Chaudhry v. Rezy Group Inc et al

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
FAISAL CHAUDHRY,
Plaintiff,
v.
REZY GROUP, INC. and MICHAEL
CROW,
Defendants.
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Civil Action No. 3:25-CV -1322-X
MEMORANDUM OPINION AND ORDER
Before the Court are Defendants Rezy Group and Michael Crow’s motion to
compel arbitration (Doc. 24). Having carefully considered the motion, Plaintiff Faisal
Chaudhry’s 	response, 	Defendants’ 	reply, 	and 	applicable 	case 	law, 	the 	Court
GRANTS the motion.
I. 	Background
This case is about one of the many contracts executed by Faisal Chaudhry, his
company RCF Family LP (a non-party to this suit), and Rezy Group, and Michael
Crow (collectively “Defendants”). 	Specifically, Chaudhry seeks repayment with
interest on an unpaid promissory note and a guaranty. Chaudhry alleges that Rezy
Group executed a promissory note for $1,000,000. 	And on that promissory note,
Chaudhry contends that Crow executed a guaranty for 80% of the note. Additionally,
Chaudhry alleges that after Rezy Group had utilized the entire loan, Chaudhry
provided Crow an additional loan for $150,000.
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Otherwise, there are three other potentially relevant contracts between Rezy
Group, Inc., Crow, Chaudhry, and RCF Family LP:1 the April 1, 2024 Common Stock
Purchase Agreement, the April 10, 2024 Common Stock Purchase Agreement (“April
10th Agreement”), and the April 18, 2024 Stockholder’s Agreement for RCF Family
LP. Finally, as part of the business dealings, Chaudhry became the Chief Technology
Officer of Rezy Group and received 250,000 common shares. The parties are currently
in arbitration in Georgia regarding these contracts but not the promissory note and
guaranty.
Chaudhry’s claim against Rezy Group is failure to pay back the promissory
note and his claim against Crow is a breach of guaranty for an alleged failure to pay
for the indebtedness of Rezy Group. 	The Court previously denied Michael Crow’s
motion to dismiss this case, deeming the Court to have personal jurisdiction over him.
The Court denied Chaudhry’s motion for summary judgment because there are
material facts in dispute. Defendants have now jointly moved for the Court to compel
the claims against them to arbitration, joining the other disputes not before this
Court.
II. 	Legal Standard
The Federal Arbitration Act requires district courts to compel arbitration if
there is a valid arbitration agreement encompassing the issues in dispute.2 	In
determining whether the parties agreed to arbitrate the dispute, a court must
1 Defendants argue that these contracts are relevant to compel this action to arbitration with
the other disputes.
2 9 U.S.C. § 3.
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consider: (1) whether there is a valid agreement to arbitrate between the parties, and
(2) whether the dispute in question falls within the scope of that arbitration
agreement.3 The validity of the arbitration agreement is determined by traditional
state contract principles.4
III. 	Analysis
Following 	the 	Court’s 	determination 	of 	personal 	jurisdiction 	over 	Crow,
Defendants jointly filed this motion to compel arbitration. 	Defendants assert that
(1) a valid arbitration agreement exists, (2) all parties to this lawsuit are bound by
the arbitration provision in the April 10th Agreement, and (3) the promissory note
and the claims arising from it relate to the April 10th Agreement.
Chaudhry 	disagrees, 	contending 	that 	the 	arbitration 	provision 	is
unenforceable. 	For 	the 	reasons 	explained 	below, 	the 	Court 	concludes 	that
Chaudhry’s assertions lack merit and directs the claims in this action to arbitration.
A. There is a valid agreement to arbitrate between the parties.
The parties agree that the central documents underlying the relationship
between the parties include arbitration clauses. The April 10th agreement includes
the following arbitration provision:
4.2 Arbitration. Any controversy between the parties arising out or
relating to this Agreement shall be settled in arbitration in Atlanta,
State 	of 	Georgia, 	in 	accordance 	with 	the 	rules 	of 	The 	American
Arbitration Association, and judgment entered upon the award rendered
may be enforced by appropriate judicial action.
3 Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522, 530 (5th Cir.
2019).
4 Id.
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On March 26, 2025, Rezy initiated arbitration in Atlanta against RCF Family
LP and Faisal Chaudhry for disputes arising out of their contractual agreements.
Notably, Defendants have brought claims in arbitration to determine the validity and
enforceability of the promissory note. But at issue here is whether Chaudhry’s claims
in this action are within the scope of the arbitration agreement.
