Petition=20
for Writ of Mandamus Denied and Opinion filed November 1,=20
2007.
In The
Fourteenth=20
Court of Appeals
____________
NO. 14-07-00185-CV
____________
IN RE IGLOO=20
PRODUCTS CORP. AND JOSE RODRIGUEZ, =
Relators
ORIGINAL=20
PROCEEDING
WRIT OF=20
MANDAMUS
O P I N I=20
O N
In this original =
proceeding,=20
relators Igloo Products Corporation and Jose Rodriguez seek a writ =
of=20
mandamus directing the respondent, Dan R. Beck, presiding judge of =
the=20
155th District Court of Waller County, (1) to vacate his January =
9, 2007=20
order denying relators=3D motion to compel =
arbitration,=20
and (2) to grant relators=3D motion to compel =
arbitration=20
of all claims pending in the action and to stay trial court =
proceedings=20
pending such arbitration. We deny the petition for writ of=20
mandamus.
Underlying=20
Facts and Procedural History
Igloo Products =
Corporation is a=20
manufacturing company in Houston, Texas. Igloo does not =
carry=20
workers=3D compensation =
insurance and is=20
thus not a subscriber to the Texas Workers=3D Compensation =
Act. Tex.=20
Labor Code Ann. ' 406.002 (Vernon =
2006). =20
Igloo, however, has established the Igloo Products Corp. Employee =
Injury=20
Benefit Plan (Athe Plan@) under the federal =
Employee=20
Retirement Income Security Act (AERISA@). See =
generally 29=20
U.S.C. '1001 et seq. =
The Plan=20
specifies certain medical, wage-replacement, dismemberment, =
burial, and=20
death benefits payable to participating employees in the event of =
injury=20
or death suffered in the course and scope of employment with =
Igloo. =20
Participation in the Plan is not a condition of employment with=20
Igloo. To participate in the Plan and to secure the right to =
receive=20
the specified benefits, an employee must execute an Election and=20
Arbitration Agreement.
Joel Varela was =
fatally injured=20
on June 23, 2006, during the course and scope of his employment =
with=20
Igloo. Because Varela was a participating employee under the =
Plan,=20
Igloo paid medical, funeral, and burial expense benefits to his =
surviving=20
spouse. Thereafter, Varela=3Ds spouse and children =
(collectively Athe =
Varelas@) filed the =
underlying lawsuit=20
against Igloo and its employee, relator Jose Rodriguez. =
(Igloo and=20
Jose Rodriguez are hereinafter collectively referred to as =
Athe Igloo =
Parties.@) The =
Varelas=20
alleged that Joel Varela=3Ds death resulted from =
the Igloo=20
Parties=3D negligence and gross =
negligence. The Varelas assert claims under the Texas =
Wrongful Death=20
Act. =20
See Tex. Civ. Prac. & Rem. Code Ann. '' 71.001 B .012 (Vernon 1997 =
and Supp.=20
2006).
In the trial court, =
the Igloo=20
Parties moved to compel arbitration of the Varelas=3D claims under the =
terms of the=20
Election and Arbitration Agreement that Joel Varela had executed =
in=20
connection with his participation in the Plan (Athe =
Agreement@). The =
Agreement purports=20
to bind Varela=3Ds Abeneficiaries, heirs, =
children,=20
spouse, parents and legal representatives.@ The Igloo =
Parties=20
further asserted that by having accepted payment of benefits under =
the=20
Plan, the Varelas were equitably estopped and contractually =
precluded from=20
avoiding the Agreement=3Ds arbitration =
provision. =20
The Varelas opposed the motion to compel arbitration, arguing that =
neither=20
Joel Varela=3Ds execution of the =
Agreement=20
nor Igloo=3Ds payment of benefits =
owing to=20
his estate could bind them to arbitrate their individual, personal =
claims=20
for Joel Varela=3Ds wrongful death. The =
Varelas=20
also contended that, even if the Agreement applied to their =
wrongful death=20
claims, the trial court should not compel arbitration because the =
parties=20
have not mediated the Varelas=3D claims.
