In re Turner Brothers Trucking Co., 06-99-00120-CV

• Decision Date: 22 November 1999
• Docket Number: No. 06-99-00120-CV,06-99-00120-CV
• Citation: 8 S.W.3d 370
• Parties: (Tex.App.-Texarkana 1999) IN RE TURNER BROTHERS TRUCKING COMPANY, INC. Submitted:
• Court: Texas Court of Appeals

Page 370

8 S.W.3d 370 (Tex.App.-Texarkana 1999)

IN RE TURNER BROTHERS TRUCKING COMPANY, INC.

No. 06-99-00120-CV

In The Court of Appeals Sixth Appellate District of Texas at Texarkana

Submitted: November 22, 1999

Decided: November 23, 1999

[Copyrighted Material Omitted]

Before Cornelius, C.J., Grant and Ross, JJ.

O P I N I O N

Opinion by Justice Ross

This is a petition for writ of mandamus, arising out of the trial court's denial of Turner Brothers Trucking Company, Inc.'s (Turner Brothers) motion to compel arbitration of a personal injury lawsuit filed by Tommy and Marilyn McCaskill. We deny the writ.

On or about September 23, 1996, Tommy was employed by Turner Brothers and was operating a sixty-five-ton hydraulic crane owned by Turner Brothers. The crane fell, causing serious personal injuries to Tommy. Before July 1996, the date of Tommy's employment, Turner Brothers entered into a contract with Employment Disputes Resolution, Inc. (EDR), in connection with an ERISA-qualified employee welfare benefit plan. The contract purports to govern the adjudication of all personal injury or related tort claims between Turner Brothers and its employees who agreed to be bound by that contract.

Turner Brothers claims that Tommy executed a document¹ which provided for any dispute between the employee and Turner Brothers to be resolved in an EDR forum and under EDR rules and procedures, to the exclusion of legal action in state or federal court. Turner Brothers' petition alleges that Tommy could have chosen not to sign the agreement; Tommy claims he had no real choice but to sign.

After the accident, the McCaskills filed suit against Turner Brothers in the Upshur County District Court. However, on being advised of the arbitration agreement, the McCaskills nonsuited this action in December 1996. The arbitration process was then begun and preliminary discovery, in accordance with the arbitration process, commenced. Turner Brothers alleges that at some point in 1998, however, the McCaskills filed suit against Patterson Onshore Drilling Company, alleging that it was responsible for the injuries suffered by Tommy in September 1996. Patterson filed a third party action against Turner Brothers, but before Turner Brothers was served, the McCaskills filed a second amended petition naming Turner Brothers as a defendant. Turner Brothers moved to compel arbitration; a hearing on that motion was held on April 29, 1999, and the motion was denied on May 18, 1999.

Recognizing that mandamus is an extraordinary remedy, Turner Brothers claims entitlement to mandamus under the Federal Arbitration Act.² It contends that federal public policy favors arbitration and that federal policy preempts state law in this situation. Turner Brothers claims that the agreement signed by Tommy is legally binding and compels him to submit any claim arising out of the September 23, 1996, accident to an EDR forum, i.e., arbitration. The McCaskills contend that the agreement is not governed by the mandates of the Federal Arbitration Act and that the alleged agreement is not legally binding.

Mandamus issues only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy at law. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). In a mandamus proceeding, the court must determine whether: (1) the relator has an adequate remedy by appeal; and (2) the trial court abused its discretion in entering the order of which the relator complains. Houston Chronicle Publ'g Co. v. Crapitto, 907 S.W.2d 99, 102 (Tex. App.Houston [14th Dist.] 1995, orig. proceeding). 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. Once the party establishes a claim within the scope of the agreement, the trial court must compel arbitration and stay its own proceedings. A party erroneously denied the right to arbitrate under the Federal Arbitration Act has no adequate remedy on appeal, and relief by mandamus is appropriate. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573-75 (Tex. 1999).

