MC LLC v. GCA LLC (2026)

OPINION

Appellant Post MC, LLC sold substantially all of its assets to appellee GCA Concrete Design, LLC d/b/a Moderncrete Concrete Design in November 2017. Daniel Bishop, Post MC's president and principal, had executed the asset purchase agreement (Agreement) on Post MC's behalf. In April 2023, GCA sued Bishop, asserting a claim for breach of noncompete and nonsolicitation agreements against him, and asserting various related claims involving misappropriation of trade secrets and fraud against other individuals who, like Bishop, are not parties to this appeal (collectively, “Original Defendants”).

Six months later, Bishop, as a third-party plaintiff, joined in the suit appellee Michael Brett Butler, GCA's principal, who had signed the promissory note for the purchase of Post MC's assets in his capacity as GCA's member and manager and had personally guaranteed the note. Bishop asserted a claim against GCA and Butler for breach of contract for failure to make required payments. In May 2024, GCA joined Post MC as a third-party defendant, and Post MC counterclaimed for breach of contract, asserting that GCA and Butler had failed to make the payments required under the promissory note and guaranty. Three weeks later, Post MC filed a motion to compel arbitration, invoking the arbitration clause in the Agreement. After a hearing on the motion to compel arbitration, the trial court denied the motion. For the reasons explained below, we conclude that the trial court erred by denying the motion to compel. We reverse that order in part and remand to the trial court for further proceedings.

BACKGROUND

GCA and Post MC's Asset Purchase Agreement

Before selling its assets to GCA, Post MC owned a concrete-polishing and floor-refinishing business.¹ GCA agreed to pay Post MC $3,500,000 for Post MC's assets. As part of that purchase price, GCA agreed to execute a $525,000 seller promissory note (“Seller's Note”), payable to lender Post MC in installments. Butler personally guaranteed the Seller's Note as expressly required by the terms of the Agreement.

Butler signed the Agreement on behalf of GCA, as its president, and Bishop signed the Agreement on behalf of Post MC, as its president. In addition, Bishop signed the Agreement in his individual capacity, agreeing “to be bound personally only to Sections 7, 12, 13, and 15.” Section 7 governs “Seller Representations, Warranties and Covenants.” Section 12, “Transition Assistance” requires Bishop to assist GCA with specified matters related to the transition of the ownership and operation of the business for 30 days. Section 15 establishes an “Indemnity Agreement by Seller” under which Post MC and Bishop agreed to indemnify GCA and various related individuals for certain claims and liabilities, up to a cap of $2,500,000. Section 13 establishes a “Covenant Not to Compete, Covenant Not to Solicit,” under which Bishop agreed that neither Post MC nor Bishop would compete with GCA or advise any competitor in the business of concrete polishing, floor refinishing, or patterned-concrete installation within a 300-mile radius of the business's then-current location for five years. Section 13 specifies that Bishop was permitted to work with his brother Chris Bishop and any entity owned by Chris, “in the business operations and marketing of products,” even if the products are used in concrete polishing and floor refinishing, provided that any such “business owned by Chris Bishop or at which Chris Bishop is employed does not solicit business that competes with [GCA].”²

Section 26, which contains the arbitration agreement, is not one of the paragraphs that Bishop agreed to be bound by personally. Section 26 provides as follows:

Arbitration. Any controversy or claim arising out of this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the rules of JAMS, and judgment upon the award rendered by the arbitration may be entered in any court having jurisdiction thereof. The arbitration agreement set forth herein shall not limit a court from granting a temporary restraining order or preliminary injunction in order to preserve the status quo of the parties pending arbitration. Further, the arbitrator(s) shall have power to enter such orders by way of interim award, and they shall be enforceable in court. The place of such arbitration shall be in Austin, Travis County, Texas.

Judicial Arbitration and Mediation Services (JAMS) Rule 11(b) establishes that the arbitrator has the power to determine the arbitrability of claims:

Jurisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought, and who are proper Parties to the Arbitration, shall be submitted to and ruled on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter.

GCA's Initial Suit

Six years after it bought Post MC's assets, in April 2023, GCA sued Bishop; Chris; Chris's employer, XrQ Corp.; and XrQ Corp.'s owner, Tim Kennady. GCA alleged that after it purchased Post MC's assets, Bishop, XrQ, and Kennady had made false representations to it about potential business opportunities, including a possible joint venture, to induce GCA to modify Bishop's noncompete agreement and to share its confidential business information with Bishop and Kennady. GCA also alleged that Chris, who had become employed by GCA in 2019, had also acquired GCA's confidential information and trade secrets and then went to work for a competing company.

