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Texas: Trial court erred in failing to enforce arbitration agreement in non-subscriber negligence suit

In Lucchese Boot Co. v. Licon, the El Paso Court of Appeals held that the trial court erred when it denied Lucchese's motion to compel arbitration. According to the court's opinion, Licon suffered work-related injuries and filed a non-subscriber negligence suit against Lucchese, his employer. Lucchese attempted to compel arbitration under the terms of its Area Brands Texas Injury Benefit Plan, and that motion was granted. The El Paso Court of Appeals struck down two other orders compelling arbitration against other Lucchese employees under the same plan because that plan was illusory (because the employer retained an unilateral right to terminate the agreement at any time). Licon moved for reconsideration of the trial court's order and that order was vacated. Lucchese then sought to compel arbitration under its Problem Resolution Program. The trial court denied Lucchese's motion to compel arbitration. The El Paso Court of Appeals reversed the trial court's judgment and remanded the matter for further proc ...

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Texas: Rule 11 agreement was enforceable, but fact issues of performance preclude summary judgment

In MKM Engineers, Inc. v. Guzder, the Fourteenth Court of Appeals held that a Rule 11 agreement entered into by the parties was enforceable, but there were issues of fact preventing summary judgment on a breach of contract claim. The Court's 24-page opinion outlines a complex factual and procedural history. The parties attended a mediation and settlement conferences that resulted in a Rule 11 agreement with future duties, such as a side-letter, the drafting and execution of a "final settlement agreement" with mutual releases and payment of the settlement amount. The Court held that the Rule 11 agreement was enforceable, despite one of the party's challenge that the agreement did not contain all of the material terms. The Court noted that Texas law allows courts to enforce "settlement agreements that contemplate additional documentation or leave open certain terms for future negotiation." According to the Court:   The critical issue for determining enforceability when the parties agree that some term ...

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Blog: Eleventh Circuit lacks jurisdiction over arbitration order, but confirms order for award

Jeanne M. Kohler at Carlton Fields recently wrote about a decision by the Eleventh Circuit Court of Appeals where the court held that it lacked jurisdiction over an appeal of an order compelling arbitration because no notice of appeal was filed within 30 days of the order, even though the district court's order stayed the litigation and did not dismiss it. The finality of the order compelling arbitration was not implicated. The Eleventh Circuit Court of Appeals reviewed a separate order in the same case. The challenge to the second order concerned whether the arbitrator exceeded his authority. The Eleventh Circuit Court of Appeals held that the review of an arbitration award is limited to whether it is irrational, fails to draw its essence from the collective bargaining agreement, or exceeds the scope of the arbitrator's authority. According to the court, even if a court disagreed with the arbitrator's interpretation of the agreement, the arbitrator's interpretation did not impermissibly amend or ...

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Texas: Trial court erred in granting summary judgment to void a mediated settlement agreement

The Thirteenth Court of Appeals, in Flores v. Medline Industries, Inc., held that the trial court erred when it granted a motion for summary judgment to void a mediated settlement agreement. The parties--Flores and Medline Industries, Inc.--attended a mediation after a motion for summary judgment was filed. The trial court had ruled on the MSJ, but the parties were not aware of the ruling at the time of the mediation. The parties resolved the case at mediation, resulting in a mediated settlement agreement. Afterwards, Medline filed a MSJ seeking to void the mediated settlement agreement on the grounds of mutual or unilateral mistake which was granted. In reversing the trial court's summary judgment, the Thirteenth Court of Appeals analyzed whether conclusive evidence was presented on the issue of mistake. Medline's position was that it would not have attended the mediation, or would have settled for a smaller amount, if it knew of the summary judgment. The court of appeals held that Medline "failed to concl ...

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US Supreme Court: Class Arbitration Waivers Valid

On December 14, 2015, the United States Supreme Court issued its opinion in DirectTV, Inc. v. Imburgia. The US Supreme Court held that the Federal Arbitration Act requires the enforcement of an arbitration agreement despite language that the agreement was unenforceable if the "law of your state" made class arbitration waivers unenforceable. DirectTV and its customers entered into service agreements that contained an arbitration provision that also waived class arbitrations. The contract stated that it would be unenforceable if the "law of your state" made class arbitration waivers unenforceable. Any arbitration was governed by the Federal Arbitration Act. At the time that Imburgia entered into the contract with DirectTV, California law made class arbitration waivers unenforceable because they were unconscionable. The trial court denied DirectTV's request to arbitrate and that decision was affirmed by the California Court of Appeal. While California law did invalidate class action arbitration waivers, the ...

