Opinion
04-21-00557-CV
12-14-2022
CARDINAL SENIOR CARE, LLC, Appellant v. Greg BRADWELL, Appellee
From the 57th Judicial District Court, Bexar County, Texas Trial Court No. 2021CI11679 Honorable Mary Lou Alvarez, Judge Presiding
Sitting: Luz Elena D. Chapa, Justice Irene Rios, Justice Liza A. Rodriguez, Justice
MEMORANDUM OPINION
Irene Rios, Justice
In this interlocutory appeal, appellant Cardinal Senior Care, LLC ("Cardinal") appeals the trial court's order denying its motion to compel arbitration and stay trial court proceedings. In two issues, Cardinal argues: (1) the trial court erred when it denied its motion to compel; and (2) the trial court should stay all trial court proceedings-including proceedings involving other defendants who are non-signatories to the arbitration agreement-pending the outcome of arbitration between Cardinal and appellee Greg Bradwell. We reverse the trial court's order denying the motion to compel and stay trial court proceedings and remand the case for further proceedings consistent with this opinion.
Background
Bradwell was employed by Cardinal as a home health provider. As a condition of his employment, Bradwell signed an arbitration agreement on October 10, 2017. The arbitration agreement states, "the Federal Arbitration Act . . . will govern all aspects of this Arbitration Agreement." Neither party contests governance under the Federal Arbitration Act. Bradwell, on behalf of Cardinal, provided home health services to Gary Thompson and Norma L. Thompson (collectively, "the Thompsons").
On July 18, 2019, Bradwell allegedly sustained injuries while moving a washing machine for the Thompsons. Cardinal is a non-subscriber to Texas Workers' Compensation Insurance, but provides its employees benefits for certain work-related injuries through the Cardinal Senior Care LLC Work Injury Benefit Plan. Bradwell filed a claim with Cardinal under its work injury benefit plan. On September 4, 2019, Bradwell was notified by Cardinal's claims administrator that he was not eligible for benefits under the plan because he was not acting within the course and scope of his employment, as a home health provider, when he was moving the washing machine.
On June 11, 2021, Bradwell filed suit against the Thompsons and Cardinal alleging their negligence contributed to his injuries and seeking recovery of past and future medical expenses, mental anguish, physical impairment, and disfigurement.
On July 13, 2021, Cardinal filed its original answer, and filed a motion to compel arbitration on November 3, 2021, claiming Bradwell's claims are subject to a valid and enforceable arbitration agreement between Bradwell and Cardinal. Cardinal requested the trial court stay the proceedings against Cardinal and order the parties to arbitration. Cardinal also argued the claims against the Thompsons should be stayed pending the outcome of arbitration because it argued the litigation against the Thompsons may interfere or impact the arbitration. Bradwell opposed the motion.
After a hearing, the trial court denied Cardinal's motion to compel arbitration and stay trial court proceedings in its entirety. Cardinal appeals.
Standard of Review
In general, we review a trial court's decision to grant or deny a motion to compel arbitration for an abuse of discretion. Metso Mins. Indus., Inc. v. Maverick Aggregates, Inc., No. 04-15-00532-CV, 2016 WL 3022060, at *2 (Tex. App.-San Antonio May 25, 2016, pet. denied) (mem. op.). Under this standard, we defer to the trial court's factual determinations if they are supported by the evidence and review its legal determinations de novo. Id. "Thus, the existence and the applicability of an arbitration agreement is a question of law reviewed under a de novo standard." City of San Antonio v. Cortes, 468 S.W.3d 580, 583 (Tex. App.-San Antonio 2015, pet. denied).
