Reversed and Remanded and Memorandum Opinion filed August 8, 2013.




                                     In The

                    Fourteenth Court of Appeals

                             NO. 14-12-00965-CV

    SATYA, INC., GOPAL P. BATHIJA, AMEEN M. ALI, AND SATYA
                    GROUP II, LTD., Appellants

                                       V.

                         VIKRAM MEHTA, Appellee

                   On Appeal from the 133rd District Court
                            Harris County, Texas
                      Trial Court Cause No. 2012-27585

                 MEMORANDUM                     OPINION


      This is an interlocutory appeal from the denial of a motion to compel
arbitration. The arbitration provision is part of a limited-partnership agreement,
and a signatory to the agreement sued the limited partnership and its alleged
agents, asserting that the defendants acted within the scope of their agency in
committing various torts and statutory violations related to the agreement. We
conclude that the defendants may enforce the arbitration provision even though
they did not sign the limited-partnership agreement in their individual capacities.
We accordingly reverse and remand with instructions to the trial court to grant the
motion and stay further proceedings as appropriate.

                  I. FACTUAL AND PROCEDURAL BACKGROUND

      Appellee Vikram Mehta signed a limited-partnership agreement with Satya
Group II, Ltd. (“the Limited Partnership”). The agreement provides that “if any
dispute arises between [the partners] relating to this [a]greement,” the partners will
first attempt to resolve the dispute through mediation, and if unsuccessful, will
resolve the dispute through arbitration. Defendant Gopal P. Bathija signed the
agreement on behalf of the limited partnership’s general partner, Satya
Management II, LLC (“the General Partner”).           Mehta later sued Bathija, the
Limited Partnership, and two other defendants. The additional defendants are
Satya, Inc. (“the Corporation”) and Ameen M. Ali. Mehta alleged that Bathija and
Ali own the Corporation and the Limited Partnership and are the sole managers of
the latter’s General Partner. He additionally alleged that Bathija operates the
Limited Partnership; that Ali is a partner in the Limited Partnership; and that
Bathija, Ali, the Corporation, and the Limited Partnership are agents for one
another and were acting within the scope of their agency when committing the torts
alleged in Mehta’s petition.

      According to Mehta, defendants Bathija, Ali, the Limited Partnership, and
the Corporation (collectively, “the Partnership Parties”) obtained the right to
purchase various real properties at or near market value through “one of Defendant
Bathija’s front companies” such as the Corporation or the Limited Partnership.
Mehta asserted that the Partnership Parties then created or adopted a private
placement memorandum that they circulated to potential investors in order to sell

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interests in the Limited Partnership, which then purchased an option to purchase
the property or purchased the property outright.          According to Mehta, the
Partnership Parties failed to disclose that a significant portion of the price paid by
the Limited Partnership for those interests was paid “to Bathija’s front company”
as a fee for the assignment of the right to purchase. In support of his claims of
fraud and fraud in a real-estate transaction, Mehta asserted that he relied on the
Partnership Parties’ misrepresentations and was thereby induced to invest in the
Limited Partnership and in another project known as the Westheimer Project.
Specifically, he contends that he paid the Limited Partnership $104,000 and
invested an additional $100,000 in the Westheimer Project. Based on the same
facts, Mehta also asserted claims for breach of fiduciary duty and violations of the
Texas Securities Act. Finally, Mehta pleaded that the defendants conspired to
commit the torts alleged; that Bathija and Ali used the Corporation and the Limited
Partnership as a sham to perpetuate a fraud; and that the Corporation and the
Limited Partnership are Bathija’s alter egos.

      The Partnership Parties moved to dismiss the claims associated with the
Limited Partnership and to compel arbitration of those claims. They specifically
excluded from their motion Mehta’s claims involving the Westheimer Project. In
response to the motion, Mehta asserted that his claims were independent of the
limited-partnership agreement containing the arbitration provision. The defendants
filed a reply on the morning of the hearing on the motion, and six days after the
hearing, Mehta filed a sur-reply in which he asserted that “only [the Limited
Partnership] should be dismissed and the rest of the [Partnership Parties] should
remain in this case because they are not signatories” to the limited-partnership
agreement. The trial court nevertheless denied the motion to compel in its entirety.
On the same day that the Partnership Parties filed their notice of appeal, Mehta


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filed a notice of non-suit as to his claims against the Limited Partnership.

