GSC Wholesale, LLC v. Young, 14-20-00871-CV

CourtCourt of Appeals of Texas
Writing for the CourtRANDY WILSON, JUSTICE
PartiesGSC WHOLESALE, LLC D/B/A GROCERS SUPPLY AND THE GROCERS SUPPLY PRODUCE CO., LLC, Appellants v. ZACH YOUNG, Appellee
Docket Number14-20-00871-CV
Decision Date27 September 2022

GSC WHOLESALE, LLC D/B/A GROCERS SUPPLY AND THE GROCERS SUPPLY PRODUCE CO., LLC, Appellants
v.

ZACH YOUNG, Appellee

No. 14-20-00871-CV

Court of Appeals of Texas, Fourteenth District

September 27, 2022


On Appeal from the 295th District Court Harris County, Texas Trial Court Cause No. 2020-37352

Panel consists of Justices Wise, Poissant, and Wilson (Poissant, J., dissenting).

MAJORITY OPINION

RANDY WILSON, JUSTICE

Appellants GSC Wholesale, LLC d/b/a Grocers Supply ("GSC") and the Grocers Supply Produce Co., LLC, ("GSP") appeal the denial of their motion to compel arbitration in the lawsuit brought by appellee Zach Young. In two issues, appellants argue the trial court erred when it denied their motion to compel arbitration. We reverse and remand.

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I. Factual and Procedural Background

Young was hired by GSC as a Produce Warehouse Selector on August 7, 2014. On or around June 25, 2019, Young claims he suffered work related injuries when "a fork lift began to roll and pinned" him. Young alleges that this forklift was owned or controlled by GSC and GSP (collectively the "Grocers Supply Parties"). Young filed a lawsuit against the Grocers Supply Parties for negligence, and they responded by filing a Motion to Stay Proceedings and Compel Arbitration. In their motion, the Grocers Supply Parties relied upon the "GSC Wholesale, LLC Mutual Agreement to Arbitrate Occupational Injury and Disease Claims," signed by Young on January 29, 2015 (the "Arbitration Agreement"). The Grocers Supply Parties asserted that the Arbitration Agreement is a valid arbitration agreement between Young and the Grocers Supply Parties and that Young's claims fall within its scope. It is undisputed that neither of the Grocers Supply Parties signed the Arbitration Agreement.

After Young filed a response arguing that GSC did not accept and agree to the arbitration agreement, the Grocers Supply Parties filed a "Reply/Supplement" in which they asserted that though they did not sign the Arbitration Agreement, they had manifested their assent to the Arbitration Agreement by their conduct. The Grocers Supply Parties attached to this supplement a declaration by Susannah Roggi, Senior Director of Risk Management and Claims for C&S Wholesale Grocers, stating that on or before September 1, 2013, the Grocers Supply Parties adopted the Grocers Supply Occupational Injury Benefits Plan (the "Plan"). Roggi testified that under the Plan Young had been paid $84,448.00 as temporary total disability benefits and $39,337.74 as medical benefits as a result of the accident on June 25, 2019.

The Grocers Supply Parties later filed a second declaration from Roggi as

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additional evidence in support of their motion to compel. Roggi attached to this declaration a copy of the Plan. Roggi said that, as set forth on page 14 of the Plan, the Plan contains a mandatory arbitration provision. Section 3.7(a) of the Plan states: "[t]he Employer and each Employee, in exchange for eligibility to receive Benefits provided under the Plan, employment and such other consideration, will be bound by the 'Mutual Agreement to Arbitrate Occupational Injury and Disease Claims', as provided by the Plan Sponsor in substantially the same form as attached hereto as Appendix C." In this second declaration, Roggi stated that she had reviewed the Arbitration Agreement and that the Arbitration Agreement is in substantially the same form as Appendix C to the Plan.

On December 9, 2020, the trial court held a hearing at which the court heard argument, but no party offered additional evidence or requested an evidentiary hearing. On the next day, the trial court signed an order denying the motion to compel. In its order, the trial court found that:

the terminology used by Defendant in drafting the agreement "Accepted and Agreed on behalf of the Employer" and the parties [sic]" . . . may mutually agree to amend the Agreement by entering into a written instrument . . . and [sic] executed by the parties" at a minimum creates a conflict in the evidence as to whether the parties to this agreement intended to require Defendant's signature as a condition precedent to the agreement's enforceability. It is Defendant's burden to show a valid enforceable arbitration agreement. This Court[] finds that the evidence presented shows that Defendant's signature was a condition precedent to the agreement's enforceability and hence finds the arbitration agreement unenforceable

This interlocutory appeal followed. See Tex. Civ. Prac. & Rem. Code Ann. §§ 51.016, 171.021, and 171.098(a)(1).

