In re H.E. Butt Grocery

• Decision Date: 27 April 2000
• Docket Number: No. 14-99-01299-CV,14-99-01299-CV
• Citation: 17 S.W.3d 360
• Parties: <!--17 S.W.3d 360 (Tex.App.-Houston 2000) IN RE H.E. BUTT GROCERY COMPANY, ET AL., Relators In The Fourteenth Court of Appeals
• Court: Texas Court of Appeals

Page 360

17 S.W.3d 360 (Tex.App.-Houston[14th Dist.] 2000)

IN RE H.E. BUTT GROCERY COMPANY, ET AL., Relators

No. 14-99-01299-CV

In The Fourteenth Court of Appeals

April 27, 2000.

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Panel consists of Justices Anderson, Hudson and Lee.^*

O P I N I O N

ORIGINAL PROCEEDING WRIT OF MANDAMUS

JOHN S. ANDERSON, Justice.

Relator, H. E. Butt Grocery Company ("HEB") seeks a writ of mandamus directing the trial court to vacate its order denying HEB's motion to compel arbitration under the Federal Arbitration Act (FAA). The real party in interest, Harry Swinton ("Swinton"), sued HEB, a non-subscriber under the Texas Workers' Compensation Act (TWCA), for alleged personal injuries suffered in the course and scope of employment. HEB contends the trial court clearly abused its discretion in refusing to compel arbitration of Swinton's claims in the face of a valid arbitration agreement contained in the "Election and Agreement Form" ("the benefit agreement") signed by Swinton. Because the benefit agreement, including the arbitration provision, is enforceable, we conditionally grant the writ.

I. BACKGROUND

In January 1998, Swinton filed the underlying negligence suit seeking damages for alleged personal injuries suffered two years earlier while in the course and scope of his employment for HEB. HEB answered and immediately moved to compel arbitration based on the benefit agreement. In signing this agreement, Swinton elected comprehensive coverage rather than basic coverage under HEB's Work Injury Benefit Plan ("the HEB Plan" or "the Plan"). By electing comprehensive coverage, Swinton was eligible for a heightened level of benefits. In return for these benefits, Swinton agreed to (1) waive his right to sue HEB, (2) release HEB from all existing and future claims for occupational injury, death or disease, (3) limit his recovery to the benefits provided by the Plan, and (4) indemnify HEB from any claims or lawsuits other than those arising directly under the Plan. More important for purposes of this proceeding, Swinton agreed to binding arbitration as follows:

It is agreed that any and all disputes, claims (whether tort, contract, statutory or otherwise) and/or controversies which relate, in any manner, to this Agreement, the Plan or Trust or to the occupational injury, death or disease of Partner shall be submitted to final and binding arbitration under the Federal Arbitration Act, in accordance with the terms and conditions outlined in the SPD [Summary Plan Description] under the heading "Arbitration of Disputes." The claims covered by this agreement to arbitrate include, but are not limited to, those which relate to the following:

a. The formation, application and interpretation of this Agreement.

b. Eligibility for benefits from the Trust coverage under the Plan or claims for damages or monetary award.

c. That H-E-B has discharged or in any manner discriminated against Partner because Partner in good faith filed a claim, hired a lawyer to represent him or her in a claim instituted, or caused to be instituted in good faith, any proceeding under the Agreement, the Plan or the TWCA, or has testified in any such proceeding. (emphasis in the original)

In contrast, if Swinton had elected basic coverage, either by choosing that option in the benefit agreement or by not signing the agreement at all, Swinton would have been eligible to receive less benefits but would have retained the right to sue HEB as all employees of non-subscribers are permitted to do. See TEX. LAB. CODE ANN. 406.033 (Vernon 1996).

In response to HEB's motion to compel arbitration, Swinton filed pleadings and motions asserting, in part, that the benefit agreement violated public policy and was illegal, illusory, unconscionable, and the product of fraud. On October 18, 1999, the trial court held a hearing. Both Swinton and HEB employee Don Roberson testified at this hearing. Swinton testified that some time after orientation, an unidentified HEB representative placed documents in front of him and told him, "either you sign these documents right now or . . . you don't work for HEB." Swinton testified that he signed the documents in the place directed by the HEB representative. Swinton also testified that he was not given time to read or discuss the documents, but only to glance over them. Roberson testified that all employees are given an opportunity to read the benefit agreement and ask questions. According to Roberson, employees are even allowed to take the agreement home, but are told to return it promptly to avoid default tobasic coverage. Although he did not witness Swinton's signature on the benefit agreement, Roberson testified that he did not know of anyone at HEB who forced employees to sign the agreement.

