Heye v. American Golf Corp., Inc.

• Decision Date: 30 September 2003
• Docket Number: No. 22,920.,22,920.
• Citation: 134 N.M. 558,80 P.3d 495
• Parties: Melissa HEYE, Plaintiff-Appellee, v. AMERICAN GOLF CORPORATION, INC., a foreign corporation, and George Brazil, an individual, Defendants-Appellants.
• Court: Court of Appeals of New Mexico

80 P.3d 495

134 N.M. 558

Melissa HEYE, Plaintiff-Appellee, v. AMERICAN GOLF CORPORATION, INC., a foreign corporation, and George Brazil, an individual, Defendants-Appellants.

No. 22,920.

Court of Appeals of New Mexico.

September 30, 2003.

Christopher M. Moody, Whitney Warner, Moody & Warner, P.C., Albuquerque, for Appellee.

Martin R. Esquivel, Rosario D. Vega-Lynn, Narvaez Law Firm, P.A., Albuquerque, for Appellants.

OPINION

CASTILLO, J.

{1} This case requires us to determine the validity of an arbitration agreement that binds only the employee to arbitration and that was signed by the employee after she was hired. Because we hold that the agreement to arbitrate is illusory in this case, we affirm the trial court's denial of the employer's motion to compel arbitration.

I. BACKGROUND

{2} On or about March 10, 1999, Melissa Heye (Plaintiff) applied for a position in the pro shop at the Paradise Hills Golf Course, a club managed by American Golf Corporation, Inc. (AGC). She was hired several days later. On March 19, 1999, after Plaintiff was hired but before she began working on March 22, 1999, AGC gave Plaintiff a number of documents, including the Co-Worker Alliance Handbook (the handbook). Page 20 of the handbook contained information about AGC's arbitration policy; page 23 of the handbook included an acknowledgment form with a statement that the employee agrees "to be bound by the arbitration policy set forth on page 20 of this handbook." Plaintiff signed the form. She worked for AGC until January 24, 2000. Plaintiff then filed a charge of employment discrimination with the New Mexico Human Rights Division. Thereafter, on September 15, 2000, she filed a complaint in district court against AGC and her immediate supervisor, George Brazil, (Defendants) alleging sexual discrimination and hostile work environment, sexual harassment, retaliation, retaliatory discharge, negligent supervision and retention, battery, and intentional infliction of emotional distress.

{3} Defendants moved to compel binding arbitration pursuant to the acknowledgment form Plaintiff signed. Plaintiff argued for denial of the motion on several grounds: (1) that the agreement was illusory and not supported by consideration; (2) that the alleged agreement is unconscionable because it fails to provide Plaintiff with a reasonable means to resolve her claims; and (3) even if the agreement were valid, its scope does not cover all of Plaintiff's claims. After a hearing on the merits, the trial court issued a letter ruling on April 14, 2001, granting Defendants' motion. That letter was not made part of the record. Shortly thereafter, Plaintiff filed a motion for reconsideration, citing "recently decided legal authority"—specifically, Zamprelli v. American Golf Corp., No. CIV 00-181 BB/RLP (D. N.M. April 12, 2001), an unreported case in which United States District Judge Black denied AGC's motion to compel arbitration based on an identical agreement. At the September 12, 2001, motion hearing, Plaintiff raised a second case: Dumais v. American Golf Corp., 150 F.Supp.2d 1182 (D.N.M.2001) [hereinafter Dumais I], filed on June 14, 2001. In Dumais I, United States District Judge Vasquez denied AGC's motion to compel arbitration based on a similar agreement.¹ The trial court then entered an order granting Plaintiff's motion for reconsideration and denying Defendants' motion to compel arbitration. Here, AGC appeals the trial court's denial of its motion to compel arbitration.

II. DISCUSSION

A. Standard of Review

{4} We agree with the parties that the appropriate standard of review for a trial court's grant or denial of a motion to compel arbitration is de novo. Dumais II, 299 F.3d at 1218; Armijo v. Prudential Ins. Co. of Am., 72 F.3d 793, 796 (10th Cir.1995); Santa Fe Techs., Inc. v. Argus Networks, Inc., 2002-NMCA-030, ¶ 51, 131 N.M. 772, 42 P.3d 1221; Casias v. Dairyland Ins. Co., 1999-NMCA-046, ¶ 13, 126 N.M. 772, 975 P.2d 385. We review the trial court's grant of Plaintiff's motion to reconsider for abuse of discretion. Lewis v. Samson, 2001-NMSC-035, ¶ 22, 131 N.M. 317, 35 P.3d 972.

