Citations
- 95 S.W.3d 286
Full opinion text
OPINION
FITZGERALD, Justice.
Glazer’s Wholesale Distributors, Inc. brings an interlocutory appeal of the trial court’s order granting Heineken USA, Inc., Heineken Brouwerijen B.V., and Am-stel Brouwerij B.V.’s motion to compel arbitration. Glazer’s also brings a petition for writ of mandamus requesting that we order the trial court to set aside its order compelling arbitration. This Court consolidated the two cases. We dismiss the appeal for want of jurisdiction. Because we determine the statute requiring arbitration, as applied in this case, unconstitutionally delegates judicial authority in violation of article five, section one of the Texas Constitution, we conditionally grant the petition for writ of mandamus.
FACTUAL BACKGROUND
Glazer’s is a distributor of alcoholic beverages and was hired by Heineken Brou-werijen B.V. and Amstel Brouwerij B.V. (collectively “Heineken”) to distribute their products. Glazer’s distributorship contracts provide they are terminable only “for good cause.” On January 21, 1999, Heineken notified Glazer’s that it was terminating the distributorship contracts due to dissatisfaction with Glazer’s performance.
Glazer’s brought suit against Heineken and its local agent, Heineken USA, Inc., and against another distributor, Miller of Dallas, Inc., alleging common-law causes of action of breach of contract, conspiracy, breach of fiduciary duty, tortious interference with contract, fraud, and negligent misrepresentation. Glazer’s also sued Heineken alleging a statutory cause of action for violating the Beer Industry Fair Dealing Law. See Tex. Alco. Bev.Code Ann. §§ 102.71-.81 (Vernon 1995) (hereafter, “the Act”). Glazer’s alleged that Heineken violated section 102.74 because it lacked good cause to terminate the contracts. Glazer’s demanded compensation for the value of the distributorship business relating to Heineken’s brands.
Section 102.74 of the Act prohibits a beer manufacturer from terminating a distributorship contract unless it has good cause and has afforded the distributor the opportunity to cure the problems constituting good cause. See Tex. Alco. Bev.Code Ann. § 102.74 (Vernon 1995). If the manufacturer terminates the contract without good cause, it must pay the distributor the fair market value of the distributorship business relating to the terminated brands. See id. § 102.77(a); see also Ace Sales Co. v. Cerveceria Modelo, S.A. de C.V., 739 S.W.2d 442, 444 (Tex.App.—Corpus Christi 1987, writ denied). Glazer’s sought actual and exemplary damages, attorney’s fees, declaratory judgments, and temporary and permanent injunctions reinstating Glazer’s right to distribute the Heineken brands.
Heineken answered and moved the trial court to compel arbitration pursuant to section 102.77(b) of the Act, which provides that if the manufacturer and distributor cannot agree on whether “good cause” for termination exists or on the value of the distributorship business,
the matter may, at the option of either the distributor or manufacturer, be submitted to three arbitrators.... The award of the arbitrators shall be binding on the parties unless appealed within 10 days from the date of the award. All proceedings on appeal shall be in accordance with and governed by the Texas General Arbitration Act, as amended.
Tex. Alco. Bev.Code Ann. § 102.77(b) (Vernon 1995). The trial court granted the motion and ordered the parties to arbitrate only Glazer’s claim “that the Heineken Defendants violated section 102.74 of the Texas Alcoholic Beverage Code ... for determination of whether or not good cause existed for cancellation of the distribution contracts ... and the amount of the reasonable compensation, if any, to be paid for the value of the Plaintiffs business .... ” The trial court stayed the litigation of Glazer’s other causes of action pending resolution of the arbitrable issues. Glazer’s filed an interlocutory appeal of this order and a petition for writ of mandamus requesting that we order the trial court to set aside the order compelling arbitration.
JURISDICTION OVER THE INTERLOCUTORY APPEAL
Ordinarily, a party may not appeal an action until it obtains a final judgment. Pursuant to section 102.77(b) of the Act, appellant’s right of appeal is governed by the Texas General Arbitration Act, which only permits a party to bring an interlocutory appeal of an order:
(1) denying an application to compel arbitration ...;
(2) granting an application to stay arbitration ...;
(3) confirming or denying confirmation of an award;
(4) modifying or correcting an award; or
(5) vacating an award without directing a rehearing.
