Broad Arbitration Clause sweeps up related disputes even if not strictly based on contract

An arbitration clause that covers any dispute arising out of or relating to the parties' contract is expansive in scope and encompasses any controversy between the parties that touches on, has a significant relationship to, is inextricably enmeshed with, or is factually intertwined with the contract regardless of any label applied to the controversy. See Houston Progressive, 474 S.W.3d at 447-48; FD Frontier, 438 S.W.3d at 695; Hou-Scape, Inc. v. Lloyd, 945 S.W.2d 202, 205-06 (Tex. App.-Houston [1st Dist.] 1997, orig. proceeding) (per curiam). 

Its reach therefore is not limited to claims that literally arise under the contract's terms. E.g., Hou-Scape, 945 S.W.2d at 206 (claims for deceptive trade practices, fraudulent inducement, negligence, defamation, and tortious interference with business relations all held to be within scope of broad arbitration clause).

SOURCE: HOUSTON COURT OF APPEALS - Nos. 01-16-00780-CV (mandamus case) 01-16-00783-CV (interlocutory appeal) - 5/9/2017 styled IN RE CRS INDUSTRIES, INC

IN RE CRS INDUSTRIES, INC.
CRS INDUSTRIES, INC., Appellant,
v. MACDONALD SYSTEMS, INC., Appellee.

Nos. 01-16-00780-CV, 01-16-00783-CV.

Court of Appeals of Texas, First District, Houston.

Opinion issued May 9, 2017.

Original Proceeding on Petition for Writ of Mandamus.

On Appeal from the 152nd District Court Harris County, Texas, Trial Court Case No. 2016-41521.

Panel consists of Chief Justice Radack and Justices Brown and Lloyd.

MEMORANDUM OPINION

HARVEY BROWN, Justice.

CRS Industries, Inc. filed this interlocutory appeal and a petition for writ of mandamus, both of which assert that the trial court abused its discretion by denying CRS's motion to compel arbitration. We agree and reverse the order denying the motion, remand to the trial court so that it can enter an order compelling arbitration and staying this suit, and dismiss CRS's petition for writ of mandamus as moot.

Background

CRS manufactures air purification systems. It contractually agreed to allow MacDonald Systems, Inc. to market and sell its commercial products within a designated territory. The two subsequently became embroiled in a dispute about the sale of a residential product, and MacDonald filed this suit.

MacDonald alleged that it designed a new air filtration system that incorporated one of CRS's products and had identified a customer for this new product, DuPure Water Filters. MacDonald further alleged that the parties agreed to compensate it for the new design by allowing it to purchase the new product from CRS and sell it to DuPure at a profit of $300 per unit. Instead, CRS fired MacDonald as its product representative, and CRS and DuPure refused to pay MacDonald for the new design. MacDonald alleged that CRS is selling or has sold the new design to a company that bought DuPure. It alleged three causes of action—promissory estoppel, quantum meruit, and breach of contract—by which it sought recovery of the $300-per-unit profit it allegedly was promised.

CRS moved to compel arbitration of MacDonald's claims and to stay the suit pending that arbitration based on a clause in their contract requiring arbitration of all claims, disputes, and other matters arising out of or relating to the contract. MacDonald responded that the arbitration clause was inapplicable because the parties' dispute concerned a residential product rather than the commercial ones that were the subject of their contract. It did not, however, otherwise dispute the validity of the contract or its arbitration clause.

The trial court denied CRS's motion to compel arbitration without making any fact findings or stating its reasons. By way of interlocutory appeal and a petition for writ of mandamus, CRS urges that the trial court abused its discretion.

Jurisdiction

CRS is a Florida company whose principal office is in that state, and MacDonald is a Texas company whose principal office is in this state. As they are located in different states, their contract's arbitration clause involves interstate commerce and is subject to the Federal Arbitration Act. 9 U.S.C. § 2; Rapid Settlements v. Green, 294 S.W.3d 701, 705 (Tex. App.-Houston [1st Dist.] 2009, no pet.). The Act's applicability, in turn, gives this court jurisdiction to hear CRS's appeal from the trial court's order denying its motion to compel arbitration. See TEX. CIV. PRAC. & REM. CODE § 51.016; see also 9 U.S.C. § 16(a)(1)(B).

