Alternative Dispute Resolution in Texas - Litigation and appeals involving issues in mediation, arbitration, and other means of nonjudicial conflict resolution and settlement.
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Monday, May 26, 2008
In re Jindal Saw Limited (Tex.App.- Houston 2008)
In re Jindal Saw Limited No. 01-07-01068-CV (Tex.App.- Houston [1st Dist.] May 22, 2008) (Alcala) (workplace safety, occupational injury, worker's comp, nonsubscriber, arbitration, wrongful death, survival action)
Opinion by Justice Else Alcala
Panel Composition: Justices Tim Taft, Evelyn Keyes, and Elsa Alcala
Full style of this case: In re Jindal Saw Limited, Jindal Enterprises LLC, and Saw Pipes USA
Appeal from Probate Court No 1 of Harris County
Trial Court Judge: Hon. Russell Austin
Disposition: Grant Petition for Writ of Mandamus
Attorneys: Levi G McCathern II, Jeffrey Christopher Wright
Attorney Kurt B. Arnold, Marvin B. Peterson, Micajah Daniel Boatright
By petition for writ of mandamus, relators, Jindal Saw Limited, Jindal Enterprises LLC, and Saw Pipes USA, Inc. (collectively, “Saw Pipes”), challenge the trial court’s October 11, 2007 order denying Saw Pipes’ motion to compel arbitration.[1] In two issues, Saw Pipes contends that the trial court abused its discretion by denying its motion to compel arbitration of the survival action and wrongful-death claims because an enforceable arbitration agreement exists and the claims fall within the scope of the arbitration agreement. We conclude that the non-signatories to the arbitration agreement are bound to arbitrate the survival action claims because the signatory agreed to arbitrate his claims against Saw Pipes. We also conclude, however, that the non-signatories’ wrongful-death claims are not bound by the arbitration agreement because those claims are personal to the non-signatories and they did not agree to arbitrate the claims. We grant the petition for writ of mandamus for the survival action and deny the petition for writ of mandamus for the wrongful-death claims.
* * *
Conclusion
By denying the motion to compel arbitration in the October 11, 2007 order, the trial court abused its discretion with regard to the survival claim and did not abuse its discretion with regard to the wrongful-death claims. Accordingly, we grant the petition for writ of mandamus for Yvonne’s survival claim and deny the petition for writ of mandamus for the wrongful-death claims of Yvonne and the children. We lift the stay that we issued when the petition was filed. We are confident that the trial court will act promptly in accord with this opinion, and our writ will issue only if it does not.
Elsa Alcala
Justice
Monday, November 5, 2007
Arbitration denied because mediation had not been attempted
Context: Employment, Workplace Safety, Nonsubscriber, Negligence, Wrongful Death and Survivor Claims
Arbitration agreement provided for disputes to be submitted to arbitration only if they could not be resolved through company's internal dispute resolution mechanism or mediation. Houston Court of Appeals does not reach the issue whether survivors are bound be deceased employee's agreement to arbitrate claims that could not be resolved internally or through mediation. Court declines to grant mandamus to set aside trial court's denial of employer's motion to compel arbitration.
In Re Igloo Products Corp. , No. 14-07-00185-CV (Tex.App.- Houston [14th Dist.] Nov. 1, 2007)(Frost)(arbitration mandamus denied)
Appeal from 155th District Court of Waller County (Judge Daniel R. Beck)
IN RE IGLOO PRODUCTS CORP. AND JOSE RODRIGUEZ, Relators
ORIGINAL PROCEEDING WRIT OF MANDAMUS
OPINION BY JUSTICE KEM FROST
In this original proceeding, relators Igloo Products Corporation and Jose Rodriguez seek a writ of mandamus directing the respondent, Dan R. Beck, presiding judge of the 155th District Court of Waller County, (1) to vacate his January 9, 2007 order denying relators' motion to compel arbitration, and (2) to grant relators' motion to compel arbitration of all claims pending in the action and to stay trial court proceedings pending such arbitration.
We deny the petition for writ of mandamus.
Underlying Facts and Procedural History
Igloo Products Corporation is a manufacturing company in Houston, Texas. Igloo does not carry workers' compensation insurance and is thus not a subscriber to the Texas Workers' Compensation Act. Tex. Labor Code Ann. ' 406.002 (Vernon 2006).
Igloo, however, has established the Igloo Products Corp. Employee Injury Benefit Plan ("the Plan") under the federal Employee Retirement Income Security Act ("ERISA"). See generally 29 U.S.C. '1001 et seq. The Plan specifies certain medical, wage-replacement, dismemberment, burial, and death benefits payable to participating employees in the event of injury or death suffered in the course and scope of employment with Igloo.
Participation in the Plan is not a condition of employment with Igloo. To participate in the Plan and to secure the right to receive the specified benefits, an employee must execute an Election and Arbitration Agreement.[1]
Joel Varela was fatally injured on June 23, 2006, during the course and scope of his employment with Igloo. Because Varela was a participating employee under the Plan, Igloo paid medical, funeral, and burial expense benefits to his surviving spouse. Thereafter, Varela's spouse and children (collectively "the Varelas") filed the underlying lawsuit against Igloo and its employee, relator Jose Rodriguez. (Igloo and Jose Rodriguez are hereinafter collectively referred to as "the Igloo Parties.") The Varelas alleged that Joel Varela's death resulted from the Igloo Parties' negligence and gross negligence.
