Court Opinion

ID: 4446034
Source: CourtListenerOpinion
Date Created: 2019-10-11 06:10:47.675725+00
Date Added: 2024-06-11T14:27:57.438454
License: Public Domain

Opinion issued October 10, 2019

                                  In The

                            Court of Appeals
                                  For The

                        First District of Texas
                         ————————————
                           NO. 01-18-00977-CV
                         ———————————
  STADIUM MOTORCARS, LLC D/B/A CENTRAL HOUSTON NISSAN
   AND CENTRAL HOUSTON MOTORCARS, LLC D/B/A CENTRAL
              HOUSTON CADILLAC, Appellants
                                    V.
                      CHRIS SINGLETON, Appellee

                     On Appeal from the 269th District
                           Harris County, Texas
                     Trial Court Case No. 2018-35688

                     MEMORANDUM OPINION

     Appellants Stadium Motorcars, LLC d/b/a Central Houston Nissan and

Central Houston Motorcars, LLC d/b/a Central Houston Cadillac (collectively,
“Central Nissan”) appeal the trial court’s judgment confirming an arbitration award

in favor of appellee, Chris Singleton. In two issues, Central Nissan argues that (1)

arbitration awards that conflict with public policy may be vacated on common law

grounds, and (2) the trial court erred in confirming the arbitration award because the

award conflicts with Texas’s public policy as an employment at-will state. We

affirm.

                                    Background

      Singleton is an automotive repair professional with more than twenty years’

experience in the automotive industry. In mid-February 2016, Singleton left his job

as body shop manager at Baker Nissan, a Houston area car dealership, to begin a

new position at a different Houston area dealership, Central Nissan. The owners of

Central Nissan own other car dealerships in the Houston area, including Central

Cadillac. Singleton signed a one-year guaranteed employment contract with Central

Nissan on February 11, 2016.

      In his new position, Singleton’s responsibilities included opening, and later

managing, a new body shop for Central Nissan. Singleton’s duties also included

helping transfer the pre-existing collision business at Central Cadillac to the new

body shop at Central Nissan.

      Shortly after he was hired by Central Nissan, Singleton uncovered evidence

that employees of Central Nissan and one of its sister companies were engaged in

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what he believed to be criminal insurance fraud. The fraud involved the submission

of fraudulent claims to insurance companies for reimbursement of repairs not

actually performed. On May 2, 2016, Singleton prepared a spreadsheet summarizing

the fraudulent invoicing practice and delivered it to his immediate supervisor.

Singleton also informed Central Nissan’s owner and controller of the ongoing fraud.

Finally, Singleton advised Central Nissan’s management that he was unwilling to

participate in these activities. The following day, Central Nissan fired Singleton.

Prior to Singleton’s dismissal, no written record existed indicating Singleton had

been admonished or disciplined for poor performance, or any other reason, by

Central Nissan.

      At the time of Singleton’s hiring, Central Nissan required Singleton to sign an

agreement stipulating that any disputes arising out of Singleton’s employment must

be submitted to arbitration.    The agreement further mandated that arbitration

proceedings “shall be . . . carried out in conformity with the procedures of the Texas

Arbitration Act.”    In accordance with the agreement, Singleton brought an

arbitration proceeding against Central Nissan.      Singleton asserted that Central

Nissan wrongfully fired him because he refused to perform an illegal act. In

submitting to arbitration, Singleton and Central Nissan further agreed that the

“Arbitrator’s award will be binding and not subject to appeal, except for the limited

grounds set forth in Texas Civil Practice & Remedies Code section 171.088.” At

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the conclusion of the arbitration, the arbitrator found that Central Nissan fired

Singleton because Singleton refused to participate in illegal and fraudulent activity.

As a result, the arbitrator awarded Singleton damages totaling $334,922.

      On May 29, 2018, Central Nissan filed a petition in district court to vacate the

arbitration award, asserting that the award was contrary to Texas public policy

because Texas is an at-will employment state. In response, Singleton asserted a

general denial and requested the court to confirm the award and enter a judgment

against Central Nissan. On September 28, 2018, the court confirmed the arbitration

award and entered judgment in favor of Singleton. This appeal followed.

                                     Discussion

      In two issues, Central Nissan argues that (1) courts may review arbitration

awards on common law public policy grounds, and (2) the trial court erred in

confirming the arbitration award because it is contrary to Texas’s public policy as

an at-will employment state.

   A. Standard of Review and Applicable Law

      A trial court’s confirmation or vacatur of an arbitration award is reviewed de

novo. Forest Oil Corp. v. El Rucio Land & Cattle Co., 446 S.W.3d 58, 75 (Tex.

App.—Houston [1st Dist.] 2014), aff’d, 518 S.W.3d 422 (Tex. 2017). Judicial

review of arbitration awards is “extraordinarily narrow” because Texas law favors

the arbitration of disputes. Id. In reviewing an arbitration award, “courts indulge

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every reasonable presumption to uphold an award, and none against it.”              IQ

Holdings, Inc. v. Villa D’Este Condo. Owner’s Ass’n, Inc, 509 S.W.3d 367, 372

(Tex. App.—Houston [1st Dist.] 2014, no pet.). The review of an arbitration award

is centered on “the integrity of the process, not the propriety of the result.” Forest

Oil Corp., 446 S.W.3d at 75.

