Western Rim Property Services Inc. v. Paula Bazan-Garcia
04-14-00829-CV
| Tex. App. | Feb 9, 2015Background
- Plaintiff Paula Bazan-Garcia sued Western Rim Property Services (WRPS) in county court and resisted WRPS’s motion to compel arbitration under two employer agreements that incorporate the AAA Employment Rules.
- WRPS moved to compel arbitration and argued the AAA Rules (included in its appellate appendix) (1) contain a delegation clause giving arbitrators authority to decide arbitrability and unconscionability and (2) limit or shift fees so arbitration would not be prohibitively expensive.
- Bazan-Garcia opposed arbitration asserting the agreements (and their delegation clauses) are unconscionable because of cost-splitting and a Dallas-venue provision; she submitted three prior AAA invoices and an affidavit about travel/lodging costs.
- WRPS contends the AAA Rules are publicly available authority that courts may consider without being in the clerk’s record, and that the Rules contradict Bazan-Garcia’s cost/venue assertions and allow arbitrator modification or fee waivers.
- The core procedural posture: appeal from trial court order denying WRPS’s motion to compel arbitration; WRPS asks the appellate court to enforce delegation clauses, compel arbitration, and abate litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the AAA Employment Rules may be considered on appeal though not in clerk’s record | AAA Rules cannot be considered because they were not introduced into evidence at trial | AAA Rules are publicly available authority (on AAA website), were relied upon at trial, and may be considered on appeal | Court may consider publicly available AAA Rules without formal admission (authority supports consideration) |
| Whether delegation clauses require arbitrator to decide Bazan-Garcia’s unconscionability defense | Delegation clauses are unconscionable (costs/venue) so court should decide arbitrability | Delegation clauses are enforceable; Bazan-Garcia waived many challenges and AAA Rules delegate arbitrability to arbitrator | Delegation clauses are enforceable; unconscionability defense must be sent to arbitrator (plaintiff waived some challenges and failed to meet burden) |
| Whether arbitration would be prohibitively expensive (merits of unconscionability) | Prior AAA invoices and affidavit show high costs and travel expenses making arbitration unconscionable | Invoices are insufficient: agreement does not require AAA to administer; AAA Rules, if applied, cap fees, allow fee waivers, and provide telephonic management conferences | Plaintiff failed to show likelihood of prohibitive cost for arbitrating enforceability; invoices/affidavit inadequate; AAA Rules (if applied) defeat the claim |
| If any provision is unconscionable, whether it is essential and whether severance is required | Challenged provisions are integral; no severability clause, so agreement unenforceable | Severance is proper unless provision is essential; AAA Rules and parties’ incorporation indicate those provisions are not essential | Unconscionable provisions (if any) may be severed; remainder enforceable; essential-purpose threshold not met |
Key Cases Cited
- In re Olshan Found. Repair Co., LLC, 328 S.W.3d 883 (Tex. 2010) (courts may consult publicly available AAA Rules and require party resisting arbitration to show likelihood of prohibitive costs under the AAA fee scheme)
- Rent-A-Center, West v. Jackson, 561 U.S. 63 (2010) (party who fails to raise challenges to delegation clause in trial court is bound by that clause)
- In re Poly-America, 262 S.W.3d 337 (Tex. 2008) (arbitrator-authority to modify unconscionable terms forecloses some unconscionability challenges)
- Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79 (2000) (plaintiff must make factual showing that AAA would administer arbitration and that costs would be prohibitive; conclusory testimony is insufficient)
- Venture Cotton Co-op v. Freeman, 435 S.W.3d 222 (Tex. 2014) (severance analysis and ‘‘essential purpose’’ test for unconscionable provisions)
- Forest Oil Corp. v. McAllen, 268 S.W.3d 51 (Tex. 2008) (courts must enforce delegation clauses under Texas Arbitration Act when present)
- Aspen Tech., Inc. v. Shasha, 253 S.W.3d 857 (Tex. App.—Houston [14th Dist.] 2008) (evidence of AAA costs insufficient unless party shows AAA will administer arbitration)