                                                                             ACCEPTED
                                                                         04-15-00268-CV
                                                             FOURTH COURT OF APPEALS
                                                                  SAN ANTONIO, TEXAS
                                                                    5/28/2015 5:02:59 PM
                                                                          KEITH HOTTLE




NO. 04-15-00268-CV
                                                                                  CLERK




                                                        FILED IN
                                                 4th COURT OF APPEALS
                                                  SAN ANTONIO, TEXAS
                                                 5/28/2015 5:02:59 PM
            IN THE FOURTH COURT OF A         PPEALSKEITH E. HOTTLE

                  SAN ANTONIO, TEXAS
                                                         Clerk




AMATEUR ATHLETIC UNION OF THE UNITED STATES, INC., PAUL
     CAMPBELL, ROD SEAFORD, AND CHARLES OLIVER,
                                                        Appellants
                                v.
                        AUGUSTUS BRAY
                                                          Appellee

      Original Proceeding from the 57th Judicial District Court
 in Bexar County, Texas, The Honorable David A. Canales, Presiding


                      APPELLANTS’ BRIEF

                                 DANNICK VILLASEÑOR-HERNANDEZ
                                 Texas Bar No. 24072713
                                 RUTH G. MALINAS
                                 Texas Bar No. 08399350
                                 Plunkett & Griesenbeck, Inc.
                                 Catholic Life Building, Suite 900
                                 1635 N.E. Loop 410
                                 San Antonio, Texas 78209
                                 (210) 734-7092 (telephone)
                                 (210) 734-0379 (facsimile)
                                 dhernandez@pg-law.com
                                 rmalinas@pg-law.com
                                 ATTORNEYS FOR APPELLANTS

                ORAL ARGUMENT REQUESTED
              IDENTITY OF PARTIES AND COUNSEL


                               APPELLATE AND TRIAL COUNSEL FOR
          APPELLANTS                     APPELLANTS
Amateur Athletic Union, Inc.   Dannick Villaseñor-Hernandez
Paul Campbell                  (Lead Trial and Appellate Counsel)
Rod Seaford                    Ruth G. Malinas (Appellate)
Charles Oliver                 Lewin Plunkett (Trial)
                               Plunkett & Griesenbeck, Inc.
                               Catholic Life Building, Suite 900
                               1635 N.E. Loop 410
                               San Antonio, Texas 78209
                               APPELLATE AND TRIAL COUNSEL FOR
           APPELLEE                       APPELLEE
Augustus Bray                  Jerry Galow
                               Justin Studdard
                               Galow & Smith, P.C.
                               1204 Nueces
                               Austin, Texas 78701




                               i
                                   TABLE OF CONTENTS
                                                                                                     Page
IDENTITY OF PARTIES AND COUNSEL............................................... i
TABLE OF AUTHORITIES .................................................................... iii
STATEMENT REGARDING ORAL ARGUMENT ................................. vi
ISSUES PRESENTED ............................................................................... i
STATEMENT OF FACTS ......................................................................... 1
    I.   The Parties .............................................................................. 1
    II. The Arbitration Agreement .................................................... 1
    III. Underlying Facts ..................................................................... 2
    IV. Procedural History .................................................................. 4
SUMMARY OF ARGUMENTS ................................................................. 4
    I.   Standard of Review ................................................................. 6
    II. Bray’s Claims Are Subject to a Valid Arbitration Agreement.
         ................................................................................................. 6
         A.      Rules Governing Arbitration Agreements Generally.... 6
         B.      The Arbitration Agreement Bray Signed is Valid. ........ 7
         C.      Bray’s Claims Fall Within The Scope of the Arbitration
                 Agreement. ................................................................... 10
    III. Bray Presented No Evidence The Arbitration Agreement
         Was Unconscionable At the Time It Was Made. .................. 12
         A.      Standards Governing Unconscionability ..................... 12
         B.      Procedural Unconscionability ...................................... 13
         C.      Substantive Unconscionability .................................... 15
CONCLUSION AND PRAYER ............................................................... 19
CERTIFICATE OF COMPLIANCE ........................................................ 21
CERTIFICATE OF SERVICE................................................................. 22




