ConocoPhillips Company v. Tonia Graham and Mindy Dicus

Opinion issued March 29, 2012.

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-11-00503-CV

———————————

ConocoPhillips Company , Appellant

V.

Tonia Graham

and Mindy Dicus ,

Appellee

On Appeal from the 157th District Court

Harris County, Texas

Trial Court Case No. 1060385

MEMORANDUM OPINION

This

is an interlocutory appeal from the trial court’s order denying ConocoPhillips

Company’s motion to compel arbitration. In its sole issue, ConocoPhillips

contends that it is a third-party beneficiary entitled to enforce arbitration

agreements between its contractor and the contractor’s employees in this suit

brought by the employees against it for injuries allegedly sustained while

providing services at its refinery. We hold that ConocoPhillips is a third-party

beneficiary entitled to enforce the arbitration agreements and that the

employees’ claims fall within the agreements’ scope. We therefore reverse the

trial court’s order and remand to the trial court with instruction to compel

arbitration of Graham and Dicus’s claims against ConocoPhillips.

Background

ConocoPhillips

operates a petroleum refinery in Borger, Texas. It hired J.V. Industrial

Companies, Ltd. (JVIC) to perform fabrication work at the refinery. The

relationship between ConocoPhillips and JVIC is governed by a master services

agreement. Under the agreement, ConocoPhillips and JVIC agree to indemnify each

other for certain claims. Among them, JVIC agrees to indemnify ConocoPhillips

for claims filed against it by JVIC employees, up to a maximum of $10 million

per occurrence. This agreement also contains an arbitration agreement covering

certain claims between ConocoPhillips and JVIC. It further assigns JVIC sole

responsibility for the “work safety” of its employees, requiring that JVIC

perform routine safety inspections and adopt and train its employees in safety

procedures.

JVIC also has arbitration

agreements with its employees, including Tonia Graham and Mindy Dicus.Graham

and Dicus each signed an “Arbitration Agreement/Policy,” in which they agreed

to arbitrate certain claims “[a]s a condition for reviewing your application

for employment and/or as a condition of employment with [JVIC] . . . .” In

these agreements, JVIC and Graham or Dicus agreed to “submit any claim covered

by [the] agreement to binding arbitration” and that such arbitration will be

“the sole and exclusive remedy for resolving” such claims or disputes. The

agreement covers:

all claims and/or disputes between

and among all Applicants/ Employees and JVIC, and all disputes between and

among Applicants/Employees and JVIC’s subcontractors, contractors, clients,

vendors, facility owners where Applicant/Employee performs services for JVIC,

and each of their subsidiaries, affiliates, parents, employees, agents, and any

other person or entity who has signed this or a similar agreement or otherwise

agreed to use arbitration to settle claims or disputes that may arise,

including, by way of example, disputes arising from or concerning: . . .

(5)

Any other claim for personal, emotional,

physical, or economic injury.

The only disputes which are not included within this

mutual agreement to arbitrate are:

(1) Claims by Applicant/Employee

for workers’ compensation or unemployment compensation benefits . . .

(2) Claims against

Applicant/Employee for injunctive relief . . . .

(emphasis in original).

Graham and Dicus were working for

JVIC at ConocoPhillips’s Borger facility when a steam header ruptured, causing

ConocoPhillips to evacuate the refinery. Graham and Dicusassert that they were injured

during the evacuation. When Graham and Dicus sued ConocoPhillips, JVIC assumed

ConocoPhillips’s defense and agreed to indemnify ConocoPhillips pursuant to the

master service agreement. ConocoPhillips then moved to compel arbitration of

Graham and Dicus’s claims against it on the ground that it is a third-party

beneficiary to their arbitration agreements with JVIC. Graham and Dicus

contested ConocoPhillips’s right to enforce their arbitration agreements with

JVIC. The trial court denied the motion to compel arbitration, which

ConocoPhillips appeals.

Standard of Review and Burdens of Proof

The

arbitration agreements signed by Graham and Dicus expressly invoke the Federal

Arbitration Agreement. [1] See In

re Rubiola , 334 S.W.3d 220, 223

(Tex. 2011)(orig. proceeding) (stating that parties may expressly agree to

arbitrate under FAA); In re Kellogg Brown & Root , 80 S.W.3d 611, 617

(Tex. App.—Houston [1st Dist.] 2002, orig. proceeding) (holding that when

parties expressly agree to arbitrate under FAA, they are not required to

demonstrate transaction involving or affecting interstate commerce). Under the

FAA, a party may apply for an order compelling arbitration of claims governed

by a valid arbitration agreement. Id. ;

9 U.S.C. § 4 (West 2008). An order denying such a motion to compel arbitration

is reviewable by interlocutory appeal. Tex.