GCA sued Bishop for breach of nonsolicitation and noncompete agreements, and sued Bishop and the other Original Defendants for tortious interference with existing and prospective contracts, violation of the Texas Uniform Trade Secrets Act, common-law trade-secret misappropriation, conspiracy, fraudulent inducement and fraud, and negligent misrepresentation, seeking damages, temporary and permanent injunctive relief, and attorneys' fees. In May 2023, the Original Defendants filed a “Plea in Abatement and Motion to Compel Contractually Agreed Arbitration,” asserting that because GCA alleged that Bishop had breached the noncompete agreement contained in the Agreement and alleged related misconduct by Bishop in his business dealings with the other Original Defendants, GCA should be compelled to arbitrate those claims based on the Agreement's provision requiring arbitration of “any controversy or claim arising out of this Agreement, or the breach thereof.” In August 2023, the parties filed a joint agreed motion to refer the matter to a special judge under Texas Civil Practice and Remedies Code Chapter 151 “as a compromise.” In September 2023, the trial court signed the order referring the matter to a special judge and staying the district-court proceeding until the special judge submitted his verdict.

After the case was referred to the special judge, Bishop and the other Original Defendants answered, and Bishop joined Butler and alleged claims against GCA and Butler for breaching the Seller's Note and the personal guaranty by failing to make the required payments owed under those agreements' terms. The parties began engaging in discovery. In December 2023, the special judge temporarily enjoined Bishop from engaging in a business substantially similar to GCA's business within a 300-mile radius of GCA's location in Round Rock, Texas. After the special judge granted GCA's second motion to compel and ordered Bishop and XrQ to amend their discovery responses and produce certain documents, the Original Defendants filed a motion for reconsideration, which was denied. Two months later, GCA filed a motion to show cause and for sanctions, asserting that Bishop and XrQ failed to comply with the special judge's temporary injunction and requesting that they be held in contempt and sanctioned. On February 26, 2024, a few days after conducting a hearing on GCA's motion, the special judge granted the motion, found Bishop and XrQ in contempt, ordered criminal and civil contempt penalties, ordered death-penalty sanctions, and ordered monetary sanctions.

Post MC Becomes a Party to the Suit

Under the parties' second agreed discovery control plan and scheduling order, the last date for joinder of parties and amendment of pleadings was May 17, 2024. On that date, at 4:54 p.m., GCA filed its fourth amended original petition, joinder, and application for temporary and permanent injunction, in which it joined Post MC as a party. In its fourth amended petition, GCA sued Post MC for breach of nonsolicitation and noncompete agreements, fraudulent inducement and fraud, and negligent misrepresentation, and it sought to hold all the defendants jointly and severally liable on all claims asserted. Also, on that date, at 7:19 p.m., Post MC filed its third-party petition within the Original Defendants' “Defendants' Answer to Plaintiff's Third Amended Petition, Amended Counterclaims, and Third-Party Petition of Post MC, LLC.” Post MC counterclaimed against GCA and Butler for breach of contract, alleging that they breached the Agreement and Butler's personal guaranty by failing to make required payments “due and owing to Post MC, LLC under the terms of the Seller's Note.”³ Post MC and the Original Defendants also asserted other compulsory counterclaims against GCA, including claims for indemnification under the Agreement by Post MC and Bishop; breach of an agreement between GCA and XrQ that was allegedly entered into in connection with a modification of the Agreement (brought by XrQ); tortious interference by Bishop, Chris, and XrQ, based in part on GCA's attempts to enforce the Agreement's noncompete provision beyond its scope; and unjust enrichment based in part on the alleged wrongful retention of amounts due on the Seller's Note.

Three weeks later, on June 7, 2024, Post MC filed its motion to compel arbitration, seeking to compel GCA and Butler to arbitrate all claims asserted by or against them (i.e., the entire lawsuit) and to stay the litigation pending the conclusion of the arbitration. Post MC attached to its motion a declaration by Bishop, as Post MC's authorized corporate representative, authenticating copies of the Agreement executed by Butler on behalf of GCA and the promissory note executed by Butler both on behalf of GCA and individually as guarantor in favor of lender Post MC. Post MC later supplemented its motion with a copy of the JAMS rules. In its motion, Post MC asserted that the arbitration agreement contained in the Agreement between Post MC and GCA required submission of the entire suit to arbitration and that “any dispute regarding arbitrability, including the proper parties, should be submitted to arbitration in accordance with the Arbitration Agreement and the agreed-upon JAMS rules.” Post MC argued that the claims between GCA, Butler, and Post MC arise out of the Agreement and thus are subject to the arbitration agreement and that the claims between the signatories and the nonsignatories to the Agreement should also be submitted to arbitration because they “involve the same operative facts and are inherently inseparable from the claims by and against the nonsignatories.” In the alternative, if the trial court determined arbitrability and were to conclude that certain claims were not subject to the arbitration agreement, Post MC argued that those claims and the litigation itself should be stayed pending the conclusion of the arbitration.