The Varelas assert claims under the Texas Wrongful Death Act.[2] See Tex. Civ. Prac. & Rem. Code Ann. '' 71.001 B .012 (Vernon 1997 and Supp. 2006).
In the trial court, the Igloo Parties moved to compel arbitration of the Varelas' claims under the terms of the Election and Arbitration Agreement that Joel Varela had executed in connection with his participation in the Plan ("the Agreement"). The Agreement purports to bind Varela's "beneficiaries, heirs, children, spouse, parents and legal representatives."
The Igloo Parties further asserted that by having accepted payment of benefits under the Plan, the Varelas were equitably estopped and contractually precluded from avoiding the Agreement's arbitration provision.
The Varelas opposed the motion to compel arbitration, arguing that neither Joel Varela's execution of the Agreement nor Igloo's payment of benefits owing to his estate could bind them to arbitrate their individual, personal claims for Joel Varela's wrongful death. The Varelas also contended that, even if the Agreement applied to their wrongful death claims, the trial court should not compel arbitration because the parties have not mediated the Varelas' claims.
The trial court denied the Igloo Parties' motion to compel arbitration, and the Igloo Parties have filed a petition for writ of mandamus in this court.
Standard of Review
The Igloo Parties assert, and the Varelas do not dispute, that the Agreement in this case is subject to the Federal Arbitration Act ("FAA"). See generally 9 U.S.C. '1 et seq. Mandamus relief is available when the trial court abuses its discretion by erroneously denying a party its contracted‑for arbitration rights under the FAA. See In re D. Wilson Const. Co., 196 S.W.3d 774, 780-81 (Tex. 2006) (orig. proceeding). Therefore, the Igloo Parties' right to mandamus relief hinges on whether the trial court's refusal to compel arbitration was an abuse of its discretion.[3]
A party seeking to compel arbitration must establish that a valid arbitration agreement exists and that the claims asserted are within the scope of the agreement. See In re D. Wilson Construction Co., 196 S.W.3d at 781. If these two showings are made, the burden shifts to the party opposing arbitration to present a valid defense to the agreement. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227-28 (Tex. 2003). In the absence of evidence of a valid defense, the trial court has no discretion to exercise and must compel arbitration and stay its own proceedings. In re J.D. Edwards World Solutions Co., 87 S.W.3d 546, 549 (Tex. 2002) (orig. proceeding).
The trial court denied the Igloo Parties' motion to compel arbitration. The trial court concluded that the Igloo Parties failed to prove that (1) there is a valid, enforceable arbitration agreement between the Igloo Parties and the Varelas and (2) the Varelas' claims are within the scope of a valid, enforceable arbitration agreement.
Analysis
Both the Plan and the Agreement address resolution of disputes between Igloo and those employees who choose to participate in the Plan. Pertinent portions of both documents are set forth below.
ELECTION AND ARBITRATION AGREEMENT
By signing this Election and Arbitration Agreement (hereinafter "Agreement"), I, the undersigned employee of Igloo Products Corp. (hereinafter "the Company"), voluntarily elect to participate in the Igloo Products Corp. Employee Injury Benefit Plan (hereinafter the "Plan") and agree with the Company to the following:
* * *
MUTUAL PROMISES TO RESOLVE CLAIMS BY BINDING ARBITRATION: I recognize that disputes may arise between the Company (or one of its affiliates) and me during or after my employment with the Company. I understand and agree that any and all such disputes that cannot first be resolved through the Company's internal dispute resolution procedures or mediation must be submitted to binding arbitration.
I acknowledge and understand that by signing this Agreement I am giving up the right to a jury trial on all of the claims covered by this Agreement in exchange for eligibility for the Plan's medical, disability, dismemberment, death and burial benefits and in anticipation of gaining the benefits or a speedy, impartial, mutually-binding procedure for resolving disputes.
Igloo Products Corp. Employee Injury Benefit Plan
* * *
Arbitration of Employment Disputes: By executing and agreeing to the Election and Arbitration Agreement, an Employee affirmatively agrees to submit to binding arbitration all claims or disputes covered by the Election and Arbitration Agreement.
* * *
B. Arbitration Procedures. The following provisions are incorporated by reference into, and made part of, the Election and Arbitration Agreement, the same as if they were set forth at length in the Election and Arbitration Agreement itself:
* * *
3. Mediation: The Company (and each Employer) and I agree that the arbitration procedures described in this Paragraph B . . . and incorporated by reference into the Election and Arbitration Agreement shall not be invoked unless the party seeking arbitration has first mediated the dispute with the other party or parties . . . .[4]
The Varelas concede that Joel Varela entered into a valid arbitration agreement with Igloo. They dispute, however, whether that agreement binds them to arbitrate their own personal claims for wrongful death of their husband and father. The Varelas assert that Joel Varela did not and could not bind his spouse and children to arbitrate rather than litigate their wrongful death claims against Igloo. The Igloo Parties assert that the Varelas' acceptance of medical, funeral, and burial benefits under the Plan independently binds them to the arbitration provision. However, we need not address these arguments because we conclude that, even presuming, without deciding, that the Varelas are bound to the arbitration provisions of the Agreement, the Varelas' claims are not within the scope of claims subject to arbitration under the Agreement.
