Court of Appeals of Texas, Third District, Austin
Stability Healthcare Staffing, LLC; Stability Healthcare Inc.; Jay Ryan Blecker; Jason Casani; and Jon Chesnik, Appellants
Ryan Beres, Appellee
THE 368TH DISTRICT COURT OF WILLIAMSON COUNTY NO.
18-0612-C368, THE HONORABLE RICK J. KENNON, JUDGE PRESIDING
Justices Goodwin, Baker, and Triana
D. TRIANA, JUSTICE
Healthcare Staffing, LLC, Stability Healthcare Inc., Jay Ryan
Blecker, Jason Casani, and Jon Chesnik (Stability Healthcare)
appeal the district court's order denying appellants'
motion to compel arbitration. Because we conclude that there
was no valid agreement between the parties to arbitrate and
that direct benefits estoppel does not apply, we affirm the
district court's order denying the motion to compel
Ryan Beres joined Stability Healthcare as an owner, member,
and partner in 2013. He was reimbursed as a partner,
receiving a K-1 rather than a W-2. During the first quarter
of 2017, Stability Healthcare told Beres to exchange his
equity ownership for a W-2 employment relationship and
repeatedly presented Beres with an employment handbook that
contained an arbitration agreement. Beres refused to sign the
employment handbook containing the arbitration agreement and
did not agree to becoming a W-2 employee.
August or September of 2017, Stability Healthcare informed
Beres that his services were no longer wanted, thereby
terminating him from working at Stability Healthcare. In
response, Beres sued Stability Healthcare seeking a
declaratory judgment and asserting several causes of action,
all of which center on Beres's status as a partner and
owner of Stability Healthcare. Stability Healthcare removed
the lawsuit to federal district court on the basis of
diversity jurisdiction, but Stability Healthcare could not
meet its burden of establishing the existence of federal
jurisdiction. As a result, the federal district court
remanded this lawsuit to state court. Beres v. Stability
Healthcare Staffing, LLC, No. 1:18-CV-531-RP, 2018 U.S.
Dist. LEXIS 223773 (W.D. Tex. Oct. 25, 2018). Stability
Healthcare moved to compel arbitration under the Federal
Arbitration Act, and the district court denied the motion.
Stability Healthcare appeals.
an arbitration agreement is enforceable is subject to de novo
review. In re Labatt Food Serv., L.P., 279 S.W.3d
640, 643 (Tex. 2009) (orig. proceeding). "[W]hether an
arbitration agreement binds a nonsignatory is a gateway
matter to be determined by courts rather than arbitrators
unless the parties clearly and unmistakably provide
otherwise." Id. (citing In re Weekley
Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005) (orig.
proceeding)). Nonsignatories to an agreement subject to the
Federal Arbitration Agreement may be bound to an arbitration
clause when rules of law or equity would bind them to a
contract generally. Id.
Healthcare asserts that: (1) Beres is "expressly
bound" by the arbitration agreement because he continued
to work at Stability Healthcare, and (2) Beres is equitably
estopped from denying his obligation to arbitrate because he
accepted the benefit of continued employment. Because these
issues are dispositive, we do not reach Stability
Healthcare's remaining arguments.
Agreement to Arbitrate
Healthcare first asserts that Beres is expressly bound to the
arbitration agreement. "Under the Federal Arbitration
Act (FAA), ordinary principles of state contract law
determine whether there is a valid agreement to
arbitrate." In re Kellogg Brown & Root,
Inc., 166 S.W.3d 732, 738 (Tex. 2005) (orig.
proceeding). Because of arbitration's contractual nature,
it does "not require parties to arbitrate when they have
not agreed to do so." Id. (quoting Volt
Info. Scis., Inc. v. Board of Trs. of Leland Stanford Junior
Univ., 489 U.S. 468, 478-79 (1989)). Beres rejected
Stability Healthcare's unilateral attempts to restructure
his status from a K-1 member-owner to a W-2 employee many
times. Though Stability Healthcare presented the employee
handbook and arbitration agreement to Beres multiple times,
he intentionally refused to be bound by the terms in those
agreements by not signing the handbook or any agreement
presented to him that would have changed his status to that
of an employee without an ownership interest in the business.
He retained an attorney in order to protect his ownership
interest from Stability Healthcare's attempts to change
their professional relationship, further signaling his
refusal to change that relationship. Rather than agree to a
change of status or to the employee handbook containing the
arbitration provision, Beres was terminated from working at
Stability Healthcare. Because the record does not reflect
Beres's agreement to the arbitration clause, we cannot
agree that by continuing to provide services to Stability
Healthcare, Beres expressly agreed to the arbitration
agreement he refused to sign.
Healthcare argues that, in the absence of express agreement,
Beres, is bound by the arbitration agreement under the
doctrine of equitable estoppel because he continued to
provide services to and accept payment from Stability
Healthcare after refusing to sign the employee handbook or
any other documents indicating acceptance of a change in
employment status. Under direct benefits estoppel, which is a
form of equitable estoppel, "a non-signatory plaintiff
seeking the benefits of a contract is estopped from
simultaneously attempting to avoid the contract's
burdens, such as the obligation to arbitrate disputes."
Id. at 739. Employers may enforce an arbitration
agreement with a nonsignatory employee if the employer
provided notice of its arbitration agreement and the
nonsignatory accepted the agreement. In re Dillard
Dep't Stores, Inc.,198 S.W.3d 778, 780 (Tex. 2006)
(orig. proceeding). Notice is effective if it ...