Truly Nolen of Am., Inc. v. Martinez

• Decision Date: 26 February 2020
• Docket Number: No. 08-19-00118-CV,08-19-00118-CV
• Citation: 597 S.W.3d 15
• Parties: TRULY NOLEN OF AMERICA, INC., Appellant, v. Omar MARTINEZ, Appellee.
• Court: Texas Court of Appeals

597 S.W.3d 15

TRULY NOLEN OF AMERICA, INC., Appellant,

v.Omar MARTINEZ, Appellee.

No. 08-19-00118-CV

Court of Appeals of Texas, El Paso.

February 26, 2020

OPINION

GINA M. PALAFOX, Justice Appellee Omar Martinez (Martinez) filed suit alleging he was wrongfully terminated on a discriminatory basis from his employment with Appellant Truly Nolen of America, Inc. (Truly Nolen) following a workplace injury that he sustained in the course and scope of his employment. After various means of discovery were utilized by both parties during the pendency of the suit, Truly Nolen eventually filed a motion to compel arbitration based on an arbitration agreement signed by Martinez. This motion was filed more than a year and a half after Martinez filed his lawsuit, four days before the discovery period scheduled by the trial court was set to end, and a little over a month before trial was set to begin. Martinez filed a response arguing that no valid agreement existed and that Truly Nolen waived its right to arbitrate by substantially invoking the judicial process to Martinez's detriment. After a hearing, the trial court denied Truly Nolen's motion to compel arbitration. In one issue, Truly Nolen appeals the trial court's denial of its motion. We affirm.

BACKGROUND

Martinez was employed at Truly Nolen beginning in 2010. During Truly Nolen's hiring process, it customarily required new employees to sign an "Acceptance of Binding Arbitration – Receipt," and receipt and acknowledgement of Truly Nolen's arbitration policy was a mandatory condition of employment. The acceptance form referenced the arbitration policy and contained an admonition that employees, "Please Read Carefully: Acceptance of this Policy Affects your Legal Rights." Martinez signed the signature block on this form for indicating that the "Binding Arbitration Policy" had been "Agreed to." The arbitration policy applied to any claims of discrimination and prohibited litigation of such claims by Truly Nolen or its employees in court and instead required that such claims be resolved by binding arbitration administered by the American Arbitration Association (AAA). The agreement further provided: "By signing the acceptance form and accepting or continuing employment, the [employee] voluntarily, knowingly and intelligently waives any right he or she may have to seek remedies in court, including the right to a jury trial." As alleged by Martinez in his suit, he was terminated from his employment on May 18, 2017, or weeks after sustaining an on-the-job injury on April 6, 2017.

On August 31, 2017, Martinez filed his original petition alleging that he was wrongfully discharged on a discriminatory basis by Truly Nolen. In his petition, Martinez requested a jury trial and discovery disclosures. Along with his petition, Martinez also filed that same day the following requests: (1) a request for production of documents with 44 itemized requests; (2) a request for admissions with 13 queries; and (3) a set of interrogatories with 21 interrogatories and some sub-parts. On October 6, 2017, Truly Nolen filed its original answer containing a general denial and a demand for a jury trial. Truly Nolen followed-up by making multiple discovery requests of its own, and on February 9, 2018, Martinez filed a Certificate of Written Discovery, stating that he served the following on Truly Nolen: (1) his response to eight requests for admissions; (2) his response to requests for disclosure; (3) his response to 11 requests for production; (4) his answers to 18 interrogatories; (5) his witness list; and (6) his exhibit list. Truly Nolen likewise served its response to requests for admissions, requests for production, and interrogatories, and it later supplemented its response to Martinez's requests for production.

On April 4, 2018, Truly Nolen filed its Notice of Intention to Take Deposition by Written Questions for the custodians of records for three entities, including two businesses where Martinez had previously worked. On the same day the notice was filed, Martinez filed a motion to quash praying that the trial court quash the depositions and enter a protective order prohibiting production of the requested records from the witnesses. Ultimately, depositions by written questions were completed for all three of the custodians of records and also for a separate custodian not designated in any notice. In addition, Martinez and Truly Nolen corresponded by email to coordinate depositions for six witnesses by Martinez and for the deposition of Martinez by Truly Nolen.

