Alliance Auto Auction of Dallas, Inc. v. Lone Star Cleburne Autoplex, Inc.

Supreme Court of Texas
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No. 22-0191
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Alliance Auto Auction of Dallas, Inc.,
Petitioner,

v.

Lone Star Cleburne Autoplex, Inc.,
Respondent

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On Petition for Review from the
Court of Appeals for the Tenth District of Texas
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PER CURIAM

Lone Star Cleburne Autoplex filed this suit asserting that
Alliance Auto Auctions of Dallas conspired with two of Lone Star’s
employees to embezzle money from Lone Star. Alliance moved to stay
the suit and compel arbitration, relying on arbitration clauses contained
in authorization agreements between Lone Star and AuctionACCESS, a
company Alliance used to verify and authorize car dealerships to buy
and sell in Alliance’s auctions. Alliance asserted that it can enforce the
arbitration clauses as a third-party beneficiary of those agreements.
Lone Star opposed the motion, contending its claims fall outside the
scope of the arbitration agreement.
The arbitration agreement is set forth in the terms and conditions
incorporated into the authorization agreements. It requires that any
controversy or claim related to the authorization agreements be resolved
by binding arbitration “under the rules of the alternative dispute
resolution (ADR) firm selected by the parties. If the parties are unable
to agree to an ADR firm, the mediation/arbitration will be conducted
under the rules and supervision of the American Arbitration Association
(AAA).” The terms and conditions also include a clause designating any
auction company that utilizes AuctionACCESS’s system (such as
Alliance) as a third-party beneficiary of the agreement, permitting
Alliance, “[a]t [its] election, and in [its] sole discretion, . . . to avail itself
of any provision or protection in this Agreement.”
The trial court denied Alliance’s motion to compel arbitration, and
the court of appeals affirmed. ___ S.W.3d ___, 2022 WL 229511, at *1
(Tex. App.—Waco Jan. 26, 2022). Alliance argued on appeal that the
trial court should not have determined whether Lone Star’s claims are
subject to arbitration because the parties agreed that the arbitration
would be conducted under the AAA rules, and those rules delegate such
arbitrability issues to the arbitrator. The court of appeals did not
address that argument, instead holding that the “question of whether a
case should be sent to arbitration is a gateway issue that courts must
decide at the outset of litigation.” Id.
After Alliance filed its petition for review in this Court, we issued
our decision in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC,
667 S.W.3d 694 (Tex. 2023). Contrary to the court of appeals’ broad
holding here, we held in TotalEnergies that, “as a general rule, an

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agreement to arbitrate in accordance with the AAA or similar rules
constitutes a clear and unmistakable agreement that the arbitrator
must decide whether the parties’ disputes must be resolved through
arbitration.” Id. at 708. Moreover, “the fact that the parties’ arbitration
agreement may cover only some disputes while carving out others does
not affect the fact that the delegation agreement clearly and
unmistakably requires the arbitrator to decide whether the present
disputes must be resolved through arbitration.” Id. at 719. In light of
our holdings in TotalEnergies, the court of appeals’ holding in this case—
that arbitrability is always a “gateway issue that courts must decide at
the outset of litigation”—is incorrect.
Lone Star contends, however, that at least two features of this
arbitration agreement distinguish it from the agreement we addressed
in TotalEnergies and prevent this case from falling within the general
rule we announced there. Specifically, Lone Star notes that (1) the
parties here agreed to arbitrate under the AAA rules only if they are
unable to agree on a different ADR firm and (2) Alliance is not a party
to the arbitration agreement but is instead a third-party beneficiary that
may, or may not, elect to invoke the arbitration agreement. Lone Star
contends that these unique provisions prevent the agreement from
“clearly and unmistakably” delegating arbitrability issues to the
arbitrator.
As noted, the court of appeals decided this case without
addressing these arguments based on a broad rule that we later rejected
in TotalEnergies. Accordingly, we grant Alliance’s petition for review,
and, without hearing oral argument, see TEX. R. APP. P. 59.1, we reverse

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the court of appeals’ judgment and remand the case to that court to
consider Lone Star’s arguments, along with any other issues the parties
raised that the court did not reach, in light of our holdings in
TotalEnergies.

OPINION DELIVERED: September 1, 2023

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