Stadium Motorcars, LLC v. Singleton

          On Appeal from the 269th District Harris County, Texas Trial Court Case No. 2018-35688

          Panel consists of Justices Lloyd, Goodman, and Landau.

          MEMORANDUM OPINION

          RUSSELL LLOYD JUSTICE

         Appellants Stadium Motorcars, LLC d/b/a Central Houston Nissan and Central Houston Motorcars, LLC d/b/a Central Houston Cadillac (collectively, "Central Nissan") appeal the trial court's judgment confirming an arbitration award in favor of appellee, Chris Singleton. In two issues, Central Nissan argues that (1) arbitration awards that conflict with public policy may be vacated on common law grounds, and (2) the trial court erred in confirming the arbitration award because the award conflicts with Texas's public policy as an employment at-will state. We affirm.

         Background

         Singleton is an automotive repair professional with more than twenty years' experience in the automotive industry. In mid-February 2016, Singleton left his job as body shop manager at Baker Nissan, a Houston area car dealership, to begin a new position at a different Houston area dealership, Central Nissan. The owners of Central Nissan own other car dealerships in the Houston area, including Central Cadillac. Singleton signed a one-year guaranteed employment contract with Central Nissan on February 11, 2016.

         In his new position, Singleton's responsibilities included opening, and later managing, a new body shop for Central Nissan. Singleton's duties also included helping transfer the pre-existing collision business at Central Cadillac to the new body shop at Central Nissan.

         Shortly after he was hired by Central Nissan, Singleton uncovered evidence that employees of Central Nissan and one of its sister companies were engaged in what he believed to be criminal insurance fraud. The fraud involved the submission of fraudulent claims to insurance companies for reimbursement of repairs not actually performed. On May 2, 2016, Singleton prepared a spreadsheet summarizing the fraudulent invoicing practice and delivered it to his immediate supervisor. Singleton also informed Central Nissan's owner and controller of the ongoing fraud. Finally, Singleton advised Central Nissan's management that he was unwilling to participate in these activities. The following day, Central Nissan fired Singleton. Prior to Singleton's dismissal, no written record existed indicating Singleton had been admonished or disciplined for poor performance, or any other reason, by Central Nissan.

         At the time of Singleton's hiring, Central Nissan required Singleton to sign an agreement stipulating that any disputes arising out of Singleton's employment must be submitted to arbitration. The agreement further mandated that arbitration proceedings "shall be . . . carried out in conformity with the procedures of the Texas Arbitration Act." In accordance with the agreement, Singleton brought an arbitration proceeding against Central Nissan. Singleton asserted that Central Nissan wrongfully fired him because he refused to perform an illegal act. In submitting to arbitration, Singleton and Central Nissan further agreed that the "Arbitrator's award will be binding and not subject to appeal, except for the limited grounds set forth in Texas Civil Practice & Remedies Code section 171.088." At the conclusion of the arbitration, the arbitrator found that Central Nissan fired Singleton because Singleton refused to participate in illegal and fraudulent activity. As a result, the arbitrator awarded Singleton damages totaling $334, 922.

         On May 29, 2018, Central Nissan filed a petition in district court to vacate the arbitration award, asserting that the award was contrary to Texas public policy because Texas is an at-will employment state. In response, Singleton asserted a general denial and requested the court to confirm the award and enter a judgment against Central Nissan. On September 28, 2018, the court confirmed the arbitration award and entered judgment in favor of Singleton. This appeal followed.

         Discussion

         In two issues, Central Nissan argues that (1) courts may review arbitration awards on common law public policy grounds, and (2) the trial court erred in confirming the arbitration award because it is contrary to Texas's public policy as an at-will employment state.

         A. Standard of Review and Applicable Law

         A trial court's confirmation or vacatur of an arbitration award is reviewed de novo. Forest Oil Corp. v. El Rucio Land & Cattle Co., 446 S.W.3d 58, 75 (Tex. App.-Houston [1st Dist.] 2014), aff'd, 518 S.W.3d 422 (Tex. 2017). Judicial review of arbitration awards is "extraordinarily narrow" because Texas law favors the arbitration of disputes. Id. In reviewing an arbitration award, "courts indulge every reasonable presumption to uphold an award, and none against it." IQ Holdings, Inc. v. Villa D'Este Condo. Owner's Ass'n, Inc, 509 S.W.3d 367, 372 (Tex. App.-Houston [1st Dist.] 2014, no pet.). The review of ...