Thursday, February 18, 2010
Saturday, February 13, 2010
EMPLOYMENT ARBITRATION: Hatton v. D.R. Horton, Inc. Sequel: Appeal After Arbitration Based on EAF Was Enforced by Mandamus Fails
The enforceability of the arbitration clause contained in D.R. Horton, Inc.'s employee handbook acknowledgment form is again before this Court. In Cause No. 14-06-00262-CV, an interlocutory appeal, and Cause No. 14-06-00284-CV, a petition for writ of mandamus, D.R. Horton seeks relief from the trial court's order denying its motion to compel arbitration pursuant to the arbitration clause.Brenda Hatton, the appellee and real party in interest in the subject cases, began working for D.R. Horton in June of 1997 and signed its “Employee Acknowledgment Form" (“EAF") in 2001, which contained, among other matters, the arbitration clause at issue here. In 2005, Hatton filed suit against D.R. Horton, asserting a discrimination claim under the Texas Labor Code and a breach of contract claim. D.R. Horton filed a motion to compel arbitration, and the trial court denied the motion.
In the subject cases, D.R. Horton argues that the trial court abused its discretion by denying arbitration because the arbitration clause is valid and covers the parties' dispute. Hatton argues the arbitration provision contained in the EAF is unenforceable because it is illusory, unconscionable, and its terms are too indefinite to form a binding contract. These are the same arguments made and addressed in our opinion issued on November 2, 2006, in D.R. Horton, Inc. v. Brooks, Cause No. 14-06-00099-CV, and In re D.R. Horton, Inc., Cause No. 14-06-00152-CV. In that opinion, we determined the arbitration clause was valid.
We conditionally granted D.R. Horton's petition for a writ of mandamus and dismissed its interlocutory appeal as moot. Because the facts and legal arguments in the subject consolidated cases are the same as those addressed in our November 2, 2006 opinion, that opinion is controlling and we cite the parties to it.For the reasons stated in our November 2, 2006 opinion, we conclude that the trial court abused its discretion in failing to order Hatton to arbitrate her claims against D.R. Horton pursuant to the arbitration agreement between the parties. Accordingly, we conditionally grant D.R. Horton's petition for writ of mandamus in Cause No. 14-06-00284-CV and direct the trial court to vacate the order denying D.R. Horton's motion to compel and to enter an order compelling the parties to arbitration. The writ will issue only if the trial court fails to comply with this opinion. Having granted full relief under our mandamus jurisdiction, we dismiss as moot D.R. Horton's interlocutory appeal, Cause No. 14-06-00262-CV. See In re D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006) (orig. proceeding).
Petition for Writ of Mandamus Conditionally Granted and Memorandum Opinion filed November 7, 2006.
Panel consists of Chief Justice Hedges, and Justices Yates and Guzman.
Thursday, February 11, 2010
Monday, January 25, 2010
On January 25, 2008, Allan G. Levine, an attorney for one of the plaintiffs in the underlying civil lawsuit, contacted LLG to obtain potential dates for scheduling mediation of the dispute with Alan F. Levin, the principal shareholder of LLG. After obtaining several available dates, Levine contacted Sigmon, the defendant’s attorney, and Don Fogel, the other plaintiff’s attorney in the underlying case. After checking their respective calendars, the attorneys “settled on February 8, 2008” to mediate the underlying dispute.
Levine notified Levin’s office and confirmed the date. LLG faxed a letter containing information regarding the mediation to all three attorneys on January 29, 2008. This letter provided: “In the absence of [two weeks’] advance written notice the attorneys are responsible to see that the mediator is promptly paid fifty percent (50%) of the total mediation fee as an agreed cancellation/rescheduling fee.” LLG also faxed to the attorneys an “Attorney Confidential Information Sheet and Request for Mediation” form (the “mediation request form”) and a “Rules for Mediation” form (the “mediation rules form”).
Sigmon neither completed nor signed the mediation request form. The mediation rules form contained the following paragraph:
CANCELLATION/RESCHEDULING FEE AGREEMENT. ONCE A CASE HAS BEEN SET FOR MEDIATION, THE ATTORNEYS AND THE PARTIES RECOGNIZE THAT THE MEDIATOR’S CALENDAR HAS BEEN RESERVED, AND THEY MUST THEREFORE PROVIDE THE MEDIATOR AT LEAST TWO (2) WEEKS ADVANCE WRITTEN NOTICE OF CANCELLATION/RESCHEDULING. IN THE ABSENCE OF SUCH ADVANCE WRITTEN NOTICE, THE ATTORNEYS AND PARTIES AGREE TO AND SHALL PAY THE MEDIATOR FIFTY PERCENT (50%) OF THE TOTAL MEDIATION FEE FOR THE DAY(S) AS AN AGREED CANCELLATION/RESCHEDULING FEE. THIS RULE ALSO APPLIES TO MEDIATIONS SCHEDULED LESS THAN TWO (2) WEEKS IN ADVANCE OF THE MEDIATION DATE.