The Agreement requires that "any and all ... disputes that cannot first be resolved through the Company's internal dispute resolution procedures or mediation must be submitted to binding arbitration."[5] The Plan's arbitration procedures, which are incorporated by reference into the Agreement, "shall not be invoked unless the party seeking arbitration has first mediated the dispute with the other party."[6]
Neither party has suggested the Plan or the Agreement is ambiguous, and we conclude that both documents unambiguously provide for the arbitration only of claims that cannot first be resolved through Igloo's internal dispute resolution procedures or mediation. The Igloo Parties admit that the Varelas' claims have not been mediated or otherwise submitted to Igloo's internal dispute resolution procedures. In their motion to compel arbitration, the Igloo Parties neither alleged nor presented any proof that (1) the Varelas' claims fell within the category of claims that could not be resolved through Igloo's internal dispute resolution procedures or through mediation or (2) the Varelas' claims had been subjected to Igloo's internal dispute resolution procedures or mediation.
The Igloo Parties contend, however, that it is for the arbitrator, not the courts, to decide whether arbitration is precluded by there having been no prior mediation or internal dispute resolution procedures. In making this argument, the Igloo Parties rely primarily on Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002). Howsam involved a dispute between a securities brokerage firm and its former customer. After the customer commenced arbitration proceedings under the arbitration clause of her brokerage account agreement, the firm filed suit in federal district court seeking a declaratory judgment that the dispute was ineligible for arbitration and an injunction prohibiting the customer's prosecution of the arbitration proceeding. The firm claimed that arbitration was precluded by the terms of the arbitration code of the National Association of Securities Dealers ("NASD"), under the auspices of which the customer had elected to arbitrate. The NASD code included a rule that no dispute "shall be eligible for submission [to arbitration] . . . where six (6) years have elapsed from the occurrence or event giving rise to the . . . dispute." Finding that the NASD arbitrator should interpret whether the NASD time-limit rule precluded prosecution of the arbitration, the district court dismissed the firm's action. On appeal, the Court of Appeals for the Tenth Circuit reversed, concluding that application of the NASD rule presented a question of the underlying dispute's arbitrability, which is presumptively for a court to decide.
On certiorari, the United States Supreme Court stated that courts, rather than arbitrators, should decide "gateway" matters that "contracting parties would likely have expected a court to have decided . . . where they are not likely to have thought that they had agreed that an arbitrator would do so, and consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate." Howsam, 537 U.S. at 83B84, 123 S. Ct. at 592. The Supreme Court stated that courts, rather than arbitrators, should decide gateway disputes as to whether parties are bound by a given arbitration clause or whether an arbitration agreement covers a particular kind of controversy. See id., 537 U.S. at 84, 123 S. Ct. at 592. On the other hand, matters of "procedural arbitrability," such as allegations of waiver, delay, or a similar defense to arbitrability, are presumptively for the arbitrator to decide. See id. However, this presumption may be overcome by language in the arbitration agreement reflecting an intent contrary to this presumption. See id. The agreement in Howsam did not exempt from the scope of the arbitration clause claims based on an event that occurred more than six years before the claim was submitted to arbitration. See id., 537 U.S. at 81B82, 123 S. Ct. at 591. The United States Supreme Court held that application of the NASD time-limit rule was the province of the arbitrator based on the arbitration agreement at issue. See id., 537 U.S. at 84-86, 123 S. Ct. at 592-3.
Two of our sister courts have construed Howsam in the context of an agreement containing a mediation requirement. See In re Pisces Foods, L.L.C., 228 S.W.3d 349 (Tex. App.-Austin 2007, orig. proceeding); In re R&R Personnel Specialists of Tyler, Inc., 146 S.W.3d 699 (Tex. App.-Tyler 2004, orig. proceeding). In R&R Personnel Specialists, the party opposing arbitration argued that the movant had waived its right to arbitration by failing (1) to give timely notice of its underlying claim; (2) to give written notice of its intent to arbitrate the claim; and (3) to participate in mediation before seeking arbitration. Citing Howsam, but without quoting the contractual language on which any one of these purported requirements was based, the court of appeals characterized waiver as a question of procedural arbitrability for the arbitrator to decide. The court granted mandamus relief directing the trial court to vacate its order denying arbitration and to compel such arbitration. R&R Personnel Specialists, 146 S.W.3d at 704B05.[7]
In Pisces Foods, the trial court denied an employer's motion to compel arbitration of an employee's personal injury claim. The arbitration agreement stated:
Each Step [of this dispute resolution program] must be followed in sequence so that we have every opportunity to work together toward an agreeable resolution of the issue . . . . If you have a work-related problem that involves a legally protected right that could not be settled through Steps 1, 2 or 3 [internal dispute resolution procedures and mediation] of the Program, you may request arbitration. Pisces Foods, 228 S.W.3d at 351. Without deciding (1) the employee's claim that she was not bound by the agreement or (2) the employer's claim that the agreement had been wrongfully excluded from evidence at the hearing on the motion to compel arbitration, the court of appeals held that arbitration was not available under the agreement because no mediation had occurred. Id.
