Court Opinion

ID: 9634677
Source: CourtListenerOpinion
Date Created: 2023-08-22 13:20:12.449969+00
Date Added: 2024-06-11T09:43:04.202985
License: Public Domain

CASTILLO, Justice,
dissenting.
I concur with the majority’s decision to deny Davidson’s petition for writ of mandamus. However, with regard to the majority’s decision to affirm the trial court’s order denying Davidson’s motion to compel arbitration, I respectfully dissent. I would hold that a valid arbitration agreement exists and the claim asserted falls within the scope of the agreement.
JURISDICTION
Both the petition for writ of mandamus and the interlocutory appeal address the propriety of the trial court’s denial of an at will employer’s motion to stay the trial court proceedings and compel arbitration.1 *515To determine subject matter jurisdiction over and thus the proper disposition of the matter before us, we must first determine whether the FAA or the TGAA applies.2
It is undisputed that Davidson seeks arbitration under both acts and that the arbitration agreement addressed both. "Where the parties designate in the arbitration agreement which arbitration statute they wish to have control, the court should apply their choice. D. Wilson Constr. Co. v. Cris Equipment Co., 988 S.W.2d 388, 392 (Tex.App.-Corpus Christi 1999, orig. proceeding). Here, the parties agreed to apply whichever act “shall have the broadest effect.” For purposes of our subject matter jurisdiction, however, jurisdiction cannot be conferred by the parties’ agreement. Russ Berrie & Co. v. Gantt, 998 S.W.2d 713, 715 (Tex.App.—El Paso 1999, no. pet.). Accordingly, the agreement and record before us are first examined under the federal act to see if there is evidence of a transaction affecting interstate commerce.3 See In re Pamela Godt, 28 S.W.3d 732, 737 (Tex.App.-Corpus Christi 2000, orig. proceeding) (federal act will not be applied if the contract does not relate to interstate commerce).
The record before us is scant. The undisputed facts show that Webster resides in Aransas Pass, Texas and his former employer J.M. Davidson, Inc., a corporation authorized to do business in the state of Texas, is located in Aransas Pass as well. Webster was a heavy-equipment mechanic and was injured. These facts are insufficient to conclusively establish a “transaction involving commerce.”4 Therefore, based on the record presented to this Court, I concur in the majority decision to deny mandamus relief under the FAA.5 Our jurisdiction therefore is premised on the provisions of the TGAA. Tex.Civ.PRAc. & Rem.Code Ann. § 171.098(a)(1) (Vernon Supp.2001).
*516Since no evidence other than the “Alternative Dispute Resolution Policy” in question was introduced at the hearing on the motion to compel arbitration, there are no factual questions in dispute. The only issue before us, then, is the trial court’s legal interpretation of the arbitration provision. Accordingly, de novo review is appropriate. Nationwide of Bryan, Inc. v. Dyer, 969 S.W.2d 518, 520 (Tex.App.—Austin 1998, no pet.).
THE AGREEMENT TO ARBITRATE
A party seeking to compel arbitration must make an “application” for a court order. Tex.Civ.Prac. & Rem.Code Ann. §§ 171.021(a), 171.024(b) (Vernon Supp. 2001). Once a party requests arbitration and demonstrates that a written agreement to arbitrate exists and the claims presented fall within the scope of that agreement, the trial court shall enter an order requiring arbitration of those claims. Tex.Civ.Prac. & Rem.Code § 171.021 (Vernon Supp.2001); Capital Income Props, v. Blackmon, 843 S.W.2d 22, 23-24 (Tex.1992). The initial burden of establishing that a valid arbitration agreement exists is on the party seeking arbitration. EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 91 (Tex.1996). Once the existence of an arbitration agreement has been established, a presumption attaches favoring arbitration. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996); Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898-99 (Tex.1995) (orig.proceeding); Dallas Cardiology Assoc., P.A. v. Mallick, 978 S.W.2d 209, 212 (Tex.App.—Texarkana 1998, pet. denied). The burden then shifts to the opposing party to establish some ground for the revocation of the arbitration agreement. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999) (per curiam). Since the question of whether a valid arbitration agreement exists is governed by substantive contract law, a reviewing court must determine whether both parties willingly entered into a mutually binding contract for arbitration for which consideration was given. See Kline v. O’Quinn, 874 S.W.2d 776, 782 (Tex.App.—Houston [14th Dist.] 1994, writ denied).
DISCUSSION
Davidson filed a verified copy of a written arbitration agreement which Webster signed. Central to this dissent is that the document before us provides that the parties “mutually agree and contract that any and all claims, disputes or controversies ... including the arbitrability of any claim, dispute or controversy shall be exclusively and finally settled by binding arbitration ... ”. That the parties agreed to arbitrate the arbitrability of any claim, dispute or controversy presents the most compelling reason to enforce the agreement.
The current dispute entails Davidson’s contention that the arbitration agreement is valid and Webster’s contention that it is not.6 Neither party disputed the existence of the agreement to arbitrate, and neither party challenged consent to the agreement.7 Davidson has made an initial *517showing that the parties agreed to arbitrate. The parties’ agreement to submit the arbitrability of any claim, dispute or controversy to arbitration supports a finding that the current dispute is within the scope of the arbitration agreement.
Concluding that the agreement is illusory, however, the majority holds that Davidson did not meet its burden of proof to show that a binding arbitration agreement exists absent consideration therefor and further holds that the agreement was not binding on both parties. The majority’s conclusions are addressed seriatim.

