Tex. La Fiesta Auto Sales v. Belk

• Decision Date: 15 September 2011
• Docket Number: No. 14–10–01146–CV.,14–10–01146–CV.
• Citation: 349 S.W.3d 872
• Parties: TEXAS LA FIESTA AUTO SALES, LLC and Patricia Tubbs, Appellants,v.William BELK, Appellee.
• Court: Texas Court of Appeals

349 S.W.3d 872

TEXAS LA FIESTA AUTO SALES, LLC and Patricia Tubbs, Appellants,

v.William BELK, Appellee.

No. 14–10–01146–CV.

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

Sept. 15, 2011.

Travis B. Vargo, Aaron Ries, Houston, for appellants.Christopher Douglas Collings, Houston, for appellee.Panel consists of Justices ANDERSON, BROWN, and CHRISTOPHER.

SUBSTITUTE OPINION

JEFFREY V. BROWN, Justice.

We originally issued our opinion dismissing the appellants' appeal on June 21, 2011. We deny the appellants' motion for rehearing, vacate our earlier judgment, withdraw our previous opinion, and issue this substitute opinion in its place.

In this accelerated, interlocutory appeal, appellants Texas La Fiesta Auto Sales, LLC, and Patricia Tubbs appeal the trial court's order compelling arbitration. Specifically, they contend the trial court erred in (1) denying appellants' motion to compel arbitration under a January 25 arbitration agreement and instead compelling arbitration under a superseding agreement; (2) conducting an evidentiary hearing on the motion to compel; (3) drawing legal conclusions reserved for the arbitrator or jury; (4) depriving appellants of reasonable notice of a trial on the merits; and (5) granting relief not requested by either party. In response, appellee William Belk asserts that this court lacks jurisdiction to entertain a direct appeal of an order compelling arbitration and, alternatively, that the trial court's actions and order compelling arbitration were proper.

I

Texas La Fiesta Auto Sales is a used-automobile dealership. Patricia Tubbs is the president and managing member of La Fiesta. In January 2010, William Belk went to work for La Fiesta as a sales manager. In connection with his employment, Belk signed various documents, including an “Employee Arbitration Agreement” dated January 25, 2010 (the “arbitration agreement”). The arbitration agreement provides that any arbitration will be governed by the Federal Arbitration Act (“FAA”) and the American Arbitration Association:

Employer and Employee agree that all claims, demands, disputes, controversies of every kind or nature that may arise between them and concerning any issues surrounding the employment of the Employee shall be settled by binding arbitration conducted pursuant to the provisions of 9 U.S.C. Section 1 et seq. and according to the Commercial Rules of the American Arbitration Association.

Several days later, La Fiesta provided Belk with an employment contract, which Belk signed on February 2, 2010 (the “employment contract”). For reasons not apparent in the record, no representative of La Fiesta signed the employment contract.

The employment contract contained the following merger clause:

6.02. This Agreement supersedes all previous agreements between the Employee and the Employer, and contains the entire understanding between the parties with respect to the subject matter specified in this Agreement. Each party to this Agreement acknowledges that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing signed by the party to be charged.

The contract also contained an arbitration provision that, unlike the January 25 arbitration agreement, provided for arbitration under the Texas Labor Code:

6.04. Any controversy between the parties to this Agreement involving construction or application of any of the terms, covenants, or conditions of this Agreement, shall on the written request of one party served on the other, be submitted to a board of arbitration consisting of three (3) persons, and such arbitration shall comply with and be governed by the provisions of Chapter 102 of the Texas Labor Code....

Shortly thereafter, Tubbs terminated Belk's employment. Belk sued La Fiesta and Tubbs, asserting breach of the employment contract,¹ promissory estoppel, fraudulent inducement, fraudulent conveyance, and negligence. La Fiesta moved to compel arbitration under the arbitration agreement. In response, Belk filed a single document containing a motion for continuance, a motion for partial summary judgment, and a response to La Fiesta's motion to compel arbitration. Belk argued, among other things, that a valid employment contract existed between him and La Fiesta which superseded the arbitration agreement. La Fiesta responded, asserting that Belk failed to present any arguments or evidence that would render the arbitration agreement unenforceable. La Fiesta also asserted that, even if the employment contract were valid, it too contains an arbitration provision and thus “either way, this case must be arbitrated.”

The trial court held an evidentiary hearing on La Fiesta's motion to compel arbitration. Belk presented testimony and submitted exhibits in support of his position, but La Fiesta offered no evidence. At the conclusion of the hearing, the trial court orally ordered the parties to arbitration pursuant to paragraph 6.04 of the employment contract.

