IHS Acquisition No. 171, Inc. v. Beatty–Ortiz

• Decision Date: 30 May 2012
• Docket Number: No. 08–11–00195–CV.,08–11–00195–CV.
• Citation: 387 S.W.3d 799
• Parties: IHS ACQUISITION NO. 171, INC. d/b/a Mesa Hills Specialty Hospital, Encore Healthcare, LLC, and Lyric Health Care Holdings III, Inc., Appellants, v. Joann BEATTY–ORTIZ, Appellee.
• Court: Texas Court of Appeals

387 S.W.3d 799

IHS ACQUISITION NO. 171, INC. d/b/a Mesa Hills Specialty Hospital, Encore Healthcare, LLC, and Lyric Health Care Holdings III, Inc., Appellants,

v.Joann BEATTY–ORTIZ, Appellee.

No. 08–11–00195–CV.

Court of Appeals of Texas, El Paso.

May 9, 2012.

Rehearing Overruled May 30, 2012.

Shawn R. Oller, Little Mendelson, PC, Phoenix, AZ, for Appellants.

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. 171, Inc. d/b/a Mesa Hills Specialty Hospital, Encore Healthcare, L.L.C., and Lyric Healthcare Holdings III, Inc., (collectively Appellants), file this interlocutory appeal challenging the trial court's denial of its motion to compel arbitration. Finding error, we reverse.

FACTUAL SUMMARY

IHS Acquisitions No. 171, doing business as Mesa Hills Specialty Hospital, hired Joann Beatty–Ortiz (Beatty) in May 2000. On June 30, 2006, Beatty was promoted to Chief Executive Officer (CEO) where she remained until her termination on February 3, 2010.

On March 31, 2010, Beatty filed a complaint with the Texas Workforce Commission Civil Rights Division against “IHS Acquisitions # 171 d/b/a Mesa Hills Specialty Hospital” alleging continuing gender discrimination from November 2008 until the date of her termination. She claimed constant harassment and belittlement from the Regional Director of Operations, Paul Miller, and that she was not the only female subjected to Miller's demeaning behavior and double standards. Beatty further asserted that prior to her termination, she had not received a single disciplinary action warning that her job was in jeopardy or a negative performance evaluation. She was the only female CEO in her region and upon her termination, the position was filled by a man who was previously the director of environmental services.

On October 28, 2010, Beatty filed suit against Appellants, alleging essentially the same gender discrimination allegations contained in her Texas Workforce Commission Complaint against IHS. The only explanation she was given was that “the hospital was not going in the direction they wanted to.” Beatty sought front and back pay benefits, compensatory damages, punitive damages, attorney's fees, costs, and prejudgment and post-judgment interest. Appellants collectively filed a motion to compel arbitration, attaching a copy of a document signed by Beatty on September 23, 2008.

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 Employee to 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 8, 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 of 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.

THE MISNOMER

The agreement binds the “Employer,” listed as IHS Acquisition No. 174 as an affiliate of Lyric Health Care Holdings, III, Inc. But Beatty was employed by IHS Acquisition No. 171, filed her complaint against IHS Acquisition No. 171, and ultimately sued IHS Acquisition No. 171. While Appellants maintain the contract contains a simple scrivener's error, Beatty 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 ...