Longoria v. CKR Prop. Mgmt., LLC

577 S.W.3d 263

Denise LONGORIA, Appellant

v.CKR PROPERTY MANAGEMENT, LLC, Appellee

NO. 14-18-00100-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed December 21, 2018

Rehearing En Banc Denied June 13, 2019

William J. Boyce, Justice

Appellant Denise Longoria signed an arbitration agreement before beginning her employment with appellee CKR Property Management, LLC ("CKR Property"). The parties' arbitration agreement states that Longoria and CKR Property agree to arbitrate "any claim or dispute between them or against the other ... whether related to the employment relationship or otherwise...." Longoria resigned from CKR Property and was rehired by CKR Property approximately ten months later. Longoria did not sign a separate arbitration agreement before beginning her second period of employment.

CKR Property fired Longoria six months after she was rehired and sued her for claims arising from her second employment period. Longoria moved to compel arbitration and the trial court denied Longoria’s motion. For the reasons outlined below, we reverse the trial court’s order denying arbitration and remand the cause to the trial court for proceedings consistent with this opinion.

BACKGROUND

CKR Property, which manages multi-family residential apartment complexes, hired Longoria in June 2015 to supervise operations at multiple properties. Before beginning her employment at CKR Property, Longoria signed an arbitration agreement entitled "Acknowledgement of Receipt of Arbitration Agreement." The arbitration agreement states, in relevant part:

Denise N. Longoria and CKR Property Management agree that they prefer and choose to arbitrate any dispute they may have instead of litigating in court before a judge or jury. Therefore, they agree that any claim or dispute between them or against the other or any agent or employee of the other, whether related to the employment relationship or otherwise, including those created by practice, common law, court decision, or statute now existing or created later, including any related to allegations of violations of state or federal statutes related to discrimination, and all disputes about the validity of this arbitration clause, shall be resolved by final binding arbitration by the American Arbitration Association, under the National Rules for the Resolution of Employment Disputes. CKR Property Management agrees to pay all costs of the arbitration, except in that [sic] each party will bear their own legal fees. Fees paid are subject to the award of fees by the arbitrator, as provided by law and arbitration rules. This agreement shall be governed by and interpreted under the Federal Arbitration Act....

Longoria signed the agreement and dated it June 15, 2015. The record does not contain any other documents Longoria signed before beginning her first employment period. Longoria resigned from CKR Property in June 2016.

CKR Property rehired Longoria in April 2017. Before beginning her second period of employment, Longoria signed a "Confidentiality and Non-Competition Agreement." This second agreement does not contain any provisions addressing either (1) the previously signed arbitration agreement; or (2) the arbitrability of claims arising under the non-compete agreement. Longoria did not sign a separate arbitration agreement before beginning her second employment period. CKR Property terminated Longoria’s employment six months later.

CKR Property sued Longoria in October 2017, asserting claims arising from Longoria’s alleged breach of the non-compete agreement. Longoria filed a general denial and asserted affirmative defenses.

Longoria filed a motion to compel arbitration under the Federal Arbitration Act ("FAA"). See generally 9 U.S.C.A. §§ 1 - 16 (West 2009). CKR Property responded and the trial court held a hearing on the motion. The trial court signed an order on January 30, 2018, denying Longoria’s motion to compel arbitration. Longoria timely appealed.

STANDARD OF REVIEW

We review the trial court’s denial of a motion to compel arbitration under an abuse of discretion standard. Branch Law Firm L.L.P. v. Osborn , 532 S.W.3d 1, 12 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). " ‘An order denying arbitration must be upheld if it is proper on any basis considered by the trial court.’ " Id. (quoting In re Weeks Marine, Inc. , 242 S.W.3d 849, 854 (Tex. App.—Houston [14th Dist.] 2007, orig. proceeding [mand. denied] ) ).

A trial court abuses its discretion if it acts arbitrarily or unreasonably or without reference to any guiding rules or principles. Id. "Under this standard, we defer to a trial court’s factual determinations if they are supported by evidence, but [we] review a trial court’s legal determinations de novo." Id. (citing In re Labatt Food Serv., L.P. , 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding) ).

ANALYSIS

Asserting that the trial court erred by denying her motion to compel arbitration, Longoria argues that she and CKR Property executed a valid arbitration agreement and that CKR Property’s claims fall within the scope of that agreement. CKR Property contends that the arbitration agreement does not apply to its claims because the agreement was executed as part of Longoria’s first employment period from June 2015 to June 2016, and applies only to claims arising from that period. Pointing out that its claims arose from the non-compete agreement Longoria signed as part of her second employment period from April 2017 to October 2017, CKR Property asserts that the trial court correctly denied Longoria’s motion to compel.