Sigmon’s client in the underlying suit was unable to attend the mediation in person, but was willing to be available by telephone; Sigmon was available and prepared to attend the mediation on his client’s behalf. Fogel objected to the lack of personal attendance by Sigmon’s client, and the mediation was cancelled.
In April 2008, LLG filed suit against Sigmon, alleging breach of contract because Sigmon refused to pay the cancellation fee listed in the mediation request form. After generally denying the allegations and asserting several affirmative defenses, Sigmon filed a traditional motion for summary judgment.
In the summary-judgment motion, Sigmon asserted (1) there was no agreement to mediate, either written or oral, (2) he did not agree to be personally obligated for any cancellation or rescheduling fees caused by his client or anyone else, and (3) his client’s intended appearance at the mediation via telephone was not a breach of any such agreement. In an affidavit attached to the motion, Sigmon stated, among other things:
· He made no agreement with respect to mediating the underlying suit;
· He made no agreement regarding the amount of or obligation for any cancellation or rescheduling fees;
· He did not reschedule or cancel the mediation;
· Fogel declined to go forward with the mediation when Sigmon’s client was unable to physically attend the mediation;
· Neither Sigmon nor his client “accepted, acquiesced, or otherwise agreed to the matters contained in (i) The Levin Law Group, P.C.’s letter of January 29, 2008, (ii) an unsigned pre-printed one page document entitled ‘Rules for Mediation,’ or (iii) a pre-printed uncompleted document entitled ‘Attorney’s Confidential Information Sheet and Request for Mediation.’”
LLG filed a response to Sigmon’s summary-judgment motion, in which it stated:
Sigmon consented to the scheduling of the mediation for February 8, 2008; he received the correspondence of January 29, 2008 with the Rules of Mediation and the Attorney’s Confidential Information Sheet and Request for Mediation; he did not object to the terms contained within those documents. Further, he received the January 30, 2008 letter reemphasizing the terms and made no objection.
LLG also attached affidavits from Levin and Levine. In his affidavit, Levin stated that because last-minute cancellations are a “huge problem” for mediators, he had implemented a cancellation policy. He stated that, in his experience, generally “all the attorneys are well familiar with the cancellation policy of this mediator as well as other quality mediators” but he “specifically call[s] the policy to the attorney’s attention every single time.”
In the affidavit, Levin also indicated that, in this specific situation, his staff forwarded a letter by facsimile to all three attorneys in the underlying case. In the first paragraph of the letter, he stated “I specifically alert you to Rule 19 dealing with cancellation/rescheduling fees.” Levin also specified the total mediation fee in this case was $6,375.00; thus the cancellation/rescheduling fee would be $3,187.50.
LLG also attached an affidavit from Levine, indicating that he contacted Levin’s assistant to obtain potential dates for mediation. Levine stated that after “dialoging” with Sigmon and Fogel, they settled on February 8, 2008, and Levine notified Levin’s office and confirmed the date. Levine averred that it was his belief the other attorneys understood personal attendance at the mediation was essential. He further stated that he recognized he and his clients were bound by the Rules of Mediation provided by Levin, including “the cancellation fee and the fact that the attorney and/or party who causes the cancellation is responsible to pay fifty percent (50%) of Mr. Levin’s total fee.” Levine explained he had never been asked by a mediator to sign any type of “formal agreement”, and he and all other “practicing, experienced attorneys who engage in mediation in Harris County, Texas, deem [themselves] and [their] clients bound to the Rules of Mediation once Mr. Levin and the date for mediation have been selected.”
Sigmon replied to LLG’s response, objecting to much of the affidavit evidence. The trial court did not rule on these objections, but granted Sigmon’s summary-judgment motion on August 1, 2008. The judgment became final on September 17, 2008, and, after a motion for new trial was overruled by operation of law, this appeal timely ensued.
I. Standard of Review [omitted]
II. Existence of a Contract
The parties agree there is no written contract in this case. LLG asserts, however, that “there is a fact issue concerning whether [Sigmon] accepted the terms of mediation by scheduling the date and failing to object to any of the terms contained in the mediation agreement,” thus precluding summary judgment.
The elements of written and oral contracts are the same and must be present for a contract to be binding. Wal-Mart Stores, Inc. v. Lopez, 93 S.W.3d 548, 555 (Tex. App.—Houston [14th Dist.] 2002, no pet.). A binding contract must have an offer and an acceptance; the acceptance must be in strict compliance with the terms of the offer. Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 25 (Tex. App.—Houston [14th Dist.] 2005, no pet.). Generally, acceptance of an offer must be communicated to the offeror for a contract to be binding. Id. at 26. Thus, silence does not ordinarily indicate acceptance of an offer. See id. (citing Restatement (Second) of Contracts § 69(1) cmt. a (1981)); see also Tex. Ass’n of Counties County Gov’t Risk Mgmt. Pool v. Matagorda County, 52 S.W.3d 128, 132 (Tex. 2000) (noting that “as a general rule, ‘silence and inaction will not be construed as an assent to an offer’” (quoting 2 Williston on Contracts § 6:49 (4th ed. 1991))).
