Stability Healthcare Staffing, LLC Stability Healthcare Inc. Jay Ryan Blecker Jason Casani, and Jon Chesnik v. Ryan Beres

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-19-00145-CV

Stability Healthcare Staffing, LLC; Stability Healthcare Inc.; Jay Ryan Blecker; Jason Casani; and Jon Chesnik, Appellants

v.

Ryan Beres, Appellee

FROM THE 368TH DISTRICT COURT OF WILLIAMSON COUNTY NO. 18-0612-C368, THE HONORABLE RICK J. KENNON, JUDGE PRESIDING

MEMORANDUM OPINION

Stability Healthcare Staffing, LLC, Stability Healthcare Inc., Jay Ryan Blecker,

Jason Casani, and Jon Chesnik (Stability Healthcare) appeal the district court’s order denying

appellants’ motion to compel arbitration. Because we conclude that there was no valid

agreement between the parties to arbitrate and that direct benefits estoppel does not apply, we

affirm the district court’s order denying the motion to compel arbitration.

BACKGROUND

Appellee Ryan Beres joined Stability Healthcare as an owner, member, and

partner in 2013. He was reimbursed as a partner, receiving a K-1 rather than a W-2. During the

first quarter of 2017, Stability Healthcare told Beres to exchange his equity ownership for a W-2

employment relationship and repeatedly presented Beres with an employment handbook that contained an arbitration agreement. Beres refused to sign the employment handbook containing

the arbitration agreement and did not agree to becoming a W-2 employee.

In August or September of 2017, Stability Healthcare informed Beres that his

services were no longer wanted, thereby terminating him from working at Stability Healthcare.

In response, Beres sued Stability Healthcare seeking a declaratory judgment and asserting

several causes of action, all of which center on Beres’s status as a partner and owner of Stability

Healthcare. Stability Healthcare removed the lawsuit to federal district court on the basis of

diversity jurisdiction, but Stability Healthcare could not meet its burden of establishing the

existence of federal jurisdiction. As a result, the federal district court remanded this lawsuit to

state court. Beres v. Stability Healthcare Staffing, LLC, No. 1:18-CV-531-RP, 2018 U.S. Dist.

LEXIS 223773 (W.D. Tex. Oct. 25, 2018). Stability Healthcare moved to compel arbitration

under the Federal Arbitration Act, and the district court denied the motion. Stability Healthcare

appeals.

DISCUSSION

Whether an arbitration agreement is enforceable is subject to de novo review. In

re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding). “[W]hether an

arbitration agreement binds a nonsignatory is a gateway matter to be determined by courts rather

than arbitrators unless the parties clearly and unmistakably provide otherwise.” Id. (citing In re

Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005) (orig. proceeding)). Nonsignatories to

an agreement subject to the Federal Arbitration Agreement may be bound to an arbitration clause

when rules of law or equity would bind them to a contract generally. Id.

2 Stability Healthcare asserts that: (1) Beres is “expressly bound” by the arbitration

agreement because he continued to work at Stability Healthcare, and (2) Beres is equitably

estopped from denying his obligation to arbitrate because he accepted the benefit of continued

employment. Because these issues are dispositive, we do not reach Stability Healthcare’s

remaining arguments.

Express Agreement to Arbitrate

Stability Healthcare first asserts that Beres is expressly bound to the arbitration

agreement. “Under the Federal Arbitration Act (FAA), ordinary principles of state contract law

determine whether there is a valid agreement to arbitrate.” In re Kellogg Brown & Root, Inc.,

166 S.W.3d 732, 738 (Tex. 2005) (orig. proceeding). Because of arbitration’s contractual nature,

it does “not require parties to arbitrate when they have not agreed to do so.” Id. (quoting Volt

Info. Scis., Inc. v. Board of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478-79 (1989)).

Beres rejected Stability Healthcare’s unilateral attempts to restructure his status from a K-1

member-owner to a W-2 employee many times. Though Stability Healthcare presented the

employee handbook and arbitration agreement to Beres multiple times, he intentionally refused

to be bound by the terms in those agreements by not signing the handbook or any agreement

presented to him that would have changed his status to that of an employee without an ownership

interest in the business. He retained an attorney in order to protect his ownership interest from

Stability Healthcare’s attempts to change their professional relationship, further signaling his

refusal to change that relationship. Rather than agree to a change of status or to the employee

handbook containing the arbitration provision, Beres was terminated from working at Stability

Healthcare. Because the record does not reflect Beres’s agreement to the arbitration clause, we

3 cannot agree that by continuing to provide services to Stability Healthcare, Beres expressly

agreed to the arbitration agreement he refused to sign.

Equitable Estoppel

Stability Healthcare argues that, in the absence of express agreement, Beres, is

bound by the arbitration agreement under the doctrine of equitable estoppel because he continued

to provide services to and accept payment from Stability Healthcare after refusing to sign the

employee handbook or any other documents indicating acceptance of a change in employment

status. Under direct benefits estoppel, which is a form of equitable estoppel, “a non-signatory

plaintiff seeking the benefits of a contract is estopped from simultaneously attempting to avoid

the contract’s burdens, such as the obligation to arbitrate disputes.” Id. at 739. Employers may

enforce an arbitration agreement with a nonsignatory employee if the employer provided notice

of its arbitration agreement and the nonsignatory accepted the agreement. In re Dillard Dep’t

Stores, Inc., 198 S.W.3d 778, 780 (Tex. 2006) (orig. proceeding). Notice is effective if it

unequivocally communicates to the employee definite changes in the employment terms. Id. If

the employee receives notice and continues working with knowledge of the modified

employment terms, the employee accepts the terms as a matter of law. Id.

It is undisputed that Beres continued to provide services to Stability Healthcare

while simultaneously exchanging messages with Stability Healthcare in which he refused to

change his status with the business. The record is unclear as to whether Beres was an employee

as well as being an owner or partner. However, the arbitration agreement did not provide notice

that continued employment depended on accepting the agreement. Additionally, as described

above, Beres repeatedly refused to sign the employee handbook and rejected Stability

Healthcare’s attempts to persuade him to relinquish his status as an owner or partner right up to

4 the time Stability Healthcare terminated him. Under the circumstances, we conclude that

equitable estoppel does not apply here.

CONCLUSION

Having overruled Stability Healthcare’s appellate issues, we affirm the district

court’s order.

__________________________________________ Gisela D. Triana, Justice

Before Justices Goodwin, Baker, and Triana

Affirmed

Filed: August 6, 2019