                                                     ii
                                  TABLE OF AUTHORITIES

                                                                                                        Page
CASES
Aldridge v. Thrift Financial Marketing, LLC,
  376 S.W.3d 877 (Tex. App. – Fort Worth 2012, no pet.)...................... 12
Alexander v. Anthony Intern., L.P.,
  341 F.3d 256 (3d Cir.2003)................................................................... 13
Cleveland Construction, Inc. v. Levco Construction, Inc.,
  359 S.W.3d 843 (Tex. App. – Houston [1st Dist.] 2012, pet. dism’d) .... 6
Dennis v. College Station Hosp., L.P.,
  169 S.W.3d 282 (Tex. App. – Waco 2005, pet. denied) .......................... 7
Ellis v. Schlimmer,
  337 S.W.3d 860 (Tex. 2011) ................................................................. 12
Glass, Ltd. v. Eye Ten Oaks Invs., Ltd.,
  147 S.W.3d 507 (Tex. App. – San Antonio 2004, no pet.) ...................... 6
Green Tree Fin. Corp.-Ala. v. Randolph,
  531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) ........................... 16
Harris v. Green Tree Fin. Corp.,
  183 F.3d 173 (3d Cir.1999)................................................................... 13
Henry v. Gonzalez,
  18 S.W.3d 684 (Tex. App. – San Antonio 2000, pet. dism’d) ................. 6
In re AdvancePCS Health L.P.,
  172 S.W.3d 603 (Tex.2005) .............................................................. 7, 12
In re D. Wilson Constr. Co.,
  196 S.W.3d 774 (Tex. 2006) ................................................................. 11
In re FirstMerit Bank, N.A.,
  52 S.W.3d 749 (Tex. 2001)(orig. proceeding) ................................. 18, 19
In re H.E. Butt Grocery Co.,
  17 S.W.3d 360 (Tex. App. – Houston [14th Dist.] 2000, orig.
  proceeding) ........................................................................................... 13
In re Kaplan High Educ. Corp.,
  235 S.W.3d 206, 226 Ed. Law Rep. 343, 50 Tex. Sup. Ct. J. 1058 (Tex.
  2007) ................................................................................................... 8, 9
In re McKinney,
  167 S.W.3d 833 (Tex. 2005)(per curiam) ............................................. 14
In re Odyssey Healthcare, Inc.,
  310 S.W.3d 419 (Tex. 2010) ................................................................... 7
In re Olshan Foundation Repair Co., LLC,
  338 S.W.3d 883 (Tex. 2010) ......................................... 12, 13, 15, 16, 18


                                                      iii
In re Palm Harbor Homes, Inc.,
  195, S.W.3d 672, 49 Tex. Sup. Ct. J. 711 (Tex. 2006) ................... 12, 14
In re Polyamerica,
  296 S.W.3d 74 (Tex. 2009) ................................................................... 13
In re Rubiola,
  334 S.W.3D 220 (Tex. 2011) ................................................................. 10
In re Santander Consumer USA, Inc.,
  445 S.W.3d 216 (Tex. App. – Houston [1st Dist.] 2013) ........................ 4
J.M. Davidson, Inc. v. Webster,
  128 S.W.3d 223 (Tex. 2003) ................................................................... 6
Leander Cut Stone Co. v. Brazos Masonry, Inc.,
  987 S.W.2d 638 (Tex. App. – Waco 1999, no pet.) ................................. 6
Meyer v. WMCO-GP, LLC,
  211 S.W.3d 302 (Tex. 2006) ................................................................. 11
Prudential Sees., Inc. v. Marshall,
  909 S.W.2d 896 (Tex. 1995)(orig. proceeding)(per curiam) ................... 7
RULES
TEX. CIV. PRAC. & REM. CODE ANN. §51.016 (West) .................................. 4
Tex. R. App. P. 9.4(i)(1) ........................................................................... 21
Tex. R. App. P.9.4(i)(3) ............................................................................ 21

OTHER AUTHORITIES
RESTATEMENT (SECOND) OF CONTRACTS §208 cmt. b (1981)…..12




                                                  iv
                      STATEMENT OF THE CASE

Nature of the Case:        This interlocutory appeal arises from a
                           defamation suit Plaintiff Augustus Bray
                           (“Bray”) filed against Amateur Athletic
                           Union, Inc. (“AAU”), Paul Campbell
                           (“Campbell”), Rod Seaford (“Seaford”), and
                           Charles      Oliver    (“Oliver”). CR:1-9.
                           Defendants AAU, Campbell, Seaford and
                           Oliver filed a Motion to Compel Arbitration
                           and Abate Proceedings Pending Arbitration.
                           CR:32-86.