Discussing both Howsam and R&R Personnel Specialists, as well as a number of decisions from other jurisdictions,[8] the Austin Court of Appeals held that the relator's right to arbitration had not yet accrued or been triggered because there was no proof that either party had requested or attempted mediation. Pisces Foods, 228 S.W.3d at 353-54.
The Varelas do not contend (as did the employee in R&R Personnel Specialists) that failure to mediate the claims constitutes a waiver of the Igloo Parties' right to compel arbitration.[9] They assert that the Agreement has not yet been triggered and that the trial court thus properly declined to compel arbitration. If Joel Varela agreed to arbitrate all claims and disputes with Igloo without any reference to mediation but with separate arbitration procedures providing for prior submission of disputes to mediation, we might reach a different conclusion.
In this case, however, the only claims that Joel Varela agreed to arbitrate were "disputes that cannot first be resolved through [Igloo's] internal dispute resolution procedures or mediation."
Because arbitration is a matter of contract, a party cannot be required to submit to arbitration any dispute which he has not agreed to submit to arbitration. Howsam, 537 U.S. at 83, 123 S. Ct. at 591. Joel Varela agreed to arbitrate only disputes that were not resolved by Igloo's internal dispute resolution procedures or mediation. Therefore, the issue at hand is a "gateway dispute" as to whether the arbitration agreement covers a particular kind of controversy, and courts, rather than the arbitrator, must resolve this issue. See id., 537 U.S. at 84, 123 S. Ct. at 592; HIM Portland, LLC v. Devito Builders, Inc., 317 F.3d 41, 44 (1st Cir. 2003); Kemiron Atlantic, Inc. v. Aguakem International, Inc., 290 F.3d 1287, 1289-90 (11th Cir. 2002); Pisces Foods, 228 S.W.3d at 353-54; see also Allen v. Apollo Group, Inc., No. Civ.A.H-04-3041, 2004 WL 3119918, at *5-8 (S.D. Tex. Nov. 9, 2004) (Rosenthal, J.).
Presuming, without deciding, that the Varelas are bound by the arbitration provisions in question, the trial court did not abuse its discretion by impliedly determining that the Igloo Parties did not prove that the Varelas' claims fall within the scope of the arbitration agreement because they are not "disputes that cannot first be resolved through [Igloo's] internal dispute resolution procedures or mediation." See Pisces Foods, 228 S.W.3d at 353-54.[10]
Accordingly, we deny the Igloo Parties' petition for writ of mandamus and vacate our March 8, 2007 order staying proceedings in the trial court.
/s/ Kem Thompson Frost Justice
Petition Denied and Opinion filed November 1, 2007.
Panel consists of Justices Frost, Seymore, and Guzman.
[1] The Election and Arbitration Agreement specifically excludes criminal matters and claims for unemployment benefits from the arbitration requirement.
[2] The Varelas previously asserted a claim under the Texas survival statute, but they no longer assert this claim. See Tex. Civ. Prac. & Rem. Code Ann. ' 71.021 (Vernon 1997).
[3] In 1992, addressing whether a party is entitled to mandamus relief for wrongful denial of its arbitration rights under an agreement subject to the FAA, the Texas Supreme Court concluded that the Texas Arbitraton Act ("TAA") does not provide such a party the ability to assert an interlocutory appeal. See Jack B. Anglin, Inc. v. Tipps, 842 S.W.2d 266, 272-73 (Tex. 1992). In 2006, the Texas Supreme Court decided that such a party can file an interlocutory appeal of the trial court's denial of a motion to compel arbitration under an agreement governed by the FAA. See In re D. Wilson Const. Co., 196 S.W.3d 774, 778-80 (Tex. 2006). It might appear that the Igloo Parties are not entitled to mandamus relief in this case because the FAA governs the Agreement and, under In re D. Wilson Const. Co., they have an adequate remedy at law by interlocutory appeal. See id. However, the Texas Supreme Court reaffirmed in In re D. Wilson Const. Co. that mandamus remains available when a party is erroneously denied its contracted‑for arbitration rights under the FAA. See In re D. Wilson Const. Co., 196 S.W.3d at 780-81. Therefore, we conclude that mandamus relief is still potentially available to the Igloo Parties.
[4] All boldface and underlining emphasis shown in the quoted material is contained in the original documentation.
[5] Italic emphasis added; underlining in original.
[6] All emphasis added.
[7] See also In re Weekley Homes, 985 S.W.2d 111 (Tex. App.-San Antonio 1998, orig. proceeding) (holding, pre-Howsam, that whether party's failure to mediate before invoking arbitration provision releases other parties from obligation to arbitrate is procedural question for arbitrator to address in cases in which arbitration agreement did not exempt claims that had not been mediated).