Motion to Compel Arbitration

CRS posits that MacDonald's claims in this suit relate to their contract and therefore are subject to the contract's arbitration clause. On this basis, CRS contends that the trial court erred by denying its motion to compel arbitration.

On interlocutory appeal, we review a trial court's denial of a motion to compel arbitration for an abuse of discretion. Houston Progressive Radiology Assocs. v. Lee, 474 S.W.3d 435, 442 (Tex. App.-Houston [1st Dist.] 2015, no pet.). We defer to the trial court's factual determinations, if any, so long as they are supported by the evidence, but we review questions of law de novo. Id.

A party who moves to compel arbitration must show the existence of a valid, enforceable arbitration agreement and that the agreement's scope encompasses the lawsuit's claims. In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011); Houston Progressive, 474 S.W.3d at 442. Whether a valid agreement exists is a legal question, which turns on the application of ordinary contract principles. Valerus Compression Servs. v. Austin, 417 S.W.3d 202, 208 (Tex. App.-Houston [1st Dist.] 2013, no pet.). In determining whether claims are within the agreement's scope, courts focus on the factual allegations of the petition rather than the causes of action alleged. In re Rubiola, 334 S.W.3d at 225; FD Frontier Drilling (Cyprus) v. Didmon, 438 S.W.3d 688, 695 (Tex. App.-Houston [1st Dist.] 2014, pet. denied). Allegations that touch on the subject of the contract containing the arbitration clause or that are factually intertwined with claims subject to that clause generally are within the clause's scope. In re Dillard Dep't Stores, 186 S.W.3d 514, 516 (Tex. 2006) (per curiam); Valerus, 417 S.W.3d at 208. Courts must resolve any doubts about the agreement's scope in favor of arbitration. In re Rubiola, 334 S.W.3d at 225; Valerus, 417 S.W.3d at 208. If the movant shows that a valid arbitration agreement encompasses the lawsuit's claims, and the opposing party has not proven a defense to enforcement of the agreement, the trial court has no discretion but to compel arbitration and stay the suit. Richmont Holdings v. Superior Recharge Sys., 392 S.W.3d 633, 635 (Tex. 2013) (per curiam).

MacDonald did not dispute the validity of the contract or its arbitration clause in the trial court. Nor has it filed an appellate brief or a response to CRS's petition for mandamus relief. Accordingly, the arbitration clause's validity is undisputed.

The dispositive issue, therefore, is whether MacDonald's claims are within the scope of the contract's arbitration clause. We hold that they are.

The contract specified the products that MacDonald was entitled to market and sell, commercial ones. It disallowed MacDonald from marketing or soliciting orders for any other products unless mutually agreed upon in writing. It provided that CRS retained sole and exclusive ownership of all product designs and modifications and that technical information or plans used or prepared by MacDonald remained the sole property of CRS. It included a merger clause, which provided that the contract was the entire agreement and superseded and replaced any other understandings or agreements. It also provided that its terms could only be amended or modified by an agreement in writing signed by representatives of the parties.

In addition, the contract had an arbitration clause. Setting aside an inapplicable exception, this clause specified that all claims, disputes, and matters arising out of or relating to the contract or its breach must be arbitrated. An arbitration clause that covers any dispute arising out of or relating to the parties' contract is expansive in scope and encompasses any controversy between the parties that touches on, has a significant relationship to, is inextricably enmeshed with, or is factually intertwined with the contract regardless of any label applied to the controversy. See Houston Progressive, 474 S.W.3d at 447-48; FD Frontier, 438 S.W.3d at 695; Hou-Scape, Inc. v. Lloyd, 945 S.W.2d 202, 205-06 (Tex. App.-Houston [1st Dist.] 1997, orig. proceeding) (per curiam). Its reach therefore is not limited to claims that literally arise under the contract's terms. E.g., Hou-Scape, 945 S.W.2d at 206 (claims for deceptive trade practices, fraudulent inducement, negligence, defamation, and tortious interference with business relations all held to be within scope of broad arbitration clause).