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II. Issues and Analysis

Did the trial court err in denying the motion to compel?

On appeal, the Grocers Supply Parties assert that the trial court erred in denying the motion to compel. The Grocers Supply Parties argue in part that they need not rely on the Arbitration Agreement because they may rely upon a similar arbitration agreement contained in the Grocers Supply Parties' "Non-Subscriber Occupational Injury Plan" (the "Non-Subscriber Plan"). The Grocers Supply Parties assert that they may rely on and enforce this arbitration agreement against Young because Young received notice of the terms of the Non-Subscriber Plan and its arbitration agreement and Young specifically agreed to be bound by them.

On appeal, Young argues that the Grocers Supply Parties did not raise this argument based on the Non-Subscriber Plan in the trial court and thus waived it. Young contends that on appeal the Grocers Supply Parties have shifted the focus of their arguments from the Arbitration Agreement that was the basis of the motion to compel to the argument based on the Non-Subscriber Plan and other arguments not raised in the trial court. We begin by addressing the whether the trial court erred in denying the motion to compel based on the Arbitration Agreement.

The Grocers Supply Parties assert that Young signed the Arbitration Agreement and argue that Young's claims fall within the scope of the Arbitration Agreement. The Grocers Supply Parties also contend that even if they did not sign the Arbitration Agreement,[1] they manifested their assent to it by their conduct.

A. Standard of Review

A trial court's order denying a motion to compel arbitration is reviewed for

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an abuse of discretion. Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner or acts without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). We defer to the trial court's factual determinations if they are supported by evidence, and we review the trial court's legal determinations de novo. Henry, 551 S.W.3d at 115.

A party seeking to compel arbitration bears the burden to establish (1) the existence of a valid arbitration agreement, and (2) the claims in dispute fall within the scope of the arbitration agreement. In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011); J.M. Davidson v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). If the party seeking arbitration meets its two-pronged burden to establish the agreement's validity and scope, then the burden shifts to the party opposing arbitration to raise a valid defense to the agreement's enforcement, and absent evidence supporting such a defense, the trial court must compel arbitration. J.M. Davidson, 128 S.W.3d at 227-28. A trial court's determination as to whether a valid arbitration agreement exists and whether the claims fall within the scope of an arbitration agreement are legal determinations subject to de novo review. In re Labbat Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009). The trial court erred in denying the motion to compel if the evidence before the trial court proved as a matter of law that (1) the Arbitration Agreement is a valid arbitration agreement, and (2) Young's claims against the Grocers Supply Parties fall within the scope of the Arbitration Agreement. See In re Poly-America, L.P., 262 S.W.3d 337, 354 (Tex. 2008). Young has not contended that his claims fall outside the scope of the Arbitration Agreement. Nor has Young disputed that he signed and agreed to the Arbitration Agreement. Rather, Young contends that the only way for an Employer to manifest assent to the Arbitration Agreement is by signing it, and because no Employer

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signed the agreement, Young argues that there is no valid arbitration agreement.

B. Applicable Law

"Contracts require mutual assent to be enforceable." Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007) (per curiam). "Evidence of mutual assent in written contracts generally consists of signatures of the parties and delivery with the intent to bind." Id. Neither the Federal Arbitration Act nor Texas law requires that arbitration agreements or clauses be signed, so long as they are written and agreed to by the parties. In re Polymerica, LLC, 296 S.W.3d 74, 76 (Tex. 2009) (orig. proceeding) (per curiam). Unless the parties explicitly require that a party to an arbitration agreement sign the agreement to manifest the party's assent thereto, a party may manifest its assent to the arbitration agreement by its acts, conduct, or acquiescence in the terms of the agreement, and signing the agreement is not a condition precedent to its enforceability. See Mid. Continent Cas. Co. v. Glob. Enercom Mgmt., Inc., 323 S.W.3d 151, 157 (Tex. 2010); Hearthshire Braeswood Plaza Ltd. P'ship v. Bill Kelly Co., 849 S.W.2d 380, 392 (Tex. App.-Houston [14th Dist.] 1993, writ denied).

In construing the Arbitration Agreement, our primary concern is to ascertain and give effect to the intentions of the parties as expressed in the contract. Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998); Carter v. Z.B., N.A., 578 S.W.3d 613, 618-19 (Tex. App.-Houston [14th Dist.] 2019, no pet.). To ascertain the parties' true intentions, we...

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