Court of Appeals of Texas, Dallas.

The CANZERI COMPANY, Appellant,

v.

AON SERVICES GROUP, INC., Appellee.

No. 05-99-01656-CV.

|

June 6, 2000.

Before Justices OVARD, MOSELEY, and O’NEILL.

OPINION

OVARD.

*1 In this interlocutory appeal, The Canzeri Company (Canzeri) appeals from the trial court’s order staying arbitration. In a single issue, Canzeri contends the trial court erred in staying arbitration because a valid arbitration agreement exists which is binding on appellee Aon Services Group, Inc. (Aon) and no evidence supports the trial court’s finding that Aon carried its burden of showing there is not an agreement to arbitrate. Because we conclude there is some probative evidence in the record sufficient to support the trial court’s order, we affirm.

CARE Systems Corporation (CARE) developed software for and assisted in managing workers’ compensation claims. CARE engaged Canzeri to assist it in marketing CARE’s products and services to potential clients and entered into a Representative Agreement pursuant to which Canzeri received commissions. Thereafter, Canzeri assisted CARE in negotiating an Outsourcing Agreement with Kmart Corporation (the Kmart Contract) whereby Kmart outsourced the administration of a portion of its workers’ compensation claims to CARE and another party. The Kmart Contract represented approximately sixty percent of CARE’s business. Following execution of the Kmart Contract, CARE and Canzeri executed a letter agreement (the Commission Agreement) amending the Representative Agreement and providing that Canzeri was to receive 5% of the revenue stream generated by the Kmart Contract.

Several months after CARE and Canzeri entered into the Commission Agreement, CARE sold substantially all of its assets to Aon. The sale was memorialized in an Asset Purchase Agreement dated February 5, 1999 (the APA). The APA specified certain assets and liabilities included in the sale. Among the assets included in the purchase were all of CARE’s rights and obligations derived from the contracts listed on Schedule 1.1.6 of the APA, which were designated as the “Material Contracts.” The Kmart Contract was included on Schedule 1.1.6; however, neither the Representative Agreement nor the Commission Agreement were listed.

Following the asset purchase, Canzeri asserted it was entitled to commissions from Aon for the Kmart Contract, and Aon denied that it assumed any obligation to pay commissions to Canzeri. Canzeri then filed a demand for arbitration with the American Arbitration Association pursuant to arbitration provisions contained in the Representative Agreement and the Commission Agreement. Aon filed suit in district court seeking a declaration that it owed no commissions to Canzeri and sought a stay of the arbitration proceeding on the ground that no agreement to arbitrate exists between Aon and Canzeri. Canzeri, on the other hand, asserted that in the APA Aon assumed CARE’s obligation to arbitrate. Following an evidentiary hearing, the trial court granted Aon’s motion to stay arbitration. In its order, the trial court found that Aon had “carried its burden of showing there is not an agreement to arbitrate and that the appropriate relief under the circumstances is the issuance of an Order staying the arbitration proceeding.” This interlocutory appeal followed.

*2 The civil practice and remedies code provides that “[a] court may stay an arbitration commenced or threatened on application and a showing that there is not an agreement to arbitrate.” Tex.Civ.Prac. & Rem.Code Ann. § 171.023(a) (Vernon Supp.2000). Section 171.098(a)(2) of the code provides for an interlocutory appeal of an order staying arbitration. See Tex.Civ.Prac. & Rem.Code Ann. § 171.098(a)(2) (Vernon Supp.2000).

In both its brief and at oral argument, Canzeri has urged that we use a legal sufficiency or “no evidence” standard of review to determine whether the trial court erred in determining that no agreement to arbitrate exists between Canzeri and Aon. Aon concurs. Absent definitive authority to the contrary, we will utilize the standard of review urged by the parties. See BDO Seidman v. Miller, 949 S.W.2d 858, 860-61 (Tex.App.-Austin 1997, writ dism’d w.o.j.) (applying no-evidence standard of review to interlocutory appeal of trial court’s refusal to stay litigation and granting stay of arbitration); Fridl v. Cook, 908 S.W.2d 507, 511 (Tex.App.-El Paso 1995, writ dism’d w.o.j.) (“In reviewing factual questions concerning an order denying arbitration, we use a ‘no evidence’ standard.”); cf. Carlin v. 3V Inc., 928 S.W.2d 291, 293 (Tex.App.-Hous. [14th Dist.] 1996, no writ) (“The proper standard of review on appeal from an interlocutory order concerning a motion to stay litigation and compel arbitration is the ‘no evidence’ standard of review.”); Hearthshire Braeswood v. Bill Kelly Co., 849 S.W.2d 380, 384 (Tex.App.-Houston [14th Dist.] 1993, writ denied) (same).

