COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

READYONE INDUSTRIES, INC.,

 Appellant,

v.

ROBERTO CARREON,

 Appellee. 

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No. 08-13-00150-CV

Appeal from

384th District Court

of El Paso County, Texas

(TC # 2011-DCV-00940)

O P I N I O N

ReadyOne Industries, Inc. is appealing the trial court’s order denying its motion to 

compel arbitration. For the following reasons, we sustain Issue One, reverse the order denying 

the motion to compel arbitration, and remand to the trial court with instructions to enter an order 

compelling arbitration.

PROCEDURAL BACKGROUND

Roberto Carreon filed suit against his employer, ReadyOne, alleging that the failure to 

provide a safe work environment caused him to suffer an on-the-job injury to his shoulder, 

elbow, wrist, and other parts of his body on November 1, 2011. ReadyOne filed a motion to 

compel arbitration and to stay the proceedings pending arbitration. It supported the motion with 

the affidavit of Wes Schotten, Director of Human Resources and Compliance, and four exhibits: 

(1) the English language version of the Mutual Agreement to Arbitrate (MAA) adopted by 
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ReadyOne effective October 1, 2007; (2) the Spanish language version of the MAA adopted by 

ReadyOne effective October 1, 2007; (3) a Receipt and Arbitration Acknowledgment dated 

August 30, 2010 signed by Roberto Carreon; and (4) the Employee Injury Benefit Plan/Summary 

Plan Description (SPD). Carreon filed a response alleging that the Franken Amendment made 

the MAA unenforceable. He also complained of fraudulent inducement and lack of mental 

capacity to enter into a contract. Carreon filed a motion to compel limited discovery related to 

arbitration which the trial court granted. ReadyOne challenged that order by filing a mandamus 

petition in this Court. We held that the Franken Amendment does not apply to this personal 

injury suit. In re ReadyOne Industries, Inc., 394 S.W.3d 689, 693-95 (Tex.App.--El Paso 2012, 

orig. proceeding). We also concluded that Carreon failed to show a colorable basis or reason to 

believe that discovery would be material in establishing that the arbitration agreement was 

invalid because he lacked the mental capacity to understand what he was signing. Id., 394 

S.W.3d at 696-97. Finding that ReadyOne did not have an adequate remedy by appeal, we 

conditionally granted mandamus relief. Id. at 697.

Carreon subsequently filed a supplemental response raising a new argument that the 

MAA is illusory because it permits ReadyOne to amend, modify, or terminate the arbitration at 

any time. This argument is based on an assertion that the MAA is incorporated by reference in 

the SPD, and therefore, the SPD’s provisions for termination and amendment apply rather than 

the termination provision set forth in the MAA. The trial court denied ReadyOne’s motion to 

compel arbitration on the ground that the MAA is illusory. ReadyOne brought this accelerated 

interlocutory appeal to challenge that order. See TEX.CIV.PRAC.&REM.CODE ANN. § 51.016 

(West Supp. 2014)(permitting an interlocutory appeal from the denial of a motion to compel 

arbitration under the Federal Arbitration Act). 
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ILLUSORY ARBITRATION AGREEMENT

In its sole issue on appeal, ReadyOne contends that the trial court erred by refusing to 

compel arbitration on the ground that the MAA is illusory. We agree.

Relevant Law and Standard of Review

We review a trial court’s decision to grant or deny a motion to compel arbitration under 

an abuse of discretion standard. Ellman v. JC General Contractors, 419 S.W.3d 516, 520 

(Tex.App.--El Paso 2013, no pet.). Under this standard, we defer to a trial court’s factual 

determinations if they are supported by evidence, but we review a trial court’s legal 

determinations de novo. In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009). 

Ellman, 419 S.W.3d at 520. 

A party seeking to compel arbitration must (1) establish the existence of a valid 

arbitration agreement; and (2) show that the claims asserted are within the scope of the 

agreement. See In re Advance PCS Health L.P., 172 S.W.3d 603, 605 (Tex. 2005); Delfingen

US-Texas, L.P., v. Valenzuela, 407 S.W.3d 791, 797 (Tex.App.--El Paso 2013, no pet.). It is 

undisputed that the Federal Arbitration Act governs the arbitration at issue in this case. Under 

the FAA, we apply state contract law principles to determine whether a valid arbitration 

agreement exists. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); Delfingen, 

407 S.W.3d at 797. Once the party seeking to compel arbitration proves that a valid arbitration 

agreement exists, a presumption attaches favoring arbitration and the burden shifts to the party 

resisting arbitration to establish a defense to enforcement. Delfingen, 407 S.W.3d at 797. In the 

context of enforcement, defenses refer to unconscionability, duress, fraudulent inducement, and 

revocation. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001); Delfingen, 407 SW.3d 

at 797. Because the law favors arbitration, the burden of proving a defense to arbitration is on 
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the party opposing it. IHS Acquisition No. 171, Inc. v. Beatty-Ortiz, 387 S.W.3d 799, 807 

(Tex.App.--El Paso 2012, no pet.), citing J.M. Davidson, 128 S.W.3d at 227.

Analysis of the MAA and SPD/Employee Injury Benefit Plan

An arbitration agreement is illusory if one party can avoid its promise to arbitrate by 

unilaterally amending the provision or terminating it altogether. In re Odyssey Healthcare, Inc., 

310 S.W.3d 419, 424 (Tex. 2010); In re ReadyOne Industries, Inc., 400 S.W.3d 164, 170 

(Tex.App.--El Paso 2013, orig. proceeding). The MAA is a four-page agreement consisting of 

thirteen paragraphs. It requires ReadyOne and Carreon to arbitrate covered claims which occur 

on or after the effective date of the agreement, October 1, 2007. Paragraph 5 addresses the scope 

of the agreement to arbitrate and provides that all claims that ReadyOne or claimant may have 

which arise from any injury suffered by claimant in the course and scope of employment, 

including but not limited to, claims for negligence, gross negligence, and all claims for personal 

injuries. Paragraph 10, titled “Termination of Agreement” provides that:

Company shall have the right to prospectively terminate this Agreement. 