Focusing on MacDonald's factual allegations, its claims are within the expansive scope of the arbitration clause. MacDonald acknowledged that it sold CRS's products under contract. It alleged that it made an additional agreement with CRS to sell a new design that incorporated an existing CRS product. It sued to recover the profit it contended it should have received from the sales of this new design.

When CRS moved to compel arbitration of these claims, MacDonald contended that its claims were outside of the arbitration clause's scope because the contract only concerned commercial products and the parties' dispute concerned a residential product. In part, MacDonald relied on a letter predating the parties' contract in which CRS authorized MacDonald to sell residential products. This purported distinction between commercial and residential products, however, merely confirms that MacDonald's claims are factually intertwined with and relate to the parties' contract. That contract postdated the letter in question by several months, contained a merger clause, and expressly forbade MacDonald from selling or soliciting orders for products other than those specified in the contract, which was limited to commercial products. Whatever rights MacDonald may have with respect to the newly designed residential product are therefore inextricably enmeshed with the contract and subject to its mandatory arbitration clause.

In sum, we hold that the evidence shows the existence of a valid, enforceable arbitration agreement between CRS and MacDonald and that the agreement encompasses MacDonald's claims in this suit. Given that MacDonald has not proven a defense to the enforcement of the agreement, the trial court had no discretion but to compel arbitration of MacDonald's claims and stay this suit. Richmont Holdings, 392 S.W.3d at 635. Accordingly, we reverse the trial court's ordering denying CRS's motion to compel arbitration and remand for entry of an order compelling arbitration and staying the suit pending arbitration of MacDonald's claims.

Petition for Writ of Mandamus

Because MacDonald's claims are subject to arbitration by means of CRS's interlocutory appeal, we need not address CRS's related petition for writ of mandamus. See Royston, Rayzor, Vickery & Williams, LLP v. Lopez, 467 S.W.3d 494, 499 (Tex. 2015). Thus, we dismiss CRS's petition as moot. See Houston Progressive, 474 S.W.3d at 439, 451.

Conclusion

We conclude that the trial court abused its discretion by denying CRS's motion to compel arbitration. We therefore reverse the trial court's order denying the motion, remand this cause to the trial court so that it can enter an order compelling arbitration and staying this suit pending arbitration, and dismiss CRS's related petition for writ of mandamus as moot. 

NONSIGNATORIES: Wrongful Death Plaintiffs Compelled to Arbitrate by Texas Supreme Court