In reviewing “no evidence” or legal sufficiency points, we consider only the evidence and inferences, when viewed in their most favorable light, that tend to support the finding or judgment under attack, and we disregard all evidence and inferences to the contrary. Phillips v. ACS Mun. Brokers, Inc., 888 S.W.2d 872, 874 (Tex.App.-Dallas 1994, no writ); Bill Kelly Co., 849 S.W.2d at 384. If there is any evidence of probative force to support the finding, that is, more than a scintilla, the finding must be upheld and the no evidence challenge fails. Leitch v. Hornsby, 935 S.W .2d 114, 118 (Tex.1996); Sherman v. First Nat’l Bank, 760 S.W.2d 240, 242 (Tex.1988). When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983). However, if the evidence supplies some reasonable basis for differing conclusions by reasonable minds as to the existence of a vital fact, then there is some evidence. Id.¹

The record reveals more than a scintilla of evidence to support the trial court’s order. First, two witnesses testified that no agreement to arbitrate exits between Canzeri and Aon. Paul Slamar, an in-house attorney and senior vice president for Aon, testified Aon had never entered into any contract with Canzeri and had never entered into any agreement to submit any disputes with Canzeri to arbitration. Slamar further testified Aon never agreed to assume the obligations under the Commission Agreement between CARE and Canzeri. This testimony was admitted without objection. Further, Paul Robert Auchter, a lawyer for Canzeri and an officer of the company, testified by deposition that Canzeri has never had any contractual relationship with Aon, including any agreement that touches on the question of arbitration. Auchter’s deposition testimony also was admitted without objection. The foregoing testimony constitutes more than a scintilla of evidence supporting the trial court’s determination that no agreement to arbitrate exists between Canzeri and Aon.

*3 At oral argument, Canzeri asserted the trial court should have limited its consideration to construing the contracts and should not have considered extrinsic or parol evidence concerning whether an agreement to arbitrate exists or whether Aon intended to assume an obligation to arbitrate. Canzeri argues that the relevant contracts are unambiguous and, when read together, show Aon assumed CARE’s obligation to arbitrate with Canzeri.

The parol evidence rule precludes consideration of extrinsic evidence to contradict, vary, or add to the terms of an unambiguous written agreement, absent fraud, accident, or mistake. Hudson Buick, Pontiac, GMC Truck Co. v. Gooch, 7 S.W.3d 191, 198 (Tex.App .-Tyler 1999, pet. denied). The general rule is that evidence admitted in violation of the parol evidence rule, whether objected to or not, is incompetent and without any probative force to support any finding. See, e.g., id.; Herbert v. Polly Ranch Homeowners Ass’n, 943 S.W.2d 906, 910 (Tex.App.-Houston [1st Dist.] 1996, no writ); Huddleston v. Fergeson, 564 S.W.2d 448, 452 (Tex.App.-Amarillo 1978, no writ); see also Texarkana & Ft. S. Ry. Co. v. Bass, 260 S.W. 828, 830 (Tex.Comm’n App.1924, judgm’t adopted). This is so because the parol evidence rule “is not merely a rule of procedure but is one of substantive law.” Bass, 260 S.W. at 830; King v. Fordice, 776 S.W.2d 608, 612 (Tex.App.-Dallas 1989, writ denied). Parol evidence, however, is always competent to show the nonexistence of a contract. Baker v. Baker, 143 Tex. 191, 198, 183 S.W.2d 724, 728 (1944); King, 776 S.W.2d at 610. Oral testimony is such a case is not offered to vary the terms of a contract but instead is offered to show no contract exists. See King, 776 S.W.2d at 610. Aon’s witnesses affirmatively testified that no agreement to arbitrate exists. Therefore, the parol evidence rule is inapplicable.²

Furthermore, Canzeri has made no attempt to demonstrate that the testimony Aon relies on is covered by the parol evidence rule. Canzeri’s discussion of the parol evidence rule is limited to a brief paragraph in its reply brief in which Canzeri criticizes all of Aon’s testimony as “self serving testimony about Aon’s’ ‘understandings,’ ‘wishes,’ and ‘assumptions,’ and CARE’s representations and assurances.” Canzeri’s argument refers to all the testimonial evidence generally and does not distinguish among the various witnesses.³ Nowhere in its briefs does Canzeri assert the trial court erred in considering the testimonial evidence of Slamar and Auchter. Nor in its briefs does Canzeri contend this testimony does no more than create a mere surmise or suspicion and therefore, in legal effect, is no evidence. Consequently, we conclude Canzeri has failed to preserve any parol evidence issue for review. See Favaloro v. Commission for Lawyer Discipline, 13 S.W.3d 831, 840 (Tex.App.-Dallas 2000, no pet. h.) (failure to include citation to legal authority or substantive analysis fails to preserve arguments for review); see also Trenholm v. Ratcliff, 646 S.W.2d 927, 934 (Tex.1983) ( “Points of error must be supported by argument and authorities, and if not so supported, the points are waived.”).

