Opinion
No. 14-10-01146-CV
Opinion filed June 21, 2011.
On Appeal from the 11th District Court Harris County, Texas, Trial Court Cause No. 2010-23318.
Panel consists of Justices ANDERSON, BROWN, and CHRISTOPHER.
OPINION
In this accelerated, interlocutory appeal, appellants Texas La Fiesta Auto Sales, LLC, and Patricia Tubbs appeal the trial court's order compelling arbitration. Specifically, they contend the trial court erred in (1) denying appellants' motion to compel arbitration under a January 25 arbitration agreement and instead compelling arbitration under a superseding agreement; (2) conducting an evidentiary hearing on the motion to compel; (3) drawing legal conclusions reserved for the arbitrator or jury; and (4) depriving appellants of reasonable notice of a trial on the merits. In response, appellee William Belk asserts that this court lacks jurisdiction to entertain a direct appeal of an order compelling arbitration. We agree with Belk, and accordingly dismiss the appeal.
I
Texas La Fiesta Auto Sales is a used-automobile dealership. Patricia Tubbs is the president and managing member of La Fiesta. In January 2010, William Belk went to work for La Fiesta as a sales manager. In connection with his employment, Belk signed various documents, including an "Employee Arbitration Agreement" dated January 25, 2010. The arbitration agreement provides, in relevant part:
Employer and Employee agree that all claims, demands, disputes, controversies of every kind or nature that may arise between them and concerning any issues surrounding the employment of the Employee shall be settled by binding arbitration conducted pursuant to the provisions of 9 U.S.C. Section 1 et seq. and according to the Commercial Rules of the American Arbitration Association.
Several days later, La Fiesta provided Belk with an employment contract, which Belk signed on February 2, 2010. For reasons not apparent in the record, no representative of La Fiesta signed the contract.
The February 2 employment contract contained the following merger clause:
6.02. This Agreement supersedes all previous agreements between the Employee and the Employer, and contains the entire understanding between the parties with respect to the subject matter specified in this Agreement. Each party to this Agreement acknowledges that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing signed by the party to be charged.
The contract also contained an arbitration provision that differed in some respects from the January 25 arbitration agreement:
6.04. Any controversy between the parties to this Agreement involving construction or application of any of the terms, covenants, or conditions of this Agreement, shall on the written request of one party served on the other, be submitted to a board of arbitration consisting of three (3) persons, and such arbitration shall comply with and be governed by the provisions of Chapter 102 of the Texas Labor Code. . . .
Shortly thereafter, Tubbs terminated Belk's employment. Belk sued La Fiesta and Tubbs, asserting breach of the employment contract, promissory estoppel, fraudulent inducement, fraudulent conveyance, and negligence. La Fiesta moved to compel arbitration under the January 25 arbitration agreement. In response, Belk filed a single document containing a motion for continuance, a motion for partial summary judgment, and a response to La Fiesta's motion to compel arbitration. Belk argued, among other things, that a valid employment contract existed between him and La Fiesta which superseded the January 25 arbitration agreement. La Fiesta responded, asserting that Belk failed to present any arguments or evidence that would render the January 25 arbitration agreement unenforceable. La Fiesta also asserted that, even if the employment contract were valid, it too contains an arbitration provision and thus "either way, this case must be arbitrated."
Among other things, Belk claimed that he was wrongfully terminated without cause and without just compensation under the employment contract. The employment contract provides that if Belk is terminated without cause during the first year of his employment, he is entitled to additional compensation of $300,000.
The trial court held an evidentiary hearing on La Fiesta's motion to compel arbitration. Belk presented testimony and submitted exhibits in support of his position, but La Fiesta offered no evidence. At the conclusion of the hearing, the trial court orally ordered the parties to arbitration pursuant to paragraph 6.04 of the employment contract. On November 2, 2010, the trial court signed an order compelling arbitration. A week later, on November 9, the trial court signed an "Order Regarding Arbitration" clarifying the prior order. In the November 9 order, the trial court stated its finding that paragraph 6.02 of the February 2, 2010 employment contract "contained a merger clause resulting in a novation of the January 25, 2010 arbitration agreement" and therefore the court compelled arbitration under paragraph 6.04 of the employment contract. The court's order further recited that "[a]ll factual and legal issues regarding the February 2, 2010 employment agreement other than whether it existed despite the absence of [La Fiesta's] signature will be determined by the arbitrator(s)."
II
As an initial matter, Belk contends that La Fiesta and Tubbs are attempting to appeal the trial court's order compelling arbitration, which is an unappealable interlocutory order. This court must independently determine whether it has jurisdiction over an appeal, even if no party contests jurisdiction. M. O. Dental Lab .v. Rape, 139 S.W.3d 671, 673 (Tex. 2004) (per curiam); HEB Grocery Co., L.P. v. Kirksey, No. 14-10-00217-CV, 2010 WL 1790878, at *1 (Tex. App.-Houston [14th Dist.] May 6, 2010, no pet.) (per curiam). Unless a statute specifically authorizes an interlocutory appeal, appellate courts have jurisdiction over final judgments only. Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001); HEB Grocery Co., 2010 WL 1790878, at *1. We construe statutes granting interlocutory appeals strictly because they comprise a narrow exception to the general rule that interlocutory orders are not immediately appealable. Tex. A M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 841 (Tex. 2007); Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 355 (Tex. 2001).
