In re Weeks Marine, Inc.

• Decision Date: 20 December 2007
• Docket Number: No. 14-07-00501-CV.,14-07-00501-CV.
• Citation: 242 S.W.3d 849
• Parties: In re WEEKS MARINE, INC., Relator.
• Court: Texas Court of Appeals

242 S.W.3d 849

In re WEEKS MARINE, INC., Relator.

No. 14-07-00501-CV.

Court of Appeals of Texas, Houston (14th Dist.).

December 20, 2007.

Kenneth G. Engerrand, Houston, TX, for appellants.

Jeffrey L. Raizner and Michael P. Doyle, Houston, TX, for appellees.

Panel consists of Justices YATES, FROST, and SEYMORE.

OPINION

CHARLES W. SEYMORE, Justice.

In this original proceeding, relator Weeks Marine, Inc. ("Weeks Marine") seeks a writ of mandamus directing the respondent, Levi Benton, presiding judge of the 215th District Court of Harris County, (1) to vacate (a) his October 31, 2006 order denying Weeks Marine's motion to compel arbitration and (b) his May 3, 2007 order denying Weeks Marine's motion for reconsideration of the October 31 order, and (2) to stay court proceedings and compel the parties to arbitration of their dispute(s). We grant the petition in part and deny in part.

UNDERLYING FACTS AND PROCEDURAL HISTORY

Jose Jimenez was injured in April, 2006, on a deck barge in a shipyard during the course and scope of his employment with Weeks Marine. Several days after the injury, Jimenez executed a Claim Arbitration Agreement ("the Agreement") in which he agreed to arbitrate any claims arising from his injury in exchange for Weeks Marine's agreeing to advance certain sums to Jimenez. Under the Agreement, the advances were to be credited against any recovery Jimenez may ultimately have against Weeks Marine, whether by settlement or award, arising from the injury. The Agreement called for the advances to be paid from the date Jimenez was injured until the earlier of (1) his being declared fit for duty; (2) his, reaching maximum medical improvement; or (3) six months of payments.

Two months after the incident giving rise to his injury, Jimenez brought suit against Weeks Marine under the Jones Act and general maritime law, asserting that Weeks Marine's negligence and the unseaworthiness of its vessel caused his injury. Jimenez refused Weeks Marine's demand to submit the claims to arbitration, although he continued to accept payment of advances under the Agreement. Weeks Marine paid the advances for six months, with a total of $20,602.50 paid to Jimenez.

Weeks Marine filed a motion to compel arbitration in the trial court, which denied the motion after briefing and a hearing. Approximately three months later, Weeks Marine filed a motion for reconsideration of its motion to compel arbitration. Weeks Marine's motion for reconsideration was based on a then-new decision of the United States Court of Appeals for the Fifth Circuit, in which that court affirmed an order requiring an injured employee to arbitrate claims under a post-injury agreement similar to the Agreement at issue in this case. After additional briefing and another hearing, the trial court denied the motion for reconsideration and refused to alter its order denying Weeks Marine's motion to compel arbitration. Weeks Marine then filed this mandamus proceeding, seeking relief from the orders denying its motion to compel arbitration and its motion for reconsideration.

STANDARD OF REVIEW

Mandamus is an extraordinary remedy that will issue only to correct a clear abuse of discretion when the abuse cannot be remedied by appeal. Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992) (orig.proceeding). Whether Weeks. Marine has an adequate remedy by appeal depends on whether the Agreement is subject, to, or excepted from, the Federal Arbitration Act ("FAA").¹ A party has no remedy by appeal in state court for the wrongful denial of its right to arbitrate under an agreement subject to the. FAA. Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 272 (Tex.1992) (orig.proceeding); In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex.2001) (orig.proceeding).² Jimenez argues the Agreement in this case is excepted from the FAA. If so, Weeks Marine has a remedy by interlocutory appeal under the Texas General Arbitration Act ("TAA")³ and mandamus relief is not appropriate.

If the Agreement is not excepted from FAA coverage, so that mandamus relief is at least theoretically available, Weeks Marine's right to such relief depends on whether the trial court abused its discretion by refusing to compel arbitration. On mandamus review of factual issues, a trial court will be held to have abused its discretion only if the party requesting mandamus relief establishes that the trial court could have reached but one decision (and not the decision it made). Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985) (orig.proceeding); Walker, 827 S.W.2d at 839-40. Mandamus review of issues of law is less deferential. A trial court abuses its discretion if it clearly fails to analyze the law correctly or apply the law to the facts. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex.2005) (orig.proceeding).