      When reviewing an arbitration award under the Texas Arbitration Act

(“TAA”), a court “shall confirm” the arbitration award “[u]nless grounds are offered

for vacating, modifying, or correcting an award under Section 171.088 or 171.091.”

TEX. CIV. PRAC. & REM. CODE § 171.087. A party seeking to avoid confirmation of

an arbitration award under the TAA may do so “only by demonstrating a ground

expressly listed in section 171.088.” Hoskins v. Hoskins, 497 S.W.3d 490, 495 (Tex.

2016).

   B. Analysis

      In its first issue, Central Nissan contends that arbitration awards that conflict

with public policy can be vacated on common-law grounds.

      In Hoskins, the Texas Supreme Court addressed a split among the courts of

appeals as to “whether the TAA permits vacatur of an arbitration award on common-

law grounds not enumerated in the statute.” 497 S.W.3d at 493. Hoskins involved

a dispute over a family trust that culminated in the appointment of an arbitrator to

obtain “resolution through arbitration pursuant to the provisions of the Texas

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General Arbitration Act.” Id. at 492. In an effort to overturn the trial court’s

confirmation of the arbitration award, the plaintiff argued that the award should be

vacated on the common law ground that the arbitrator “demonstrated a manifest

disregard of the law . . . .” Id. at 492–93.

      Interpreting the TAA, the Court concluded that “[t]he statutory text could not

be plainer: the trial court ‘shall confirm’ an award unless vacatur is required under

one of the enumerated grounds in section 171.088.” Id. at 494. Because an

arbitrator’s “manifest disregard of the law” is not a ground for vacatur enumerated

in section 171.088, and “the TAA leaves no room for courts to expand on those

grounds,” the Court affirmed the judgment of the lower court. Id. at 491, 494.

      In support of the proposition that arbitration awards that conflict with public

policy may be vacated on common law grounds, Central Nissan relies on Jefferson

County v. Jefferson County Constables Association, 546 S.W.3d 661 (Tex. 2018).

In that case, the court affirmed the lower court’s confirmation of an arbitration award

stemming from the County’s violation of its collective bargaining agreement with

the deputy constables’ association. Id. at 663. In its analysis, the Court observed

that the TAA does not govern collective bargaining agreements. Id. at 665. Because

the TAA was inapplicable, the Court reviewed the arbitrator’s award under the

common law. Id. In doing so, the court acknowledged that “the common law allows

vacatur of an arbitration award if the arbitrator exceeds the scope of his authority or

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the award ‘clearly violates carefully articulated, fundamental [public] policy.’” Id.

(quoting CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 239 (Tex. 2002)).

      Central Nissan points to the fact that Jefferson County was decided after the

Court decided Hoskins. It argues that because Jefferson County permitted vacatur

of an arbitration award on common law grounds after the Court’s holding in Hoskins,

Hoskins was overruled by Jefferson County.        However, Jefferson County and

Hoskins differ in an important respect. Jefferson County involved an arbitration

award stemming from the violation of a collective bargaining agreement which is

not subject to the TAA. Id. Therefore, the Court’s review of the award was

conducted under the common law. Id. In Hoskins, however, the parties executed an

agreement that called for arbitration subject to the TAA. Hoskins, 497 S.W.3d at

492. Consequently, the TAA was the governing law and the grounds for vacatur of

the award were limited to those specifically enumerated in section 171.088.

      Here, as in Hoskins, both parties agreed that arbitration would be governed by

the TAA. Furthermore, both parties specifically agreed that the arbitration award

“will be binding and not subject to appeal, except for the limited grounds set forth

in Texas Civil Practice & Remedies Code section 171.088.” Because the arbitration

award in this case stems from an arbitration proceeding governed by the TAA, the

statute, not common law, is controlling. The only grounds for vacatur of this

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arbitration award are those enumerated in section 171.088. See Hoskins, 497 S.W.3d

at 494. We overrule Central Nissan’s first issue.

      In its second issue, Central Nissan argues that the trial court erred in

confirming the arbitration award because the award is contrary to Texas public

policy as an employment-at-will state.

      Texas has long adhered to the employment at-will doctrine.1 See E. Line &

R.R.R. Co. v. Scott, 10 S.W. 99, 102 (Tex. 1888). However, in Sabine Pilot Service,

Inc. v. Hauck, the Court recognized a narrow exception to the doctrine for an

employee discharged “for the sole reason that the employee refused to perform an

illegal act.” 687 S.W.2d 733, 735 (Tex. 1985). Under this exception, the plaintiff

bears the burden “to prove by a preponderance of the evidence that his discharge

was for no reason other than his refusal to perform an illegal act.” Id. The Sabine

Pilot doctrine applies only when an employee is “unacceptably forced to choose

between risking criminal liability or being discharged from his livelihood.” Winters

v. Houston Chronicle Pub. Co., 795 S.W.2d 723, 724 (Tex. 1990).

