Hawk Steel Industries, Inc. v. Willie James Stafford, Jr. ( 2019 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-19-00040-CV
___________________________
HAWK STEEL INDUSTRIES, INC., Appellant
V.
WILLIE JAMES STAFFORD, JR., Appellee
On Appeal from the 236th District Court
Tarrant County, Texas
Trial Court No. 236-302552-18
Before Sudderth, C.J.; Gabriel and Birdwell, JJ.
Memorandum Opinion by Chief Justice Sudderth
MEMORANDUM OPINION
Appellant Hawk Steel Industries, Inc., appeals the trial court’s order denying its
request to compel arbitration. Because Hawk failed to show that Stafford’s claims are
subject to a valid arbitration agreement, we hold that the trial court did not abuse its
discretion and affirm the trial court’s order.
Background
Stafford, an employee of Hawk, a nonsubscriber to workman’s compensation,
filed suit against Hawk alleging that he suffered an on-the-job injury while unloading a
truck. Hawk answered and moved to compel arbitration. In support of its motion,
Hawk attached a business records affidavit that authenticated three documents as
records made and retained by Hawk in the regular course of business:
(1) a document entitled “Receipt of SPD and Mutual Agreement to Arbitrate
Acknowledgment” (Receipt and Acknowledgment),
(2) the “Summary Plan Description” of Hawk’s occupational injury employee
benefit plan (SPD), and
(3) a “Mutual Agreement to Arbitrate” (MAA).
The Receipt and Acknowledgment states in full:
RECEIPT OF SPD AND MUTUAL AGREEMENT TO
ARBITRATE ACKNOWLEDGEMENT
RECEIPT OF MATERIALS. By my signature below, I acknowledge
that I have received and read (or had the opportunity to read) the
Summary Plan Description (the “SPD”) for the Hawk Steel Industries,
Inc. Occupational Injury Employee Benefit Plan, effective March 1,
2008.
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ARBITRATION. 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 the Company 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 the
Company at any time on or after March 1, 2008, I am accepting and
agreeing to comply with these arbitration requirements. I understand
that the Company is also accepting and agreeing to comply with these
arbitration requirements. All covered claims brought by my spouse,
children, beneficiaries, representatives, executors, administrators,
guardians, heirs or assigns are also subject to the SPD’s arbitration
policy, and any decision of an arbitrator will be final and binding on such
persons and the Company. [emphasis added]
Except for the title of the document, the Receipt and Acknowledgment does not
reference any document entitled “Mutual Agreement to Arbitrate.” The SPD, which
is specifically referenced, does not address arbitration for on-the-job injuries.1
Hawk argues that the terms of the arbitration agreement are set out in the
MAA. The MAA filed by Hawk provides for an effective date of March 1, 2008, and
would purport to cover on-the-job-injury disputes. However, Hawk provided no
evidence that the MAA it produced was the same MAA that is referenced in the title
of the Receipt and Acknowledgement or the MAA that governs this dispute. Neither
Hawk nor Stafford are identified anywhere in the MAA. Instead, the MAA defines
the agreement as between the “Company” and the “Claimant” and defines
“Company” as an entity listed on an attached “Schedule A.” But there are no
The only time arbitration is mentioned in the SPD is in reference to filing suit
1
under section 502(a) of ERISA. See 29 U.S.C.A. § 1132(a)(1)(B).
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schedules attached to the version of the MAA submitted by Hawk in support of its
motion.
While Stafford admitted that he had signed the Receipt and Acknowledgment
and received the SPD, he denied ever having received or been notified of the
existence of the MAA. Stafford also asserted that Hawk had objected to and refused
to answer Stafford’s discovery requests seeking information about Stafford’s receipt
of the MAA and whether the MAA was part of the SPD.
At the hearing on Hawk’s motion to compel arbitration, no witnesses testified
and no additional evidence was offered or admitted. After the trial court denied
Hawk’s motion to compel arbitration, this appeal followed. See Tex. Civ. Prac. &
Rem. Code Ann. § 171.098.