"As a threshold matter, the party moving to compel arbitration must establish the existence of a valid and enforceable arbitration agreement between the parties." Metso Mins., 2016 WL 3022060, at *2. "Once a valid and enforceable arbitration agreement is established by the moving party, the trial court must then determine whether the claims presented fall within the scope of that agreement." Id. "In determining 'whether a party's claims fall within an arbitration agreement's scope, we focus on the petition's factual allegations rather than the legal causes of action asserted.'" Cortes, 468 S.W.3d at 583 (alterations omitted) (quoting In re FirstMerit Bank, 52 S.W.3d 749, 754 (Tex. 2001) (orig. proceeding)). "When making this determination, a strong presumption in favor of arbitration exists, and courts must resolve any doubts about the scope of the arbitration agreement in favor of arbitration." Metso Mins., 2016 WL 3022060, at *2. "If, during the process of resolving these questions, the court concludes the disputes at issue are arbitrable under the parties' agreement, then the court must order the parties to arbitrate, leaving it to the arbitrator to resolve the underlying claims." Id.; see also Cortes, 468 S.W.3d at 583 ("If the arbitration agreement includes the claims at issue and the opposing party cannot prove any defense preventing arbitration, 'the trial court has no discretion but to compel arbitration and stay its own proceedings.'" (quoting FirstMerit Bank, 52 S.W.3d at 754)).
To succeed on its motion to compel arbitration, Cardinal had to demonstrate a valid arbitration agreement existed and Bradwell's claims fell within the scope of the agreement. Cortes, 468 S.W.3d at 583.
Motion To Compel Arbitration
In its first issue, Cardinal argues the trial court erred when it denied its motion to compel arbitration because Bradwell's claims fall within the scope of a valid and enforceable arbitration agreement between Cardinal and Bradwell.
In response, Bradwell argues the arbitration agreement has a one-year time limit on bringing a claim to arbitration and-because Bradwell filed his suit outside of the one-year limitation-he is no longer subject to the arbitration agreement. We disagree with Bradwell's interpretation of the limitation clause in the arbitration agreement.
"Arbitration agreements are interpreted under contract principles." Nabors Drilling USA, LP v. Carpenter, 198 S.W.3d 240, 247 (Tex. App.-San Antonio 2006, no pet.). "In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument." J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003) (applying contract principles to the interpretation of an arbitration agreement). "To achieve this objective, we must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless." Id. "No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument." Id.
A. Valid and Enforceable Arbitration Agreement
Here, Cardinal provided the trial court with a valid and enforceable arbitration agreement attached to its motion to compel arbitration. Relating to the validity and enforceability of the agreement, the arbitration agreement contains the following relevant paragraphs:
• It is a condition of [Bradwell's] employment with [Cardinal] that [Bradwell and Cardinal] agree to arbitrate all arbitrable claims arising from or related to [Bradwell's] employment with [Cardinal] . . . .
• Arbitration is Mandatory, Binding, and Mutual: All Claims related to [Bradwell's] employment with [Cardinal] arising in any part after the Effective Date, save and except any benefit claims under our Occupation Injury Benefit Plan and any claims made not arbitrable by governing statute or rule, will be resolved only through mandatory binding arbitration. [Bradwell] and [Cardinal] both agree to arbitrate all Claims, and [Bradwell] and [Cardinal] both waive all rights to a jury or non-jury trial in state and federal court as to the Claims.
• Consideration: The mutual promises made herein between us to arbitrate Claims under this Arbitration Agreement are consideration for this Arbitration Agreement. Your continued employment with [Cardinal] and its employment of you, after having been notified of adoption of this Arbitration Agreement and the terms hereof, are consideration for this Arbitration Agreement.
Bradwell signed the arbitration agreement on October 10, 2017, nearly two years before he sustained his alleged injuries. Just above Bradwell's signature, the arbitration agreement included a paragraph in bold font stating:
I acknowledge receipt of this Arbitration Agreement and Notice of Arbitration Policy. I have read it, or have had an opportunity to read it, and I understand and agree to the same.
Bradwell has never argued before the trial court, or on appeal, that he did not sign the arbitration agreement. Instead, Bradwell argues the arbitration agreement lapsed one year after he sustained his alleged injuries and is no longer enforceable. For support of his position, Bradwell points us to the following provision of the arbitration agreement:
Bradwell contends he is entitled to resolve his claim through litigation rather than arbitration because he brought his suit outside of the one-year window to arbitrate claims, but within the two-year statute of limitation for personal injury causes of action. See Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a) (providing a two-year statute of limitations for personal injury causes of action). Bradwell also contends Cardinal should have brought a claim against itself within the one-year limitations period if it wished to arbitrate his claims. However, this argument is without merit because Cardinal could not have requested arbitration within the one-year limitations period when Bradwell did not even assert the claim until nearly a year after the limitations period expired.