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Texas: Arbitration agreement requiring employee to pay own attorney's fees was not substantively unconscionable

In Ophthalmic Consultants of Texas, P.A. v. Morales, the Court of Appeals for the Thirteenth District of Texas reversed the trial court's ruling denying a motion to compel arbitration. The Court of Appeals held that a valid arbitration agreement existed and that the claims fell within the scope of the agreement. Morales, a doctor. was hired by OCT and signed an agreement to arbitrate employment claims. The arbitration agreement provided that OCT would bear all costs and expenses of arbitration, unless Morales instituted arbitration. In that circumstance, Morales would be responsible for paying no more than $100.00 for any AAA administrative fee. Morales filed a claim with the Texas Workforce Commission alleging that OCT engaged in discriminatory practices and later filed a lawsuit. OCT asserted that the suit should be stayed pending arbitration. The Court of Appeals considered whether the agreement to arbitrate was illusory, failed for indefiniteness, or was substantively unconscionable. The Cour ...

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Blog: Inaccurate Translation Invalidates Arbitration Agreement

The Jackson|Lewis California Workplace Law Blog reports on a decision from the California Court of Appeal that held an automobile dealership that translated a sales contract into Spanish, but did not include the arbitration agreement in the translation, could not enforce the agreement. According to the decision, despite signing the English version of the contract (that did contain an arbitration provision), under California law, the arbitration agreement was not enforceable because (1) Spanish was the primary language of the party seeking to invalidate the arbitration agreement; (2) negotiations were conducted in Spanish; and (3) the party seeking to invalidate the arbitration agreement was unaware of the arbitration provision in the Spanish version of the contract.

Texas: No interlocutory appeal from order granting arbitration

In Prophet Ronald Dwayne Whitfield v. Big Star Honda, et al., the Court of Appeals for the First District of Texas held that under the Texas Arbitration Act or the Federal Arbitration Act, there is no interlocutory appeal over an order granting a motion to compel arbitration. An appellate court has no jurisdiction in that instance and must dismiss the appeal. The Court of Appeals noted an exception to that rule, established by the Texas Supreme Court in In re Gulf Exploration, LLC, 289 S.W.3d 836, 840 (Tex. 2009): courts may review an order compelling arbitration if the order also dismisses the underlying litigation so it is final, rather than interlocutory.

Here, the trial court entered no final judgment and the arbitration order stayed the litigation but did not dismiss the case. Accordingly, the court of appeals lacked jurisdiction and the appeal was dismissed.

Thanks to Ronnie Hornberger for bringing this decision to our attention.

Texas: Party waived right to arbitration by substantially invoking the judicial process

In Hogg v. Lynch, Chappell & Alsup, P.C., the El Paso Court of Appeals held that a law firm's client waived her right to seek arbitration by substantially invoking the judicial process to the law firm's detriment. Ms. Hogg and the law firm entered into a contingent fee agreement. Ms. Hogg and her attorneys attended a mediation relating to the estate of Ms. Hogg's late husband. The MSA stated that warranty deeds would be executed and an estate closing would take place. Ms. Hogg asked the law firm to take a lower contingency fee percentage, the firm declined, and Ms. Hogg terminated the law firm's services. Ultimately, the law firm and Ms. Hogg engaged in scheduling orders and discovery. The El Paso Court of Appeals outlined relevant factors when making the determination if a party has impliedly waived its rights to arbitration, including:  • whether the party who pursued arbitration was the plaintiff or the defendant; • how long the party who pursued arbitration delayed before ...

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Texas: Arbitration agreement with employee enforceable even though she did not sign

In Firstlight Federal Credit Union v. Loya, the Eighth District Court of Appeals held that the trial court abused its discretion in refusing to compel arbitration. The court held that Loya, an at-will employee, was bound by the arbitration agreement as a matter of law despite her lack of signature because she continued working after receiving notice of the arbitration agreement. According to the Court of Appeals, there was evidence that Loya received a notice of the arbitration policy and acknowledged its receipt electronically through a secure web-portal. It was undisputed that Loya did not print, sign, and return the online version of the company's Dispute Resolution Policy & Procedure. The Court of Appeals also examined the "delegation clause" of the agreement--that portion of the agreement that determines whether the court or the arbitrator has the power to rule on gateway issues, such as the validity and enforceability of the arbitration agreement. Here, the Court of Appeals held that the agree ...

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