Victor S. Elgohary v. Gilbert A. Herrera
405 S.W.3d 785
Tex. App.2013Background
- Employment agreement Nov 2006 between Elgohary and Herrera Partners (signatory); Herrera and Herrera LLC were not signatories.
- Arbitration clause mandates binding arbitration in Houston for disputes arising under the agreement.
- Herrera Partners terminated Elgohary’s employment May 2007 for cause; dissolution of Herrera Partners occurred June 2007.
- In March 2009 Elgohary demanded arbitration against Herrera Partners (signatory) and Herrera (non-signatory); no court order compelled arbitration.
- Arbitrator ruled Herrera bound as successor under a “successors and assigns” clause and awarded Elgohary unpaid wages and expenses; the award stated it applied to Herrera Partners and any successor, including Gilbert Herrera.
- Trial court confirmed the award against Herrera Partners, denied confirmation against Herrera and Herrera LLP, and vacated the award as to Herrera; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Gateway issue: who decides arbitrability for a non-signatory | Elgohary: arbitrability is a gateway issue for the court. | Herrera: arbitrator should decide arbitrability given AAA rules and contract language. | The court must decide gateway arbitrability absent clear and unmistakable agreement to arbitrate otherwise. |
| Whether the arbitrator exceeded powers by binding Herrera (non-signatory) | Arbitrator had authority only if parties clearly agreed; Herrera was non-signatory. | Arbitrator correctly deemed Herrera bound via successors/assigns clause and AAA rules. | Arbitrator exceeded powers by binding Herrera absent clear agreement to arbitrate individually; remand for court review. |
| Remand for independent review of arbitrability theories | Trial court should independently review if Herrera is bound under statutory theories. | N/A or vague substantive challenge. | Remand to trial court for independent review of arbitrability under six theories. |
| Effect of ruling on other non-signatories | N/A | N/A | Not reached; dismissal of remaining issues. |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (clear and unmistakable evidence required for arbitrability to be decided by arbitrator)
- Roe v. Ladymon, 318 S.W.3d 502 (Tex. App.—Dallas 2010) (gateway issues of arbitrability must be decided by court absent clear agreement to arbitrate)
- In re Merrill Lynch Trust Co., 235 S.W.3d 185 (Tex. 2007) (six theories to bind non-signatories to arbitrate; independent trial court review recommended)
- Bridas S.A.P.I.C. v. Government of Turkmenistan, 345 F.3d 347 (5th Cir. 2003) (discusses theories to compel non-signatories to arbitrate)
- DK Joint Venture 1 v. Weyand, 649 F.3d 310 (5th Cir. 2011) (agents/officers of signatories not personally bound absent clear intent)
- In re Vesta Ins. Group, Inc., 192 S.W.3d 759 (Tex. 2006) (agency/affiliates context for arbitration binding)
- Roe v. Ladymon, 318 S.W.3d 502 (Tex. App.—Dallas 2010) (reiterates that non-signatory status affects arbitrability decision)