Opinion issued February 21, 2013.




                                    In The

                           Court of Appeals
                                    For The

                       First District of Texas
                         ————————————
                           NO. 01-12-00293-CV
                           NO. 01-12-00356-CV
                         ———————————
  ACADEMY, LTD. AND ACADEMY MANAGING CO., LTD., Appellant
                                      V.
             DONNA MILLER, INDIVIDUALLY AND AS
             THE INDEPENDENT ADMINISTRATOR OF
           THE ESTATE OF GREGORY W. MILLER, Appellee


                 On Appeal from the 152nd District Court
                          Harris County, Texas
                    Trial Court Case No. 2011-46550


                                      and
   ACADEMY, LTD. AND ACADEMY MANAGING CO., LTD., Relator



            Original Proceeding on Petition for Writ of Mandamus


                                   OPINION

      This is an interlocutory appeal and a companion petition for a writ of

mandamus that challenge the trial court’s order designating an arbitral forum.

Donna Miller, both individually and as the executor of her deceased husband’s

estate, has sued her husband’s former employers, Academy, Ltd. and Academy

Managing Co., L.L.C. (Academy), contending that Academy breached its

agreement, pursuant to its executive compensation plan, to pay the estate $2.4

million if Academy underwent a change of control within a three-year period.

      Academy invoked the agreement’s arbitration provision and moved in the

trial court to compel arbitration, which it did. Then, in a motion to clarify that

ruling, Miller asked the trial court to interpret the arbitration provision as not

requiring administration by the American Arbitration Association. In its order

granting Miller’s motion, the trial court declared that “the previously ordered

arbitration of this cause shall be conducted privately and without having to file and

administer the arbitration with the American Arbitration Association.”

      Academy seeks either appellate or mandamus relief from the trial court’s

order granting Miller’s motion to clarify and supplementing its prior order

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compelling arbitration. We hold that we lack jurisdiction over Academy’s appeal,

but we exercise our mandamus jurisdiction to correct the trial court’s error in

interpreting a contract issue that properly belongs to the arbitrators. We therefore

conditionally grant the writ.

                                   Background

      In 2007, Academy established an executive compensation plan, named “Plan

I,” for certain employees, including the decedent. Plan I contains the following

arbitration provision:

      Section 14. Dispute Resolution; Governing Law

      (a) The exclusive venue for any action in respect of Section 13 of this
          Retention Plan shall be the state and Federal courts located in
          Harris County, Texas.

      (b) Except as provided in Section 14(a) above, any controversy or
          claim arising out of or relating to this Retention Plan Shall be
          settled by arbitration in Harris County, Texas by three arbitrators
          appointed by the parties. If the parties cannot agree within 30
          days on the appointment of arbitrators, one shall be appointed by
          the Company and one by the applicable Participant, and the third
          shall be appointed by the first two arbitrators. The arbitration
          shall be conducted in accordance with the rules of the American
          Arbitration Association for resolution of commercial disputes,
          except with respect to the selection of arbitrators, which shall be
          as provided in this paragraph. Any award entered by the
          arbitrators shall be final, binding and nonappealable and judgment
          may be entered thereon by either party in accordance with
          applicable law in any court of competent jurisdiction. This
          arbitration provision shall be specifically enforceable. The
          arbitrators have no authority to modify any provision of this
          Retention Plan other than a benefit specifically provided under or
          by virtue of the Retention Plan. If a Participant substantially
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          prevails on at least one material issue which is the subject of such
          arbitration, the Company shall be responsible for all of the fees
          and expenses of the American Arbitration Association and the
          arbitrators. Otherwise, each party shall share the fees and
          expenses of the American Arbitration Association and the
          arbitrators equally.

                                     Discussion

 I.     Appellate Jurisdiction

      The parties do not contend that their arbitration agreement is governed

exclusively by either the Federal Arbitration Act or the Texas General Arbitration

Act, and Academy has invoked both sections 51.016 and 171.098 of the Texas

Civil Practice and Remedies Code as the basis for our jurisdiction over its appeal.

As a threshold issue, Miller challenges whether appellate jurisdiction exists,

contending that Academy’s challenge to the trial court’s order requiring a non-

AAA-administered arbitration does not fall within any of the specific grounds for

appeal that either of these sections authorizes.

      Section 171.098(a)(1), the appeal provision of the state arbitration statute,

requires, as a predicate to our interlocutory appellate jurisdiction, the filing of “an

application to compel arbitration made under Section 171.021” and an order

denying that application. TEX. CIV. PRAC. & REM. CODE ANN. § 171.098 (West

2012). To prevail under Section 171.021, such a motion must show the existence

of an agreement to arbitrate that applies to the parties’ dispute and that the

opposing party has refused to arbitrate. TEX. CIV. PRAC. & REM. CODE ANN.

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§ 171.021(a) (West 2012).      Section 51.016 allows for state court appeals in

agreements governed by the FAA. TEX. CIV. PRAC. & REM. CODE ANN. § 51.016

(West 2012). Pertinent to this case, a party may appeal (1) an order refusing to

stay litigation pending arbitration of its subject matter, (2) denial of a petition to

order arbitration, and (3) an order denying an application to compel arbitration. Id.

(incorporating grounds set forth in 9 U.S.C. § 16).

      The appealed order, purporting to clarify the parties’ rights under the

arbitration agreement, does not fall within any of the types of appealable orders

identified under either the state or federal statutes. We therefore lack appellate

jurisdiction over Academy’s attempted interlocutory appeal.

