In re Big 8 Food Stores, Ltd.

• Decision Date: 03 August 2005
• Docket Number: No. 08-04-00255-CV.,08-04-00255-CV.
• Citation: 166 S.W.3d 869
• Parties: In re BIG 8 FOOD STORES, LTD., Relator.
• Court: Texas Supreme Court

166 S.W.3d 869

In re BIG 8 FOOD STORES, LTD., Relator.

No. 08-04-00255-CV.

Court of Appeals of Texas, El Paso.

June 16, 2005.

Rehearing Overruled August 3, 2005.

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Gary D. Sarles, Sarles & Ouimet, L.L.P., Dallas, M. Mitchell Moss, Scott, Hulse, Marshall, Feuile, Finger & Thurmond, P.C., El Paso, for Relator.

Javier Espinoza, Scherr, Legate & Ehrlich, PLLC, El Paso, for Interested Party.

Before BARAJAS, C.J., McCLURE, and CHEW, JJ.

OPINION

RICHARD BARAJAS, Chief Justice.

Relator, Big 8 Food Stores, Ltd. ("Big 8"), asks this Court to issue a writ of mandamus against Respondent, the Honorable Javier Alvarez, Judge of the County Court at Law Number Three, El Paso County, Texas. For the reasons stated, we conditionally grant relief.

I. SUMMARY OF THE EVIDENCE

Real Party in Interest, Maria Marquez ("Marquez") was an employee of Big 8, a non-subscriber under the Texas Workers' Compensation Act. Marquez was injured while in the course and scope of her employment. She sued Big 8 for negligence. Big 8 moved to compel arbitration based on a written agreement signed by Marquez. Marquez denied that she had knowingly agreed to arbitration and argued that the arbitration agreement lacked consideration, that she was fraudulently induced into signing the agreement, that there was no meeting of the minds, and that Big 8 had failed to satisfy all the conditions precedent prior to seeking arbitration. After a hearing, the trial court denied Big 8's motion to compel arbitration, without stating the grounds. Big 8 filed a motion to reconsider which was also denied. This original proceeding in mandamus follows. Real Party in Interest, Marquez, responded to the Petition for Writ of Mandamus, urging for the first time, that the Federal Arbitration Act does not apply to the controversy because the agreement does not substantially affect interstate commerce. She also contends that the agreement is unenforceable on the grounds of procedural unconscionability.

II. DISCUSSION

In two issues, Big 8 asserts that the trial court erred in failing to order to arbitration the negligence claims asserted by Marquez, and that the court should have upheld the arbitration agreement because Marquez had accepted benefits under the plan. We begin with a discussion of the standard of review.

A. Standard of Review

Mandamus will lie only to correct a clear abuse of discretion. Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992) (orig.proceeding); In re Jobe Concrete Products, Inc., No. 08-02-00175-CV, 2003 WL 21757512, at *1 (Tex.App.-El Paso July 31, 2003, orig. proceeding). Moreover, there must be no other adequate remedy at law. Walker, 827 S.W.2d at 840. An appellate court rarely interferes with a trial court's exercise of discretion. A clear abuse of discretion warranting correction by mandamus occurs when a court issues a decision which is without basis or guiding principles of law. Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985) (orig.proceeding); In re Jobe Concrete Products, Inc., 2003 WL 21757512, at *1.

Mandamus is the proper means for reviewing an order denying arbitration under the Federal Arbitration Act. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 945 (Tex.1996) (orig.proceeding); In re Jobe Concrete Products, Inc., 2003 WL 21757512, at *1. Federal and State law strongly favor arbitration. Cantella, 924 S.W.2d at 944; In re Jobe, 2003 WL 21757512, at *1. A presumption exists in favor of agreements to arbitrate under the FAA. Prudential Sec., Inc. v. Marshall, 909 S.W.2d 896, 898 (Tex.1995); In re Jobe, 2003 WL 21757512, at *1. Courts must resolve any doubts about an agreement to arbitrate in favor of arbitration. Cantella, 924 S.W.2d at 944; Marshall, 909 S.W.2d at 899; In re Jobe, 2003 WL 21757512, at *1. Once a party seeking to compel arbitration establishes that an agreement exists under the FAA, and that the claims raised are within the scope of the agreement, a trial court has no discretion but to compel arbitration and stay its proceedings pending arbitration. Cantella, 924 S.W.2d at 944; In re Jobe, 2003 WL 21757512, at *1.