Consideration

The majority concludes that the agreement to arbitrate is illusory because Davidson provided no consideration. The agreement expressly provides that the parties “mutually agree and contract” to submit their disputes to arbitration. The agreement also expressly waives the parties’ respective right to trial by jury. Both parties agreed to submit any claim, dispute or controversy, including the arbitrability thereof, to arbitration and in return each relinquished trial by jury. Both parties agreed and were, therefore, obligated to submit not only the arbitrability of their agreement but also the arbitrability of Webster’s retaliation claim to binding arbitration.
The essence of arbitration is the agreement to submit a controversy to a third party. See Manes v. Dallas Baptist Coll., 638 S.W.2d 143, 145 (Tex.App.—Dallas 1982, writ ref'd n.r.e.). The purpose of arbitration is to avoid the formalities, delay and expense of ordinary litigation. Ferguson v. Ferguson, 110 S.W.2d 1016, 1021 (Tex.App.—Eastland 1937, no writ). Consideration is a fundamental element of every valid contract; it can consist of a benefit to the promisor or a loss or detriment to the promisee. Smith v. Renz, 840 S.W.2d 702, 704 (Tex.App.—Corpus Christi 1992, writ denied). Where there is an arbitration agreement, the benefit of the bargain is the right to avoid the expense and delay of litigation by arbitrating. In re Jebbia, 26 S.W.3d 753, 756 (Tex.App.—Houston [14th Dist.] 2000, orig. proceeding).
A written instrument reciting a consideration imports one. Warren v. Gentry, 21 Tex.Civ.App. 151, 50 S.W. 1025, 1025-26 (Tex.Civ.App. 1899, no writ). To offset this legal presumption of consideration, it was incumbent upon Webster to present legally admissible evidence on the question of lack of consideration. He did not. Accordingly, the record before us discloses that his employer and he agreed to a forum outside the courtroom to address their claims, disputes, and controversies. By their agreement, both parties stood to benefit by the reduced cost and time to determine disputes, which is the objective of arbitration. At the time they agreed to arbitrate, both parties gave up something of value to them-the right to take the case directly to a jury trial. This mutual agreement provides sufficient consideration to support the arbitration agreement. In re Jebbia, 26 S.W.3d at 756; In re Alamo Lumber Co., 23 S.W.3d 577, 579 (Tex.App.—San Antonio 2000, orig. proceeding).

