Jonathan Thompson, P.E., and Atlas Design Services, PLLC v. Thompson-Hamilton Engineering Services, LLC D/B/A Atlas Design Services and Sharon Hamilton, P.E.
Date Filed2023-12-21
Docket03-22-00155-CV
Cited0 times
StatusPublished
Full Opinion (html_with_citations)
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
ON MOTION FOR REHEARING
NO. 03-22-00155-CV
Jonathan Thompson, P.E., and Atlas Design Services, PLLC, Appellants
v.
Thompson-Hamilton Engineering Services, LLC D/B/A Atlas Design Services and Sharon
Hamilton, P.E., Appellees
FROM THE 274TH DISTRICT COURT OF HAYS COUNTY
NO. 20-2211, THE HONORABLE SHERRI TIBBE, JUDGE PRESIDING
M E M O RAN D U M O PI N I O N
We withdraw our previous opinion and judgment issued on October 12, 2023, and
substitute the following opinion and judgment in their place. We deny the motion for rehearing
filed by appellants.
Appellants Jonathan Thompson, P.E., and Atlas Design Services, PLLC
(collectively, Thompson) appeal from the trial courtâs denial of Thompsonâs motion to compel
arbitration. In the underlying suit, appellees Thompson-Hamilton Engineering Services, LLC
d/b/a Atlas Design Services (Thompson-Hamilton) and Sharon Hamilton, P.E. (collectively,
Hamilton) sued Thompson for damages and injunctive relief, asserting that Thompson unlawfully
diverted assets from Thompson-Hamilton, a business co-owned by Jonathan Thompson and
Sharon Hamilton. After Hamilton filed a motion for contempt, seeking to enforce the partiesâ
agreed temporary injunction, Thompson moved to compel arbitration based on a provision in an
unsigned mediated settlement agreement. For the reasons explained below, we affirm the denial
of the motion to compel arbitration.
BACKGROUND
Jonathan Thompson and Sharon Hamilton have co-owned Thompson-Hamilton
Engineering Services, LLC d/b/a Atlas Design Services since 2007. Hamilton alleges in the live
petition in the underlying suit that Jonathan Thompson started Atlas Design Services, PLLC, a
competing business, for his own pecuniary gain. Hamilton further alleges that Jonathan shifted
existing and prospective business from Thompson-Hamilton to his competing business by hiding
the true identity of the competing business from Thompson-Hamiltonâs existing and prospective
customers through his unlawful use of Thompson-Hamiltonâs assumed name, trade dress, and
reputation in the local engineering community. In addition, Hamilton alleges that Thompson
unlawfully appropriated Thompson-Hamiltonâs confidential information.
Hamilton sued Thompson in October 2020, seeking damages and declaratory and
injunctive relief, and asserting claims for (1) breach of contract, (2) breach of fiduciary duty,
(3) misappropriation of confidential and proprietary information, (4) tortious interference with
existing and prospective contracts, (5) unfair competition, (6) deceptive advertising and use of
assumed name, (7) misappropriation of brand and trade-dress infringement and (8) fraud. In
November 2020, the trial court signed an agreed temporary injunction.
After the parties attended mediation in February 2021, the mediator circulated a
draft mediated settlement agreement (Agreement) to the parties. That Agreement contained a
provision establishing that â[a]ny further disputes between the parties will be submitted to binding
2
arbitration before [the mediator].â The Agreement was never signed by the parties or filed with
the trial court.
Neither partyâs counsel signed the Agreement. When the mediator circulated the
agreement by email to the partiesâ attorneys, requesting that they â[s]ee attached and please
confirm by reply to all,â Hamiltonâs former counsel replied â[a]greed to substance and formâ in a
one-line email. Nothing in the record indicates that Thompsonâs counsel ever replied.
