T.W. Odom Management Services, Ltd. v. Thomas Williford

In The
Court of Appeals
Ninth District of Texas at Beaumont
___________________
NO. 09-16-00095-CV
____________________
T.W. ODOM MANAGEMENT SERVICES, LTD., Appellant
V.
THOMAS WILLIFORD, Appellee
_________________________________ ______________________
On Appeal from the 58th District Court
Jefferson County, Texas
Trial Cause No. A-197,693
____________________________________________ ____________
MEMORANDUM OPINION
T.W. Odom Management Services, Ltd., appeals from the trial court’s order
denying its motion to compel arbitration in a negligence suit brought against it by
Thomas Williford. Williford’s suit arises from injuries he allegedly suffered while
working for T.W. Odom. In issue one, T.W. Odom complains that the trial court
erred by deciding whether Williford’s negligence claims fall within the scope of
the parties’ arbitration agreement when the agreement provides that the arbitrator
should have decided the issue. In issue two, T.W. Odom argues that Williford’s
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claims are tort claims that fall within the scope of the parties’ arbitration
agreement. Because the arbitration agreement clearly and unmistakably shows that
T.W. Odom and Williford intended to delegate gateway issues relating to the
interpretation, applicability, or enforceability of the agreement to the arbitrator, we
conclude that the trial court erred by deciding whether Williford’s negligence
claims fall within the scope of the parties’ agreement. Accordingly, we reverse the
trial court’s order denying arbitration and remand to the trial court with
instructions to enter an order granting T.W. Odom’s motion to compel arbitration.
Background
T.W. Odom is a non-subscriber to Texas’s statutory workers’ compensation
insurance plan and an owner of several Waffle House restaurants. T.W. Odom
established the T.W. Odom Management Services Workplace Injury Benefit Plan
(the Plan), an occupational injury plan governed by the federal Employee
Retirement Income Security Act of 1974 (ERISA), to provide non-subscriber
compensation benefits to employees injured on the job. The Plan provides no-fault
medical, disability, death, and dismemberment benefits to T.W. Odom’s
participating employees.
In March 2013, T.W. Odom hired Williford to work in its maintenance
department. At that time, Williford became a participant under the Plan, and
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Williford also signed an arbitration agreement as a condition of his employment. In
January 2014, Williford was injured when he slipped and fell at work. Williford
collected over $90,000 in non-subscriber compensation benefits under the Plan for
medical expenses and lost wages. Although Williford’s doctors cleared him to
return to work in September 2015, Williford chose instead to file a negligence suit
against T.W. Odom for the injuries he allegedly sustained on the job. Williford
alleged that T.W. Odom was negligent in failing to keep its premises clean,
provide a safe work place, provide adequate manpower for the work, provide
adequate instructions and warnings to its employees, and properly schedule and
manage the work. Williford sought traditional negligence damages, including loss
of earnings and earning capacity, as well as past and future damages for medical
expenses, physical pain, mental anguish, and physical impairment. In his suit,
Williford does not claim that he was denied any non-subscriber compensation
benefits under the Plan.
T.W. Odom filed a motion to compel arbitration. During the trial court’s
hearing on T.W. Odom’s motion to compel, Williford objected to arbitration,
arguing that his claims were not tort claims that were included in the parties’
arbitration agreement, but were claims for non-subscriber compensation benefits
that were specifically excluded from the arbitration agreement. Williford admitted
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that he had signed a second arbitration agreement in September 2015, but he
claimed that it was ineffective because he timely rejected the agreement.
Williford’s counsel argued that because Williford rejected the 2015 agreement, he
was not bound to arbitrate his claims because the 2013 agreement also became
ineffective. Williford’s counsel argued in the alternative that if the trial court found
the 2013 agreement remained effective despite Williford’s rejection of the 2015
agreement, then the trial court should find that Williford’s claims do not fall within
the scope of the 2013 Agreement, because they are “negligence claim[s] on the
back of a nonsubscriber claim[.]” According to Williford’s counsel, Williford is
seeking non-subscriber compensation in the form of lost wages, impairment,
medical, and past and future pain and suffering.