      Central Nissan contends that Singleton’s discharge does not fit within the

Sabine Pilot exception. Specifically, it argues that for a discharged employee to be

protected by Sabine Pilot, an employer must expressly request the employee to

1
      Employment for an indefinite term may be terminated at will and without cause.
      See Winters v. Chronicle Publ’g. Co., 795 S.W.2d 723, 723 (Tex. 1990).
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perform an illegal act. Central Nissan reasons that because it did not explicitly

request that Singleton perform an illegal act, Singleton’s actions essentially amount

to internal private whistleblowing, which is not protected under Sabine Pilot. See

Garza v. Doctors on Wilcrest, P.A., 976 S.W.2d 899, 901 (Tex. App.—Houston

[14th Dist.] 1998, pet. denied).

      However, courts have held that an employee may assert a Sabine Pilot claim

despite the fact that an employer fails to “directly confront an employee and make

an affirmative statement that the employee will be terminated if he refuses to perform

an illegal act.” Higginbotham v. Allwaste, Inc., 889 S.W.2d 411, 413 (Tex. App.—

Houston [14th Dist.] 1994, writ denied). In Higginbotham, an employee for an

asbestos abatement services company refused to hide material overstatements of his

employer’s quarterly profits. See id. at 412. The employee was subsequently fired

and filed a wrongful termination claim. Id. at 412. In determining whether the

employee’s refusal to perform illegal acts provided a basis to prevail on a Sabine

Pilot claim, the court observed that “[g]enerally, one who seeks the performance of

an illegal act does so with subtlety and stealth.” Id. at 416.

      Similarly, in Rescar, Inc. v. Ward, a plant manager alerted his supervisors to

environmental violations, including the illegal dumping of toxic chemicals. 60
S.W.3d 169, 174 (Tex. App.—Houston [1st Dist.] 2001, judgm’t vacated w.r.m.).

The manager refused to participate in these activities and was later fired by his

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employer. Id. at 174, 177. The court concluded that “there was more than a scintilla

of evidence in the record . . . that [the employee] was discharged for the sole reason

he refused to perform one of these illegal acts.” Id. at 178.

      In Garza, an x-ray technician sued her former employer for wrongful

termination after being discharged for alerting the Texas Board of Medical

Examiners that one of her colleagues was performing x-rays on patients without

proper certification and without the use of proper protective shielding. Garza, 976
S.W.2d at 900. After the jury found for the technician and awarded damages, the

trial court granted the defense’s motion for judgment notwithstanding the verdict.

Id. On appeal, the court affirmed the lower court, finding that the Sabine Pilot

exception did not apply because the technician “was not unacceptably forced to

choose between risking criminal liability or being discharged from her livelihood.”

Id. at 901. Moreover, the technician failed to meet her burden “to prove by a

preponderance of the evidence that her discharge was for no reason other than her

refusal to perform an illegal act.” Id.

      The court’s refusal to extend Sabine Pilot in Garza was not because the

employer failed to explicitly request the technician to perform an illegal act. Rather,

it was because the technician was not forced “to choose between risking criminal

liability or being discharged from her livelihood.” Id. Here, in contrast, Singleton’s

refusal to participate in an ongoing criminal insurance fraud perpetrated by

                                          10
employees of Central Nissan directly resulted in his firing. Thus, even if the

common law applied and permitted vacatur of Singleton’s arbitration award for

public policy reasons, Singleton presents a Sabine Pilot claim consistent with

Texas’s employment-at-will policy. Accordingly, we overrule Central Nissan’s

second issue.

   C. Frivolous Appeal

      In his brief, Singleton requests that this Court impose sanctions on Central

Nissan for filing a frivolous appeal. See TEX. R. APP. P. 45.

      We may award just damages to a prevailing party if we objectively determine,

after considering “the record, briefs, or other papers filed in the court of appeals,”

that an appeal is frivolous. Id.; Woods v. Kenner, 501 S.W.3d 185, 198–99 (Tex.

App.—Houston [1st Dist.] 2016, no pet.). An appeal is frivolous when the record,

viewed from the perspective of the advocate, does not provide reasonable grounds

for the advocate to believe that the case could be reversed. Smith v. Brown, 51
S.W.3d 376, 381 (Tex. App.—Houston [1st Dist.] 2001, pet. denied). The decision

to grant appellate sanctions is a matter of discretion that an appellate court exercises

with prudence and caution and only after careful deliberation. Id. And Rule 45 does

not require the Court to award just damages in every case in which an appeal is

frivolous. Glassman v. Goodfriend, 347 S.W.3d 772, 782 (Tex. App.—Houston

[14th Dist.] 2011, pet. denied).

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      After a review of the record, briefing, and other papers filed in this Court, we

deny Singleton’s request for sanctions. See TEX. R. APP. P. 45.

                                    Conclusion

      We affirm the trial court’s judgment.

                                              Russell Lloyd
                                              Justice

Panel consists of Justices Lloyd, Goodman, and Landau.

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