[8] See General Warehousemen & Helpers Union Local 767 v. Albertson's Distribution, Inc., 331 F.3d 485, 488 (5th Cir. 2003); HIM Portland, LLC v. Devito Builders, Inc., 317 F.3d 41, 44 (1st Cir. 2003); Kemiron Atlantic, Inc. v. Aguakem International, Inc., 290 F.3d 1287 (11th Cir. 2002); Allen v. Apollo Group, Inc., No. Civ.A.H-04-3041, 2004 WL 3119918 (S.D. Tex. Nov. 9, 2004) (unreported decision).
[9] The Varelas assert a waiver argument, but it is based solely on the contention that by substantially invoking the judicial process, the Igloo Parties have waived the right to arbitrate. However, based on our disposition, we need not address the Varelas' argument in this regard.
[10] This court relied on Howsam in granting mandamus relief directing the trial court to compel arbitration in In re Global Construction Company, L.L.C., 166 S.W.3d 795 (Tex. App.-Houston [14th Dist.] 2005, orig. proceeding). The question posed was whether "the underlying dispute, in which the real party in interest claims that arbitration is time-barred, is an issue of procedural arbitrability and thus for the arbitrator, or is an issue of substantive arbitrability for the court." Id. at 796 (citing Howsam). Under the contract at issue in that case, a demand for arbitration was required to be made "within 30 days after the date on which the party making the demand receives the final written decision [of the Architect]." The trial court "expressly found that [the party] waived its right to arbitrate those claims that had been submitted to the architect by failing to demand arbitration within thirty days." Id. at 797. We held that Aany contractual time limit on a request for arbitration is a matter for the arbitrator." Id. at 799. Although the contract in that case required mediation, the parties did not raise, and the court did not address, this requirement. Id. at 797-99. Indeed, in that case, the parties had agreed that the claims involved fell within the scope of the agreement. Id. at 798. In addition, unlike the Agreement in this case, the arbitration agreement in that case stated that '[a]ny claims arising out of or related to the Contract' are subject to arbitration." Id. at 796. Therefore, In re Global Construction Company is not on point.
Wednesday, August 15, 2007
Corpus Christi Court of Appeals mandates arbitration in workplace injury case
Thirteenth Court of Appeals finds that motion to compel arbitration should have been granted in the absence of any viable defense; Writ of mandamus conditionally granted.
In Re: SSP Partners, No. 13-07-00031-CV (Tex.App.- Corpus Christi, Aug. 14, 2007)(Opinion by Justice Benavides)(arbitration compelled by mandamus)(Before Justices Rodriguez, Garza and Benavides)
Appeal from 398th District Court of Hidalgo County
Before Justices Rodriguez, Garza, and Benavides
Memorandum Opinion by Justice Benavides
Relator, SSP Partners, brings this petition for writ of mandamus complaining of the trial court's order denying its motion to compel arbitration. We conclude that real party in interest, Virginia Torres, failed to raise a valid defense to arbitration. Therefore, all of Torres's claims should have been sent to arbitration. We conditionally grant the writ.
I. Background
In February 2005, Virginia Torres, a native of Mexico, applied for employment with the Circle K convenience store ("Circle K") located on La Homa Road in Mission, Texas. Circle K is owned and operated by SSP Partners. Torres is illiterate in both English and Spanish and, therefore, took the employment application home to obtain assistance from her seventeen-year-old daughter.
Torres went back to the Circle K with her daughter to submit the completed employment application. At that time, Circle K agreed to hire her and asked her to fill out an Election and Arbitration Agreement ("the Agreement"). The Agreement was in English and was administered by two Anglo-American women who did not speak Spanish. Torres's daughter translated the document for her, and Torres signed it. Torres alleges that even though the Agreement was translated, she did not understand the document or what she was signing.
The Agreement is a mutual arbitration agreement and an election for SSP Partners' Employee Injury Benefit Plan. SSP Partners is a non-subscriber under the Texas Workers' Compensation Act and, therefore, offers its employees the Employee Injury Benefit Plan instead. The first page of the Agreement discusses the circumstances in which an employee is entitled to benefits under the Employee Injury Benefit Plan. The Agreement specifically states that an employee is eligible for benefits if the injury occurs "on the job."
Beneath this section and continuing through the rest of the document is the agreement to arbitrate. The Agreement provides that both SSP Partners and the employee agree to pursue any claims and remedies that they may have against one another in arbitration before the American Arbitration Association rather than in a judicial forum. The parties agreed to arbitrate "any and all: . . . tort claims, including negligence, negligence per se and gross negligence claims (including claims for personal or bodily injury or physical, mental or psychological injury, without regard to whether or not such injury was sustained on the job)." (emphasis added).
Both parties also agreed to follow any procedures that are contained within the Summary Plan Description, which outlines the arbitration procedures. The Summary Plan Description requires that a party seeking to invoke arbitration must first provide notice to the opposing party and also must mediate the dispute. Failure to provide notice or mediate the dispute prevents invocation of the Agreement. Once the Agreement has been invoked, the Agreement provides that SSP Partners is to pay all expenses of arbitration after the first $250, that each party will only have the right to take one deposition of one individual and an expert witness, and that the arbitrator will be assigned by the American Arbitration Association.