During the hearing, T.W. Odom argued that Williford’s negligence claims
are tort claims that are within the scope of the parties’ 2013 arbitration agreement
and are not claims for non-subscriber compensation benefits under the Plan. T.W.
Odom conceded that Williford had signed a second arbitration agreement in
September 2015 before he was to return to work and that Williford had timely
revoked his consent to the 2015 agreement, but T.W. Odom argued that Williford’s
revocation of the 2015 agreement did not release Williford from the 2013
agreement. According to T.W. Odom, the 2015 agreement states that if it does not
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become effective, then the original 2013 agreement remains valid. T.W Odom
argued that the 2013 agreement was the “relevant operative arbitration
agreement[.]”
The trial court denied T.W. Odom’s motion to compel arbitration. The trial
court rejected Williford’s argument that the 2013 arbitration agreement was no
longer effective. The trial court found that the “genesis of the case is a
nonsubscriber case[,]” and that Williford’s tort was based on a non-subscriber
injury. The trial court concluded that Williford’s case was a non-subscriber case
that is excluded from the 2013 arbitration agreement. T.W. Odom appealed the
trial court’s order denying its motion to compel.
Standard of Review and Applicable Law
This is an appeal pursuant to section 51.016 of the Texas Civil Practice and
Remedies Code, which authorizes interlocutory appeals of matters subject to the
Federal Arbitration Act (FAA). See Tex. Civ. Prac. & Rem. Code Ann. § 51.016
(West 2015); see also 9 U.S.C.A § 16. A party attempting to compel arbitration
under the FAA must establish that there is a valid arbitration agreement and show
that the claims raised fall within the scope of that agreement. In re Rubiola, 334
S.W.3d 220, 223 (Tex. 2011) (orig. proceeding). There is a presumption favoring
agreements to arbitrate under the FAA, but the presumption only arises after the
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party seeking to compel arbitration proves that a valid arbitration agreement exists.
In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737-38 (Tex. 2005) (orig.
proceeding). If the party seeking to compel arbitration proves that a valid
arbitration agreement exists, the burden shifts to the party opposing arbitration to
raise an affirmative defense to enforcement of the agreement. J.M. Davidson, Inc.
v. Webster, 128 S.W.3d 223, 227 (Tex. 2003).
We review a trial court’s denial of a motion to compel arbitration for an
abuse of discretion. In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex.
2009) (orig. proceeding). The trial court’s determination of the arbitration
agreement’s validity is a question of law which we review de novo. In re D. Wilson
Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006) (orig. proceeding); J.M. Davidson,
Inc., 128 S.W.3d at 227. In determining the validity of the arbitration agreement
under the FAA, we generally apply state-law principles governing the formation of
contracts. In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 676 (Tex. 2006) (orig.
proceeding). We may not expand upon the terms of the contract or tolerate a liberal
interpretation of the contract by reading into it a voluntary agreement to arbitrate
when one does not exist. Aldridge v. Thrift Fin. Mktg., LLC, 376 S.W.3d 877, 883
(Tex. App.—Fort Worth 2012, no pet.). The plain meaning of the contractual
language must clearly indicate the intent to arbitrate. Id.
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Once the party seeking to compel arbitration establishes that a valid
agreement exists, the trial court must then determine whether the arbitration
agreement covers the claims at issue. In re FirstMerit Bank, N.A., 52 S.W.3d 749,
753 (Tex. 2001) (orig. proceeding). The determination of whether the arbitration
agreement imposes a duty to arbitrate the claims in a particular dispute is a matter
of contract interpretation. Jabri v. Qaddura, 108 S.W.3d 404, 410 (Tex. App.—
Fort Worth 2003, no pet.). “If a written contract is so worded that it can be given a
certain or definite legal meaning or interpretation, then it is not ambiguous and the
court will construe the contract as a matter of law.” Id. at 411. The court’s primary
concern in construing the contract is to ascertain the true intention of the parties as
expressed in the contract. J.M. Davidson, Inc., 128 S.W.3d at 229.