Post MC also argued that the statutory requirements for referral to a special judge were no longer satisfied because Chapter 151 requires each party to a case to file a motion requesting referral to a special judge, and neither Post MC nor Butler had filed such a motion, and they were not named in the order appointing the special judge because they were not parties to the suit when that order was signed. Accordingly, a week after it filed its motion to compel arbitration, Post MC filed a motion to lift the stay of the district-court proceedings, requesting that its motion to compel arbitration be considered by the district court, and a motion to stay the special-judge proceeding pending resolution of the motion to compel arbitration.

GCA and Butler filed a single response to all three motions. In their response, they argued that (1) Bishop, as the sole member of Post MC, was attempting to forum shop his way out of adverse rulings; (2) Post MC had waived its right to compel arbitration by substantially invoking the judicial process to GCA and Butler's detriment, and arbitration would severely prejudice GCA and Butler; and (3) none of the individual parties to the suit, including Butler, should be bound by the arbitration agreement because they were not signatories to it.⁴

The motions were heard by the district court on July 2, 2024. The district court signed orders denying all three motions on July 12, 2024.

This interlocutory appeal followed. After Post MC filed an emergency motion to stay the trial-court proceedings, this Court granted the motion and stayed the trial-court proceedings.

GCA and Butler subsequently filed a motion to dismiss this appeal in part, arguing that this Court lacks jurisdiction to consider the district court's orders denying Post MC's motion to stay the special-judge proceedings and the order denying the motion to lift the stay of the district-court proceedings.

ANALYSIS

In four issues, Post MC challenges the trial court's denial of its motion to compel arbitration and the other two related orders. In its first issue, with three sub-issues, it contends that the trial court erred by (1) denying its motion to compel arbitration of all claims in the suit, given the Agreement's incorporation of JAMS rules, which provide that the arbitrator determines all issues of jurisdiction and arbitrability, including who are proper parties to the arbitration; (2) finding that GCA and Butler satisfied their burden to establish that Post MC intentionally and unequivocally waived its right to arbitration by implication; and (3) attributing to Post MC Bishop's prior conduct in his individual capacity as a party to the suit to establish waiver by Post MC of its right to arbitration. In Post MC's second issue, it argues that the trial court erred by denying its request to stay the special-judge proceedings. In its third issue, it contends that the trial court erred by denying its request to lift the stay of the district-court proceedings. In its fourth issue, Post MC asserts that this Court has interlocutory appellate jurisdiction over the trial court's denial of its motions to stay the special-judge proceedings and to lift the stay of the district-court proceedings. We begin by providing the relevant background law governing arbitration agreements.

I. Standard of Review

We review a trial court's denial of a motion to compel arbitration for abuse of discretion. Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). Under this standard, we defer to the trial court's factual determinations if they are supported by evidence and review its legal determinations de novo. Id.; see also Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding) (“A trial court has no ‘discretion’ in determining what the law is or applying the law to the facts.”). Whether a valid and enforceable arbitration agreement exists between the parties is a legal question subject to de novo review, see J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003), as is the question of whether a party has waived arbitration by litigation conduct, see Perry Homes v. Cull, 258 S.W.3d 580, 598 (Tex. 2008).

If, as in this case, an order denying a motion to compel arbitration does not state the grounds for the denial, then we must affirm the order if any of the grounds asserted in the trial court for denying the motion are meritorious. Boring Co. v. 304 Constr., LLC, No. 03-23-00394-CV, 2024 WL 2220716, at *4 (Tex. App.—Austin May 17, 2024, no pet.) (mem. op). And if, as here, the trial court makes no written findings of fact or conclusions of law in support of its ruling, we imply all facts necessary to support the judgment and supported by the evidence. See BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002).

“A trial court that refuses to compel arbitration under a valid and enforceable arbitration agreement has clearly abused its discretion.” In re Whataburger Rests. LLC, 645 S.W.3d 188, 194 (Tex. 2022) (orig. proceeding) (quoting In re 24R, Inc., 324 S.W.3d 564, 566 (Tex. 2010) (orig. proceeding) (per curiam)); see In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753–54 (Tex. 2001) (orig. proceeding) (stating that when trial court concludes that arbitration agreement encompasses claims and party opposing arbitration has failed to prove defenses, trial court “has no discretion but to compel arbitration”).

