Opinion
13-21-00301-CV
09-29-2022
DILLARD TEXAS SOUTH, LLC, AND KEVIN LYON, INDIVIDUALLY AND AS REPRESENTATIVE AGENT OR SERVANT OF DILLARD'S INC. AND DILLARDS TEXAS SOUTH, LLC, Appellants, v. AMANDA CORTEZ BAZAN, Appellee.
On appeal from the 206th District Court of Hidalgo County, Texas.
Before Justices Benavides, Hinojosa, and Silva.
MEMORANDUM OPINION
LETICIA HINOJOSA JUSTICE.
By one issue, appellants Dillard Texas South, LLC, and Kevin Lyon, individually and as representative agent or servant of Dillard's Inc. and Dillard Texas South, LLC, (collectively, Dillard's) argue that the trial court erred when it denied its motion to compel arbitration. We reverse and remand.
I. Background
A. The Arbitration Agreements
Appellee Amanda Cortez Bazan began working at the Dillard's department store in McAllen, Texas in 2008. As a condition of her employment, Bazan signed an acknowledgement confirming she received a summary plan description (SPD) of the Dillard Texas Operating Limited Partnership d/b/a Dillard's Inc.'s injury benefit plan for Texas employees. The injury benefit plan included a mandatory arbitration clause, wherein Bazan recognized the following:
I also acknowledge that this SPD includes a mandatory company policy requiring that certain claims or disputes relating to an on-the-job injury (that cannot otherwise be resolved between [Dillard's] and me) must be submitted to an arbitrator, rather than a judge and jury in court. I understand that by receiving this SPD and becoming employed (or continuing my employment) with [Dillard's] at any time on or after April 14, 2004, I am accepting and agreeing to comply with these arbitration requirements.
By signing the acknowledgment, Bazan further agreed that the arbitration agreement applied to all claims against Dillard's and "its officers, directors, owners, employees, representatives, agents, subsidiaries, affiliates, successors, or assigns." Bazan also agreed that the Federal Arbitration Act (FAA) would govern the interpretation, enforcement, and proceedings under the agreement.
During her employment, and as a condition of remaining employed, Bazan signed additional agreements to arbitrate any legal claims in 2008, 2011, and 2016. Relevant to this appeal, all the subsequent agreements set forth that the arbitration provision applied to Dillard's, Inc. and "its affiliates, subsidiaries and Limited Liability Partnerships."
B. The Underlying Incident and Litigation
On December 21, 2020, Bazan was injured while in the course and scope of her employment when, according to her, a shelf dislodged, causing several heavy boxes to fall and strike her on her head, neck, and back. Bazan claimed that her supervisor Lyon "did nothing to help [her] or get her the medical attention she needed." Dillard's is a non-subscriber to Texas's worker's compensation program, but under the SPD, Dillard's paid for Bazan's medical bills resulting from this incident.
On May 14, 2021, Bazan filed a personal injury lawsuit against Dillard's and its manager Lyon for their alleged negligence, gross negligence, and intentional infliction of emotional distress. Dillard's filed its answer on June 11, 2021, generally denying all claims and asserting numerous affirmative defenses such as payment and offset, claiming it paid "all medical bills and related expenses" to Bazan as well as "supplemental salary or income payments."
Dillard's filed a motion to compel arbitration on July 12, 2021, and an amended motion to compel on July 15, 2021. In its amended motion, Dillard's argued that Bazan signed an arbitration agreement with Dillard's when she began her at-will employment on May 13, 2008. It further contended that Bazan had accepted benefits under the SPD for her personal injury claim, thus estopping her from contesting arbitration. Dillard's included an affidavit from Jamie Dorsey, Administrative Assistant to the Vice President and General Counsel of Dillard's, with its motion to compel. In the affidavit, Dorsey testified that she administered the Dillard's arbitration program. Dorsey also testified to the following:
Dillard's, Inc., a Delaware corporation, and its related entities, including Dillard Texas South, LLC, a Delaware limited liability company (hereinafter collectively "Dillard's") operate approximately 300 stores in 29 states[,] including the Dillard's store located at La Plaza Mall, 2200 South I-10, McAllen, TX 78501 ("Dillard's Store 727").
Dorsey further testified that Dillard's maintains an intranet for its employees nationwide, and that by searching this in-house intranet, she found the most recent arbitration agreement Bazan had signed on April 11, 2016. This signed agreement was also attached as an exhibit to the amended motion to compel.
Bazan replied on July 21, 2021. She argued that she worked for Dillard Texas South, LLC, which was not specifically mentioned in any of the agreements she signed. She stated that the SPD she received and signed mentioned "Dillard Texas Operating Limited Partnership" or "Dillard's Inc.", which were not her employers. Bazan contended that "Dillard Texas South, LLC" was not "on any tendered 'arbitration agreement,'" and thus she should have her claims resolved by a court and not an arbitrator.
The trial court held a hearing on the motion to compel arbitration on July 29, 2021. After considering arguments of counsel and taking the matter under advisement, the trial court denied the motion on August 31, 2021. Dillard's appeals. See Tex. Civ. Prac. & Rem. Code Ann. § 171.098.
