DeArmond v. HALLIBURTON ENERGY SERVICES

• Citation: 134 N.M. 630,81 P.3d 573
• Decision Date: 25 September 2003
• Docket Number: No. 22802.,22802.
• Parties: Ronald DeARMOND, Plaintiff-Appellant, v. HALLIBURTON ENERGY SERVICES, INC., Defendant-Appellee.
• Court: Court of Appeals of New Mexico

81 P.3d 573

134 N.M. 630

Ronald DeARMOND, Plaintiff-Appellant, v. HALLIBURTON ENERGY SERVICES, INC., Defendant-Appellee.

No. 22802.

Court of Appeals of New Mexico.

September 25, 2003.

Certiorari Granted December 9, 2003.

Hannah B. Best, Hannah Best & Associates, Albuquerque, for Appellant.

Robert L. Ivey, Vinson & Elkins, L.L.P., Houston, TX, Stanley Kotovsky, Hinkle, Hensley, Shanor & Martin, L.L.P., Albuquerque, for Appellee.

Certiorari Granted, No. 28,366, December 9, 2003.

OPINION

CASTILLO, J.

{1} In this case, we decide whether the trial court correctly determined that Plaintiff Ronald DeArmond (DeArmond) and Defendant Halliburton Energy Services, Inc., (Halliburton) entered into a valid contract agreeing to arbitrate work-related problems, thus waiving any right to a jury trial on these issues. We hold that the record is not sufficient to support the trial court's decision, and we therefore reverse the trial court's order granting Halliburton's motion to compel arbitration. We remand for reconsideration of Halliburton's motion.

I. BACKGROUND

{2} DeArmond was employed by Halliburton as a senior equipment operator. In November 1998, he was injured on the job; and as a result, he needed surgery to correct a torn pectoral muscle. DeArmond requested the necessary leave from Halliburton. In January 1999, Halliburton laid DeArmond off, and his health benefits were terminated.

{3} DeArmond sued Halliburton on February 2, 2000, in state district court. The suit alleged (1) discrimination based on race and medical condition in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e to -17 (2000), and the New Mexico Human Rights Act, NMSA 1978, §§ 28-1-10 to -15 (1969, as amended through 1995); (2) breach of implied employment contract; and (3) abusive discharge. Halliburton removed the case to federal court on April 18, 2000. DeArmond amended his complaint to dismiss the federal claim and secured a remand to state district court on September 19, 2000. On August 14, 2001, Halliburton filed its motion to compel arbitration, asserting that its arbitration agreement with DeArmond was enforceable under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16 (2000), and, alternatively, the New Mexico Uniform Arbitration Act, NMSA 1978, §§ 44-7-1 to -22 (1971) (Act). Although DeArmond requested a hearing, the trial court made its decision based on the pleadings and affidavits without entering specific findings of fact. The trial court did not address the question of whether the agreement was governed by the federal and/or state arbitration statutes.

II. DISCUSSION

A. Standard of Review

{4} The trial court held no evidentiary hearing and made no findings or conclusions; therefore, it appears the trial court determined as a matter of law that an agreement to arbitrate existed. In this regard, the court's order compelling arbitration was similar in nature to a grant of a summary judgment motion. Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n. 9 (3rd Cir.1980). As with a summary judgment motion, a motion to compel arbitration may only be granted as a matter of law when there is no genuine issue of material fact as to the existence of an agreement. Avedon Eng'g, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir.1997). Only when there is no genuine issue of fact concerning the formation of an arbitration agreement should the court decide the existence of the agreement as a matter of law. Par-Knit Mills, Inc., 636 F.2d at 54. "The district court, when considering a motion to compel arbitration which is opposed on the ground that no agreement to arbitrate had been made between the parties, should give to the opposing party the benefit of all reasonable doubts and inferences that may arise." Id. We review de novo the grant of the motion to compel arbitration in the same manner we would review a grant of a summary judgment motion. See Avedon Eng'g, Inc., 126 F.3d at 1283; Campbell v. Millennium Ventures, LLC, 2002-NMCA-101, ¶¶ 13-14, 132 N.M. 733, 55 P.3d 429 (reviewing de novo trial court's order granting summary judgment and compelling arbitration). We may reverse the order to compel arbitration if we determine that there are genuine issues of material fact as to whether an agreement to arbitrate exists. See Par-Knit Mills, Inc., 636 F.2d at 55.