Following its recent decision in In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009), the Texas Supreme Court today issued a per curiam opinion requiring the survivors of another worker killed on the job to arbitrate - rather than litigate - their wrongful death claims based on the worker's agreement to arbitrate personal injury and death claims against the employer, a nonsubscriber under the Texas Workers Compensation Act. The Court re-iterated that the Plaintiffs were bound by the agreement as nonsignatories because their claims were entirely derivative of the claims of the dead employee. The Court further rejected the contention that the Arbitration Agreement attached to the company's Employee Injury Benefits Plan was unenforceable because it constituted an illegal pre-injury/death waiver, reasoning that the duty to arbitrate, rather than litigate, merely took the resolution of the claims to a different forum, rather than altering their availability or viability substantively. As such, it did not amount to an illegal waiver. In Re Golden Peanut Co.,LLC, (Tex. 2009) No. 09-0122 (Tex. Nov. 20, 2009)(per curiam)(mandamus compelling arbitration granted) (arbitration and nonsignatories, wrongful death plaintiffs bound by arb agreement signed by worker killed on the job as derivative claimants and must arbitrate claim against employer, pre-injury waivers, forum selection vs. waiver of substantive rights) IN RE GOLDEN PEANUT COMPANY, LLC; from Gaines County; 11th district (11 08 00215 CV, 269 SW3d 302, 11 13 08) Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus. EXCERPTS FROM THE OPINION Texas Labor Code section 406.033(e), which prohibits pre-injury waivers of personal injury or death claims, does not invalidate the decedent’s arbitration agreement. Golden Peanut petitioned the court of appeals for mandamus relief. The court held that the Mutual Agreement to Arbitrate was valid, was supported by consideration, and did not violate Texas Labor Code section 406.033(e), which prohibits pre-injury waivers of personal injury or wrongful death claims. 269 S.W.3d 302, 307– 09. However, without the benefit of our holding in In re Labatt Food Service, L.P., the court of appeals held that the trial court did not abuse its discretion in refusing to compel arbitration because the Drennans, as nonsignatories, were not bound by the agreement to arbitrate. Id. In Labatt, we held that a decedent's pre-death arbitration agreement binds his or her wrongful death beneficiaries because, under Texas law, the wrongful death cause of action is entirely derivative of the decedent’s rights. Id. at 646. The Drennans contend the arbitration agreement is nevertheless unenforceable because it violates section 406.033(e) of the Texas Labor Code, which provides [a] cause of action [against a nonsubscriber] may not be waived by an employee before the employee’s injury or death. Any agreement by an employee to waive a cause of action or any right described in Subsection (a) before the employee’s injury or death is void and unenforceable. Tex. Lab. Code §406.033(e). Subsection (a), in turn, limits the common law defenses available to an employer who does not carry workers’ compensation insurance. Id. § 406.033(a). However, an agreement to arbitrate is a waiver of neither a cause of action nor the rights provided under section 406.033(a), but rather an agreement that those claims should be tried in a specific forum. See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974) (holding that arbitration clauses are, “in effect, a specialized kind of forum-selection clause”). See also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985) (stating that, “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum”). Accordingly, section 406.033(e) does not render the arbitration agreement void. [the hyperlinks are not part of the opinion as issued by the court]

Presumption of Receipt substitutes for proof of delivery of employer's policy document containing arbitration clause

