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At a Glance:
Title:
Beldon Roofing & Remodeling Co. v. Tanner
Date:
May 28, 1997
Citation:
04-97-00071-CV
Status:
Unpublished Opinion

Beldon Roofing & Remodeling Co. v. Tanner

Court of Appeals of Texas, San Antonio.

BELDON ROOFING & REMODELING COMPANY, Relator,

v.

The Honorable Martha TANNER, Respondent.

No. 04-97-00071-CV.

|

May 28, 1997.

Sitting: KAREN ANGELINI, Justice.

WRIT OF MANDAMUS CONDITIONALLY GRANTED

PER CURIAM.

*1 In this original proceeding, Beldon Roofing & Remodeling Company (Beldon) seeks a writ of mandamus directing Judge Tanner to vacate her order denying its motion to compel arbitration. For the reasons that follow, we conditionally grant the writ.

FACTS

Beldon, a nonsubscriber to the Texas workers’ compensation system, has established an occupational injury plan to provide benefits to its employees who are injured in the course of their employment. On April 5, 1995, Ignacio Vasquez signed an agreement entitled “Election of Benefits, Release, Waiver, Indemnity, and Arbitration Agreement” (the Agreement). In the Agreement, Vasquez elected to be covered under the plan and to waive his rights to sue Beldon for negligence arising in the course of employment. The Agreement contains a provision subjecting all claims, including tort claims, that relate to the Agreement, the plan, or employment with Beldon to arbitration.

In November and December 1995, Vasquez was injured in the course of his employment with Beldon. He brought suit against Beldon, asserting that his injuries resulted from Beldon’s negligence and that the Agreement was procured by fraud, was unenforceable for lack of consent, and was void as against public policy. Vasquez’s wife asserted a derivative claim for loss of consortium.1 Beldon filed a motion to abate the proceedings and to compel arbitration. Verified copies of the occupational injury plan and the Agreement were attached to the motion. At the hearing on the motion, Beldon argued that the plaintiffs’ claims fall within the scope of the arbitration provision. The plaintiffs argued that the Agreement, including the arbitration provision, was unenforceable and requested time to conduct discovery to support this argument. Judge Tanner denied the motion “without prejudice to refiling, to allow time for completion of discovery.”

DISCUSSION

Once a party seeking to compel arbitration establishes that a valid agreement to arbitrate exists and that the claims raised are within the scope of that agreement, the trial judge has no discretion but to compel arbitration. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996) (orig.proceeding). Beldon asserts that it established that an agreement to arbitrate exists and that the claims raised are within its scope. It thus argues that Judge Tanner abused her discretion by denying the motion to compel arbitration.

The plaintiffs assert that the motion to compel arbitration was properly denied for several reasons. First, the arbitration provision is not enforceable because Vasquez did not understand what he was signing. Second, the arbitration provision is not enforceable pursuant to the Texas Arbitration Act. Third, the Agreement, including the arbitration provision, is not enforceable because it violates public policy. Fourth, the arbitration provision is not applicable to this dispute. Fifth and finally, no discovery has been conducted regarding the plaintiffs’ defenses to the arbitration provision. We shall consider each of these arguments in turn.

1. Failure to Understand

*2 When a party seeks to compel arbitration, the first issue to be determined is whether the parties entered into a valid agreement to arbitrate. See Shearson Lehman Hutton, 763 S.W.2d at 937. In this case, the plaintiffs argue that the arbitration provision is invalid because Vasquez did not understand it. Vasquez claims that Beldon did not explain it to him; instead, he was simply given a stack of papers to sign.

Unequal bargaining power between an employer and an employee is not sufficient to defeat an arbitration agreement. See Emerald Texas, Inc. v. Peel, 920 S.W.2d 398, 402 (Tex.App.-Houston [1st Dist.] 1996, no writ).

The Agreement signed by Vasquez has the title “Election of Benefits, Release, Waiver, Indemnity, and Arbitration Agreement” on its front page. Immediately following the title is the following notice, written in capital letters and underscored:

By signing this agreement, you agree to release and waive certain rights to sue your employer, the trustee of the Beldon Roofing and Remodeling Co. Occupational Injury Trust Plan, and Plan in exchange for the agreement to provide certain benefits through the trust which are described below. You agree to indemnify your employer and the trustee in certain circumstances and you agree to arbitrate all future disputes. This agreement affects your legal rights! Read this agreement carefully and make sure you understand it before signing it!

The arbitration provision is on page four of the six-page document. It appears under the separately numbered heading “ARBITRATION.” Accompanying the Agreement is a verified statement by Vasquez, acknowledging that he read and understood the Agreement and that he voluntarily executed it.

Considering the conspicuousness of the arbitration provision in this case and the presumption that a party who signs an arbitration agreement knows its contents, the assertion that Vasquez did not understand what he was signing is not sufficient to establish that the arbitration provision was lacking in consent, unconscionable, or fraudulently induced.

2. Texas Arbitration Act

*3 The Texas Arbitration Act (the Texas Act) provides, in part:

A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. A court shall refuse to enforce an agreement or contract provision to submit a controversy to arbitration if the court finds it was unconscionable at the time the agreement or contract was made. Provided, however, that none of the provisions of this chapter shall apply to:

...

...

(c) any claim for personal injury except upon the advice of counsel to both parties as evidenced by a written agreement signed by counsel to both parties. A claim for workers’ compensation shall not be submitted to arbitration under this chapter.