Analysis
In issue one, T.W. Odom complains that the trial court erred by deciding the
parties’ dispute over whether Williford’s negligence claims are claims for non-
subscriber compensation benefits that are excluded from the 2013 arbitration
agreement. According to T.W. Odom, the arbitration agreement contains a
delegation provision that delegates to the arbitrator the authority to decide disputes
concerning the interpretation and applicability of the agreement. Alternatively, in
issue two, T.W. Odom argues that even if the trial court had the authority to decide
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the dispute, the trial court abused its discretion by denying its motion to compel
because Williford’s non-subscriber negligence claims are tort claims that fall
within the scope of the arbitration agreement.
In determining whether the trial court abused its discretion by denying T.W.
Odom’s motion to compel, we review the trial court’s interpretation of the parties’
arbitration agreement de novo. See Jabri, 108 S.W.3d at 410. Applying contract
construction principles, we must review the entire arbitration agreement to
determine whether it is so worded that it can be given a certain legal interpretation.
See id. at 412. If the agreement clearly demonstrates that the parties intended to
confer on the arbitrator the power to determine what disputes are arbitrable, then
the trial court’s ruling as to the scope of the arbitration agreement was an abuse of
discretion. See generally id. at 410.
When a dispute involving an arbitration agreement is brought to court for a
resolution, it is the trial court’s obligation to determine whether the parties agreed
to submit a particular issue to arbitration. IHS Acquisition No. 171, Inc. v. Beatty-
Ortiz, 387 S.W.3d 799, 807 (Tex. App.—El Paso 2012, no pet.) (citing United
Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564 (1960)). “[A] delegation
provision is an agreement to arbitrate threshold issues concerning the arbitration
agreement.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010). Parties
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can agree to arbitrate “‘gateway’questions of ‘arbitrability,’” such as whether an
agreement covers a particular claim. Id.; see also G.T. Leach Builders, LLC v.
Sapphire V.P., LP, 458 S.W.3d 502, 520-21 (Tex. 2015) (explaining that generally,
substantive arbitrability questions addressing the existence, enforceability, and
scope of an agreement are for courts to decide, while procedural arbitrability
questions addressing the construction and application of limits on that agreement
are for arbitrators to decide). When an arbitration provision gives the arbitrator the
power to resolve gateway issues regarding the validity and enforceability of the
arbitration agreement, questions of substantive arbitrability are transferred from the
court to the arbitrator. IHS Acquisition, 387 S.W.3d at 807. “These ‘gateway
matters’ include whether the parties agreed to arbitrate and whether a claim or
dispute is encompassed in the agreement to arbitrate.” Saxa Inc. v. DFD
Architecture Inc., 312 S.W.3d 224, 229 (Tex. App.—Dallas 2010, pet. denied)
(citing In re Labatt Food Serv., L.P., 279 S.W.3d at 643).
A trial court should not assume that the parties agreed to arbitrate
substantive arbitrability unless there is clear and unmistakable evidence that they
intended to do so. Id. (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S.
938, 944 (1995)). If the agreement clearly demonstrates that the parties intended to
confer on the arbitrator the power to determine what disputes are arbitrable, the
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trial court lacks the power to decide that issue. See First Options of Chicago, Inc.,
514 U.S. at 943 (concluding the question of determining primary power to decide
arbitrability turns upon what the parties agreed to regarding the matter). Thus,
when an arbitration agreement clearly and unmistakably demonstrates the parties’
intent to confer on the arbitrator the power to determine substantive arbitrability,
questions regarding gateway issues that are normally decided by the court will be
submitted to the arbitrator. See id.
Williford signed the 2013 arbitration agreement as a condition of his
employment, and Williford agreed to arbitrate “all claims and controversies
(“claims”), past, present, or future, whether or not arising out of [Williford’s]
employment or termination from employment[.]” The 2013 agreement provides
that arbitrable claims include, but are not limited to, claims for wages or other
compensation and tort claims. The agreement further provides that T.W. Odom and
Williford agreed that claims for “workers’ compensation, non-subscriber
compensation or unemployment benefits[]” were not arbitrable.
