Judges: DAN MORALES, Attorney General of Texas
Filed Date: 6/17/1992
Status: Precedential
Modified Date: 7/6/2016
Honorable Carl A. Parker Chairman Subcommittee on Insurance Texas State Senate P. O. Box 12068 Austin, Texas 78711
Re: Whether V.T.C.S. article 224 et seq., the Texas general arbitration statute, violates article
Dear Senator Parker:
You have requested our opinion as to whether V.T.C.S. article 224 et seq., the Texas general arbitration statute, violates article
A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. A court shall refuse to enforce an agreement or contract to submit a controversy to arbitration if the court finds it was unconscionable at the time the agreement or contract was made. Provided, however, that none of the provisions of this Act shall apply to:
(a) any collective bargaining agreement between an employer and a labor union;
(b) any contract for the acquisition by an individual person or persons (as distinguished from a corporation, trust, partnership, association, or other legal entity) of real or personal property, or services, or money or credit where the total consideration therefore to be paid or furnished by the individual is $50,000 or less, unless said individual and the other party or parties agree in writing to submit to arbitration and such written agreement is signed by the parties to such agreement and their attorneys; (c) any claim for personal injury except upon the advice of counsel to both parties as evidenced by a written agreement signed by counsel for both parties. A claim for workers' compensation shall not be submitted to arbitration under this Act.
With certain exceptions, the statute declares a prior written agreement to arbitrate to be "valid, enforceable and irrevocable," except where the agreement itself is tainted, for example, by fraud, partiality on the part of the arbitrator, absence of an effective arbitration agreement,1 or unconscionability.
Article
All courts shall be open and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.
The Texas Supreme Court has indicated that establishing an "open courts" violation requires compliance with a two-pronged test First, the litigant "must show that he has a well-recognized common-law cause of action that is being restricted." In addition, "he must show that the restriction is unreasonable or arbitrary when balanced against the purpose . . . of the statue." Moreno v. Sterling Drug, Inc., 78'7 S.W.2d 348, 355 (Tex. 1990).
Initially, we note that every legislative act carries with it a presumption of constitutionality. It is to be presumed that the Legislature has not acted unreasonably or arbitrarily; and a mere difference of opinion, where reasonable minds could differ, is not a sufficient basis for striking down legislation as arbitrary or unreasonable.
Article I, section 13 "prohibits legislative bodies from arbitrarily withdrawing all legal remedies from one having a cause of action well established and well defined in the common law." Castillo v. Hidalgo County Water Dist. No. 1,
Many of the causes of action covered by article 224, et seq., are statutory rather than common-law causes of action and therefore fall outside the ambit of article I section 13. See, eg., Bus.
Com. Code §
Under the traditional common law, courts have refused specific enforcement to agreements to arbitrate future disputes. [Emphasis in original.] Either party to an executory agreement providing for arbitration of future disputes has been allowed to revoke the agreement at any time before the arbitration proceeding resulted in an award. The only penalty for such revocation consisted of damages, if any, for breach of contract. . . .The rationale behind these rules rested on a "public policy" argument against allowing private persons to oust the courts of their jurisdiction to determine the rights and liabilities of parties to a contract. This notion was a result of early English precedent which was transferred to the United States and to Texas through our adoption of the common law. The doctrine has long since been abandoned in England by case law and by statute, and an increasing number of American jurisdictions have rejected the rationale by adopting modern and comprehensive arbitration statutes. . . . The doctrine was evolved in an era when court congestion was not a major problem as it is today, and in modem times a policy encouraging agreements to arbitrate is preferable. In addition to alleviating some measure of the burden on the courts, arbitration in a commercial context is a valuable tool which provides business people, and all citizens, with greater flexibility, efficiency, and privacy. . . . While it is unnecessary in this case to alter common law arbitration rules, the policy of refusing specific enforcement to executory arbitration agreements is not justifiable when the case fits within the common mold. L H. Lacy Company,
559 S.W.2d at 352 (emphasis added, footnotes omitted)2
The quoted language would seem to indicate beyond all peradventure that the Supreme Court of Texas takes a highly favorable view of arbitration statutes, suggesting that the easy revocation of arbitration agreements under common law was based on an outmoded idea of public policy. When such sentiments are coupled with the presumption of constitutionality which every statute commands, we believe that it is even more clear that the court would find that article 224, et seq., does not impose any restrictions upon a litigant's right to judicial redress which are "unreasonable or arbitrary when balanced against the purpose of the statute." Accordingly, we conclude that article 224, et seq., does not contravene article
Very truly yours,
DAN MORALES Attorney General of Texas
WILL PRYOR First Assistant Attorney General
MARY KELLER Deputy Assistant Attorney General
RENEA HICKS Special Assistant Attorney General
MADELEINE B. JOHNSON Chair, Opinion Committee
Prepared by Rick Gilpin Assistant Attorney General
Sax v. Votteler , 648 S.W.2d 661 ( 1983 )
L. H. Lacy Co. v. City of Lubbock , 559 S.W.2d 348 ( 1977 )
Wylie Independent School District v. TMC Foundations, Inc. , 770 S.W.2d 19 ( 1989 )
Smith v. Davis , 426 S.W.2d 827 ( 1968 )
Moreno v. Sterling Drug, Inc. , 787 S.W.2d 348 ( 1990 )
Castillo Ex Rel. Castillo v. Hidalgo County Water District ... , 771 S.W.2d 633 ( 1989 )