Vista Quality Markets v. Jorge Lizalde

438 S.W.3d 114, 2014 WL 2557709, 2014 Tex. App. LEXIS 6166
CourtCourt of Appeals of Texas
DecidedJune 6, 2014
Docket08-13-00163-CV
StatusPublished
Cited by10 cases

This text of 438 S.W.3d 114 (Vista Quality Markets v. Jorge Lizalde) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vista Quality Markets v. Jorge Lizalde, 438 S.W.3d 114, 2014 WL 2557709, 2014 Tex. App. LEXIS 6166 (Tex. Ct. App. 2014).

Opinion

OPINION

GUADALUPE RIVERA, Justice.

Vista Quality Markets (“Vista”) appeals the trial court’s order denying its motion to compel arbitration. We reverse and remand to the trial court with instructions to enter an order compelling arbitration.

FACTUAL AND PROCEDURAL BACKGROUND

Vista is engaged in the business of operating grocery stores in El Paso, Texas, and is a non-subscriber to workers’ compensation. In February 2012, after sustaining an on-the-job injury, Appellee Jorge Li-zalde sued Vista, his employer, for gross negligence and retaliation under the Employee Retirement Income Security Act of 1974 (“ERISA”). 1 Vista moved to compel arbitration based on the existence of an arbitration agreement between the parties. In support of its motion, Vista attached the affidavit of its Director of Human Resources Joe Pina. Attached to Pina’s affidavit was: (1) a copy of Vista’s Mutual Agreement to Arbitrate; and (2) a document titled “Receipt of Policy and Arbitration Acknowledgment” signed by Lizalde on July 1, 2009.

*117 In response Lizalde argued, in part, that the motion should be denied because he was fraudulently induced into signing the agreement, that there was no meeting of the minds, that the agreement was illusory due to lack of mutuality of obligation and unenforceable because it was unconscionable. After a hearing, the trial court denied Vista’s motion to compel arbitration. This appeal followed.

DISCUSSION

Standard of Review & Applicable Law

We review a trial court’s denial on a motion to compel arbitration for an abuse of discretion. Sidley Austin Brown & Wood, LLP v. J.A. Green Dev. Corp., 327 S.W.3d 859, 862-63 (Tex.App.-Dallas 2010, no pet.). A trial court’s determination regarding the validity of an arbitration agreement is subject to de novo review. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.2003). In evaluating a motion to compel arbitration, we must first determine whether a valid arbitration agreement exists between the parties. In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex.2006). When a trial court refuses to compel arbitration pursuant to a valid and enforceable arbitration agreement it abuses its discretion. In re Halliburton Co., 80 S.W.3d 566, 573 (Tex.2002).

A party seeking to compel arbitration must establish the existence of a valid arbitration agreement and show that the claims presented fall within the scope of that agreement. In re Dillard Dept. Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006); In re AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex.2005); Budd v. Max International, LLC, 339 S.W.3d 915, 918 (Tex.App.-Dallas 2011, no pet.). While there is a strong presumption in favor of arbitration, it arises only after a valid arbitration agreement is proven to exist. J.M. Davidson, 128 S.W.3d at 227.

EXISTENCE OF VALID ARBITRATION AGREEMENT

In Issue One, Vista challenges the trial court’s denial of its motion to compel arbitration and requests that we reverse and remand this case instructing the trial court to compel arbitration. In pertinent part, Vista asserts the trial court erred in applying the doctrine of incorporation by reference in this case and simultaneously concluding the arbitration agreement was illusory. Lizalde contends the trial court did not abuse its discretion in denying Vista’s motion because the arbitration agreement was illusory and unenforceable under Texas law.

Therefore, the dispute is not whether an arbitration agreement between the parties exists, but whether the arbitration agreement was valid based on the defenses Li-zalde raised. See In re AdvancePCS Health, 172 S.W.3d at 607 (once party seeking to compel arbitration establishes existence of an agreement to arbitrate, the burden shifts to nonmovant to raise an affirmative defense); J.M. Davidson, 128 S.W.3d at 227 (same).

Illusory Agreement

Lizalde argued the arbitration agreement was illusory because Vista could unilaterally modify or amend the agreement at any time. Vista maintains the arbitration agreement is not illusory and that the trial court erred in concluding the termination and modification clause contained in Vista’s benefit plan was incorporated by reference into the arbitration agreement.

Mutual promises to arbitrate employment constitute sufficient consideration for such agreements. D.R. Horton, Inc. v. Brooks, 207 S.W.3d 862, 868 (Tex. *118 App.-Houston [14th Dist.] 2006, no pet.). An arbitration agreement is illusory if one party is able to “avoid its promise to arbitrate by amending the provision or terminating it altogether.” In re 24R, Inc., 324 S.W.3d 564, 567 (Tex.2010); In re Lucchese Boot Co., 324 S.W.3d 211, 213 (Tex. App.-El Paso 2010, orig. proceeding) (promise to arbitrate not illusory where it cannot be avoided by change or termination); see also Carey v. 24 Hour Fitness, USA, Inc., 669 F.3d 202, 206-09 (5th Cir.2012) (finding arbitration agreement illusory because employer could unilaterally modify or terminate provision at any time); Morrison v. Amway Corp., 517 F.3d 248, 254 (5th Cir.2008) (same).

“When illusory promises are all that support a purported bilateral contract, there is no mutuality of obligation, and therefore, no contract.” In re 24R, Inc., 324 S.W.3d at 567. In the context of a stand-alone arbitration agreement, binding promises from both parties are needed because they are the only consideration exchanged to create a contract. In re AdvancePCS Health, 172 S.W.3d at 607. However, when an arbitration clause is part of an underlying contract, the remainder of the parties’ agreement provides the required consideration. See id.

Lizalde argued Vista’s work-related injury plan became part of the arbitration agreement based on the following language within the mutual agreement to arbitrate:

7. Consideration

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Cite This Page — Counsel Stack

Bluebook (online)
438 S.W.3d 114, 2014 WL 2557709, 2014 Tex. App. LEXIS 6166, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vista-quality-markets-v-jorge-lizalde-texapp-2014.