After signing the document, Torres began to work for Circle K. One day while off work, Torres stopped at the Circle K to purchase some food. She was informed that her schedule had changed. She went in the back to check the schedule, slipped on a misplaced floor mat, and was injured. Torres applied for benefits under the plan but was denied.
Torres sued SSP Partners for negligence, seeking damages for her injuries. In response to Torres's suit, SSP Partners filed a motion to compel arbitration based on the Agreement. Torres filed a response to the motion in which she repeatedly argued the unconscionability of the Agreement and the Employee Benefit Injury Plan. However, she did not attach any affidavits or other admissible evidence to support her response.
At an evidentiary hearing on SSP Partners' motion, the trial court allowed Torres to put on evidence, including her own testimony regarding the unconscionability of the Agreement and the Employee Benefit Injury Plan, over SSP Partners' objection. The relevant portion of her testimony follows:
Q: Okay. Ma'am let me show you the [Agreement] and ask you whether or not that is your signature.
A: Yes, this one.
Q: Okay. And - - and during your meeting with the American ladies, American Anglo ladies, did they themselves explain the [Agreement] to you in Spanish?
A: No. Like - - they spoke English.
Q: Okay. Did you have an opportunity to bargain with regard to the [Agreement] or the summary description?
A: No.
Q: Okay. Did you, Ma'am - - did you have anything to do with drafting those documents?
A: No. I only wanted to work.
. . . .
Q: Okay. Did they have somebody who knew how to speak Spanish there to translate those documents to you?
A: No.
After Torres's testimony and oral arguments, the trial court denied SSP Partners' motion to compel arbitration. SSP Partners then filed this petition requesting a writ of mandamus directing the trial court to compel Torres's claims to arbitration. We requested a response and granted SSP Partners' motion for temporary relief, staying the trial court's proceedings.
II. Mandamus is the Appropriate Procedural Vehicle
Mandamus issues only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no adequate remedy by appeal. In re Daisy Mfg. Co., 17 S.W.3d 654, 658 (Tex. 2000) (orig. proceeding). The Federal Arbitration Act ("FAA") may govern a written arbitration clause enforced in Texas state court, if the parties have expressly designated it to govern. Volt Info. Sci. v. Bd. of Trs., 489 U.S. 468, 479 (1989); In re AdvancePCS Health, L.P., 172 S.W.2d 603, 605-06 & n.3 (Tex. 2006) (orig. proceeding). If the parties have designated the FAA to govern their arbitration agreement, then that designation should be upheld. See In re AdvancePCS Health, L.P., 172 S.W.2d at 606 & n.3.
The Agreement in this case expressly states that the FAA governs. This Court will uphold that express designation. Texas law does not permit an interlocutory appeal of an order denying arbitration under the FAA. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992). Because this case is governed by the FAA, mandamus is the appropriate vehicle for review. Id.
III. Discussion
Texas procedure governs the enforcement of arbitration agreements under the FAA in a Texas court. Id. at 268. First, a party seeking to compel arbitration must file a motion to compel arbitration demonstrating (1) a valid agreement to arbitrate between the parties and (2) the dispute is within the scope of the arbitration agreement. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753-54 (Tex. 2001) (orig. proceeding). The trial court's determination of the validity of an arbitration agreement is a legal question reviewed de novo. Id. As to the second element, however, because federal policy favors arbitration, a presumption exists favoring agreements to arbitrate under the FAA. Id. Therefore, courts must resolve any doubts about an arbitration agreement's scope in favor of arbitration. Id. Trial courts are instructed not to deny arbitration "unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute." In re Dillard Dep't Stores, Inc., 186 S.W.3d 514, 515-16 (Tex. 2006) (orig. proceeding) (per curiam).
Once the party seeking to compel arbitration makes the required showing, the burden shifts to the party opposing arbitration to establish a defense to arbitration. In re RLS Legal Solutions, LLC, 221 S.W.3d 629, 630 (Tex. 2007) (orig. proceeding); In re Jebbia, 26 S.W.3d 753, 756 (Tex. App.-Houston [14th Dist.] 2000, orig. proceeding). If the non-movant does present a defense to arbitration, the trial court has no discretion but to compel arbitration and stay its own proceedings. See In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (orig. proceeding); Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (orig. proceeding) (per curiam). In Jack B. Anglin, the Texas Supreme Court held that a motion to compel arbitration is to be decided summarily. Jack B. Anglin Co., 842 S.W.2d at 269. The court observed: "we think it unlikely that the legislature intended the issue to be resolved following a full evidentiary hearing in all cases." Id. The court then stated that in deciding summarily, the trial court may make its decision on the basis of affidavits, pleadings, discovery, and stipulations. Id. However, if fact issues exist, the court may hold a hearing to determine whether to compel arbitration. Id.