The trial court =
denied the=20
Igloo Parties=3D motion to compel =
arbitration,=20
and the Igloo Parties have filed a petition for writ of mandamus =
in this=20
court.
Standard=20
of Review
The Igloo Parties =
assert, and=20
the Varelas do not dispute, that the Agreement in this case is =
subject to=20
the Federal Arbitration Act (AFAA@). See =
generally 9=20
U.S.C. '1 et seq. =
Mandamus=20
relief is available when the trial court abuses its discretion by=20
erroneously denying a party its contracted‑for arbitration =
rights under=20
the FAA. See In re D. Wilson Const. Co., 196 S.W.3d =
774,=20
780B81 (Tex. 2006) (orig. =
proceeding). Therefore, the Igloo Parties=3D right to mandamus =
relief=20
hinges on whether the trial court=3Ds refusal to compel =
arbitration=20
was an abuse of its discretion.
A party seeking to =
compel=20
arbitration must establish that a valid arbitration agreement =
exists and=20
that the claims asserted are within the scope of the =
agreement. =20
See In re D. Wilson Construction Co., 196 S.W.3d at =
781. If=20
these two showings are made, the burden shifts to the party =
opposing=20
arbitration to present a valid defense to the agreement. =
J.M.=20
Davidson, Inc. v. Webster, 128 S.W.3d 223, 227B28 (Tex. =
2003). In the =
absence of=20
evidence of a valid defense, the trial court has no discretion to =
exercise=20
and must compel arbitration and stay its own proceedings. =
In re=20
J.D. Edwards World Solutions Co., 87 S.W.3d 546, 549 (Tex. =
2002)=20
(orig. proceeding).
The trial court =
denied the=20
Igloo Parties=3D motion to compel=20
arbitration. The trial court concluded that the Igloo =
Parties failed=20
to prove that (1) there is a valid, enforceable arbitration =
agreement=20
between the Igloo Parties and the Varelas and (2) the =
Varelas=3D claims are within =
the scope of=20
a valid, enforceable arbitration agreement.
Analysis
Both the Plan and the =
Agreement=20
address resolution of disputes between Igloo and those employees =
who=20
choose to participate in the Plan. Pertinent portions of =
both=20
documents are set forth below.
ELECTION AND ARBITRATION=20
AGREEMENT
By signing this Election and Arbitration =
Agreement=20
(hereinafter AAgreement@), I, the undersigned employee of Igloo =
Products=20
Corp. (hereinafter Athe Company@), voluntarily elect to participate in =
the Igloo=20
Products Corp. Employee Injury Benefit Plan (hereinafter the =
APlan@) and agree with the Company to the=20
following:
* * *
MUTUAL PROMISES TO RESOLVE CLAIMS BY =
BINDING=20
ARBITRATION: I =
recognize=20
that disputes may arise between the Company (or one of its =
affiliates) and=20
me during or after my employment with the Company. I =
understand and=20
agree that any and all such disputes that cannot first be resolved =
through=20
the Company=3Ds internal dispute resolution procedures =
or=20
mediation must be submitted to binding=20
arbitration.
I acknowledge and understand that by =
signing this=20
Agreement I am giving up the right to a jury trial on all of the =
claims=20
covered by this Agreement in=20
exchange for eligibility for the Plan=3Ds medical, disability, dismemberment, =
death and=20
burial benefits and in anticipation of gaining the benefits or a =
speedy,=20
impartial, mutually-binding procedure for resolving =
disputes.
Igloo Products Corp. Employee Injury =
Benefit=20
Plan
* * *
Arbitration of Employment =
Disputes: By executing and agreeing to =
the Election=20
and Arbitration Agreement, an Employee affirmatively agrees to =
submit to=20
binding arbitration all claims or disputes covered by the Election =
and=20
Arbitration Agreement.