Trial Court:               The 57th Judicial District Court, the
                           Honorable David A. Canales, Presiding


Trial Court Disposition:   The trial court denied Appellant’s Motion to
                           Compel Arbitration and Abate Proceedings
                           Pending     Arbitration.    CR:227.     This
                           interlocutory appeal followed.




                                  v
           STATEMENT REGARDING ORAL ARGUMENT

     Appellants believe oral argument is necessary in this case, even

though the interpretation of the arbitration provision in the agreement

is a question of law. Oral argument would assist the Court in

understanding the facts, analyzing the applicable legal issues in the

context of those facts and ultimately deciding the case.




                                    vi
                        ISSUES PRESENTED

     Did the trial court err in denying Appellants’ Motion to Compel

Arbitration   and   Abate   Proceedings   Pending   Arbitration   where

Appellants met their burden of establishing the existence of a valid

agreement to arbitrate the claims made the basis of this lawsuit and

Plaintiff presented no evidence of a defense to the enforcement of the

agreement?




                                   i
                         STATEMENT OF FACTS
 I.   The Parties

        The Amateur Athletic Union of the United States, Inc. (“AAU”) is

  a non-profit volunteer sports organization. CR:3. Bray has been a

  thirty-year volunteer for the AAU (CR:3), including serving as the

  Governor of the South Texas District since being elected in 2005. CR:82.

  At the time of the alleged incident giving rise to this suit, Campbell was

  the Junior Olympic Event Director and Oliver was the Meet Director for

  the AAU. CR:3. Rod Seaford was the Chair of the AAU National Board

  of Review. CR:3.

II.   The Arbitration Agreement

        When applying for AAU membership (or submitting a yearly

  renewal application), the applicant/member agrees to be bound by the

  AAU Code, including its National Policies. CR:41. The AAU’s National

  Policies include a binding arbitration provision, which states the

  applicant/member and the AAU agree to submit all civil disputes to

  binding arbitration in the county of the AAU National Office (Orange

  County, Florida) unless otherwise so set by the American Arbitration

  Association (“AAA”). CR:41. The arbitration provision is conspicuously

  located on the first page of the AAU’s National Policies and is in bold


                                      1
   capital letters and underlined.        CR: 41. The AAU’s individual

   membership application includes the following language: “[t]he

   Applicant agrees to be bound by the AAU Code, including all AAU

   Policies, which are available for review on the AAU website at:

   aausports.org.” CR:44.

III.   Underlying Facts

         The underlying lawsuit arose out of an alleged incident that

   occurred at an AAU-sponsored track meet in Houston, Texas in August

   2012. CR:2. Bray, Campbell and Oliver were in attendance in the course

   and scope of their respective AAU roles. CR:2. Bray had been assigned

   to the Jury of Appeals, which was tasked with making final decisions on

   any protests at the track meet. CR:3. While sitting in the press box, an

   unidentified woman allegedly bumped into Bray, and he made contact

   with the woman’s body. CR:3. Bray claims Oliver told the woman to

   contact the police department and file a charge. CR:3.       Bray was

   arrested and escorted by police officers from the track meet. CR:4. Bray

   also claims Campbell made a statement in front of approximately ten

   people that Bray was being charged with sexual assault and would no

   longer be affiliated with the AAU. CR:3-4. Bray alleges Campbell and




                                      2
Oliver coerced Marv Allen, another member in the press box at the time

of the incident, to make false statements against Bray, which Mr. Allen

later recanted. CR:4. Bray was charged with the criminal offense of

“assault by contact,” but the charge was later dismissed. CR:4.

     Bray submitted written complaints against Campbell and Oliver

to the AAU National Board of Review (“Board”) based on this incident.

CR:4. Bray claims the Board, chaired by Seaford, failed to exercise its

powers and investigate his claims and ultimately dismissed his

complaint. The National Board of Review handles complaints alleging

violations of the AAU Code or AAU sport operating rule. CR:64. The

Board of Review may review any decision, action, or omission by a

member or other entity (other than Congress) which is a part of the

AAU or any of its activities. CR:69. It may exercise original jurisdiction

in any matter including the actions or omissions of a District member.

CR:69.

     Bray appealed the Board’s dismissal to the AAU National Board of

Appeals. CR:4. On July 24, 2013, the Board of Appeals sustained the

decision of the National Board of Review. CR:4.




                                    3
IV.   Procedural History

        On July 10, 2014, Bray filed the underlying lawsuit against the

  AAU, Campbell, Oliver, and Seaford. Bray sought damages under the

  following theories: negligence, intentional infliction of emotional

  distress, defamation, aiding and abetting, and conspiracy. CR:5-7.

