Texas Supreme Court finds Agreement to Arbitrate

Yesterday, we posted about a Third Court of Appeals opinion where a party seeking to compel arbitration was found to have not established the existence of an agreement to arbitrate. Today, the Texas Supreme Court addresses the same issue but comes up with the opposite result.

The case involved claims by investors against their stock broker based on Enron stock losses. In this case, the plaintiffs, who sought to avoid arbitration, signed contracts with a company called Olde Discount Corporation. The contracts contained arbitration clauses. Later, Olde changed its name to H&R Block, but the plaintiffs continued to use the same broker.

In October 2002, the plaintiffs sued H&R Block, and H&R Block moved to compel arbitration. The trial court denied the motion, and the Corpus Christi Court of Appeals denied the petition for mandamus (in 2003 – the opinion never explains the delay between these events and today’s opinion). The Supreme Court, however, disagreed with the other courts that looked at these facts and ordered the claims to arbitration.

According to the Court, H&R Block made an evidentiary record that demonstrated that the plaintiffs signed an agreement to arbitrate with Olde, and that H&R Block was simply the new name for Olde. Since the change in name would not have invalidated the contracts as a whole, it did not invalidate the arbitration clause, and H&R Block could enforce the arbitration clause in the Olde contract.

Like yesterday’s Third Court of Appeals opinion, the case does not make any new law, but read in concert together, the two opinions provide a good discussion of the burden of proof a party seeking to establish the existence of an agreement to arbitrate must meet.

In re: H&R Block, ___ S.W.3d ___ (Tex. 2007) (Cause No. 04-0061).

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