The next month, Hamilton filed an amended petition seeking, in addition to the
other claims, a declaration that the partiesâ Agreement âis void, unenforceable, and therefore
rescinded as a result of Defendant [Jonathan] Thompson fraudulently inducing [Hamilton] to enter
into the [Agreement] with no intent of complying by its termsâeither in whole or in part.â
Hamilton alleged that Jonathan Thompson âmade false representations of material fact and created
the false and misleading impression that he was acting in good faith in order to end the lawsuitâ
and that the evidence would show that Jonathan âsurreptitiously plotted his ruse with the specific
intent of harming [Hamilton] for [Thompsonâs] own financial benefit.â
In January 2022, Hamilton filed a motion for contempt, seeking to enforce the
agreed temporary injunction, arguing that the Agreement never became effective and the agreed
temporary injunction remained in effect. 1 In February 2022, Thompson moved to compel
arbitration under the Texas Arbitration Act, asserting that the Agreement was valid and enforceable
and required the trial court to send the matter to arbitration. See Tex. Civ. Prac. & Rem. Code
1
Hamilton retained new counsel in summer 2021. Hamiltonâs new counsel sent a ten-page
letter to Thompsonâs counsel on October 15, 2021, seeking to âfinalize the settlement of this case
prior to end of the calendar yearâ and addressing various issues to be resolved by the parties
surrounding settlement to accomplish that goal. According to the letter, each party at that point
was taking the position that the other party had first breached terms of the Agreement. However,
no party has asserted to the trial court that the other party has breached the Agreement.
3
§§ 171.021-.026, .096(d). After conducting a hearing on both motions, without making findings
of fact or conclusions of law, the trial court granted Hamiltonâs motion for contempt and denied
Thompsonâs motion to compel arbitration. 2 This interlocutory appeal followed. See id.
§ 171.098(a)(1).
ANALYSIS
In two issues, Thompson challenges the trial courtâs denial of the motion to compel
arbitration.3 First, Thompson asserts that the trial court erred by denying the motion because a
valid and enforceable agreement to arbitrate existed. Second, Thompson contends that the trial
court erred by denying the motion because Hamilton failed to establish the asserted defense of
waiver of arbitration. We turn first to the issue of whether an enforceable agreement to arbitrate
existed because it is potentially dispositive.
Standard of Review
âArbitration is a creature of contract between consenting parties.â Jody James
Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 629 (Tex. 2018). â[A] party seeking to compel
arbitration must establish the existence of a valid arbitration agreement and the existence of a
2
According to Hamiltonâs brief, Sharon Hamilton appeared at the hearing and testified as
a live witness; Jonathan Thompson did not. Thompson failed to make arrangements to pay for the
reporterâs record and to ensure the proper filing of the reporterâs record. However, because we
resolve this interlocutory appeal as a matter of law, and not based on any implied fact finding by
the trial court, we need not determine the effect of Thompsonâs failure to provide a record of what
appears to be an evidentiary hearing.
3
In a third issue, Thompson asserts that if we determine that a valid agreement to arbitrate
exists between the parties, we should grant mandamus relief from the trial courtâs order holding
Thompson in contempt for violations of the agreed temporary injunction. Because we conclude
that no valid agreement to arbitrate exists, we overrule this issue.
4
dispute within the scope of the agreement.â Rachal v. Reitz, 403 S.W.3d 840, 843(Tex. 2013). âWhether parties have agreed to arbitrate is a gateway matter ordinarily committed to the trial court and controlled by state law governing âthe validity, revocability, and enforceability of contracts generally.ââ Jody James Farms,547 S.W.3d at 631
(quoting Arthur Andersen LLP v. Carlisle,556 U.S. 624, 631
(2009)).
Thompson moved to compel arbitration under the Texas Arbitration Act, which
establishes that a âwritten agreement to arbitrateâ is enforceable if the agreement is to arbitrate
either an existing controversy or one that âarises between the parties after the date of the
agreement.â Tex. Civ. Prac. & Rem. Code § 171.001(a). We review a trial courtâs denial of a
motion to compel arbitration for abuse of discretion, deferring to the trial courtâs factual
determinations if supported by the evidence, and reviewing the courtâs legal determinations
de novo. Dargahi v. Handa, No. 03-17-00386-CV, 2017 WL 5247517, at *2 (Tex. App.âAustin Nov. 8, 2017, no pet.) (mem. op.); SEB, Inc. v. Campbell, No. 03â10â00375âCV,2011 WL 749292
,
at *2 (Tex. App.âAustin Mar. 2, 2011, no pet.) (mem. op.) (noting courts apply same standard of
review whether appeal is brought under Texas Arbitration Act or Federal Arbitration Act).
When one party resists arbitration, the trial court must determine whether a valid
agreement to arbitrate exists, which is a question of law subject to de novo review. Baby Dolls
Topless Saloons, Inc. v. Sotero, 642 S.W.3d 583, 585-86 (Tex. 2022) (per curiam) (citing J.M. Davidson, Inc. v. Webster,128 S.W.3d 223, 227
(Tex. 2003)); see also Oak Crest Manor Nursing Home, LLC v. Barba, No. 03-16-00514-CV,2016 WL 7046844
, at *2 (Tex. App.âAustin Dec. 1,
2016, no pet.) (mem. op.) (âWhether the parties agreed to be bound to an arbitration agreement is
a contract-formation question that we review de novo, deferring to the trial courtâs findings of
historical fact as between the parties so long as those determinations are supported by evidence.â).