                                II. ISSUES PRESENTED

      In their first issue, the Partnership Parties contend that Mehta’s claims are
within the scope of the arbitration agreement. They argue in their second issue that
the arbitration provision applies to Bathija, Ali, and the Corporation even though
Ali and the Corporation did not sign the limited-partnership agreement and Bathija
did not sign it in his individual capacity.

                                    III. ANALYSIS

      The record does not contain the complete limited-partnership agreement, and
in the excerpts that are in the record, there is no reference to either the Federal
Arbitration Act (“the Federal Act”) or the Texas General Arbitration Act (“the
Texas Act”). In the trial court, the parties did not identify the statute that they
contend applies, but on appeal, the Partnership Parties assert that the case is
governed by the Texas Act. Mehta does not contest that assertion, and no one
contends that the Federal Act has any preemptive effect in this case. We therefore
treat the case as one governed by the Texas Act. See Osornia v. AmeriMex Motor
& Controls, Inc., 367 S.W.3d 707, 711 (Tex. App.—Houston [14th Dist.] 2012, no
pet.). Because the substantive principles that control our analysis are the same
under both statutes, we rely on cases decided under the Federal Act as well as
cases decided under the Texas Act, without differentiating between them. See id.

      When considering a motion to compel arbitration, a court must determine
whether a valid arbitration agreement exists, and whether the claims in dispute fall
within its scope.     In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011) (orig.
proceeding). “Whether a valid arbitration agreement exists is a legal question
subject to de novo review.” In re D. Wilson Constr. Co., 196 S.W.3d 774, 781


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(Tex. 2006) (orig. proceeding) (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d
223, 227 (Tex. 2003)). If a valid arbitration agreement exists, then a strong
presumption arises favoring arbitration, and the burden shifts to the party opposing
arbitration to raise an affirmative defense to its enforcement. J.M. Davidson, Inc.,
128 S.W.3d at 227. Mehta has not challenged the existence of a valid arbitration
agreement or raised any affirmative defenses to its enforcement.

      Where, as here, the existence of a valid arbitration agreement has been
established, the court next considers the agreement’s terms to determine which
issues are arbitrable. See Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 61 (Tex.
2008). Any doubts as to which claims fall within the scope of the arbitration
clause must be resolved in favor of arbitration. Prudential Sec. Inc. v. Marshall,
909 S.W.2d 896, 899 (Tex. 1995) (per curiam) (orig. proceeding). A court should
not deny arbitration unless the court can say with positive assurance that an
arbitration clause is not susceptible of an interpretation that would cover the claims
at issue. Id. In determining whether a claim falls within the scope of an arbitration
clause, we focus on the factual allegations, rather than the legal claims asserted.
See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 754 (Tex. 2001) (orig.
proceeding). The presumption of arbitrability is particularly applicable where, as
here, the arbitration clause is broad. See Baty v. Bowen, Miclette & Britt, Inc., No.
14-11-00663-CV, 2013 WL 2253584, at *11 (Tex. App.—Houston [14th Dist.]
May 23, 2013, no pet. h.).

A.    A valid arbitration agreement exists, and Mehta has asserted claims
      that fall within its scope.
      In the trial court, Mehta asserted that although he agreed to arbitrate “any
dispute” between the partners “relating to” the limited-partnership agreement, the
provision applied only to breach-of-contract claims, and that he could not be
compelled to arbitrate his tort claims or claims of statutory violations. As the
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Partnership Parties pointed out, both in the trial court and on appeal, Mehta’s
position is contrary to Texas law. Because Mehta has not reurged this position on
appeal, we will address the law on this issue only briefly.

      A party to a contract containing an arbitration provision cannot avoid
arbitration by recasting a contract dispute as a claim for fraudulent inducement.
See In re Kaplan Higher Educ. Corp., 235 S.W.3d 206, 209 (Tex. 2007) (per
curiam) (orig. proceeding). As the Texas Supreme Court has pointed out, “almost
every contract claim against a corporation could be recast as a fraudulent
inducement claim against the agents or employees who took part in the
negotiations preceding it.” Id. The same is true of claims arising from limited-
partnership agreements.     See Capital Income Props.-LXXX v. Blackmon, 843
S.W.2d 22, 23–24 (Tex. 1992) (per curiam) (orig. proceeding) (holding that claims
of fraudulent inducement to invest in a limited partnership, breach of fiduciary
duty, and misrepresentation arose out of and related to a limited-partnership
agreement containing a broad arbitration provision and were therefore arbitrable).