        Appellants filed a Motion to Compel Arbitration and Abate Proceedings

  Pending Arbitration, which the trial court denied.       Appellants file this

  interlocutory appeal of the trial court’s order denying their Motion to Compel

  Arbitration and Abate the Proceedings Pending Arbitration. The Civil

  Practices and Remedies Code authorizes an interlocutory appeal of a trial

  court’s denial of a motion to compel arbitration under the FAA in suits filed

  after September 1, 2009. TEX. CIV. PRAC. & REM. CODE ANN. §51.016 (West);

  In re Santander Consumer USA, Inc., 445 S.W.3d 216, 218 (Tex. App. –

  Houston [1st Dist.] 2013).


                        SUMMARY OF ARGUMENTS

        Appellants established that the arbitration agreement contained

  in the AAU’s National Policies is a valid agreement. Given Bray’s long-

  time involvement with the AAU, including the last ten (10) years as an

  officer, he cannot claim he was not aware of the arbitration agreement.

  The mutual promise to arbitrate between Bray and AAU was sufficient



                                        4
consideration. Even though Campbell, Oliver and Seaford were

nonsignatories to the arbitration agreement, Bray is still bound by the

arbitration provision with all Appellants. The arbitration provision

requires parties to submit all civil disputes to arbitration, and as such,

Bray’s claims fall within the scope of the arbitration agreement.

     Once Appellants established Bray’s claims fell within the scope of

a valid arbitration agreement, the burden shifted to Bray to prove his

unconscionability defense; however, he provided no evidence to support

it. Bray failed to bring forth any evidence of his financial situation or a

comparison of the total costs associated with arbitration and litigation

to demonstrate the alleged excessive costs.        Without such evidence,

Bray’s assertion of unconscionability fails.

                   ARGUMENT AND AUTHORITIES

     The trial court abused its discretion in denying Appellants’ Motion

to Compel Arbitration and Abate Proceedings Pending Arbitration,

because pursuant to Texas law, Appellants established the existence of

a valid arbitration agreement encompassing all claims alleged in this

lawsuit,   and   Appellee   did   not    present   any   evidence   on   his

unconscionability defense to such agreement.



                                     5
 I.   Standard of Review

      Texas appellate courts review interlocutory orders denying a

motion to compel arbitration for abuse of discretion. Cleveland

Construction, Inc. v. Levco Construction, Inc., 359 S.W.3d 843, 851

(Tex. App. – Houston [1st Dist.] 2012, pet. dism’d). Under the abuse-of-

discretion standard, this Court gives deference to the trial court’s

factual determinations but reviews its legal conclusions de novo. Id.

Whether a valid arbitration agreement exists is a question of law that is

reviewed de novo. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227-

228 (Tex. 2003). Whether the agreement encompasses the claims raised

in a given lawsuit is also a question of law and is reviewed de novo.

Henry v. Gonzalez, 18 S.W.3d 684, 691 (Tex. App. – San Antonio 2000,

pet. dism’d); see also Leander Cut Stone Co. v. Brazos Masonry, Inc.,

987 S.W.2d 638, 640 (Tex. App. – Waco 1999, no pet.).

II.   Bray’s Claims Are Subject to a Valid Arbitration Agreement.
      A.   Rules Governing Arbitration Agreements Generally

      Texas and federal law favors arbitration agreements. Glass, Ltd.

v. Eye Ten Oaks Invs., Ltd., 147 S.W.3d 507, 512 (Tex. App. – San

Antonio 2004, no pet.). Thus, courts must resolve any doubts about the

scope of an arbitration agreement in favor of arbitration. Dennis v.



                                   6
College Station Hosp., L.P., 169 S.W.3d 282, 284 (Tex. App. – Waco

2005, pet. denied); In re Bank One, N.A., 216 S.W.3d 825, 826 (Tex.

2007). The policy favoring arbitration is so compelling that a court

should enforce an arbitration clause unless it can be said with positive

assurance that the clause is not susceptible to an interpretation

covering the dispute at issue. Prudential Sees., Inc. v. Marshall, 909

S.W.2d 896, 899 (Tex. 1995)(orig. proceeding)(per curiam).

     B.    The Arbitration Agreement Bray Signed is Valid.

     Appellants must show Bray’s claim were subject to a valid

arbitration agreement. In re Odyssey Healthcare, Inc., 310 S.W.3d 419,

422 (Tex. 2010). When determining whether an arbitration agreement

subject to the FAA is valid, courts apply state contract law. In re Palm

Harbor Homes, Inc., 195, S.W.3d 672, 678, 49 Tex. Sup. Ct. J. 711 (Tex.

