in Re Nexstar Broadcasting, Inc. D/B/A KBTV NBC 4

• Court: Court of Appeals of Texas
• Decided: May 14, 2009
• Docket: 09-09-00146-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

____________________

NO. 09-09-00146-CV

IN RE NEXSTAR BROADCASTING, INC. d/b/a KBTV NBC 4

Original Proceeding

MEMORANDUM OPINION

Nexstar Broadcasting, Inc. d/b/a KBTV NBC 4, filed a petition for writ of mandamus seeking to enforce an agreement to arbitrate an employment dispute with the real party in interest, Rocio Garza. We hold: (1) mandamus relief is available because the dispute concerns a contract evidencing a transaction involving interstate commerce; (2) the arbitration agreement is supported by a reciprocal agreement to arbitrate and is enforceable; (3) the claims brought in the litigation fall within the scope of the arbitration agreement; (4) Nexstar did not waive its right to enforce the agreement; and (5) Garza failed to establish that enforcement of the agreement would be unconscionable. Accordingly, we conditionally grant relief.

Garza challenges Nexstar's assertion that the federal arbitration act applies. ⁽¹⁾ The trial court may resolve a motion to compel arbitration in a summary proceeding. Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992). A full evidentiary hearing is required only to resolve matters controverted by opposing affidavits or other admissible evidence. Id. It appears here that the 136th District Court considered the motion to arbitrate through summary proceedings, as expressly permitted by Jack B. Anglin. See id. Nexstar's motion to compel includes an attached copy of the employment agreement and an affidavit from its general manager. Included in the affidavit is a statement that during Garza's employment, the station did business in Texas and Louisiana. Garza did not controvert this statement in an opposing affidavit. Garza argues that the state arbitration act applies because Nexstar is engaged in the operation of a small television station in Texas and the employment contract is performable in this state.

The federal act applies when the dispute concerns a contract evidencing a transaction involving interstate commerce. Id. at 269-70. In this case, Nexstar employed Garza in a business engaged in commerce between the states of Texas and Louisiana.

An employment contract evidences a transaction involving interstate commerce where the employees work exclusively in one state but the employer is engaged in interstate commerce. See In re Border Steel, Inc., 229 S.W.3d 825, 831 (Tex. App.--El Paso 2007, orig. proceeding [mand. denied]) ("There are numerous ways, independent of where employees perform their duties, for an entity to affect interstate commerce."); In re Big 8 Food Stores, Ltd., 166 S.W.3d 869, 879 (Tex. App.--El Paso 2005, orig. proceeding) ("Because Big 8's business operations fall within the scope of Congress's regulatory power under the Commerce Clause, Big 8's relationship with its employees involves 'commerce' as that term is used in the FAA."). We conclude that the employment contract between Nexstar and Garza relates to a transaction substantially affecting interstate commerce and is subject to the federal arbitration act. Accordingly, mandamus is the appropriate vehicle for Nexstar to challenge the trial court's ruling on Nexstar's motion to abate. See Jack B. Anglin, 842 S.W.2d at 272.

"A party seeking to compel arbitration must establish the existence of an arbitration agreement, and show that the claims raised fall within the scope of that agreement." In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999), abrogated on other grounds by In re Halliburton Co., 80 S.W.3d 566, 572 (Tex. 2002). "The trial court's determination of the arbitration agreement's validity is a legal question subject to de novo review." J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). "If the trial court finds a valid agreement, the burden shifts to the party opposing arbitration to raise an affirmative defense to enforcing arbitration." Id. Once a party establishes that a valid arbitration agreement exists, a strong presumption arises favoring arbitration. Id. Here, the trial court found the contract's arbitration clause unenforceable because Garza's employment relationship with Nexstar was "'at will'."

The parties' reciprocal promises to arbitrate may provide sufficient consideration to support the enforcement of an arbitration agreement. See In re Halliburton Co., 80 S.W.3d at 569. In such a case, the employee's at-will employment status does not make the consideration illusory because both parties are bound to arbitrate. Id. Garza contends the consideration for the arbitration clause in her employment agreement is illusory because the contract grants Nexstar the unilateral right to enforce the noncompetition covenant by seeking injunctive relief in a court. Nexstar's unilateral right to bypass arbitration and seek redress in the courts is limited to enforcement of the covenant not to compete. Any claim for damages for breach of contract by either party is subject to the arbitration clause. The parties' contract provided separately for an agreement not to compete and an agreement to arbitrate disputes arising out of the employment agreement. The consideration for the former consisted of Nexstar's agreement to provide confidential information to Garza, while the consideration for the latter consisted of the parties' mutual agreement to arbitrate their disputes. Contract language exempting an employer's claims for injunctive relief from an arbitration agreement does not affect the mutuality of the promise to arbitrate employment disputes. See In re Alamo Lumber Co., 23 S.W.3d 577, 579 (Tex. App.--San Antonio 2000, orig. proceeding, pet. denied). Because Nexstar agreed to arbitrate any claim for damages, Garza's agreement to arbitrate was supported by Nexstar's reciprocal agreement to arbitrate.

Garza argues in the alternative that the contract, if supported by consideration, is unenforceable because it is ambiguous. A contract is ambiguous if it is subject to two or more reasonable interpretations after examining the entire writing in an effort to harmonize and give effect to all of the provisions so that none are rendered meaningless. J.M. Davidson, 128 S.W.3d at 229. The employment contract in this case is not subject to more than one reasonable interpretation; rather, the enforcement of the covenant not to compete through court-ordered injunctive relief is the sole exception to the agreement to arbitrate all employment disputes.