A. SSP Partners demonstrated a valid agreement to arbitrate.
SSP Partners argues that it demonstrated a valid agreement to arbitrate, and therefore, it was entitled to arbitration. SSP Partners filed a motion to compel arbitration attaching the Agreement, which is signed by Torres. Torres does not dispute that she signed the Agreement. Rather, Torres argues the trial court had discretion to deny arbitration because SSP Partners did not provide evidence of the satisfaction of the arbitration procedures outlined in its agreement, which she argues were conditions precedent to the invocation of the arbitration agreement. Specifically, she claims that SSP Partners failed to provide written notice of its intent to compel arbitration and failed to mediate her claims before seeking arbitration. We disagree with Torres and hold satisfaction of pre-arbitration procedures is a matter of procedural arbitrability and is, therefore, properly decided by an arbitrator.
Procedural arbitrability encompasses those questions that "grow out of the dispute and bear on its final disposition." In re R & R Specialists of Tyler, Inc., 146 S.W.3d 669, 704 (Tex. App.-Tyler 2004, orig. proceeding) (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85 (2002)). "Questions of procedural arbitrability relate to whether procedures have been followed or excused and whether an unexcused failure to follow such procedures allows a party [to] enforce the duty to arbitrate." Id. at 704-05 (citing John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964)). Such questions encompass determinations as to whether the conditions precedent to arbitration, such as notice and time limits, have been met and are questions for the arbitrator to decide. Id. (citing Howsam, 537 U.S. at 84).
In R & R Specialists of Tyler, Inc., the plaintiff claimed that his employer failed to comply with the express provisions of the arbitration agreement by "not giving written notice of its intention to seek arbitration, not complying with the deadlines regarding notice of claim, and not participating in mediation before seeking arbitration." R & R Specialists of Tyler, Inc., 146 S.W.3d at 703. The court held that this argument relates to procedural arbitrability and is, therefore, a question for the arbitrator to decide. Id. at 704.
Similarly, in Grand Homes 96, L.P. v. Loudermilk, Grand Homes argued that the Loudermilks never demonstrated that they had satisfied conditions precedent to arbitration. Grand Homes 96, L.P., 208 S.W.3d 696, 701 (Tex. App.-Fort Worth 2006, pet. filed). The court held that procedural questions, including whether procedures have been followed or excused and whether an unexcused failure to follow such procedures allows a party to avoid the duty to arbitrate, are left for the arbitrator to decide. Id. at 702 (citing In re Weekley Homes, 985 S.W.2d 111, 114 (Tex. App.-San Antonio 1998, orig. proceeding)).
In this case, Torres argues that SSP Partners has not provided "evidence showing the arbitration procedure outline[d] in the arbitration agreement had or had not been followed." Torres, therefore, argues that SSP Partners did not demonstrate that a valid arbitration agreement existed. She argues that without this proof, the trial court had discretion to deny arbitration and to proceed with an evidentiary hearing. This argument fails because, as discussed above, whether the condition precedent has been satisfied is not a question for the court to decide; it is a question for the arbitrator. Id.
B. The dispute is within the scope of the agreement.
SSP Partners argues that it met its burden of proving that the Agreement covers the claims at issue because the Agreement's scope is broad and applies to all personal injury claims, whether sustained on or off the job. SSP Partners directs us to the following language in support of its argument: "The types of claims covered by this agreement include, but are not limited to, any and all . . . tort claims, including negligence, negligence per se and gross negligence claims (including claims for personal injury or bodily injury or physical, mental or psychological injury, without regard to whether or not such injury was sustained on the job) . . . ." (emphasis added). In contrast, Torres argues that the Agreement is only invoked if the injury occurred "on the job" or "within the scope of employment," relying on language contained in the initial description of benefits under the Plan. Again, we disagree with Torres.
A court should not deny arbitration "unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue." In re Dillard Dep't Stores, Inc., 186 S.W.3d at 516. Further, the courts are required "to construe arbitration clauses broadly, and when a contract contains an arbitration clause, there is a presumption of arbitrability." In re Choice Homes, Inc., 174 S.W.3d 408, 413 (Tex. App.-Houston [14th Dist.] 2005, orig. proceeding). Therefore, any doubts are to be resolved in favor of coverage. Id.
In Choice Homes, the plaintiff/employees sued their employer for injuries they sustained after the employer terminated their employment. Id. The employer moved to compel arbitration based on an agreement that expressly applied to "all claims and disputes that [the employee] may now have or may in the future have against the Company." Id. at 413. Construing the clause broadly, the Houston court of appeals interpreted this clause as covering "many types of claims including but not limited to tort claims, claims for personal or bodily injury or physical, mental, or psychological injury, without regard to whether such injury was sustained on the job." Id. It held that the clause included those injuries that occurred after termination. Id. at 414.
The language in the Agreement between Torres and SSP Partners is even clearer than the language in Choice Homes. It expressly provides that it applies "without regard to whether or not such injury was sustained on the job." (emphasis added). We cannot discern any ambiguity in the clause. Although Torres points to language at the beginning of the contract describing the benefits available under the Plan, which only provides benefits for injuries sustained on the job, there is no such limit in the arbitration clause itself. Even if it could be said that the Plan's coverage provisions created an ambiguity, we must resolve this ambiguity in favor of coverage. Id. at 413; see also Dillard, 186 S.W.3d at 516. Therefore, we hold that the language in the Agreement includes Torres's claim for personal injuries sustained while off the job.