II.   Mandamus Jurisdiction

      Academy alternatively seeks mandamus relief, complaining that the trial

court abused its discretion in signing the order, because it effectively denies

Academy’s right to arbitrate the underlying dispute according to the arbitration

agreement’s terms.     A writ of mandamus issues to correct a clear abuse of

discretion when no adequate remedy at law exists. Walker v. Packer, 827 S.W.2d

833, 839 (Tex. 1992). A trial court has no discretion to apply the law incorrectly.

Id. at 840. A party seeking relief from the failure to enforce a valid arbitration

agreement, according to its terms, has no adequate remedy at law and is entitled to

mandamus relief to correct the trial court’s error. See In re Serv. Corp. Int’l, 355

                                          5
S.W.3d 655, 657 (Tex. 2011) (orig. proceeding) (holding that mandamus relief is

available from trial court’s appointment of arbitrator in contravention of parties’

agreement that they would select arbitrator by mutual agreement or, if unable to

agree, seek appointment by AAA); see Aspen Tech., Inv. v. Shasha, 253 S.W.3d

857 (Tex. App.—Houston [14th Dist.] 2008, orig. proceeding) (granting relief

from trial court’s order compelling arbitration under clause in parties’ 2006

agreement instead of under parties’ 2008 agreement, which had valid arbitration

clause that supplanted earlier one); accord BP Exploration Libya Ltd. v.

ExxonMobil Libya Ltd., 689 F.3d 481, 496–97 (5th Cir. 2012) (vacating district

court’s order requiring parties to proceed to arbitration before five arbitrators,

where parties had expressly agreed to arbitrate before three-member panel).

      The parties’ arbitration agreement provides that they are to select three

arbitrators by mutual agreement, or, if they “cannot agree within 30 days on the

appointment of arbitrators, one shall be appointed by the Company and one by the

applicable Participant, and the third shall be appointed by the first two arbitrators.”

The parties apparently have no quarrel over this selection method, and they can

comply with it before determining whether the arbitration is subject to formal

AAA administration.




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      Because no obstacle to the appointment of the arbitrators exists, we next

consider if the question decided by the trial court—whether the arbitration

agreement requires the parties to file and administer the arbitration through the

American Arbitration Association or merely requires that the arbitrators use the

rules set forth by the AAA—is for the courts or the arbitrators to decide. In Green

Tree Financial Corp. v. Bazzle, the United States Supreme Court explained the

narrow scope of the judicial role in interpreting arbitration agreements:

      In certain limited circumstances, courts assume that the parties
      intended courts, not arbitrators, to decide a particular arbitration-
      related matter (in the absence of “clea[r] and unmistakabl[e]”
      evidence to the contrary). AT&T Technologies, Inc. v.
      Communications Workers, 475 U. S. 643, 649 (1986). These limited
      instances typically involve matters of a kind that “contracting parties
      would likely have expected a court” to decide. Howsam v. Dean
      Witter Reynolds, Inc., 537 U. S. 79, 83 (2002). They include certain
      gateway matters, such as whether the parties have a valid arbitration
      agreement at all or whether a concededly binding arbitration clause
      applies to a certain type of controversy. See generally Howsam,
      supra. See also John Wiley & Sons, Inc. v. Livingston, 376 U. S. 543,
      546-547 (1964) (whether an arbitration agreement survives a
      corporate merger); AT&T, supra, at 651–52 (whether a labor-
      management layoff controversy falls within the scope of an arbitration
      clause).

539 U.S. 444, 452 (2003); see also Howsam v. Dean Witter Reynolds, Inc., 537

U.S. 79, 82–83, 123 S. Ct. 588, 591 (2002) (holding that applicability of NASD

time limit rule is matter presumptively for arbitrator, not for judge). The question

of whether the parties agreed to formal AAA administration in this case concerns

neither the validity nor the scope of the arbitration agreement. Consequently, the

                                          7
issue belongs to the arbitrators, not to the courts. See Howsam, 537 U.S. at 83; In

re D. Wilson Constr. Co., 196 S.W.3d 774, 780–81 (Tex. 2006) (orig. proceeding);

see also Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc., 347

S.W.3d 897, 902 (Tex. App.—Dallas 2011, pet. denied) (holding that challenge to

Civilian Board of Contract Appeals’ [CBCA] jurisdiction as arbitrator of dispute,

as well as waiver and election-of-remedies complaints, “are matters of procedure

that are for the arbitrator and not for the court,” and conditionally granting writ of

mandamus directing trial court to vacate portion of order requiring arbitration to

proceed under AAA instead of CBCA); Am. Realty Trust, Inc. v. JDN Real

Estate—McKinney, L.P., 74 S.W.3d 527, 531 (Tex. App.—Dallas 2002, pet.

denied) (citing John Wiley & Sons v. Livingston, 376 U.S. 543, 557, 84 S. Ct. 909,

918 (1964) (“[I]f a court determines the parties have an obligation to submit the

subject matter of a dispute to arbitration, ‘procedural’ questions concerning the

dispute . . . are left to the arbitrator.”)). We hold that the trial court erred in

straying past the gateway and into the arbitrators’ presumptive arena by addressing

whether the parties agreed to formal AAA administration and ordering that they

did not.




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                                      Conclusion

      We dismiss Academy’s appeal for lack of jurisdiction. We conditionally

grant mandamus relief to Academy and direct the trial court to vacate its March 5,

2012 order supplementing its earlier order compelling arbitration.               We are

confident the trial court will comply, and the writ will issue only if it fails to do so.




                                                Jane Bland
                                                Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.




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