Coffman v. Provost ★ Umphrey Law Firm

• Decision Date: 05 April 2001
• Docket Number: No. 1:99-CV-628.,1:99-CV-628.
• Citation: 161 F.Supp.2d 720
• Parties: Sonya B. COFFMAN, Plaintiff, v. PROVOST ★ UMPHREY LAW FIRM, L.L.P., Walter Umphrey P.C., and T. Walter Umphrey, Defendants.
• Court: U.S. District Court — Eastern District of Texas

Page 720

161 F.Supp.2d 720

Sonya B. COFFMAN, Plaintiff, v. PROVOST ★ UMPHREY LAW FIRM, L.L.P., Walter Umphrey P.C., and T. Walter Umphrey, Defendants.

No. 1:99-CV-628.

United States District Court, E.D. Texas, Beaumont Division.

April 5, 2001.

COPYRIGHT MATERIAL OMITTED

Timothy Allen Daniels, Monica Lynne Luebker, Keith R. Verges, Figari Davenport & Graves LLP, Dallas, TX, Raymond Lyn Stevens, Stevens Baldo & Freeman LLP, Beaumont, TX, for plaintiff.

Elizabeth M. Marsh, Thompson Coe Cousins & Irons, Austin, TX, Lawrence Louis Germer, Germer & Gertz, Beaumont, TX, for defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO COMPEL ARBITRATION AND TO DISMISS WITH PREJUDICE, OR ALTERNATIVELY, TO STAY ACTION

SCHELL, District Judge.

This matter is before the court on "Defendants' Motion to Compel Arbitration and to Dismiss With Prejudice, or Alternatively, to Stay Action" (Dkt.# 4), filed on August 30, 1999. Plaintiff filed a Response on September 14, 1999, Defendants filed a Reply on October 5, 1999, Plaintiff filed a Surreply on January 24, 2000, and Defendants filed a Response to Plaintiff's Surreply on January 28, 2000. Upon consideration of the parties' written submissions and the applicable law, the court is of the opinion that Defendants' motion should be GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

Plaintiff is a former employee of Provost ★ Umphrey Law Firm, L.L.P. ("Provost ★ Umphrey").¹ Plaintiff originally brought this action against Defendants alleging breach of contract, repudiation, breach of fiduciary duty, breach of the duty of good faith and fair dealing, and violations of Title VII and/or the Texas Commission on Human Rights Act ("TCHRA"). Plaintiff later amended her complaint to add a cause of action under the Equal Pay Act. Defendants ask this court to dismiss Plaintiff's action and to compel submission of all of her claims to arbitration. If this court determines that only some of Plaintiff's claims are subject to arbitration, Defendants alternatively ask this court to stay all proceedings until such arbitration has been completed.

Defendants' motion is based upon various partnership agreements which govern the business and operations of Provost ★ Umphrey. The original partnership agreement was first effective on August 26, 1986. Plaintiff did not sign that agreement. Since that time, however, the original partnership agreement has been amended and restated on several occasions. Plaintiff admits that she signed the following four partnership agreements:

• Restated Partnership Agreement of Provost ★ Umphrey Law Firm, L.L.P.—Effective January 1, 1994 ("1994 Partnership Agreement").

• Restated Partnership Agreement of Provost ★ Umphrey Law Firm, L.L.P.—Effective January 1, 1996 ("1996 Partnership Agreement").

• Amendment No. 1 to the Restated Partnership Agreement of Provost ★ Umphrey Law Firm, L.L.P., Dated January 1, 1996—Effective January 1, 1997 ("1996 Amendment No. 1").

• Partnership Agreement of Provost ★ Umphrey Law Firm, L.L.P., As Restated —Effective January 1, 1998 ("1999 Partnership Agreement").

The 1994 and 1996 Partnership Agreements do not contain an arbitration clause. The 1996 Amendment No. 1 and the 1998 Partnership Agreement, on the other hand, both contain an identical arbitration clause as follows:

Binding Arbitration. The equity partners and non-equity partners shall make a good faith effort to settle any dispute or claim arising under this partnership agreement. If the equity or non-equity partners fail to resolve a dispute or claim, such equity or non-equity partner shall submit the dispute or claim to binding arbitration under the rules of the American Arbitration Association then in effect. Judgment on arbitration awards may be entered by any court of competent jurisdiction.

Defs.' Mot. at 3. Further, all four of the above-referenced partnership agreements contain an integration clause stating that "[t]his agreement contains the entire agreement ... and all prior agreements ... are terminated." Id. at 2.