* * *
B. =20
Arbitration Procedures. The following provisions are =
incorporated=20
by reference into, and made part of, the Election and Arbitration=20
Agreement, the same as if they were set forth at length in the =
Election=20
and Arbitration Agreement itself:
* * *
3. =20
Mediation: The Company =
(and each=20
Employer) and I agree that the arbitration procedures described in =
this=20
Paragraph B . . . and incorporated by reference into the Election =
and=20
Arbitration Agreement shall not be invoked unless the party =
seeking=20
arbitration has first mediated the dispute with the other party or =
parties=20
. . . .
The Varelas concede =
that Joel=20
Varela entered into a valid arbitration agreement with =
Igloo. They=20
dispute, however, whether that agreement binds them to arbitrate =
their own=20
personal claims for wrongful death of their husband and =
father. The=20
Varelas assert that Joel Varela did not and could not bind his =
spouse and=20
children to arbitrate rather than litigate their wrongful death =
claims=20
against Igloo. The Igloo Parties assert that the =
Varelas=3D acceptance of =
medical,=20
funeral, and burial benefits under the Plan independently binds =
them to=20
the arbitration provision. However, we need not address =
these=20
arguments because we conclude that, even presuming, without =
deciding, that=20
the Varelas are bound to the arbitration provisions of the =
Agreement, the=20
Varelas=3D claims are not =
within the=20
scope of claims subject to arbitration under the Agreement. =20
The Agreement =
requires that=20
Aany and all ... =
disputes=20
that cannot first be resolved through the =
Company=3Ds internal dispute =
resolution=20
procedures or mediation must be =
submitted to=20
binding arbitration.@ The =
Plan=3Ds arbitration =
procedures, which=20
are incorporated by reference into the Agreement, Ashall not be =
invoked=20
unless the party seeking arbitration has first mediated the =
dispute=20
with the other party.@ Neither party =
has=20
suggested the Plan or the Agreement is ambiguous, and we conclude =
that=20
both documents unambiguously provide for the arbitration =
only of=20
claims that cannot first be resolved through Igloo=3Ds internal dispute =
resolution=20
procedures or mediation. The Igloo Parties admit that the=20
Varelas=3D claims have not been =
mediated=20
or otherwise submitted to Igloo=3Ds internal dispute =
resolution=20
procedures. In their motion to compel arbitration, the Igloo =
Parties=20
neither alleged nor presented any proof that (1) the =
Varelas=3D claims fell within =
the=20
category of claims that could not be resolved through =
Igloo=3Ds internal dispute =
resolution=20
procedures or through mediation or (2) the Varelas=3D claims had been =
subjected to=20
Igloo=3Ds internal dispute =
resolution=20
procedures or mediation.
The Igloo Parties =
contend,=20
however, that it is for the arbitrator, not the courts, to =
decide=20
whether arbitration is precluded by there having been no prior =
mediation=20
or internal dispute resolution procedures. In making this =
argument,=20
the Igloo Parties rely primarily on Howsam v. Dean Witter =
Reynolds,=20
Inc., 537 U.S. 79, 123 S. Ct. 588, 154 L. Ed. 2d 491 =
(2002). =20
Howsam involved a dispute between a securities brokerage =
firm and=20
its former customer. After the customer commenced =
arbitration=20
proceedings under the arbitration clause of her brokerage account=20
agreement, the firm filed suit in federal district court seeking a =
declaratory judgment that the dispute was ineligible for =
arbitration and=20
an injunction prohibiting the customer=3Ds prosecution of the=20
arbitration proceeding. The firm claimed that arbitration =
was=20
precluded by the terms of the arbitration code of the National =
Association=20
of Securities Dealers (ANASD@), under the auspices =
of which=20
the customer had elected to arbitrate. The NASD code =
included a rule=20
that no dispute Ashall be eligible for =
submission [to arbitration] . . . where six (6) years have elapsed =
from=20
the occurrence or event giving rise to the . . . =
dispute.@ Finding that =
the NASD=20
arbitrator should interpret whether the NASD time-limit rule =
precluded=20
prosecution of the arbitration, the district court dismissed the=20
firm=3Ds action. On =
appeal, the=20
Court of Appeals for the Tenth Circuit reversed, concluding that=20
application of the NASD rule presented a question of the =
underlying=20
dispute=3Ds arbitrability, =
which is=20
presumptively for a court to decide.
