993). A nonsettling defendant seeking a settlement credit

under the one-satisfaction rule has the burden to prove its right to such a credit. Utts

v. Short, 

 (Tex. 2002); Mobil Oil Corp. v. Ellender, 

 (Tex. 1998). In Ellender, the Court held that a nonsettling defendant meets

this burden by introducing into the record either the settlement agreement or some

other evidence of the settlement amount. 

; see also Utts, 

. “Once the nonsettling defendant demonstrates a right to a settlement

credit, the burden shifts to the plaintiff to show that certain amounts should not be


                                           16
credited because of the settlement agreement’s allocation.” Utts, 

.

The plaintiff can rebut the presumption that the nonsettling defendant is entitled to

settlement credits by presenting evidence showing that the settlement proceeds are

allocated among defendants, injuries, or damages such that entering judgment on the

jury’s award would not provide for the plaintiff’s double recovery. See 

 at 828–

29 (requiring nonsettling plaintiff to show that it did not benefit from settlement);

Casteel, 22 S.W.3d at 391–92 (requiring showing of allocation between joint and

separate damages); Ellender, 

 (requiring showing of allocation

between actual and punitive damages); First Title, 

 (applying one-

satisfaction rule when plaintiff did not show it settled for separate injury). A written

settlement agreement that specifically allocates damages to each cause of action will

satisfy this burden. Ellender, 

; see also First Title, 

 (examining contents of settlement agreement).

      These one-satisfaction-rule cases cited by the Sunbelt Appellants, however,

involve settlement credits applied after the jury had awarded damages in favor of the

plaintiff against the nonsettling defendant. For example, in Sky View, the plaintiff

settled with three defendants before trial, one defendant after trial but before entry

of judgment, and proceeded to a jury trial against the remaining defendants. Sky

View, 

 & n.4. After the jury rendered its verdict, and in response

to the plaintiff’s motion for entry of judgment, the nonsettling defendants alleged


                                          17
that the plaintiff benefited from the settlement agreement with the other defendants

based on the same injury for which the jury awarded him damages, and that allowing

the plaintiff to recover the full amount of the jury’s award would result in a double

recovery. 

. The Texas Supreme Court noted that this “is a proper time and

method to raise the one-satisfaction rule.” Id.; see also Utts, 

(holding that nonsettling defendant properly raised settlement-credit issue in

response to plaintiff’s motion for judgment).

      These cases do not hold that the plaintiff’s claims are moot against the non-

settling defendants because of a settlement with other defendants, but instead hold

that the plaintiff is only entitled to one recovery for the same injury. Thus, the

application of the one satisfaction rule in these cases resulted in a settlement credit

which mitigated some or all of the plaintiff’s damages against the nonsettling

defendant, not in the courts dismissing the plaintiff’s claims against the nonsettling

defendants as moot because of the settlement. The Sunbelt Appellants have not

pointed this Court to any case law where a court has applied the one-satisfaction rule

in the same procedural posture as this case, i.e., where a nonsettling defendant seeks

to apply the one satisfaction rule before an award of damages has been rendered

against the nonsettling defendant, nor have they cited to any case law applying this

rule to render an appeal moot. Whether the Sunbelt Appellants will be ultimately

entitled to a settlement credit based on David’s settlement with Monique in the event


                                          18
a jury (or arbitrator) finds in favor of David based on his claims against them does

not make the Sunbelt Appellants’ appeal moot. See, e.g., San Saba Energy, L.P. v.

Crawford, 

 (Tex. App.—Houston [14th Dist.] 2005, no pet.)

(holding that “[t]he application of [the one satisfaction] rule does not moot any issue

in the case” because despite appellant’s execution of release and assignment of

royalty interest, even if operated to fully compensate appellant for alleged damages,

live controversy still existed in that trial court could render take-nothing judgment);

see also Christus Health & Christus Health Gulf Coast v. Kone Inc., No. 14-07-

00786-CV, 

, at *5 (Tex. App.—Houston [14th Dist.] June 25,

2009, pet. denied) (mem. op.) (application of one-satisfaction rule did not render

appeal moot).

      Thus, we decline to hold that David and the Administrator’s settlement with

Monique moots David’s claims against the Sunbelt Appellants, as non-settling

defendants, based on the one satisfaction rule.

