Court Opinion

ID: 2905553
Source: CourtListenerOpinion
Date Created: 2015-09-09 23:04:16.243299+00
Date Added: 2024-06-11T11:37:21.920899
License: Public Domain

In The

Court of Appeals

Ninth District of Texas at Beaumont

____________________

NO. 09-04-526 CV

____________________

IN RE RLS LEGAL SOLUTIONS, L.L.C. and YANDELL ROGERS III

Original Proceeding

OPINION

 Amy Maida sued RLS Legal Solutions, L.L.C. and Yandell Rogers III (1) for various
claims related to her employment.  The employment agreement of December 7, 2001, has
an arbitration provision, as follows:
	15.	Arbitration of Disputes.  Any legal or equitable dispute or
controversy arising under, out of, or in connection with or in relation
to this Agreement; or arising out of, or related to the employment of
Employee, the terms and conditions of employment, or the
termination of Employee by the Company (other than worker's
compensation claims), shall be resolved exclusively by binding
arbitration.

RLS is before this Court on its second petition for writ of mandamus.  In the first
mandamus proceeding, we ordered the trial court to hold an evidentiary hearing on disputed
material facts regarding the arbitration agreement.  See Rogers v. Maida, 126 S.W.3d 643,
646 (Tex. App.--Beaumont 2004, orig. proceeding).  This mandamus petition attacks an
order denying RLS's motion to compel arbitration.  The parties agreed the Federal
Arbitration Act applies.  Id. at 644.  
	A writ of mandamus will issue to correct a clear abuse of discretion when there is
no adequate remedy at law.  See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex.
2001).  The trial court abuses its discretion if it reaches a decision so arbitrary and
unreasonable as to amount to a clear and prejudicial error of law.  See Walker v. Packer,
827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding).  When the trial court's decision rests
on resolution of fact issues, the party opposing the trial court's decision must establish that
the court could reasonably have reached only one decision.  Id. at 839-40.  The trial court
has no discretion in determining what the law is or applying the law to the facts.  Id. at
840.  A party erroneously denied the right to arbitrate under the Federal Arbitration Act
has no adequate legal remedy and may seek reversal of the order by filing a petition for
writ of mandamus.  See In re FirstMerit Bank, N.A., 52 S.W.3d at 753. 
	There is a strong presumption favoring arbitration, but the presumption arises only
if a valid arbitration agreement exists.  See J. M. Davidson, Inc. v. Webster, 128 S.W.3d
223, 227 (Tex. 2003);  In re Oakwood Mobile Homes, Inc., 987 S.W.2d at 573.  Maida
says there was no enforceable agreement to arbitrate because RLS procured the arbitration
agreement by economic duress.  The trial court heard evidence and denied the motion to
compel arbitration.  In its first issue, RLS argues the trial court abused its discretion by
not submitting Maida's allegation of economic duress to arbitration.  In its second issue,
RLS says Maida did not meet her burden of proof on the elements of economic duress. 
We consider these two issues together.  
 Economic duress occurs when one party takes unjust advantage of the other party's
economic necessity or distress to coerce the other party into making an agreement.  See
King v. Bishop, 879 S.W.2d 222, 224 (Tex. App.--Houston [14th Dist.] 1994, no writ). 
It is a defense to the enforcement of the contract. Id.  A party claiming duress must show
a threat by the other party to do something which the other party had no legal right to do,
the threat destroyed the free agency of the person to whom it was directed, the restraint
caused by the threat was imminent, and the person against whom the threat was directed
had no means of protection.  See Sudan v. Sudan, 145 S.W.3d 280, 286 (Tex. App.--Houston [14th Dist.] 2004, no pet. h.).    
	RLS cites In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001), and 
Shearson Lehman Bros., Inc. v. Kilgore, 871 S.W.2d 925, 927-28 (Tex. App.--Corpus
Christi 1994, orig. proceeding) for the proposition that Maida's allegations of economic
duress relate to the employment contract as a whole, rather than to the arbitration
provision, and the entire matter therefore must be arbitrated.  In FirstMerit Bank, the
purchasers of a mobile home signed a retail installment financing agreement.  See
FirstMerit Bank, 52 S.W.3d at 752.  The agreement contained an "Arbitration
Addendum," which required arbitration of any disputes.  Id. at 752-53.  When the mobile
home was delivered, the purchasers attempted to revoke their acceptance.  They claimed
the home was defective and promised repairs were not made.  Id. at 753.  In determining
the purchasers' defenses did not defeat arbitration, the Supreme Court held the defenses
"must specifically relate to the Arbitration Addendum itself, not the contract as a whole,
if they are to defeat arbitration."  Id. at 756.  The Supreme Court held:  
	Once the trial court concludes that the arbitration agreement encompasses the
claims, and that the party opposing arbitration has failed to prove its
defenses, the trial court has no discretion but to compel arbitration and stay
its own proceedings.  (footnotes omitted).