On certiorari, the =
United=20
States Supreme Court stated that courts, rather than arbitrators, =
should=20
decide Agateway@ matters that =
Acontracting parties =
would=20
likely have expected a court to have decided . . . where they are =
not=20
likely to have thought that they had agreed that an arbitrator =
would do=20
so, and consequently, where reference of the gateway dispute to =
the court=20
avoids the risk of forcing parties to arbitrate a matter that they =
may=20
well not have agreed to arbitrate.@ Howsam, =
537 U.S.=20
at 83B84, 123 S. Ct. at =
592. =20
The Supreme Court stated that courts, rather than arbitrators, =
should=20
decide gateway disputes as to whether parties are bound by a given =
arbitration clause or whether an arbitration agreement covers a =
particular=20
kind of controversy. See id., 537 U.S. at 84, 123 S. =
Ct. at=20
592. On the other hand, matters of Aprocedural=20
arbitrability,@ such as allegations =
of waiver,=20
delay, or a similar defense to arbitrability, are presumptively =
for the=20
arbitrator to decide. See id. However, this =
presumption=20
may be overcome by language in the arbitration agreement =
reflecting an=20
intent contrary to this presumption. See =
id. The=20
agreement in Howsam did not exempt from the scope of the=20
arbitration clause claims based on an event that occurred more =
than six=20
years before the claim was submitted to arbitration. See =
id.,=20
537 U.S. at 81B82, 123 S. Ct. at =
591. =20
The United States Supreme Court held that application of the NASD=20
time-limit rule was the province of the arbitrator based on the=20
arbitration agreement at issue. See id., 537 U.S. at =
84B86, 123 S. Ct. at=20
592B3.
Two of our sister =
courts have=20
construed Howsam in the context of an agreement containing =
a=20
mediation requirement. See In re Pisces Foods, =
L.L.C., 228=20
S.W.3d 349 (Tex. App.CAustin 2007, orig.=20
proceeding); In re R&R Personnel Specialists of Tyler, =
Inc.,=20
146 S.W.3d 699 (Tex. App.CTyler 2004, orig.=20
proceeding). In R&R Personnel Specialists, the =
party=20
opposing arbitration argued that the movant had waived its right =
to=20
arbitration by failing (1) to give timely notice of its underlying =
claim;=20
(2) to give written notice of its intent to arbitrate the claim; =
and (3)=20
to participate in mediation before seeking arbitration. =
Citing=20
Howsam, but without quoting the contractual language on =
which any=20
one of these purported requirements was based, the court of =
appeals=20
characterized waiver as a question of procedural arbitrability for =
the=20
arbitrator to decide. The court granted mandamus relief =
directing=20
the trial court to vacate its order denying arbitration and to =
compel such=20
arbitration. R&R Personnel Specialists, 146 =
S.W.3d =20
at 704B05.
In Pisces =
Foods, the=20
trial court denied an employer=3Ds motion to compel =
arbitration=20
of an employee=3Ds personal injury =
claim. =20
The arbitration agreement stated:
Each Step [of this dispute resolution =
program]=20
must be followed in sequence so that we have every opportunity to =
work=20
together toward an agreeable resolution of the issue . . . . If =
you have a=20
work-related problem that involves a legally protected right that =
could=20
not be settled through Steps 1, 2 or 3 [internal dispute =
resolution=20
procedures and mediation] of the Program, you may request=20
arbitration.
Pisces =
Foods, 228 S.W.3d at =
351. =20
Without deciding (1) the employee=3Ds claim that she was =
not bound=20
by the agreement or (2) the employer=3Ds claim that the =
agreement had=20
been wrongfully excluded from evidence at the hearing on the =
motion to=20
compel arbitration, the court of appeals held that arbitration was =
not=20
available under the agreement because no mediation had =
occurred. =20
Id.
