Court Opinion

ID: 2801339
Source: CourtListenerOpinion
Date Created: 2015-05-18 07:11:32.687562+00
Date Added: 2024-06-11T12:21:58.607161
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                              NO. 02-14-00317-CV

ENSIGN GROUP, INC., SAVOY                                          APPELLANTS
HEALTHCARE, INC., AND XAVIER
PRUITT, INDIVIDUALLY

                                        V.

ERICA MAMMEN                                                          APPELLEE

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          FROM THE 431ST DISTRICT COURT OF DENTON COUNTY
                    TRIAL COURT NO. 14-04607-431

                                     ----------

                        MEMORANDUM OPINION1

                                     ----------

      Appellants Ensign Group, Inc.; Savoy Healthcare, Inc.; and Xavier Pruitt,

individually, appeal the trial court’s interlocutory order denying their motion to

compel arbitration of Appellee Erica Mammen’s claims. See Tex. Civ. Prac. &

Rem. Code Ann. § 51.016 (West 2015). We will reverse and remand.

      1
       See Tex. R. App. P. 47.4.
      Mammen began working for Savoy Healthcare, Inc. d/b/a Heritage

Gardens Rehabilitation and Healthcare in May 2010.             Heritage Gardens

terminated Mammen’s employment on April 18, 2014, and Mammen sued

Appellants soon thereafter, on June 18, 2014.       According to Mammen’s first

amended original petition, on or about May 28, 2014, a prospective employer

informed Mammen that she was going to receive “an offer letter of employment.”

Shortly thereafter, however, the prospective employer rescinded the offer letter

“because of a bad reference” from Appellants. Mammen alleged that Pruitt had

made the following statements about her: (i) “upon her termination, [Mammen]

was escorted out of the building by Police”; (ii) “[Mammen] worked two (2) years

for Defendants, not six (6)”; and (iii) “[Mammen] was a ‘lazy’ worker and not re-

hirable.” Mammen averred that Appellants were negligent and had committed

slander and tortious interference with prospective contract.

      Appellants answered and moved to compel arbitration of Mammen’s

claims, arguing that she had executed a written arbitration agreement that

covered each of her claims. The agreement, signed by Mammen on May 3,

2010, states in relevant part as follows:

                 Heritage Gardens Rehabilitation and Healthcare
                   (referred to throughout as “the Employer”)

           AGREEMENT TO ARBITRATE CLAIMS (New Employees)

             Alternative Dispute Resolution (ADR) is the preferred method
      for collegially and internally resolving differences that may arise in
      the workplace through grievance and staff complaint procedures.
      The Agreement to Arbitrate Claims (“Agreement”) establishes the

                                            2
method chosen by the Employer and Employee (hereafter “Parties”)
to resolve disputes if informal internal ADR methods prove
unsuccessful. The Employee agrees to submit all claims, as
outlined below, to binding arbitration, in exchange for employment
with this Employer.      The Employee is required to sign this
Agreement prior to the commencement of employment with the
Employer.

       Article 1. The Employer and the Employee, named below,
agree as Parties to this contract, to the resolution by binding
arbitration of all claims, except: (1) criminal proceedings, (2) breach
of confidentiality obligations, and (3) any other claims not subject to
arbitration under federal and Texas law. The claims that otherwise
would have been decided in a court of law, whether local, state or
federal, will instead be decided by arbitration, whether or not the
claims subject to this Agreement arise out of the Employee’s
employment, remuneration or termination, that the Employee may
have against the Employer . . . .

       Article 2. The claims covered by this Agreement include, but
are not limited to, . . . claims for personal, physical or emotional
injury arising from negligence, any intentional tort, . . . and claims for
violation of any federal law, state or other governmental law, statute
or regulation not otherwise excluded under Article 1 of this
Agreement. The Parties agree that final and binding arbitration shall
be the sole and exclusive remedy for resolving any claims covered
by this Agreement, except as state and federal law provides for
judicial review of arbitration proceedings. By entering into this
contract the Parties are accepting the use of arbitration and
voluntarily giving up their right to have such disputes decided in a
court of law before a jury.

       Article 3. The Federal Arbitration Act (FAA) will govern the
interpretation, enforcement, and all judicial proceedings under
and/or related to arbitration under this Agreement. . . . The
Employer shall pay for up to $1,000.00 of the arbitrator’s fees and
the parties shall split the remaining arbitrator’s fees, if any, equally.
Each party shall bear its own fees and costs for the arbitration and
shall be responsible for their own attorney’s fees, if any, in
arbitration. . . .

