in Re: Jose Luis Villanueva

Opinion

COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS

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§ IN RE: JOSE LUIS VILLANUEVA, No. 08-08-00329-CV § Relator. AN ORIGINAL PROCEEDING § IN MANDAMUS §

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OPINION DENYING MOTION FOR REHEARING

On July 8, 2009, this court conditionally granted mandamus relief in favor of Jose Luis

Villanueva because we concluded the trial court had abused its discretion by granting a motion to

compel arbitration. The real party in interest, Swift Transportation Company, Inc., has filed a motion

for rehearing asserting that Villanueva has an adequate remedy by appeal. We write to explain the

basis for our conclusion that appeal is an inadequate remedy and to discuss In re Gulf Exploration

Co., LLC, 289 S.W.3d 836 (Tex. 2009).

To be entitled to mandamus relief, a relator must demonstrate he has no adequate remedy by

appeal. In re Prudential Insurance Company of America, 148 S.W.3d 124, 136 (Tex. 2004). Swift

contends that the Supreme Court’s recent opinion in In re Gulf Exploration Co., LLC, 289 S.W.3d

836 (Tex. 2009) forecloses mandamus review of an order compelling arbitration except where

legislative mandates conflict. In Gulf Exploration, the Supreme Court explained that in 1994 it had

authorized general mandamus review of orders either compelling or denying arbitration under the

FAA. Id. at 841-42, citing Freis v. Canales, 877 S.W.2d 283, 284 (Tex. 1994). But with the

Palacios decision, the court limited mandamus review to orders denying arbitration while leaving open the question whether mandamus review of orders compelling arbitration should be entirely

precluded. Id. at 842, citing In re Palacios, 221 S.W.3d 564, 565 (Tex. 2006). It addressed this

question in Gulf Exploration.

The trial court’s error in compelling arbitration when the parties have not agreed to it can be

reviewed on final appeal. Id. at 842. Both the federal and Texas arbitration statutes provide for

vacating an arbitration award on final appeal if the arbitrators exceeded their powers. Id. But the

court stopped short of holding that mandamus review is never available for an order compelling

arbitration. See id. at 843 (noting Supreme Court had reviewed order compelling arbitration in In

re Poly-America, 262 S.W.3d 337 (Tex. 2008) and granted mandamus relief regarding a waiver of

statutory remedies). The critical inquiry is whether appeal is an adequate remedy. See id. at 842.

Answering this question depends on a careful balancing of the case-specific benefits and detriments

of delaying or interrupting a particular proceeding. Id. at 842, citing In re Prudential, 148 S.W.3d

at 136. The Supreme Court’s explanation in Prudential of the factors to be considered bears

repeating here:

The operative word, ‘adequate’, has no comprehensive definition; it is simply a proxy for the careful balance of jurisprudential considerations that determine when appellate courts will use original mandamus proceedings to review the actions of lower courts. These considerations implicate both public and private interests. Mandamus review of incidental, interlocutory rulings by the trial courts unduly interferes with trial court proceedings, distracts appellate court attention to issues that are unimportant both to the ultimate disposition of the case at hand and to the uniform development of the law, and adds unproductively to the expense and delay of civil litigation. Mandamus review of significant rulings in exceptional cases may be essential to preserve important substantive and procedural rights from impairment or loss, allow the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments, and spare private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conducted proceedings. An appellate remedy is ‘adequate’ when any benefits to mandamus review are outweighed by the detriments. When the benefits outweigh the detriments, appellate courts must consider whether the appellate remedy is adequate. Prudential, 148 S.W.3d at 136.

Given that both the federal and state arbitration acts exclude immediate review of orders

compelling arbitration, the balance is tilted strongly against mandamus review. Gulf Exploration

289 S.W.3d at 842. Nevertheless, we have held that appeal is an inadequate remedy for Villanueva.

It is true that delay and expense generally do not, standing alone, render a final appeal inadequate

because arbitration clauses are usually contractual and cover contractual claims. Gulf Exploration,

289 S.W.3d at 842-43. In those cases, a prevailing party can recover its fees and expenses even if

they were incurred in collateral proceedings like arbitration. Id. at 843. But the instant case

concerns an on-the-job injury claim, not a contractual claim. Thus, Villanueva will not be able to

recover his fees and expenses incurred during the arbitration proceeding. This fact is not dispositive

but it is entitled to some weight in our case-specific balancing.

The more compelling argument is that we were presented with two mandamus petitions

concerning the same employer, the same injury benefit plan, the same arbitration clause, and two

plaintiff-employees in similar circumstances. Yet the two district judges hearing Swift’s motion to

compel arbitration filed in each case reached opposite conclusions, with one judge compelling

arbitration and the other denying it. These conflicting rulings are not incidental; they are significant

rulings in exceptional cases. It is patently unjust and arbitrary to fully address the merits of the

significant issues presented in Swift Transportation but summarily deny mandamus review of the

same issues in Villanueva because the trial court chose to grant Swift’s motion to compel arbitration.

Finally, we note that Swift did not raise its argument regarding the unavailability of

mandamus review until its motion for rehearing. We do not suggest that Swift waived the issue, but

the failure to raise it sooner cuts against any argument that permitting mandamus review

unnecessarily interrupts the underlying proceedings, increases the expense and delay of civil litigation, and distracts the attention of the appellate court from other important matters. See

Prudential, 148 S.W.3d at 136. We are not persuaded by Swift’s argument that it could not have

raised the issue earlier because Gulf Transportation was not decided until after this case was argued.

As Villanueva suggests, the parties in Gulf Exploration raised the argument under Palacios both in

the court of appeals and the Supreme Court. See In re Great Western Drilling, Ltd., 211 S.W.3d

828, 834-35 (Tex.App.--Eastland 2006, orig. proceeding), mand. granted, In re Gulf Exploration

Co., LLC, 289 S.W.3d 836 (Tex. 2009).

Under the unique circumstances presented, we conclude that direct appeal following

arbitration is an inadequate remedy for Villanueva. We overrule Swift’s motion for rehearing.

October 28, 2009 ANN CRAWFORD McCLURE, Justice

Before McClure, Rivera, JJ., and Barajas, C.J. (Ret.) Barajas, C.J. (Ret.), sitting by assignment, not participating