5
To challenge an arbitration clause, a party can contest (1) the validity of the contract as a whole,
(2) the validity of the arbitration provision specifically, and (3) whether an agreement exists at all.
RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 124(Tex. 2018) (citing In re Morgan Stanley & Co.,293 S.W.3d 182, 187
(Tex. 2009)). Challenges of the third typeâthat the contract never came into existenceâare decided by the court. RSL Funding,569 S.W.3d at 124
; see also Tex. Civ.
Prac. & Rem. Code § 171.021(b) (âIf a party opposing an application [to arbitrate under an
agreement to arbitrate] denies the existence of the agreement, the court shall summarily determine
that issue.â). In opposition to the motion to compel arbitration, Hamilton raised this third type
of challenge.
Did the parties have a valid and enforceable agreement?
Thompson argues that the Agreement and the arbitration provision contained within
it are valid and enforceable because Hamiltonâs signature, as a matter of law, was not a condition
precedent to being bound by the terms of the Agreement. Thompson asserts that the Agreementâs
plain text did not require a signature as a condition precedent. Thompson further contends that the
evidence before the trial court of the partiesâ conduct conclusively demonstrates that the parties
had agreed to the terms of the Agreement, even though they did not sign the document. In
response, Hamilton asserts that the Agreement is unenforceable because (1) it does not satisfy Rule
11âs minimum requirements for settlement agreements, (2) the Agreement contemplates that the
partiesâ signatures are required to take effect, and (3) Thompsonâs conduct demonstrates lack of
intent to be bound by the unsigned Agreement.
We interpret arbitration agreements under traditional contract principles. J.M.
Davidson, Inc., 128 S.W.3d at 228. To prove the existence of a valid contract, a party âmust
6
establish that (1) an offer was made; (2) the other party accepted in strict compliance with the
terms of the offer; (3) the parties had a meeting of the minds on the essential terms of the contract
(mutual assent); (4) each party consented to those terms; and (5) the parties executed and delivered
the contract with the intent that it be mutual and binding.â USAA Tex. Lloyds Co. v. Menchaca,
545 S.W.3d 479, 502 n.21 (Tex. 2018). âContracts require mutual assent to be enforceable. Evidence of mutual assent in written contracts generally consists of signatures of the parties and delivery with the intent to bind.â Baylor Univ. v. Sonnichsen,221 S.W.3d 632, 635
(Tex. 2007) (per curiam) (citations omitted); cf. Phillips v. Carlton Energy Group, LLC,475 S.W.3d 265, 277
(Tex. 2015) (explaining that âwhile signature and delivery are often evidence of the mutual assent
required for a contract, they are not essential . . . âunless the parties explicitly require signatures as
a condition of mutual assentââ (footnote omitted)).
The central question here is whether the parties executed and delivered the contract
with the intent that it be mutual and binding. In response to Thompsonâs motion to compel
arbitration, Hamilton asserted that the Agreement never became effective because it was never
signed by either party. Hamilton further alleged that the parties were still negotiating significant
details about the final settlement terms, and thus, the Agreement âwas for all intents and purposes,
an âagreement to agreeââ that is unenforceable because neither party ever signed it or filed it or the
post-mediation email with the trial court as a Rule 11 agreement. Thompson contends on appeal
that the absence of the partiesâ signatures on the Agreement is not dispositive of the question of
whether they intended to be bound, relying on cases holding that â[a] party may accept a contract,
and indicate its intent to be bound to the terms by acts and conduct in accordance with the terms.â
E.g., Thomas J. Sibley, P.C. v. Brentwood Inv. Dev. Co., L.P., 356 S.W.3d 659, 663(Tex. App.âEl Paso 2011, pet. denied) (citing Augusta Dev. Co. v. Fish Oil Well Servicing Co.,761 S.W.2d 538
,
7
544 (Tex. App.âCorpus ChristiâEdinburg 1988, no writ) (âHowever, in order to constitute a
contract in writing, a writing does not necessarily have to be signed by both parties, so long as the
party not signing accepts the contract by his acts, conduct or acquiescence.â)). In addition,
Thompson relies on Section 171.001 of the Texas Arbitration Act, which requires only that an
agreement to arbitrate be in writing but does not require the agreement to be signed to be
enforceable, except in limited circumstances not present here. Tex. Civ. Prac. & Rem. Code
§ 171.001(a); see also id. § 171.002 (requiring signatures on arbitration agreements for acquisition
contracts for property or services for less than $50,000 and agreements to arbitrate personal-injury
claims).
