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Click here for the full text of this decision FACTS:Raymond and Crystal Ripple contracted with Palm Harbor Village (the retailer) to purchase a manufactured home which was to be, and was, manufactured by Palm Harbor Homes Inc. During the process of contracting for and purchasing the home, the Ripples and the retailer entered into several separate agreements. Two of the agreements were arbitration agreements. The first was dated Oct. 1, 1998, and the second was dated Dec. 17, 1998. After the manufactured home was purchased by the Ripples, they began experiencing problems with it and lodged a series of complaints. They eventually sued both the retailer and the manufacturer, alleging breach of contract, breach of warranty, and statutory liability under the Residential Construction Liability Act. The retailer and manufacturer moved to compel arbitration under the Federal Arbitration Act. The trial court denied the motion as to both. A divided court of appeals denied mandamus relief. HOLDING:The court conditionally grants the writ of mandamus and directs the trial court to compel arbitration of the Ripples’ claims. The Ripples urge that the second agreement is applicable to the issues in this appeal, and the relators do not contend otherwise. The court assumes, without deciding, that the second agreement governs the issues. Given the Ripples’ concession at oral argument that records of the hearings in the trial court would not show that evidence was introduced, and their consistent position taken before the trial court as reflected by the record which is before us, the failure of relators to present transcripts of the hearings does not create a presumption that matters occurring during the hearings would support an implied finding that an arbitration agreement did not exist. As a matter of law, the existence of an arbitration agreement among the parties was established. The agreement’s provision extending to the manufacturer a right to opt out of arbitration, even if it were illusory because it did not bind the manufacturer to arbitrate, did not make either the consideration of the underlying contract or the promises to arbitrate any disagreements between themselves illusory as between the retailer and the Ripples. The manufacturer is a third-party beneficiary of the underlying contract and not a first party to it. The manufacturer was not a promisor and therefore was not required to give consideration for the agreement which created its third-party beneficiary status. The Ripples’ obligation to arbitrate with the manufacturer did not fail for lack of consideration. J.M. Davidson Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003), addressed illusoriness in regard to promises between direct parties to an agreement. In this matter the manufacturer was a third-party beneficiary, not a direct party promisor. The court holds that the agreement was not illusory as to the manufacturer. The manufacturer’s limited right as a third-party beneficiary to refuse to arbitrate does not render the arbitration agreement so one-sided as to be substantively unconscionable. The fact that the Ripples would not have been able to buy the manufactured home unless they signed the arbitration agreement does not, in and of itself, make the agreement substantively unconscionable. Assuming arguendo that the agreement constituted a contract of adhesion, the court notes that adhesion contracts are not per se unconscionable or void. The court finds neither unfair surprise nor oppression in the agreement as a whole nor in the substance of the manufacturer’s opt-out provision. The agreement was not procedurally unconscionable, as to either the retailer or the manufacturer. OPINION:Johnson, J.; Jefferson, C.J., Hecht, Wainwright, Brister, Medina, Green and Willett, J.J., joined. CONCURRENCE:O’Neill, J. “In my view, the unilateral right that the retail contract conferred on the manufacturer to compel or avoid arbitration with the parties to that contract after the events giving rise to the Ripples’ claim arose rendered the contract’s arbitration clause unconscionable as to the manufacturer and non-binding on the Ripples. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 230 & n.2 (Tex. 2003). Because I agree with the trial court and the court of appeals on this point, I do not join part IV, A, of the Court’s opinion. Nevertheless, the Ripples’ claims against the manufacturer in this case necessarily rely on the terms of the retail contract and raise substantially interdependent and concerted misconduct; accordingly, I believe the Ripples are equitably estopped from seeking to avoid arbitration with the manufacturer.”

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