One-Year Time Limit on Bringing a Claim: All parties must file a Claim for arbitration within one (1) year after the date of the incident or occurrence giving rise to the Claim. Failure to do so will result in the Claim being barred as at that one-year date. Should this time limitation become unenforceable because of applicable statute or case law, [Cardinal and Bradwell] agree the arbitrator may determine the appropriate limitations period prior to the date of the final arbitration hearing.
When read in context with the entire arbitration agreement, it is clear the parties intended to arbitrate all claims arising from Bradwell's employment, with limited exceptions not applicable here. In addition, Bradwell waived his right to a jury or non-jury trial on any claims arising from his employment. Contrary to Bradwell's assertion, the limitations clause does not render the arbitration agreement unenforceable a year after the date of the occurrence giving rise to the claim, but simply provides the timeline under which a claimant must arbitrate a claim before it is barred. See G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 521 (Tex. 2015) ("The [limitations] deadline [in the arbitration agreement] does not determine the present existence, enforceability, or scope of the agreement to arbitrate the parties' dispute, but instead imposes a procedural limit on the parties' rights under that agreement."). This provision is akin to a statute of limitations that provides the timeline under which a plaintiff may bring a lawsuit for a cause of action.
If we were to adopt Bradwell's interpretation of the limitations clause, any person would be able to defeat an arbitration agreement containing a limitations clause by simply sitting on their rights until the limitations period runs. This would be in conflict with the strong presumption in favor of arbitration. See Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018) ("[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability."); FirstMerit Bank, 52 S.W.2d at 753 (holding a presumption exists favoring agreements to arbitrate under the Federal Arbitration Act); Associated Glass, Ltd. v. Eye Ten Oaks Invs., Ltd., 147 S.W.3d 507, 512 (Tex. App.-San Antonio 2004, no pet.) ("Because state and federal policies favor arbitration, a presumption exists favoring agreements to arbitrate, and courts must resolve any doubts about an arbitration agreement's scope in favor of arbitration."). From a plain reading of the arbitration agreement, the parties intended all claims, with limited exceptions not applicable here, to be resolved by arbitration. The parties further intended the limitations clause to limit the amount of time that a party could bring such claims to arbitration.
Furthermore, the arbitration agreement expressly states the arbitrator "may determine the appropriate limitations period" should the "time limitation become unenforceable because of applicable statute or case law . . . ." Even if we were to adopt Bradwell's interpretation, which we do not, the arbitration agreement allows the arbitrator-not the courts-to determine the appropriate limitations period and, consequently, whether the arbitration agreement is enforceable. See Berry Y&V Fabricators, LLC v. Bambace, 604 S.W.3d 482, 486 (Tex. App.-Houston [14th Dist.] 2020, no pet.) ("[Because] parties have the right to contract as they see fit, they may delegate to the arbitrator questions concerning validity or enforceability of an arbitration agreement, and we enforce such clauses when the delegation is clear and unmistakable."); see also Perry Homes v. Cull, 258 S.W.3d 580, 588 (Tex. 2008) ("Although the federal courts do not defer to arbitrators when waiver is a question of litigation conduct, they consistently do so when waiver concerns limitations periods . . . ."); Lupe Holdings, LP v. Sanchez, No. 01-21-00351-CV, 2022 WL 2837331, at *7 (Tex. App.-Houston [1st Dist.] July 21, 2022, no pet.) (mem. op.) ("[T]he parties' dispute over the meaning and effect of the statute of limitations deadline in the Arbitration Agreement presents questions of procedural arbitrability, which both the United States Supreme Court and the Supreme Court of Texas have held are for the arbitrator, not the courts, to decide.").
