Texas Court of Appeals in El Paso dismisses attempted
appeal from order that postponed ruling on arbitrability pending arbitration-related
discovery as unappealable by interlocutory appeal given that the order did not
effectively deny arbitration and did not fit any of the categories of
arbitration-related orders for which statute authorizes an immediate complaint
to the appellate courts by an aggrieved party.
ReadyOne Industries, Inc. v. Simental (Tex.App.- El Paso, Dec. 21, 2012)
OPINION BY JUSTICE ANTCLIFF
In this non-subscriber negligence case, ReadyOne Industries, Inc. brings
an interlocutory appeal from the trial court's order permitting
arbitration-related discovery.[1]
Because the trial court did not rule on the merits of ReadyOne's motion to
compel arbitration, but rather expressly postponed its ruling on the motion
until after the discovery it had ordered was completed, we dismiss the appeal
for want of jurisdiction.
FACTUAL AND PROCEDURAL BACKGROUND
Alleging that she sustained an on-the-job injury, Margarita Simental sued
ReadyOne for negligence. After filing an answer, ReadyOne moved to compel
arbitration pursuant to an agreement requiring claims of on-the-job injuries to
be submitted to binding arbitration. In response, Simental moved for limited
discovery on the issue of arbitrability to "develop [her] case, and defend
against [ReadyOne's] contentions that a valid arbitration agreement exists[,] .
. . [and]. . . to develop or inquire into any factual issues that may preclude
or discredit the existence of a valid arbitration agreement."
At the hearing on these matters, Simental argued that because her
affidavit, attached to the response to ReadyOne's motion to compel arbitration,
raised concerns about fraudulent inducement and no meeting of the minds,
discovery on the validity of the arbitration agreement was required.[2]
Simental also argued that her claims against ReadyOne are not arbitrable
because the Franken Amendment[3] prevents federal contractors from enforcing
agreements to arbitrate tort claims related to or arising out of negligent
hiring, supervision, or retention.[4] After considering the parties' arguments,
the trial court ordered limited discovery on the applicability of the Franken
Amendment and on Simental's claims of fraudulent inducement and no meeting of
the minds. In its order, the trial court made clear that "[it] has not
provided a final ruling on Defendant's Motion to Compel Arbitration and will
not provide such ruling until . . . the . . . discovery [ordered] should be
complete."
JURISDICTION
ReadyOne contends that the trial court's order is reviewable by
interlocutory appeal pursuant to Section 51.016 of the Texas Civil Practice and
Remedies Code. See TEX.CIV.PRAC.&REM.CODE ANN. § 51.016 (West Supp.
2012). Simental, on the other hand, argues that ReadyOne cannot bring an
interlocutory appeal of the trial court's order under Section 51.016 because
the trial court did not rule on the merits of ReadyOne's motion to compel
arbitration. We agree.
Standard of Review
Appellate courts have
jurisdiction over interlocutory orders permitted by statute. See
TEX.CIV.PRAC.&REM.CODE ANN. §§ 51.012 and 51.014 (West Supp. 2012). We
strictly construe such statutes because interlocutory orders are a narrow
exception to the general rule that interlocutory orders are not immediately appealable.
CMH Homes v. Perez, 340 S.W.3d 444, 447-48 (Tex. 2011); Nazareth Hall Nursing
Ctr. v. Castro, 374 S.W.3d 590, 593 (Tex.App.-El Paso 2012, no pet.); Lucchese,
Inc. v. Solano, 08-11-00101-CV, 2012 WL 2409659, *2 (Tex.App.-El Paso 2012, no
pet.). The substance and function of the interlocutory order from which an
appeal is taken controls our interlocutory jurisdiction. Castro, 374 S.W.3d at
593; Solano, 2012 WL 2409659, at *3; Texas La Fiesta Auto Sales, LLC v. Belk,
349 S.W.3d 872, 878 (Tex.App.-Houston [14th Dist.] 2011, no pet.). When a party
attempts to appeal a non-appealable interlocutory order, we have no
jurisdiction except to dismiss the appeal. Cantu Servs., Inc. v. United Freedom
Assoc., Inc., 329 S.W.3d 58, 63 (Tex.App.-El Paso 2010, no pet.) (quotation
marks omitted).
Applicable Law
Section 51.016 of the Texas Civil Practice and Remedies Code provides
that in a matter subject to the Federal Arbitration Act (FAA), a party may
appeal from an interlocutory order of a district court "under the same
circumstances that an appeal from a federal district court's order . . . would
be permitted by 9 U.S.C. Section 16." TEX.CIV.PRAC.&REM.CODE ANN. §
51.016 (West Supp. 2012). Section 16 of the FAA identifies the types of orders
from which an appeal may be taken. Pursuant to Section 16, an appeal may be
taken from:
(1) an order—
(A) refusing a stay of any action under section 3 of this title,
(B) denying a petition under section 4 of this title to order
arbitration to proceed,
(C) denying an application under section 206 of this title to compel
arbitration,
(D) confirming or denying confirmation of an award or partial award, or
(E) modifying, correcting, or vacating an award;
(2) an interlocutory order granting, continuing, or modifying an
injunction against an arbitration that is subject to this title; or
(3) a final decision with respect to an arbitration that is subject to
this title.
