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Click here for the full text of this decision FACTS:Media Arts Group, a California-based company that produces artwork based on Thomas Kinkade’s paintings, entered into agreements with several galleries to sell the art. Three gallery owners executed a total of seven dealer agreements, which consist of three parts: 1. the basal dealer agreement; 2. Exhibit A (addressing the geographical district covered by the agreement); and 3. the Standard Terms and Conditions. Exhibit A contains the parties’ signatures, but the Standard Terms and Conditions section does not, and may not have been attached to all dealer agreements. Contained in the Standard Terms and Conditions section is a provision for arbitration. The gallery owners sued Media Arts and others for breach of contract and various other business-related causes of action, alleging that the defendants eliminated the gallery owners from the market by selling art directly to consumers at discount stores while requiring the gallery owners to sell at inflated prices. Media Arts filed a motion to stay the suit and compel arbitration and, before getting a ruling, attempted to initiate proceedings to get back more than $1 million in unpaid invoices. The trial court subsequently denied the motion, and Media Arts filed for a writ of mandamus to compel arbitration. HOLDING:Writ conditionally granted. “Media Arts has established the existence of an arbitration agreement subject to the [Federal Arbitration Act], the arbitration agreement encompasses the claims at issue, and the Gallery Owners have failed to prove any defenses to its enforcement.” The court notes that generally the FAA pre-empts application of state law that would render an existing arbitration agreement unenforceable, it does not pre-empt application of state law to determine the existence of an arbitration agreement. Therefore, to determine whether the FAA requires arbitration in this case, the court must first determine, under state law, whether an arbitration agreement exists and whether the gallery owners proved any defense. The gallery owners content that their dealer agreements did not contain arbitration provisions because the Standard Terms and Conditions were not attached to all agreements. The court finds that regardless of hearing testimony that might support the gallery owners’ position, the dealer agreements explicitly state that the Standard Terms and Condition are attached and that those terms are a fixed part of the dealer agreements. The court also observes that the pages in the agreements are numbered, from “Page 1 of 14″ to “Page 14 of 14,” and the Standard Terms and Conditions were found starting on “Page 9 of 14″, so it is clear they are part of the entire agreement. Under California law, parties are bound by a contract’s contents, provided there is no fraud, none of which is alleged here. Having established the existence of the arbitration provision, the court then decides that the gallery owners did not prove a defense to enforcement of the provision. Media Arts did not waive enforcement, despite one of the gallery owners’ recollection that a Media Arts representative told him “don’t worry about it” (meaning the arbitration provision). Waivers must be explicit, the court reminds the gallery owners. Nor did the gallery owners prove they were fraudulently induced into agreeing to the arbitration provision. The gallery owners did not prove the most basic element of the defense, the court says: a material false representation. The statement “don’t worry about it is too vague to constitute a material false representation. Finally, the court rules the arbitration provisions are not void for unconscionability. It is not procedurally unconscionable as an adhesion contract, as the gallery owners allege. Adhesion contracts are not per se unconscionable under either California or Texas law, and the gallery owners presented no evidence to show that the terms within the provision were indeed unconscionable. The arbitration provision is not substantively unconscionable, either, the court rules. “There is nothing harsh or one-sided about this arbitration provision,” the court says. “To the contrary, it requires both Media Arts and the Gallery Owners to arbitrate any potential disputes. It gives both parties equal participation in choosing arbitrators. It provides for application of the rules of the American Arbitration Association. It does not give Media Arts any greater rights than the Gallery Owners and does not limit the Gallery Owners’ ability to recover in arbitration.” OPINION:Hudson, J.; Yates, Hudson and Frost, JJ.

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