TEX. CIV. PRAC. & REM.CODE ANN. § 171.001 (Vernon Supp.1997) (emphasis added). In this case, there is no written agreement signed by counsel showing that Vasquez had the advice of counsel before agreeing to arbitration. The plaintiffs argue that the arbitration provision is therefore unenforceable.

The Texas Supreme Court has rejected an argument similar to the one made here. See section 171.001(c) does not apply to agreements subject to the Federal Act.

The arbitration provision in this case specifically invokes the Federal Act. Thus, under EZ Pawn, section 171.001(c) does not render the arbitration provision unenforceable.

3. Public Policy

The plaintiffs argue that the Agreement is void as against public policy because it constitutes a waiver of the common-law right to sue and the statutory right to seek benefits through the workers’ compensation system. They rely on Texas Health Enterprises v. Kirkgard, 882 S.W.2d 630 (Tex.App.-Beaumont 1994, writ denied) and the nonwaiver statute of our workers’ compensation law.2

*4 In Kirkgard, the employer, a nonsubscriber to the Texas workers’ compensation system, established an occupational injury plan. The employer demanded that all its employees execute a waiver of workers’ compensation and common-law rights to recover for on-the-job injuries. Employees who refused to sign the waiver were fired. The court held that the waiver violated public policy and the workers’ compensation nonwaiver statute. Hazelwood v. Mandrell Indus., 596 S.W.2d 204, 206 (Tex.Civ.App.-Houston [1st Dist.] 1980, writ ref’d n.r.e.) (holding that an agreement between a nonsubscribing employer and an employee limiting the employee’s recovery for on-the-job injuries to the amount provided under workers’ compensation, without requiring the employer to waive its common-law defenses, was void as against public policy).

Kirkgard is distinguishable from this case. It involved the “retaliatory firing of [employees] for refusing to waive their rights under the workers compensation act and their right to sue their employer for its negligence in the event of an on-the-job injury.” Brito v. Intex Aviation Servs., 879 F.Supp. 650, 654 (N.D.Tex.1995) (“The distinction between an employment contract that requires a prospective employee, as a condition to receipt or retention of employment, to agree to limit the employer’s liability, on one hand, and a voluntary occupational insurance plan, in which the employee has the option to enroll in consideration for agreeing that such plan constitutes the exclusive remedy for job related injuries, on the other, is decisive.”).

Furthermore, in Kirkgard, unlike in this case, the validity of an arbitration agreement was not at issue. The court’s public policy analysis therefore omitted any consideration of the public policy favoring arbitration. See id. at 271.

Regarding the workers’ compensation nonwaiver statute, the Federal Act preempts that statute to the extent it is inconsistent with the Act. See id. In Jack B. Anglin, the plaintiff argued that its claims under the Texas Deceptive Trade Practices Act (DTPA) were not subject to arbitration. The plaintiff relied on the DTPA nonwaiver statute.3 The court held that the Federal Act preempts any application of the DTPA nonwaiver statute that would prevent or restrict enforcement of an arbitration agreement. Id. The same reasoning applies here. To the extent that the workers’ compensation nonwaiver statute would restrict enforcement of this arbitration provision, it is preempted by the Federal Act.

4. Applicability of the Arbitration Clause

*5 Any doubts as to whether claims fall within the scope of an arbitration agreement must be resolved in favor of arbitration. Prudential Secs., Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex.1995) (orig.proceeding). Here, the arbitration provision states that “any and all disputes, claims, (whether tort, contract, statutory or otherwise) and/or controversies which relate, in any manner, to this Agreement, the Plan, the Trust or to Employee’s employment with Employer shall be submitted to final and binding arbitration.” The plaintiffs seek to recover damages resulting from personal injuries Vasquez received in the scope of his employment with Beldon. Because this claim relates to his employment with Beldon, it is within the scope of the arbitration provision.

5. Lack of Discovery

When a party contests an arbitration agreement, Texas procedure requires the trial court to consider the agreement in light of any affidavits, pleadings, discovery, and stipulations. See Jack B. Anglin, 842 S.W.2d at 269. Here, no discovery had been conducted before the hearing on the motion to compel arbitration. The plaintiffs argue that Judge Tanner therefore acted within her discretion by denying the motion to compel arbitration, without prejudice to refiling, so that they would have an opportunity to conduct discovery to establish their defenses to the arbitration agreement.

Our discussion of the plaintiffs’ four defenses to the arbitration provision disposes of this argument. None of the allegations are sufficient to defeat the arbitration provision. Thus, even if the plaintiffs could gather proof through discovery to support their allegations, such proof would not allow them to avoid arbitration.

CONCLUSION

Beldon established that an enforceable arbitration agreement exists and that the claims asserted fall within that agreement. Therefore, it was an abuse of discretion to deny Beldon’s motion to abate the proceedings and to compel arbitration. See EZ Pawn, 934 S.W.2d at 91. Accordingly, the petition for writ of mandamus is conditionally granted. We are confident that Judge Tanner will withdraw her order denying Beldon’s motion to compel arbitration and that she will abate the proceedings and order that the plaintiffs’ claims against Beldon proceed to arbitration. The writ will issue upon certification to this court that she has not done so within ten days of this opinion.

Footnotes

1

Hereafter, the Vasquezes will be referred to collectively as “the plaintiffs.”

2

That statute provides, “[A]n agreement by an employee to waive the employee’s right to compensation is void.” TEX. LAB.CODE ANN. § 406.035 (Vernon 1996).

3

That statute provides, in part, “Any waiver by a consumer of the provisions of this subchapter is contrary to public policy and is unenforceable and void.” TEX. BUS. & COM.CODE ANN. § 17.42(a) (Vernon Supp.1997).

End of Document
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