Civ. Prac. & Rem. Code Ann. § 51.016 (West Supp. 2011); 9 U.S.C. §

16 (a)(1)(B); see In re Merrill Lynch

& Co., Inc. , 315 S.W.3d 888 , 891 n.3 (Tex. 2010) (orig. proceeding).

A party seeking to compel arbitration under the FAA must

establish (1) the existence of a valid, enforceable arbitration agreement and

(2) that the claims at issue fall within that agreement’s scope. In re

Kellogg Brown & Root, Inc. ,

166 S.W.3d 732, 737 (Tex.2005) (orig. proceeding); In re Provine , 312

S.W.3d 824, 828 (Tex. App.—Houston [1st Dist.] 2009)(orig. proceeding).If the

movant establishes that an arbitration agreement governs the dispute, the

burden shifts to the party opposing arbitration to establish a defense to the

arbitration agreement. In re Provine ,

312 S.W.3d at 829 (citing In re Oakwood Mobile Homes, Inc. , 987 S.W.2d 571, 573 (Tex.1999)

(orig. proceeding)). Once the arbitration movant establishes a valid

arbitration agreement that encompasses the claims at issue, a trial court has

no discretion to deny the motion to compel arbitration unless the opposing partyproves

a defense to arbitration. Id. (quoting

In re FirstMerit Bank, N.A. , 52 S.W.3d 749 , 753–54 (Tex. 2001) (orig.

proceeding) ). Because state and

federal policies favor arbitration, courts must resolve any doubts about an

arbitration agreement’s scope in favor of arbitration. In re FirstMerit Bank,

N.A. , 52 S.W.3d at 753 .

Generally, we review a trial court’s decision to grant or

deny a motion to compel arbitration under an abuse of discretion standard. Okorafor

v. Uncle Sam & Assocs., Inc. , 295 S.W.3d 27, 38 (Tex. App.—Houston [1st

Dist.] 2009, pet. denied). Under this standard, we defer to a trial court’s

factual determinations if they are supported by evidence, but we review a trial

court’s legal determinations de novo. In

re Labatt Food Serv., L.P. , 279 S.W.3d 640, 643 (Tex. 2009) (orig.

proceeding); see also In re D. Wilson Constr. Co. , 196 S.W.3d 774, 780 (Tex. 2006)

(orig. proceeding). Whether a valid arbitration agreement exists and whether

the arbitration agreement is ambiguous are questions of law that we review de

novo. In re D. Wilson Constr. , 196

S.W.3d at 781 . The primary issue here is whether ConocoPhillips, which is not a

party to Graham and Discus’s arbitration agreements, may enforce those

agreements against them. Whether a non-signatory can compel arbitration

pursuant to an arbitration agreement is an issue that goes to the existence of

a valid arbitration agreement between parties; we will therefore review that

determination de novo. See In re Rubiola , 334 S.W.3d at 224 ;

In re Weekley Homes, L.P. , 180 S.W.3d

127, 130 (Tex. 2005)(orig. proceeding).

Valid, Enforceable Arbitration

Agreements

Under the FAA, state contract law governs issues of

validity, revocability, and enforceability of an arbitration agreement. Arthur Andersen L.L.P. v. Carlisle , 556

U.S. 624 , 129 S. Ct. 1896, 1902 (2009); see

also In re Rubiola , 334 S.W.3d at 224 . Thus, ConocoPhillips is entitled to

enforce Graham’s and Dicus’s arbitration agreements as a third-party

beneficiary if it qualifies as such under Texas contract law. See Arthur Andersen , 129 S. Ct. at 1902 .

Texas courts of appeals have issued several recent opinions applying the third-party

beneficiary analysis in the context of enforcement of an arbitration agreement.

We begin this analysis by reviewing these cases, which shed light on the

outcome here.