SSP Partners proved a valid agreement arbitrate covering Torres's claims. We must decide, therefore, whether Torres raised a defense to arbitration. If not, the trial court abused its discretion by refusing to compel arbitration.
C. Torres failed to raise a valid defense to arbitration.
SSP Partners argues that the trial court had no discretion to refuse to compel arbitration because Torres did not raise a defense to arbitration. Specifically, SSP Partners argues that Torres did not attach any affidavits or other evidence to her response to the motion to compel, citing our decision in Prudential Securities, Inc. v. BaƱales, 860 S.W.2d 594 (Tex. App.-Corpus Christi 1993, orig. proceeding). Therefore, according to SSP Partners, Torres failed to raise a defense to arbitration and was not entitled to a hearing. Torres argues in response that the court had discretion to deny arbitration because she presented evidence at the hearing that the arbitration agreement is unconscionable and thus unenforceable, attempting to distinguish Prudential Securities. We need not decide whether Torres's failure to present affidavits in support of her response precluded her presentation of a defense to arbitration, however, because even if the trial court had the discretion to hold the evidentiary hearing, Torres's alleged defense to arbitration was inadequate to defeat SSP Partners' motion to compel arbitration. See Tex. R. App. P. 47.1.
In Prima Paint Corp. v. Flood & Conklin Mfg. Co., the United States Supreme Court held that under the FAA, "if the claim is fraud in the inducement of the arbitration clause itself, the federal court may proceed to adjudicate it, but the statutory language does not permit the federal court to consider claims of fraud in the inducement of the contract generally." Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967). "[U]nder federal law, the arbitration clause was severable from the underlying contract." Teal Const. Co./Hillside Villas Ltd. v. Darren Casey Interests, Inc., 46 S.W.3d 417, 420 (Tex. App.-Austin 2001, pet. denied) (citing and interpreting Prima Paint, 388 U.S. at 404). Texas Courts have interpreted this holding to mean that a defense applicable to an entire contract containing an arbitration provision must be submitted to the arbitrator, whereas a defense to the arbitration clause itself can be decided by a court. In re AdvancePCS Health, L.P., 172 S.W.3d at 608 n.7; In re FirstMerit Bank, 52 S.W.3d at 758; In re Service Corp. Int'l, 162 S.W.3d 801, 809 (Tex. App.-Corpus Christi 2005, orig. proceeding).
In RLS Legal Solutions L.L.C., the Texas Supreme Court held that the plaintiff was required to provide evidence of duress "specifically" and "exclusively" relating to the arbitration provision in order to avoid arbitration. In re RLS Legal Solutions L.L.C., 221 S.W.3d at 632. In that case, the plaintiff sued her employer in a dispute over compensation and benefits, and the employer moved to compel arbitration. Id. The plaintiff claimed that the employer used duress to force her into signing the agreement, but she did not provide the evidence of duress relating to the arbitration provision exclusively. Id. The Texas Supreme Court held that the trial court abused its discretion in refusing to compel arbitration because "[n]either her affidavit nor her trial testimony provide any evidence that the arbitration provision was the only provision to which she objected, or that it was the only provision she was under duress to sign." Id. at 631. The court held that "[u]nless the arbitration provision alone was singled out from the other provisions, the claim of duress goes to the agreement generally and must be decided in arbitration." Id. (1)
Neither in her pleadings nor in her testimony does Torres specifically state that she is arguing against the arbitration clause instead of the entire agreement. Rather in her response to the SSP Partners' motion to compel, Torres repeatedly argued against both the arbitration clause and the Employee Injury Benefit Plan. She testified at the hearing that she did not understand any portion of the Agreement-- including both the Employee Injury Benefit plan and the arbitration clause. Because the Supreme Court requires Torres to have exclusively and specifically argued only against the arbitration provision, and Torres did not do so, her contractual defenses to arbitration must be submitted to the arbitrator. Therefore, even if Torres was properly granted a hearing, the trial court did not have discretion to deny the SSP Partners' motion to compel arbitration.
IV. Conclusion
We conclude that SSP Partners met its burden, and in the absence of a defense to arbitration, the trial court did not have discretion to refuse to compel arbitration. We conditionally grant the petition for writ of mandamus and order the trial court to vacate its order denying relator's motion to compel arbitration. The writ will issue only if the trial court fails to vacate its order. We lift the stay issued by this Court on February 20, 2007 and direct the trial court to proceed in accordance with this opinion.
___________________________
GINA M. BENAVIDES,
Justice
Memorandum Opinion delivered and
filed this the14th day of August, 2007.
1. An example of what is considered sufficiently "specific" may be seen in a decision by the Fourteenth Court of Appeals. In that case, the arbitration agreement was between a builder and the homeowners. TMI, Inc. v. Brooks, 225 S.W.3d 783, 788 (Tex. App.-Houston [14th Dist.] May 10, 2007, pet. filed). The court held that the homeowner's defense to arbitration related specifically to the arbitration clause because the homeowners "specifically and repeatedly asserted they would not have agreed to the arbitration provision itself had they known it encompassed any disputes beyond structural defects in their houses, which they believed were covered by the warranty program." Id. at 793 (emphasis added).
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