Aside from his limitation argument, Bradwell does not argue the agreement is unconscionable or otherwise unenforceable. Accordingly, we hold a valid arbitration agreement exists between Bradwell and Cardinal.
B. Whether the Claims are Within the Scope of the Arbitration Agreement
Next, we must determine whether Bradwell's claims are within the scope of the arbitration agreement. Looking to Bradwell's factual assertions in his petition, Cardinal argues Bradwell's claims fall within the scope of the arbitration agreement. Cardinal also argues the arbitration agreement delegates the issue of whether the claims are arbitrable to the arbitrator rather than the courts.
Citing the letter denying his work injury benefits-which stated moving the washing machine was outside the course and scope of Bradwell's employment-Bradwell argued before the trial court that only claims within the scope of his employment with Cardinal are arbitrable claims. Thus, Bradwell argues, his claims are not arbitrable.
As stated above, with limited exceptions not applicable here, the arbitration agreement repeatedly stated that "all Claims" arising from or related to Bradwell's employment with Cardinal are subject to the arbitration agreement. In addition, the arbitration agreement specifically defined certain claims that are subject to the arbitration agreement:
Claims covered under this Arbitration Agreement include, but are not limited to the following: (i) claims arising from any injury suffered by an Employee while in the Course and Scope of Employment with [Cardinal], including but not limited to
claims for negligence, gross negligence, and all claims for personal injuries, physical impairment, disfigurement, pain and suffering, mental anguish, wrongful death and survival actions, loss of services and or consortium, emotional distress, and exemplary or punitive damages if allowed . . . .
"In assessing the scope of the arbitration provisions, we focus on the factual allegations and not the causes of action asserted." San Antonio Eye Ctr., P.A. v. Vision Assocs. of S. Tex. P.A., No. 04-22-00078-CV, 2022 WL 3908843, at *3 (Tex. App.-San Antonio Aug. 31, 2022, pet. filed) (citing Henry, 551 S.W.3d at 115). "We apply a common-sense examination of the underlying claims to determine if they come within the scope of the arbitration clause." San Antonio Eye Center, P.A., 2022 WL 3908843, at *3.
In his petition, Bradwell asserts he "was in the course and scope of his employment for [Cardinal]" when he was injured. He further alleges Cardinal was negligent by, among other things, failing to provide him with a safe working environment. Finally-although we look at factual assertions rather than causes of action when determining whether the claim falls within the scope of the arbitration agreement-we note Bradwell's sole cause of action against Cardinal was for negligence.
According to the arbitration agreement, any claims arising from any injury suffered by Bradwell while in the course and scope of his employment with Cardinal, including claims for negligence and the damages thereof, are claims that fall within the scope of the arbitration agreement. Therefore, interpreting the arbitration agreement in light of Bradwell's factual assertions, the claims here fall within the scope of the arbitration agreement.
Moreover, the arbitration agreement expressly states: "Any dispute as to whether a claim is arbitrable shall be resolved by the Arbitrator under this Arbitration Agreement." "Generally, a court may consider an arbitration agreement's terms to determine which issues must be arbitrated." RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 121 (Tex. 2018). "But as parties have a right to contract as they see fit, they may agree to arbitral delegation clauses that send gateway issues such as arbitrability to the arbitrator." Id. "When faced with such an agreement, courts have no discretion but to compel arbitration unless the clause's validity is challenged on legal or public policy grounds." Id. "So the proper procedure is for a court to first determine if there is a binding arbitration agreement that delegates arbitrability to the arbitrator." Id. "If there is such an agreement, the court must then compel arbitration so the arbitrator may decide gateway issues the parties have agreed to arbitrate." Id.
Here, Bradwell does not challenge the validity of the delegation clause. Thus, the issue of arbitrability-whether the claims fall within the scope of the arbitration agreement-is delegated to the arbitrator to decide, not the trial court.
Accordingly, we hold the trial court abused its discretion when it denied Cardinal's motion to compel arbitration. Cardinal's first issue is sustained.