Because Plaintiff signed the 1996 Amendment No. 1 and the 1998 Partnership Agreement, Plaintiff concedes that the following claims must be compelled to arbitration: (1) the enforceability of the 1996 Amendment No. 1 and the 1998 Partnership Agreement; (2) breach of the 1996 Amendment No. 1 and the 1998 Partnership Agreement; (3) repudiation; and (4) breach of the duty of good faith and fair dealing. Plaintiff has already instigated arbitration proceedings with the American Arbitration Association ("AAA") on those issues, but has asked the AAA to stay her claims until this court rules on Defendants' motion. Therefore, this court is left to consider whether Plaintiff's remaining claims for (1) breach of the 1994 and 1996 Partnership Agreements; (2) breach of fiduciary duty; (3) violations of Title VII and/or TCHRA; and (4) violations of the Equal Pay Act must also be compelled to arbitration.

II. ANALYSIS

Section two of the Federal Arbitration Act ("FAA") states that a written arbitration agreement in any contract involving interstate commerce is valid, irrevocable, and enforceable except on grounds that would permit the revocation of a contract in law or equity.² See 9 U.S.C. § 2. Section four of the FAA allows a party to seek an order compelling arbitration if the other party has failed to arbitrate under a written arbitration agreement. See id. § 4. If a suit is filed in federal court and the court finds that one or more of the issues is referable to arbitration, § 3 of the FAA requires a court to stay the action pending arbitration. See id. § 3. When ruling on a motion to compel arbitration, the district court must consider two things: "(1) whether a valid agreement to arbitrate between the parties exists; and (2) whether the dispute in question falls within the scope of that arbitration agreement." Pennzoil Exploration and Production Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1065 (5th Cir.1998) (citations omitted). In the instant case, both parties agree that a valid arbitration agreement exists; therefore, this court only needs to determine if Plaintiff's remaining claims fall within the scope of the agreement.

A. Scope of the Arbitration Agreement

In determining the scope of an arbitration agreement that falls under the FAA, the court must apply the "federal substantive law of arbitrability." Harvey v. Joyce, 199 F.3d 790, 793 (5th Cir.2000) (citing Moses H. Cone Memorial Hosp. v. Mercury Const., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Federal law in this area requires the court to apply ordinary state law principles of contract construction. See Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir.1996) (citations omitted). Texas contract law requires the court to determine the intent of the parties by interpreting the language of the contract in its plain grammatical meaning unless doing so would defeat the parties' intentions. See R & P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518-19 (Tex.1980) (citations omitted); Ikon Office Solutions, Inc. v. Eifert, 2 S.W.3d 688, 694 (Tex.App.— Houston [14th Dist.] 1999, no pet.) (citation omitted). Further, because arbitration is a matter of contract, a party cannot be compelled to submit any dispute to arbitration which he has not agreed to submit. See United Offshore Co. v. Southern Deepwater Pipeline Co., 899 F.2d 405, 408 (5th Cir.1990) (citing AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986)); see also Volt Info. Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior Univ., 489 U.S. 468, 474-75, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) (stating that § 4 of the FAA "does not confer a right to compel arbitration of any dispute at anytime; it confers only the right to obtain an order directing that `arbitration proceed in the manner provided for in [the parties'] agreement'") (quoting 9 U.S.C. § 4) (emphasis not in statute).

In applying the rules of contract law, however, the court must bear in mind the strong federal policy favoring arbitration. See Webb, 89 F.3d at 258 (citation omitted). The law of arbitration calls for a presumption that when the scope of an arbitration agreement is reasonably in doubt, it should be construed in favor of arbitration. See Mar-Len of Louisiana Inc. v. Parsons-Gilbane, 773 F.2d 633, 635 (5th Cir.1985) (citing United Steelworkers of America v. Warrior & Gulf Navigational Co., 363 U.S. 574, 583, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). "[A]rbitration should not be denied `unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation that could cover the dispute at issue.'" Id. at 636 (citation omitted). "This presumption can be overcome with clear evidence that the parties did not intend the claims to be arbitrable." Harvey, 199 F.3d at 793 (citation omitted).

Keeping in mind the strong federal policy in favor of arbitration, it is also important to note that the Fifth Circuit has made a distinction between "narrow" and "broad" arbitration clauses. See Complaint of Hornbeck Offshore (1984) Corp. v. Coastal Carriers Corp., 981 F.2d 752, 754 (5th Cir.1993). An arbitration clause is characterized as narrow when the language of the clause requires the arbitration of disputes "arising out of" the agreement. See Pennzoil, 139 F.3d at 1067. A broad arbitration clause, on the other hand, includes language such as "any dispute that arises out of or relates to" the agreement, or disputes that are "in connection with" the agreement. See id. Here, the arbitration clause states that "[t]he equity partners and non-equity partners shall make a good faith effort to settle any dispute or claim arising under this partnership agreement" and if the partners "fail to resolve a dispute or claim, such equity or non-equity partner shall submit the dispute or claim to binding arbitration." Defs.' Mot. at 3 (...