Arbitration is a creature of contract, and a clause requiring arbitration will be interpreted under contract principles. In re Jobe, 2003 WL 21757512, at *1; Belmont Constructors, Inc. v. Lyondell Petrochemical Co., 896 S.W.2d 352, 357 (Tex.App.-Houston [1st Dist.] 1995, no writ). A party seeking to compel arbitration must establish its right to that remedy under the contract. In re Jobe, 2003 WL 21757512, at *1; Belmont, 896 S.W.2d at 357. A clause requiring arbitration will be enforced according to its plain meaning unless this would defeat the intention of the parties. In re Jobe, 2003 WL 21757512, at *1; Pepe Int'l Dev. Co. v. Pub Brewing Co., 915 S.W.2d 925, 930 (Tex.App.-Houston [1st Dist.] 1996, no writ). The parties' agreement and intent to submit to arbitration must be unambiguous. In re Jobe, 2003 WL 21757512, at *1; Porter & Clements, L.L.P. v. Stone, 935 S.W.2d 217, 220 (Tex.App.-Houston [1st Dist.] 1996, orig. proceeding). Construction of an unambiguous contract is a question of law. In re Jobe, 2003 WL 21757512, at *1; see MCI Telecommunications Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650-51 (Tex.1999). Because the issue before us is the court's legal interpretation of the arbitration clause and the enforceability of the employment agreement, we conclude that de novo review of that finding is appropriate in this case. Russ Berrie and Co., Inc. v. Gantt, 998 S.W.2d 713, 716 (Tex.App.-El Paso 1999, no pet.), citing Certain Underwriters at Lloyd's of London v. Celebrity, Inc., 950 S.W.2d 375, 377 (Tex.App.-Tyler 1996, writ dism'd w.o.j.). But see Dallas Cardiology Associates, P.A. v. Mallick, 978 S.W.2d 209, 212 (Tex.App.-Texarkana 1998, pet. denied); Pony Exp. Courier Corp. v. Morris, 921 S.W.2d 817, 819-20 (Tex.App.-San Antonio 1996, no writ); Pepe Int'l Dev. Co. v. Pub Brewing Co., 915 S.W.2d 925, 929 (Tex.App.-Houston [1st Dist.] 1996, no writ).

B. The Procedure to be Followed on a Motion to Compel Arbitration

In Jack B. Anglin Co. v. Tipps, the Texas Supreme Court set out the procedure to be followed when a motion to compel arbitration has been filed:

[T]he trial court may summarily decide whether to compel arbitration on the basis of affidavits, pleadings, discovery, and stipulations. However, if the material facts necessary to determine the issue are controverted, by an opposing affidavit or otherwise admissible evidence, the trial court must conduct an evidentiary hearing to determine the disputed material facts.

Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992). In arriving at this procedure, the Texas Supreme Court drew from established summary judgment procedure. See id.; see also In re Jebbia, 26 S.W.3d 753, 756-57 (Tex.App.-Houston [14th Dist.] 2000, orig. proceeding) ("A summary motion to compel arbitration is essentially a motion for partial summary judgment, subject to the same evidentiary standards.").

Our sister appellate courts have elaborated on the procedure set out in Tipps. See, e.g., Jebbia, 26 S.W.3d at 756-57; Weekley Homes, Inc. v. Jennings, 936 S.W.2d 16, 18-19 (Tex.App.-San Antonio 1996, writ denied); Prudential Sec. Inc. v. Banales, 860 S.W.2d 594, 597 (Tex.App.-Corpus Christi 1993, orig. proceeding). The Fourteenth Court of Appeals explained the correct procedure this way:

The party alleging an arbitration agreement must present complete summary proof of his "case in chief" that an agreement to arbitrate requires arbitration of the issues in dispute. If that summary proof intrinsically raises issues about the procedural enforceability of the agreement, the movant's summary proof should include any evidence that resolves those issues without creating an issue of material fact. Naturally, the non-movant, to resist summary arbitration, needs only to raise an issue of material fact about a necessary element of its opponent's "case in chief" or present some evidence supporting every element of a defensive claim that there is no enforceable agreement to arbitrate.

If the movant has proven there is an arbitration agreement, as a matter of law, the court must compel arbitration, and a presumption arises that all disputed issues between the parties must be arbitrated. If issues of material fact remain about whether there is an enforceable agreement to arbitrate, the trial court must promptly allow the party claiming the right to arbitrate an evidentiary hearing on the matter.

Jebbia, 26 S.W.3d at 757 (citations omitted). We agree that this is the correct procedure for the trial court and the parties to follow in matters of this nature.

C. Establishing the Existence of an Arbitration Agreement

Public policy favors the submission of disputes to arbitration. In re Conseco Fin. Servicing Corp., 19 S.W.3d 562, 566 (Tex.App.-Waco 2000, orig. proceeding). But arbitration is also a creature of contract. Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 537 (5th Cir.2003); Ysleta Indep. Sch. Dist. v. Godinez, 998 S.W.2d 700, 702 (Tex.App.-El Paso 1999, no pet.). Therefore, a party cannot be compelled to arbitrate a dispute unless he has agreed to do so. Lang, 321 F.3d at 537. A party seeking to compel arbitration must first establish that an arbitration agreement exists. Id. at 537; In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999); In re Anaheim Angels Baseball Club, Inc., 993 S.W.2d 875, 877 (Tex.App.-El Paso 1999, orig. proceeding). When we are called upon to decide whether the parties have agreed to arbitrate, we do not resolve doubts or indulge a presumption in favor of arbitration. Lang, 321 F.3d at 537-38; Jebbia, 26 S.W.3d at 757. Instead, we apply standard contract principles to determine whether a valid arbitration agreement exists. Lang, 321 F.3d at 538; Godinez, 998 S.W.2d at 702.

Under standard contract principles, the presence...