      2.     Disclaimer

      As noted above, Monique, and the Sunbelt Appellants to some extent, also

contend that the Sunbelt Appellants’ appeal is moot because, via the settlement,

David has disclaimed any interest in or relinquished his claim to the funds from

William’s account. Thus, according to appellants, the entire proceeding is moot




                                          19
because David’s claims against the Sunbelt Appellants are based on his claimed

entitlement to the funds in William’s account.

      The parties have not submitted the settlement agreement to this Court.

Although the Sunbelt Appellants filed a motion to compel production of the

settlement agreement, that motion was filed with this Court, not with the trial court,

and did not provide this Court with any support demonstrating that an appellate court

has the authority to compel production of documents. See Mot. to Compel (citing

TEX. R. CIV. P. 192.3(g) (rule for practice in district and county courts permitting

discovery of settlement agreements); 194.2(h) (former rule for practice in district

and county courts requiring disclosure of settlement agreements in pre 1/1/2021

cases)).

      Further, in Monique’s supplemental briefing and in David’s letter response

related to the settlement agreement, and again at oral argument, Monique and David

both indicated that they would provide the settlement agreement, under seal, if

ordered to do so. Again, neither party has pointed to any authority of this Court to

either seal documents or order parties to produce documents. And none of the parties

has moved this Court to abate the appeal to allow the trial court to consider whether

the settlement agreement should be (1) sealed, or (2) produced.

      Without the language in the settlement agreement, we cannot determine the

effect of David’s purported “disclaimer.” See TEX. PROP. CODE § 240.002(2)


                                         20
(defining “Disclaim” as “to refuse to accept an interest in or power over property,

including an interest or power the person is entitled to . . . by . . . other contract or

arrangement”); id. 240.002(6) (defining “Disclaimer” as “the refusal to accept an

interest in or power over property”); id. § 240.051(c) (“If an interest in property

passes because of an event not related to the death of a decedent . . . a disclaimer of

the interest . . . takes effect . . . as of the time the instrument creating the interest

became irrevocable.”). Meaning, it is not clear if David was disclaiming his interest

in the funds in William’s account as that term is used in the property code, or if he

was agreeing to relinquish any claim to those funds in the future in exchange for the

settlement. The parties do not cite to the statutes from the Property Code, nor expand

on the disclaimer argument, except to say generally that if David has disclaimed any

interest he has in the funds, “he cannot now claim that he is entitled to them.”

      Without the language of the settlement agreement, we are left with the motion

to dismiss and orders from the trial court. In the agreed motion to dismiss filed in

the trial court, David stated that he “no longer desire[d] to pursue the claims he raised

in this matter against Monique,” requested that the court dismiss, with prejudice,

those claims, but “expressly d[id] not dismiss his claims against any other Defendant

in this matter.” This same language appears in the trial court’s order granting the

agreed motion to dismiss. A plaintiff may settle with one or more defendants and

still retain a cause of action as to those remaining. Henderson v. S. Farm Bureau Ins.


                                           21
Co., 

 (Tex. App.—Texarkana 2012, pet. denied); see also

Underkofler v. Vanasek, 

 (Tex. 2001) (agreeing that defendant

was not entitled to summary judgment on basis that plaintiff’s settlement of

underlying case eliminated any claim for damages, in part, because settlement did

not include all defendants). “A tortfeasor can claim the protection of a release only

if the release refers to him by name or with such descriptive particularity that his

identity or his connection with the tortious event is not in doubt.” Atl. Lloyds Ins.

Co. v. Butler, 

 (Tex. App.—Houston [1st Dist.] 2004, pet.

denied) (quoting Duncan, 

).

      Here, it is undisputed that the Sunbelt Appellants are not parties to the

settlement and that David expressly reserved, i.e., did not dismiss, his claims against

the Sunbelt Appellants. Based on what we have in the record before us, we cannot

conclude that David’s settlement with Monique, and any purported disclaimer of his

interest in the funds from William’s account, moots David’s claims against the

Sunbelt Appellants and, relatedly, the Sunbelt Appellants’ appeal from the trial

court’s denial of their motion to compel arbitration of those claims. Thus, we turn to

the merits of the Sunbelt Appellants’ appeal.

