Brock Services, LLC v. Eustolia Darait Montelongo ( 2019 )

Opinion issued August 8, 2019
In The
Court of Appeals
For The
First District of Texas
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NO. 01-18-00923-CV
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BROCK SERVICES, LLC, Appellant
V.
EUSTOLIA DARAIT MONTELONGO, Appellee
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2018-30236
MEMORANDUM OPINION
Eustolia Montelongo brought suit against her former employer, Brock
Services, LLC, alleging that she was subjected to harassment based on her sex and
retaliation for having reported the harassment.
Brock moved to compel arbitration. The trial court denied the motion and
Brock appeals, contending that it proved Montelongo entered into a valid arbitration
agreement with Brock and that Montelongo’s claims fall within the scope of that
agreement. We reverse and remand.
BACKGROUND
In March 2017, Brock offered to hire Montelongo as an industrial insulation
installer. Brock conditions each offer of employment, including Montelongo’s, on
the prospective employee’s agreement to adhere to Brock’s Dispute Resolution
Policy. Montelongo received a written copy of the Dispute Resolution Policy and an
electronic copy of its Employee Handbook as part of the hiring process.
The two-page Dispute Resolution Policy begins with a sentence written in
Spanish, centered on the page and printed in boldfaced, capital letters, which
translated into English, provides the following warning: “If you cannot read and
understand this information in English, you must request this information in
Spanish.”
The Dispute Resolution Policy then proceeds to explain that it
creates a mutual obligation to arbitrate between Brock Holdings III,
Inc., its affiliates, subsidiaries and parent (the “Brock Group”), and all
employees of The Brock Group (collectively, The Brock Group and
employees of The Brock Group are herein referred to as the “Parties”),
and is for the express benefit of all other persons or entities included in
the definition of the term “Company” and “Company’s Customer” (as
both terms are hereinafter defined). Each, every, any and all claims,
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disputes and/or controversies now existing or later arising between or
among the Parties, or between or among the employees of The Brock
Group and any other person or entity constituting the Company or a
Company Customer, whether now known or unknown, arising out of or
related to employment or termination of employment with The Brock
Group shall be resolved only through final and binding arbitration,
pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq., and not
by way of court or jury trial.
The Agreement specifies that it covers claims including those alleging
termination[] or harassment and claims arising under the . . . Civil
Rights Act of 1964, Americans with Disabilities Act, Age
Discrimination in Employment Act, Family Medical Leave Act, Fair
Labor Standards Act, Employee Retirement Income Security Act, and
federal, state, or other statues and/or ordinances, if any, addressing the
same or similar subject matters, and all other federal, state, or other
statutory and common law claims including retaliation claims (but
excluding other workers’ compensation and unemployment insurance
claims).
With respect to these types of claims, the Dispute Resolution Policy further
declares:
Nothing in this Dispute Resolution Policy shall be deemed to preclude
a party from filing or maintaining a charge with the Equal
Employment Opportunity Commission or the National Labor
Relations Board or bringing an administrative claim before any
agency in order to fulfill the party’s obligation to exhaust
administrative remedies before making a claim in arbitration.
On her hiring date, Montelongo signed the Dispute Resolution Policy and an
acknowledgment of electronic delivery of Brock’s Employee Handbook. Page 70 of
the Handbook addresses the Dispute Resolution Policy, explaining that it
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is a binding agreement and acceptance and/or continuation of
employment with the Company constitutes knowing and voluntary
acceptance and agreement to the terms and condition[s] of the Dispute
Resolution Policy.
The Handbook’s acknowledgement page includes notice “that the policies,
rules and benefits described in the Handbook are subject to change at the sole
discretion of the Company at any time.” However, the Handbook expressly excepts
the Dispute Resolution Policy from this notice, which, the Handbook declares, is “a
distinct and separate agreement from all other modifiable Company Policy
provisions” that “may not be changed or modified by The Brock Group, except with
the acceptance of the employee after 60 days’ notice.”
With respect to fees and costs, the Dispute Resolution Policy provides:
Each party will pay the fees for his, her or its own attorneys, subject to
any remedies to which that party may later be entitled under applicable
law. If an employee brings a claim, dispute, or controversy subject to
this Dispute Resolution Policy, the employee bears the responsibility
for JAMS’s initial filing or case management fee. All other fees
associated with the arbitrator or arbitral forum shall be paid for by a
company in The Brock Group, if it is a party to the arbitration, or by the
applicable person(s) or entity(ies) constituting the Company or
Company’s Customer that is otherwise a party to the arbitration, if no
company in The Brock Group is a party to the arbitration.
Both the Dispute Resolution Policy and the section of the Handbook discussing it
advise the prospective employee to consult with legal counsel regarding the legal
consequences of the Dispute Resolution Policy.
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Montelongo alleges that the following events began shortly after she was hired
and form the basis of her claims against Brock. Montelongo’s supervisor would
sexually harrassing her, making provocative comments about her body and
propositioning her. Montelongo complained to Brock about the harassment. The
company conducted an investigation but did not inform Montelongo of the outcome.
