Llano Logistics, Inc. v. Carmona
| Decision Date | 14 April 2022 |
| Docket Number | 07-21-00254-CV |
| Parties | LLANO LOGISTICS, INC., APPELLANT v. ULYSSES CARMONA, APPELLEE |
| Court | Texas Court of Appeals |
On Appeal from the 99th District Court Lubbock County, Texas Trial Court No. 2020-539, 270, Honorable J. Phillip Hays Presiding
Before QUINN, C.J., and PARKER and DOSS, JJ.
Appellant Llano Logistics, Inc., filed an interlocutory appeal of the trial court's denial of Llano's motion to compel arbitration in a suit brought by appellee, Ulysses Carmona for negligence and premises liability. We reverse and remand.
Carmona worked for Llano as a truck driver delivering groceries to United Supermarkets. While walking through the delivery area after making a delivery, Carmona was struck by another employee who was driving a "spotter truck." The accident caused Carmona significant physical injuries.
Carmona filed suit against Llano on March 24, 2020. Llano is a non-subscriber to Texas Workers' Compensation insurance but does maintain a Texas Workplace Benefit Plan that includes a Dispute Resolution Program and Agreement (DRPA) that requires certain work-related disputes to be resolved by arbitration. Carmona signed the Plan as a condition of his employment with Llano. In its answer, Llano did not seek to compel arbitration or otherwise refer to the DRPA. Rather, its answer requested a jury instruction and asserted several affirmative defenses. During the pendency of this suit, Llano has paid Carmona for his lost wages and medical care as provided for by the Plan.
In late April 2020, the parties entered into an agreed scheduling order that was accepted by the trial court and that set a schedule for discovery and set trial for July 12, 2021. For the next year, the parties engaged in discovery in accordance with this scheduling order. On April 12, 2021, Llano filed a motion to compel arbitration. Carmona opposed the motion. After holding a hearing on the motion, the trial court took the matter under advisement pending a scheduled mediation. Subsequently, the trial court entered a new scheduling order that set trial for November 15, 2021. Llano objected to the new scheduling order and requested the trial court to rule on its motion to compel arbitration. On October 7, the trial court signed an order denying Llano's motion. As a result, Llano filed the instant interlocutory appeal.[1] Llano presents one issue by its appeal. Its sole issue contends that the trial court erred in denying Llano's motion to compel arbitration. Within this argument, Llano contends that the parties entered into an enforceable arbitration agreement, Carmona's claims fall within the scope of claims covered by the agreement, and Carmona did not satisfy his burden to prove a valid defense to enforcement. Carmona responds contending that Llano failed to meet its burden to prove the existence of an enforceable arbitration agreement and, if the arbitration agreement is enforceable, Carmona established that Llano waived its right of arbitration.
A trial court's order denying a motion to compel arbitration is reviewed for abuse of discretion. Houston NFL Holding L.P. v. Ryans, 581 S.W.3d 900, 907 (Tex. App.- Houston [1st Dist.] 2019, pet. denied). Under this standard, we defer to the trial court's factual determinations if they are supported by evidence, but we review its legal determinations de novo. Id.
In determining whether a party's claims are subject to arbitration, the court must decide whether the parties entered into a valid arbitration agreement and, if so, whether plaintiff's claims fall within the scope of the agreement. Dallas Cardiology Assocs., P.A. v. Mallick, 978 S.W.2d 209, 212 (Tex. App.-Texarkana 1998, pet. denied). If the answer to both prongs is affirmative, the trial court has no discretion but to compel arbitration. Id. The party seeking arbitration has the initial burden to establish its right to the remedy under the first prong; in other words, to establish that a valid arbitration agreement exists. Id. Once the existence of an arbitration agreement has been established, a presumption attaches favoring arbitration. Id. At this point, the burden shifts to the opposing party to establish some ground in avoidance of the arbitration agreement, such as fraud, waiver, unconscionability, or that the dispute falls outside the scope of the agreement. Id. The trial court must resolve any doubts regarding the scope of arbitration agreements in favor of arbitration. Id.
Carmona does not dispute that an arbitration agreement was included in the DRPA; he was given notice of the provision; and, on its face, the arbitration provision covers Carmona's claims. Carmona does challenge the validity of the arbitration provision on the basis that the consideration provided by Llano was illusory.