                          Motion to Compel Arbitration

      In their first issue, the Sunbelt Appellants argue that the trial court erred in

denying their motion to compel arbitration because both William and David signed


                                          22
valid agreements to arbitrate. The Sunbelt Appellants argue that the Brokerage

Account Applications signed by William and David incorporated by reference the

Brokerage Account Customer Application, which contained the applicable

arbitration clause. In response, David and the Administrator argue that there was no

valid agreement to arbitrate signed by either William or David because the

arbitration agreements do not identify the parties and, with respect to William’s

purported arbitration agreement specifically, no evidence of the Client Agreement

allegedly containing the arbitration clause was introduced into evidence.

C.    Standard of Review and Applicable Legal Principles

      “We review a trial court’s order denying a motion to compel arbitration for

abuse of discretion.” Henry v. Cash Biz, LP, 

 (Tex. 2018); SK

Plymouth, LLC v. Simmons, 

, 714 (Tex. App.—Houston [1st Dist.]

2020, no pet.). A trial court abuses its discretion if it acts in an arbitrary or

unreasonable manner or acts without reference to any guiding rules or principles.

Downer v. Aquamarine Operators, Inc., 

, 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, 

.

      A party seeking to compel arbitration under the FAA must establish that (1)

there is a valid arbitration agreement and (2) the claims in dispute fall within that

agreement’s scope. In re Rubiola, 

 (Tex. 2011); Simmons, 605


                                          23
S.W.3d at 714. Here, the parties initially dispute whether the Sunbelt Appellants met

their burden to show that there was a valid, enforceable arbitration agreement.

      The trial court’s determination as to the validity of an arbitration agreement is

a legal determination that we review de novo. See Jody James Farms, JV v. Altman

Grp., Inc., 

 (Tex. 2018); J.M. Davidson, Inc. v. Webster, 

 (Tex. 2003). While there is a strong policy favoring arbitration, this

policy does not apply to the initial determination whether there is a valid arbitration

agreement. In re Kellogg Brown & Root, Inc., 

 (Tex. 2005).

The presumption favoring arbitration arises only after the party seeking to compel

arbitration establishes a valid agreement to arbitrate because “the purpose of the

FAA [is] to make arbitration agreements as enforceable as other contracts, not more

so.” 

 at 738 (quoting Bridas S.A.P.I.C. v. Gov’t of Turkm., 

, 354 n.4

(5th Cir. 2003)).

      To determine whether there was a valid agreement to arbitrate, we apply

ordinary principles of state contract law. Simmons, 605 S.W.3d at 715. The elements

of a valid contract are (1) an offer, (2) an acceptance, (3) a meeting of the minds, (4)

each party’s consent to the terms, and (5) execution and delivery of the contract with

the intent that it be mutual and binding. Prime Prods., Inc. v. S.S.I. Plastics, Inc., 

 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).




                                           24
D.    William’s Arbitration Agreement

      With respect to William’s account, the Sunbelt Appellants argue that there

was a valid agreement to arbitrate as evidenced by William’s account application,

which incorporated by reference the “Client Agreement” containing the applicable

arbitration clause. The Sunbelt Appellants contend that the Brokerage Account

Customer Agreement, attached to Smetek’s affidavit as Attachment 14, is one and

the same as the Client Agreement referred to in William’s account application and

contains the applicable arbitration clause. Essentially, therefore, the first dispute we

must resolve is whether the unsigned Brokerage Account Customer Agreement, i.e.,

Attachment 14 to Smetek’s affidavit, was incorporated by reference into the account

agreement signed by William. We hold that it was not.

      “A party cannot be required to arbitrate unless it has agreed to do so.” Trico

Marine Servs., Inc. v. Stewart & Stevenson Tech. Servs., Inc., 

(Tex. App.—Houston [1st Dist.] 2002, no pet.) (quoting Hou–Scape, Inc. v. Lloyd,

 (Tex. App.—Houston [1st Dist.] 1997, orig. proceeding)). The

parties’ agreement to arbitrate must be clear. 