Tex. Civ. PRac. & Rem.Code Ann. § 171.098(a)(l)-(5) (Vernon Supp.2001). An order granting a motion to compel arbitration is not one of the permitted categories for an interlocutory appeal under the Texas General Arbitration Act. See id.; Lipshy Motorcars, Inc. v. Sovereign Assocs., Inc., 944 S.W.2d 68, 69 (Tex. App.—Dallas 1997, no writ); see also Materials Evolution Dev., USA Inc. v. Jablonowski, 949 S.W.2d 31, 33 (Tex.App.—San Antonio 1997, no writ).
Glazer’s argues that the supreme court, in Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266 (Tex.1992) (orig.proceeding), held the Texas General Arbitration Act permits an interlocutory appeal of an order compelling arbitration. In Anglin, the court did state that the Texas General Arbitration Act allows a party “to appeal from an interlocutory order granting or denying a request to compel arbitration.” Id. at 271-72 (emphasis added). However, this Court has held that language to be dicta insofar as it purports to authorize an appeal of an order compelling arbitration. See Lipshy Motorcars, Inc., 944 S.W.2d at 70; see also In re Van Blarcum, 19 S.W.3d 484, 488-89 n. 7 (Tex.App.—Corpus Christi 2000, orig. proceeding) (citing Lipshy Motorcars ).
The Texas General Arbitration Act clearly does not authorize Glazer’s to bring an interlocutory appeal of the order compelling arbitration. Accordingly, we lack jurisdiction over the appeal. See id. We dismiss the appeal for want of jurisdiction.
MANDAMUS
Mandamus is an extraordinary remedy and is available only in limited circumstances of manifest and urgent necessity. See Holloway v. Fifth Court of Appeals, 767 S.W.2d 680, 684 (Tex.1989) (orig.proceeding). The writ of mandamus will issue only to correct a clear abuse of discretion or violation of duty imposed by law, when no adequate remedy at law exists. See In re L & L Kempwood Assocs., L.P., 9 S.W.3d 125, 128 (Tex.1999) (orig.proceeding) (per curiam); Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992) (orig.proceeding); Jampole v. Touchy, 673 S.W.2d 569, 572-73 (Tex.1984) (orig.proceeding).
An abuse of discretion occurs when the' trial court’s decision is arbitrary and unreasonable “as to amount to a clear and prejudicial error of law.” Harris v. Jones, 8 S.W.3d 383, 385 (Tex.App.—El Paso1999, no pet.); Walker, 827 S.W.2d at 839; Mercedes-Benz Credit Corp. v. Rhyne, 925 S.W.2d 664, 666 (Tex.1996). The relator must establish that the facts and law allow for only one decision. See Walker, 827 S.W.2d at 839; In re Clark, 977 S.W.2d 152, 155 (Tex.App.—Houston [14th Dist.] 1998, orig. proceeding). When the trial court, in exercising otherwise discretionary authority, “has but one course to follow and one way to decide, discretionary power is effectively null.” Harris, 8 S.W.3d at 385, 386; United States Fire Ins. Co. v. Millard, 847 S.W.2d 668, 671 (Tex.App.—Houston [1st Dist.] 1993, orig. proceeding). The trial court does not have any “discretion” in determining what the law is or applying the law to the facts in the case; therefore, appellate review is much less deferential regarding a trial court’s determination of the legal principles controlling its ruling. See In re Perritt, 973 S.W.2d 776, 780 (Tex.App.—Texarkana 1998, orig. proceeding); City of Lubbock v. Hancock, 940 S.W.2d 128, 124 (Tex.App.—Amarillo 1996, orig. proceeding). Thus, “a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion, and may result in appellate reversal by extraordinary writ.” Walker, 827 S.W.2d at 840; see In re Godt, 28 S.W.3d 732, 738 (Tex.App.—Corpus Christi 2000, orig. proceeding); In re Jebbia, 26 S.W.3d 753, 756 (Tex.App.—Houston [14th Dist.] 2000, orig. proceeding); Weber v. Hall, 929 S.W.2d 138, 140 (Tex.App.—Houston [14th Dist.] 1996, orig. proceeding). Mandamus is available to correct judicial action contrary to well-settled law derived from binding precedent from a court of superior jurisdiction. See Kozacki v. Knize, 883 S.W.2d 760, 762 (Tex.App.—Waco 1994, orig. proceeding) (per curiam); City of Lubbock, 940 S.W.2d at 125; see also In re Smith Barney, Inc., 975 S.W.2d 593, 597 (Tex.1998) (doctrine of stare decisis requires lower courts to follow supreme court precedents) (quoting 21 Int’l Holdings, Inc. v. Westinghouse Elec. Corp., 856 S.W.2d 479, 486 (Tex.App.—San Antonio 1993, no writ) (Peeples, J., concurring), overruled on other grounds by In re Smith Barney, Inc., 975 S.W.2d at 598); Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex.1993) (stare decisis rule restated). Mandamus is also appropriate in cases of first impression where an abuse of discretion is found. See Huie v. DeShazo, 922 S.W.2d 920, 927-28 (Tex.1996) (orig.proceeding); In re News Am. Publ’g, Inc., 974 S.W.2d 97, 105 (Tex.App.—San Antonio 1998, orig. proceeding).