II. Standard of Review and Applicable Law
"We review a trial court's order denying a motion to compel arbitration for abuse of discretion." See Wagner v. Apache Corp., 627 S.W.3d 277, 283 (Tex. 2021); Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018) (citing In re Labatt Food Serv., L.P., 279 S.W.3d 640, 642-43 (Tex. 2009) (orig. proceeding)). "We defer to the trial court's factual determinations if they are supported by evidence but review its legal determinations de novo." Henry, 551 S.W.3d at 115. "Whether the claims in dispute fall within the scope of a valid arbitration agreement and whether a party waived its right to arbitrate are questions of law, which are reviewed de novo." Id.; Perry Homes v. Cull, 258 S.W.3d 580, 598 & n.102 (Tex. 2008).
"Arbitration is a creature of contract between consenting parties." Jody James Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 629 (Tex. 2018) (citing Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). "Nevertheless, as may be required by principles of contract law and agency, a person who has agreed to arbitrate disputes with one party may be required to arbitrate related disputes with non-parties." Id.
A moving party must first establish the existence of a valid and enforceable arbitration agreement when relying on a contract to compel arbitration. See id. Then, the party must show that the claims at issue are within the arbitration agreement's scope. Id. at 633. "Whether a non-signatory may enforce an arbitration agreement's terms is a question within the first element." Id. Texas courts have articulated six scenarios where arbitration with non-signatories may be required: (1) incorporation by reference, (2) assumption, (3) agency, (4) alter ego, (5) equitable estoppel, and (6) third-party beneficiary. Id.
III. Analysis
Dillard's asserts that Dillards Texas South, LLC, Bazan's employer and a non- signatory to the arbitration agreement, can compel arbitration for two reasons: (1) Dillards Texas South, LLC is a third-party beneficiary, and (2) Bazan is estopped from challenging arbitration because she received benefits under the SPD.
We first address the contention that Dillard Texas South, LLC is a third-party beneficiary of the agreements Bazan signed with Dillard Texas Operating Limited Partnership d/b/a Dillard's, Inc. Here, Bazan contends there is no agreement to arbitrate her work injury claims with Dillard's. We disagree. Under Texas law, a non-signatory may enforce an arbitration agreement as a third-party beneficiary if it establishes that the parties to the contract: (1) intended to secure a benefit to the third-party and (2) entered into the contract directly for the third-party's benefit. See In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 677 (Tex. 2006) (orig. proceeding); see also ConocoPhillips Co. v. Graham, No. 01-11-00503-CV, 2012 WL 1059084, at *6 (Tex. App.-Houston [1st Dist.] Mar. 29, 2012, no pet.) (mem. op.). The benefit to the third-party must be more than merely incidental to the contract. See City of Houston v. Williams, 353 S.W.3d 128, 145 (Tex. 2011). Demonstrating a clear intent to benefit a third-party does not require the phrase "third-party beneficiary" or any other "magic words." Id. at 145. A third-party beneficiary may be identified in the agreement by a "class or category" of persons, all of whom may not be known to the contracting parties at the time of execution. See In re NEXT Fin. Grp., Inc., 271 S.W.3d 263, 267 (Tex. 2008) (orig. proceeding) (per curiam) (citing In re Prudential Ins. Co. of Am. Sales Prac. Litig. All Agent Actions, 133 F.3d 225, 230 (3rd. Circ. 1998) (noting that the arbitration agreement at issue intended to include "certain classes of individuals-member firms of the [National Association of Securities Dealers, or NASD], customers, and so on-who would benefit from the applicant's agreement with the NASD")).
Reviewing this issue de novo, we conclude that Bazan's agreement intended to include a certain "class or category" of entities affiliated with Dillard's, such as Dillard Texas South, LLC and its representative Lyon. See In re NEXT Fin. Grp., 271 S.W.3d at 267. The multiple agreements Bazan signed in 2008, 2011, and 2016 with Dillard's as a condition of maintaining her employment set forth that the agreement applied to Dillard's and "its affiliates, subsidiaries and Limited Liability Partnerships." Dillard Texas South, LLC, per Dorsey's affidavit, is included in this "class or category" of referenced entities. The plain language of the SPD and subsequent agreements show that Bazan and Dillard Texas Operating Limited Partnership d/b/a Dillard's Inc. intended to secure a benefit to her employer and entered into the contract for her employer's benefit. See In re Palm Harbor Homes, 195 S.W.3d at 677; see also ConocoPhillips Co., 2012 WL 1059084, at *6. This benefit was intentional and not merely incidental. See In re Palm Harbor Homes, 195 S.W.3d at 677.
Accordingly, we hold there is an agreement to arbitrate between Bazan and Dillard's. We also hold that Bazan's injuries fall within the scope of the agreement to arbitrate as it is an "on-the-job injury" as contemplated in the SPD. See Jody James Farms, JV, 547 S.W.3d at 629. The trial court thus abused its discretion in denying appellant's motion to compel. See Wagner, 627 S.W.3d at 283; Henry, 551 S.W.3d at 115. We sustain this issue.
Because we concluded that Dillards Texas South, LLC was a third-party beneficiary that could enforce the arbitration agreement, we need not address appellant's estoppel arguments. See Tex. R. App. P. 47.1 ("The court of appeals must hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal.")
Bazan submitted a letter brief urging this Court to review Morgan v. Sundance Inc., 142 S.Ct. 1708 (2022), a recent United States Supreme Court case concerning arbitration and the issue of waiver. Having reviewed this opinion, we find it inapplicable to the case at hand as waiver was not an issue at the trial court proceeding. See Garza v. Harrison, 574 S.W.3d 389, 405 (Tex. 2019) (holding that most arguments raised for the first time on appeal are waived).
IV. Conclusion
We reverse the trial court's judgment and remand for proceedings consistent with this opinion.