On November 2, 2010, the trial court signed an order compelling arbitration. In this order, the court denied in part La Fiesta's motion to compel “on the grounds that Paragraph 6.02 of the Employment Contract of February 2, 2010, supersedes as a matter of law the stand-alone arbitration agreement dated January 25, 2010” and granted the motion in part “on the basis that Paragraph 6.04 of the Employment Contract of February 2, 2010, is enforceable.” Accordingly, the court ordered arbitration to comply with and be governed by the provisions of Chapter 102 of the Texas Labor Code, “per the enforceable Employment Contract.” A week later, on November 9, the trial court signed an “Order Regarding Arbitration” clarifying the prior order. In the November 9 order, the trial court stated its finding that paragraph 6.02 of the employment contract “contained a merger clause resulting in a novation of the January 25, 2010 arbitration agreement” and therefore the court compelled arbitration under paragraph 6.04 of the employment contract. The court's order further recited that “[a]ll factual and legal issues regarding the February 2, 2010 employment agreement other than whether it existed despite the absence of [La Fiesta's] signature will be determined by the arbitrator(s).”

II

As an initial matter, Belk contends that La Fiesta and Tubbs are attempting to appeal the trial court's order compelling arbitration, which is an unappealable interlocutory order. See Gathe v. Cigna Healthplan of Tex. Inc., 879 S.W.2d 360, 362 (Tex.App.-Houston [14th Dist.] 1994, writ denied) (“The general Texas statute permitting appeal of interlocutory orders does not include an order compelling arbitration as one of those that may be appealed.”). Belk specifically points out that the Texas Civil Practice and Remedies Code does not include orders compelling arbitration as an appealable interlocutory order. See Tex. Civ. Prac. & Rem.Code §§ 51.014, 171.098.

Appellants respond that Texas Civil Practice and Remedies Code section 51.016 provides jurisdiction. Section 51.016 provides that, in a matter subject to the FAA, a party may appeal from a “judgment or interlocutory order ... under the same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16.” Tex. Civ. Prac. & Rem.Code § 51.016. Section 16 of the FAA, titled “Appeals,” provides:

(a) An appeal may be taken from—

(1) an order—

(A) refusing a stay of any action under section 3 of this title,

(B) denying a petition under section 4 of this title to order arbitration to proceed,

(C) denying an application under section 206 of this title to compel arbitration,

(D) confirming or denying confirmation of an award or partial award, or

(E) modifying, correcting, or vacating an award;

(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or

(3) a final decision with respect to an arbitration that is subject to this title.

9 U.S.C. § 16(a).

The appellants argue that the trial court denied their motion to compel arbitration under the arbitration agreement. They further argue that because the arbitration agreement invokes the FAA, appellants may take an interlocutory appeal from the trial court's order “denying a petition under section 4 of this title to order arbitration to proceed.” See 9 U.S.C. § 16(a)(1)(B). Alternatively, to the extent the order is not immediately appealable, the appellants “formally move the Court to treat this appeal as a mandamus petition.” ²See CMH Homes v. Perez, 340 S.W.3d 444, 447–52, 454 (Tex.2011) (holding court of appeals correctly determined it lacked jurisdiction to hear interlocutory appeal from trial court's order appointing an arbitrator, but remanding case back to court of appeals to consider mandamus relief requested in the alternative).

This court must independently determine whether it has jurisdiction over an appeal, even if no party contests jurisdiction. M.O. Dental Lab v. Rape, 139 S.W.3d 671, 673 (Tex.2004) (per curiam). Unless a statute specifically authorizes an interlocutory appeal, appellate courts have jurisdiction over final judgments only. CMH Homes, 340 S.W.3d at 447; Lehmann v. Har–Con Corp., 39 S.W.3d 191, 195 (Tex.2001). We construe statutes granting interlocutory appeals strictly because they comprise a narrow exception to the general rule that interlocutory orders are not immediately appealable. See, e.g., CMH Homes, 340 S.W.3d at 447; Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 841 (Tex.2007); Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 355 (Tex.2001).

As this court has previously explained, “[t]he substance and function of the order viewed in the context of the record controls our interlocutory jurisdiction.” McReynolds v. Elston, 222 S.W.3d 731, 738 (Tex.App.-Houston [14th Dist.] 2007, no pet.). In McReynolds v. Elston, a...