II. Applicable Arbitration Law

A. Existence of Arbitration Agreement

“A party seeking to compel arbitration must establish the existence of a valid arbitration agreement and that the claims at issue fall within the scope of that agreement.” Henry, 551 S.W.3d at 115. “This is a two-step process, requiring the party to ‘first establish the existence of an arbitration agreement’ and then establish that ‘the arbitration agreement covers’ the claims asserted.” TotalEnergies E&P USA, Inc. v. MP Gulf of Mex., LLC, 667 S.W.3d 694, 720 (Tex. 2023) (quoting In re FirstMerit Bank, 52 S.W.3d at 753). A strong presumption favoring arbitration arises after the party seeking to compel arbitration proves that a valid arbitration agreement exists. J.M. Davidson, Inc., 128 S.W.3d at 227.

GCA and Butler do not dispute whether the arbitration agreement contained within the Agreement between GCA and Post MC exists and is a valid arbitration agreement. Instead, they acknowledge that Post MC and GCA agreed to the arbitration provision but contend that none of the individuals who are parties to the suit, including Bishop and Butler, agreed to arbitration. We address GCA and Butler's contention about which parties are subject to the arbitration provision in more detail below, but we conclude that a valid arbitration agreement exists between Post MC and GCA.

If the party seeking arbitration carries its initial burden to establish the existence of a valid arbitration agreement, the burden then shifts to the party resisting arbitration to present evidence on its defenses to the arbitration agreement. See J.M. Davidson, Inc., 128 S.W.3d at 227); see also Murdock v. Trisun Healthcare, LLC, No. 03-10-00711-CV, 2013 WL 1955767, at *3 (Tex. App.—Austin May 9, 2013, pet. denied) (mem. op.). We therefore next consider whether GCA and Butler established their asserted defense that Post waived its right to arbitration.

B. GCA and Butler's Waiver Defense

If the parties have agreed to resolve disputes through arbitration, “courts must honor the agreement by referring the disputes to arbitration unless the party demanding arbitration has waived that right by substantially participating in the litigation.” G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 509 (Tex. 2015). GCA and Butler assert that Post MC has waived its right to enforce the arbitration agreement. “Waiver—the ‘intentional relinquishment of a known right’—can occur either expressly, through a clear repudiation of the right, or impliedly, through conduct inconsistent with a claim to the right.” Id. at 511 (quoting Perry Homes, 258 S.W.3d at 594).

GCA and Butler contend that Post MC impliedly waived its arbitration rights through Bishop's litigation conduct and through its own litigation conduct and that requiring GCA and Butler to participate in arbitration at this point in the litigation would significantly prejudice them. “A party asserting implied waiver as a defense to arbitration has the burden to prove that (1) the other party has ‘substantially invoked the judicial process,’ which is conduct inconsistent with a claimed right to compel arbitration, and (2) the inconsistent conduct has caused it to suffer detriment or prejudice.” Id. at 511-12. Because there is a strong presumption against waiver of arbitration, a party opposing enforcement of a valid arbitration agreement based on the defense of waiver bears a heavy burden of proof. See, e.g., Perry Homes, 258 S.W.3d at 590 (describing burden as high hurdle); In re Bruce Terminix Co., 988 S.W.2d 702, 705 (Tex. 1998) (orig. proceeding). Whether a party has substantially invoked the judicial process depends on the totality of the circumstances. Perry Homes, 258 S.W.3d at 590-91 (identifying wide variety of factors that courts consider when applying totality-of-the-circumstances test).

1. Bishop's Litigation Conduct

In the trial court, GCA and Butler argued that Post MC had waived its right to arbitrate not only because of its own litigation conduct, but also because Bishop had fully participated in hearings, depositions, and other discovery. GCA and Butler contended that Post MC's motion to compel arbitration “is a thinly disguised attempt to forum shop” to avoid the adverse contempt and sanctions orders against Bishop. They asserted that because Post MC “is solely owned by Daniel Bishop, who has personally received all payments under the Agreement and has been actively participating in the Special Judge process for over a year,” Post MC had waived its right to arbitrate and consented to proceeding before the special judge. On appeal, GCA and Butler argue for the first time that “Post MC effectively assigned its rights under the [Agreement] to [Bishop],” and thus, Bishop's litigation conduct should be attributed to Post MC. Specifically, they contend that Post MC waived its arbitration right by “passing that right onto its principal, [Bishop], who by agreeing to and participating in the Special Judge process waived all rights to arbitration.”

