Hi Tech Luxury Imports, LLC v. Townsend L. Morgan, Jr. ( 2019 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-19-00021-CV
Hi Tech Luxury Imports, LLC, Appellant
v.
Townsend L. Morgan, Jr., Appellee
FROM THE 345TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-18-002579,
THE HONORABLE DUSTIN M. HOWELL, JUDGE PRESIDING
MEMORANDUM OPINION
Appellant Hi Tech Luxury Imports, LLC (Hi Tech), appeals from the district
court’s order denying its motion to compel arbitration under the Federal Arbitration Act (FAA).
We will affirm the district court’s order.
BACKGROUND
Appellee Townsend L. Morgan, Jr., filed suit against Hi Tech, his former
employer, alleging wrongful termination and age discrimination in violation of Chapter 21 of the
Texas Labor Code. See Tex. Lab. Code § 21.051. After the case had been set for a jury trial, Hi
Tech filed a motion to compel arbitration. In the motion, Hi Tech asserted that the parties had
executed an agreement to arbitrate, and that Morgan’s claims fell within the scope of that
agreement. Morgan filed a response in opposition, arguing that the arbitration agreement was
invalid because Hi Tech had failed to sign it. Following a hearing on the matter, the district
court denied the motion to compel arbitration. This interlocutory appeal followed. See Tex. Civ.
Prac. & Rem. Code § 51.016.
STANDARD OF REVIEW
“We review a trial court’s order denying a motion to compel arbitration for abuse
of discretion.” Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018) (citing In re Labatt
Food Serv., L.P., 279 S.W.3d 640, 642–43 (Tex. 2009)). “We defer to the trial court’s factual
determinations if they are supported by evidence but review its legal determinations de novo.”
Id. A party seeking to compel arbitration under the FAA must establish that (1) there is a valid
arbitration agreement, and (2) the claims in dispute fall within that agreement’s scope. In re
Rubiola, 334 S.W.3d 220, 223 (Tex. 2011). “Whether parties have agreed to arbitrate is a
gateway matter ordinarily committed to the trial court and controlled by state law governing ‘the
validity, revocability, and enforceability of contracts generally.’” Jody James Farms, JV v.
Altman Grp., Inc., 547 S.W.3d 624, 631 (Tex. 2018) (quoting Arthur Andersen LLP v. Carlisle,
556 U.S. 624, 631 (2009)). No presumption of arbitration exists until “after the party seeking to
compel arbitration proves that a valid arbitration agreement exists.” J.M. Davidson, Inc. v.
Webster, 128 S.W.3d 223, 227 (Tex. 2003). “The burden of establishing the existence of an
arbitration agreement is evidentiary and runs with the party seeking to compel arbitration.”
Fitness Entm’t Ltd v. Hurst, 527 S.W.3d 699, 703 (Tex. App.—El Paso 2017, pet. denied).
DISCUSSION
“Under Texas law, a binding contract requires: ‘(1) an offer; (2) an acceptance in
strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party’s consent
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to the terms; and (5) execution and delivery of the contract with intent that it be mutual and
binding.’” Huckaba v. Ref-Chem, L.P., 892 F.3d 686, 689 (5th Cir. 2018) (quoting In re Capco
Energy, Inc., 669 F.3d 274, 279-80 (5th Cir. 2012)). The only question in this case is whether
the parties intended that the arbitration agreement be mutual and binding, despite Hi Tech’s
failure to sign the agreement.
“Contracts require mutual assent to be enforceable.” Baylor Univ. v. Sonnichsen,
221 S.W.3d 632, 635 (Tex. 2007). “Evidence of mutual assent in written contracts generally
consists of signatures of the parties and delivery with the intent to bind.” Id.; New York Party
Shuttle, LLC v. Bilello, 414 S.W.3d 206, 214 (Tex. App.—Houston [1st Dist.] 2013, pet. denied).
