Stripes LLC v. Hazzem Mrayyan
13-15-00246-CV
| Tex. App. | Jul 6, 2015Background
- Plaintiff Hazem Mrayyan signed an optional Election and Arbitration Agreement (Dec. 14, 2012) tied to an ERISA Plan that provides medical/disability benefits to nonsubscriber employees; the Agreement incorporates Plan arbitration procedures and DSI rules.
- Plaintiff received substantial Plan benefits (over $450,000) after his March 27, 2013 work injury; the Agreement contains a ratification clause tying benefit payments to reaffirmation of arbitration.
- Stripes filed an Application for Order for Arbitration (Oct. 8, 2014) and the trial court entered an Agreed Stay Order (Dec. 2, 2014) staying proceedings as to Stripes pending arbitration before Dispute Solutions, Inc. (DSI).
- Plaintiff later filed Demands for Arbitration (Mar. 6 and Mar. 19, 2015) and DSI appointed Arbitrator Black; Respondents moved in arbitration to determine the enforceability of the Agreement.
- Plaintiff sought temporary injunctive relief in trial court to enjoin the DSI arbitration and preserve the court’s adjudication of arbitrability and jury rights; the trial court granted and later extended injunctions.
- Stripes appeals, arguing the injunctions are void because they violated the mandatory statutory/Agreed stay, were based on improperly verified and untimely pleadings, destroyed the status quo, and ignored that arbitrability was delegated to the arbitrator (and/or waived by Plaintiff).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held (trial-court order challenged on appeal) |
|---|---|---|---|
| 1) Was the trial court permitted to enjoin the DSI arbitration while a §171.025 stay and Agreed Stay Order were in effect? | Mrayyan argued he needed the court to decide arbitrability and preserve jury rights; arbitration would irreparably harm him. | Stripes contends §171.025 and the Agreed Stay Order mandatorily stayed court proceedings and made filings in court void; arbitration was the agreed forum. | Trial court issued injunctions; Stripes argues on appeal those orders are void as issued in violation of the stay. |
| 2) Were Plaintiff’s injunctive pleadings properly verified and timely before the court? | Mrayyan relied on counsel verifications and late-filed verified pleadings to support injunctive relief. | Stripes argues Rule 682 requires personal-knowledge verification by the applicant and Rule 21 requires timely service; counsel’s after‑the‑fact verification and a midnight filing were defective. | Trial court nonetheless granted relief; defendant asserts the orders must be vacated for defective verification and untimeliness. |
| 3) Did the injunction improperly change or destroy the status quo? | Plaintiff claimed the status quo required court control to prevent arbitration. | Stripes shows the last peaceable non-contested status was the Agreed Stay plus ongoing arbitration before Arbitrator Black; enjoining arbitration reversed that status. | Trial court enjoined arbitration (temporarily); Stripes argues that amounted to destroying, not preserving, the status quo. |
| 4) Who decides arbitrability (court or arbitrator) and was arbitrator selection/jurisdiction waived? | Mrayyan contended courts should decide arbitrability and preserve jury trial rights because he allegedly could not understand the Agreement when signing. | Stripes points to the Agreement’s broad delegation clause and incorporation of DSI Rule 5 empowering the arbitrator to decide validity and to DSI Rule 5(c)/practice that Plaintiff waived objections by demanding arbitration and participating in arbitrator selection. | Trial court enjoined arbitration to reserve the right to decide arbitrability; Stripes argues arbitration (and arbitrator) must decide arbitrability and that Plaintiff waived objections. |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (delegation provisions and arbitrator authority to decide gateway arbitrability issues).
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (procedural questions about arbitration are for arbitrators unless parties clearly provide otherwise).
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (default rule: courts decide arbitrability absent clear and unmistakable evidence to delegate).
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (temporary injunction elements: cause of action, probable right, imminent/irreparable injury).
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (unconscionability is a defense to arbitration, and arbitration forum may decide it).
- D. Wilson Constr. Co. v. McAllen Indep. Sch. Dist., 848 S.W.2d 226 (Tex. App.—Corpus Christi 1992) (party who agrees to arbitrate waives jury and court forum for covered disputes).