GCA and Butler did not address below or in their appellate brief the well-established law that a limited-liability company is a legal entity separate from its member, even when that member is the sole member. See, e.g., Sherman v. Boston, 486 S.W.3d 88, 94 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). They did not attempt to establish, or even argue, in the trial court that Bishop was Post MC's “effective assignee” under the Agreement. On appeal, they state in conclusory fashion and without citation to the record that “Post MC assigned all of the rights, duties and obligations under the [Agreement] and the Promissory Note to [Bishop].” They reference the facts that payments were made under the Seller's Note to Bishop and that Bishop asserted a claim in his individual capacity in a superseded pleading for breach of the Seller's Note (which Post MC characterizes as a “mistaken” assertion), but they do not explain how these facts support their argument that Post MC assigned all of its rights, duties, and obligations under the Agreement and Seller's Note to Bishop or specifically its right to arbitration. Cf. In re Marriage of Brookshire, --- S.W.3d ---, No. 12-24-00322-CV, 2026 WL 1593277, at *19 (Tex. App.—Tyler June 3, 2026, no pet. h.) (characterizing sole member's receipt of LLC's asset-sale proceeds in his personal account as distribution from LLC to member, not dissolution or termination of LLC's separate existence). We conclude that there is no evidence in the record supporting an assignment by Post MC of its right to arbitration to Bishop and no evidence supporting a conclusion that Post MC is not a separate legal entity from Bishop. Therefore, we hold that there is no basis for attributing Bishop's litigation conduct to Post MC when considering whether Post MC substantially invoked the judicial process.

2. Post MC's Litigation Conduct

As for Post MC's litigation conduct, GCA and Butler argue—without supporting legal authority—that Post MC waived its right to arbitration by seeking affirmative relief in the special-judge proceeding when it filed its third-party petition and did not make the pleading subject to its claim for arbitration. However, the Texas Supreme Court has held on several occasions that “[m]erely filing suit does not waive arbitration.” Richmont Holdings, Inc. v. Superior Recharge Sys., L.L.C., 455 S.W.3d 573, 576 (Tex. 2014) (per curiam); see also Perry Homes, 258 S.W.3d at 590. In addition, GCA and Butler argue on appeal that Post MC had actual knowledge through Bishop of the proceedings, presumably implying delay on Post MC's part in joining the suit and moving to compel arbitration.⁵ “But mere delay in moving to compel arbitration is not enough for waiver.” E.g., Richmont Holdings, 455 S.W.3d at 576 (collecting cases involving delays); see also G.T. Leach Builders, 458 S.W.3d at 513 (declining to find delay in moving to compel arbitration to be relevant circumstance when most of delay occurred before plaintiff added arbitration movant to case).

Having concluded that the circumstances as a whole here do not establish that Post MC substantially invoked the judicial process, we need not consider whether GCA and Butler were prejudiced by the progression of the suit before Post MC became a party and moved to compel arbitration. See Richmont Holdings, 455 S.W.3d at 576 (concluding that party who delayed nineteen months in moving to compel arbitration; filed a second, separate suit in another county based in part on contract at issue in first suit; moved to transfer venue; and engaged in minimal discovery had not substantially invoked judicial process and declining to consider whether opposing party was prejudiced by delay). Because we hold that GCA and Butler have not established that Post MC has waived its right to arbitration under the arbitration agreement, we now consider whether GCA and Post MC's agreement to arbitrate in accordance with JAMS rules establishes a clear and unmistakable agreement to delegate arbitrability issues to the arbitrator.

C. Who Determines Arbitrability of Claims

“Because arbitration is a matter of contract—‘a matter of consent, not coercion’—parties cannot be compelled to arbitrate any controversy unless they have contractually agreed to do so.” TotalEnergies, 667 S.W.3d at 701 (quoting Robinson v. Home Owners Mgmt. Enters., Inc., 590 S.W.3d 518, 521 (Tex. 2019)). Federal and state laws strongly favor arbitration.⁶ In re FirstMerit Bank, 52 S.W.3d at 753. “[W]hen a party challenges the validity or scope of an arbitration agreement contained within a broader contract, courts must resolve that challenge to determine whether the parties agreed to arbitrate their controversies regarding the contract.” TotalEnergies, 667 S.W.3d at 701. But “[i]f the parties have contractually agreed to delegate arbitrability disputes to the arbitrator, courts must enforce that agreement just as they must enforce an agreement to delegate resolution of the underlying merits to the arbitrator.” Id. at 702; see also Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 67, 70-72 (2010) (explaining that unless party specifically challenges provision delegating arbitrability disputes to arbitrator, court must treat delegation provision as valid and enforce it).

Here, as discussed above, GCA and Butler did not challenge the validity of the arbitration agreement. To the extent that they contended in the trial court and assert on appeal that the arbitration agreement does not apply to some claims and some parties, we must determine whether GCA and Post MC contractually agreed to delegate those arbitrability disputes to the arbitrator.