Id. at 753-54.  The initial question here is whether Maida's economic duress defense
specifically relates to the arbitration provision.  See generally In re Halliburton Co., 80
S.W.3d 566, 572 (Tex. 2002) ("courts may consider both procedural and substantive
unconscionability of an arbitration clause in evaluating the validity of an arbitration
provision."); see also Kilgore, 871 S.W.2d at 928 ("whether there is a valid agreement
to arbitrate is an initial question for the trial court and not the arbitrators").  
	Maida testified in support of her assertion the arbitration agreement was wrongfully
procured by economic duress.  She testified she objected to signing the agreement because
of the arbitration clause and for other reasons.  When asked whether she liked the
arbitration clause, Maida stated:
	     I did not.  In fact, I spoke with several of my attorney friends about the
arbitration clause and the non-compete clauses.  The arbitration clause was
going to allow me not to be able to be in a position that I needed to be in
now, and that is, to have someone represent me to help me where I feel like
the company did me wrong, and that is, not pay me correctly, not pay me at
all, and allow me to be in a position to have to quit so that I could not be
making the kind of money that I had once made[.]

Maida also testified that she did not receive her regularly scheduled pay on Friday,
November 16, 2001, for work already performed because she did not initially sign the
agreement.  Maida testified that she was told she would not be paid until she signed.  In
her affidavit, Maida stated as follows:
	     After I refused to agree to this arbitration clause, I was told that my
payroll checks would not be direct deposited into my account until I signed
the agreement and that I would not be paid until I signed the agreement.  I
had received my paychecks by direct deposit for three (3) years, but was told
"that a phone call to cancel my direct deposit would be made to the payroll
department unless I signed my agreement."  . . . So even though they held
checks for money I had already earned and was entitled to, I was told that
"I would not receive any more paychecks until I signed my agreement."

RLS stopped the direct deposit payment of Maida's salary.  She was afraid she would be
unable to meet her financial obligations without her regular compensation and benefits. 
Maida's affidavit further stated: 
	I needed my paycheck to meet my financial responsibilities since I am a
single family income household provider.  I had no way to pay my
mortgage, vehicle note, car and homeowner's insurance as well as any
household bills without my compensation checks so by their wrongful
conduct they forced me to sign even though I vehemently objected to the
arbitration clause. . . .  I was entitled to be paid a salary and commissionable
amount based on my personal sales and there was no clause whatsoever that
provided that the company could withhold my earned pay for any reason,
including forcing me to sign a new agreement.  Therefore, the company
coerced me into signing the arbitration agreement by wrongfully withholding
pay to which I was contractually entitled. 