A. Pertinent

case law

Graham and Dicus rely heavily on this Court’s rejection of

an attempt to enforce an arbitration clause by a purported third-party

beneficiary in In re Bayer

Materialscience, L.L.C. , 265 S.W.3d 452 , 454–56 (Tex. App.—Houston [1st

Dist.] 2007) (orig. proceeding). Bayer

is factually similar to this case in many ways. Like this case, employees of an

independent contractor, Brock, sued a plant owner, Bayer, to recover for

injuries sustained at the plant. Id.

at 454 . Also like this case, there was an arbitration agreement between the

plaintiffs-employees and their employer, Brock. Bayer moved to compel

arbitration, contending that it was a third-party beneficiary to the employees’

arbitration agreements. Id. The

arbitration agreements contained language similar, but not identical, to that

at issue here. They required the employees to arbitrate:

each, every, any and all claims, disputes or controversies

between or among [the employee and employer], and also between or among all

other persons named, described, referred to and/or stated anywhere in this

agreement. Those claims, disputes and controversies shall include, but are not

limited to, . . . all claims, disputes and controversies with or against [the

employer’s] customers, clients and/or any other person(s) under contract with

[the employer], including . . . the owner(s) of any and all property upon which

and/or with which [the employee] may or has performed any work or services for

or on behalf of any person.

Id.

It was undisputed that Bayer was a “customer” of Brock and

was also the owner of the property where the accident occurred. Id. at 456 . But this language, alone,

was not sufficient to “confer upon Bayer a thirdparty contract right of

enforcement” against the employees. Id. Noting

that Bayer had to overcome the legal presumption that a party is presumed to

contract only for its own benefit and that neither Bayer’s duty to the

employees nor the employees’ remedy against Bayer arose out of their contracts

with Brock, we held Bayer was not a third-party beneficiary to the arbitration

agreements. Id. at 457–58.

ConocoPhillips relies heavily on a decision from the

Beaumont Court of Appeals in which the court, a few months after Bayer , faced a similar fact patternbut

reached a different result. In re Citgo

Petro. Corp. , 248 S.W.3d 769 (Tex. App.—Beaumont 2008, orig. proceeding).

Similar to thiscase, an employee of a contractor sued the property owner,

Citgo, forinjuries suffered on the job at a refinery. Id. at 763.The contractor, Pat Tank, and its employee had entered

into an arbitration agreement similar to the one at issue in Bayer and here. Id. The agreement obligated the parties to arbitrate “all claims or

disputes between and among Employee, [the contractor], and [the contractor’s]

customer[s], and clients . . . and any other person or entity that has

signed this or [a] similar agreement or otherwise agreed to use mediation

and/or arbitration to settle any claims or disputes that may arise between

them.” Id. at 773­−74. Like

Bayer, Citgo was a client of the contractor-employer, Pat Tank. Id. at 774.

In holding that Citgo was an intended third-party

beneficiary to Pat Tank’s contract with its employee, the Beaumont court

distinguished Bayer on the basis of

Pat Tank’s indemnity obligation to Citgo. Id.

at 776–777. Unlike in Bayer , the

record in Citgo contained Pat Tank’s

contract with Citgo, which required it to indemnify Citgo for damages,

including arbitrator’s fees, arising out of claims filed by its employees

against Citgo. Id. at 777. The court

observed that Pat Tank’s contractual obligation to indemnify Citgo “suggests

one reason Pat Tank would intend to give Citgo the right to enforce the

arbitration agreement between Pat Tank and [its employee]” because the

employee’s claim “may ultimately, though indirectly, be paid by Pat Tank under

the indemnity contract.” Id. The

court concluded that these circumstances indicated “an intent to give Citgo the

benefit of [the employee’s] promise to arbitrate.” Id.

The Citgo court

held that another party, Stoneburner, was not a third-party beneficiary to Pat

Tank’s arbitration agreement with its employee. Although Stoneburner contended

that it was a “vendor” under the agreement, it produced no other evidence

regarding the parties’ intent to confer a benefit upon it. The court observed,

“The fact that the dispute resolution agreement includes non-signatory vendors

within its sweep does not, without more, demonstrate Stoneburner’s status as an

intended third-party beneficiary.” Id.

(citing Bayer , 265 S.W.3d at

457–58).Thus, like Bayer , the court

found that a generic description of a type of party covered by the employee’s

arbitration agreement with his employer did not, standing alone, conferthird-party

beneficiary status on the party that fell within that description.

ConocoPhillips also relies on a post- Bayer decisionby the Texas Supreme Court

in which it held that a party was entitled to enforce another party’s

arbitration agreement with the claimant as a third-party beneficiary. See In re NEXT Fin. Grp. , 271 S.W.3d

263, 267 (Tex. 2008) (orig. proceeding). In NEXT

Financial , a securities brokerage firm sought to enforce an arbitration

agreement between its employee and the National Association of Securities

Dealers (NASD). Id. at 265 . In his

agreement with the NASD, the employee agreed to “arbitrate any dispute, claim

or controversy that may arise between me and my firm . . . that is required to

be arbitrated under the rules, constitutions, or bylaws of [the NASD.]” Id. Without further discussion, the

Texas Supreme Court held that the brokerage firm was “a clearly intended” third-party

beneficiary of the employee’s agreement with the NASD and could “compel

arbitration in accordance with the terms of that agreement, even though NEXT is

not a signatory to [it].” Id. at 267

(citing In re Prudential Ins. Co. of Am.