In TotalEnergies, the Texas Supreme Court held that “as a general rule, an 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. Specifically, the court held that an agreement stating that the arbitration must be conducted “in accordance with the rules of the AAA” incorporated the AAA rules into the parties' arbitration agreement and made them “ ‘part of’ the parties' agreement as if they were set forth within the agreement itself.” 667 S.W.3d at 709.

In this case, GCA and Post MC agreed that “[a]ny controversy or claim arising out of this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the rules of JAMS.” (Emphasis added.) The JAMS rules, in turn, provide that “[j]urisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought, and who are proper Parties to the Arbitration, shall be submitted to and ruled on by the Arbitrator” and that “[t]he Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter.” JAMS R.11(b) (2021) (emphases added). The similarly worded AAA rule at issue in TotalEnergies provides that the arbitrator “shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.” 667 S.W.3d at 709 (quoting Am. Arb. Ass'n. R-7(a) (2013)). The Texas Supreme Court concluded that the use of “[t]he verb ‘shall’ in this sentence ‘evidences the mandatory nature of the duty imposed,’ [a]nd the use of the definite article ‘the’ with the singular noun ‘power’ indicates exclusivity, limiting the delegation of ‘the power’ to the arbitrator.” Id. (citation omitted) (quoting Southwestern Bell Tel., L.P. v. Emmett, 459 S.W.3d 578, 588 (Tex. 2015)). Likewise, the JAMS rule provides that arbitrability disputes “shall be submitted to” the arbitrator, who has “the authority” to determine them. Consequently, we conclude that the JAMS rule also “clearly and unmistakably delegates” the authority to decide arbitrability disputes exclusively to the arbitrator. Id. at 711. Thus, we hold that the parties' agreement to arbitrate disputes in accordance with the JAMS rules “incorporates those rules into the agreement and clearly and unmistakably demonstrates the parties' intent to delegate arbitrability issues to the arbitrator.” Id. at 712.

Accordingly, we must enforce the delegation provision, and we hold that GCA and Post MC's agreement to delegate arbitrability issues requires the arbitrator to decide whether their arbitration agreement requires arbitration of some or all of the claims asserted in the suit between those two parties. See id. at 720-21.

We next turn to the question of whether this Court or the arbitrator should determine whether the other parties to the suit should be required to arbitrate some or all of the claims between them and GCA and Post MC.

D. Who Determines Which Parties Are Required to Arbitrate

Post MC argued in the trial court that the entire suit should be submitted to arbitration and that “any dispute about arbitrability, including the proper parties, should be submitted to arbitration in accordance with the arbitration agreement and the agreed-upon JAMS rules.” Post MC asserted that because JAMS Rule 11(b) states that disputes about “who are proper Parties to the Arbitration[ ] shall be submitted to and ruled upon by the Arbitrator,” the arbitrator should determine any dispute about whether Butler or any of the Original Defendants should submit to arbitration. In addition, Post MC argues on appeal that on their merits all the claims asserted by and against the Original Defendants should be compelled to arbitration because they involve the “same operative facts and are inherently inseparable” from the claims by and against GCA and Post MC, relying on Dennis v. College Station Hospital, L.P. See 169 S.W.3d 282, 287 (Tex. App.—Waco 2005, pet. denied) (concluding that hospital's claim against doctor in his individual capacity under agreement without arbitration clause should be compelled to arbitration with doctor's counterclaim for breach of contract that arose under related agreement with doctor's professional association, which contained arbitration clause). In their response, GCA and Butler argued that the Original Defendants had already waived any right that they might have to arbitration when Bishop did not pursue his motion to compel arbitration and they all agreed to the special-judge proceeding. GCA and Butler also contended that Butler was not a party to the Agreement, did not agree to arbitration, and had willingly participated in the special-judge proceeding after being sued by the Original Defendants.

We first address Post MC's contention that JAMS Rule 11(b)'s language means that the arbitrator should determine whether all parties to the suit should be compelled to arbitration. Although the supreme court held in TotalEnergies that the incorporation of AAA or other arbitration rules can be effective as a clear and unmistakable contractual delegation of the question of arbitrability to the arbitrator, because the parties in that case were both signatories to the agreements at issue, the court expressly left in place its prior holding “that an arbitration agreement's incorporation of the AAA rules did not clearly and unmistakably demonstrate an agreement to delegate arbitrability of claims against a non-signatory to the arbitrator because parties ‘cannot be forced to arbitrate absent a binding agreement to do so.’ ” 667 S.W.3d at 703 n.10 (quoting Jody James Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 632 (Tex. 2018), and noting that “[c]ourts in other jurisdictions have since reached the opposite result in cases involving non-signatories”). This Court, in a recent case decided after TotalEnergies, held that when an arbitration agreement incorporating AAA rules is silent about nonsignatories, the court, not the arbitrator, must decide arbitrability of disputes involving nonsignatories. CPG 220 Holdings 2014, LLC v. Mulcahy, 709 S.W.3d 728, 734, 736 (Tex. App.—Austin 2025, pet. denied) (relying on reasoning in Jody James Farms that question of whether nonsignatory may enforce arbitration agreement is issue of existence of “valid” arbitration agreement between signatory and nonsignatories).