An arbitration agreement does not have to be signed to become effective as conduct after receipt, such as continued employment, may be sufficient to signify acceptance. But what if there is no direct proof of delivery? In this case, the Houston court of appeals panel upholds the enforceability of the employer's dispute resolution plan including arbitration based on the presumption of receipt that was not properly rebutted by the employee. In Re Halliburton (Tex.App.- Houston [1st Dist.] Jul. 2, 2009) (orig. proceeding) FROM THE OPINION: Motion to Compel In July 2008, Halliburton moved to compel arbitration and to dismiss or stay the trial court proceedings. Halliburton argued that O’Beirne accepted the terms and conditions of the DRP twice in writing and by his continued employment with Halliburton after Halliburton mailed a copy of the DRP to its employees in 2001. Halliburton also argued that O’Beirne’s claims fall within the scope of the arbitration agreement because the DRP is broadly written to include “all legal and equitable claims” including “employee benefits or incidents of employment with the company.” Halliburton argued that O’Beirne’s claims for unpaid bonuses and benefits were squarely within the scope of the arbitration agreement. * * * [W]e begin with the most recent version of Halliburton’s DRP relevant to this case, the 2001 DRP, which Halliburton asserts it mailed to O’Beirne. Presumption of Receipt A presumption of receipt arises when a party presents evidence that a document was placed in the United States mail with the proper address and sufficient postage. Southland Life Ins. Co. v. Greenwade, 159 S.W.2d 854, 857 (Tex. 1942); Texaco, Inc. v. Phan, 137 S.W.3d 763, 767 (Tex. App.— Houston [1st Dist.] 2004, no pet.). “The matters of proper addressing, stamping, and mailing may be proved by circumstantial evidence, such as the customary mailing routine of the sender’s business.” Phan, 137 S.W.3d at 767 (citing Cooper v. Hall, 489 S.W.2d 409, 415 (Tex. Civ. App.—Amarillo 1972, writ ref’d n.r.e.)). Testimony that the notice was not received is enough to rebut this presumption, thus creating a fact issue to be resolved by the trial court. Greenwade, 159 S.W.2d at 857–58; Phan, 137 S.W.3d at 767. The presumption of receipt is overcome only when the evidence supporting the contrary inference is conclusive, or so clear, positive, and disinterested that it would be unreasonable not to consider it conclusive. Phan, 137 S.W.3d at 767–68. Here, Halliburton provided uncontroverted evidence that copies of the 2001 DRP materials were sent to O’Beirne in a properly addressed packet, with Halliburton’s return address. In addition, Halliburton provided evidence that they kept track of packets returned to Halliburton by the Post Office as undeliverable and that O’Beirne’s packet was not returned. These uncontroverted facts are circumstantial evidence that proper postage was affixed to O’Beirne’s packet, supporting the presumption of receipt. O’Beirne presented no evidence to the trial court that he did not receive the DRP materials mailed to him in 2001. His affidavit “disputes” that he received the plan materials that Halliburton asserted it provided to him in 2000 when he was hired, but it does not address the materials mailed in 2001. Rather, O’Beirne argues that Halliburton did not establish the presumption of receipt because it did not provide direct evidence of proper postage. Because this can be—and has been—proven by circumstantial evidence, we hold that Halliburton established the presumption that O’Beirne received the 2001 DRP materials. Agreement to Arbitrate The 2001 DRP provided, “Employment or continued employment after the Effective Date of this Plan constitutes consent by both the Employee and the Company to be bound by this Plan, both during the employment and after termination of employment.” The 2001 DRP defines the “effective date” as June 15, 1998, as amended as of August 15, 1999. O’Beirne does not dispute that he was employed by Halliburton after the effective date of the plan. Therefore, O’Beirne accepted the agreement by performance, i.e., his employment. Accordingly, we hold that a valid agreement to arbitrate exists between Halliburton and O’Beirne. Scope of the Agreement We next consider whether O’Beirne’s claims fall within the scope of the agreement to arbitrate. The 2001 DRP aterials state, “All Disputes not otherwise settled by the Parties shall be finally and conclusively resolved under this Plan and the Rules.” “Dispute” is defined as: “all legal and equitable claims, demands, and controversies, of whatever nature or kind, whether in contract, tort, under statute or regulation, or some other law . . . including , but not limited to, any matters with respect to . . . (2) the employment . . . of an Employee, including the terms, conditions, or termination of such employment . . . [or] (3) employee benefits or incidents of employment with the Company. . . .” O’Beirne has sued Halliburton for bonuses and other monies he claims were due to him upon his retirement from Halliburton. Because his claims deal with his employment, termination of employment, and benefits of such employment, we hold that O’Beirne’s claims are within the scope of the arbitration agreement. Conclusion Because O’Beirne’s claims are within the scope of a valid arbitration agreement, we hold that the trial court abused its discretion by denying Halliburton’s motion to compel arbitration. See In re Tenet Healthcare, Ltd., 84 S.W.3d at 765 (“A court has no discretion and must compel arbitration if the answer to both questions is affirmative.”) We conditionally grant relator’s petition for writ of mandamus, and we direct the trial court to vacate its February 9, 2009 order and grant relator’s motion to compel arbitration. We are confident the trial court will promptly comply, and our writ will issue only if it does not. We vacate the temporary stay granted in this case on March 10, 2009. In re Halliburton Co. (Tex.App.- Houston [1st Dist.] Jul. 2, 2009)(Sharp) (arbitration mandamus) (FAA: trial court should have granted motion to compel arbitration in employment dispute) GRANT PETITION FOR WRIT OF MANDAMUS: Opinion by Justice Sharp Before Chief Justice Radack, Justices Taft and Sharp 01-09-00150-CV In re Halliburton Company Appeal from 133rd District Court of Harris County Trial Court Judge: Jaclanel M. McFarland

Pre-Arbitration Discovery Quashed by Texas High Court: In Re Houston Pipe Line Co., LP (Tex. 2009)