B. The Arbitration Agreement

{5} In late 1997, Halliburton adopted a company-wide Dispute Resolution Program (DRP) with an effective date of January 1, 1998. Thereafter, in November 1997, Halliburton mailed a notice of the DRP to all employees at their addresses of record. The mailing included a memorandum, a twenty-two-page Plan Document, the DRP Rules, a summary brochure, and a cover letter of explanation. The cover letter stated that "[t]he Halliburton Dispute Resolution Program binds the employee and the Company to handle workplace problems through a series of measures designed to bring timely resolution." The memorandum further explained that as of January 1, 1998, all "Halliburton employee disputes" would be referred through the DRP for resolution, that both Halliburton and DeArmond would be bound by the agreement, and that "[y]our decision to ... continue your current employment after January 1, 1998 means you have agreed to and are bound by the terms of this Program as contained in the Plan Document and Rules (all enclosed)." DeArmond continued employment after January 1, 1998.

{6} Halliburton, on appeal, drops its alternative argument that the DRP is enforceable under the Act. Since DeArmond neither contests application of the FAA nor argues for application of the Act, we proceed under the assumption that the FAA governs.

{7} A primary purpose of the FAA is to require courts to compel arbitration in cases where the parties agree to arbitrate; the law was enacted "to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). The FAA applies in state as well as federal courts, Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 684, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996), and provides that

[a] written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. Section 2 of the FAA "is a congressional declaration of a liberal federal policy favoring arbitration agreements[.]" Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Thus, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration[.]" Id. at 24-25, 103 S.Ct. 927; Gilmer, 500 U.S. at 25, 111 S.Ct. 1647.

{8} However, a legally enforceable contract is still a prerequisite for 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 arbitration is reversed when there is a dispute as to the existence of an agreement); AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ("[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." (internal quotation marks and citation omitted)); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) ("[T]he first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute."); Dumais v. Am. Golf Corp., 299 F.3d 1216, 1220 (10th Cir. 2002) ("The presumption in favor of arbitration... disappears when the parties dispute the existence of a valid arbitration agreement."); Avedon Eng'g, Inc., 126 F.3d at 1286 ("[T]he FAA was not enacted to force parties to arbitrate in the absence of an agreement.").

{9} Whether a valid contract to arbitrate exists is a question of state contract law. First Options of Chicago, Inc., 514 U.S. at 944-45, 115 S.Ct. 1920; Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987); Avedon Eng'g, Inc., 126 F.3d at 1286-87; Armijo v. Prudential Ins. Co. of Am., 72 F.3d 793, 797 (10th Cir.1995). States may not subject an arbitration agreement to requirements that are more stringent than those governing the formation of other contracts. Doctor's Assocs., 517 U.S. at 687, 116 S.Ct. 1652. 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); UJI 13-801 NMRA 2003 (defining contract). "The general rule in contract actions is that the burden of proof is on the party seeking to prove the existence of a fact." Newcum v. Lawson, 101 N.M. 448, 454, 684 P.2d 534, 540 (Ct.App.1984); Camino Real Mobile Home Park P'ship v. Wolfe, 119 N.M. 436, 442, 891 P.2d 1190, 1196 (1995). {10} DeArmond contends that Halliburton has not proven the existence of a valid, enforceable agreement to arbitrate. Specifically, he argues that three elements essential to a contract are missing: acceptance, consideration, and mutual assent. We agree that there is an absence of proof of acceptance and mutuality; we therefore need not address DeArmond's arguments concerning consideration.

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