Forged Components, Inc. v. Ricky Guzman
409 S.W.3d 91
Tex. App.2013Background
- Guzman sued his employer Forged Components, Inc. (FCI) for negligence after a workplace injury; FCI is a non-subscriber to Texas workers’ compensation and alleged intoxication as a defense.
- Guzman had earlier signed FCI’s Occupational Disease and Injury Employee Welfare Benefit Plan (the Plan), which contains an arbitration provision invoking the Federal Arbitration Act (FAA).
- FCI moved to compel arbitration under the Plan; the trial court denied that motion on November 12, 2009.
- On November 18, 2009, FCI’s counsel sent a proposed Rule 11 arbitration agreement to Guzman; Guzman’s counsel signed and added a handwritten clarification that the Plan’s procedures would not apply; FCI filed the signed Rule 11 agreement in court.
- FCI later attempted to revoke consent and resisted enforcement, but the trial court compelled arbitration under the Rule 11 agreement; arbitration before Judge Katie Kennedy resulted in an award for Guzman of $1,312,518.23; the trial court confirmed the award but added post-judgment interest.
- On appeal, FCI challenged denial of arbitration under the Plan, enforcement of the Rule 11 agreement, confirmation of the award, and the post-judgment interest; Guzman cross-appealed seeking pre-judgment interest.
Issues
| Issue | Plaintiff's Argument (Guzman) | Defendant's Argument (FCI) | Held |
|---|---|---|---|
| Whether FAA governs the Rule 11 agreement | FAA applies because employer activity affects interstate commerce | FAA does not apply to Rule 11 (no express FAA clause); TAA governs and requires party signatures | FAA governs both agreements because FCI’s business affects interstate commerce; FAA preempts conflicting TAA provisions |
| Whether trial court erred denying motion to compel under the Plan | Denial harmless because dispute was ultimately arbitrated | Trial court should have compelled arbitration under the Plan and its procedures | Any error was harmless; arbitration occurred and FCI failed to show prejudice |
| Whether Rule 11 agreement is enforceable | Signed Rule 11 with handwritten clarification constituted acceptance (or was later accepted by FCI) | Guzman’s handwritten note was a counteroffer; FCI revoked consent; Guzman waived arbitration | Court found an enforceable Rule 11 agreement (objective acts showed mutual assent); revocation and waiver arguments fail |
| Whether arbitration award should be vacated | Award should stand; arbitrator heard intoxication evidence | Arbitrator exceeded authority and ignored evidence of intoxication; award should be vacated | Award confirmed; arbitrator did not exceed powers and did not improperly refuse to hear evidence; vacatur denied; trial court erred in awarding post-judgment interest and judgment modified to remove it |
Key Cases Cited
- Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (U.S. 2003) (FAA applies to contracts "involving commerce")
- In re L & L Kempwood Assocs., L.P., 9 S.W.3d 125 (Tex. 1999) (FAA extends to contracts affecting commerce)
- In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (party seeking FAA arbitration must prove existence and scope of agreement)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (waiver standard where party substantially invokes judicial process)
- Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (statutory FAA vacatur grounds are exclusive)
- Royce Homes, L.P. v. Bates, 315 S.W.3d 77 (Tex. App.—Houston [1st Dist.] 2010) (FAA preempts inconsistent TAA provisions)