In this case, Levine was the only attorney who spoke with LLG and Sigmon about scheduling the mediation. In his affidavit, Levine does not indicate that, before Sigmon agreed to mediate the underlying dispute, Levine communicated either Levin’s mediation fee or cancellation/rescheduling charges. The parties agree that these terms were communicated to Sigmon after the mediation was scheduled. Thus, the fact that Sigmon agreed to mediate the dispute does not support an inference that Sigmon agreed to the mediation rules or cancellation fees. See Advantage Physical Therapy, Inc., 165 S.W.3d at 25 (acceptance must be in strict compliance with terms of offer).
In fact, Sigmon presented uncontroverted affidavit evidence that he never entered into an agreement to mediate the underlying suit under the terms and conditions specified by the letters from LLG, the mediation request form, or the mediation rules form. The only evidence LLG specifies to support its claim of an oral agreement to mediate under the written terms it provided is Sigmon’s “lack of objection” to these terms, i.e., Sigmon’s silence, after LLG faxed the written terms to him. But silence rarely indicates acceptance of an offer. See id. at 26; see also Tex. Ass’n of Counties County Gov’t Risk Mgmt. Pool, 52 S.W.3d at 132; Restatement (Second) of Contracts, § 69(1) (noting that assent may be inferred “[w]here an offeree takes the benefit of offered services with reasonable opportunity to reject them”).
Here, Sigmon did not take the benefit of the offered services with a “reasonable opportunity” to reject them. Ultimately, he did not take the benefit of the offered services at all. Further, the confirmation letter, mediation rules form, and mediation agreement form were faxed to Sigmon on January 29, 2008. Six days later, on Monday, February 4, 2008, Sigmon notified LLG that his client would be unable to physically attend the mediation. Thus, Sigmon’s purported lack of objection to the terms of the mediation does not indicate acceptance of LLG’s mediation rules. See Tex. Ass’n of Counties County Gov’t Risk Mgmt. Pool, 52 S.W.3d at 132; Advantage Physical Therapy, Inc., 165 S.W.3d at 26.
Additionally, it is uncontroverted that Sigmon was willing to attend the mediation on behalf of his client, and his client agreed to be available throughout the mediation by telephone. Levin and Levine both stated in their affidavits that they were willing to conduct the mediation under these conditions. The parties agree that Fogel objected to this format, and the mediation was cancelled as a result of Fogel’s objection.
Thus, if the rules for mediation require “personal attendance” as Levin states in his affidavit, Sigmon objected to the offered mediation terms by notifying LLG that his client would not be able to personally attend the mediation. If anything, this objection to LLG’s mediation terms could be deemed a counter-offer by Sigmon, which Levin and Levine accepted, but Fogel rejected. See, e.g., Lewis v. Adams, 979 S.W.2d 831, 834 (Tex. App.—Houston [14th Dist.] 1998, no pet.) (“It is elementary that an acceptance must not change or qualify the terms of an offer; if it does, there is no meeting of the minds between the parties because the modification then becomes a counteroffer.”). At any rate, the “communications between the parties and the acts and circumstances surrounding those communications” in this case indicate that there was no meeting of the minds, and thus no offer and acceptance, regarding the essential terms of the mediation. Wal-Mart Stores, Inc., 93 S.W.3d at 556.
Under these circumstances, we conclude that Sigmon conclusively established that he did not accept the terms of the mediation specified in the letters faxed by LLG, the mediation rules form, or the mediation agreement form—an essential element of LLG’s breach of contract claim. Cf. IHS Cedars Treatment Ctr. of Desoto, Tex., Inc., 143 S.W.3d at 798; see Advantage Physical Therapy, Inc., 165 S.W.3d at 25–26. Because LLG presented no evidence raising a genuine issue of material fact regarding this issue, the trial court properly granted summary judgment to Sigmon. We accordingly overrule LLG’s issue.AFFIRMED: Opinion by Justice Kent Sullivan 14-08-01165-CV The Levin Law Group, P.C. v. Ernesto De Andre Sigmon Appeal from County Civil Court at Law No 4 of Harris County Trial Court Judge: Roberta Anne Lloyd TAGS: formation of contract, agreement to mediate / arbitrate, ADR - mediation costs, cancellation fee charges, meeting of the minds element in contract formation See related blog post by Victoria VanBuren on Karl Bayer's Disputing Blog: Texas Appeals Court Finds No ‘Meeting of the Minds’ in Dispute Over Mediation Cancellation Fee