Discussing both =
Howsam=20
and R&R Personnel Specialists, as well as a number of =
decisions=20
from other jurisdictions, =
the=20
Austin Court of Appeals held that the relator=3Ds right to =
arbitration had not=20
yet accrued or been triggered because there was no proof that =
either party=20
had requested or attempted mediation. Pisces Foods, =
228=20
S.W.3d at 353B54.
=20
The Varelas =
do not=20
contend (as did the employee in R&R Personnel =
Specialists) that=20
failure to mediate the claims constitutes a waiver of the Igloo=20
Parties=3D right to compel =
arbitration. =20
They assert that the Agreement has not yet been triggered and that =
the=20
trial court thus properly declined to compel arbitration. If =
Joel=20
Varela agreed to arbitrate all claims and disputes with Igloo =
without any=20
reference to mediation but with separate arbitration procedures =
providing=20
for prior submission of disputes to mediation, we might reach a =
different=20
conclusion. In this case, however, the only claims that Joel =
Varela=20
agreed to arbitrate were Adisputes that cannot =
first be=20
resolved through [Igloo=3Ds] internal dispute =
resolution=20
procedures or mediation.@ Because =
arbitration is a=20
matter of contract, a party cannot be required to submit to =
arbitration=20
any dispute which he has not agreed to submit to =
arbitration. =20
Howsam, 537 U.S. at 83, 123 S. Ct. at 591. Joel =
Varela agreed=20
to arbitrate only disputes that were not resolved by =
Igloo=3Ds internal dispute =
resolution=20
procedures or mediation. Therefore, the issue at hand is a=20
Agateway =
dispute@ as to whether the =
arbitration=20
agreement covers a particular kind of controversy, and courts, =
rather than=20
the arbitrator, must resolve this issue. See id., 537 =
U.S. at=20
84, 123 S. Ct. at 592; HIM Portland, LLC v. Devito Builders, =
Inc.,=20
317 F.3d 41, 44 (1st Cir. 2003); Kemiron Atlantic, Inc. v. =
Aguakem=20
International, Inc., 290 F.3d 1287, 1289B90 (11th Cir. 2002); =
Pisces=20
Foods, 228 S.W.3d at 353B54; see also =
Allen v.=20
Apollo Group, Inc., No. Civ.A.H-04-3041, 2004 WL 3119918, at=20
*5B8 (S.D. Tex. Nov. 9, =
2004)=20
(Rosenthal, J.). Presuming, without deciding, that the =
Varelas are=20
bound by the arbitration provisions in question, the trial court =
did not=20
abuse its discretion by impliedly determining that the Igloo =
Parties did=20
not prove that the Varelas=3D claims fall within =
the scope=20
of the arbitration agreement because they are not Adisputes that cannot =
first be=20
resolved through [Igloo=3Ds] internal dispute =
resolution=20
procedures or mediation.@ See Pisces=20
Foods, 228=20
S.W.3d at 353B54. =20
Accordingly, we deny =
the Igloo=20
Parties=3D petition for writ of =
mandamus=20
and vacate our March 8, 2007 order staying proceedings in the =
trial=20
court.
/s/ Kem=20
Thompson Frost
Justice
Petition Denied and Opinion filed =
November 1,=20
2007.
Panel consists of Justices Frost, =
Seymore, and=20
Guzman.
The Election and Arbitration =
Agreement=20
specifically excludes criminal matters and claims for unemployment =
benefits from the arbitration requirement.
The Varelas previously asserted a =
claim=20
under the Texas survival statute, but they no longer assert this=20
claim. See Tex. Civ. Prac. & Rem. Code Ann. =
' 71.021 (Vernon 1997).
