Court Opinion

ID: 4325356
Source: CourtListenerOpinion
Date Created: 2018-10-29 08:33:58.65511+00
Date Added: 2024-06-11T14:19:40.998416
License: Public Domain

COURT OF APPEALS
                                     EIGHTH DISTRICT OF TEXAS
                                          EL PASO, TEXAS

                                                         §
    IN RE:                                                                   No. 08-18-00034-CV
                                                         §
    COPART, INC., COPART OF                                                An Original Proceeding
    HOUSTON, INC., AND HOUSTON                           §                     in Mandamus
    COPART SALVAGE AUTO
    AUCTIONS, L.P.,                                      §

    RELATORS.                                            §

                                                OPINION

         Relators, Copart, Inc., Copart of Houston, Inc., and Houston Copart Salvage Auto

Auctions, L.P. (referred to collectively as Copart) have filed a mandamus petition against the

Honorable Luis Aguilar, Judge of the 243rd District Court of El Paso County, Texas, to challenge

the trial court’s order permitting the real party in interest, Maria Ordaz, to engage in pre-arbitration

discovery. We conditionally grant mandamus relief.

                                         FACTUAL SUMMARY

         The real party in interest, Maria Ordaz, filed suit against Copart alleging employment

discrimination and retaliation causes of action under the Texas Labor Code.1 Copart’s counsel

emailed a motion to compel arbitration to counsel for Ordaz prior to filing the motion. The motion

was supported by the affidavit of Kallie Sirles, a Human Resource Generalist at Copart, Inc.

1
 The suit is styled Maria R. Ordaz v. Copart, Inc., Copart of Houston, Inc., and Houston Copart Salvage Auto
Auctions, L.P. (cause number 2017DCV4011).
Attached to Sirles’ affidavit are several exhibits, including the arbitration agreement electronically

signed by Ordaz. Sirles’ affidavit addressed the existence of its arbitration agreement, the receipt

of the arbitration agreement by Ordaz, Ordaz’s acknowledgement and signature of the arbitration

agreement, and that the records attached to her affidavit are business records kept in the ordinary

course of business.

       After receiving the motion to compel arbitration, Ordaz’s counsel called opposing counsel

and unsuccessfully attempted to confer regarding dates for the deposition of Sirles. Copart’s

counsel unsuccessfully attempt to obtain opposing counsel’s agreement to submit a joint motion

to compel arbitration. Ordaz subsequently noticed Sirles for deposition. Copart filed its motion

to compel arbitration and a motion to quash the deposition notice. Ordaz responded by filing a

motion to compel discovery in which she sought pre-arbitration discovery pursuant to Section

171.086(a) of the Civil Practice and Remedies Code. Following a hearing, the trial court granted

Ordaz’s motion to compel discovery and denied Copart’s motion to quash the deposition notice.

                              PRE-ARBITRATION DISCOVERY

       In Issue One, Copart argues that the trial court clearly abused its discretion by granting

Ordaz’s motion to compel discovery and denying Copart’s motion to quash the deposition notice

for Kallie Sirles. Ordaz did not file a response to the motion to compel arbitration, but she argued

in her motion to compel discovery that she is entitled to pre-arbitration discovery under Section

171.086(a) of the Civil Practice and Remedies Code.

                                        Standard of Review

       To be entitled to mandamus relief, a relator must generally meet two requirements. First,

the relator must show that the trial court clearly abused its discretion. In re Prudential Insurance

Company of America, 148 S.W.3d 124, 135 (Tex. 2004). A trial court abuses its discretion when

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it acts arbitrarily, capriciously, and without reference to guiding principles. In re Green, 527
S.W.3d 277, 279 (Tex.App.--El Paso December 2, 2016, orig. proceeding); In re Mid-Century

Insurance Company of Texas, 426 S.W.3d 169, 178 (Tex.App.--Houston [1st Dist.] 2012, orig.

proceeding). Mandamus relief is appropriate when a trial court improperly orders pre-arbitration

discovery. See In re Houston Pipe Line Co., 311 S.W.3d 449, 451 (Tex. 2009); In re VNA, Inc.,

403 S.W.3d 483, 488 (Tex.App.--El Paso 2013, orig. proceeding); In re ReadyOne Industries, Inc.,

400 S.W.3d 164, 168-69 (Tex.App.--El Paso 2013, orig. proceeding); In re ReadyOne Industries,

Inc., 394 S.W.3d 680, 685-86 and 688 (Tex.App.--El Paso 2012, orig. proceeding); In re ReadyOne

Industries, Inc., 420 S.W.3d 179, 186-87 (Tex.App.--El Paso 2012, orig. proceeding).

                                   Relevant Law and Analysis

       Texas law encourages parties to resolve disputes through arbitration. See G.T. Leach

Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 508 (Tex. 2015); TEX.CIV.PRAC.&REM.