However, as Thompson acknowledges, âwhen the terms of the contract make it
clear that a signature is required, a partyâs failure to sign the agreement will render the agreement
unenforceable.â St. Davidâs Healthcare Pâship, LP v. Fuller, 627 S.W.3d 707, 711 (Tex. App.â Austin 2021, pet. dismâd) (quoting Wright v. Hernandez,469 S.W.3d 744, 758
(Tex. App.âEl Paso 2015, no pet.) (citing e.g., Simmons & Simmons Constr. Co. v. Rea,286 S.W.2d 415, 418-19
(Tex. 1955) (concluding evidence did not support juryâs verdict enforcing contract when one party
had not signed contract, contract contained signature block, contract itself stated that partiesâ
signatures had to be notarized, and contract was given to one party with directions to sign it and
return to other party for signing))). Thompson argues that the plain language of the Agreement
does not expressly require a signature because it acted only as memorialization of the agreement
that the parties reached at the mediation and â[n]o portion of the text of the [Agreement] explicitly
requires a signature for the agreement to be valid.â We disagree.
When we construe a written contract, our primary concern âis to ascertain the true
intentions of the parties as expressed in the instrument.â Coker v. Coker, 650 S.W.2d 391, 393
8
(Tex. 1983). To achieve this objective, we âexamine and consider the entire writing in an effort to
harmonize and give effect to all the provisions of the contract so that none will be rendered
meaningless.â Id.Objective manifestations of the partiesâ intent control, and â[w]e therefore âpresume parties intend what the words of their contract say.ââ URI, Inc. v. Kleberg County,543 S.W.3d 755, 764
(Tex. 2018) (quoting Gilbert Tex. Constr., L.P. v. Underwriters at Lloydâs London,327 S.W.3d 118, 127
(Tex. 2010)).
Several parts of the Agreement express an intent that the partiesâ signatures are
required for it to become effective. The introductory paragraphs state as follows:
Today the undersigned mediated with Patrick Keel. After consulting with their
attorneys, the parties and their attorneys now sign this document to memorialize
the terms of their agreement under § 154.071 of the Texas Civil Practice &
Remedies Code and Rule 11 of the Texas Rules of Civil Procedure.
Although the mediator assisted in drafting this agreement, the parties and their
attorneys thoroughly reviewed the document and made or had the opportunity to
make any changes to it that the parties desired. The parties sign this agreement of
their own free will and without duress, relying on their own understanding of the
agreement and the advice of their attorneys.
(Emphases added). The document concludes âSigned on February 12, 2021,â followed by
signature blocks for Thompson and Hamilton to sign in both their individual and representative
capacities, as well as signature lines for each of their attorneys to approve the Agreement as
to form.
By referring to Section 154.071 and Rule 11, both of which require the signing of
a written agreement to establish an enforceable settlement agreement, the Agreement by its
unambiguous terms requires the partiesâ signatures to make it enforceable. See Tex. Civ. Prac. &
Rem. Code § 154.071(a) (âIf the parties reach a settlement and execute a written agreement
9
disposing of the dispute, the agreement is enforceable in the same manner as any other written
contract.â); Tex. R. Civ. P. 11 (âUnless otherwise provided in these rules, no agreement between
attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and
filed with the papers as part of the record, or unless it be made in open court and entered of
record.â). The Texas Supreme Court has held that âcompliance with Rule 11 is a general
prerequisite for any judgment enforcing an agreement touching a pending suit.â Kennedy v. Hyde,
682 S.W.2d 525, 529(Tex. 1984) (concluding that oral settlement agreement was unenforceable because it did not comply with Rule 11). In addition, the Agreement states in two separate places that the parties are signing âto memorialize the terms of their agreementâ and based on their agreement to those terms after reviewing and having the opportunity to make changes. Finally, the signature blocks require them to sign individually and in their representative capacities and their attorneys to sign to indicate their approval of the form. Together, these references to the partiesâ signatures are far more than the mere signature block that our sister court concluded was insufficient standing alone to establish that a partyâs signature is a condition precedent to the enforceability of the partiesâ agreement. See Wright,469 S.W.3d at 760
(citing Tricon Energy Ltd. v. Vinmar Intâl, Ltd.,718 F.3d 448, 454-55
(5th Cir. 2013)). We conclude that the Agreement
unambiguously requires the partiesâ signatures to become effective, and the undisputed evidence
establishes that the Agreement was not signed by the parties. Therefore, we hold that it is
not enforceable.
