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Click here for the full text of this decision FACTS:This is an original proceeding for a writ of mandamus. The relators, Palm Harbor Homes Inc. and Palm Harbor Homes 1 L.P. d/b/a Palm Harbor Village, initiated this original action in April 2002, seeking a writ of mandamus to compel Judge J. Ray Gayle, then judge of the 239th District Court in Brazoria County, to rescind an order dated Dec. 4, 2001, denying the relators’ plea in abatement and motion to compel arbitration, and to compel the real parties in interest Raymond Ripple and wife Crystal Parnell Ripple to submit the dispute to binding arbitration before the American Arbitration Association. On Feb. 6, 2003, after the retirement of J. Ray Gayle as judge of the 239th District Court, this court abated the proceeding to allow the relators to resubmit their motion to Judge Sherry Sebesta, who had succeeded Judge Gayle as judge of the 239th District Court of Brazoria County. On March 6, 2003, at a hearing before Judge Sebesta, the relators presented their second motion to compel arbitration, which the court denied by order dated March 29, 2003. On April 1, 2003, the relators filed an amended petition in this court on April 1, 2003, seeking a writ of mandamus to compel Judge Sebesta to rescind her order of March 28, 2003 and to compel arbitration. HOLDING:Denied. The relators rely upon the provisions of two documents (Palm Harbor No. 1 and No. 2) to support their contention that the Ripples entered into a valid and enforceable agreement to arbitrate. Both documents involve the same parties and relate to the same transaction; therefore, the court reads their provisions together in ascertaining the parties’ intent. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000). Because the second document does not specify whether and to what extent it is intended to operate in discharge or substitution of the first document, the court interprets the two documents together, and in the event of any inconsistency between the two documents, the provisions of the Palm Harbor Agreement, being the later of the two, prevails. The documents relied upon by relators do not suggest, much less conclusively prove, that the Ripples received an independent consideration for giving the opt out right to the manufacturer. The court concludes that the trial court did not abuse its discretion in ruling relators failed to meet their burden of showing the Ripples received an independent consideration for giving the unilateral right to rescind to the manufacturer. Under Texas law, an “opt out” provision purporting to give one party the unilateral right to avoid their contractual obligations renders the contract invalid for want of mutuality. The Palm Harbor opt out provision is absolute and unlimited. It purports to give the manufacturer, as a third-party beneficiary of the contract, the unconditional right to unilaterally “opt out” of the agreement to arbitrate whenever and for whatever reason (or for no reason) it might decide would be in its best interest. Under Texas law, such an unlimited right to rescind a bilateral contract renders the contract void for want of mutuality. The court holds that the trial court did not abuse its discretion in ruling that the opt out provision in the Palm Harbor Agreement rendered that agreement invalid and unenforceable. The trial court could reasonably have inferred from all the circumstances reflected in the record that the Ripples were at a commercial disadvantage in their contractual negotiations with the relators, and that, because of the disparity in their bargaining power, the Ripples were not afforded any meaningful opportunity to negotiate a fair and mutually binding opt out provision. The court concludes that the trial court acted within its judicial discretion in ruling that it would be unconscionable, under the circumstances existing at the time of the execution of the Palm Harbor Agreement, to compel the Ripples to arbitrate their claims against the relators. Such rights as the manufacturer might have, as a third-party beneficiary, to compel arbitration are entirely dependent upon the existence of a valid and enforceable contract. The trial court has ruled that the purported contract is invalid and unenforceable as to both the relators, and it did not abuse its discretion in refusing to compel arbitration on the relator’s claim of equitable estoppel. OPINION:Evans, J.; Keyes, H. and Evans, JJ. DISSENT:Hedges, J. “I respectfully dissent. I begin with the premise that, contrary to the majority’s position, the Relators should not be treated as a single entity. I then deduce that, because the right to arbitrate was validly invoked by the Retailer, and the Ripple’s claims against the Manufacturer are inseparable from their claims against the Retailer, I would hold that the trial court erred in denying the Relators’ motion to arbitrate all claims.”

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