IN RE: Frank A. Smith Sales

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Court of Appeals of Texas, Corpus Christi-Edinburg.

IN RE: Frank A. Smith Sales, Inc. d/b/a Frank Smith Toyota

NUMBER 13–16–00020–CV

Decided: February 22, 2016

Before Justices Garza, Perkes, and Longoria

MEMORANDUM OPINION

Relator Frank A. Smith Sales, Inc. d/b/a Frank Smith Toyota (“Smith Toyota”) filed a petition for writ of mandamus seeking to compel the trial court to vacate an order requiring mediation and to rule on Smith Toyota's motion to compel arbitration.  We conditionally grant the writ of mandamus in part and deny it in part.

I. Background

Real party in interest Rosalba Danek worked for the Smith Toyota dealership as a warranty administrator and manager for the café located within the dealership.  Smith Toyota terminated her employment, and she filed suit in the 275th District Court of Hidalgo County alleging discrimination, retaliation, and defamation regarding her termination of employment.2

Smith Toyota's employee handbook includes a “dispute resolution procedure.”  According to the procedure delineated in the handbook, an employee first discusses employment problems with their immediate supervisor, then that employee can request a further meeting with the general manager or the dealer if the employment problem is not resolved to the employee's satisfaction at the preliminary meeting.  If the employee remains dissatisfied, that employee has “the right to demand binding arbitration of any legal dispute between you and [Smith Toyota] which could be brought in court, including claims regarding wrongful discharge, employment discrimination, harassment, or any other dispute relating to your employment or arising under any labor, employment, or civil rights law.”  The handbook provides that arbitrations shall be conducted in accordance with the Federal Arbitration Act and Smith Toyota's arbitration rules.  According to the handbook, “[a]ll employees who are hired or promoted after the effective date of this policy are required as a condition of their employment to agree to resolve their disputes in this manner rather than through the court system.”

On July 26, 2007, and again on May 24, 2013, Danek signed acknowledgements that she had received the employee handbook.  The acknowledgments each expressly included an “Agreement to Arbitrate” providing:

I accept the Company's offer to arbitrate and agree that any dispute of a legal nature arising under federal, state, or local law between me and the Company, including any such claim regarding Company property, discrimination, harassment, or any other legal dispute relating to my employment or arising under any labor, employment, or civil rights law, will be subject to final and binding arbitration in accordance with the terms of the Company's Arbitration Policy and Arbitration Rules.  I understand that the arbitrator, who will serve as judge and jury, has the same authority to award money damages and other relief as does a court or jury.  I also understand that, while the Employee Handbook is otherwise subject to change at the Company's discretion, this Agreement to Arbitrate and the Company's Arbitration Policy will be binding and irrevocable for the Company and me as written, with respect to any claim arising while this Agreement is in effect.

Smith Toyota filed a motion to stay proceedings and compel arbitration on September 22, 2014, contending that the claims Danek asserted in her lawsuit were subject to arbitration based on her agreement to arbitrate.  Danek filed an opposition and response to the motion to compel stay proceedings and compel arbitration.  Her response effectively conceded that the asserted claims were within the scope of the arbitration agreement, but nevertheless asserted that there was no valid agreement to arbitrate because Smith Toyota reserved the right to change the handbook policies, thus there was no mutuality of obligation and a failure of consideration.  Danek also contended that the arbitration agreement constituted an invalid contract of adhesion, omitted essential terms, and deprived her of an “equivalent and accessible forum in which to effectively vindicate her employment rights.”  Smith Toyota filed a reply to Danek's response and opposition reiterating its claim for arbitration.

Smith Toyota's motion to compel arbitration was originally set for a hearing on November 12, 2014, but that hearing was passed by agreement of the parties.  The trial court heard Smith Toyota's motion to stay proceedings and compel arbitration on October 13, 2015;  however, the trial court did not rule on the motion to stay proceedings and compel arbitration.  On December 16, 2015, although no party had filed a motion requesting mediation, the trial court instead ordered the parties to participate in “full-day mediation” before a specified mediator within sixty days from the date of its order.