      Mehta’s claims for fraudulent inducement are disputes “relating to” the
limited-partnership agreement and are accordingly arbitrable. See id. Because
Mehta’s fraud, breach-of-fiduciary-duty, and statutory claims are based on the
same facts, those claims also are subject to arbitration. See Kaplan Higher Educ.
Corp., 235 S.W.3d at 208–09 & n.2 (explaining that the plaintiffs’ claims of
negligence, negligence per se, negligent misrepresentation, and statutory violations
were based on the same facts as their claim of fraudulent inducement and were
alternative forms of the same arbitrable claim).

      We sustain the Partnership Parties’ first issue.

B.    The arbitration agreement applies to Bathija, Ali, and the Corporation.
      In their second issue, the Partnership Parties argue that they are entitled to

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enforce the arbitration provision found in the limited-partnership agreement even
though Bathija did not sign the agreement in his individual capacity, and Ali and
the Corporation did not sign the agreement at all. We agree.

         “[W]hen an agreement between two parties clearly provides for the
substance of a dispute to be arbitrated, one cannot avoid it by simply pleading that
a nonsignatory agent or affiliate was pulling the strings.” Id. at 210. That is
precisely what Mehta has attempted to do here. He and Bathija signed the limited-
partnership agreement. Although Bathija signed on behalf of the General Partner,
Mehta contends that Bathija, Ali, the Corporation, and the Limited Partnership are
agents for one another, and that each acted within the scope of that agency in
committing the torts alleged.

         In his sole response to this argument, Mehta asserts that the Partnership
Parties cannot rely on his pleaded allegations of agency because they did not raise
the argument in the trial court. That is factually incorrect. At the hearing on the
motion to compel arbitration, counsel for the Partnership Parties explained that
under the holding of In re Kaplan Higher Education Corp., the agents of a
signatory to an agreement containing an arbitration provision can enforce the
provision as to claims related to the agreement.1 We therefore do not address the
question of whether a movant to compel arbitration would waive an agency
argument if it failed to raise the argument in the trial court, because here, the
Partnership Parties did raise the argument and thus, there could be no waiver in any
event.

         We sustain the Partnership Parties’ second issue and reverse the trial court’s
order denying their motion to compel arbitration.

         1
         It is undisputed that Mehta alleged that the Partnership Parties are one another’s agents
and acted within the scope of their agency.

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C.    Disposition

      Under the Texas Act, an order compelling arbitration must include a stay of
the trial court’s proceedings; however, if the arbitrable issues are severable from
the nonarbitrable issues, then only the arbitrable issues need be stayed. See TEX.
CIV. PRAC. & REM. CODE §§ 171.021(c), 171.025 (West 2011). No one has sought
to compel arbitration of the claims concerning the Westheimer Project, but the
parties have not addressed the question of whether Mehta’s claims against Bathija,
Ali, and the Corporation in connection with the Limited Partnership are severable
from his claims against them in connection with the Westheimer Project. Under
these circumstances, the trial court is better positioned to consider whether
litigation of Mehta’s claims concerning the Westheimer Project should be stayed.
See Forest Oil Corp., 268 S.W.3d at 61–62 (ordering proceedings in the trial court
stayed as to the arbitrable claims, and remanding for the trial court to determine
whether the nonarbitrable claims also should be stayed); see also TEX. R. APP. P.
43.3(a) (“When reversing a trial court’s judgment, the court must render the
judgment that the trial court should have rendered, except when . . . a remand is
necessary for further proceedings . . . .”). We therefore instruct the trial court to
determine on remand whether the claims concerning the Westheimer Project
should be stayed pending arbitration of the claims related to the Limited
Partnership.

                                 IV. CONCLUSION

      We reverse the trial court’s order denying the defendants’ motion to compel
arbitration and we remand the case with instructions to the trial court to (a) grant
the motion to compel arbitration of Mehta’s claims against the remaining
Partnership Parties concerning the Limited Partnership, (b) stay further
proceedings concerning those claims, (c) determine whether Mehta’s claims

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concerning the Limited Partnership are severable from his claims concerning the
Westheimer Project, and (d) stay the claims concerning the Westheimer Project if
those claims are not severable from the claims related to the Limited Partnership.




                                      /s/       Tracy Christopher
                                                Justice



Panel consists of Justices Brown, Christopher, and McCally.




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