      The doctrine of incorporation by reference provides that “an unsigned paper

may be incorporated by reference in the paper signed[.]” Owen v. Hendricks, 

 (Tex. 1968); see also Trico Marine Servs., 

. “The

language used is not important provided the document signed by the defendant


                                          25
plainly refers to another writing.” Owen, 

. Plainly referring to a

document requires more than merely mentioning the document. Bob Montgomery

Chevrolet, Inc. v. Dent Zone Cos., 

 (Tex. App.—Dallas 2013,

no pet.). The language in the signed document must show the parties intended for

the other document to become part of the agreement. 

 Furthermore, the

incorporated document must be referenced by name. Stewart & Stevenson, LLC v.

Galveston Party Boats, Inc., No. 01-09-00030-CV, 

, at *11 (Tex.

App.—Houston [1st Dist.] Nov. 5, 2009, no pet.) (mem. op.); Gray & Co. Realtors,

Inc. v. Atl. Hous. Found. Inc., 

 (Tex. App.—Dallas 2007, no

pet.).

         As noted above, William’s account application itself did not include an

arbitration clause, but instead stated as follows:

         Pre-Dispute Arbitration
         This account is governed by a pre-dispute arbitration clause, which
         appears on the last page of the Client Agreement, and you acknowledge
         that you have received a copy of this clause.

This provision plainly refers to a “Client Agreement” which contains the applicable

“pre-dispute arbitration clause.” The Sunbelt Appellants did not introduce any

document entitled a “Client Agreement” in support of their motion to compel.

Rather, the only document purportedly applicable to William’s account was entitled

a “Brokerage Account Customer Agreement.”


                                          26
      While the Sunbelt Appellants contend that the words “customer” and “client"

are synonymous, their interpretation ignores the case law set out above requiring a

document to “plainly refer[] to” and “reference[] by name” another document in

order for it to be incorporated by reference. See Owen, 

; Bob

Montgomery Chevrolet, 

; Stewart & Stevenson, 

, at *11; Gray & Co. Realtors, 

. Here, the document

referenced in the account application and the purported incorporated document do

not even have the same title. Cf. Trico Marine Servs., 73 S.W.3d at 549–50 (holding

reference in heading in proposal to “General Terms and Conditions of Sale”

followed by blank space did not “plainly refer, as a matter of law, to any separate

document” and, thus, did not incorporate by reference separate document containing

arbitration clause, even though it was entitled “General Terms & Conditions of

Sale”). While William’s account application unambiguously refers to a Client

Agreement, there is no mention of a separate Brokerage Account Customer

Agreement in that account application. Nor is there any indication in the Brokerage

Account Customer Agreement itself that it was alternatively entitled or referred to

as the Client Agreement. Accordingly, we decline to hold that this reference to a

“Client Agreement” in William’s account application plainly referred to the




                                        27
Brokerage Account Customer Agreement attached as Attachment 14 to the Smetek

affidavit such that it was incorporated by reference.3

      Because there was no Client Agreement before the trial court, and thus no

evidence of the language of the arbitration clause contained in that Client

Agreement, we hold that the trial court did not err in denying the Sunbelt Appellants’

motion to compel arbitration on the basis that there was lack of evidence of a valid

and enforceable arbitration agreement between William and the Sunbelt Appellants.

E.    David’s Arbitration Agreement

      With respect to David’s account, the Sunbelt Appellants likewise argue that

the Brokerage Account Customer Agreement containing the arbitration provision

was incorporated by reference into the account application. In response, David

contends that even if the Brokerage Account Customer Agreement was incorporated


3
      Furthermore, we find the case relied on by the Sunbelt Appellants in support of their
      incorporation by reference argument to be distinguishable. See In re Raymond
      James & Assocs., Inc., 

, 318–19 (Tex. App.—Houston [1st Dist.]
      2006, orig. proceeding). In Raymond James, a panel of this Court considered
      whether a “New Account Form,” which was signed by the plaintiffs and included a
      statement that, by signing, the account holders agreed to abide by the terms and
      conditions in the Client Agreement, including an arbitration clause, effectively
      incorporated by reference the Client Agreement. 

. This Court held that it
      did: “The New Account Form, in a statement just above the Account Holders’
      signature line, incorporates the Client Agreement by reference, plainly referring to
      the Client Agreement, which contains a binding arbitration clause.” 