This original proceeding ensued.  By two issues, Smith Toyota contends that the trial court abused its discretion by refusing to rule on and grant its motion to compel arbitration and by ordering the parties to mediation prior to ruling on its motion to compel arbitration.  Smith Toyota also filed an emergency motion for temporary relief asking us to impose a stay of the trial court proceedings until such time as we may fully consider the petition for writ of mandamus.  This Court granted temporary relief and ordered all trial court proceedings, including the aforementioned mediation order, to be stayed pending further order of this Court.  See Tex.R.App. P. 52.10(b).  This Court requested, but did not receive, a response to the petition for writ of mandamus from Danek.

II. Standard of Review

To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court committed a clear abuse of discretion for which the relator has no adequate remedy at law.  In re Frank Kent Motor Co., 361 S.W.3d 628, 630 (Tex.2012) (orig.proceeding);  In re Olshan Found.  Repair Co., 328 S.W.3d 883, 887 (Tex.2010) (orig.proceeding);  In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex.2004) (orig.proceeding);  Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992) (orig. proceeding). The relator has the burden of establishing both prerequisites to mandamus relief.  In re CSX Corp., 124 S.W.3d 149, 151 (Tex.2003) (orig.proceeding).  This burden is a heavy one.  Id.;  Canadian Helicopters Ltd. v. Wittig, 876 S.W.2d 304, 305 (Tex.1994) (orig.proceeding).

A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable that it amounts to a clear and prejudicial error of law or if it clearly fails to correctly analyze or apply the law.  In re Olshan Found.  Repair Co., 328 S.W.3d at 888;  Walker, 827 S.W.2d at 840.  The second requirement for mandamus relief, that the relator has no adequate remedy by appeal, “has no comprehensive definition” and is decided on a case-by-case basis.  See In re Ford Motor Co., 165 S.W.3d 315, 317 (Tex.2005) (orig.proceeding) (citing In re Prudential Ins. Co. of Am., 148 S.W.3d at 136).

III. Applicable Law & Analysis

Arbitration is intended to provide a lower-cost, expedited means to resolve disputes.  In re Poly–Am., L.P., 262 S.W.3d 337, 347 (Tex.2008) (orig.proceeding).  Motions to compel arbitration should be resolved without delay.  In re Houston Pipe Line Co., 311 S.W.3d 449, 451 (Tex.2009) (orig.proceeding);  Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 268–69 (Tex.1992) (orig.proceeding).  Accordingly, mandamus is available to review a trial court's deferral of a ruling on a motion to compel arbitration.  See, e.g., In re Houston Pipe Line Co., 311 S.W.3d at 452;  In re Champion Techs., 173 S.W.3d 595, 599 (Tex.App.—Eastland 2005, orig. proceeding);  In re MHI P'ship, Ltd., 7 S.W.3d 918, 921 (Tex.App.—Houston [1st Dist.] 1999, orig. proceeding).

Mandamus is also appropriate when a trial court defers ruling on a motion to compel arbitration and instead grants mediation.  See In re Heritage Bldg. Sys., Inc., 185 S.W.3d 539, 543 (Tex.App.—Beaumont 2006, orig. proceeding) (per curiam) (conditionally granting mandamus relief and directing the trial court to vacate an order to mediate and noting that, while “[t]he arbitrator may, or may not, choose to require mediation,” “the trial court's ordering the parties to mediation undermines the expectation of the parties that their dispute will be resolved by proceedings directed by an arbitrator”);  see also In re Brenntag Sw., Inc., No. 13–15–00160–CV, 2015 WL 1933463, at *2 (Tex.App.—Corpus Christi Apr. 28, 2015, orig. proceeding) (mem.op.)  (“Mandamus is appropriate when a trial court defers ruling on a motion to compel arbitration and instead grants mediation.”).