After making the complaint, Montelongo, claims, she was subjected to harassment
and retaliation by her new supervisor and male co-workers, and she was wrongly
denied a promotion and raise. Montelongo filed a claim with the Texas Workforce
Commission alleging sexual harassment and retaliation. When Brock learned of the
TWC claim, it placed Montelongo on unpaid leave. Montelongo alleges that due to
the harassment and mistreatment, she reached the point that she felt she had no
alternative but to leave her employment.
Montelongo received a right-to-sue letter from the TWC and brought this suit
against Brock. Brock answered and moved to compel arbitration.
DISCUSSION
Brock contends that the trial court erred in denying its motion to compel
arbitration because it proved the validity of the arbitration agreement set forth in its
Dispute Resolution Policy and that Montelongo’s claims come within the
agreement’s scope. In the trial court, Montelongo opposed the motion with
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arguments that no valid arbitration agreement existed and alternatively, that the
agreement is unenforceable.
I. Standard of Review
We review the trial court’s denial of a motion to compel arbitration for an
abuse of discretion. In re Houston Progressive Radiology Assocs., 474 S.W.3d 435,
442–43 (Tex. App.—Houston [1st Dist.] 2015, no pet.). Under this standard, we
defer to the trial court’s factual determinations if the evidence supports them, but we
review the trial court’s legal determinations de novo. In re Labatt Food Serv., L.P.,
279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding); see Parker v. Schlumberger
Tech. Corp., 475 S.W.3d 914, 922 (Tex. App.—Houston [1st Dist.] 2015, no pet.).
The parties agree that the Federal Arbitration Act governs the Agreement. See
9 U.S.C. §§ 1–16; In re Rubiola, 334 S.W.3d 220, 223 (Tex. 2011). Under the FAA,
a party seeking to compel arbitration must show that (1) a valid, enforceable
arbitration agreement exists and (2) her claims fall within the agreement’s scope. In
re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding);
In re Provine, 312 S.W.3d 824, 828 (Tex. App.–Houston [1st Dist.] 2009, orig.
proceeding).
Whether a valid arbitration agreement exists is a legal question. In re D.
Wilson Constr. Co., 196 S.W.3d at 774, 781 (Tex. 2006); Valerus Compression
Servs., LP v. Austin, 417 S.W.3d 202, 208 (Tex. App.—Houston [1st Dist.] 2013, no
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pet.). We apply ordinary contract principles in interpreting an agreement to arbitrate.
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); Valerus
Compression Servs., 417 S.W.3d at 208. “We examine and consider the entire
writing in an effort to harmonize and give effect to all the provisions of the contract
so that none will be rendered meaningless.” Valerus Compression Servs., 417
S.W.3d at 208. “No single provision taken alone will be given controlling effect.”
Id.
II. An Arbitration Agreement Exists Between Brock and Montelongo
Brock contends that the trial court erred in denying its motion to compel
arbitration based on any of Montelongo’s challenges against the formation of the
arbitration agreement. Under contract law, the determination of a meeting of the
minds, and thus offer and acceptance, is based on an objective standard. DeClaire v.
G & B McIntosh Family Ltd. P’ship, 260 S.W.3d 34, 44 (Tex. App.—Houston [1st
Dist.] 2008, no pet.). We consider only the parties’ objective manifestations of
assent, not their subjective states of mind. Palavan v. McCulley, 498 S.W.3d 134,
141 (Tex. App.—Houston [1st Dist.] 2016, no pet.) (citing Adams v. Petrade Int’l.,
Inc., 754 S.W.2d 696, 717 (Tex. App.—Houston [1st Dist.] 1988, writ denied)). The
law presumes that the party knows and accepts the contract terms. Nat’l Prop.
Holdings, L.P. v. Westergren, 453 S.W.3d 419, 425 (Tex. 2015) (per curiam).
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The strong presumption favoring arbitration arises “only after the party
seeking to compel arbitration proves that a valid arbitration agreement exists.” J.M.
Davidson, 128 S.W.3d at 227. Once a movant proves the existence of a valid
arbitration agreement, though, courts must resolve all doubts regarding the
agreement’s scope in favor of arbitration. In re Kellogg Brown & Root, 166 S.W.3d
at 737; see In re D. Wilson Constr., 196 S.W.3d at 783 (instructing that courts
“should not deny arbitration unless it can be said with positive assurance that an
arbitration clause is not susceptible of an interpretation which would cover the
dispute at issue” (quoting Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899
(Tex.1995) (per curiam) (orig. proceeding)).
If the party moving to compel arbitration establishes that a valid arbitration
agreement encompasses the nonmovant’s claims, the burden shifts to the nonmovant
to establish a defense. In re Provine, 312 S.W.3d at 829. Absent a defense, the trial
court has no discretion to deny the motion. See id.
A. The circumstances surrounding Montelongo’s execution of the
arbitration agreement do not prevent it from binding her to its
terms.