. There
      was no dispute in Raymond James, as there is here, however, about whether the
      Client Agreements introduced applied to the account holders. Thus, we find
      Raymond James inapplicable to the question before us today, i.e., whether the
      reference in the account application to the “Client Agreement” plainly refers to and
      incorporates a separate document titled by a different name.
                                           28
by reference into the account application, it is not a valid arbitration agreement

because it does not identify the parties.

      In 2017, David sought to open his own individual investment brokerage

account by signing a “Brokerage Account Application.” The Brokerage Account

Application directs that it is to be used to “open a brokerage account with your

Broker/Dealer to be held at National Financial Services LLC.” The Brokerage

Account Application, however, does not define “Broker/Dealer,” does not otherwise

identify The Fisher Group or Sunbelt as the Broker/Dealer, and does not contain a

reference to either The Fisher Group or Sunbelt anywhere in the document. The

Brokerage Account Application is signed by Fisher, in the capacity of “Registered

Rep,” and by “Smetek,” in the capacity of “Office Manager/Principal.”

      David’s Brokerage Account Application contains the following language:

“You acknowledge that this account is governed by a pre-dispute arbitration clause,

which appears on the last page of the Brokerage Account Customer Agreement, and

that you have read the pre-dispute arbitration clause.” Included in the documents

attached to Smetek’s affidavit are a “Brokerage Account Customer Agreement” that

the Sunbelt Appellants contend was incorporated by reference into David’s account

application. This Brokerage Account Customer Agreement includes the following

definitions of “Who’s Who in This Agreement”:




                                            29
      In this document, “us,” “we,” and “our” refer to your Broker/Dealer.
      “NFS” is National Financial Services LLC, a NYSE member, whom
      we have engaged to provide custody and clearing services for us.

      The terms “account owner,” “you,” and “your” refer to the owner(s)
      indicated on the account application.
The Brokerage Account Customer Agreement also includes the following language:

“All controversies that may arise between me, my Broker/Dealer and NFS

concerning any subject matter, issue or circumstance whatsoever . . . shall be

determined by arbitration[.]”

      As noted above, although there is a strong presumption favoring arbitration,

that presumption arises only after the party seeking to compel arbitration proves a

valid arbitration agreement exists. Kellogg Brown & Root, Inc., 

;

see also Carr v. Main Carr Dev., LLC, 

 (Tex. App.—Dallas

2011, pet. denied) (“Even the exceptionally strong policy favoring arbitration cannot

justify requiring litigants to forego a judicial remedy when they have not agreed to

do so.”). The parties’ agreement to arbitrate must be clear, see Trico Marine Servs.,

, including the identity of the parties who have agreed to arbitrate.

See VSR Fin. Servs., Inc. v. McLendon, 

, 827–29 (Tex. App.—Dallas

2013, no pet.); see also McCarthy v. Azure, 

 (1st Cir.1994) (“The

federal policy [favoring arbitration], however, does not extend to situations in which

the identity of the parties who have agreed to arbitrate is unclear.”).



                                          30
      Neither the account application nor the Brokerage Account Customer

Agreement for David’s account reference Sunbelt or The Fisher Group by name.

The only arbitration clause appears in the Brokerage Account Customer Agreement

and provides that it applies between “You, your Broker/Dealer, and NFS.”

Furthermore, the arbitration clause purports to cover “[a]ll controversies that may

arise between me, my Broker/Dealer and NFS concerning any subject matter, issue

or circumstance whatsoever . . . .” However, “Broker/Dealer” is not defined

anywhere in the Brokerage Account Customer Agreement. Thus, even if the

Brokerage Account Customer Agreement was incorporated by reference into the

account application, it does not define or identify the specific parties with which

David is to arbitrate other than NFS and “your” or “my” “Broker/Dealer.”

      Further, although the account application is signed by Fisher, it identifies her

only as “Registered Rep” not as Broker/Dealer. Similarly, although the account

application is signed by “Smetek,” his signature appears only in the capacity of

“Office Manager/Principal” not in any apparent representative capacity of Sunbelt

or as Broker/Dealer. Moreover, although the account application includes references

to “Broker/Dealer,” just like the Brokerage Account Customer Agreement, that term

is not defined anywhere in the application.