     Article 4. . . . This Agreement shall survive the termination of
Employee’s employment . . . . This Agreement is binding on all

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       Parties, including the Employee, their personal representatives,
       spouse, children, agents, successors, and heirs.

              ....

               Article 6. The terms of this Agreement are severable. If any
       term or provision of this agreement is determined to be illegal or
       unenforceable by a court of competent jurisdiction, the remaining
       terms and provisions of this agreement shall remain in full force and
       effect.

In response to Appellants’ motion to compel, Mammen argued that the

agreement does not cover her claims, is substantively unconscionable, and

violates her procedural due process rights. The trial court denied Appellants’

motion.

       Appellants argue in their only issue that the trial court erred by denying

their motion to compel arbitration.           They contend that the valid arbitration

agreement covers Mammen’s claims and that it is neither substantively nor

procedurally unconscionable.

       Mammen responds that her claims, which arose from tortious conduct that

occurred after her employment was terminated, fall outside the scope of the

arbitration agreement because the agreement is limited (i) to claims arising in the

workplace and (ii) for which internal alternative dispute resolution procedures

have    failed,   as   specified   in   the       agreement’s   introductory   paragraph.

Alternatively, Mammen argues that Article 3’s cost-splitting provision renders the

agreement substantively unconscionable and that her inability to utilize

Appellants’ internal alternative dispute resolution procedures, which are

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“conditions precedent” to arbitration, render the agreement procedurally

unconscionable.

      We review de novo whether an enforceable agreement to arbitrate exists.

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

proceeding).   We defer to the trial court’s factual determinations that are

supported by the record and review legal questions de novo.         Id.; Garcia v.

Huerta, 340 S.W.3d 864, 868‒69 (Tex. App.—San Antonio 2011, pet. denied).

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

agreement (2) whose scope includes the claims asserted. In re Kellogg Brown &

Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding).         Under the

Federal Arbitration Act (FAA), an agreement to arbitrate is valid if it meets the

requirements of the general contract law of the applicable state.             In re

AdvancePCS Health, L.P., 172 S.W.3d 603, 606 (Tex. 2005) (orig. proceeding);

see Paragon Indus. Applications, Inc. v. Stan Excavating, LLC, 432 S.W.3d 542,

547 (Tex. App.—Texarkana 2014, no pet.) (“The elements of a valid contract are

(1) an offer, (2) an acceptance, (3) a meeting of the minds, (4) each party’s

consent to the terms, and (5) execution and delivery of the contract with the

intent that it be mutual and binding.”).    To determine whether an arbitration

agreement covers a party’s claims, a court must focus on the complaint’s factual

allegations rather than the legal causes of action asserted. In re FirstMerit Bank,

N.A., 52 S.W.3d 749, 754 (Tex. 2001) (orig. proceeding); see In re Bath Junkie

Franchise, Inc., 246 S.W.3d 356, 366 (Tex. App.—Beaumont 2008, orig.

                                        5
proceeding) (stating that to come within the scope of an arbitration provision, a

party’s allegations need only be factually intertwined with arbitrable claims or

otherwise touch upon the subject matter of the agreement containing the

arbitration provision).   We resolve doubts as to scope in favor of finding

coverage.      In re Bank One, N.A., 216 S.W.3d 825, 826 (Tex. 2007) (orig.

proceeding).

      The written arbitration agreement’s introductory paragraph clarifies that

Mammen entered into the agreement in exchange for and before she began her

employment with Heritage Gardens. Mammen signed the agreement and noted

the date.      The following conspicuous language is located just above her

signature: “THE UNDERSIGNED CERTIFIES THAT HE/SHE HAS READ THIS

AGREEMENT, UNDERSTANDS THIS AGREEMENT, HAS BEEN GIVEN A

COPY OF THE AGREEMENT AND AGREES THAT BY SIGNING THIS

AGREEMENT, HE/SHE AND THE EMPLOYER ARE GIVING UP THEIR

RESPECTIVE RIGHTS TO A JURY TRIAL.”                  Therefore, the arbitration

agreement is valid.

