The Houston [14th] Court of Appeals has reversed a trial court order denying a defendant business’s motion to compel arbitration of a personal injury claim.
Pearland Urban Air, LLC v. Abigail Delila Cerna a/n/f of R.W. (No. 14-23-00090-CV; February 8, 2024) stemmed from an injury suffered by Plaintiff’s son while jumping on a trampoline at Defendant’s trampoline park. The accident occurred on Plaintiff’s second visit to the park. On the first visit, Plaintiff signed a release and indemnification agreement, which contained an arbitration clause. On the second visit, Plaintiff did not sign another release. Plaintiff sued Defendant, asserting negligence. Defendant moved to compel arbitration based on the release initially signed by Plaintiff. Plaintiff responded that since she did not execute a new release on the second visit, Defendant could not prove the existence of a valid arbitration agreement. She further argued that even if an agreement existed, it was unenforceable as to her minor child and the Texas Arbitration Act did not apply to personal injury claims. The trial court denied the motion to compel. Defendant filed an interlocutory appeal.
In an opinion by Justice Jewell, the court of appeals reversed and remanded. First, the court ruled that a valid arbitration agreement came into being when Plaintiff signed the release form at her first visit to the park. The release contained an arbitration provision explicitly applying to personal injury. Plaintiff acknowledged signing the release on behalf of her minor son but, as we have seen, raised a contract-formation defense at the trial court. The court of appeals rejected this defense, holding that in accordance with recent SCOTX precedent, an arbitration agreement may be binding on a non-signatory if the non-signatory benefited from the agreement in a way that equitably binds the non-signatory to the agreement (i.e., direct benefits estoppel). That was the case here because once Plaintiff signed the initial release, her son entered the park and participated in its activities.
The court likewise rejected Plaintiff’s argument that the initial agreement expired and was not renewed at her second visit to the park on the basis that the initial agreement referred determinations about the scope of the arbitration agreement to the arbitrator. “When the contract delegates the arbitrability question to an arbitrator,” the court ruled, “a court has no power to decide the issue” (citation omitted). The court ruled further that the agreement delegated to the arbitrator the question of whether the Texas Arbitration Act barred its application to Plaintiff’s claim, as this likewise question goes to the “scope, arbitrability, or validity” of the agreement.
Chief Justice Christopher filed a concurring opinion in which she would have ruled that the contract formation issue was one for the court to decide. Pointing to the Texas Arbitration Act’s prohibition of arbitration of personal injury claims unless the claimant and the claimant’s attorney sign the agreement, Chief Justice Christopher observed that the arbitration agreement in this case specified that the Federal Arbitration Act governed the agreement. Because the FAA pre-empts the TAA, she would hold that the signature requirement was not a valid defense to the agreement.
