Pak Foods Houston, LLC v. Garcia

• Citation: 433 S.W.3d 171
• Decision Date: 22 May 2014
• Docket Number: No. 14–13–00409–CV.,14–13–00409–CV.
• Parties: PAK FOODS HOUSTON, LLC, Appellant v. Marissa GARCIA, Individually and as Next Friend of S.L., A Minor, Appellees.
• Court: Court of Appeals of Texas

433 S.W.3d 171

PAK FOODS HOUSTON, LLC, Appellant

v.Marissa GARCIA, Individually and as Next Friend of S.L., A Minor, Appellees.

No. 14–13–00409–CV.

Court of Appeals of Texas,

Houston (14th Dist.).

May 22, 2014.

Alan N. Magenheim, Houston, for Appellant.

John Joseph Klevenhagen III, Houston, for Appellees.

Panel consists of Chief Justice FROST and Justices JAMISON and WISE.

MAJORITY OPINION

MARTHA HILL JAMISON, Justice.

PAK Foods Houston, LLC brings this interlocutory appeal from the trial court's order denying its motion to compel arbitration pursuant to the Federal Arbitration Act (FAA). SeeTex. Civ. Prac. & Rem.Code § 51.016 (providing that matters subject to the FAA may be appealed under the same circumstances that an appeal from a federal court order is permitted by 9 U.S.C. § 16). PAK Foods argues the trial court abused its discretion in denying arbitration and S.L. did not prove a defense to the parties' arbitration agreement. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellees, Marissa Garcia, Individually and as Next Friend of S.L., a minor, filed the underlying personal injury suit alleging S.L. was injured while working for PAK Foods in its fast-food restaurant.¹ PAK Foods filed a motion to compel arbitration and stay trial proceedings.

In its motion, PAK Foods asserted that S.L. agreed to arbitration both by commencing work at the restaurant and by signing the Mutual Agreement to Arbitrate. The agreement states that “If Claimant receives notice of this Agreement prior to commencing work at Company, Claimant's commencement of work at Company shall constitute acceptance of the terms and conditions of this Agreement.” In addition, “continuation of work” for three days after receipt of notice of the agreement constitutes acceptance of its terms and conditions. The arbitration agreement states that “Covered Claims shall be exclusively resolved by binding arbitration.” “Covered Claims” are broadly defined:

This Agreement is mutual, covering all claims that Company or Claimant may have which arise from: Any injury suffered by Claimant while in the Course and Scope of Claimant's employment with Company, including but not limited to claims for negligence, gross negligence, and all claims for personal injuries, physical impairment, disfigurement, pain and suffering, mental anguish, wrongful death, survival actions, loss of consortium and/or services, medical and hospital expenses, expenses of transportation for medical treatment, expenses of drugs and medical appliances, emotional distress, exemplary or punitive damages and any other loss, detriment or claim of whatever kind or character.

Appellees filed a response objecting to arbitration on the ground that S.L., a minor, did not sign the arbitration agreement and, if she did sign, she disaffirmed it by terminating her employment and filing suit, rendering the agreement void. PAK Foods replied to appellees' response, asserting that S.L. accepted and ratified its arbitration agreement by continuing her employment. After a non-evidentiary hearing, the trial court signed an order denying PAK Foods' motion to compel arbitration, as well as findings of facts and conclusions of law. PAK Foods filed a timely notice of accelerated appeal.

II. GOVERNING LAW

Arbitration cannot be ordered in the absence of an agreement to arbitrate. See Freis v. Canales, 877 S.W.2d 283, 284 (Tex.1994). Thus, despite strong presumptions that favor arbitration, a valid agreement to arbitrate is a settled, threshold requirement to compel arbitration. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737–38 (Tex.2005) (orig. proceeding). Courts apply state contract law in determining whether there is a valid agreement to arbitrate. See In re Rubiola, 334 S.W.3d 220, 224 (Tex.2011) (orig. proceeding). After a party seeking to compel arbitration has established that a valid arbitration agreement exists between the parties, the party seeking to avoid arbitration must then prove its defenses against enforcing an otherwise valid arbitration provision. In re Odyssey Healthcare, Inc., 310 S.W.3d 419, 422 (Tex.2010) (orig. proceeding).