Discussion
Although framed as two separate issues, Hawk’s argument on appeal is that the
trial court abused its discretion by denying its motion to compel arbitration because
Stafford was bound by the terms of the MAA that was attached to Hawk’s motion.
We disagree. Hawk neither met its evidentiary burden of establishing the contents of
the MAA referenced in the Receipt and Acknowledgement nor established that
Stafford’s claims could be subject to arbitration based solely on the arbitration
paragraph of the Receipt and Acknowledgment. Thus, the trial court did not abuse its
discretion by denying the motion to compel arbitration.
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I. Standard of review and applicable law
We review a trial court’s ruling on a motion to compel arbitration for an abuse
of discretion. In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009). We defer
to the trial court’s factual determinations but review legal questions de novo. Doe v.
Columbia N. Hills Hosp. Subsidiary, L.P., 521 S.W.3d 76, 80 (Tex. App.—Fort Worth
2017, pet. denied). Whether a valid arbitration agreement exists is a question of law
that we review de novo. Id. at 80–81.
In the trial court, motions to compel arbitration are treated somewhat similarly
to motions for summary judgment. Id. at 81 (citing In re Jebbia, 26 S.W.3d 753, 756–57
(Tex. App.—Houston [14th Dist.] 2000, orig. proceeding); Jack B. Anglin Co. v. Tipps,
842 S.W.2d 266, 268–69 (Tex. 1992)). The same evidentiary standards apply, and the
party alleging that an arbitration agreement exists must present summary proof that
the dispute is subject to arbitration (through affidavits, pleadings, discovery, or
stipulations), and the party resisting arbitration may contest the opponent’s proof or
present evidence supporting the elements of a defense to enforcement. Id. If the
evidence raises a genuine issue of material fact, the trial court must conduct an
evidentiary hearing to resolve the factual dispute. Id. (citing Jack B. Anglin Co., 842
S.W.2d at 269; In re Estate of Guerrero, 465 S.W.3d 693, 700 (Tex. App.—Houston
[14th Dist.] 2015, pet. denied)).
As the party seeking to compel arbitration, Hawk bore the burden to establish
the existence of a valid arbitration agreement. In re AdvancePCS Health L.P., 172
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S.W.3d 603, 605 (Tex. 2005). A valid arbitration agreement exists if the employee (1)
received notice of the policy and (2) accepted it. In re Dallas Peterbilt, Ltd., 196 S.W.3d
161, 162 (Tex. 2006). Generally, there is a strong presumption in favor of arbitration,
but that presumption does not apply to the initial determination of whether a valid
arbitration agreement exists. J.M. Davidson v. Webster, 128 S.W.3d 223, 227 (Tex.
2003). While an arbitration agreement need not be in any particular form, it must
clearly appear that the parties intended to submit their dispute to arbitration and to be
bound by that decision. Wetzel v. Sullivan, King & Sabom, P.C., 745 S.W.2d 78, 81 (Tex.
App.—Houston [1st Dist.] 1988, no pet.).
Once the existence of a valid arbitration agreement has been established, we
apply traditional contract principles to interpret the agreement. J.M. Davidson, 128
S.W.3d at 227. We give the language used its plain grammatical meaning unless it
definitely appears that the intention of the parties would thereby be defeated. Reilly v.
Rangers Mgmt., Inc., 727 S.W.2d 527, 529 (Tex. 1987) (citing Fox v. Thoreson, 398 S.W.2d
88, 92 (Tex. 1966)).
II. No evidence of notice or receipt of MAA
Hawk argues that the parties agreed to arbitrate claims related to on-the-job
injuries and that Stafford’s signature on the Receipt and Acknowledgment clearly
establishes that Stafford received and accepted the terms of the MAA. Yet, other
than in the title of the document itself, the Receipt and Acknowledgment makes no
reference to a document entitled “Mutual Agreement to Arbitrate.”
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To interpret the Receipt and Acknowledgment, we need look no further than
the plain words used by the parties. See Reilly, 727 S.W.2d at 529. And in so doing, we
must harmonize and give meaning to all terms used in an agreement and avoid
rendering any term meaningless. Stine v. Stewart, 80 S.W.3d 586, 589 (Tex. 2002).
