AOF Services, LLC v. Ronald Santorsola

Opinion

ACCEPTED 13-14-00641-CV THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS 4/23/2015 5:14:13 PM DORIAN RAMIREZ CLERK

FILED IN NO. 13-14-00641-CV 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, TEXAS 4/23/2015 5:14:13 PM __________________________________________________________________ DORIAN E. RAMIREZ Clerk IN THE COURT OF APPEALS FOR THE 13th DISTRICT OF TEXAS __________________________________________________________________

AOF SERVICES, LLC Appellant v.

RONALD SANTORSOLA Appellee

ON APPEAL FROM AN INTERLOCUTORY ORDER OF THE 2nd 25th DISTRICT COURT OF GONZALES COUNTY, TEXAS TRIAL COURT NO. 25,609-CV

REPLY BRIEF FOR THE APPELLANT AOF SERVICES, LLC

Paul C. Allred Texas Bar No. 01102000 8150 N. Central Expressway, Suite 700 Dallas, TX 75206 Tel (214) 448-9496 Fax (214) 276-1325 paulallred@msn.com

Attorney for Appellant TABLE OF CONTENTS

CERTIFICATE OF COMPLIANCE .......................................................... ii

TABLE OF AUTHORITIES ........................................................................ iii

SUMMARY OF THE ARGUMENT ........................................................... 5

ARGUMENT AND AUTHORITIES .......................................................... 6

CONCLUSION/PRAYER.............................................................................. 12

CERTIFICATE OF SERVICE ..................................................................... 13

APPENDIX…………………………………..……………………….……….14

CERTIFICATE OF COMPLIANCE

I certify that this document was produced on a computer using Microsoft

Word and contains 1,910 words, as determined by the computer software’s word-

count function, excluding the sections of the document listed in Texas Rule of

Appellate Procedure 9.4(i)(1).

Paul C. Allred TABLE OF AUTHORITIES

CASES page

Royston, Rayzor, Vickery & Williams, L.L.P. v. Lopez…………….…… 6, 7 2013 Tex. App. LEXIS 7843 at *23 (Tex. App. – Corpus Christi, June 27, 2013)

In re Poly-America, L.P. …………………………………………………… 7 262 S.W.3d 337, 355-56 (Tex. 2008) (orig. proceeding)

In re Fleetwood Homes of Texas, L.P……………………………………... 7 257 S.W.3d 692, 695 (Tex. 2008) (per curium)

APPELLANT’S REPLY BRIEF -Page 3 SUMMARY OF APPELLANT’s REPLY ARGUMENT

The Appellee’s arguments that the arbitration agreement is unconscionable

because it is one sided, because it unfairly limits discovery, and because it unfairly

splits fees, are all unsupported.

The arbitration agreement is bilateral between the parties.

The arbitration agreement does not unfairly limit discovery.

And the arbitration agreement does not unfairly split fees.

Accordingly, the evidence submitted by Appellee does not support the trial

court’s finding that the arbitration agreement was unconscionable on any of these

grounds. Therefore, the trial court erred in denying AOF’s Plea in Abatement and

Motion to Compel Arbitration.

AOF respectively requests this Court to reverse the trial court’s order

denying AOF’s Plea in Abatement and Motion To Compel Arbitration, and render

judgment in favor of Appellant compelling arbitration and abating pending suit

pending resolution of the arbitration proceeding.

APPELLANT’S REPLY BRIEF -Page 4 APPELLANT’s REPLY ARGUMENT AND AUTHORITIES

A. The arbitration agreement is a bilateral agreement to arbitrate that applies equally to AOF and Appellee Appellee argues that only his claims are subject to arbitration, while AOF’s

claims are excluded. This is contrary to the unambiguous language of the

arbitration agreement.

The arbitration agreement provides that:

“any claim, controversy, or other dispute relating to my employment, separation from the company, or following separation from the company, shall be resolved by arbitration.” (Apx: Exhibit A at p4)

This agreement applies equally to employer and employee.

The agreement has certain exceptions, but these exceptions again apply

equally to employer and employee, and are primarily for claims subject to

administrative procedures.

The case Appellee relies on is wholly distinguishable and illustrates how an

agreement that a court found is one-sided is different from the AOF arbitration

agreement. In Royston, Rayzor, Vickery & Williams, L.L.P. v. Lopez, 2013 Tex.