      Turning to the agreement’s scope, we disagree with Mammen that the

agreement applies only to claims arising in the workplace and for which internal

alternative dispute resolution procedures have failed. This language—contained

at the outset of the agreement—is akin to recitals in a contract, which generally

will not control the operative clauses in a contract unless the latter are

ambiguous. See City of the Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699,

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722 (Tex. App.—Fort Worth 2008, pet. dism’d).         More importantly, however,

Mammen relies on this language to the exclusion of the rest of the agreement,

which unambiguously identifies its scope. The introductory paragraph states that

the employee agrees “to submit all claims, as outlined below, to binding

arbitration.” [Emphasis added.] Article 1 outlines the claims that are subject to

arbitration:   “all claims, except:     (1) criminal proceedings, (2) breach of

confidentiality obligations, and (3) any other claims not subject to arbitration

under federal and Texas law.” [Emphasis added.] Mammen’s tort claims do not

fall within any of the three exceptions; therefore, the agreement covers her

claims.

       Mammen complains about the agreement’s broad scope, figuring that if

Appellants’ interpretation is correct, then “any claim arising outside of the

workplace and at any time in the future would have to be arbitrated.”          The

agreement expressly addresses Mammen’s concern, leaving no doubt about its

expansive coverage. The three exceptions aside, arbitration is required “whether

or not the claims subject to this Agreement arise out of the Employee’s

employment, remuneration or termination.” [Emphasis added.]            Mammen’s

claims plainly arise from her employment, remuneration, or termination, and are

therefore subject to arbitration, see Bath Junkie Franchise, 246 S.W.3d at 366,

but even if they did not so arise, the claims would still be arbitrable. See, e.g.,

Wee Tots Pediatrics, P.A. v. Morohunfola, 268 S.W.3d 784, 791 (Tex. App.—Fort

                                        7
Worth 2008, orig. proceeding) (enforcing arbitration agreement that required

arbitration of “[a]ll controversies which may arise between the parties”).

      Once the party seeking arbitration establishes both validity and scope, the

trial court must compel arbitration unless the party opposing arbitration proves a

defense precluding enforcement.       See J.M. Davidson, Inc. v. Webster, 128
S.W.3d 223, 227 (Tex. 2003). Mammen argues that the arbitration agreement is

substantively unconscionable because Article 3 requires her to pay half of the

arbitration fees after Appellants pay the first $1,000 due, and “[i]t was undisputed

before the trial court that [she] was unemployed since her termination and lacked

resources sufficient to pay for half of the arbitration costs.” 2 However, a party

seeking to invalidate an arbitration agreement on the ground that arbitration

would be prohibitively expensive bears the burden of showing the likelihood of

incurring excessive costs. In re Olshan Found. Repair, 328 S.W.3d 883, 895

(Tex. 2010) (orig. proceeding). “[P]arties must at least provide evidence of the

likely cost of their particular arbitration, through invoices, expert testimony,

reliable cost estimates, or other comparable evidence.”        Id.   “Evidence that

merely speculates about the risk of possible cost is insufficient.” Id. Inconsistent

with the burden that Olshan places upon Mammen, she has provided no

evidence about the arbitration fees that she will likely incur; she merely

speculates that they will be unaffordable, whatever they are.                Moreover,

      2
      Appellants did not somehow waive their argument that Mammen’s
unconscionability defense lacks merit.

                                         8
Appellants confirmed in the trial court that they “are willing to assume

responsibility for the balance of the arbitrator’s fees based on a showing that

[Mammen] i[s] unable to afford same.” Consequently, Mammen’s substantive

unconscionability defense is unpersuasive.

       Again referencing part of the arbitration agreement’s introductory

language, Mammen argues that the agreement is procedurally unconscionable

because, as an employee who has been terminated, she is unable to utilize

Appellants’ internal alternative dispute resolution procedures. But as explained

above, the valid arbitration agreement covers Mammen’s claims and is not so

limited.

       The trial court erred by denying Appellants’ motion to compel arbitration.

Accordingly, we sustain Appellants’ sole issue, reverse the trial court’s order

denying Appellants’ motion to compel arbitration, and remand this cause to the

trial court for further proceedings consistent with this opinion.

                                                     /s/ Bill Meier

                                                     BILL MEIER
                                                     JUSTICE

PANEL: LIVINGSTON, C.J.; GARDNER and MEIER, JJ.

DELIVERED: May 14, 2015

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