      Sunbelt appears to argue that Broker/Dealer as referenced in both the account

application and the Brokerage Account Customer Agreement necessarily refers to


                                         31
the Sunbelt Appellants, and therefore, David agreed to arbitrate his claims against

them. What is clear from the evidentiary record in this case, however, is there is no

definition in the account application or the Brokerage Account Customer Agreement

of the term “Broker/Dealer,” and neither the account application nor the Brokerage

Account Customer Agreement declare Sunbelt or any other person or entity to be

the “Broker/Dealer.”

      We find this case to be analogous to VSR Financial Services, 409 S.W.3d at

827–29, where the Dallas Court of Appeals considered a similar issue. There, the

appellees sued VSR and the Chapman defendants, who provided accounting services

and investment advice, for an investment loss sustained by appellees. 

 at 821–22.

Appellees opened brokerage accounts and signed a “VSR New Account Form,”

which identified VSR by name and was signed by one of the Chapman defendants

in the capacity of a “Registered Rep.” Id. at 822. The “VSR New Account Form”

did not contain an arbitration clause. Id. The appellees also signed account

agreements, which contained an arbitration clause encompassing disputes between

the account owner and the “Introducing Firm, Clearing Agent and any Sub–Advisor

(and/or any other agent),” and incorporated by reference terms and conditions that

contained an identical arbitration provision as the account agreement. Id. The term

“Introducing Firm” was not defined in either the account agreement or the terms and




                                         32
conditions, nor was VSR or any other entity declared to be the “Introducing Firm”

in either document. Id.

      Considering whether VSR and the Chapman defendants could enforce the

arbitration provisions against the appellees, the Dallas court noted that VSR is not a

named party to the Agreements, there is no definition in the Agreements or the Terms

and Conditions of the term “Introducing Firm,” and neither the Agreements nor the

Terms and Conditions declare VSR or any other entity to be the “Introducing Firm.”

Id. at 828. The court rejected VSR’s argument that the evidence could not be

construed “in any way other than concluding that reference to the Introducing Firm

was intended to mean VSR,” explaining that “the question is not whether we believe

VSR could be the ‘Introducing Firm,’ [but rather] the trial court abused its discretion

in concluding there was no clear agreement between VSR and appellees to arbitrate.”

Id. at 828–29. The court concluded that the trial court should not have found a valid,

enforceable agreement between VSR and appellees to arbitrate, and thus, did not

abuse its discretion in denying the motions to compel arbitration. Id. at 829.

      For these same reasons, we hold that the Sunbelt Appellants failed to carry

their burden to establish the existence of a valid and enforceable arbitration

agreement between them and David. Therefore, the trial court did not abuse its

discretion in denying the Sunbelt Appellants’ motion to compel arbitration based on

David’s account.


                                          33
      Because we hold that the Sunbelt Appellants failed to carry their burden to

introduce evidence of a valid and enforceable arbitration provision related to either

William or David’s accounts, we do not reach their remaining arguments in their

first issue related to whether David’s claims fall within the scope of the arbitration

provisions, or their arguments in their fourth issue related to whether the trial court

erred in denying their motion to compel arbitration based on David and the

Administrator’s defenses to enforcement. Accordingly, we overrule the Sunbelt

Appellants’ first and fourth issues.

      In their second and third issues, the Sunbelt Appellants argue that the trial

court abused its discretion by sustaining various conclusory and hearsay objections

to Smetek’s affidavit submitted in support of their motion to compel arbitration.

However, the evidence the Sunbelt Appellants argue was erroneously excluded was

not necessary to resolve the dispositive argument before this court, which is the legal

question of whether a valid agreement to arbitrate existed between the Sunbelt

Appellants and David or William. As this excluded evidence was not relevant to our

legal determination that no enforceable arbitration agreement existed between the

Sunbelt Appellants and David or William, we do not need to consider whether the

affidavit in question was adequate evidence. See TEX. R. APP. P. 47.1.

      We overrule the Sunbelt Appellants’ second and third issues.




                                          34
                                  Conclusion

      Having found no valid and enforceable arbitration agreement, we affirm the

interlocutory order of the trial court denying the Sunbelt Appellants’ motion to

compel arbitration. We further dismiss Monique’s appeal as moot.




                                                 Amparo Guerra
                                                 Justice
Panel consists of Justices Goodman, Hightower, and Guerra.




                                       35