The title of the one-page Receipt and Acknowledgment is “Receipt of SPD and
Mutual Agreement to Arbitrate Acknowledgment.” Hawk argues that the title should
be read to expressly reference Stafford’s receipt of the MAA as a separate document.
But we must read the title in the context of the content of the document. See Stine, 80
S.W.3d at 589; see also RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 121 (Tex.
2015) (explaining that while courts may consider the title of a contract provision or
section to interpret a contract, “the greater weight must be given to the operative
contractual clauses of the agreement”). Below the title, the first paragraph is labeled
“Receipt of Materials” and states that Stafford has received and read the SPD, which
is a capitalized, defined term in the document. It does not state that Stafford has
received the MAA; in fact, it makes no mention of the MAA at all or attempt to
define the MAA.
To make up for this, Hawk relies on the second paragraph, titled “Arbitration.”
It states:
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 the Company 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
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continuing my employment) with the Company at any time on or after
March 1, 2008, I am accepting and agreeing to comply with these
arbitration requirements.
Certainly in this paragraph Stafford acknowledges that the SPD contains an
arbitration provision as to certain claims or disputes relating to on-the-job injuries.
And in the sentence that follows, Stafford acknowledges that he agrees to comply
with the arbitration requirements in the SPD. But the SPD actually contains no
provision regarding arbitration of injury claims.
The SPD is 21 pages long and contains no reference to the MAA. The only
mention of arbitration within the SPD is a provision that if an employee disagrees
with a determination of ERISA benefits, the disagreement is subject to nonbinding
arbitration prior to filing a civil action. The SPD refers to and includes only one
appendix, which provides notice in compliance with the Health Information
Portability and Accountability Act (HIPAA).
Nor does the MAA contain any reference to the SPD. And the MAA and the
SPD do not appear to be part of the same document. The format of the SPD differs
from that of the MAA: the SPD is formatted in a single column while the MAA is
written in two columns; the SPD is written in a different font than the MAA; section
headings in the SPD are in bold, capitalized letters and centered on the page, while the
section headings in the MAA are underlined and left-justified; every page of the
SPD—including the appendix—includes a footer that states, “Summary Plan
Description of the Occupational Injury Employee Benefit Plan,” while the MAA’s
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footer states “Copyright 2003 Gibson, McClure, Wallace & Daniels, L.L.P.” Finally,
the MAA is completely divorced from the SPD, making no mention of the SPD, of
Hawk, or of Stafford. While it identifies a “Company” and defines it as the entity set
forth on “Schedule A” to the MAA, no such schedule was attached to the version of
the MAA that was filed as part of Hawk’s motion to compel arbitration. Indeed, the
only commonality the SPD and MAA appear to share is their effective dates of March
1, 2008.
Stafford agreed that “by receiving th[e] SPD and becoming employed (or
continuing [his] employment) with the Company at any time on or after March 1,
2008, [he was] accepting and agreeing to comply with these arbitration requirements.”
In other words, Stafford agreed to accept and comply with the ERISA arbitration
provisions provided for in the SPD. But Stafford’s agreement as to the SPD provides
no evidence that he agreed to or had any notice of the MAA which was offered by
Hawk in support of its motion to compel arbitration.
Other than offering the MAA into evidence through a business records
affidavit, Hawk provided no additional evidence that Stafford received or otherwise
had notice of the MAA in question. See Peterbilt, 196 S.W.3d at 162. The business
records affidavit made no attempt to establish that Stafford received or was notified
of the existence of the MAA. Nor did Hawk elicit any testimony at the hearing in an
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attempt to establish Stafford’s notice or knowledge of the MAA.2 Hawk thus failed to
meet its burden of proof that Stafford received the MAA. See Big Bass Towing Co. v.
Akin, 409 S.W.3d 835, 840 (Tex. App.—Dallas 2013, no pet.) (rejecting argument that
employee had notice of arbitration agreement based on affidavit which claimed that
agreement was discussed at a company meeting but provided no basis for the affiant’s
personal knowledge and did nothing to establish employee attended meeting).
