In re Brookshire Bros., Ltd.

• Decision Date: 18 July 2006
• Docket Number: No. 06-06-00059-CV.,06-06-00059-CV.
• Parties: In re BROOKSHIRE BROTHERS, LTD.
• Court: Texas Court of Appeals

198 S.W.3d 381

In re BROOKSHIRE BROTHERS, LTD.

No. 06-06-00059-CV.

Court of Appeals of Texas, Sixth District, Texarkana.

Submitted July 17, 2006.

Decided July 18, 2006.

COPYRIGHT MATERIAL OMITTED

Warren T. McCollum, Fenley & Bate, LLP, Lufkin, for relator.

Michael R. McGown, Benckenstein, Norvell & Nathan, LLP, Beaumont, Richard S. Fischer, Nacogdoches, for real party in interest.

Before MORRISS, C.J., ROSS and CARTER, JJ.

OPINION

Opinion by Justice CARTER.

Brookshire Brothers, Ltd. (Brookshire) has petitioned this Court for a writ of mandamus. Brookshire sought to compel arbitration of a claim by one of its employees, Clara Mayfield, arising from an injury she sustained while working at Brookshire's grocery store in Carthage. At the time of the injury, Brookshire was a nonsubscriber to the Texas Workers' Compensation law. Mayfield filed a suit alleging Brookshire's negligence proximately caused her injuries. The trial court denied Brookshire's motion to stay litigation and compel arbitration; this request for mandamus relief ensued. We deny the petition for writ of mandamus.

Mandamus Standard

Certain principles are recognized for appellate courts to consider when deciding whether mandamus should issue. With respect to matters involving the factual findings which are discretionary by the trial court, the appellate courts should defer and should not substitute their own judgment for that of the trial court. The movant must establish that the trial court could have come to only one decision. Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992). On the other hand, review of a trial court's determination of the legal principles controlling its ruling is much less deferential. A trial court has no discretion in determining what the law is or applying the law to the facts. Thus, a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion and may result in appellate reversal by extraordinary writ. Id.

Arbitration of disputes is strongly favored. EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex.1996); Prudential Sec., Inc. v. Marshall, 909 S.W.2d 896, 898 (Tex.1995). In determining whether the claims fall within the scope of an arbitration agreement, a court must focus on the factual allegations of the complaint, rather than on the legal causes of action asserted. Marshall, 909 S.W.2d at 900. The burden is on the party opposing arbitration to show that their claims fall outside the scope of the arbitration agreement. Id. Once an agreement to arbitrate has been shown to exist, the party resisting arbitration bears the burden of proving that the matter in dispute is not within the scope of the arbitration agreement. Id. Courts should not deny arbitration "unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue." Loy v. Harter, 128 S.W.3d 397, 402-03 (Tex.App.-Texarkana 2004, pet. denied) (quoting Marshall, 909 S.W.2d at 899). That said, since arbitration agreements are founded in contract law, a party has no obligation to submit the controversy to arbitration unless he or she has contracted to do so. See Gateway Coal Co. v. United Mine Workers, 414 U.S. 368, 374, 94 S.Ct. 629, 38 L.Ed.2d 583 (1974).

An employer may enforce an arbitration agreement entered into during an at-will employment relationship if the employer establishes that the employee received notice of its arbitration policy and accepted it. In re Halliburton Co., 80 S.W.3d 566, 568 (Tex.2002) (orig.proceeding). Notice is effective if it unequivocally communicates to the employee definite changes in the employment. Halliburton, 80 S.W.3d at 568 (citing Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986)). If the employee receives notice and continues working with knowledge of the modified employment terms, the employee accepts them as a matter of law. Halliburton, 80 S.W.3d at 568; see also In re Dillard Dep't Stores, Inc., No. 04-1132, ___ S.W.3d ___, 2006 WL 508629, 2006 Tex. LEXIS 196 (Tex. Mar. 3, 2006) (orig.proceeding).

The Instant Case

Mayfield worked for Brookshire for twenty years. On July 21, 2004, she was working in the company's grocery store in Carthage and slipped and suffered an injury. After numerous medical consultations, Mayfield did not physically work for Brookshire after October 28, 2005, but she did retain her status as an employee and continued to receive medical and disability benefits provided by a Brookshire plan. More than a year after her injury, on or around August 29, 2005, Brookshire enacted a policy requiring arbitration of disputes or claims by employees. Brookshire delivered the policy to employees December 15, 2005, but the new policy was not sent to Mayfield until January 2006.