However, “while signature and delivery are often evidence of the mutual assent required for a
contract, they are not essential.” Phillips v. Carlton Energy Grp., LLC, 475 S.W.3d 265, 277
(Tex. 2015); see also Perez v. Lemarroy, 592 F. Supp. 2d 924, 931 (S.D. Tex. 2008) (“The
Federal Arbitration Act (‘FAA’) only requires that an arbitration clause be in writing, without
any requirement that an arbitration clause must be signed, thus, no signatures are necessary to
bind parties to an arbitration agreement.”). “Signatures are not required ‘[a]s long as the parties
give their consent to the terms of the contract, and there is no evidence of an intent to require
both signatures as a condition precedent to it becoming effective as a contract.’” Huckaba,
892 F.3d at 689 (quoting Perez, 592 F. Supp. 2d at 930–31).
“A court can decide intent as a matter of law.” Id. (citing Tricon Energy Ltd. v.
Vinmar Int’l, Ltd., 718 F.3d 448, 454 (5th Cir. 2013)). “In construing a contract, a court must
ascertain the true intentions of the parties as expressed in the writing itself.” Italian Cowboy
Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011). “We begin this
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analysis with the contract’s express language.” Id. Unless that language is ambiguous, see id.,
“we end it there too,” Huckaba, 892 F.3d at 689.
Here, the language of the contract provides unambiguous evidence of the parties’
intent to require both signatures as a condition precedent to enforcement of the agreement.
Although it is true, as Hi Tech observes, that the agreement is written primarily from the
employee’s perspective, the document repeatedly refers to both parties agreeing to the terms of
the contract. The agreement discusses the “mutual benefits” that arbitration can provide to “both
the Company and [Morgan],” and the agreement requires that “[Morgan] and the Company both
agree” that any disputes “between [Morgan] and the Company” shall be submitted to arbitration.
The agreement further provides that “[b]oth the Company and [Morgan] agree that any
arbitration proceeding must move forward under the Federal Arbitration Act” and that “[t]his is
the entire agreement between the Company and the employee.” The agreement also contains the
following statement, “I UNDERSTAND BY AGREEING TO THIS BINDING ARBITRATION
PROVISION, BOTH I AND THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY
JURY.” This language indicates that, by agreeing to arbitrate, both parties would be giving up
their rights to a jury trial, which suggests that the signatures of both parties would be required for
the agreement to be enforceable. Additionally, in the signature block at the bottom of the
agreement, there are lines for two signatures, one for the “Employee” and one for the “Manager”
of Hi Tech. There is also a line next to the Manager’s signature for the Manager to print his
name. Moreover, both signature lines appear below the following statement, “MY SIGNATURE
BELOW ATTESTS TO THE FACT THAT I HAVE READ, UNDERSTAND, AND AGREE
TO BE LEGALLY BOUND TO ALL OF THE ABOVE TERMS.” Thus, both parties were to
indicate their mutual assent to the terms of the arbitration agreement by signing the document.
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Hi Tech did not sign the arbitration agreement, and the above language indicates
that the signatures of both Hi Tech and Townsend were required for the agreement to be
enforceable. The burden was on Hi Tech to prove the validity of the agreement, see Henry,
551 S.W.3d at 115; Fitness Entm’t Ltd., 527 S.W.3d at 703–04, and it failed to satisfy that
burden here. Accordingly, we cannot conclude that the district court abused its discretion in
denying Hi Tech’s motion to compel arbitration. See Huckaba, 892 F.3d at 691 (refusing to
enforce arbitration agreement in wrongful-termination case when employer failed to sign
agreement and concluding that enforcement would allow employer to “have it both ways—argue
that it did not intend to be bound because it did not sign the agreement or it did because it kept
the agreement and sought to compel arbitration”); see also Simmons & Simmons Constr. Co. v.
Rea, 286 S.W.2d 415, 416–17 (Tex. 1955) (concluding that signature block on contract and other
language in agreement was evidence that signatures of both parties were required); In re Bunzl
USA, Inc., 155 S.W.3d 202, 210–11 (Tex. App.—El Paso 2004, orig. proceeding) (same).
CONCLUSION
We affirm the district court’s order.
__________________________________________
Gisela D. Triana, Justice
Before Justices Goodwin, Baker, and Triana
Affirmed
Filed: April 30, 2019
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