Montelongo argued that her “signature is not enough” to show that she agreed
to arbitrate her claims because her primary language is Spanish and she did not
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understand the legal effect of agreeing to arbitration.1 However, absent proof of
mental incapacity, fraud, misrepresentation, or deceit, “a party is bound by the terms
of the contract he signed, regardless of whether he read it or thought it had different
terms.” In re McKinney, 167 S.W.3d 833, 835 (Tex. 2005); see In re Big 8 Food
Stores, Ltd., 166 S.W.3d 869, 877 (Tex. App.—El Paso 2005, orig. proceeding).
Texas courts have consistently found arbitration agreements enforceable in the face
of similar complaints. See In re Dallas Peterbilt, Ltd., 196 S.W.3d 161, 163 (Tex.
2006) (holding that an employee who signed an acknowledgment that he received a
summary of the company’s dispute resolution policy and accepted the company’s
offer of employment, received notice of and accepted its arbitration agreement’s
terms as a matter of law); In re Big 8 Food Stores, 166 S.W.3d at 878 (“Illiteracy
thus does not relieve a contracting party of the consequences of his agreement.”);
see also Nguyen Ngoc Giao v. Smith & Lamm, P.C., 714 S.W.2d 144, 146 (Tex.
App.—Houston [1st Dist.] 1986, no writ) (holding that party bound by contract he
signed despite his inability to read, write, or speak English).
1
Montelongo does not address the significance of the sentence written in Spanish at
the beginning of the Dispute Resolution Policy, which instructs her to ask for the
policy in Spanish if she was unable to read it in English. Nor does she account for
the policy language advising her to consult with a lawyer to better understand the
legal consequences of signing the arbitration agreement.
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B. Brock was not required to sign the arbitration agreement.
Montelongo also claimed that the arbitration agreement was not binding
because it has only her signature and was not signed by a Brock representative. This
claim also is unavailing. The FAA does not require parties to sign an arbitration
agreement. See In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex. 2005)
(citing 9 U.S.C. § 3). Texas law recognizes that a contract signed by only one party
can be effective as long as the other party demonstrates acceptance of its acts,
conduct, or acquiescence in the terms of the contract. See Brown v. Mesa Distribs.,
Inc., 414 S.W.3d 279, 285 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (citing
DeClaire, 260 S.W.3d at 44). Montelongo does not identify any conduct by Brock
that would call its acceptance of the arbitration agreement into question. Thus, this
claim does not support the trial court’s denial of Brock’s motion to compel
arbitration.
C. The arbitration agreement did not need a conspicuous jury waiver
to be valid.
Montelongo attacked the arbitration agreement based on its lack of a
conspicuous jury waiver,2 but its absence does not preclude enforcement of the
2
The first page of the agreement declares that the parties agree all claims arising out
of the employment relationship “shall be resolved only through final and binding
arbitration, pursuant to the [FAA], and not by way of court or jury trial.”
Montelongo’s complaint ostensibly concerns the lack of conspicuousness, not the
lack of content.
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arbitration agreement. “Arbitration is an agreement to resolve disputes out of court
in the first instance, not an agreement to waive a particular constitutional right
available within the judicial process.” Chambers v. O’Quinn, 305 S.W.3d 141, 149
(Tex. App.—Houston [1st Dist.] 2009, pet. denied). “[A] party . . . waives its rights
to recourse in the courts” when it enters into an arbitration agreement. Id. An
agreement to arbitrate employment-related disputes and waive the right to trial
necessarily includes a waiver of the right to trial by jury.
D. The arbitration agreement is not illusory because any modification
requires the approval of both parties.
Montelongo also contended that the arbitration agreement is illusory, because
the Employee Handbook’s disclaimer provides “that the policies, rules and benefits
described in the Handbook are subject to change at the sole discretion of the
Company at any time.” The trial court could not properly deny the motion to compel
arbitration based on that disclaimer, though, because the Handbook makes clear that
the disclaimer does not apply to the arbitration agreement. The handbook sets the
Dispute Resolution Policy apart from other policies addressed in the handbook,
declaring that it is “a distinct and separate agreement from all other modifiable
Company Policy provisions” that “may not be changed or modified by The Brock
Group, except with the acceptance of the employee after 60 days’ notice.”
“An arbitration clause is not illusory unless one party can avoid its promise
to arbitrate by amending the provision or terminating it altogether.” In re 24R, Inc.,
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324 S.W.3d 564, 567 (Tex. 2010) (orig. proceeding) (per curiam) (citing In re
Odyssey Healthcare, Inc., 310 S.W.3d 419, 424 (Tex. 2004) (orig. proceeding) (per
curiam)). Brock’s Employee Handbook expressly distinguishes the Dispute
Resolution Policy from the other policies it addresses, requiring 60 days’ notice of
any proposed change or modification and the employee’s acceptance before it can
be made. See id. Because the arbitration agreement’s terms cannot be changed
without the consent of both Brock and its employees, it is not illusory.
CONCLUSION
We hold that the trial court erred in denying Brock’s motion to compel
arbitration. We therefore reverse the judgment and remand the case for further
proceedings consistent with this opinion.
Gordon Goodman
Justice
Panel consists of Chief Justice Radack and Justices Goodman and Countiss.
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