Appellants contend that Texas Civil Practice and Remedies Code section 51.016 provides jurisdiction. Section 51.016 provides that, in a matter subject to the Federal Arbitration Act ("FAA"), a party may appeal from a "judgment or interlocutory order . . . under the same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16." Tex. Civ. Prac. Rem. Code § 51.016. Section 16 of the FAA, entitled "Appeals," provides:
(a) An appeal may be taken from —
(1) an order —
(A) refusing a stay of any action under section 3 of this title,
(B) denying a petition under section 4 of this title to order arbitration to proceed,
(C) denying an application under section 206 of this title to compel arbitration,
(D) confirming or denying confirmation of an award or partial award, or
(E) modifying, correcting, or vacating an award;
(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or
(3) a final decision with respect to an arbitration that is subject to this title.
Appellants argue that the trial court denied the appellants' motion to compel arbitration under the January 25 arbitration agreement. They further argue that because the January 25 arbitration agreement invokes the FAA, appellants may take an interlocutory appeal from the trial court's order "denying a petition under section 4 of this title to order arbitration to proceed." 9 U.S.C. § 16(a)(1)(B). But the trial court's order does not deny arbitration; it compels arbitration. Although appellants complain they did not get arbitration under the specific agreement they preferred, the trial court granted the ultimate relief appellants requested — an order compelling arbitration.
Appellants are not without recourse, as they may appeal their complaint that the trial court erred in compelling arbitration under the employment contract by final appeal. See In re Gulf Exploration, LLC, 289 S.W.3d 836, 842 (Tex. 2009) ("If a trial court compels arbitration when the parties have not agreed to it, that error can unquestionably be reviewed by final appeal."); Perry Homes v. Cull, 258 S.W.3d 580, 586 (Tex. 2008) (noting general rule that trial-court order compelling arbitration may be reviewed post-arbitration).
Section 16 of the FAA "expressly prohibits pre-arbitration appeals." Perry Homes v. Cull, 258 S.W.3d 580, 586 (Tex. 2008) (citing 9 U.S.C. § 16(b)(2)); Chambers v. O'Quinn, 242 S.W.3d 30, 31-32 (Tex. 2007) (noting that "the FAA does not provide for interlocutory appeals from an order compelling arbitration"). And, as this court explained in HEB Grocery Co., a "careful reading" of 9 U.S.C. section 16(a)(1)(B) "reveals that it applies when a party has failed or refused to arbitrate," 2010 WL 1790878, at *2, not when a party has been compelled to arbitrate. Likewise, the Texas Arbitration Act allows interlocutory appeals only from orders that deny arbitration. Chambers, 242 S.W.3d at 31 (citing Tex. Civ. Prac. Rem. Code § 171.098(a)(1), (2)); HEB Grocery Co., 2010 WL 1790878, at *2.
III
After the parties filed their briefs, the Supreme Court of Texas issued an opinion concerning the availability of judicial review of an interlocutory arbitration order. In CMH Homes v. Perez, No. 10-0688, ___ S.W.3d ___, 2011 WL 2112775, at *2-5, *7 (Tex. May 27, 2011), the Supreme Court concluded that the court of appeals correctly determined that it lacked jurisdiction to hear an interlocutory appeal from a trial court's order appointing an arbitrator, but remanded the case back to the court of appeals for mandamus review. We requested that the parties provide additional briefing concerning the effect, if any, of CMH Homes on the issues raised in this appeal.
In response, Belk distinguishes CMH Homes on two grounds. First, Belk points out that the order being reviewed in that case was an order appointing an arbitrator rather than, as here, an order compelling arbitration. See id. at *1 ("Although the order was titled `Order on Plaintiff's Motion to Compel Arbitration,' the only directive in the order was to name an arbitrator to preside over the dispute."). Specifically, Belk argues that the trial court properly applied state-law principles of contract formation to conclude that a valid arbitration agreement existed and, accordingly, compelled arbitration. See, e.g., In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008) (noting that a state court must initially determine, through the neutral application of its own contract law, whether an enforceable arbitration agreement exists). Second, Belk correctly notes that, unlike the appellants in CMH Homes, the appellants here made no request for mandamus relief. See CMH Homes, 2011 WL 2112775 at *6 (noting that "CMH Homes invoked the court of appeals' appellate jurisdiction by specifically requesting that its appeal be treated as a mandamus petition").
The appellants respond that CMH Homes allows this court to treat their appeal from the trial court's November 2 order as a separate mandamus petition and, to the extent the order is not immediately appealable, the appellants "formally move the Court to treat this appeal as a mandamus petition." To be entitled to mandamus, a petition must show not only that the trial court clearly abused its discretion, but also that the relator has no adequate remedy by appeal. See In re Gulf Exploration, LLC, 289 S.W.3d 836, 842 (Tex. 2009). Here, the appellants argue that the trial court abused its discretion by determining that the February 2 employment contract was valid and compelling arbitration under the terms of that agreement rather than the January 25 arbitration agreement. But the appellants make no attempt to demonstrate that they have no adequate remedy by appeal. See id. at 842-43 (concluding that appellant was not entitled to mandamus review when it failed to show that its appellate remedy following arbitration was inadequate). Consequently, to the extent the appellants have requested that we treat their appellate brief as a petition for mandamus, the petition is denied.
Moreover, as we stated in note 2, supra, there is at least some authority for the notion that appellants will have an adequate remedy by appeal post-arbitration.
* * *
Because there is no statutory authority providing for an interlocutory appeal from an order compelling arbitration, we conclude that we are without jurisdiction over this interlocutory appeal and order it dismissed. Further, to the extent the appellants request mandamus relief, the petition for mandamus is denied.