2006). There must be consideration to support the arbitration

agreement. Id. The consideration can be the bilateral promise to

arbitrate or the remainder of the contract. Id. (citing In re AdvancePCS

Health L.P., 172 S.W.3d 603, 607 (Tex. 2005)).

     The arbitration agreement contained in the AAU National Policies

binds both the member/applicant and AAU to submit all civil disputes




                                   7
to arbitration. CR:41. In addition, the arbitration agreement is only one

section of the AAU Codebook, which every member agreed to be bound

by when applying for membership. CR:41.

     Bray argues that there was no binding arbitration agreement

between Bray and the individual defendants because they (Campbell,

Oliver and Seaford) did not sign the arbitration agreement. CR:89.

Bray’s petition, however, alleges Campbell and Oliver were acting in

the course and scope of employment by AAU and in furtherance of

AAU’s business. Bray seeks to hold AAU liable under the theory of

respondeat superior. CR:5.

     In Kaplan, a DTPA and negligence suit, students sued a college,

its corporate parent, the college president, and the college admissions

director. In re Kaplan High Educ. Corp., 235 S.W.3d 206, 208 (Tex.

2007). The students had signed an enrollment agreement including an

arbitration provision to which the college and the college president were

signatories. See id. When the defendants sought to compel arbitration,

the students dropped their claims against the non-signatory admissions

director and corporate parent in an attempt to avoid arbitration. The

trial court denied the motion to compel arbitration.



                                    8
     The Texas Supreme Court granted the non-signatory defendants’

petition for writ of mandamus. See id. at 210. The Court held that the

non-signatory defendants could invoke the arbitration clause because

they were acting as agents of the college with respect to the conduct at

issue in the lawsuit. Moreover, the college would be responsible for the

alleged misconduct of the non-signatory defendants. See id. at 209-210;

see also In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 763 (Tex. 2006)

(holding that non-signatory officers, agents, and affiliates of corporation

with whom plaintiff agreed to arbitrate can invoke arbitration

agreement).

     The above rule is sound and applies in this case. The Appellants’

alleged actions occurred during an AAU-sponsored event. Bray alleges

that Appellants were acting in the “scope of their employment and in

furtherance of AAU’s business” with respect to the acts of which Bray

complains.    And, Bray seeks to hold AAU vicariously liable for the

individual defendants’ conduct. Under the circumstances the individual

defendants are entitled to seek arbitration.




                                    9
     C.    Bray’s Claims Fall Within The Scope of the Arbitration
           Agreement.

     To determine whether the claim falls within the scope of the

arbitration agreement, this Court must examine the terms of the

agreement and the factual allegations of the plaintiff’s claim. See In re

Rubiola, 334 S.W.3D 220, 224 (Tex. 2011). The arbitration agreement

located on the first page of the AAU National Policies states:

     BY APPLYING FOR AAU MEMBERSHIP (OR HAVING A
     THIRD   PARTY    SUBMIT    AN   APPLICATION   FOR
     MEMBERSHIP IN THE AAU ON BEHALF OF THE
     APPLICANT), OR UPON ENTERING ANY AAU EVENT, THE
     APPLICANT/MEMBER/ENTRANT AND THE AAU AGREE TO
     SUBMIT ALL CIVIL DISPUTES TO BINDING ARBITRATION.
     THE ARBITRATION HEARING SHALL BE HELD IN THE
     COUNTY OF THE LOCALE OF THE AAU NATIONAL OFFICE
     UNLESS OTHERWISE SO SET BY THE AMERICAN
     ARBITRATION ASSOCIATION (“AAA”). THE PARTIES
     FURTHER AGREE TO SUBMIT THE MATTER TO ONE (1)
     ARBITRATOR PURSUANT TO THE RULES SET OUT BY THE
     AAA, INCLUDING THE FEDERAL ARBITRATION ACT AND
     TO THE ARBITRATION CODE OF THE NATIONAL OFFICE’S
     RESIDENT STATE, WHICH IS CURRENTLY FLORIDA. […]

CR:41 (emphasis in original).