9 U.S.C.A. § 16(a)(West 2009).
Discussion
When strictly construed, Section 51.016 of the Texas Civil Practice and
Remedies Code does not permit an interlocutory appeal from a trial court's
order deferring ruling on a motion to compel arbitration. As established above,
Section 16 of the FAA refers only to orders denying an application to compel
arbitration and not to orders postponing a ruling on a motion to compel
arbitration. See 9 U.S.C.A. § 16 (no express provision authorizing
appeal from trial court's postponement of ruling on a motion to compel
arbitration under the FAA). Accordingly, an order deferring a ruling on a
motion to compel arbitration is not appealable under Section 16. Because such
an order is not appealable under the FAA, it is not an appealable order under
Section 51.016. See TEX.CIV.PRAC.&REM.CODE ANN. § 51.016 (in matters
subject to the FAA, an appeal is available only under the same circumstances
that an appeal from federal district court's order would be permitted). We
therefore conclude that the trial court's order permitting arbitration-related
discovery is not reviewable by interlocutory appeal.
ReadyOne argues that Section 16 "allow[s] an interlocutory appeal
from a district court order that postpones a ruling on a motion to compel
arbitration pending further discovery." In support of its argument,
ReadyOne points us to several decisions from various intermediate federal
appellate courts that stand for the proposition that if the substance of the
order effectively denies a motion to compel arbitration, it is an appealable
order under Section 16, even if the order does not determine conclusively
whether the dispute should be referred to an arbitrator. [5] Although we may
rely on decisions from intermediate federal appellate courts as persuasive
authority, we are not persuaded by those relied upon by ReadyOne. See Penrod
Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993)(stating that
opinions from any federal or state court may be relied on a persuasive
authority, but Texas appellate courts are obligated to follow only higher Texas
courts and the United States Supreme Court). Here, unlike in the cases on which
ReadyOne relies, the substance of the trial court's order did not effectively
deny ReadyOne's motion to compel arbitration. Moreover, our sister court
considered this identical issue in In re F.C. Holdings, Inc. and held
that, "[r]egardless of whether arbitration is sought under the [FAA] or
the Texas Arbitration Act, appeal is not available when a trial court defers
ruling on a motion to compel arbitration." 349 S.W.3d 811, 815
(Tex.App.-Tyler 2011, orig. proceeding)(citations omitted). We are thus more
persuaded by our reasoning and that of our sister court in In re F.C.
Holdings, Inc. than by the reasoning of the federal appeals courts in the
cases relied upon by ReadyOne.
CONCLUSION
Because the trial court's order permitting arbitration-related discovery
and deferring ruling on ReadyOne's motion to compel arbitration is not an
appealable order under Section 16 of the FAA, and thus, is not an appealable
order under Section 51.016 of the Texas Civil Practice and Remedies Code, we do
not have jurisdiction to consider ReadyOne's appeal. Accordingly, we dismiss
the appeal for want of jurisdiction.
[1] ReadyOne also filed a companion petition for writ of mandamus
seeking to compel the trial court to vacate its order.
[2] Simental's response to ReadyOne's motion to compel arbitration is
not in the record. However, there is no doubt that ReadyOne was aware of its
existence. At the hearing, counsel for ReadyOne acknowledged receiving Simental's
response that day and, despite receiving it then, argued that Simental's
affidavit was insufficient to require discovery on the issues of fraudulent
inducement and no meeting of the minds. In any event, neither party complains
about the absence of the response from the record, and more importantly, the
response is unnecessary for the resolution of this appeal.
[3] Section 8116 of the Department of Defense Appropriations Act of 2010
is known as the Franken Amendment because of its author, Senator Al Franken of
"Saturday Night Live" fame.
[4] Counsel for Simental informed the trial court that he had briefed
this issue in the response to ReadyOne's motion to compel arbitration. As noted
above in footnote two, the response is not in the record.
[5] See, e.g., Madol v.
Dan Nelson Auto. Grp., 372 F.3d 997, 998-99 (8th Cir. 2004)(concluding that the
district court's order that did not determine conclusively whether the dispute
should be referred to an arbitrator, but rather rejected the magistrate judge's
order compelling arbitration, stayed proceedings, and reopened discovery, was
an appealable order under Section 16 because the order refused a stay and
directed that the litigation proceed); Boomer v. AT&T Corp., 309 F.3d 404,
411-12 (7th Cir. 2002)(concluding that the district court's order explicitly
denying a motion to compel arbitration was immediately appealable under Section
16, notwithstanding the issuance of a subsequent minute order directing the
parties to confer and advise it regarding whether a separate trial on
arbitrability of the claims was warranted).