The writ will not issue if another remedy, usually an appeal, is available and adequate. See Street v. Second Court of Appeals, 715 S.W.2d 638, 639 (Tex.1986) (orig.proceeding); In re Levi Strauss & Co., 959 S.W.2d 700, 702 (Tex.App.—El Paso 1998, orig. proceeding). This extraordinary remedy applies only in situations involving “manifest and urgent necessity.” Walker, 827 S.W.2d at 840; Holloway v. Fifth Court of Appeals, 767 S.W.2d 680, 684 (Tex.1989) (orig.proceeding). Expense or delay are generally insufficient to demonstrate an appellate remedy is inadequate. However, interference through the issuance of the writ is justified “when parties stand to lose their substantial rights.” Walker, 827 S.W.2d at 842; see Canadian Helicopters Ltd. v. Wittig, 876 S.W.2d 304, 306 (Tex.1994) (orig.proceeding). In Walker, the supreme court found that a party would not have an adequate remedy by appeal “when the appellate court would not be able to cure the trial court’s discovery error” (for instance, if the trial court erroneously required disclosure of documents protected by the attorney-client privilege). Walker, 827 S.W.2d at 843. Similarly, if a trial court erroneously required a party to participate in binding arbitration, a party will not have an adequate appellate remedy to protect its substantial right to litigate the issues in open court. See id.; Solis v. Evins, 951 S.W.2d 44, 52 (Tex.App.—Corpus Christi 1997, orig. proceeding).
In Jack B. Anglin Co., Anglin filed an application to compel arbitration on all the City’s claims, including breach of contract, negligence, and the Texas Deceptive Trade Practices Act (DTPA). See Anglin, 842 S.W.2d at 267. The trial court ordered arbitration only as to the City’s breach of contract cause of action; it denied arbitration of the City’s DTPA claim. See id. at 268. The supreme court held, in part, that Anglin was denied its contractual right of arbitration of the City’s DTPA claim under the Federal Arbitration Act, and “absent mandamus relief, Anglin would be deprived of the benefits of the arbitration clause it contracted for, and the purpose of providing a rapid, inexpensive alternative to traditional litigation would be defeated.” Id. at 273.
In Freis v. Canales, 877 S.W.2d 283 (Tex.1994) (orig.proceeding) (per curiam), the supreme court considered whether mandamus would lie from an order compelling arbitration under the Federal Arbitration Act. See id. at 284. The court stated, “[A] party who is compelled to arbitrate imthout having agreed to do so will have lost its right to have the dispute resolved by litigation. Accordingly, such a party has no adequate remedy by appeal.” Id.; see also Turford v. Underwood, 952 S.W.2d 641, 643 (Tex.App.—Beaumont 1997, orig. proceeding) (“A party compelled to arbitrate without having agreed to do so, having lost his right to have the dispute resolved by litigation, has no adequate remedy at law and may seek review by mandamus.”).
In this case, Glazer’s complains of the court ordering arbitration without the parties’ having an agreement to do so. We conclude that if the trial court improperly ordered Glazer’s to arbitration, it has no adequate remedy by appeal. See In re Godt, 28 S.W.3d at 738; Solis, 951 S.W.2d at 52; see also Canadian Helicopters Ltd., 876 S.W.2d at 306 (requirement that relator lack adequate remedy by appeal met when parties in danger of permanently losing substantial rights). Thus, the outcome of this original proceeding hinges on whether the trial court clearly abused its discretion in ordering Glazer’s to arbitrate its statutory claim.