     Based on the terms of the arbitration provision, its applicability to

Bray’s claims is clear. Bray’s Original Petition relies on the AAU Code

and National Policies in establishing his complaints. CR:4-5. In



                                   10
addition, Bray alleges Oliver has allowed members to circumvent the

intent and historical application of the AAU Athletics Handbook as well

as the AAU Code. CR: 4. By seeking to invoke the AAU Codebook,

which contains the arbitration agreement, when bringing his claims

against   Appellants,   Bray   is   equitably   estopped   from   refusing

arbitration. Meyer v. WMCO-GP, LLC, 211 S.W.3d 302, 305 (Tex. 2006).

     Further, under a broad arbitration clause, arbitration can be

compelled even though the particular dispute is not specifically covered.

In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006). The

arbitration provision at issue in this case clearly encompasses Bray’s

claims, which relate to the alleged actions and/or omissions under the

AAU Code and National Policies, which applies to all members of the

AAU. CR:41. Seaford’s only involvement in this case was his position as

the Chair of the AAU National Board of Review who reviewed Bray’s

complaint and issued an opinion in accordance with the AAU Codebook

and National Policies. CR:4.




                                    11
III.   Bray Presented No Evidence The Arbitration Agreement Was
       Unconscionable At the Time It Was Made.
       A.   Standards Governing Unconscionability

       There is nothing inherently unconscionable about arbitration

agreements. In re Palm Harbor Homes, Inc., 195, S.W.3d 672, 678, 49

Tex. Sup. Ct. J. 711 (Tex. 2006)(quoting In re AdvancePCS Health L.P.,

172 S.W.3d 603, 608 (Tex.2005)). This Court must be “wary of setting

the bar for holding arbitration clauses unconscionable too low.” In re

Olshan Foundation Repair Co., LLC, 338 S.W.3d 883, 893 (Tex. 2010).

The theory is that “courts should not enforce a transaction so one-sided,

with so gross a disparity in the values exchanged, that no rational

contracting party would have entered the contract. Id. (citing

RESTATEMENT (SECOND) OF CONTRACTS §208 cmt. b (1981)).

Once the party seeking arbitration has established the existence of a

valid arbitration agreement, the party opposing arbitration has the

burden to bring forward legally sufficient evidence of a defense. Ellis v.

Schlimmer, 337 S.W.3d 860, 861-862 (Tex. 2011); Aldridge v. Thrift

Financial Marketing, LLC, 376 S.W.3d 877, 882 (Tex. App. – Fort

Worth 2012, no pet.). The party opposing arbitration has the burden to

show the costs of arbitration render it unconscionable. In re Olshan



                                   12
Foundation Repair Co., LLC, 338 S.W.3d 883, 893 (Tex. 2010). If the

opposing party does not provide evidence, the trial court must compel

arbitration and stay its own proceedings. In re H.E. Butt Grocery Co.,

17 S.W.3d 360, 367 (Tex. App. – Houston [14th Dist.] 2000, orig.

proceeding).

     B.    Procedural Unconscionability

     Procedural unconscionability “pertains to the process by which an

agreement is reached and the form of an agreement, including the use

therein of fine print and convoluted or unclear language.” Alexander v.

Anthony Intern., L.P., 341 F.3d 256, 265 (3d Cir.2003)(quoting Harris v.

Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir.1999)). In his response

to the Motion to Compel Arbitration, Bray argued the arbitration

agreement was procedurally unconscionable because he had not signed

and agreed to the arbitration agreement. CR:91. However, the FAA

does not require that an agreement to arbitrate be signed by the

parties. In re Polyamerica, 296 S.W.3d 74, 76 (Tex. 2009). Since

Plaintiff did not allege fraud, misrepresentation or deceit at the time

the agreement was entered into, he is bound by the agreement




                                  13
regardless of whether he read it. See In re McKinney, 167 S.W.3d 833,

835 (Tex. 2005)(per curiam).

     During his thirty years of dedicated and decorated service to the

AAU (CR:5), including serving Governor of the South Texas District,

Bray was aware of the AAU Code and National Policies, including the

arbitration provision. CR:3. Even though he did not sign the arbitration

provision, he repeatedly signed documents in his official capacity as

Governor of the South Texas District containing a stipulation that he

would “abide by and be bound by the AAU Codebook,” which contained

the binding arbitration provision. CR:81-86.

     Nor can there be any complaint in this case about the

conspicuousness of    the   arbitration   provision.   The   arbitration

agreement is on the first page of the AAU’s National Policies in capital

letters, bold and underlined font. CR:41. Its conspicuousness and his

acknowledgement via signature on numerous occasions negates Bray’s

procedural unconscionability argument. See In re Palm Harbor Homes,

Inc., 195 S.W.3d 672, 679 (Tex. 2006).




