Rush Truck Ctrs. of Tex., L.P. v. Mendoza ex rel. Estate

676 S.W.3d 821

RUSH TRUCK CENTERS OF TEXAS, L.P. d/b/a Rush Enterprises, Inc., a/k/a Rush Truck Center-El Paso, Appellant,

v.Rosario Y. MENDOZA, Individually and on Behalf of the Estate of Marco A. Hoyos Martinez, Appellee.

No. 08-22-00226-CV

Court of Appeals of Texas, El Paso.

September 1, 2023

ATTORNEY FOR APPELLANT: Aldo R. Lopez, Ray Pena McChristian P.C., 5822 Cromo Dr., El Paso, TX 79912.

ATTORNEY FOR APPELLEE: James F. Scherr, Manuel E. Lopez III, Scherr & Legate, PLLC, 420 E. San Antonio Ave., 2nd Floor, El Paso, TX 79901.

Before Rodriguez, C.J., Palafox, and Soto, JJ.

OPINION

YVONNE T. RODRIGUEZ, Chief Justice

BACKGROUND

In a single issue, Appellant challenges the denial of a motion to stay proceedings and compel arbitration. We reverse.

Factual Background and Procedural Background

Appellant, Rush Truck Centers of Texas, L.P. (Rush), is a Texas truck dealership that engages in the sale of heavy and medium duty trucks, and provides parts, service, and body work for heavy and medium duty trucks. Marco A. Hoyos Martinez, was initially hired by Rush in 2019 as a fabricator at Rush's Denton, Texas office. As part of Rush's electronic onboarding process, Hoyos was required to create a username and password to access and sign his onboarding documents. In April 2020, Hoyos was furloughed due to the COVID-19 pandemic. In October 2020, an offer to rehire Hoyos as a Body Service Technician Level II was made by Rush Truck Centers of El Paso. Hoyos used the same electronic onboarding system from 2019 for the execution of the 2020 onboarding documents after he was rehired. The 2020 onboarding documents included the "Employment At-Will and Arbitration Agreement" (the Arbitration Agreement). Hoyos accessed the Arbitration Agreement with his personal credentials and electronically signed it on November 5, 2020. Hoyos then began working for Rush again.

On November 23, 2020, Hoyos fatally fell from a ladder as he was cleaning a vocational garbage disposal truck with soapy water to prepare it for re-painting. A workers’ compensation claim was filed and Appellee, Rosario Y. Mendoza (Mendoza), is currently receiving death benefits under the Texas Workers’ Compensation Act (TWCA) as his surviving spouse.^{1 ,2} On January 31, 2022, Mendoza initiated a gross negligence and workers’ compensation lawsuit against Rush after her late husband's death.

The pleadings allege the gross negligence claim is based on Rush's failure: to instruct Hoyos on the use of an unsecured ladder at heights above six feet; to provide necessary and proper training; to provide fall protection; to supervise; to allow ventilation; provide noxious fume protection, and other proper personal protective equipment, and therefore, breached its non-delegable duty to provide a safe workplace to its employees. On June 29, 2022, Rush filed its motion to stay proceedings and compel arbitration. Mendoza opposed the motion, and a hearing was held. On October 11, 2022, the trial court denied the motion to stay proceedings and compel arbitration. This accelerated appeal followed.

DISCUSSION

In a single issue, Rush challenges the denial of its motion to stay proceedings and compel arbitration. First, Rush maintains there is a valid arbitration agreement and Mendoza's claims fall within the scope of the Arbitration Agreement. Second, Rush did not waive its right to arbitration, and the Arbitration Agreement remains within the Federal Arbitration Act's coverage because the exception for individuals personally engaged in interstate commerce does not apply. We agree.

Standard of Review

We review the trial court's ruling on a motion to compel arbitration based on an abuse of discretion standard. CC Rest., L.P. v. Olague , 633 S.W.3d 238, 241 (Tex. App.—El Paso 2021, pet. dism'd). The trial court "clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." In re Bunzl USA, Inc. , 155 S.W.3d 202, 207 (Tex. App.—El Paso 2004, orig. proceeding). The question of whether an arbitration agreement is valid and enforceable is a question of law we review de novo. Solcius, LLC v. Meraz , No. 08-22-00146-CV, 2023 WL 2261414, at *4 (Tex. App.—El Paso Feb. 27, 2023) (mem. op.). We also review the trial court's purely legal determinations de novo, and any clear failure to correctly determine the law constitutes an abuse of discretion. Olague , 633 S.W.3d at 241. If a valid and enforceable arbitration agreement exists covering Mendoza's claims, the trial court abused its discretion in failing to compel arbitration. Id. (citing Firstlight Federal Credit Union v. Loya , 478 S.W.3d 157, 161 (Tex. App.—El Paso 2015, no pet.) ).

