IHS Acquisition No. 131, Inc. v. Iturralde

• Decision Date: 23 May 2012
• Docket Number: No. 08–11–00091–CV.,08–11–00091–CV.
• Citation: 387 S.W.3d 785
• Parties: IHS ACQUISITION NO. 131, INC. d/b/a Horizon Healthcare Center at El Paso, Appellant, v. Martha ITURRALDE, Appellee.
• Court: Texas Court of Appeals

387 S.W.3d 785

IHS ACQUISITION NO. 131, INC. d/b/a Horizon Healthcare Center at El Paso, Appellant,

v.Martha ITURRALDE, Appellee.

No. 08–11–00091–CV.

Court of Appeals of Texas, El Paso.

April 25, 2012.

Rehearing Overruled May 23, 2012.

Shawn R. Oller, Littler Mendelson, PC, Phoenix, AZ, for Appellant.

John P. Mobbs, Attorney at Law, El Paso, TX, for Appellee.

Before McCLURE, C.J., RIVERA, and ANTCLIFF, JJ.

OPINION

ANN CRAWFORD McCLURE, Chief Justice.

IHS Acquisition No. 131, Inc. d/b/a Horizon Healthcare Center at El Paso (IHS), files this interlocutory appeal challenging the trial court's denial of its motion to compel arbitration. Finding error, we reverse.

FACTUAL SUMMARY

On May 18, 2010, Martha Iturralde filed her first amended petition against IHS Acquisition No. 131, Inc. d/b/a Horizon Healthcare Center at El Paso, her former employer. She complained that in April 2008, she was passed over for a promotion as an Environmental Director because of her age. Iturralde was 46 years old at the time. According to Iturralde, she was the most qualified person for the position, but because of her age IHS chose to promote a 24–year–old man with who had no management experience or qualifications. Then in December 2008, IHS demoted her to the position of Housekeeping Aide and cut her salary in half. IHS explained that the change occurred because her former position as Housekeeping Supervisor was eliminated. Iturralde claimed that IHS had a retaliatory motive for her demotion because she had previously filed an Equal Opportunity Employment Commission claim. On December 21, 2010, IHS filed a motion to compel arbitration and attached a copy of a document signed by Iturralde.

THE ARBITRATION AGREEMENT

The document, entitled “Mutual Arbitration Agreement” provides in relevant part:

IHS Acquisition No. 174, Inc. (‘Employer’) as an affiliate of Lyric Health Care Holdings, III, Inc. maintains an Employee Injury Benefit Plan (the ‘Plan’) to pay benefits to Participants due to injuries or illnesses incurred in the course and scope of employment with Company or affiliates of Company who adopt the Plan. The Plan pays defined: (i) disability wage replacement benefits; (ii) death benefits to Participant's beneficiaries; (iii) dismemberment/loss of use benefits; and (iv) medical benefits.

The Mutual Arbitration Agreement (‘Agreement’) binds Employer and Employeeto arbitrate claims covered by this Agreement. The Effective Date of this Agreement is for employees currently employed by Employer, three (3) business days following the notice date of the Plan (through receipt of the Summary Plan Description)(‘Notice Date’). The Notice Date is August 2, 2008. If an Employee is hired after the Notice Date, the Employee shall be provided a copy of the Summary Plan Description and this Agreement and will be bound by this Agreement and covered by the Plan.

I. ARBITRATION

(This is our agreement to binding arbitration.)

The Employer and Employee each agree to binding arbitration of all claims and disputes described hereafter, whether these claims and disputes exist now or arise in the future. All claims subject to arbitration must be submitted to arbitration within one year of the date of the incident giving rise to the claim or is forever barred. The claims, disputes and allegations subject to binding arbitration under this Agreement include my claims involving Employer, as well as Employer's claims against me for:

1. Employer's negligence, gross negligence, strict liability, intentional act, omission or any other claim or cause of action with respect to any employment-related death, injuries, trauma or illness;

2. tort claims (including, but not limited to, any claims for bodily injury or physical, mental or psychological injury) for injuries, trauma or illness I may sustain in the course and scope of my employment;

3. claims for wrongful termination, demotion, or discharge under statutory or common law, including retaliatory discharge claims related to workplace injuries, illnesses or trauma;

4. claims for a violation of any federal, state or other government law, statute, regulation or ordinance relating directly or indirectly to my workplace injury, illness or trauma; and

5. any and all claims challenging the validity or enforceability of this Agreement (in whole or in part) or challenging the applicability of this Agreement to a particular dispute or claim.

The appeal of a full or partial denial of benefits under the Plan is not covered by this Agreement.