*518
Davidson’s right to modify or terminate personnel policies

The majority concludes that arbitration is not binding on both parties because Davidson retained the absolute right to modify or terminate the agreement at any time. The agreement to arbitrate is contained in the same document that also contains a paragraph addressing employment application policies. This second paragraph contains the statement that the company “reserves the right to unilaterally abolish or modify any personnel policy without prior notice,” upon which the majority bases its holding. The second paragraph also contains language stating that “employment will be ‘at-will’ “ and that Davidson may terminate “employment at any time and for any reason.”8
An agreement to arbitrate contained in a written contract is separable from the entire contract and is valid and enforceable in spite of any attack made upon the contract as a whole. Pepe Int’l Dev. Co. v. Pub. Brewing, 915 S.W.2d 925, 932 (Tex.App.-Houston [1st Dist.] 1996, no writ). That the employer has the right to unilaterally terminate or modify personnel policies does not negate the employee’s right to compel arbitration of “any claim, dispute or controversy” in conjunction with his employment. Id.; Henry v. Gonzalez, 18 S.W.3d 684, 690 (Tex.App.—San Antonio 2000, pet. dism’d). In the event the employer exercised that right, the employee retained the right to force arbitration on the issue. At all times, Webster retained the right to compel arbitration of any claim, dispute or controversy. Nothing in the document before us limits the ability of either the employer or the employee to terminate employment at will.
The majority concludes that the opinions in In re Jebbia and In re Alamo Lumber Co., upon which Davidson relies, are not controlling. The majority acknowledges that in both cases the language of the arbitration agreement was held to bind both parties and that mutual promises to arbitrate supplied valid consideration. Relying upon Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386 (Tex.App.—Houston [14th Dist.] 1998, writ dism’d w.o.j.), the majority concludes that the agreement here sought to bind only the employee. Tenet, however, is distinguishable. There, neither the employee handbook nor the acknowledgement form contained language binding the employer. The language merely established the existence of a conditional agreement to arbitrate. See Shearson Lehman Hutton, Inc. v. Tucker, 806 S.W.2d 914, 920 (Tex.App.-Corpus Christi 1991, writ dism’d w.o.j.). The Fourteenth Court of Appeals, which decided Tenet, has also now held that mutual promises to give up the right to litigate can constitute the consideration supporting the agreement to arbitrate. Jebbia, 26 S.W.3d at 758. The court has also held that, where the language of the arbitration agreement indicates that it is binding on both parties, the argument that no contract was formed is without merit. Id.
*519In the present case, the arbitration agreement reads that the parties “mutually agree and contract” to arbitrate.9 An objective review of the record before us shows that the parties in this case were mutually obligated at the time they executed the arbitration agreement. Davidson promised to relinquish litigation in favor of arbitration and Webster promised the same. These mutual promises provided the consideration necessary to fulfill the mutuality of obligation requirement, and a valid agreement to arbitrate was formed between the parties.
Webster’s arguments
Because Davidson established a valid arbitration agreement, Webster had the burden to show that the claim fell outside the agreement. Prudential Sec. Inc., 909 S.W.2d at 900; D. Wilson Constr. Co., 988 S.W.2d at 394. Although he did not deny the existence of the agreement to arbitrate, Webster refused to arbitrate and thereby invoked the trial court’s jurisdiction to hear the motion to compel. Tex. CivPRAc. & Rem.Code Ann. § 171.021(a)(Vernon Supp.2001). None of his arguments to the trial court addressed or met his burden to show that the claim fell outside the agreement. None mandated revocation of the arbitration agreement.
Nothing in the record in this case establishes that the arbitration agreement was pled as an affirmative defense, and Webster presented no authority holding that the arbitration agreement should not be enforced because it is an affirmative defense unavailable under the Texas Labor Code as he maintained. Webster adduced neither evidence nor relevant precedent to show that the agreement is unconscionable as claimed. Tex.Civ.Prac. & Rem.Code Ann. § 171.022 (Vernon Supp.2001); Emerald Tex. v. Peel, 920 S.W.2d 398, 401 (Tex.App.—Houston 1991, no writ.) (an arbitration agreement is invalid if unconscionable); American Employers’ Ins. Co. v. Aiken, 942 S.W.2d 156, 160 (Tex.App.—Fort Worth 1997, no writ) (there is nothing unconscionable per se about an arbitration contract and the party claiming unconscio-nability has the burden to prove it). Webster’s argument that the contract is illusory and lacks mutuality has been addressed. His argument regarding the absence of interstate commerce addressed only the applicability of the FAA. Webster did not address the applicability of the TGAA below.10 Finally, Webster’s contention that arbitration violates public policy is unavailing. “The public policy of both our state and federal governments favors agreements to resolve legal disputes through such voluntary settlement procedures.” Anglin, 842 S.W.2d at 268; see Cantella & Co., 924 S.W.2d at 944.
CONCLUSION
I would hold that Davidson established a valid arbitration agreement under the TGAA and that Webster has neither overcome the strong presumption favoring arbitration under the TGAA nor established grounds for revocation of the agreement. *520Prudential Sec. Inc., 909 S.W.2d at 900; D. Wilson Constr. Co., 988 S.W.2d at 394. Accordingly, I would find that the trial court erred by denying Davidson’s motion to compel arbitration and to stay proceedings. I would deny the petition for writ of mandamus and reverse the trial court’s order with instructions that the trial court (1) order arbitration of Webster’s claims against Davidson, and (2) stay Webster’s civil action pending arbitration in accordance with their agreement.