The first issue raised is whether Tommy entered into a legally binding agreement requiring him to pursue his personal injury claim through EDR. He argues first that the purported agreement is void for lack of consideration. A contract must be based on valid consideration, i.e., mutuality of obligation. Consideration consists of benefits and detriments to the contracting parties. The detriments must induce the parties to make the promises, and the promises must induce the parties to incur the detriments. A contract that lacks consideration lacks mutuality of obligation and is unenforceable. Federal Sign v. Texas S. Univ., 951 S.W.2d 401, 408-09 (Tex. 1997).

In this case, consideration is recited in the agreement, and the record shows that, as other consideration, Tommy was eligible to receive and did receive increased benefits due to his participation in the EDR plan. This is sufficient to support the legal consideration requirement.

The McCaskills' other challenges to the enforcement of the arbitration agreement depend on the applicable statute under which its enforcement is sought. Turner Brothers seeks enforcement under Section 2 of the Federal Arbitration Act:

A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity . . . .

9 U.S.C.A. 2.

The McCaskills argue that the federal Act is inapplicable to the agreement in question and further contend that this agreement is controlled by the Texas arbitration statute which, at the time of the execution of the contracts and the injury involved in this case, read as follows:

A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. A court shall refuse to enforce an agreement or contract provision to submit a controversy to arbitration if the court finds it was unconscionable at the time the agreement or contract was made. Provided, however, that none of the provisions of this chapter shall apply to:

. . . .

(c)any claim for personal injury except upon the advice of counsel to both parties as evidenced by a written agreement signed by counsel to both parties. A claim for workers' compensation shall not be submitted to arbitration under this chapter.

TEX. CIV. PRAC. & REM. CODE ANN. 171.001 (Vernon 1997), amended by Act of May 8, 1997, 75th Leg., R.S., ch. 165, 5.01, 1997 Tex. Gen. Laws 329.³

Section 2 of the Federal Arbitration Act states that a written provision in a contract "evidencing a transaction involving commerce" to settle a dispute arising thereunder by arbitration "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C.A. 2. The Supreme Court has ruled that in enacting Section 2, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims that the contracting parties agreed to settle in arbitration. Congress' authority in this regard rests on the Commerce Clause⁴ and the Supremacy Clause⁵ of the United States Constitution and takes precedence over state attempts, legislative or judicial, to undercut the enforceability of arbitration agreements. State law to the contrary was preempted. Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). In a 1995 decision, the Supreme Court defined the limits of "involving commerce," as used in Section 2, holding that "involving commerce" was the functional equivalent of "affecting commerce," and: "That phrase'affecting commerce'normally signals Congress' intent to exercise its Commerce Clause powers to the full." Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273, 115 S.Ct. 834, 130 L.Ed.2d 753, 764 (1995).

Later in 1995, the Supreme Court again addressed the issue of the limits of Congress' authority under the Commerce Clause. In United States v. Lopez, 514 U.S. 549, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995), the Court considered a constitutional challenge to the Gun-Free School Zone Act of 1990, which prohibited the possession of a firearm in a designated school zone. That Act was held to exceed Congress' authority to regulate under the Commerce Clause. In the course of the opinion, Chief Justice Rehnquist expounded on Congress' Commerce Clause power, finding three broad areas of activity subject to regulation: 1) regulation of the use of the channels of interstate commerce; 2) regulation and protection of the instrumentalities of commerce, or persons or things in interstate commerce; and 3) regulation of those activities "having a substantial relation to interstate commerce." 514 U.S. at 558. The opinion, after considering which of two standards-- "affecting commerce" or "substantially affecting commerce"-properly expresses the limitation on Congress' authority, determined that "the prop er test requires an analysis of whether the regulated activity 'substantially affects' interstate commerce." Id.

The determination of whether the arbitration agreement in this case is subject to the federal Act or to state law is crucial for two reasons. First, the version of the Texas arbitration statute in effect at the time the agreements the subject of this suit were signed...