Termination is not effective for Covered Claims which accrued or occurred prior 

to the date of the termination. Termination is also not effective until ten (10) days 

after reasonable notice is given to Claimant. 

Paragraph 10 is not illusory because it does not permit ReadyOne to unilaterally or 

retrospectively terminate the agreement and it requires ReadyOne to provide ten days’ notice to 

prospectively terminate. See In re Halliburton Co., 80 S.W.3d 566, 569-70 (Tex. 2002); In re 

ReadyOne, 400 S.W.3d at 170-71 (finding the same provision contains the proper savings clause

under Halliburton and is not illusory). 

Carreon counters that the MAA is not a stand-alone arbitration agreement, but rather is 

incorporated by reference in the SPD/Employee Injury Benefit Plan. This ERISA plan contains 

the following provision:
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AMENDMENT OR TERMINATION OF PLAN

The Company presently intends to continue the Plan indefinitely, but the 

Company reserves the right to amend, modify, or terminate the Plan at any time; 

provided, however, no amendment or termination of the Plan will reduce the 

amount of any benefit then due and payable under the Plan to or with respect to 

you in connection with an Injury occurring prior to the date of such amendment or 

termination. Any such amendment or termination will be adopted pursuant to 

formal written action of a representative authorized to act on behalf of the 

Company. 

Because the “Amendment or Termination of Plan” provision of the SPD/Employee Injury 

Benefit Plan does not contain a saving clause which complies with Halliburton, Carreon argues 

that the MAA is illusory. 

Carreon relied on language in the Arbitration Acknowledgement and SPD/Employee 

Injury Benefit Plan to support his position that these documents are incorporated by reference in 

the MAA. Documents incorporated into a contract by reference become part of that contract. In 

re 24R, Inc., 324 S.W.3d 564, 567 (Tex. 2010); In re Bank One, N.A., 216 S.W.3d 825, 826 

(Tex. 2007). Carreon first pointed to a document referred to as the Receipt and Arbitration 

Acknowledgment1 which states as follows:

RECEIPT OF MATERIALS. By my signature below, I acknowledge that I 

have received and read (or had the opportunity to read) the Benefits Schedule, 

Summary Plan Description (the ‘SPD’) for the Employee Injury Benefit Plan, and 

Mutual Agreement To Arbitrate Claims, effective 10/01/2007.

ARBITRATION. I acknowledge that this includes a mandatory company policy 

requiring that certain claims or disputes (that cannot otherwise be resolved 

between the Company and me) must be submitted to an arbitrator, rather than a 

judge and jury in court. I understand that by receiving this Mutual Agreement To 

Arbitrate Claims and becoming employed (or continuing my employment) with 

the Company at any time on or after 10/01/2007, I am accepting and agreeing to 

comply with these arbitration requirements. I understand that the Company is 

also accepting and agreeing to comply with these arbitration requirements. All 

covered claims brought by my spouse, children, parents, estate, successors and 

assigns are also subject to this Mutual Agreement To Arbitrate Claims, and any 

decision of an arbitrator will be final and binding on such persons and the 

 

1

 Carreon signed the Spanish language version of this document. 
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Company. 

The receipt portion of this document merely requires Carreon to acknowledge that he has 

received and read, or had an opportunity to read, various documents, including the MAA and 

SPD. The arbitration portion of the document requires Carreon to acknowledge that one of the 

documents he received is a mandatory company policy which requires both he and ReadyOne to 

arbitrate certain claims. The receipt and arbitration acknowledgement document does not 

incorporate the MAA or the SPD by reference. See In re ReadyOne, 400 S.W.3d at 169-73; Sun 

Fab Industrial Contracting, Inc. v. Lujan, 361 S.W.3d 147, 152-53 (Tex.App.--El Paso 2011, no 

pet.).

Carreon also argued the SPD incorporated the MAA by reference. The “Program 

Highlights” section of the SPD, contains the following:

What if I am still not satisfied with how my injury is handled?

In addition to a formal benefit appeals process, there is an Arbitration Policy 

attached to the back of this booklet. The Arbitration Policy will help resolve 

any other injury-related disputes between you and the Company quickly and 

fairly. Arbitration is a process in which a skilled, independent arbitrator (similar 

to a judge) hears both sides of the situation and then makes a final and binding 

decision. Decisions by the arbitrator generally must be made according to the 

same principles of law that control decisions by courts. Arbitrators can award the 

same damages or remedies as a court of law. [Emphasis in original].

We recently considered an incorporation-by-reference argument based on the same document in 

a mandamus proceeding involving ReadyOne and concluded that the SPD does not incorporate 

the MAA by reference. In re ReadyOne, 400 S.W.3d at 169-73. We will adhere to that decision

here. Finding that the MAA is not illusory, we sustain the sole issue presented by ReadyOne. 

We reverse the trial court’s order denying ReadyOne’s motion to compel arbitration and remand 

the cause to the trial court with instructions to enter an order compelling arbitration.
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December 10, 2014

ANN CRAWFORD McCLURE, Chief Justice

Before McClure, C.J., Rivera, and Rodriguez, JJ.

(Rivera, J., not participating)