B. Chaudhry’s claims are within the scope of the arbitration agreement.
Chaudhry contends that (1) the claims are not covered by the arbitration
provision and (2) the provision does not list himself or Crow as signatories in their
individual capacities. For the reasons explained below, the Court concludes that all
Chaudhry’s claims fall within the scope of the April 10th Agreement’s arbitration
provision.
In determining whether the claims at issue are within the scope of the
arbitration provision, the Court must “examine the scope of the parties’ agreement,
as 	reflected 	in 	the arbitration clause.”5 	Here, 	the 	contract 	states 	that 	“any
controversy between the parties arising out or relating to this Agreement shall be
settled by arbitration[.]”6 This “relating to” language indicates a broadly construed
arbitration clause.7 	“Due regard must be given to the federal policy favoring
arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in
favor of arbitration.”8
5 Paper, Allied-Indus. Chem. & Energy Workers Int'l Union, Loc. 4-12 v. Exxon Mobil Corp.,
657 F.3d 272, 275 (5th Cir. 2011).
6 Doc. 25 at 30.
7 Emily’s Place, Inc. v. Regions Bank, 764 F. Supp. 3d 485, 492 (N.D. Tex. 2025).
8 Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Standford Junior Univ., 489 U.S. 468, 476 (1989).
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Section 1.2 of the April 10th Agreement directly addresses the promissory note
central to Chaudhry’s claims. 	The promissory note was fully executed on May 1,
2024, after the April 10th Agreement was executed. Chaudhry’s claims regarding the
promissory note and subsequent loan arise out of and relate to the April 10th
Agreement. 	Thus, the Court is “obliged to enforce the parties’ agreement according
to its terms” and finds that Chaudhry’s claims are all within the scope of the
arbitration provision, the merits of which are for the arbitrator—not the Court—to
decide.9
Defendants argue that even if Chaudhry did not sign the April 10th Agreement
in his individual capacity, he is subject to the arbitration provision because the
promissory note is incorporated into the April 10th Agreement by reference, and he
received direct benefits from the April 10th Agreement. Chaudhry acknowledges that
the promissory note is referenced in the April 10th Agreement but contends the
promissory note is not incorporated in the April 10th agreement and is expressly
governed by the terms of the promissory note itself. 	The Court agrees with
Defendants that the claims arise out of the April 10th Agreement.
Chaudhry is correct that he and Crow did not sign the April 10th Agreement
in individual capacities. 	But where an “action is intertwined with, and dependent
upon, that contract, its arbitration agreement should be given effect.”10 	In these
instances, the Fifth Circuit applies “direct benefits estoppel to bind a non-signatory
9 Exxon Mobil Corp., 657 F.3d at 276 (cleaned up); see also Papalote Creek II, L.L.C. v. Lower
Colorado River Auth., 918 F.3d 450, 455 (5th Cir. 2019).
10 Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524, 525 (5th Cir. 2000).
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to an arbitration agreement when the non-signatory exploits the contract containing
the arbitration clause and obtains a direct benefit from that contract.”11 Therefore,
Chaudhry cannot avoid arbitration by invoking non-signatory status for himself or
Crow.12
Moreover, Chaudhry received direct benefits from the April 10th Agreement.
Section 1.2 of the April 10th Agreement expressly contemplates the promissory note
and resulting loan and identifies Chaudhry, in his individual capacity, as the lender
to whom repayment is directly owed.13 	Chaudhry’s right to receive 5.81 percent
interest per annum on all monies Rezy borrowed under the promissory note arises
from 	the 	April 	10th 	Agreement. 	Additionally, 	the 	promissory 	note 	is 	the
consideration for the purchase of 100,000 shares of common stock under the April
10th Agreement, which were issued to RCF Family LP as part of the same integrated
transaction negotiated by Chaudhry. Because Chaudhry’s claims depend on and seek
to enforce the benefits that flow directly from the April 10th Agreement, Chaudhry is
estopped from preventing the enforcement of its provisions, which include the
applicable arbitration provision.
11 Noble Drilling Servs. Inv. v. Certex USA, Inc., 620 F.3d 469, 473 (5th Cir. 2010).
12 In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 193–94 (Tex. 2007).
13 Doc. 25 at 29.
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IV. 	Conclusion
For the foregoing reasons, the Court GRANTS Defendants’ motion to compel
arbitration.
IT IS SO ORDERED this 29th day of January, 2026.
BRANTLEY STARR
UNITED STATES DISTRICT JUDGE
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