Maida testified that when she finally signed and returned the agreement, she told RLS she
was doing so under duress.  
	Maida testified that after signing and returning the agreement, she was given a
manual check on November 19, 2001.  Maida said that when she had asked why she had
not been paid by direct deposit as usual, she was told her paycheck would be held until she
signed the agreement.  A co-worker also testified RLS threatened to withhold pay for work
already performed until the agreements were signed.  The co-worker testified that
employees were told "If you guys don't get these things signed, no paychecks on Friday." 
The co-worker also stated "I needed my paycheck on Friday, so I signed it right then and
there in the office."
	In rebuttal, RLS offered evidence Maida was paid all amounts owed on every
regularly scheduled payday in November and December 2001, and Maida received a
manual check no later than November 19, 2001.  RLS offered evidence Maida was to be
paid under her old agreement until the new agreement was signed.  
	As the fact finder at the evidentiary hearing, the trial court was the exclusive judge
of the credibility of witnesses and the weight to be given their testimony.  See Harris v.
Nelson, 25 S.W.3d 917, 919-20 (Tex. App.--Beaumont 2000, no pet.).  The trial court 
reasonably could have found Maida's testimony credible and not believed RLS's
explanation.  The economic duress defense and Maida's objection specifically related to
the arbitration agreement itself, though Maida also objected to other provisions in the
contract.  The evidence was sufficient to support a determination that RLS withheld
Maida's compensation for work already performed for the purpose of obtaining her
agreement to arbitrate employment disputes, and that the withholding of her compensation
for work already performed defeated Maida's free agency.  See generally Windham v.
Alexander, Weston & Poehner, P.C., 887 S.W.2d 182, 185 (Tex. Civ. App.--Texarkana
1994, writ denied); Simpson, 724 S.W.2d at 109.  On this record the trial court reasonably
could have found the restraint was imminent and Maida had no means of protection from
the threat.  These facts differ from those in In re Halliburton because here the withholding
of payment was for work already performed, and was not "merely [premising] continued
employment on acceptance of new or additional employment terms."  See Halliburton, 80
S.W.3d at 572.  Even if she was not entitled to continued employment, payment was due
for work already performed, and RLS was not legally entitled to condition that payment
on her signing an agreement to arbitrate.  The finding implicit in the order is that there was
no valid, enforceable agreement to arbitrate because it was procured by economic duress. 
Relator has not shown that this decision was arbitrary and unreasonable, or that in
resolving the fact issues the trial court could not reasonably have reached this decision. 
See Walker v. Packer, 827 S.W.2d 839-40.  Issues one and two are overruled.
	In its third issue, RLS complains Maida's responses to requests for admissions were
filed in bad faith and the trial court abused its discretion by not deeming the requests
admitted.  Maida contends RLS waived the issue by failing to present it to the trial court. 
With its reply to Maida's response, RLS provided a "Second Supplement to Motion to
Compel Arbitration," in which RLS objected to Maida's responses and sought to have all
of the requests deemed admitted.  In its motion, RLS argued Maida had not provided any
substantive answers, and that she had denied basic, undisputed facts, as well as facts she
admitted in her deposition.  The issue is preserved for review.  
	Rule 198.1 of the Texas Rules of Civil Procedure provides that a party may
propound written requests for admissions.  See Tex. R. Civ. P. 198.1.  Rule 198.2(b)
states as follows:
	(b)	Content of response.  Unless the responding party states an objection
or asserts a privilege, the responding party must specifically admit or
deny the request or explain in detail the reasons that the responding
party cannot admit or deny the request.  A response must fairly meet
the substance of the request.  The responding party may qualify an
answer, or deny a request in part, only when good faith requires.  

Tex. R. Civ. P. 198.2(b).  If a response is not timely served, the requests are considered
admitted without the necessity of a court order.  See Tex. R. Civ. P. 198.2(c).  The party
who has requested admissions may move to determine the sufficiency of an answer or
objection.  See Tex. R. Civ. P. 215.4(a).  "[A]n evasive or incomplete answer may be
treated as a failure to answer[,]" and "[i]f the court determines that an answer does not
comply with the requirements of Rule 198, it may order either that the matter is admitted
or that an amended answer be served."  Id.  
	In support of its argument, RLS cites Taylor v. Taylor, 747 S.W.2d 940, 945 (Tex.
App.--Amarillo 1988, writ denied), in which the court held that, once the trial court found
there was no proper response to the requests and that the responses did not satisfy the
requirement of the rule, "the court was authorized, if not required, by the rules to deem
the matters admitted."  RLS argues "The vast majority of the requests for admission go
to similar, uncontroversial and basic information that has been independently established
through documentary evidence.  For example, Maida denied matters such as her income
as reported in her W-2's for 1999, 2000, and 2001."   
	There is no indication the trial court found those responses which relate specifically
to the withholding of the relevant check -- for example, the responses to requests nos. 21,
25 and 26 -- were evasive or otherwise not in compliance with Rule 198.  Rather, the trial
judge's denial of the motion to compel arbitration indicates the judge believed the check
was not paid timely, and therefore those three responses were properly denied.  Even if
some of the requests for admissions RLS labels "uncontroversial" should have been
deemed admitted by the trial court, the trial court was not required to deem all the requests
admitted as a discovery sanction and then compel arbitration.  The failure to impose that
result as a sanction was not an abuse of discretion.  Issue three is overruled.  The petition
for writ of mandamus is denied.
	PETITION FOR WRIT OF MANDAMUS DENIED.

							_________________________________
								DAVID GAULTNEY
									Justice

Submitted on December 21, 2004
Opinion Delivered January 27, 2005

Before McKeithen, C.J., Burgess and Gaultney, JJ.
1. We will refer to relators together as RLS.