B. The Handbook and Arbitration Agreement

{5} There are two pages in the handbook that form the basis for the dispute as to whether a valid, enforceable arbitration agreement exists. Page 20 in the handbook discusses arbitration and states in pertinent part:

I agree that any claim of unlawful harassment or discrimination or claims of wrongful discharge, arising out of my employment with AGC, including public policy claims, contract claims and claims involving any applicable Federal, State, or Local statute, ordinance or regulation relating to the termination of my employment, employment discrimination, harassment or retaliation, will be resolved exclusively by final and binding arbitration and not by court action.... I acknowledge that I am knowingly and voluntarily waiving my right to pursue such claims in court and instead will pursue them through arbitration.... This arbitration shall be the exclusive means of resolving any dispute(s) listed in this agreement and no other action will be brought in any court or administrative forum.

{6} We reproduce the text of the acknowledgment form on Page 23 in its entirety:

Acknowledgment

My signature below indicates that I have read this AGC Co-Worker Alliance Agreement and handbook and promise and agree to abide by its terms and conditions.

I further understand that the Company reserves the right to amend, supplement, rescind or revise any policy, practice, or benefit described in this handbook—other than employment at-will provisions—as it deems appropriate.

I acknowledge that my employment is at-will, which means that either the Company or I have the absolute right to end the employment relationship at any time with or without notice or reason. I further understand that the president of American Golf Corporation is the only authorized representative of the Company who can modify this at-will employment relationship and the contents of this handbook, and that any such modifications must be made in writing.

I further acknowledge that I have read and agree to be bound by the arbitration policy set forth on page 20 of this handbook.

{7} Defendants contend that the terms of the agreement compel Plaintiff to arbitrate her claims. Since Defendants discuss both the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16 (2000), and the New Mexico Uniform Arbitration Act (NMUAA), NMSA 1978, §§ 44-7-1 to -22 (1971, repealed by NMSA 1978, §§ 44-7A-1 to -32 (2001)), in their motion to compel, we proceed under the assumption that they intend both acts to govern.

{8} We agree with Defendants that the federal and state acts portend a policy favoring the enforcement of arbitration agreements. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991)

(stating that a primary purpose of the FAA was "to reverse the longstanding judicial hostility to arbitration agreements ... and to place arbitration agreements upon the same footing as other contracts"); Santa Fe Techs., Inc., 2002-NMCA-030, ¶ 51, 131 N.M. 772, 42 P.3d 1221 (reiterating that arbitration is "highly favored in New Mexico" and, under the NMUAA, "when parties have agreed to arbitrate, the courts must compel arbitration"). However, under either the FAA or the NMUAA, a legally enforceable contract is a prerequisite to arbitration; without such a contract, parties will not be forced to arbitrate. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (stating that the presumption in favor of arbitrability is reversed when there is a dispute as to the existence of an agreement); Dumais II, 299 F.3d at 1220 ("The presumption in favor of arbitration ... disappears when the parties dispute the existence of a valid arbitration agreement."); Shaw v. Kuhnel & Assocs., Inc., 102 N.M. 607, 608, 698 P.2d 880, 881 (1985) ("[A]n arbitration clause is enforceable and valid unless there are legal or equitable grounds for revoking it.") superseded by statute as stated in Aguilera v. Palm Harbor Homes, Inc., 2002-NMSC-029, ¶ 3 n. 1, 132 N.M. 715, 54 P.3d 993; K.L. House Constr. Co. v. City of Albuquerque, 91 N.M. 492, 494, 576 P.2d 752, 754 (1978) ("[T]he courts only decide the threshold question of whether there is an agreement to arbitrate. If so, the court should order arbitration. If not, arbitration should be refused.").

{9} We interpret an arbitration agreement under the rules of state contract law. First Options, 514 U.S. at 944, 115 S.Ct. 1920; Santa Fe Techs., Inc., 2002-NMCA-030, ¶ 52, 131 N.M. 772, 42 P.3d 1221; Casias, 1999-NMCA-046, ¶ 11, 126 N.M. 772, 975 P.2d 385. For a contract to be legally valid and enforceable, it must be factually supported by an offer, an acceptance, consideration, and mutual assent. Garcia v. Middle Rio Grande Conservancy Dist., 1996-NMSC-029, ¶ 9, 121 N.M. 728, 918 P.2d 7 (internal quotation marks and citation omitted); Hartbarger v. Frank Paxton Co., 115 N.M. 665, 669, 857 P.2d 776, 780 (1993). Defendants assert that the arbitration agreement is supported by consideration in the form of AGC's agreement to arbitrate and in Plaintiff's employment or continued employment. Defendants further assert that the agreement is not unconscionable. We first look to AGC's agreement to arbitrate.

C. AGC's Agreement to Arbitrate

{10} The trial court's order denying Defendants' motion to compel arbitration states that it considered the briefs, supporting documentation, legal authority, and the oral arguments; we presume, therefore, that the trial court's decision was based at least in part on the newly decided cases presented by Plaintiff: Zamprelli, No. CIV 00-181 BB/RLP, and Dumais I, 150 F.Supp.2d 1182. In both cases, employees who signed agreements almost identical to that signed by Plaintiff brought suit against AGC, and AGC attempted to compel arbitration. In both ...