CODE ANN. §§ 154.002, 154.027. To that end, Section 171.021 of the Civil Practice and Remedies

Code mandates a trial court to order the parties to arbitrate on the application of a party showing

an agreement to arbitrate and the opposing party’s refusal to arbitrate. TEX.CIV.PRAC.&REM.CODE

ANN. § 171.021(a)(West 2011). Motions to compel arbitration are ordinarily decided in summary

proceedings “on the basis of affidavits, pleadings, discovery, and stipulations.” Kmart Stores of

Texas L.L.C. v. Ramirez, 510 S.W.3d 559, 565 (Tex.App.--El Paso 2016, pet. denied), quoting

Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992). A summary motion to compel

arbitration is essentially a motion for partial summary judgment, subject to the same evidentiary

standards. In re Jebbia, 26 S.W.3d 753, 756-57 (Tex.App.--Houston [14th Dist.] 2000, orig.

proceeding); see Jack B. Anglin, 842 S.W.2d at 269; Kmart Stores of Texas, 510 S.W.3d at 565.

A party seeking to compel arbitration must establish the existence of an arbitration agreement and

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show that the claims raised fall within the scope of the agreement. In re Oakwood Mobile Homes,

Inc., 987 S.W.2d 571, 573 (Tex. 1999)(orig. proceeding). If the movant has proven there is an

arbitration agreement as a matter of law, the trial court must compel arbitration. In re Jebbia, 26
S.W.3d at 757.

       If a party opposing the motion to compel arbitration denies the existence of the agreement,

the court is required to summarily determine that issue.         TEX.CIV.PRAC.&REM.CODE ANN.

§ 171.021(b). The non-movant can resist summary arbitration by raising an issue of material fact

regarding the existence of the agreement or whether the claims fall within the scope of the

agreement. In re Jebbia, 26 S.W.3d at 757. Additionally, the non-movant can resist summary

arbitration by presenting some evidence supporting every element of a defensive claim that there

is no enforceable agreement to arbitrate. In re Jebbia, 26 S.W.3d at 757. If the non-movant raises

an issue of fact, then the trial court must forego summary disposition and conduct an evidentiary

hearing sometimes referred to as a “Tipps hearing.” See Kmart Stores of Texas, 510 S.W.3d at

565. Conversely, if the movant carries its burden and the non-movant does not raise a material

issue of fact, the trial court is required to compel arbitration. In re Jebbia, 26 S.W.3d at 757.

       Ordaz did not file a response to the motion to compel arbitration contesting the existence

of the arbitration agreement or raising a defense to its enforcement. In her motion to compel

discovery, Ordaz made the following statement: “Plaintiff denies any enforceable arbitration

agreement.” She did not, however, offer any evidence in support of the statement. Consequently,

she has not established that she is entitled to an evidentiary Tipps hearing on the existence or

enforceability of the arbitration agreement.

       Citing Section 171.086(a)(4) and (6) of the Civil Practice and Remedies Code, Ordaz

contends that the trial court has discretion to order pre-arbitration discovery. The statute provides

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as follows:

       Before arbitration proceedings begin, in support of arbitration a party may file an
       application for a court order, including an order to:

                                       .         .          .

       (4) obtain from the court in its discretion an order for a deposition for discovery,
       perpetuation of testimony, or evidence needed before the arbitration proceedings
       begin;

                                       .         .          .

       (6) obtain other relief, which the court can grant in its discretion, needed to permit
       the arbitration to be conducted in an orderly manner and to prevent improper
       interference or delay of the arbitration.

TEX.CIV.PRAC.&REM.CODE ANN. § 171.086(a)(4), (6).

       The Supreme Court has held that the statute expressly authorizes pre-arbitration discovery

when a trial court cannot fairly and properly make its decision on the motion to compel arbitration

because it lacks sufficient information regarding the scope of an arbitration provision or other

issues of arbitrability. In re Houston Pipe Line Co., 311 S.W.3d 449, 451 (Tex. 2009)(citing

TEX.CIV.PRAC.&REM.CODE ANN. §§ 171.023(b), 171.086(a)(4),(6)). This is not, however, an

authorization to order discovery as to the merits of the underlying controversy. In re Houston Pipe

Line, 311 S.W.3d at 451. Motions to compel arbitration and any reasonably needed discovery

must be resolved without delay. Id.; Tipps, 842 S.W.2d at 269.

       In Houston Pipe Line, the relator signed an agreement to purchase gas from O’Connor &

Hewitt, Ltd., based on a specific price index. In re Houston Pipe Line, 311 S.W.3d at 450. The

contract included an arbitration provision. O’Connor later sued several defendants, including

Houston Pipe Line, alleging they had manipulated the index downward. Id. As a signatory to the

contract, Houston Pipe Line sought to enforce the arbitration provision. Id. Other defendants who

were not parties to the agreement sought to compel arbitration based on a direct benefits equitable

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estoppel theory. Id. O’Connor resisted arbitration by attacking the scope of the arbitration

provision and arguing it would be impossible to identify all potential defendants and to complete

damages calculations within the sixty day period specified by the arbitration provision for

discovery. Id. Rather than rule on the motion to compel arbitration, the trial court ordered

discovery to assist it in ruling on the motion to compel arbitration. Id. More specifically, the trial

court ordered discovery to determine if additional defendants could equitably invoke the

arbitration clause, whether O’Connor’s claims fell within the scope of the arbitration clause, and

if the time limitations imposed by the clause were jurisdictional. In re Houston Pipe Line, 311
S.W.3d at 450-51. The Supreme Court held that while the trial court has discretion to order pre-

arbitration discovery, the trial court abused its discretion because it ordered discovery which

related to the ultimate liability of the defendants rather than the scope of the arbitration agreement

and arbitrability, and the discovery was not limited to the issues raised by the motion to compel

arbitration. Id. at 451. On rehearing, the Court observed that the trial court retained jurisdiction

to order limited discovery related to scope or arbitrability if necessary. Id. at 452 (Opn. on reh’g).