In Jody James Farms, the Texas Supreme Court concluded that a contract that incorporates AAA rules only for disputes between the signatories to an agreement and is silent on the matter of arbitration of claims involving nonsignatories does not contain “clear and unmistakable evidence” of an agreement to arbitrate those claims. 547 S.W.3d at 632-33. In light of this reasoning, although JAMS Rule 11(b) more explicitly identifies a dispute about the “proper parties” as a dispute for the arbitrator to resolve, we decline to hold that the Agreement's incorporation of the JAMS Rules mandates that the arbitrator decide the arbitrability of claims involving nonsignatories to the arbitration agreement. Instead, we hold that the incorporation of the JAMS Rules standing alone (in the absence of other contractual language about nonsignatories, which we discuss below in relation to Butler) is not enough to delegate to the arbitrator the issue of whether any of the claims involving nonsignatories should be compelled to arbitration—that issue is one that this Court must decide.

We next assess whether either Post MC's claims against Butler or the claims involving the Original Defendants should be compelled to arbitration for the arbitrator to assess their arbitrability.

1. Claims Between Post MC and Butler

Post MC asserts that the claims between it and Butler arise out of the Agreement and are subject to the arbitration agreement. Post MC contends that even though Butler did not sign the Agreement in his personal capacity, he personally guaranteed and signed the incorporated Seller's Note as required by the Agreement, which makes Post MC's claim against him for nonpayment of the Seller's Note a claim that arises out of the Agreement and is subject to arbitration. GCA and Butler argue that merely signing an agreement ancillary to the Agreement (i.e., his guaranty of the Seller's Note) should not make Butler bound by the terms of the Agreement to which he was not a party.

“Who is bound by an arbitration agreement is normally a function of the parties' intent, as expressed in the agreement's terms.” Id. at 633. Courts have articulated six scenarios in which arbitration with nonsignatories may be required: (1) incorporation by reference, (2) assumption, (3) agency, (4) alter ego, (5) equitable estoppel, and (6) third-party beneficiary. Id. As the supreme court explained in TotalEnergies, an arbitration agreement does not “have to be included in each of the contract documents it purports to cover,” and “[s]o long as the parties agreed to arbitrate this dispute, it does not matter which document included that agreement.” 667 S.W.3d at 720 (quoting In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex. 2005) (orig. proceeding) (per curiam)); see also Romero v. Herrera, No. 04-18-00845-CV, 2019 WL 2439107, at *3 (Tex. App.—San Antonio June 12, 2019, no pet.) (“[T]he scope of an arbitration agreement turns on its terms, not on the particular written instrument in which the arbitration agreement appears.”).

In this case the Agreement expressly provided the terms of the Seller's Note and that the Note “shall be personally guaranteed by Michael Brett Butler.” The Note contains a “Guaranty” section stating,

The Lender [Post MC] is entitled to the benefits of the Guaranty and all other agreements, guaranties, instruments, and documents at any time executed by the Borrower [GCA] or Guarantor [Butler] relating to, evidencing or setting out any terms of the loan evidenced by this Note (collectively with this Note and the Guaranty, the “Loan Documents”).

(Emphases added; bold typeface omitted.) The Guaranty signed by Butler is at the end of the Seller's Note. The “Seller Promissory Note” is one of the Exhibits listed on the “List of Schedules and Exhibits” attached to the end of the Agreement. After reviewing the language of both the Agreement and the Seller's Note and the facts and circumstances surrounding their execution, we hold as a matter of law that the Agreement and the Seller's Note are components of a single, unified instrument. Cf. Rieder v. Woods, 603 S.W.3d 86, 95 (Tex. 2020) (construing two separate agreements and facts and circumstances surrounding their execution and determining that agreements were not part of single, unified instrument).

Therefore, we hold that Post MC's claims against Butler for breach of the Agreement's requirement for payments of the Seller's Note and his guaranty of that Note are claims subject to the valid arbitration agreement and should be compelled to arbitration.