In 1992, addressing whether =
a party=20
is entitled to mandamus relief for wrongful denial of its =
arbitration=20
rights under an agreement subject to the FAA, the Texas Supreme =
Court=20
concluded that the Texas Arbitraton Act (ATAA@) does not provide such a party the =
ability to=20
assert an interlocutory appeal. See Jack B. Anglin, Inc. =
v.=20
Tipps, 842 S.W.2d 266, 272B73 (Tex. 1992). In 2006, the Texas =
Supreme=20
Court decided that such a party can file an interlocutory appeal =
of the=20
trial court=3Ds denial of a motion to compel =
arbitration under=20
an agreement governed by the FAA. See In re D. Wilson =
Const.=20
Co., 196 S.W.3d 774, 778B80 (Tex. 2006). It might appear =
that the=20
Igloo Parties are not entitled to mandamus relief in this case =
because the=20
FAA governs the Agreement and, under In re D. Wilson Const. =
Co.,=20
they have an adequate remedy at law by interlocutory appeal. =
See=20
id. However, the Texas Supreme Court reaffirmed in =
In=20
re D. Wilson Const. Co. that mandamus remains available when a =
party=20
is erroneously denied its contracted‑for arbitration rights =
under the=20
FAA. See In re D. Wilson Const. Co., 196 S.W.3d at=20
780B81. Therefore, we conclude that =
mandamus=20
relief is still potentially available to the Igloo Parties. =20
All boldface and =
underlining=20
emphasis shown in the quoted material is contained in the original =
documentation.
Italic emphasis added; =
underlining in=20
original.
See also In re Weekley =
Homes, 985=20
S.W.2d 111 (Tex. App.CSan Antonio 1998, orig. proceeding) =
(holding,=20
pre-Howsam, that whether party=3Ds failure to mediate before invoking =
arbitration=20
provision releases other parties from obligation to arbitrate is=20
procedural question for arbitrator to address in cases in which=20
arbitration agreement did not exempt claims that had not been=20
mediated).
See General Warehousemen & =
Helpers=20
Union Local 767 v. Albertson=3Ds Distribution, Inc., 331 F.3d 485, 488 (5th Cir. 2003); =
HIM=20
Portland, LLC v. Devito Builders, Inc., 317 F.3d 41, 44 (1st =
Cir.=20
2003); Kemiron Atlantic, Inc. v. Aguakem International, =
Inc., 290=20
F.3d 1287 (11th Cir. 2002); Allen v. Apollo Group, Inc., =
No.=20
Civ.A.H-04-3041, 2004 WL 3119918 (S.D. Tex. Nov. 9, 2004) =
(unreported=20
decision).
The Varelas assert a waiver =
argument, but=20
it is based solely on the contention that by substantially =
invoking the=20
judicial process, the Igloo Parties have waived the right to=20
arbitrate. However, based on our disposition, we need not =
address=20
the Varelas=3D argument in this =
regard.
This court relied on =
Howsam in=20
granting mandamus relief directing the trial court to compel =
arbitration=20
in In re Global Construction Company, L.L.C., 166 S.W.3d =
795 (Tex.=20
App.CHouston [14th Dist.] 2005, orig.=20
proceeding). The question posed was whether Athe underlying dispute, in which the =
real party in=20
interest claims that arbitration is time-barred, is an issue of =
procedural=20
arbitrability and thus for the arbitrator, or is an issue of =
substantive=20
arbitrability for the court.@ Id. at 796 (citing=20
Howsam). Under the contract at issue in that case, a =
demand=20
for arbitration was required to be made Awithin 30 days after the date on which =
the party=20
making the demand receives the final written decision [of the=20
Architect].@ The trial court Aexpressly found that [the party] waived =
its right=20
to arbitrate those claims that had been submitted to the architect =
by=20
failing to demand arbitration within thirty days.@ Id. at 797. We held =
that=20
Aany contractual time limit on a request =
for=20
arbitration is a matter for the arbitrator.@ Id. at 799. Although =
the=20
contract in that case required mediation, the parties did not =
raise, and=20
the court did not address, this requirement. Id. at =
797B99. Indeed, in that case, the parties =
had agreed=20
that the claims involved fell within the scope of the =
agreement. =20
Id. at 798. In addition, unlike the Agreement in this =
case,=20
the arbitration agreement in that case stated that A>[a]ny claims arising out of or related =
to the=20
Contract=3D are subject to arbitration.@ Id. at 796. Therefore, In re =
Global=20
Construction Company is not on =
point. =20
|