Corrine Duarte, Visiting Nurse Association of El Paso A/K/A VNA Home Healthcare of El Paso and Joe Wardy v. Mayamax Rehabilitation Services, L.L.P. and Candace Baird
2016 WL 6560050
Tex. App.2016Background
- Candace Baird and Corrine Duarte formed Mayamax (partnership) on Oct. 1, 2004; the partnership agreement included a broad arbitration clause.
- On Dec. 17, 2012, Baird and Duarte executed a Settlement Agreement that terminated the partnership and contained a global mutual release extinguishing all rights, duties, and obligations under the partnership agreement.
- Duarte remained employed by Mayamax through March 2013; soon after leaving she allegedly began working for VNA, and several Mayamax employees and an independent contractor left Mayamax to work for VNA.
- Mayamax and Baird sued VNA, Wardy, and Duarte for tortious interference, breach of contract, breach of fiduciary duty, and related claims arising from conduct after the Settlement Agreement.
- Appellants (Duarte, VNA, Wardy) moved to compel arbitration under the original partnership agreement; trial court denied the motion and this interlocutory appeal followed.
Issues
| Issue | Plaintiff's Argument (Baird/Mayamax) | Defendant's Argument (Duarte/VNA/Wardy) | Held |
|---|---|---|---|
| Who decides validity when the whole contract is challenged (court vs arbitrator)? | Court should decide because the Settlement rescinded the prior agreement; Baird argued no arbitration obligation exists. | Arbitrator should decide because the attack targets the contract as a whole, not the arbitration clause itself. | Waived on appeal: defendants failed to raise this argument in the trial court, so appellate court declined to consider it. |
| Did the arbitration clause survive the termination/Settlement Agreement? | Settlement unconditionally released prior obligations; therefore no arbitration obligation survives. | Arbitration clause survived termination or should operate retroactively to pre-Settlement conduct. | Court decides gateway issue; the Settlement’s broad release terminated the arbitration agreement as of Dec. 17, 2012. |
| Are the asserted claims within the arbitration clause’s scope (including retroactive application)? | Claims arise after the Settlement (post-termination) and thus fall outside arbitration. | Some factual allegations refer to pre-Settlement conduct, so claims fall within arbitration and must be sent to arbitrator. | Because plaintiffs represented claims arise from post-Settlement conduct and Settlement terminated arbitration, court reasonably concluded claims fall outside arbitration. |
Key Cases Cited
- Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266 (Tex. 1992) (abuse-of-discretion standard for denying arbitration)
- In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002) (refusing to compel arbitration is abuse of discretion when valid agreement exists)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (U.S. 1983) (federal policy favors arbitration)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (party seeking arbitration must prove a valid arbitration agreement; burden-shifting)
- TransCore Holdings, Inc. v. Rayner, 104 S.W.3d 317 (Tex. App.—Dallas 2003) (trial court decides whether a subsequent termination/release revokes prior arbitration obligation)
- In re Morgan Stanley & Co., Inc., 293 S.W.3d 182 (Tex. 2009) (courts must resolve disputes about the very existence of an agreement before compelling arbitration)