                                   14
     C.    Substantive Unconscionability

     Substantive unconscionability refers to the “fairness of the

arbitration provision itself.” In re Olshan Foundation at 894.      Bray

complains the arbitration provision is substantively unconscionable

because the excessive arbitration costs prevent him from asserting his

rights in an arbitration. CR:91. Bray’s counsel attached a travel price

quote for airfare, hotel, and rental car expenses to Florida. CR:165-168.

Bray’s affidavit included a conclusory statement that traveling to

Florida to arbitrate his claims would be an additional financial burden.

No evidence supporting that contention, however, was provided.

CR:111.   Even when combined, the travel price quote and Bray’s

affidavit are not sufficient evidence for the Court to determine that the

costs to arbitrate make the arbitration provision unconscionable.

     At the hearing on February 5, 2015, Bray’s counsel argued that

the cost of going to arbitration would exceed his likely recovery. RR:12.

Bray’s response claimed he was unable to pay for the arbitration fees

and costs; the actual amount of the fees compared to the amount of the

underlying claim was excessive; and that the expected cost differential

between arbitration and litigation is so substantial that Plaintiff is




                                   15
deterred from asserting his rights in the arbitration proceeding. CR:91.

It was Bray’s burden to present evidence of the excessive costs he would

incur if required to arbitrate his claims. See In re Olshan Foundation

Repair at 893. Evidence of a “risk” of possible costs of arbitration is not

evidence that the cost of the arbitration forum is prohibitive or

excessive. Id. at 895 (quoting Green Tree Fin. Corp.-Ala. v. Randolph,

531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000)). To meet his

burden of proof, Bray had to show he would likely be charged excessive

arbitration fees. Id. Bray’s response, filed the evening before the

hearing held on February 5, 2015 included no evidence to support the

unconscionability defense. CR:88-102.

     At the hearing, Judge Canales expressed concern that the

arbitration agreement was silent as to who would bear the costs of

arbitration and requested additional briefing by both parties on that

issue. RR:16-17. However, an arbitration agreement’s mere silence with

respect to costs and fees by itself, is a “plainly insufficient” basis for

invalidating the agreement. Green Tree Fin. Corp. – Ala. v. Randolph,

531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).




                                    16
     Plaintiff’s Brief in Support of Plaintiff’s Response to Defendants’

Motion to Compel Arbitration, submitted after the hearing, included

Bray’s affidavit in which he claimed it would be a financial burden to

pay the arbitration fees and travel to Florida to arbitrate his claims.

CR:111. Bray also stated he has a contingency fee agreement with

Galow & Smith, which means he is not obligated to pay for litigation

expenses unless a recovery is made on his behalf. CR:111.          Bray’s

affidavit, however, contained no specific facts about his financial

situation, which the trial court needed to determine if the arbitration

costs were unconscionable. A mere claim that it would be a “serious

financial burden” is wholly insufficient. Bray’s counsel also provided an

e-mail from AAA Customer Service which references the fee schedule

contained in the AAA Commercial Rules and a general statement that

arbitrators charge between $200.00 and $500.00 per hour. CR:163. The

e-mail did not address the amount of time an arbitrator would likely

spend on this case either. Bray’s counsel included an estimate of forty

(40) service hours; however, no evidence or expert testimony was

attached to support that claim. Even if the Court considered this e-mail

as evidence of the likely arbitration charges Bray will incur, he provided



                                   17
no comparison of these charges to the expected cost of litigation, the

amount of his claim, or his ability to pay these costs. In re Olshan at

897. A party’s unsupported statement that paying arbitration fees

would be a serious financial burden is not evidence that the arbitration

agreement is unconscionable.

     In In re FirstMerit Bank, the affidavits included a statement that

the AAA charged a minimum $2,000 filing fee and a $250/day/party

hearing fee, along with several other unspecified fees. In re FirstMerit

Bank, N.A., 52 S.W.3d 749, 756-757 (Tex. 2001)(orig. proceeding). There

was no evidence, however, that the AAA would actually conduct the

arbitration or charge the specified fees. Id. at 757. Further, as the Court

noted, the AAA commercial arbitration rules provide that “the AAA

may, in the event of extreme hardship on the part of any party, defer or

reduce the administrative fees.” Id.; CR:139. Thus, there was no basis

upon which to determine whether the cost of arbitration was excessive.