App. LEXIS 7843 at *23 (Tex. App. – Corpus Christi, June 27, 2013), an attorney

engagement agreement provided that disputes about services provided under the

APPELLANT’S REPLY BRIEF -Page 5 agreement would be subject to arbitration but a dispute over payment of services

would not. Id. at *2. That is two sides of the same coin, and it is thus not

surprising that, particularly in an attorney/client agreement where a fiduciary duty

is owed to the client, the court found this to be unfairly one-sided.

The opposite is true here. The arbitration agreement does not provide that

one type of claim is arbitrable for the employee but not for the employer. Thus,

Appellee failed to meet his burden of proving that the arbitration agreement is

substantively unconscionable.

B. The arbitration agreement does not unfairly limit discovery

The arbitration agreement’s limitation on discovery is appropriate and fully

enforceable.

The Texas Supreme Court held that “limited discovery is one of arbitration’s

‘most distinctive features.’” In re Fleetwood Homes of Texas, L.P., 257 S.W.3d

692, 695 (Tex. 2008) (per curium). The Court further noted that the argument that

“‘streamlined’ discovery makes arbitration unconscionable would nullify almost

all arbitration agreements. We hold that arbitration's limits on discovery for both

parties does not make it unconscionable.” Id.

Likewise, the Supreme Court in Poly-America held that discovery limits of

APPELLANT’S REPLY BRIEF -Page 6 25 interrogatories and 25 requests for production in the arbitration agreement at

issue in that case were not substantively unconscionable.

Appellee’s so-called evidence in support of his response to the motion to

compel in which Appellee’s counsel states that in these types of cases he sends

“approximately 85 requests for production” and “21 interrogatories with permitted

subparts” (see Apx: Exhibit B p1) is no evidence at all.

Appellee fails to identify and provide specific evidence as to why the

Appellee cannot reasonably meet his proof burden based upon the discovery that is

provided for in the arbitration agreement.

Appellee fails to provide specific evidence of what information Appellee

reasonably must obtain from AOF in the additional 60 requests for production and

the additional 7 Interrogatories that Appellee’s attorney allegedly normally serves

in this type of case, and why that information is not otherwise reasonably

obtainable through deposition testimony, or any other discovery that the parties

could agree to.

Furthermore, Appellee fails to provide any evidence that Appellee cannot

reasonably obtain the information he needs to meet his burden of proof under the

discovery limitations in the arbitration agreement.

APPELLANT’S REPLY BRIEF -Page 7 C. The fee-splitting agreement in the arbitration agreement is fair and reasonable

Appellee’s argument that the arbitration agreement is substantively

unconscionable because it requires the Appellee to pay “astronomical” arbitration

costs is unsupported by the Espinoza affidavit.

The Espinoza affidavit states that the arbitration of the Christine Torres v.

Stagg Restaurants case to which the attached aribtors’ invoice is attached was for

an arbitration that lasted only one day, stating in relevant part:

“…The arbitration took place in San Antonio, TX in the spring of 2013 and lasted only one day.” (Apx: Exhibit B at p1)

This statement directly conflicts with the arbitrator’s invoice which identifies

anticipated arbitrator’s fees and costs for three days of arbitration (identified on the

invoice as the days of 01/22/2013, 01/22/2013, and 01/23/2013), stating in relevant

part:

“..Your Share of the Neutral Compensation Deposit covering 3 days of Hearing…..7,500” (Apx: Exhibit B at p2)

Additionally, the Invoice/Statement reflects anticipated arbitrator’s charges

of $7,500 for 24 hours of Study.

The Invoice/Statement attached to the Espinoza affidavit is only a cost

APPELLANT’S REPLY BRIEF -Page 8 estimate, or a request for a deposit for a three day arbitration and a deposit for 24

hours’ worth of “Study” by the arbitrator.

The Invoice/Statement on its face is not a representation of the actual costs

incurred in the arbitration of the Christine Torres v Stagg Restaurants case.

The Espinoza affidavit states that the “Total cost for the entire arbitration,

from start to finish, was $20,225.” This large figure is not represented on the

attached Invoice/Statement anywhere, and based upon the Invoice/Statement it

cannot be accurate or valid for the actual charges incurred for a one day arbitration,

which could only reasonably be guessed at being a third of the $17,250 figure of

the Invoice/Statement.

There is no evidence that 24 hours of “Study” for the arbiter would be

applicable to the arbitration of Appellee’s claim against AOF.

