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FC Background, LLC v. Fritze

Court of Appeals of Texas, Fifth District, Dallas

November 16, 2017

FC BACKGROUND, LLC, Appellant
v.
LEE FRITZE, Appellee

         On Appeal from the 14th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-16-14736

          Before Justices Lang, Evans, and Schenck

          MEMORANDUM OPINION

          DAVID EVANS JUSTICE

         FC Background, LLC (FCB) appeals the trial court's denial of its motion to compel arbitration on the claims its former employee Lee Fritze filed against it. FCB asserts the trial court erred in denying its motion because Fritze signed an employment application that required arbitration of all disputes that might arise out of the submission of the application and his employment with the company. We conclude the employment application containing the arbitration clause was superseded by a later agreement between the parties that did not provide for arbitration and instead explicitly provided for litigation in court. Accordingly, we affirm the trial court's order.

         BACKGROUND

         In 2012, Fritze signed an employment application with FCB that stated in relevant part:

I HEREBY AGREE TO SUBMIT TO BINDING ARBITRATION ALL DISPUTES AND CLAIMS ARISING OUT OF THE SUBMISSION OF THIS APPLICATION. I FURTHER AGREE, IN THE EVENT THAT I AM HIRED BY THE COMPANY, THAT ALL DISPUTES THAT CANNOT BE RESOLVED BY INFORMAL INTERNAL RESOLUTION WHICH MIGHT ARISE OUT OF MY EMPLOYMENT WITH THE COMPANY, WHETHER DURING OR AFTER THAT EMPLOYMENT, WILL BE SUBMITTED TO BINDING ARBITRATION. I AGREE THAT SUCH ARBITRATION SHALL BE CONDUCTED UNDER THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION. THIS APPLICATION CONTAINS THE ENTIRE AGREEMENT BETWEEN THE PARTIES WITH REGARD TO DISPUTE RESOLUTION, AND THERE ARE NO OTHER AGREEMENTS AS TO DISPUTE RESOLUTION, EITHER ORAL OR IN WRITING.

         FCB formally hired Fritze as vice president of sales and marketing in 2013. In 2015, the parties negotiated an employment agreement for 2016 that required Fritze to execute (1) an employment agreement dated December 28, 2015 setting forth his compensation, benefits, and other items, and (2) a non-compete agreement. Among other things, the non-compete agreement incorporated by reference the December 28 employment agreement, generally set forth Fritze's responsibilities as vice president of sales, addressed his ability to bind the company, provided for the protection of confidential information, and also provided the following:

Prior Agreements and Modifications. This Agreement expressly supersedes an[y[1] previous written or oral agreements between you and FCB relating to employment. It represents the complete understanding between you and FCB and may only be modified by written agreement signed by you and an owner of FCB.

         Neither the non-compete agreement nor the December 28 employment agreement that was incorporated by reference included an arbitration clause. Instead, the non-compete agreement stated as follows:

Applicable Law. Except as expressly stated to the contrary, this document is to be governed under the laws of the State of Texas. The Employee and the Company each submit to the exclusive jurisdiction of any state or federal court sitting in the State of Texas, in any action or proceeding arising out of or relating to this Agreement and irrevocably waive any objection to proceeding before such courts based upon lack of personal jurisdiction of [sic] inconvenient forum. The Company and the Employee irrevocably consent to the service of process out of any of the aforementioned courts by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at the address stated in the this [sic] Agreement under Notices.

         Fritze sued FCB in November 2016 alleging various claims arising from FCB's termination of his employment in July 2016. FCB filed a motion to stay proceedings and compel arbitration pursuant to the clause in the application for employment signed by Fritze. Fritze opposed the motion. At the hearing on the motion to compel arbitration, the trial court stated its reliance on the merger clause in the non-compete agreement as superseding the arbitration clause in the employment application. The trial court, however, did not limit the bases of its order denying FCB's motion by identifying in writing any ground or reason. This appeal followed.

         ANALYSIS

         FCB contends that the trial court erred in refusing to compel arbitration under the clause in the employment application. We review an order denying a motion to compel arbitration for an abuse of discretion. See Carr v. Main Carr Dev., LLC, 337 S.W.3d 489, 494 (Tex. App.- Dallas 2011, pet. denied). Under that standard, we review the trial court's legal determination de ...


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