10/22 UPDATE: Supreme Court Issues Supplemental Opinion on Pre-Arbitration Discovery Finding abuse of discretion, Texas Supreme Court orders trial court judge to vacate preliminary order governing discovery in commercial dispute and rule on pending motion to compel arbitration instead. Corpus Christi Court of Appeals had found temporary orders appropriate prior to deciding whether the parties should be sent to arbitration under the circumstances of the case. In Re Houston Pipe Line Co., L.P. (Tex. July 3, 2009), No. 08-0800 (Tex. Jul. 3, 2009) (per curiam) (mandamus granted: trial judge directed to rule on motion to compel arbitration, and to vacate pre-arbitration discovery orders found to be overbroad). FROM THE PER CURIAM OPINION: At issue in this proceeding is whether the trial court abused its discretion by permitting discovery on damage calculations and other potential defendants, instead of deciding the motion to compel arbitration. For the reasons below, we conclude the trial court should not have ordered pre-arbitration discovery, but rather should have decided the motion to compel arbitration. Houston Pipe Line Company, L.P., signed an agreement to purchase gas from O’Connor & Hewitt, Ltd., based on the Houston Ship Channel Price Index. Several years later, O’Connor sued Houston Pipe Line, Energy Transfer Partners, L.P., Energy Transfer Equity, L.P., and La Grange Acquisition, L.P., for manipulating the Index downward, which caused O’Connor to receive lower payments for gas delivered pursuant to the contract. As a signatory to the contract, Houston Pipe Line sought to enforce the arbitration provision. Energy Transfer and La Grange were not parties to the agreement, but tried to compel arbitration based on a direct benefits equitable estoppel theory. See Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 305 (Tex. 2006); Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 382 (5th Cir. 2008). O’Connor resisted arbitration by attacking the scope of the arbitration provision and contending that it would be impossible to identify all potential defendants and to complete damages calculations within the sixty days allotted for discovery, as set out in the arbitration provision. Rather than rule on the motion to compel, the trial court ordered discovery to aid it in deciding the motion. Specifically, the trial court ordered discovery to determine if additional defendants could equitably invoke the arbitration clause, whether O’Connor’s claims fell within the scope of the arbitration clause, and if the time limitations imposed by the clause were jurisdictional. In its order, the trial court suggested that it would be virtually impossible to conduct the necessary discovery within the sixty-day time frame allotted to the arbitrator under the agreement * * * Houston Pipe Line and Energy Transfer sought mandamus relief in the court of appeals, arguing that the trial court had abused its discretion by not ruling on the motion to compel. The court of appeals refused to issue the writ, concluding that the trial court had acted within its discretion. We disagree that the discovery ordered by the trial court was needed for it to rule on the motion to compel. When a party disputes the scope of an arbitration provision or raises a defense to the provision, the trial court, not the arbitrator, must decide the issues. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 (2006). And “[w]hen Texas courts are called on to decide if disputed claims fall within the scope of an arbitration clause under the Federal Act, Texas procedure controls that determination.” Tipps, 842 S.W.2d at 268. Pre-arbitration discovery is expressly authorized under the Texas Arbitration Act when a trial court cannot fairly and properly make its decision on the motion to compel because it lacks sufficient information regarding the scope of an arbitration provision or other issues of arbitrability. See Tex. Civ. Prac. & Rem. Code §§ 171.023(b), 171.086(a)(4),(6). This, however, is not an authorization to order discovery as to the merits of the underlying controversy. Motions to compel arbitration and any reasonably needed discovery should be resolved without delay. Tipps, 842 S.W.2d at 269. The discovery authorized by the trial court seeks to determine the identity of all potential defendants and to what extent each defendant is liable, including Houston Pipe Line. Such an inquiry is inappropriate because determinations of ultimate liability ordinarily must be answered during the arbitration proceeding, while questions regarding the scope of the arbitration clause should be decided by the trial court. See AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986). The necessity of identifying other culpable