Stay of Trial Court Proceedings
In its second issue, Cardinal argues the trial court should have stayed all trial court proceedings pending resolution of arbitration. Cardinal's motion included a request to stay the litigation proceedings against the Thompsons, who were non-signatories to the arbitration agreement between Cardinal and Bradwell.
The Federal Arbitration Act requires courts to stay litigation of issues that are subject to arbitration. In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 195 (Tex. 2007) (orig. proceeding) (citing 9 U.S.C. § 3). "[W]hen an issue is pending in both arbitration and litigation, the Federal Arbitration Act generally requires the arbitration to go forward first." Merrill Lynch Tr., 235 S.W.3d at 195.
Although the mandatory stay generally applies only to the parties to the arbitration agreement, the stay will also apply to a non-signatory to an arbitration agreement if "(1) the arbitrated and litigated disputes involve the same operative facts, (2) the claims asserted in the arbitration and litigation are 'inherently inseparable,' and (3) the litigation has a 'critical impact' on the arbitration." HEB Grocery Co., LP v. Del Cid, No. 04-19-00058-CV, 2019 WL 3432087, at *2 (Tex. App.-San Antonio July 31, 2019, no pet.) (mem. op.); see also In re Devon Energy Corp., 332 S.W.3d 543, 548 (Tex. App.-Houston [1st Dist.] 2009, orig. proceeding).
Here, the arbitrated claims against Cardinal and the litigated claims against the non-signatory Thompsons involve the same set of operative facts-the events of July 18, 2019 that led to Bradwell's alleged injury. A comparison between the two sets of claims reveals they are inherently inseparable. In his petition, Bradwell alleges the Thompsons breached their duty by failing to: (1) reduce or eliminate dangerous conditions by failing to maintain the premises in a reasonably safe condition, (2) repair unsafe conditions on their property, and (3) warn him of trip hazards on their property. Likewise, Bradwell alleges Cardinal failed to (1) properly inspect the Thompson's property for dangerous conditions, (2) provide an adequate and safe work environment, (3) warn him of dangerous conditions at the property, (4) remove or eliminate the dangerous conditions, and (5) warn Bradwell of the dangerous conditions. Because overlapping factual disputes are likely to arise when addressing the two sets of claims, we hold the claims against Cardinal and the claims against the Thompsons are inherently inseparable.
Finally, if the Thompson litigation continues, the proceedings will have a critical impact on the arbitration of the Cardinal claims. Reiterating the warnings of Judge Posner, the Supreme Court of Texas has noted
[There] are cases in which a party to an arbitration agreement, trying to get around it, sues not only the other party to the agreement but some related party . . . in the hope that the claim against the other party will be adjudicated first and have preclusive effect in the arbitration. Such a maneuver should not be allowed to succeed . . . [and] would require the court to stay the proceedings before it and let the arbitration go forward unimpeded.Merrill Lynch Tr., 235 S.W.3d at 195 (quoting IDS Life Ins. Co. v. SunAmerica Inc., 103 F.3d 524, 530 (7th Cir. 1996)).
Should the Thompson litigation proceed, Bradwell will benefit from discovery propounded on the Thompsons without Cardinal's ability to participate in the process. Further, the Thompson litigation could subvert Cardinal's right to a meaningful arbitration with Bradwell by deciding issues subject to the arbitration. See Devon Energy, 332 S.W.3d at 549 (holding litigation against a non-signatory could subvert a party's right to arbitration by deciding issues subject to arbitration if the litigation is not stayed). Having satisfied all three requirements to stay the trial court proceedings pertaining to the claims against the Thompsons, we hold the trial court erred when it denied Cardinal's motion to stay all trial court proceedings.
Accordingly, we sustain Cardinal's second issue.
Conclusion
We reverse the trial court's order denying Cardinal's motion to compel arbitration and stay trial court proceedings, and remand the case to the trial court for the entry of an order compelling Bradwell to arbitrate his claims against Cardinal and staying all proceedings in the underlying case pending the outcome of the arbitration of Bradwell's claims against Cardinal.