       In an opinion issued this same date, we held that Section 171.086(a)(4) and (6) plainly

contemplates that the party seeking discovery under the statute must file an application for a court

order granting such relief.     In re DISH Network, No. 08-17-00161-CV (Tex.App.--El Paso

October 24, 2018, orig. proceeding); citing TEX.CIV.PRAC.&REM.CODE ANN. § 171.086(a)(4),

(6)(“a party may file an application for a court order, including an order to . . . (4) obtain from the

court in its discretion an order for a deposition for discovery, perpetuation of testimony, or

evidence needed before the arbitration proceedings begin….”). We further held that the party

seeking pre-arbitration discovery must show that the pre-arbitration discovery sought by the party

is reasonably necessary.      In re DISH Network, No. 08-17-00161-CV (Tex.App.--El Paso

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October 24, 2018, orig. proceeding); citing In re Houston Pipe Line, 311 S.W.3d at 452 (Opn. on

reh’g). This requirement is consistent with our holdings in the In re VNA and In re ReadyOne

cases that pre-arbitration discovery is available on a particular defense if the party opposing

arbitration shows or provides a colorable basis or reason to believe that the discovery requested is

material in establishing the defense. See In re VNA, Inc., 403 S.W.3d at 488; In re ReadyOne

Industries, Inc., 420 S.W.3d at 186. Ordaz argues that we should overrule the In re VNA and In re

ReadyOne cases, but we decline to do so.

       In her motion to compel discovery, Ordaz stated that she “denies any enforceable

arbitration agreement.” She also asserted that she is not required to accept Sirles’ testimony as

true and is entitled to cross-examine Sirles and conduct other reasonable discovery on the question

of whether an enforceable arbitration agreement exists. Additionally, Ordaz stated her intent to

notice Copart’s corporate representative for deposition. Ordaz asked the trial court to order that

she be permitted to conduct this discovery pursuant to Section 171.086(a)(4) and (6). As illustrated

by In re Houston Pipe Line, Section 171.086(a)(4) and (6) does not give the trial court unlimited

discretion to order pre-arbitration discovery. The trial court’s discretion in this regard is limited

to situations where the trial court cannot fairly and properly make its decision on the motion to

compel arbitration because it lacks sufficient information related to the specific issues identified

by the party resisting arbitration. See In re Houston Pipe Line, 311 S.W.3d at 451. The burden is

on the party seeking pre-arbitration discovery under Section 171.086(a) to show that the discovery

is necessary and related to the issues raised by the party’s motion. See id.

       Ordaz’s motion to compel discovery generally contests whether an arbitration agreement

exists. This is an issue of arbitrability. See G.T. Leach Builders, 458 S.W.3d at 520. The motion

does not, however, provide any basis for the trial court to conclude that it lacks sufficient

                                                -7-
information to determine whether an arbitration agreement exists. Consequently, the trial court

abused its discretion by compelling the deposition under these facts. In her mandamus response,

Ordaz contests the validity of her electronic signature on the arbitration agreement, but she did not

raise this argument in her motion or at the hearing as a basis for obtaining pre-arbitration discovery

under Section 171.086(a)(4) and (6). Even if Ordaz had raised this issue in the trial court, the

discovery order is overbroad because it did not limit the deposition of Sirles to this issue. See In

re Houston Pipe Line, 311 S.W.3d at 451. Issue One is sustained. It is unnecessary to address

Issue Two.

       We conditionally grant the writ of mandamus and direct the trial court to vacate the orders

compelling the deposition of Sirles and denying Copart’s motion to quash the deposition notice.

As the Supreme Court observed in Houston Pipe Line, the trial court retains discretion to order

limited discovery pursuant to a properly filed Section 171.086(a) motion. See In re Houston Pipe

Line, 311 S.W.3d at 452 (Opn. on reh’g). The trial court’s order must limit discovery to the

specific issues identified by the Section 171.086(a) motion. If Ordaz fails to file within thirty days

from the date of this opinion a motion establishing she is entitled to pre-arbitration discovery

pursuant to Section 171.086(a)(4) and (6) or fails to present evidence sufficient to entitle her to a

Tipps evidentiary hearing, the trial court is ordered to summarily rule on the motion to compel

arbitration. The motion to compel arbitration and any reasonable discovery should be resolved

without delay. See In re Houston Pipe Line, 311 S.W.3d at 452 (Opn. on reh’g). The writ of

mandamus will issue only if the trial court fails to comply.

October 24, 2018
                                               YVONNE T. RODRIGUEZ, Justice

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

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