Because of this unambiguous language, we are not persuaded by Thompsonâs
argument that Hamiltonâs former counselâs email stating that he agreed to the substance and form
of the Agreement is conduct indicative of Hamiltonâs intent to be bound by the Agreementâs terms,
including the arbitration provision. We note that the mediatorâs email requested that both
10
Hamiltonâs counsel and Thompsonâs counsel confirm that the attached agreement was the
agreement reached at the mediation. Nothing in the record demonstrates that Thompsonâs counsel
responded or that either Hamilton or Thompson ever signed the Agreement. The cases relied upon
by Thompson involved contracts where at least one party signed the agreement and the courts
determined that there was no evidence of an intent to require both partiesâ signatures as a condition
precedent to the contractâs becoming effective. See, e.g., ABB Kraftwerke Aktiengesellschaft
v. Brownsville Barge & Crane, Inc., 115 S.W.3d 287, 292 (Tex. App.âCorpus ChristiâEdinburg
2003, pet. denied). Because we have determined that the Agreement unambiguously required the
partiesâ signatures to become enforceable, we conclude the trial court did not abuse its discretion
by denying the motion to compel arbitration.4
4
Because we conclude that the Agreement and the arbitration provision contained within
it are not enforceable absent the necessary signatures, we need not address Thompsonâs argument
that the partiesâ conduct after the mediation established their assent to be bound by the Agreement.
See Tex. R. App. P. 47.1. However, on rehearing, Thompson urges that we should enforce what
this Court has described as âthe Kennedy courtâs equitable-exception dictum.â Ebner v. First State
Bank of Smithville, 27 S.W.3d 287, 299(Tex. App.âAustin 2000, pet. denied) (citing Kennedy v. Hyde,682 S.W.2d 525, 529
(Tex. 1984) (holding that âcompliance with Rule 11 is a general prerequisite for any judgment enforcing an agreement touching a pending suitâ but also noting that âa nonconforming agreement may be enforced for . . . equitable reasons [of fraud or mistake]â). Thompson does not argue that the Agreement should be enforced on grounds of fraud or mistakeâ indeed, Thompson does not argue that any portion of the Agreement should be enforced other than the arbitration provision. Instead, Thompson argues that Hamilton âtook advantage of the [Agreement] by enforcing its provisions to her benefitâ and that she should not be able to denounce the Agreement because she does not dispute the existence of the Agreement or its terms. See Anderson v. Cocheu,176 S.W.3d 685, 688-89
(Tex. App.âDallas 2005, pet. denied) (noting exception to Rule 11âs writing requirement when existence of agreement and its terms are not disputed); Dehnert v. Dehnert,705 S.W.2d 849, 851
(Tex. App.âBeaumont 1986, no writ)
(holding husband could not take advantage of unsigned settlement agreement in divorce case by
receiving some property under agreement and then later denouncing agreement).
The record belies Thompsonâs contentions that Hamilton âenforcedâ the provisions of the
Agreement to her benefit and that she does not dispute the Agreementâs existence or terms.
Thompson bases his contentions on assertions in Hamiltonâs counselâs letter of Hamiltonâs claims
about the division of funds and projects. However, the letter itself demonstrates that some terms
of the Agreement were in dispute and that Hamilton sought âto finalize the settlement.â And as
11
CONCLUSION
Having concluded the trial court did not abuse its discretion by denying the motion
to compel arbitration, we affirm the interlocutory order.
__________________________________________
Gisela D. Triana, Justice
Before Justices Baker, Triana, and Theofanis
Affirmed
Filed: December 21, 2023
previously noted, Hamilton never attempted to enforce the Agreement in the trial court. On this
record, we cannot conclude that the trial court abused its discretion by failing to apply the equitable
exception to Rule 11âs requirements.
Similarly, because we have held that the Agreement and the arbitration provision contained
within it are not enforceable absent the necessary signatures, we do not reach Thompsonâs other
issue presented in which he contends the trial court erred by denying the motion to compel
arbitration because Hamilton had failed to establish the defense of waiver. See Tex. R. App. P. 47.1.
12