ISSUES PRESENTED

Jimenez contends that the Agreement is excluded from the FAA by virtue of Section 1 of the statute. Section 1 states, in pertinent part, "nothing herein contained shall apply to contracts of employment of seamen." See 9 U.S.C.A. § 1 (1999). As explained below, we conclude that (1) the Agreement is not a contract of employment of a seaman, (2) the Agreement is subject to the FAA, and therefore (3) mandamus is a proper procedure by which Weeks Marine may obtain relief from the trial court's refusal to compel arbitration of Jimenez's claims.

Having thus determined that Weeks Marine is properly before this court by original proceeding for writ of mandamus, we next address whether the trial court abused its discretion in denying the motion to compel arbitration. In the trial court, in opposition to Weeks Marine's motion to compel arbitration, Jimenez contended that the Agreement is not enforceable under the FAA because:

• post-injury agreements between a seaman and his employer are invalid under Section 5 of the Federal Employers' Liability Act; • the Agreement does not meet the stringent standards applied by the United States Supreme Court to agreements that diminish a seaman's substantive rights; and

• under Texas law, the Agreement is procedurally and substantively unconscionable.

The trial court addressed only the first of these contentions in its order denying arbitration, but the order provides that arbitration is denied "[f]or reasons not expressly limited hereto." An order denying arbitration must be upheld if it is proper on any basis considered by the trial court. In re H.E. Butt Grocery. Company, 17 S.W.3d 360, 367 (Tex.App.-Houston [14th Dist.] 2000, orig. proceeding); In re R & R Personnel Specialists of Tyler, Inc., 146 S.W.3d 699, 703 (Tex.App.-Tyler 2004, orig. proceeding). Accordingly, we review all arguments presented.

ANALYSIS

A. Is the Agreement a contract of employment of a seaman and, therefore, unenforceable under the FAA?⁴

As a preliminary matter, Weeks Marine asserts that the trial court improperly placed the burden on Weeks Marine to prove that the Agreement was not subject to exclusion under the FAA. The order denying arbitration states:

Weeks offers no evidence to establish what is within and without "plaintiff s employment contract.' While this Court does not find the [Agreement] Weeks seeks to enforce here to be within any such contract, it was Weeks [sic] burden to establish that it was not. They failed to do so.

Weeks Marine disputes the trial court's allocation of the burden of proof and contends that a party seeking to avoid arbitration under the FAA bears the burden of establishing applicability of the Section 1 exclusion, because federal law favors arbitration.⁵ According to Weeks Marine, in this case, Jimenez properly bears the burden of establishing that the Agreement is a contract of employment.

Whether the burden was on Weeks Marine to prove the Agreement is not a contract of employment or on Jimenez to prove that it is (and we do not decide this issue), the Agreement, as a matter of law and on its face, is not a contract of employment. In describing the purpose of the Agreement, the parties refer to employment only in the past tense: "I was employed by You"; "You were the owner and/or operator of the vessel and/or I was your employee." The Agreement does not address or define any terms of employment, nor does it establish or modify an employment relationship.

Jimenez insists the Agreement constitutes at least a modification of his employment contract. The amount of advances due under the Agreement is "fifty percent (50%) of the gross wages (regular and overtime) I would have otherwise earned based upon my earnings history immediately prior to my accident of April 29, 2006." Jimenez contends Weeks Marine effectually continued to pay him under his employment contract by tying the amount of advances under the Agreement to his wages. Jimenez further argues the Agreement is "employment related" because Weeks Marine stated in the cover letter transmitting the Agreement to Jimenez that advances would be "in addition to the obligatory $20 daily maintenance"; "retroactive to the date of your last work day"; and "against ... claims for wages or other compensation due."

To determine whether the Agreement is a "contract of employment," Jimenez asks us to focus solely on the presence of employment-related words in the Agreement and in a transmittal letter—"work day," "wages," "maintenance and cure"—instead of on the purpose and meaning of the Agreement itself. Jimenez offers, and we find, no support in the law for such an approach, and we decline to adopt it. Read in its entirety, with effect given to the meaning of all provisions, we conclude the parties intended the Agreement to be an agreement to arbitrate claims in exchange for voluntary payment of a portion of the potential value of those claims. The advances contemplated by the Agreement (and actually received by Jimenez) do not constitute wages, because, as Jimenez concedes, he performed no work for Weeks Marine after his injury. The Agreement...