*4 Additionally, even without the testimony noted above, there is some probative evidence supporting the trial court’s ruling. The APA specifically includes the Kmart Contract, which contains no arbitration provision, in the schedule of contracts Aon assumed. The APA, however, makes no mention of the two contracts, the Representative Agreement and the Commission Agreement, which contain the arbitration provisions. From the failure to list either of these two agreements in the APA, the trial court could have inferred that Aon did not assume any obligation to arbitrate with Canzeri.

While Canzeri asserts that the opposite inference can be drawn from the failure of the APA to list the Commission Agreement as an excluded liability, the list of excluded liabilities is specifically qualified as non-exclusive. There is no such qualification in the schedule of assumed contracts. At any rate, our standard of review permits us to consider only those inferences supporting the trial court’s ruling, not those that do not.

Finally, even assuming Aon initially assumed CARE’s agreement to arbitrate, the trial court could have determined Canzeri thereafter terminated that agreement. Approximately one month after Aon and CARE executed the APA, Canzeri and CARE entered into a settlement agreement compromising certain claims for commissions which arose prior to Aon’s purchase of the assets. The settlement agreement provides, “This Agreement expressly terminates any other written agreement between or among the parties hereto, including, but not limited to, the CARE Agreements.” The term “CARE Agreements” is defined to include all written agreements between CARE and Canzeri, which include the two contracts containing arbitration agreements. Therefore, by its terms, the settlement agreement terminates the very agreements Canzeri seeks to enforce.

Canzeri argues that the settlement agreement specifically carved out an exception for its claim against Aon. Canzeri relies on the following language, which immediately follows the termination provision:

However, [Canzeri] specifically reserves and does not release any claims, rights nor interest in future commissions or payments which it may be entitled to collect from any successor in interest and/or any assignee of CARE. The parties hereto acknowledge that CARE sold most of its assets to AON Services Group, Inc. and Cambridge Integrated Services Group, Inc., affiliates of AON Corporation, pursuant to an Asset Purchase Agreement, dated February 5, 1999.

We are unpersuaded this provision has the effect Canzeri attributes to it. While Canzeri may well have preserved its claim for future commissions against Aon, the settlement agreement does not address the procedure by which any such claims are to be resolved. Canzeri did not purport to reserve any right to arbitrate the claims. By terminating its contracts with CARE, Canzeri terminated its agreements to arbitrate disputes arising out of those contracts. Canzeri was thereby free to pursue its remaining claims in court, but it no longer had any right to demand arbitration.

*5 On the basis of our review of the entire record, we conclude there is some probative evidence supporting the trial court’s order. Therefore, we cannot conclude the trial court erred in granting Aon’s motion to stay arbitration. We overrule Canzeri’s sole issue and affirm the trial court’s order staying arbitration.⁴

Justice MOSELEY concurring w/o opinion.

	Footnotes
1		We recognize that this rendition of the no-evidence standard of review assumes that Aon had the burden of proof below. If in fact Canzeri had the burden of establishing the existence of an arbitration agreement, as Aon contends, it would be incumbent upon Canzeri to demonstrate on appeal both that there is no evidence of the non-existence of an arbitration agreement and that the evidence established the existence of such an agreement as a matter of law. See Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.1989). Although we are mindful of the potential difficulty which could arise in requiring the movant of a motion to stay arbitration to prove the non-existence of an arbitration agreement, because in this appeal we conclude the outcome would be the same regardless of which party had the burden of proof, we assume without deciding that the trial court was correct in placing the burden on Aon to prove no agreement to arbitrate existed.
2		Similarly, because the issue here concerns what evidence the trial court may consider in determining whether a contract exists, as opposed to interpreting a contract, the Illinois choice-of-law clause contained in the APA is not implicated. Even if it were, however, the parties have not demonstrated that Illinois law is different from Texas is this respect; therefore, we assume Illinois and Texas law are the same. See Country Cupboard, Inc. v. Texstar Corp., 570 S.W.2d 70, 72 (Tex.Civ.App.-Dallas 1978, writ ref’d n.r.e.) (citing Gevinson v. Manhattan Constr. Co, 449 S.W.2d 458 (Tex.1969)).
3		In addition to the testimony of Slamer and Auchter introduced at the hearing on August 26, 1999, Aon, by agreement, presented the trial court with deposition designations for two additional witnesses, Keith Zimmerman and James D. Robertson, as additional evidence.
4		Our ruling is limited to the specific interlocutory issue before us given the particular procedural posture in which it has been presented. We express no opinion on the merits of this litigation, including whether Aon assumed or is otherwise liable for any commission payments Canzeri claims it is owed, and no statement in this opinion should be construed as such.