BY ARBITRATING THESE CLAIMS, EMPLOYER AND EMPLOYEE UNDERSTAND THAT FOR EACH PARTY ANY CAUSE OF ACTION DESCRIBED IN THIS AGREEMENT WILL BE SUBJECT TO RESOLUTION IN ARBITRATION ACCORDING TO THE PROCEDURES PROVIDED IN THIS AGREEMENT.

II. ARBITRATION PROCEDURES

(This is how the arbitration will be conducted.)

...

III. TERM

Employer may modify or terminate this Agreement at any time. Any such change shall be prospective only. No change, amendment, modification or termination shall affect the obligation of both parties to arbitrate, whether the request for arbitration was before or after any modification, amendment, or termination of this Agreement. The Agreement in place at the time of the occurrence of the arbitration event shall govern.

ACKNOWLEDGEMENT OF RECEIPT

The undersigned Employee acknowledges receipt of the Agreement on the date indicated.

The Agreement was signed and dated by Iturralde on October 17, 2008.

THE MISNOMER

The agreement binds the “Employer,” listed as IHS Acquisition No. 174 as an affiliate of Lyric Health Care Holdings, Inc. But Iturralde was employed by IHS Acquisition No. 131 and ultimately sued IHS Acquisition No. 131. While Appellants maintain the contract contains a simple scrivener's error, Iturralde counters that because IHS does not claim to be the same entity as IHS Acquisition No. 174 and does not claim to be an alter ego of IHS Acquisition No. 174, IHS is not a party to the arbitration policy and cannot enforce it.

STANDARD OF REVIEW

The parties do not dispute that the FAA applies to this proceeding. See9 U.S.C.A. §§ 1–16 (West 2009). Section 51.016 of the Texas Civil Practice and Remedies Code permits the interlocutory appeal of an order denying a motion to compel arbitration under the Federal Arbitration Act. Tex.Civ.Prac. & Rem.Code Ann. § 51.016 (West Supp.2011). A trial court's determination regarding the validity of an agreement to arbitrate is a question of law which we review de novo. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003). A trial court abuses its discretion when it refuses to compel arbitration pursuant to a valid and enforceable arbitration agreement. In re Halliburton Co., 80 S.W.3d 566, 573 (Tex.2002) (orig. proceeding).

A party seeking to compel arbitration must first satisfy a two-pronged burden of proof: first, it must demonstrate the existence of a valid agreement to arbitrate the dispute, and second, it must prove that the claims asserted are within the scope of the agreement. In re Dillard Dept. Stores, Inc., 186 S.W.3d 514, 515 (Tex.2006); In re AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex.2005) (orig. proceeding); Budd v. Max International, LLC, 339 S.W.3d 915, 918 (Tex.App.-Dallas 2011, no pet.). If the party seeking arbitration carries its initial burden, then the burden shifts to the party opposite to present evidence of an affirmative defense. Id.

While a strong presumption favoring arbitration exists, the presumption arises only after the party seeking to compel arbitration proves that a valid arbitration agreement exists. J.M. Davidson, Inc., 128 S.W.3d at 227. In deciding whether a party has met its initial burden, we do not resolve doubts or indulge a presumption in favor of arbitration. Id. Rather, the party attempting to compel arbitration must show that the arbitration agreement meets all requisite contract requirements. Id. at 228. If the trial court determines that a valid agreement exists, the burden shifts to the party opposing arbitration to raise an affirmative defense to enforcement of the arbitration agreement. Id. at 227–28.

APPLICABLE LAW

The Federal Arbitration Act (FAA)

The FAA provides, in relevant part:

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

See9 U.S.C. § 2 (West 2009); Rent–A–Center, West, Inc. v. Jackson, ––– U.S. ––––, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010), quoting Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The above provision has been described as reflecting both a “liberal federal policy favoring arbitration,” and the “fundamental principle that arbitration is a matter of contract.” See AT & T Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011)citing Moses H. Cone Memorial Hospital, 460 U.S. at 24, 103 S.Ct. at 927and Rent–A–Center, ––– U.S. at ––––, 130 S.Ct. at 2776. “The FAA thereby places arbitration agreements on an equal footing with other contracts, and requires courts to enforce them according to their terms.” Rent–A–Center, ––– U.S. ––––, 130 S.Ct. at 2776 (internal citations omitted); citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006)and Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989).

An agreement to arbitrate is a contract, the relation of the parties is contractual, and the rights and liabilities of the parties are controlled by the law of contracts. As such, a party cannot be required to submit to arbitration any dispute which she has not agreed to submit. See AT & T Mobility LLC, 131 S.Ct. at 1740 (arbitration is a creature of contract; a...