In this case, Smith Toyota's motion to compel arbitration, which has been pending more than a year, was heard four months ago, yet the trial court has ordered the parties to mediation rather than ruling on the motion to compel arbitration.  Under the authority discussed herein, this ruling constituted an abuse of discretion.  See, e.g., In re Houston Pipe Line Co., 311 S.W.3d at 452;  In re Heritage Bldg. Sys., Inc., 185 S.W.3d at 543;  see also In re Brenntag Sw., Inc., 2015 WL 1933463, at *2. Specifically, Smith Toyota is entitled to resolution of its motion to compel arbitration summarily and without delay, and without requiring an alternative dispute resolution procedure that was neither agreed to, nor sought by, the parties.  Accordingly, we sustain Smith Toyota's issues in this original proceeding insofar as it contends that the trial court abused its discretion by deferring ruling on the motion to compel arbitration and instead ordering the parties to mediation.

Smith Toyota further contends;  however, that the trial court erred in refusing to grant its motion to compel arbitration.  While we have discretion to direct the trial court to make a decision on the motion to compel arbitration, we may not tell the court what that decision should be.  See In re Cunningham, 454 S.W.3d 139, 143 (Tex.App.—Texarkana 2014, orig. proceeding);  In re Shredder Co., 225 S.W.3d 676, 680 (Tex.App.—El Paso 2006, orig. proceeding);  In re Ramirez, 994 S.W 2d 682, 684 (Tex.App.—San Antonio 1998, orig. proceeding).  Thus, we overrule Smith Toyota's issues to the extent that it contends that it is entitled to an order granting its motion to stay proceedings and compel arbitration.

In so ruling, we note that the trial courts' role “is first to decide whether the parties made a valid and presently enforceable agreement to arbitrate.”  G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 519–20 (Tex.2015).  If they did, then the court must decide whether the present disputes fall within the scope of that agreement.  See id.;  In re Houston Pipe Line Co., 311 S.W.3d at 451;  J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003) (orig.proceeding).  These questions that courts must resolve are sometimes referred to as questions of “arbitrability.”  G.T. Leach Builders, LLC, 458 S.W.3d at 519–20;  In re Houston Pipe Line Co., 311 S.W.3d at 451–52.  If, by answering these questions, the court determines that the present disputes are in fact arbitrable under the parties' agreement, the court must complete its role by ordering the parties to arbitration and leaving it to the arbitrators to resolve those disputes.  See G.T. Leach Builders, LLC, 458 S.W.3d at 519–20;  Venture Cotton Co-op. v. Freeman, 435 S.W.3d 222, 232 (Tex.2014).

IV. Conclusion

The Court, having examined and fully considered the petition for writ of mandamus and the applicable law, is of the opinion that relator has met its burden to obtain mandamus relief on some of the claims alleged herein.  See In re Prudential Ins. Co. of Am., 148 S.W.3d at 135–36.  Accordingly, the stay previously imposed by this Court is lifted.  See Tex.R.App. P. 52.10(b) (“Unless vacated or modified, an order granting temporary relief is effective until the case is finally decided.”).  The petition for writ of mandamus is conditionally granted in part.  See id. 52.8(a).  We direct the trial court to vacate its December 16, 2015 order directing that the current case be submitted to mediation and to instead issue a ruling on Smith Toyota's motion to compel arbitration.  The writ will issue only if the trial court fails to comply.  The petition for writ of mandamus is denied in part, as to Smith Toyota's request for us to direct the trial court to grant its motion to compel arbitration.

FOOTNOTES

FOOTNOTE.  

2.   Danek brought suit against Frank A. Smith Sales, Inc. d/b/a Frank Smith Toyota—a Penske Dealership, PAG McAllen T1, LLC d/b/a Frank Smith Toyota—a Penske Dealership and PAG McAllen H1, LLC d/b/a Frank Smith Hyundai, a Penske Dealership.  The petition for writ of mandamus designates PAG McAllen T1, LLC and PAG McAllen H1, LLC as interested parties.

Memorandum Opinion by Justice Garza 1 FN1. See Tex.R.App. P. 52.8(d) (“When denying relief, the court may hand down an opinion but is not required to do so.  When granting relief, the court must hand down an opinion as in any other case.”);  Tex.R.App. P. 47.4 (distinguishing opinions and memorandum opinions).