ISSUES
Glazer’s contends the trial court clearly abused its discretion by ordering arbitration because: (1) the parties did not agree to arbitration; (2) the arbitration provision in section 102.77(b) of the Act violates Glazer’s rights under the Texas Constitution; and (3) the Federal Arbitration Act preempts the Texas General Arbitration Act.
CONTRACTUAL ARBITRATION
Heineken argues that the fourth paragraph of the parties’ letter agreement addresses termination for cause, incorporated by reference the Texas Alcoholic Beverage Code, and thus showed Glazer’s agreement to arbitrate. See distributorship agreement, supra note 1. Alternatively, Heineken argues that because the laws existing at the time a contract is made become a part of the contract, the arbitration provision of the Act became a part of the agreement.
Glazer’s argues that the parties did not enter into any contractual agreement to arbitrate the matters concerning “good cause” or “value” and that the language in the letter agreement referring to the regulations and laws of Texas was a “choice of law” provision.
Arbitration is a streamlined decision-making process. The Texas General Arbitration Act permits only limited discovery. See Tex. Civ. PRAc. & Rem.Code Ann. §§ 171.050, .051 (Vernon Supp.2001); Pony Express Cornier Corp. v. Morris, 921 S.W.2d 817, 822 (Tex.App.—San Antonio 1996, no writ); Transwestern Pipeline Co. v. Blackburn, 831 S.W.2d 72, 78 (Tex.App.—Amarillo 1992, orig. proceeding). The arbitration act makes no provision for interrogatories or admissions. The rules of evidence do not apply. See Tex.R. Evid. 101(b) (rules of evidence apply in court proceedings); Castleman v. AFC Enters., Inc., 995 F.Supp. 649, 653-54 (N.D.Tex.1997) (arbitration proceedings are not governed by formal rules of evidence). The arbitration act does not require that a record be made of the arbitration hearing, and the arbitrators are not required to set out their rationale for the arbitration award. The arbitration act permits limited judicial review of the structure of the proceeding but allows virtually no judicial review of the merits of the proceeding. See Tex. Civ. Peac. & Rem.Code Ann. §§ 171.088, .091 (Vernon Supp.2001) (vacating and modifying or correcting arbitration award); Island on Lake Travis, Ltd. v. Hayman Co. Gen. Contractors, Inc., 834 S.W.2d 529, 533 (Tex.App.—Austin 1992) (“A mere mistake of fact or law alone is insufficient to set aside an arbitration award; only those errors of fact or law that result in a fraud or some great and manifest wrong and injustice warrant setting aside an arbitration award.”), writ granted w.r.m., 848 S.W.2d 84 (Tex.1993); Bailey & Williams v. Westfall, 727 S.W.2d 86, 90 (Tex.App.—Dallas 1987, writ ref'd n.r.e.) (“An arbitration award has the same effect as the judgment of a court of last resort, and a trial judge reviewing the award may not substitute his judgment for the arbiters’ merely because he would have reached a different decision.”); J.J. Gregory Gourmet Servs., Inc. v. Antone’s Import Co., 927 S.W.2d 31, 33 (Tex.App.—Houston [1st Dist.] 1995, no writ) (same); Monday v. Cox, 881 S.W.2d 381, 384 (Tex.App.—San Antonio1994, writ denied) (Texas General Arbitration Act “permits courts to set aside arbitration awards only in limited circumstances”).
These limitations on the rights of the parties in arbitration make it an inexpensive, rapid alternative to traditional litigation. See Prudential Secs., Inc. v. Marshall, 909 S.W.2d 896, 900 (Tex.1995) (orig.proceeding) (per curiam); Anglin, 842 S.W.2d at 272-73. These benefits, however, are achieved only’by sacrificing many of the procedural and constitutional protections afforded by the traditional litigation process. For these reasons, the Texas General Arbitration Act requires a party to agree to arbitration before it can be forced to resign its constitutional right to have its dispute determined in a court of competent jurisdiction. See Tex. Civ. Peac. & Rem.Code Ann. §§ 171.001, .021, .088(a)(4) (Vernon Supp.2001); see also Panhandle & S.F. Ry. Co. v. Curtis, 245 S.W. 781, 788 (Tex.Civ.App.—Amarillo 1922, no writ) (