parties could, under some circumstances, be related to arbitrability. But, a party cannot avoid its agreement to arbitrate merely by alleging that there may be other potential defendants; it must link the identity of the defendants to an issue of arbitrability, such as scope, or a defense to arbitration. See 9 U.S.C. § 4; Tex. Civ. Prac. & Rem. Code §§ 171.021, 171.026; see also J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). Because the discovery ordered here is overbroad and beyond the issues raised in the motion to compel, we conclude that the trial court abused its discretion by ordering this discovery rather than ruling on the legal issues raised by the motion to compel. Accordingly, without hearing oral argument, we conditionally grant the writ and direct the trial court to vacate the discovery order and to rule on the motion to compel arbitration. FROM THE CONTRARY OPINION OF THE APPEALS COURT BELOW: The trial court cannot delay ruling on a motion to compel arbitration until discovery has been completed because this would defy the purpose of arbitration and the application of a summary procedure. See e.g., In re Great W. Drilling, Ltd., 211 S.W.3d at 835. However, there is no rule mandating a strict deadline for the court to rule on a motion to compel arbitration. Moreover, as discussed previously, it is clear that the trial court can allow discovery in some circumstances pending its ruling on a motion to compel arbitration. The Texas Supreme Court in Anglin specifically stated that the trial court may "summarily decide whether to compel arbitration on the basis of affidavits, pleadings, discovery, and stipulations." See Anglin, 842 S.W.2d at 269 (emphasis added). Moreover, an evidentiary hearing is required if there are disputed material facts. See id. Furthermore, the Texas Act allows the court to issue, "in its discretion an order for a deposition for discovery, perpetuation of testimony, or evidence needed before the arbitration proceedings begin," or to grant "other relief . . . in its discretion, needed to permit the arbitration to be conducted in an orderly manner and to prevent improper interference or delay of the Arbitration." Tex. Civ. Prac. & Rem. Code Ann. § 171.086(4), (6); see Universal Computer Sys., 183 S.W.3d at 750 (contrasting trial court's authority to resolve an existing discovery dispute with authority to facilitate an arbitration). Under the present circumstances, the trial court did not abuse its discretion in allowing the instant discovery before ruling on Houston Pipe Line's motion to compel arbitration and request to stay trial court proceedings. The trial court is not deferring its ruling until the completion of discovery, but rather, in its discretion, is allowing circumscribed discovery needed to determine the merits of the motion to compel arbitration and if necessary, to permit the arbitration to be conducted in an orderly manner and to prevent improper interference or delay of the arbitration. We note that, in considering the issues herein, we do not reach the merits of the motion to compel arbitration or the arbitrability of the instant dispute. The trial court has not ruled on the merits of this matter and has expressly deferred its ruling pending the continuation of the hearing. Therefore, the merits of the arbitration motion and any contest to it are not ripe for our consideration. In re The Shredder Co., 225 S.W.3d 676, 680 f.5 (Tex. App.-El Paso 2006, orig. proceeding); In re MHI P'ship, Ltd., 7 S.W.3d at 921 f.6; Hou-Scape, Inc. v. Lloyd, 945 S.W.2d 202, 205 (Tex. App.-Houston [1st Dist.] 1997, orig. proceeding); see In re Perritt, 992 S.W.2d 444, 446 (Tex. 1999). Whether the motion to compel arbitration should be granted or denied is a matter that remains within the trial court's discretion. (6) We note that mandamus may issue if a court does not issue a ruling on a motion to compel arbitration within a reasonable period of time. See In re The Shredder Co., 225 S.W.3d at 680; see also In re Landmark Org., L.P., No. 13-04-00527-CV, 2004 Tex. App. LEXIS 9754, at *3-4 (Tex. App.-Corpus Christi Nov. 1, 2004, orig. proceeding) (per curiam) (mem. op). However, such is not the case presently before this Court. 269 SW3d 90, (Aug. 26, 2008 opinion of the Thirteenth Court of Appeals by Chief Justice Rogelio Valdez denying mandamus relief) RELATED TERMS AND CONCEPTS: Arbitration mandamus, arbitration and discovery, motion to compel arbitration, issues for and role of the court vs. role of and questions to be decided by the arbitrator, scope of the arbitration agreement, prearbitration discovery, direct benefits equitable estoppel, application of federal FAA in state court, interaction of FAA with Texas procedural law and TAA