These facts are strikingly similar to those in Big Bass Towing, a case decided by
our sister court in Dallas. In that case, the employer argued that the employee
acknowledged and agreed to the existence of a binding arbitration policy to resolve all
workplace injury disputes. Id. at 837. The employer argued that its “Occupational
Injury Employee Benefit Plan” (of which the employee did not dispute he had notice)
and “Mutual Agreement to Arbitrate” were one document. Id. at 839. The Dallas
court determined that the employer had not established that the Mutual Agreement to
Arbitrate was part of the Occupational Injury Employee Benefit Plan and noted that
the employee benefit plan made no mention of the agreement to arbitrate; that the
only reference to arbitration in the benefit plan related to ERISA disputes; that the
benefit plan was formatted in a single column whereas the arbitration agreement was
formatted in a two-column layout; that the benefit plan utilized a different font than
the arbitration agreement; that the benefit plan included a footer that stated,
2
In fact, Stafford testified through his affidavit that he had “never seen, read[,]
or received a copy of the [MAA].”
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“Occupational Injury Employee Benefit Plan,” whereas the arbitration agreement
included a footer that stated, “Copyright 2003 Gibson, McClure, Wallace & Daniels,
L.L.P.”;3 and that the last five pages of the benefit plan were an appendix regarding
HIPAA requirements. Id. at 839–40. The employer also argued that the two
documents were related because they both had the same effective dates. Id. at 840.
The Dallas court summarily rejected this argument, stating, “The fact that two
documents have the same effective date does not imply they are the same document
or otherwise related.” Id. The court concluded that the arbitration agreement and the
benefit plan were separate documents, and “for purposes of notice, any reference to
the occupational benefits injury plan did not provide notice of the arbitration
agreement.” Id.
Likewise, we conclude that any reference in the Receipt and Acknowledgment
to the SPD did not provide notice of the MAA. Hawk offered no evidence at trial
that would support a conclusion that the MAA was part of the SPD and thereby
incorporated into the Receipt and Acknowledgment.4 Their matching effective dates
do not alone conclusively render them as one document. See id. We therefore reject
Hawk’s argument that the Receipt and Acknowledgment established that Stafford
agreed to or had notice of the terms of the MAA.
3
It appears the same form arbitration agreement was used in both cases.
We further note that Hawk made no effort to show that the version of the
4
MAA submitted at trial was still in effect at the time of Stafford’s injury.
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III. Ambiguous arbitration paragraph
To the extent that Hawk argues that the arbitration paragraph of the Receipt
and Acknowledgment itself constitutes an arbitration agreement that covers Stafford’s
claims, that argument fails because that paragraph is ambiguous as to which claims are
subject to arbitration. The question of arbitrability of a claim or dispute is a threshold
matter for the court to decide. RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 120
(Tex. 2018) (reiterating that parties may agree to delegate the issue of arbitrability to
an arbitrator but that the “default rule” leaves that determination to the court). The
arbitration paragraph provides that the parties would arbitrate “certain claims or
disputes relating to an on-the-job injury.” [Emphasis added.]. The word “certain”
serves to limit the scope of on-the-job claims and disputes that would be subject to
arbitration. Yet, the document is silent as to which “certain” on-the-job claims and
disputes would be subject to arbitration. By failing to provide further evidence that
the parties’ intent to arbitrate “certain” on-the-job-injury claims included those claims
asserted by Stafford, Hawk has failed to meet its burden to show that Stafford’s
claims in this lawsuit were subject to an arbitration agreement. J.M. Davidson, 128
S.W.3d at 231 (“While we generally favor arbitration agreements, we should not
reflexively endorse an agreement so lacking in precision that a court must first edit the
document for comprehension, and then rewrite it to ensure its enforceability.”). We
therefore hold that the trial court did not abuse its discretion by denying Hawk’s
motion to compel arbitration.
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Conclusion
Having held that Hawk has failed to establish that Stafford’s claims are subject
to a valid arbitration agreement, we affirm the trial court’s order denying arbitration.
/s/ Bonnie Sudderth
Bonnie Sudderth
Chief Justice
Delivered: August 15, 2019
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