On May 31, 2018, the case was transferred to the 327th District Court due to the requests for a jury trial. In the trial court's scheduling order, it required discovery to be completed by March 16, 2019, and it set a jury trial for April 16, 2019. On December 14, 2018, Martinez filed another Certificate of Written Discovery stating that he served on Truly Nolen a supplemental response to requests for disclosure and a supplemental witness list.

Four days before the discovery period ended and a little over a month before trial was set to begin, on March 12, 2019, Truly Nolen filed its Motion to Compel Arbitration and Stay Litigation. In its motion, Truly Nolen asserted that Martinez had agreed to arbitrate any dispute arising out of his employment and attached a copy of the arbitration agreement acceptance form signed by Martinez. Martinez filed a response contending that the motion to compel arbitration should be denied because Truly Nolen: (1) failed to mention the existence of an agreement to arbitrate or its intention to seek arbitration during any conferences had between the parties pertaining to deposition scheduling or had with the trial court pertaining to scheduling a trial date; and (2) waived its right to arbitrate by substantially invoking the judicial process and causing prejudice to Martinez. As exhibits in support of Martinez's response, he attached his original petition and Truly Nolen's answer, his motion to quash, the trial court's scheduling order, the discovery requests and responses by both parties, and the email correspondence regarding additional depositions.

A hearing on the motion to compel arbitration was held at which Truly Nolen admitted two exhibits without objection. The first was an affidavit from Truly Nolen's vice president of human resources with a copy of the arbitration agreement and its signed receipt attached. The second was a brief excerpt from the Employment Arbitration Rules guide published by the AAA instructing that an arbitrator shall have authority to order such discovery as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, "consistent with the expedited nature of arbitration." Although Truly Nolen's counsel objected at the hearing that argument from Martinez's counsel was not competent evidence, Truly Nolen's counsel made no objections to any of the exhibits attached to Martinez's response to the motion to compel arbitration. Martinez presented no new evidence at the hearing.

At the conclusion of the hearing, the trial court entered an order denying Truly Nolen's motion to compel arbitration, but the court stayed the proceedings, as requested in Truly Nolen's motion, and ordered mediation between the parties. Truly Nolen then filed its notice of appeal.

DISCUSSION

In one issue, Truly Nolen argues that the trial court erred in denying its motion to compel arbitration because it proved the existence of a valid arbitration agreement and because Martinez then failed to satisfy his burden of proving that Truly Nolen waived its right to arbitrate by substantially invoking the judicial process and causing prejudice to him. In responding, Martinez argues to the contrary on the existence of a valid, binding agreement; and, if so, whether Truly Nolen had waived arbitration by substantially invoking the judicial process to Martinez's detriment.

Standard of Review and Shifting Burdens for a Motion to Compel Arbitration

We review the trial court's denial of a motion to compel arbitration for an abuse of discretion. Firstlight Fed. Credit Union v. Loya , 478 S.W.3d 157, 161 (Tex. App.—El Paso 2015, no pet.). Under this standard, we defer to the trial court's factual determinations that are supported by the record and review legal questions de novo. Id.

A party seeking to compel arbitration must establish the existence of a valid arbitration agreement and show that the claims asserted fall within the scope of the arbitration agreement. Ellman v. JC Gen. Contractors , 419 S.W.3d 516, 519 (Tex. App.—El Paso 2013, no pet.). Once accomplished, the burden shifts to the party opposing arbitration to prove any alleged defenses to arbitration. Id. If the opposing party fails to do so, the trial court has no discretion but to compel arbitration. Id.

Whether a Valid Arbitration Agreement Exists

Applicable Law

In this appeal, Martinez does not challenge Truly Nolen's burden on the scope of the arbitration agreement, and we thus proceed to determine only if a valid arbitration agreement exists. By signing an arbitration agreement, a party manifests its intent to be bound by it. See Firstlight , 478 S.W.3d at 167. An unsigned paper may be incorporated by reference into the paper signed by the person sought to be charged, and the language used to accomplish this incorporation is not important so long as the document signed plainly refers to the other writing. See In re Prudential Ins. , 148 S.W.3d 124, 135 (Tex. 2004) ; see also In re McKinney , 167 S.W.3d 833, 835 (Tex. 2005) (holding that an agreement to arbitrate was incorporated within a signature page by the signature page's reference to it). In addition, acceptance as a matter of law can be shown by an employee's conduct in continuing to work after being notified that continuing to work constitutes the employee's assent to the arbitration agreement. See Firstlight , 478 S.W.3d at 168. Absent fraud, misrepresentation, or deceit, a...