The parties agree that the FAA governs here. "A party seeking to compel arbitration under the FAA must establish that (1) there is a valid arbitration clause; and (2) the claims in dispute fall within that agreement’s scope." In re Rubiola , 334 S.W.3d 220, 223 (Tex. 2011) (orig. proceeding); see also Branch Law Firm L.L.P. , 532 S.W.3d at 12. We analyze these prongs separately.

I. Validity of the Arbitration Agreement

The existence of a valid arbitration agreement between specific parties generally is a "gateway matter" for the court to decide. In re Weekley Homes, L.P. , 180 S.W.3d 127, 130 (Tex. 2005) (orig. proceeding). Under the FAA, ordinary principles of state contract law determine whether there is a valid arbitration agreement that meets all requisite contract elements. In re Rubiola , 334 S.W.3d at 224 ; J.M. Davidson, Inc. v. Webster , 128 S.W.3d 223, 227 (Tex. 2003). A mutual agreement to arbitrate provides sufficient consideration to support an arbitration agreement. In re 24R, Inc. , 324 S.W.3d 564, 566 (Tex. 2010) (orig. proceeding) (per curiam).

When an arbitration agreement is unambiguous, its construction is governed by the parties' objective intent as expressed in the agreement. In re Dillard Dept. Stores, Inc. , 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding) (per curiam). Challenges to an arbitration agreement’s validity generally focus on contractual issues related to the agreement’s enforceability, such as unconscionability, duress, fraudulent inducement, and revocation. See Royston, Rayzor, Vickery, & Williams, LLP v. Lopez , 467 S.W.3d 494, 500 (Tex. 2015) (orig. proceeding) (agreements to arbitrate are valid unless grounds exist in law or in equity for non-enforcement, such as fraud, unconscionability, or voidness under public policy); Venture Cotton Coop. v. Freeman , 435 S.W.3d 222, 227 (Tex. 2014) (an arbitration agreement may be "invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability" (internal quotation omitted) ); see also Klein v. Nabors Drilling USA L.P. , 710 F.3d 234, 237 (5th Cir. 2013) ("the initial question of whether there is a valid agreement to arbitrate usually concerns matters of contract formation").

Here, Longoria asserts that she and CKR Property have a valid and enforceable arbitration agreement. We agree and conclude that the unambiguous terms of the parties' arbitration agreement express an objective intent to arbitrate "any claim or dispute between them." See In re Dillard Dept. Stores, Inc. , 186 S.W.3d at 515. The parties' mutual agreement to arbitrate provides sufficient consideration for the agreement’s enforcement. See In re 24R, Inc. , 324 S.W.3d at 566.

Although only Longoria signed the arbitration agreement, CKR Property’s signature was not necessary to bind CKR Property to the agreement. See In re Polymerica, LLC , 296 S.W.3d 74, 76 (Tex. 2009) (orig. proceeding) (per curiam) ("we have never held that the employer must sign the arbitration agreement before it may insist on arbitrating a dispute with its employee"); In re Macy’s Tex., Inc. , 291 S.W.3d 418, 419-20 (Tex. 2009) (orig. proceeding) (per curiam) ("The FAA contains no requirements for the form or specificity of arbitration agreements except that they be in writing; it does not even require that they be signed."). CKR Property does not contend otherwise.

Looking at the substance of its arguments, CKR Property does not challenge the validity of the parties' arbitration agreement and does not assert the agreement is unenforceable under general contract law principles based on unconscionability, duress, fraudulent inducement, or revocation. See Royston, Rayzor, Vickery, & Williams, LLP , 467 S.W.3d at 500 ; Venture Cotton Coop. , 435 S.W.3d at 227. Counsel for CKR Property acknowledged at oral argument that the parties' "agreement in and of itself is valid." CKR Property contends that its claims in the underlying proceeding are not among those covered by the arbitration agreement; this contention is properly analyzed as a challenge to the agreement’s scope — not to its validity. See In re Rubiola , 334 S.W.3d at 223-24 (the issue of whether "the arbitration clause cover[ed] the [plaintiffs'] claims" was one that "question[ed] the clause’s scope"); see also Mendez v. New Bell Gen. Servs., L.P. , 727 F.Supp.2d 585, 595 (W.D. Tex. 2010) (when analyzing scope, "the Court must decide...