Not only does the Espinoza affidavit completely misrepresent the arbitrator’s

actual charges for a 1 day arbitration based on the attached Invoice/Statement,

more critically it fails to ever state: a) that the arbitration of Appellee’s claims

against AOF in this dispute will require 3 days arbitration and 24 hours of “Study”

by the arbitrator so that an arbitrator’s fee in excess of $20,000 is reasonably

anticipated; and b) that the Appellee will likely actually incur arbitration costs

exceeding $5,000.

APPELLANT’S REPLY BRIEF -Page 9 The Espinoza affidavit states that Appellee’s case against AOF is very

similar to the Christine Torres v Stagg Restaurants case, which at best implies that

it would require a 1 day arbitration, since it identifies the cases as being similar,

and not a 3 day arbitration.

Based on the Invoice/Statement, the arbitrator’s fees for a 1 day arbitration

in the Christine Torres v Stagg Restaurants case could not possibly be the $20,225

asserted in the affidavit. The Invoice/Statement does not state what the

arbitrator’s fees actually were for a 1 day arbitration in the Christine Torres v

Stagg Restaurants case.

What the Espinoza affidavit specifically states regarding the anticipated

arbitrator’s fees is as follows:

“If Mr. Santorsola is required to arbitrate his case through a similar arbitration association, the cost for the arbitration and litigation process will reasonably exceed $5,000, if he is require to pay approximately twenty percent of the costs”. (Apx: Exhibit B at p1)

Espinoza’s statement in the affidavit alleges that the entire cost of the

arbitration and litigation process will reasonably exceed $5,000, but fails to

specifically allege what Mr. Santorsola’s portion of those costs would be.

The affidavit fails to specifically state what Mr. Santorsola’s anticipated

portion of the anticipated arbitrator’s fees would be.

APPELLANT’S REPLY BRIEF -Page 10 In additional support for its argument, Appellee also submits the affidavit of

Ronald Santorsola (Apx: Exhibit C), which states in relevant part:

“…If it is determined that I must bring my lawsuit against my employer in arbitration, and risk having to pay over $5,000 in arbitrator fees, I will probably not continue with my claim. This risk is too great for me and I do not have that type of money…” (Apx: Exhibit C at p1)

Santorsola’s affidavit does not state that he reasonably anticipates incurring $5,000

in arbitrator’s fees in the arbitration of his claim against AOF.

Neither the Espinoza nor the Santorsola affidavits state what the actual

anticipated arbitrator’s costs Santorsola reasonably anticipates incurring would be

for the arbitration of his claim against AOF.

The record fails to offer any evidence of what the actual anticipated

arbitrator’s costs Santorsola reasonably anticipates incurring would be.

APPELLANT’S REPLY BRIEF -Page 11 CONCLUSION/PRAYER

For the reasons stated herein, AOF requests this Court to find that the trial

court erred by finding that 1) the arbitration agreement is unconscionable, and 2)

that the arbitration agreement is unenforceable. AOF requests this Court to find

that the trial court erred by denying the Plea in Abatement and Motion to Compel

Arbitration.

Accordingly, AOF respectfully requests that the order denying the Plea in

Abatement and Motion to Compel Arbitration be reversed. In the alternative, AOF

prays that this Court remand this cause to the trial court for further proceedings

consistent with its opinion on the issues presented herein. AOF further requests

that this Court award it its costs of court on appeal.

AOF further prays for such other and further relief, both general and special,

at law or in equity, to which it is justly entitled, and for which it will ever pray.

APPELLANT’S REPLY BRIEF -Page 12 Respectfully Submitted,

LAW OFFICES OF PAUL C. ALLRED

Paul C. Allred State Bar Number: 001102000

Campbell Centre II 8150 North Central Expressway, Suite 700 Dallas, Texas 75206 Telephone Number (214) 449-9496 Facsimile Number (214) 276-1325

ATTORNEY FOR APPELLANT

CERTIFICATE OF SERVICE

The undersigned attorney at law, does hereby certify that a true and correct copy of the foregoing attached instrument has been served upon the Appellee, Ronald Santorsola by and through his respective attorney of record on this the 23rd day of April, 2015.

Paul C. Allred

APPELLANT’S REPLY BRIEF -Page 13

Exhibit A: Affidavit for Admission of Business Records

Exhibit B: Affidavit of Javier Espinoza

Exhibit C: Affidavit of Ronald Santorsola

APPELLANT’S REPLY BRIEF -Page 14 APPELLANT’s REPLY BRIEF

EXHIBIT A

EXHIBIT A APPELLANT’s REPLY BRIEF

EXHIBIT B APPELLANT’s REPLY BRIEF

EXHIBIT C