In Re Macy's Texas, Inc. (Tex. 2009)

In this case the Texas Supreme Court held, in an opinion issued June 26, that an employee must arbitrate her claim against her employer for personal injuries sustained at work even though the acknowledgment of the arbitration agreement was not signed until after the employee's injury occurred. The court did not mention federal preemption in its short per curiam opinion. The Court did not find a discrepancy in the identification of the employer significant because the arbitration agreement referred to “your particular employer.” The employer had only offered a conclusory affidavit in an effort to establish the relationship between the different corporate entities in the case. The lower appellate court, by contrast, had denied mandamus relief for that reason. EXCERPTS FROM THE SUPREME COURT'S PER CURIAM OPINION: The Plan’s effective date predated her injury, even though her Acknowledgment did not. As it is undisputed that the Plan adopted the Federal Arbitration Act, the limitations on such post-injury agreements in the Texas Act do not apply. See Tex. Civ. Prac. & Rem. Code § 171.002(c) (prohibiting post-injury arbitration agreements unless signed by each party’s attorney). * * * [T]he Plan itself stated that “the Company” would mean “your particular employer.” This definition is certainly nonspecific, but it serves to avoid the kind of disputes about corporate divisions and affiliates that Tomsic tries to raise here. The FAA contains no requirements for the form or specificity of arbitration agreements except that they be in writing; it does not even require that they be signed. See 9 U.S.C. § 2; Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 978 (6th Cir. 2007) (citing cases from the 2nd, 5th, 7th, and 10th Circuits). But in this case the defendant’s affidavit establishes that the Acknowledgment was signed “For the Company” by an assistant manager at the Macy’s store where Tomsic worked. Tomsic offers no explanation why she would agree with anyone other than her employer on a health-benefits plan or arbitration for on-the-job injuries. Her suit asserts failure to provide proper equipment and a safe workplace — both nondelegable duties owed by her employer. See Gen. Elec. Co. v. Moritz, 257 S.W.3d 211, 215 (Tex. 2008). As Tomsic agreed to arbitrate with her employer and purported to sue her employer, she cannot avoid arbitration by raising factual disputes about her employer’s correct legal name. Accordingly, without hearing oral argument, Tex. R. App. P. 52.8(c), we conditionally grant the petition for writ of mandamus and direct the trial court to enter an order compelling arbitration. We are confident the trial court will comply, and our writ will issue only if it does not. CASE DETAILS AND LINKS TO OPINIONS AND DOCKET SHEETS: IN RE MACY'S TEXAS, INC.; No.08-0584 (Tex. Jun. 26, 2009) (per curiam) (arbitration mandamus granted) (motion to compel arbitration should have been granted) (dispute over correct identification of employer in connection with arbitration agreement under the FAA) (conclusory affidavit as to entity name and identity) IN RE MACY'S TEXAS, INC.; from Bexar County; 4th district (04-08-00469-CV, ___ SW3d ___, [per curiam opinion of the San Antonio Court of Appeals denying mandamus relief] 07-23-08) stay order issued October 10, 2008 lifted. Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Texas Supreme Court conditionally grants the petition for writ of mandamus. Per Curiam Opinion See Electronic Briefs in IN RE MACY'S TEXAS, INC. (Tex. 2009) COMMENTARY ON THIS CASE BY OTHERS: Texas Supreme Court Rules on Arbitration of Tort Claims in Employment Contract (Disputing blog by Karl Bayer)("The Supreme Court of Texas held that a post-injury arbitration acknowledgment agreement is valid and compelled arbitration of tort claims within the context of an employment contract. . . . Because this case was decided under the Federal Arbitration Act, and not under the Texas Arbitration Act, post-injury arbitration agreements don’t have to be signed by each party’s attorneys.") ID of Party to Arbitration Pact Doesn't Matter, Texas Supremes Hold (Blawgletter® Barry Barnett)("Something bothers Blawgletter about the decision. It looks sloppy. The defect in our view didn't involve a question of an "employer's correct legal name." It instead concerned a basic failure to agree on who the contract binds. The case should have turned on whether the actual defendant also in fact employed the plaintiff. We concede that the court might have decided the mandamus under the doctrine of equitable estoppel, which allows non-signatories of arbitration agreements to enforce them. But it didn't. Sloppy.") RELATED TERMS: FAA, arbitration in the employment context, arbitration of personal injury claims against employer, post-injury waiver of right to litigate in favor of arbitration, arbitration compelled by mandamus, Texas Supreme Court Arbitration Law Decisions, conclusory affidavits