Texas La Fiesta Auto Sales, LLC v. Belk, 2011 Tex. App. LEXIS 7521

Background

La Fiesta Auto Sales, LLC and Patricia Tubbs (employer and president) faced claims by William Belk (employee) arising from employment disputes.
Belk signed an January 25, 2010 Employee Arbitration Agreement invoking FAA and AAA Commercial Rules.
La Fiesta later provided an unsigned February 2, 2010 employment contract containing a merger clause and a Texas Labor Code arbitration provision (Chapter 102).
Belk sued for breach of the employment contract and related theories; La Fiesta moved to compel arbitration.
Trial court held an evidentiary hearing and eventually ordered arbitration under the February 2, 2010 employment contract’s Chapter 102 provisions, finding the January 2010 arbitration agreement superseded.
Court of Appeals retained jurisdiction over an interlocutory appeal and ultimately affirmed, holding the trial court properly compelled arbitration anyway.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the trial court erred in denying arbitration under the FAA and instead compelling under the later contract.	Belk argued valid arbitration existed; later contract superseded the FAA clause.	La Fiesta argued the merger clause rendered the FAA arbitration unenforceable and that the Texas Labor Code arbitration governs.	Arbitration issue resolved in favor of compelling arbitration under the later contract.
Whether the evidentiary hearing was appropriate where facts were disputed.	Belk raised fact issues; hearing necessary under 171.021.	Hearing permissible to determine existence of a valid arbitration agreement.	Evidentiary hearing proper to resolve validity of arbitration agreement.
Whether the court properly addressed whether the arbitration clause superseded the earlier agreement.	Existence of initial arbitration clause was not to be revisited.	Subsequent contract merged and superseded the earlier arbitration clause.	Trial court correctly found the later contract superseded the January 2010 arbitration agreement.
Whether the court abused its discretion by granting relief beyond what was requested.	Only relief under the arbitration agreement was requested.	Relief granted effectively arbitration under the later contract.	No abuse; order compliance with what was effectively requested (arbitration).
Whether the order on arbitration could be appealed or mandamus relief appropriate.	Appellate jurisdiction under 51.016 and 9 U.S.C. §16; mandamus as alternative.	Interlocutory order compelling arbitration generally unappealable; mandamus may be available.	Interlocutory appeal jurisdiction exists; mandamus potential relief noted.

Key Cases Cited

In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 ( tex.) (defines two-step arb. determination and de novo review for legal questions)
Valero Energy Corp. v. Teco Pipeline Co., 2 S.W.3d 576 (tex. App.-Hou. 1999) (discusses validity of subsequent agreements revoking arbitration)
Morgan Stanley Co. v. Co. (In re Morgan Stanley Co.), 293 S.W.3d 182 ( Tex. 2009) (exists/continued validity defenses; contract formation concerns for court vs. arbitrator)
In re Bath Junkie Franchise, Inc., 246 S.W.3d 356 ( tex. App.-Beaumont 2008) (novations/arbitration clause revocation addressed by court)
TransCore Holdings, Inc. v. Rayner, 104 S.W.3d 317 (tex. App.-Dallas 2003) (whether a later agreement voids prior arbitration clause)
Henry v. Gonzalez, 18 S.W.3d 684 (tex. App.-San Antonio 2000) (severability of arbitration clause from contract)
In re Permian Tank & Mfg., Inc., 306 S.W.3d 338 (tex. App.-Eastland 2010) (arbitration clause validity vs. broader contract)
CMH Homes v. Perez, 340 S.W.3d 444 (tex. 2011) (mandamus viability post-CMH Homes decision)
McReynolds v. Elston, 222 S.W.3d 731 (tex. App.-Houston 2007) (interlocutory arbitration order jurisdiction)
Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266 (tex. App.-Houston 1992) (summary determination to compel arbitration)
Forest Oil Corp. v. McAllen, 268 S.W.3d 51 (tex. 2008) (arbitration clause validity after contract)