The 2013 agreement states that “[t]he arbitration will be held under the
auspices of the American Arbitration Association (“AAA”)[,]” and “shall be in
accordance with the AAA’s then-current employment arbitration procedures.” The
agreement also references the AAA National Rules for Resolution of Employee
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Disputes. Under the AAA’s Employment Arbitration Rules, Rule 6, the “arbitrator
shall have the power to rule on his or her own jurisdiction, including any
objections with respect to the existence, scope or validity of the arbitration
agreement.”1 Additionally, the agreement states that “[t]he arbitrator, and not any
federal, state, or local court or agency, shal[l] have exclusive authority to resolve
any dispute relating to the interpretation, applicability, enforceability or formation
of this Agreement, including but not limited to any claim that all or any part of this
Agreement is void or voidable.” The 2013 agreement states that “this Agreement
can only be revoked or modified by a writing signed by the parties which
specifically states intent to revoke or modify this Agreement.” The agreement
further states that “this Agreement will remain valid and enforceable unless TW
Odom Management Services LTD and I execute a subsequent arbitration
agreement, which upon becoming and enforceable, shall take precedence over
an[d] supersede this agreement.”
T.W. Odom argues that Williford’s suit seeks damages for T.W. Odom’s
alleged negligence, and not non-subscriber compensation benefits under the Plan.
1
American Arbitration Association, EMPLOYMENT ARBITRATION RULES AND
MEDIATION PROCEDURES, Rule 6, p.17, (Rules amended and effective Nov. 1,
2009), https://www.adr.org/aaa/ShowProperty?nodeId=/UCM/ADRSTG_004362
&revision=latestreleased (last visited Aug. 8, 2016).
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According to T.W. Odom, Williford’s negligence claims concerning his workplace
injury are tort claims that are covered by the arbitration agreement and therefore
must be arbitrated under the agreement. The 2013 agreement clearly and
unmistakably provides that the arbitrator has the power to resolve any disputes
relating to the interpretation, applicability, and enforceability of the agreement, and
Williford signed the agreement and assented to having the arbitrator decide these
issues. T.W. Odom and Williford also agreed that any arbitration would be
conducted in accordance with the AAA’s employment arbitration procedures, and
the agreement references the AAA’s National Rules for Resolution of Employee
Disputes. The parties agreed to a broad arbitration clause that expressly
incorporated rules giving the arbitrator the power to rule on its own jurisdiction
and to rule on any objections with respect to the existence, scope, or validity of the
agreement.
The determination of whether the arbitration agreement imposes a duty to
arbitrate the claims in a particular dispute is a matter of contract interpretation, and
the 2013 agreement clearly provides that the arbitrator has the “exclusive authority
to resolve any dispute relating to the interpretation . . . of this Agreement[.]” See
Jabri, 108 S.W.3d at 410. The 2013 agreement clearly and unmistakably shows
that T.W. Odom and Williford intended to delegate gateway issues relating to the
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interpretation, applicability, or enforceability of the agreement to the arbitrator. See
Schlumberger Tech. Corp. v. Baker Hughes Inc., 355 S.W.3d 791, 802-03 (Tex.
App.—Houston [1st Dist.] 2011, no pet.); Saxa Inc., 312 S.W.3d at 230-31;
Haddock v. Quinn, 287 S.W.3d 158, 172 (Tex. App.—Fort Worth 2009, pet.
denied).
We conclude that the trial court erred by failing to allow the arbitrator to
decide the parties’ dispute concerning whether Williford’s negligence claims fall
within the scope of the 2013 agreement. See McGehee v. Bowman, 339 S.W.3d
820, 825-26 (Tex. App.—Dallas 2011, no pet.). Accordingly, the trial court abused
its discretion by denying T.W. Odom’s motion to compel arbitration. We sustain
T.W. Odom’s first issue. Because of our disposition of T.W. Odom’s first issue, we
need not consider T.W. Odom’s remaining issue. See Tex. R. App. P. 47.1. We
reverse the trial court’s order denying T.W. Odom’s motion to compel and remand
this case to the trial court with instructions to enter an order granting the motion to
compel arbitration and to stay the proceeding pending the results of arbitration.
REVERSED AND REMANDED.
______________________________
STEVE McKEITHEN
Chief Justice
Submitted on July 20, 2016
Opinion Delivered August 25, 2016
Before McKeithen, C.J., Kreger and Johnson, JJ.
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