On November 15, 1999, the trial court signed an order denying HEB's motion to compel arbitration and staying all proceedings for ninety days so that HEB could seek mandamus relief. Although that stay has expired, HEB has not sought further temporary relief.

II. MANDAMUS

Traditionally, the writ of mandamus issued only to compel the performance of a ministerial act or duty. See Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). The writ is also available to correct a clear abuse of discretion committed by the trial court. See id. A trial court clearly abuses its discretion if "it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." Id. (quoting Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985)). As to factual matters, the relator must establish that the trial court could reasonably have reached only one decision. See Walker, 827 S.W.2d at 840. However, review of a trial court's determination of the legal principles controlling its ruling is much less deferential. See id. A trial court has no discretion in determining what the law is or applying the law to the facts. See id.

Mandamus is appropriate when a state court erroneously denies a motion to compel arbitration under the federal scheme. See In re Valero Energy Corp., 968 S.W.2d 916 (Tex. 1998). At oral argument, Swinton's counsel conceded that the FAA applies to the benefit agreement in question.¹ Because HEB complains the trial court abused its discretion in denying arbitration under the FAA in the face of a valid arbitration agreement, mandamus review is appropriate.

III. ARBITRATION IS FAVORED

Before addressing HEB's complaint, we recognize that federal law strongly favors arbitration. See Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (per curiam). A presumption exists in favor of agreements to arbitrate under the FAA. See id. Courts must resolve any doubts about an agreement to arbitrate in favor of arbitration. See id. A party seeking to compel arbitration must establish the existence of an arbitration agreement and show that the claims raised fall within the scope of that agreement. See In re Oakwood Mobile Homes Inc., 987 S.W.2d 571, 573 (Tex. 1999) (per curiam). Once a party establishes a claim within the scope of the arbitration agreement, the trial court must compel arbitration and stay its own proceedings unless the party opposing arbitration meets its burden of presenting evidence that prevents enforcement of the agreement. See id.; see also Cantella, 924 S.W.2d at 944.

In support of its motion to compel arbitration, HEB produced the benefit agreement signed by Swinton. As quoted above, this agreement included a provision agreeing to submit any claims for occupational injury to binding arbitration under the FAA, including claims that relate to the "formation, application and interpretation of this Agreement" and "claims for damages or monetary award." Thus, HEB established the existence of an arbitration agreement and that Swinton's personal injury claim fell within the scope of that agreement. Accordingly, the trial court was required to compel arbitration unless Swinton proved that the agreement was procured in an unconscionable manner, induced or procured by fraud or duress or that HEB waived arbitration under the agreement. See Oakwood, 987 S.W.2d at 573. The trial court's order in the underlying case does not specify the grounds for denying arbitration. Because an order denying arbitration must be upheld if it is proper on any basis considered by the trial court, HEB has addressed, and we will also address, all of Swinton's defenses to the agreement. See City of Alamo v. Garcia, 878 S.W.2d 664, 665 (Tex. App.-Corpus Christi 1994, no writ).

IV. VALIDITY OF THE BENEFIT AGREEMENT

A. Questions for the Arbitrator

Swinton contends the benefit agreement is unenforceable on several grounds. First, Swinton argues the benefit agreement is illegal because it does not comply with the provisions of 28 Tex. Adm. Code 5.6302(b). Second, he argues the benefit agreement is an unconscionable contract of adhesion not only because HEB coerces employees to sign the agreement, but also because the agreement requires employees to waive their common law rights, and to bear the costs of arbitration. Third, he argues the benefit agreement is illusory because HEB retains the right to amend or terminate the Plan at any time. Fourth, he argues the benefit agreement was procured by fraud because an HEB representative directed him to sign the agreement electing comprehensive benefits (and arbitration) as a condition of employment and without giving him the opportunity to fully read or discuss the agreement. Finally, Swinton argues that the benefit agreement is void as against public policy because it provides substantially less benefits than the TWCA and requires arbitration of all disputes.

HEB responds that the enforceability of the benefit agreement or the validity of the Plan are matters for the arbitrator, not the trial court. As a general rule, "questions related to the...