A. Retroactive Application of the Arbitration Policy

Does Brookshire's arbitration policy operate retroactively so that the cause of action accrued by Mayfield more than a year earlier may only be heard in an arbitration process? Brookshire cites two federal cases involving securities transactions in which the courts have interpreted contracts, voluntarily entered by the parties, which contain broad arbitration agreements to require the disputes, some of which arose before the arbitration provision, to be resolved by arbitration. Coenen v. R.W. Pressprich & Co., 453 F.2d 1209 (2d Cir.1972); R.M. Perez & Assoc., Inc. v. Welch, 960 F.2d 534, 539 (5th Cir. 1992). After reviewing the authorities on the issue of the retroactive application of arbitration agreements, we find the answer is "much less clear."¹ Here, the arbitration provision stated: "The Policy will cover all disputes arising out of your relationship with [Brookshire], including, but not limited to, the following: ... Tort claims ...." We hold that the trial court did not clearly err in denying the motion to compel arbitration.

First, the acts or omissions giving rise to Mayfield's cause of action occurred July 21, 2004, a time when no arbitration policy was in effect. Brookshire did not institute the arbitration policy until August 29, 2005, and did not notify Mayfield of the policy until January 2006. The policy specifically designates its commencement—"Beginning August 29, 2005 (the "Effective Date")." Unlike this case, in both Dillard and Halliburton, the sequence of events was: (1) the arbitration policy was enacted, (2) the employee continued to work for the employer, and (3) the employee was injured or experienced the conduct on which the claim was based.

Second, the arbitration agreement does not specifically include prior claims. See Hendrick v. Brown & Root, Inc., 50 F.Supp.2d 527, 534 (D.Va.1999).² As opposed to many arbitration agreements, this policy was drafted and adopted solely by one of the parties, Brookshire. In many instances, an arbitration agreement is incorporated into a contract that both parties have entered as a result of an arms-length transaction. Here, Mayfield and all other employees are deemed to have accepted the terms of this policy by virtue of their continued employment with Brookshire. Since Brookshire unilaterally established the terms of the arbitration agreement, the fact that the document it prepared and presented to its employees does not specifically include a retroactive provision, even if considered ambiguous, should be construed strictly against the drafter of the document. Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d 734, 737 (Tex.1990) ("It is well-established law that where an ambiguity exists in a contract, the contract language will be construed strictly against the party who drafted it since the drafter is responsible for the language used.") (citing Republic Nat'l Bank v. Northwest Nat'l Bank, 578 S.W.2d 109 (Tex.1978)); see Hendrick, 50 F.Supp.2d at 533.³ In George Washington University v. Scott, 711 A.2d 1257 (D.C. 1998), the court held that changes in a health plan including an arbitration provision did not apply to events occurring before the effective date of the change.

The arbitration clause was not the product of any negotiation ... and it is clear the Scotts did not affirmatively agree to give up their right to seek relief in court for negligent acts committed before the effective date of the arbitration clause.... [B]efore the arbitration clause could have any retroactive effect on rights previously accrued, the language of the new provision in the contract should so state.... No ordinary reader of the 1994 and 1995 agreements would reasonably conclude that the Scotts knowingly and affirmatively gave up their right to file a civil action for negligent acts that occurred in 1994.

Id. at 1261. That court further held that the presumption in favor of arbitration applies only to the interpretation of the arbitration clause, not to the preliminary determination of the existence and validity of an agreement to arbitrate. Id. The court found a valid arbitration provision but only with respect to events after the effective date of the arbitration policy, not for prior events. Id.

Third, the arbitration provision speaks prospectively only: "The policy will cover all disputes arising out of your relationship with [Brookshire]." (Emphasis added.) Texas contract law requires the court to determine the intent of the parties by interpreting the language of the contract in its plain grammatical meaning, unless doing so would defeat the parties' intentions. See Ikon Office Solutions v. Eifert, 2 S.W.3d 688, 694 (Tex.App.-Houston [14th Dist.] 1999, no pet.). Thus, we look to the dictionary definitions and common usage of these words to understand the meaning.

The root form of the word "arising"— the intransitive verb "arise"—means "[t]o come into being." WEBSTER'S NEW COLLEGE DICTIONARY 61 (2d ed.2001). The verb "will" when used as an auxiliary verb, indicates a future tense action to be performed by the main verb. Id. at 1263; see also GARNER'S MODERN AMERICAN...