A. Validity of the Arbitration Agreement

As a threshold matter, we begin our analysis with determining whether a valid arbitration agreement exists. As the party moving to compel arbitration, Rush must prove a valid arbitration agreement exists and Mendoza's claims at issue fall within the scope of that agreement. Rachal v. Reitz , 403 S.W.3d 840, 843 (Tex. 2013). Upon doing so, the burden shifts to Mendoza to disprove the existence of a valid and enforceable arbitration agreement. See In re DISH Network, L.L.C. , 563 S.W.3d 433, 441 (Tex. App.—El Paso 2018, orig. proceeding).

(1) Contract formation

For an arbitration agreement to be valid, it must contain the state law-required contract elements. See J.M. Davidson, Inc. v. Webster , 128 S.W.3d 223, 227–28 (Tex. 2003) ; Olague , 633 S.W.3d at 241. 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 to the terms"; and (5) "execution and delivery of the contract with intent that it be mutual and binding." Karns v. Jalapeno Tree Holdings, L.L.C. , 459 S.W.3d 683, 692 (Tex. App.—El Paso 2015, pet. denied).

The Texas Uniform Electronic Transactions Act (the Act) was enacted considering the increasing use of electronic contracts. Solcius , 2023 WL 2261414, at *4 (internal citations omitted). In a contest to the validity of an electronic signature and whether it is attributable to an individual, the focus is on the efficacy of the security procedures applied in the electronic transaction. Id. ; TEX. BUS. & COM. CODE ANN. § 322.009(a) ("An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable."). Once the parties have agreed to conduct business by electronic means, the party seeking to enforce the electronic signature must present evidence to establish the efficacy of the security procedures utilized in the transaction. Solcius , 2023 WL 2261414, at *4 (citing Aerotek, Inc. v. Boyd , 624 S.W.3d 199, 204 (Tex. 2021) ). A security procedure is defined by the Act as

a procedure employed for the purpose of verifying that an electronic signature, record, or performance is that of a specific person or for detecting changes or errors in the information in an electronic record. The term includes a procedure that requires the use of algorithms or other codes, identifying words or numbers, encryption, or callback or other acknowledgment procedures.

TEX. BUS. & COM. CODE ANN. § 322.002(13).

The party opposing enforcement of an electronic agreement may present evidence to undermine the security procedures utilized in the transaction by showing it "lack[ed] integrity or effectiveness[.]" Solcius , 2023 WL 2261414, at *5 (citing Aerotek , 624 S.W.3d at 210 ). When the efficacy of the security procedures has been conclusively established and the party opposing enforcement has failed to present evidence of fraud or lack of reliability, a court must enforce the contract. See id.

(2) Efficacy of Rush's security procedures

We begin by noting Mendoza does not contest the parties’ agreement the onboarding process would be electronic; she does, however, contest the validity of the electronic signature and whether it can be attributed to Hoyos. Thus, we need only consider whether Rush provided evidence to support a finding that the electronic onboarding system—the security procedure at issue—was sufficient to conclusively establish the genuine nature of Hoyos's signature. See id. We conclude it did.

According to Mendoza, there is no evidence of the efficacy of the onboarding system because the onboarding record summary does not specify the applicable time zone or the location of the computer Hoyos used when he signed the Arbitration Agreement. Although Mendoza acknowledges the records summary identifies an IP address, she claims it is nonetheless unreliable because it does not identify the computer Hoyos used. She also points us to "inaccuracies" in the records summary—the summary indicates one of the events on the Arbitration Agreement was updated before Hoyos viewed the documents. In addition, Mendoza claims the insufficiency of the safety procedures is further shown by the lack of any Rush employee (1) observation of Hoyos completing the onboarding system; (2) speaking to him directly while he completed the onboarding process; or (3) reviewed his responses. We disagree.

When Hoyos was hired in October 2020, he was required to create credentials—a username of his choice, which would be his email address, and a password of his choice—to electronically access the onboarding documents for his employment. Hoyos created his own credentials and logged into the system using his username and password to access the onboarding documents.

Kipp Sassaman, Rush's authorized representative and Vice President of Human Resources, was deposed by Mendoza regarding Rush's electronic onboarding system. Sassaman explained Hoyos provided authorization to accept signatures electronically, had to physically view and sign the...