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Both the satisfaction of conditions precedent to an obligation to arbitrate and unconscionability challenges to an entire contract are arbitrable issues, according to the Texas Court of Appeals.
In In re SSP Partners, No. 13-07-031-CV, 2007 WL 2318131 (Tex. App. Aug. 14, 2007), Torres was hired by SSP as an employee at one of its Circle K convenience stores. Upon being hired, Torres, illiterate in English and Spanish, signed an Election and Arbitration Agreement after having it translated by her daughter.
The agreement provided for employee benefits under the company's Employee Injury Benefit Plan. The agreement also contained an arbitration provision, requiring that the parties arbitrate any and all tort claims, "without regard to whether or not such injury was sustained on the job," after providing notice of the claim and initially submitting to mediation.
Later, Torres was injured while on premises during a shopping errand, outside of working hours. Torres sued SSP for negligence, and SSP responded by filing a motion to compel arbitration. Torres countered that all aspects of the agreement, including the arbitration provision, were unconscionable and unenforceable. The trial court denied SSP's motion after hearing Torres's testimony regarding the agreement's alleged unconscionability. SSP appealed the motion's denial.
On appeal, the Court first found that SSP demonstrated a valid agreement to arbitrate. Torres maintained that the trial court had discretion to deny arbitration because SSP provided no evidence that it had provided notice to Torres of its intent to seek arbitration and no evidence that it sought mediation. Torres alleged these were conditions precedent to any obligation to arbitrate the claims. The Court held that the satisfaction of such conditions precedent was not an "agreement validity" question for the court, but instead was a procedural question for the arbitrator.
The Court then found the claims brought by Torres were clearly within the scope of the arbitration agreement. The Court noted the agreement "expressly provides that it applies 'without regard to whether or not such injury was sustained on the job.'" According to the Court, the agreement contained no ambiguity, and, even if it did, any ambiguity would be resolved in favor of arbitration.
Finally, the Court found that Torres's unconscionability defense to arbitration was improperly decided by the trial court. Citing Prima Paint, the Court noted that Torres repeatedly asserted unconscionability as to the entire agreement, and not just in the arbitration provision. The Court held that Prima Paint required such contractual defenses to be submitted to the arbitrator, and such determinations were outside the scope of the trial court's authority.
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