     A comparison of the total costs of the two forums is the most

important factor in determining whether the arbitral forum is an

adequate and accessible substitute for litigation. Id. at 894-895. If the

total cost of arbitration is comparable to the total cost of litigation, the



                                    18
arbitral forum is equally accessible. Id. at 894. “Total cost” refers to the

total cost of pursuing a claim in either forum, notwithstanding who will

be financing the claim. Id. (footnote 5). There is no reason why Bray’s

attorneys could not treat the arbitration costs like any other litigation

expenses under the contingency fee agreement.

     Bray’s lack of evidence to support his unconscionability defense

precluded the trial court from finding the arbitration agreement

unconscionable. Bray’s affidavit and evidence attached to his trial brief

(filed after the hearing) was conclusory and wholly insufficient to

support a finding of excessive arbitration costs. As a result, the trial

court erred in denying Defendants’ Motion to Compel Arbitration and

Abate Proceedings Pending Arbitration.


                     CONCLUSION AND PRAYER

     For the foregoing reasons, Appellants respectfully request that

this Court reverse or vacate the trial court’s April 14, 2015 Order

Denying Defendants’ Motion to Compel Arbitration and Abate

Proceedings Pending Arbitration and order the trial Court to abate the

proceedings so that the Parties may proceed with arbitration in Orange




                                    19
County, Florida. Appellants pray for such other and further relief as

they may be entitled.




                                 20
                  CERTIFICATE OF COMPLIANCE

     Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), the

undersigned certifies this Appellants’ Brief complies with the type-

volume limitations of Texas Rule of Appellate Procedure 9.4(i)(2)(B).

The undersigned prepared the Appellants’ Brief using Microsoft Word

2013 and is relying on that software’s word-count function.

     Exclusive of the exempted portions listed in Texas Rule of

Appellate Procedure 9.4(i)(2)(B), the brief contains 3,609 words.

                                     /s/ Dannick Villaseñor-Hernandez
                                     DANNICK VILLASEÑOR-HERNANDEZ

                                    Respectfully submitted,

                                    LEWIN PLUNKETT
                                    Texas Bar No. 16079000
                                    DANNICK VILLASEÑOR-HERNANDEZ
                                    Texas Bar No. 24072713
                                    Plunkett & Griesenbeck, Inc.
                                    Catholic Life Building, Suite 900
                                    1635 N.E. Loop 410
                                    San Antonio, Texas 78209
                                    (210) 734-7092 (telephone)
                                    (210) 734-0379 (facsimile)
                                    lplunkett@pg-law.com
                                    dhernandez@pg-law.com

                                    /s/ Dannick Villaseñor-Hernandez
                                    DANNICK VILLASEÑOR-HERNANDEZ

                                    COUNSEL FOR APPELLANTS




                                   21
                    CERTIFICATE OF SERVICE

      This will certify that a true and correct copy of the foregoing
Appellants’ Brief has been forwarded this 28th day of May, 2015, to the
following attorneys of record via the method stated:

     Jerry Galow                                 Via E-Mail
     Justin Studdard                             Via E-Mail
     Galow & Smith, P.C.
     1204 Nueces
     Austin, Texas 78701

                             /s/ Dannick Villaseñor-Hernandez
                             DANNICK VILLASEÑOR-HERNANDEZ




                                  22
APPENDIX
227
228
41
42
§ 51.016. Appeal Arising Under Federal Arbitration Act, TX CIV PRAC & REM § 51.016




  Vernon's Texas Statutes and Codes Annotated
    Civil Practice and Remedies Code (Refs & Annos)
      Title 2. Trial, Judgment, and Appeal
         Subtitle D. Appeals
           Chapter 51. Appeals
              Subchapter B. Appeals from County or District Court (Refs & Annos)

                                    V.T.C.A., Civil Practice & Remedies Code § 51.016

                                 § 51.016. Appeal Arising Under Federal Arbitration Act

                                                Effective: September 1, 2009
                                                         Currentness


In a matter subject to the Federal Arbitration Act (9 U.S.C. Section 1 et seq.), a person may take an appeal or writ of error to
the court of appeals from the judgment or interlocutory order of a district court, county court at law, or county court under the
same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16.


Credits
Added by Acts 2009, 81st Leg., ch. 820, § 1, eff. Sept. 1, 2009.



Notes of Decisions (28)

V. T. C. A., Civil Practice & Remedies Code § 51.016, TX CIV PRAC & REM § 51.016
Current through the end of the 2013 Third Called Session of the 83rd Legislature

End of Document                                                    © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  1
