A Texas appellate court affirmed the denial of a motion to compel arbitration upon finding that a condition precedent to arbitration – specifically, a requirement to file a demand for arbitration within 100 days of notice of the claim – was not met and that it was proper for the court to make this determination rather than the arbitrator because the facts in question were not in dispute.

In Grand Texas Homes, Inc. v. Hill, No. 2-07-352-CV, 2008 WL 2168147 (Tex. Ct. App. May 22, 2008), Shirley and Julius Hill (the Hills) signed a contract to buy a new home from Grand Homes, but were notified by the lending bank six months after initial approval that they no longer qualified for the loan. In September 2006, Grand Homes refused to refund the $5,000 deposit and the $118,000 paid for the home and sold the house to someone else.

Subsequently, the Hills filed suit against Grand Homes, alleging multiple claims. In September 2007, Grand Homes moved to compel arbitration based on the contract between the parties. The trial court denied the motion and Grand Homes filed this appeal.

On appeal, the Court found that the Hills met their burden of showing that the arbitration agreement should not be enforced because Grand Homes failed to comply with a condition precedent contained in the arbitration agreement – namely, that arbitration must be filed within 100 days of receiving notice of the claim.

In affirming the trial court, the Court rejected Grand Homes' argument that whether a condition precedent is met is a decision for the arbitrator. Although generally this question is for the arbitrator, in this case, the facts in question were not disputed.

First, the record showed "that Grand Homes had notice as a matter of law" of the Hills' dispute over the refund of the approximate $123,000 as evidenced by Mrs. Hill's notification that the Hills no longer qualified for their loan and Grand Homes refusal to issue a refund in September 2006.

Additionally, Mrs. Hill made many attempts to seek an accounting of the money spent and Grand Homes sent further refusals, culminating in an April 2007 letter in which Grand Homes refused to refund the "deposits retained by Grand Homes."

Second, Grand Homes was given sufficient notice of the dispute. The Hills repeatedly attempted to seek a refund of the funds even after repeated denials. These repeated attempts, in spite of the numerous denials, were sufficient to provide notice of the dispute and were not the "mere 'inquir[ies]'" asserted by Grand Homes.

Accordingly, as the facts were not in dispute, the Court held that the trial court did not err by making the determination of whether a condition precedent to arbitration was met. The denial of Grand Homes motion to compel arbitration was thus affirmed.