Whether an arbitration agreement is enforceable is a question of law which is reviewed do novo. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003). When reviewing a denial of a motion to compel arbitration, if the court's factual findings are in dispute, we review the court's denial of the motion to compel under a legal sufficiency or “no evidence” standard of review. J.M. Davidson, Inc., 128 S.W.3d at 227. We review any challenged findings by applying the same legal sufficiency standard used in reviewing jury findings. Wiese v. Pro Am Servs., Inc., 317 S.W.3d 857, 860 (Tex.App.-Houston [ 14th Dist.] 2010, no pet.). When reviewing for legal sufficiency, we consider the evidence in the light most favorable to the finding and indulge every reasonable inference that supports the challenged finding. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). We credit favorable evidence if a reasonable factfinder could and disregard contrary evidence unless a reasonable factfinder could not. Id. If there is more than a scintilla of evidence to support the finding, the legal-sufficiency challenge fails. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.2002).

III. DISCUSSION

PAK Foods raises two issues in this appeal. First, PAK Foods generally argues that the trial court abused its discretion in denying its motion to compel arbitration and stay trial court proceedings. In its second issue, PAK Foods argues that appellees did not prove any alleged defenses to enforcement of a valid arbitrationagreement. We will address the issues together.

A. Is there an Agreement to Arbitrate?

PAK Foods asserts there is an agreement to arbitrate for several reasons. First, PAK Foods refers to a document entitled “Important Acknowledgement,” which appears to contain S.L.'s signature. The Important Acknowledgement recites: “I further acknowledge reading the injury claim process and agree to resolve any dispute arising through [sic] arbitration process.” Although there are no signatures on the Mutual Agreement to Arbitrate, PAK Foods disputes the trial court's Finding of Fact Number 5, which states “[S.L.] did not sign the document titled ‘Mutual Agreement to Arbitrate.’ ” PAK Foods asserts that the minor's signature on the Important Acknowledgement evidenced her agreement to arbitrate.²

PAK Foods also argues S.L.'s signature on the contract was not required for PAK Foods to enforce it; she accepted its terms by continuing her employment. An employer may enforce an arbitration agreement entered into during an at-will employment relationship if the employee received notice of the employer's arbitration policy and accepted it by continuing to work after knowledge of the policy. In re Dallas Peterbilt, Ltd., L.L.P., 196 S.W.3d 161, 162 (Tex.2006).

In addition, PAK Foods argues S.L. entered an implied contract to arbitrate because arbitration was part of the rules of her employment that she accepted by continuing her employment. It asserts that a minor may enter into a valid contract of employment with a stranger, whether express, implied, oral, or written. See Pioneer Cas. Co. v. Bush, 457 S.W.2d 165, 168 (Tex.Civ.App.-Tyler 1970, writ ref'd n.r.e.) (reversing summary judgment against insurer where fact issue existed whether minors were employees).

The dispositive issue in this case is the validity of appellees' asserted defense that S.L., as a minor, disaffirmed any arbitration agreement. Accordingly, we will assume without deciding that S.L. entered an agreement to arbitrate the underlying dispute and consider whether appellees' defense bars enforcement of the agreement.

B. Was a Defense to Arbitration Established?

Federal law provides that arbitration agreements are governed by contract law and are subject to contract defenses. See In re Poly–Am., L.P., 262 S.W.3d 337, 347 (Tex.2008) (citing 9 U.S.C. § 2). Under the FAA, an agreement to arbitrate is valid if it meets the requirements of the general contract law of the applicable state. In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex.2005) (orig. proceeding) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)). The United States Supreme Court has emphasized that the FAA's purpose is to make arbitration agreements “as enforceable as other contracts, but not more so.” In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 192 (Tex.2007) (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n. 12, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967)). As the party opposing arbitration, appellees had the burden to prove any defenses to enforcement of the agreement. In re AdvancePCS Health L.P., 172 S.W.3d at 607.

PAK Foods does not dispute the trial court's Findings of Fact Numbers 1–4, which state:

1. [S.L.] was born on September 7, 1995.

2. [S.L.] was a minor at all times that she worked at and was present at the KFC Restaurant operated by PAK Foods Houston, LLC.

3. [S.L.] was a minor on October 23, 2011, the date PAK Foods Houston, LLC claims that she signed the document entitled “Important Acknowledgment.”

4. [S.L.] was a minor on the date she was injured at the KFC Restaurant.

Thus, it is undisputed S.L. was a 16 year old minor when the arbitration agreement was executed and she remained a minor during her employment by PAK Foods, including at the time of her injury. In Texas, the age of majority is 18 years. SeeTex. Civ. Prac. & Rem.Code § 129.001.

It has long been the law in Texas that a contract executed by a minor is not void, but it is voidable by the minor. See Cummings v. Powell, 8 Tex. 80 (1852); Askey v. Williams, 74 Tex. 294, 11 S.W. 1101, 1102 (1889); Prudential Building & Loan Ass'n v. Shaw, 119 Tex. 228, 26 S.W.2d 168, 171 (1930). It is well settled that a minor's contracts are voidable at the minor's instance, and...