. As the majority notes, since the arbitration agreement addresses both the Federal Arbitration Act (“FAA”), 9 U.S.C. § 2 (2000), and the Texas General Arbitration Act ("TGAA”), *515Tex.Civ.Prac. & Rem.Code Ann. § 171.098(a) (Vernon Supp.2001 ) and the two were urged below, the party seeking to compel arbitration under both statutes must pursue parallel proceedings. EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 87 (Tex.1996); Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex.1992).

. The FAA was a response to hostility of American courts to the enforcement of arbitration agreements. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S.Ct. 1302, 1307, 149 L.Ed.2d 234 (2001).

. The federal act applies to all suits in state and federal court when the dispute concerns a "contract evidencing a transaction involving commerce” and its application is not limited solely to interstate shipment of goods. Anglin, 842 S.W.2d at 269. The creation of an employment relationship which involves commerce is sufficient. White-Weld & Co. v. Mosser, 587 S.W.2d 485, 487 (Tex.Civ.App.-Dallas 1979, writ ref’d n.r.e.). The term "involving commerce” thus is interpreted broadly and is the functional equivalent of "affecting commerce,” signaling the intent of Congress to exercise its Commerce Clause to the fullest extent. In re L & L Kempwood Assoc., L.P., 9 S.W.3d 125, 126-27 (Tex.1999).

. A party who alleges interstate commerce may show it in a variety of ways: location of headquarters in another state; transportation of materials across state lines; manufacture of parts in a different state; billings prepared out of state; interstate mail and phone calls in support of a contract. In re Profanchik, 31 S.W.3d 381, 385 (Tex.App.—Corpus Christi 2000, orig. proceeding).

. In light of the record in this case, I would also deny mandamus relief because Davidson has an adequate remedy by interlocutory appeal. Anglin, 842 S.W.2d at 272. To be entitled to the remedy of mandamus, a relator must meet both requirements of a two-prong test. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.1992). The relator must show that (1) the trial court clearly abused its discretion, and (2) the relator has no adequate remedy by appeal. Id. This Court has no power to grant mandamus relief absent these conditions. Johnson v. Fourth Ct.App., 700 S.W.2d 916, 917 (Tex.1985) (orig.proceeding).

. The record is considered as it appeared before the trial court at the time of its ruling on the motion to compel arbitration. In re Profanchik, 31 S.W.3d at 386. Before the trial court, Webster urged that arbitration should not be ordered because arbitration is an affirmative defense unavailable under the Texas Labor Code, the contract is illusory, neither the agreement nor the dispute involves "interstate commerce,” and the contract violates public policy.

. As Webster signed the separate arbitration agreement and does not contest his consent to the agreement, we do not reach the question of whether his continued employment implied consent under Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227 (Tex.1986). Cf. In re Jebbia, *51726 S.W.3d 753, 758 (Tex.App.—Houston [14th Dist.] 2000, orig. proceeding) (arbitration agreement stated it was accepted as a condition of employment); Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 387 (Tex.App.—Houston [14th Dist.] 1998, writ dism'd w.o.j.) (agreement to arbitrate was made a condition of employment and contained in employee handbook); and In re Alamo Lumber, 23 S.W.3d 577, 578-80 (Tex.App.—San Antonio 2000, orig. proceeding) (employee signed “Employee Acknowledgment” that arbitration was required as a condition of continued employment).

. Texas is an employment at will state, and, subject to exceptions not relevant in this case, employment is terminable at any time by either party, with or without cause, absent an express agreement to the contrary. Fed. Express Corp. v. Dutschmann, 846 S.W.2d 282, 283 (Tex.1993); Schroeder v. Texas Iron Works, Inc. 813 S.W.2d 483, 489 (Tex.1991). The fact that Webster was an at will employee, however, does not affect the legitimacy of the contract to arbitrate. Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642, 644 (Tex.1994) ("...at will employment does not preclude the formation of other contracts between an employer and employee. At will employees may contract with their employers on any matter except those which would limit the ability of either employer or employee to terminate the employment at will.” (Emphasis in original.))

. Mutuality of obligation is a requisite in the formation of a contract. Tex. Gas Util. Co. v. Barrett, 460 S.W.2d 409, 412 (Tex.1970). The parties must communicate their mutual assent to each other. Garcia v. Villarreal, 478 S.W.2d 830, 832 (Tex.Civ.App.—Corpus Christi 1971, no writ).

. In the arbitration agreement, Webster and Davidson agreed to arbitrate the arbitrability of any claim, dispute or controversy under the FAA or the state statute, "whichever shall have the broadest effect." Under the agreement in this case, then, the question of the applicable statute was properly one for the arbitrator. See generally John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 11 L.Ed.2d 898(1964).