2. Claims Between GCA and Non-Signatories to Agreement

Post MC also contends that the claims between GCA and the Original Defendants should be compelled to arbitration because they involve the “same operative facts and are inherently inseparable” from the claims by and against GCA and Post MC. To the extent that Post MC argues that GCA should be required to arbitrate its claims against the Original Defendants under a theory of direct-benefits estoppel because many of its claims rely on the terms of the noncompete provision in the Agreement, we conclude that we need not reach this issue because the Original Defendants waived any potential right to arbitration under this theory by their prior litigation conduct.⁷ After Bishop filed a motion to compel arbitration at the outset of the case, he did not pursue the motion, and instead he and the other Original Defendants agreed to the special-judge proceeding. See G.T. Leach Builders, 458 S.W.3d at 511 (explaining that waiver, “the ‘intentional relinquishment of a known right,’ ” can occur expressly through “clear repudiation of the right” (quoting Perry Homes, 258 S.W.3d at 590-91)).

Having concluded that the trial court erred by not referring the claims among GCA, Butler, and Post MC to arbitration, we sustain in part Post MC's first issue.

III. Post MC's Remaining Issues

Because of our resolution of Post MC's issue challenging the trial court's denial of its motion to compel arbitration, we need not reach Post MC's issues concerning the trial court's orders on its motions to lift the stay of the special-judge proceeding and to stay the special-judge proceeding or the issue of whether we have interlocutory appellate jurisdiction over the trial court's denial of those motions. See Tex. R. App. P. 47.1.

IV. Trial-Court Stay of Other Claims Pending Arbitration

Post MC requested that if we reverse the trial court's order denying the motion to compel arbitration, we then order the claims to arbitration and stay the trial-court litigation pending the arbitration's conclusion. Upon remand to the trial court, we order that the claims between GCA and the Original Defendants that involve the same issues that are subject to arbitration must be stayed until the arbitration is completed. See, e.g., In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 195 (Tex. 2007) (orig. proceeding) (holding that if same issues must be decided both in arbitration against one party and in trial court against other parties, trial-court proceeding must be stayed); see also In re FirstMerit Bank, N.A., 52 S.W.3d at 753-54 (“Once the trial court concludes that the arbitration agreement encompasses the claims, and that the party opposing arbitration has failed to prove its defenses, the trial court has no discretion but to compel arbitration and stay its own proceedings.” (footnote omitted)).

CONCLUSION

Having concluded that the trial court erred by denying Post MC's motion to compel arbitration of the claims between it, GCA, and Butler, we reverse in part the trial court's order denying the motion, and we remand this case to the trial court for further proceedings consistent with this opinion.

Reversed in Part and Remanded

FOOTNOTES

1.   “ModernCrete Concrete Design, LLC” is identified as the “Seller” in the Agreement, and GCA is the “Buyer.” The terms of the Agreement required the Seller to change its business name after the closing date of the asset sale. The Seller changed its business name to Post MC, LLC after the closing date of the asset sale.

2.   For clarity, we refer to Chris by his first name.

3.   Post MC and the Original Defendants jointly filed “Defendants' Answer to Plaintiff's Third Amended Petition, Amended Counterclaims, and Third-Party Petition of Post MC, LLC,” amending the counterclaim for breach of contract for failure to make required payments as brought only by Post MC and no longer by Bishop.

4.   Although GCA and Butler assert on appeal that they also argued in the trial court that “the bulk of the claims do not fall within the scope of the arbitration agreement,” they did not argue that the claims were outside the scope of the arbitration agreement in their written response. At the hearing, they briefly argued that the only claim that could be sent to arbitration was the claim between Post MC and GCA (not Butler) involving the promissory note. They also argued that “XrQ and Daniel Bishop conspired to unfairly compete with GCA” and that Bishop's noncompete, which is “the heart of the lawsuit, has nothing to do with the purchase of the assets. It has to do with torts. And there's no tort that's included as part of the arbitration provision in the asset purchase agreement.”

5.   We note that GCA sued Post MC a few hours before Post MC filed its third-party petition.

6.   The arbitration agreement does not specify whether the Federal Arbitration Act (FAA) or the Texas Arbitration Act (TAA) applies to this dispute. We conclude that both acts apply because the Agreement involves interstate commerce (Post MC in the past provided, and GCA currently provides, services in multiple states) and contains a Texas choice-of-law clause. See In re Devon Energy Corp., 332 S.W.3d 543, 547 (Tex. App.—Houston [1st Dist.] 2009, orig. proceeding) (when contract involves interstate commerce, “[i]f an arbitration agreement does not specify whether the FAA or the TAA applies, but states that it is governed by the laws of Texas, both the FAA and the TAA apply unless the agreement specifically excludes federal law”).

7.   We also note that the Texas Supreme Court explicitly rejected the theory of estoppel “based solely on substantially interdependent and concerted misconduct” in In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 191 (Tex. 2007) (orig. proceeding).

Gisela D. Triana, Justice