In the context of stand-alone arbitration agreements, binding mutual promises are the consideration necessary to create a legally binding contract. In re AdvancePCS Health L.P., 172 S.W.3d 603, 607 (Tex. 2005) (per curiam). "Mutual promises to submit employment disputes to arbitration constitute sufficient consideration to support an arbitration agreement; however, if the employer can avoid its promise to arbitrate, the agreement is illusory." D.R. Horton, Inc. v. Brooks, 207 S.W.3d 862, 868 (Tex. App.- Houston [14th Dist.] 2006, no pet.). "When illusory promises are all that support a purported bilateral contract, there is no mutuality of obligation, and therefore, no contract." In re 24R, Inc., 324 S.W.3d 564, 567 (Tex. 2010) (per curiam). A promise that does not bind the promisor is illusory, such as when the promisor retains the option to discontinue performance. Id. "An arbitration clause is not illusory unless one party can avoid its promise to arbitrate by amending the provision or terminating it altogether." Id. Even when a party may amend or terminate an arbitration agreement, the agreement is not rendered illusory if that party must provide notice to the other party before the change becomes effective and any change operates prospectively only. See In re Halliburton Co., 80 S.W.3d 566, 569-70 (Tex. 2002).
The law presumes that there is sufficient consideration to support a written contract signed by the parties. Tripp Village Joint Venture v. MBank Lincoln Centre, N.A., 774 S.W.2d 746, 749 (Tex. App.-Dallas 1989, writ denied). When this presumption arises, the party alleging the lack of consideration has the burden to rebut that presumption. Blockbuster, Inc. v. C-Span Entm't, Inc., 276 S.W.3d 482, 488 (). A party that does not challenge the existence of a valid arbitration agreement in the trial court cannot assert that argument for the first time on appeal. Ranchers & Farmers Mut. Ins. Co. v. Stahlecker, No. 09-10-00286-CV, 2010 Tex.App. LEXIS 8797, at *5-6 (Tex. App.-Beaumont Nov. 4, 2010, no pet.) (mem. op.); see 950 Corbindale, L.P. v. Knotts Capital Holdings Ltd. P'ship, 316 S.W.3d 191, 196 (Tex. App.- Houston [14th Dist.] 2010, no pet.) (challenge to arbitration agreement's enforcement must be raised in trial court or is waived); see also ABP Holdings, Inc. v. Rainbow Int'l LLC, No. 10-21-00122-CV, 2021 Tex.App. LEXIS 9918, at *11 (Tex. App.-Waco Dec. 15, 2021, no pet.) (mem. op.) (same). Even when no findings of fact and conclusions of law are filed by the trial court, we will imply findings necessary to support the judgment only when the necessary findings were raised by the pleadings and supported by the evidence. Stahlecker, 2010 Tex.App. LEXIS 8797, at *5-6 ().
Here, the DRPA that was signed by both parties was admitted into evidence. As such, the presumption of valid consideration arose. Tripp Village Joint Venture, 774 S.W.2d at 749. Carmona did not rebut this presumption by arguing to the trial court that the consideration for the arbitration agreement contained in the DRPA was illusory. As such, this argument was not preserved for appellate review. Even though the trial court did not enter findings of fact and conclusions of law, we cannot imply a finding that the arbitration agreement in this case was illusory. Stahlecker, 2010 Tex.App. LEXIS 8797, at *6.
Carmona does not dispute that the arbitration agreement is facially valid and covers Carmona's claims. His contention that the agreement was not supported by consideration because Llano's promise was illusory was not preserved for our review. Consequently, we conclude that Llano met its burden to establish that a valid arbitration agreement exists. See Mallick, 978 S.W.2d at 212.
Having concluded that a valid arbitration agreement exists and applies to Carmona's claims, the burden now shifts to Carmona to establish some ground for the revocation of the arbitration agreement. Id. Carmona contends that Llano expressly and impliedly waived its right to invoke the arbitration agreement. We will consider each ground in turn.
Like other contractual obligations, a contractual right to arbitrate may be waived. Perry Homes v. Cull, 258 S.W.3d 580, 593 (Tex. 2008); CropMark Direct LLC v Urbanczyk, 377 S.W.3d 761, 763 (Tex. App.-Amarillo 2012 pet. denied). Such waiver can occur expressly, when a party expressly agrees to forego its right to arbitrate, or impliedly, when a party's conduct reveals its intent to forego its right to arbitrate. CropMark Direct, 377 S.W.3d at 763. "Because the law favors and encourages arbitration, in close cases,...
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