Granite Construction Company and RPM xConstruction, LLC v. Upper Trinity Regional Water District

Summary

The Texas Court of Appeals, Second District, considered an interlocutory appeal concerning arbitration-related orders in a dispute over construction of the Leon Hurse Dam project. The court held that the trial court, rather than the arbitrator, had to determine whether the nonsignatory Upper Trinity Regional Water District was bound by the subcontract’s arbitration provision. Applying direct-benefits estoppel and the broad scope of the arbitration clause, the court reversed the denial of arbitration and directed the trial court to refer the relevant claims to arbitration and stay related proceedings.

Holdings

1. The trial court, not the arbitrator, must decide whether an arbitration agreement exists between a non-signatory and the signatories to an arbitration agreement, even when the contract incorporates AAA rules containing a delegation-of-arbitrability provision.
2. The District was bound by the subcontract's arbitration provision under the doctrine of direct-benefits estoppel because it sued RPM based on contractual duties and sought recovery under the subcontract.
3. The District–Granite claims and Granite pass-through claims fell within the scope of the subcontract's broad arbitration clause.
4. The trial court erred by denying arbitration of the District–Granite and pass-through claims and by staying the arbitrations; those rulings were reversed, the claims were ordered referred to arbitration, and related trial-court proceedings were ordered stayed.

Questions Presented

1. Whether the trial court or the arbitrator had authority to decide whether a non-signatory District was bound by the subcontract's arbitration agreement.
2. Whether the District was bound to arbitrate under the subcontract through direct-benefits estoppel.
3. Whether the District–Granite claims and Granite pass-through claims fell within the scope of the subcontract's broad arbitration clause.
4. Whether the trial court erred by staying arbitration and denying arbitration of the District–Granite and pass-through claims.

Disposition

reversed_and_remanded