Garza contends her dispute with Nexstar does not fall within the scope of the agreement to arbitrate because she seeks a declaratory judgment and brings a claim for breach of contract only in the alternative. Garza argues she did not file a suit asking the court to decide a dispute, but merely asked the court to clarify her employment status. She also argues that the issue of arbitration is moot because a prior opinion of this Court invalidated the liquidated damages clause in a similar suit involving another former Nexstar employee. See Nexstar Broadcasting, Inc. v. Gray, No. 09-07-364-CV, 2008 WL 2521967, at *3 (Tex. App.--Beaumont Jun. 26, 2008, no pet.) (mem. op.). If we were to follow Garza's argument to its logical conclusion, she would be arguing for dismissal of the entire cause rather than a stay for arbitration proceedings. "A declaratory judgment requires a justiciable controversy as to the rights and status of parties actually before the court for adjudication, and the declaration sought must actually resolve the controversy." Brooks v. Northglen Ass'n, 141 S.W.3d 158, 163-64 (Tex. 2004). If there were no dispute between the parties, a judicial decision on the subject would be a prohibited advisory opinion. See id. Because the existence of a dispute is a prerequisite for a declaratory judgment action, Garza cannot avoid the arbitration agreement by characterizing her claim as a request for a clarification of her employment status.

Garza also argues that Nexstar waived its right to arbitrate. Because an agreement to arbitrate is simply a matter of contract between the parties, the right to arbitrate can be waived if the parties agree to resolve their dispute in court. Perry Homes v. Cull, 258 S.W.3d 580, 593 (Tex. 2008), cert. denied, 129 S.Ct. 952, 173 L.Ed.2d 116, 77 U.S.L.W. 3396 (2009). Garza seems to argue that Nexstar waived its right to arbitrate because it could have filed a suit to enjoin Garza from violating the non-competition agreement; however, we find no evidence in this record that Garza accepted employment involving the rendering of on-air services in the station's market. Furthermore, evidence that Nexstar refrained from seeking redress in the courts would not support an argument that the station's affirmative acts waived its rights under the contract. Nexstar has not substantially invoked the judicial process in this case; accordingly, its actions in this case have not affected a waiver of its right to seek enforcement of the arbitration agreement. Id. at 589-90 ("[A] party waives an arbitration clause by substantially invoking the judicial process to the other party's detriment or prejudice").

Next, Garza argues that Nexstar's actions in Nexstar v. Gray operate as an affirmative waiver of its rights to compel arbitration in this case. See generally Nexstar v. Gray, 2008 WL 2521967. To allow Nexstar to seek redress in the courts in some instances but not in others, Garza argues, would be to deny Garza rights and responsibilities made available to Gray when Nexstar elected to sue Gray in court. The dispute between Garza and Nexstar is unrelated to the dispute between Gray and Nexstar. ⁽²⁾ The arbitration clause was not at issue in Gray, and Nexstar's failure to invoke its arbitration rights in that case does not directly affect its rights to enforce other contracts, such as the one at issue here.

Finally, Garza contends the arbitration agreement is unconscionable because it provides that the parties will share equally the fees of arbitration. "Agreements to arbitrate disputes between employers and employees are generally enforceable under Texas law; there is nothing per se unconscionable about an agreement to arbitrate employment disputes and, in fact, Texas law has historically favored agreements to resolve such disputes by arbitration." In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008). "[F]ee-splitting provisions that operate to prohibit an employee from fully and effectively vindicating statutory rights are not enforceable." Id. at 356. To establish unconscionability of a fee-splitting agreement, the complaining party must establish that she "will likely incur arbitration costs in such an amount as to deter enforcement of statutory rights in the arbitral forum." Id. The mandamus record filed in this case contains no evidence regarding the fees Garza would pay in arbitration and the trial court did not expressly find that the arbitration agreement is unenforceable on this ground.

Conclusion

Nexstar established the existence of an agreement to arbitrate and the claims asserted by Garza fall within the scope of that agreement. See Oakwood Mobile Homes, 987 S.W.2d at 573. Although the trial court determined the contract is an at-will employment agreement, the parties' mutual agreement to arbitrate disputes arising out of the contract supply adequate consideration for the agreement to arbitrate. See Halliburton, 80 S.W.3d at 569. Garza failed to establish that Nexstar waived its right to compel arbitration. Cf. Perry Homes, 258 S.W.3d at 593. No evidence in the mandamus record supports an implied finding of unconscionability arising from an agreement to share the costs of arbitration. See Poly-America, 262 S.W.3d at 356. Thus, the trial court erred in ruling that the arbitration agreement is unenforceable. We are confident that the trial court will compel arbitration in this case and stay all proceedings in the trial court pending arbitration. The writ will issue only if the trial court fails to comply with these directions.

PETITION CONDITIONALLY GRANTED.

PER CURIAM

Submitted on April 13, 2009

Opinion Delivered May 14, 2009

Before McKeithen, C.J., Gaultney and Kreger, JJ.

1. The state and federal acts are not mutually exclusive and may apply simultaneously in a given situation. In re D. Wilson Const. Co., 196 S.W.3d 774, 779 (Tex. 2006). Because Nexstar filed only a petition for writ of mandamus, the applicability of the state arbitration act is not at issue. Accordingly, we do not decide whether Nexstar could have pursued an interlocutory appeal of the trial court's order. See Tex. Civ. Prac. & Rem. Code Ann. § 171.098(a)(1) (Vernon 2005).

2. Although both contracts contained the same arbitration clause, the dispute in this case differs from Nexstar's litigation with Gray, which concerned a claim for tortious interference by a non-signatory and a claim for damages against the employee. See generally Nexstar v. Gray, 2008 WL 2521967. No issue of arbitrability was asserted in that case. Id.