Sales Practice Litig. , 133 F.3d 225, 230 (3rd Cir. 1998)) (holding that

employer was intended third-party beneficiary of NASD arbitration agreement); cf. In re Palm Harbor Homes, Inc. , 195

S.W.3d 672, 677 (Tex. 2006) (orig. proceeding) (holding that intended third-party

beneficiary of arbitration agreement could compel arbitration)).

The Third Circuit case cited by the Texas Supreme Court in NEXTFinancial held that the NASD’s

arbitration agreement and rules established certain classes of individuals,

including member brokerage firms, who would benefit from brokers’ arbitration

agreements with the NASD, and that requiring the agreements to specifically

identify all intended third-party beneficiaries, known and unknown, would

frustrate the agreements’ purpose. In re

Prudential Ins. , 133 F.3d at 230 .

B. ConocoPhillips’s

right to compel arbitration

We begin, as we did in Bayer ,

by recognizing that the law favors arbitration once the existence of a valid

arbitration agreement has been established but does not presume the existence

and validity of such an agreement. See 265

S.W.3d at 455–56 (“If [an agreement to arbitrate] exists, then the law favors

enforcing it. But the law favoring arbitration does not go so far as to create

an obligation to arbitrate where none exists.”); see also Ellis v. Schlimmer , 337 S.W.3d 860, 862 (Tex. 2011)

(observing that presumption arises after valid arbitration agreement is

established and applies to issues unrelated to agreement’s validity); In re Poly-Am., L.P. , 262 S.W.3d 337,

348 (Tex. 2008) (rejecting assertion that presumption favoring arbitration

applies to assessment of whether parties entered into enforceable arbitration

agreement). ConocoPhillips must establish that it has a right to enforce Graham’s

and Dicus’s arbitration agreements before it may enjoy the strong presumption

in favor of arbitration. See Ellis ,

337 S.W.3d at 862 .

Under Texas law, an entity that is not a party to a contract

may nevertheless enforce the contract as a third-party beneficiary if it

establishes that (1) the parties to the contract intended to secure a benefit

to it and (2) entered into the contract directly for its benefit. In re Palm Harbor Homes , 195 S.W.3d at

677 . While the contract need not have been executed solely for the benefit of

the third-party, the benefit to the third-party must be more than merely

incidental to the contract. City of

Houston v. Williams , 353 S.W.3d 128, 146 (Tex. 2011). In determining

whether the parties intended to benefit a third-party, courts look to the

entire agreement, giving effect to all of its provisions. Id.

The presumption is that parties contracted only for themselves;

to overcome this presumption, a third-party must make a clear showing that the

parties to the contract intended otherwise. Id. ;

see also Bayer , 265 S.W.3d at 456

(stating that because party is presumed to contract only for its own benefit,

claimant had to overcome legal presumption that it was not third-party

beneficiary). But a clear showing of intent to benefit a third-party does not

require the phrase “third-party beneficiary” or any other magic words. City of Houston , 353 S.W.3d at 146 . Nor must a third-party beneficiary be

expressly identified by name in the agreement. See Energy Serv. Co. of Bowie, Inc. v. Superior Snubbing Servs., Inc. ,

236 S.W.3d 190, 195 (Tex. 2007). A third-party beneficiary may be identified in

the agreement by class or category of persons, all of whom may not be known to

the contracting parties at the time of execution. See In re NEXT Fin.Grp. , 271 S.W.3d at 267 ; see also In re Prudential Ins. , 133 F.3d at 230 .

We hold that ConocoPhillips is a third-party beneficiary to

JVIC’s arbitration agreements with Graham and Dicus for three reasons: (1) this

construction gives meaning to all of the contracts’ arbitration language, which

differs from the contract language in Bayer ;

(2) the presumption that parties contract for their own benefit does not have

its typical impact under the circumstances of this case; and (3) arbitration of

Graham’s and Dicus’s claims against ConocoPhillips is essential, rather than

incidental, to JVIC’s enjoyment of the full benefit of its contractual

arbitration rights.

1. The

contract language

In Bayer , the

contractor’s arbitration agreement with its employee required the employee to

arbitrate certain claims “between or among [the employee and his employer], and

also between or among all other persons named, described, referred to and/or

stated anywhere in this agreement.”265 S.W.3d at 454. JVIC’s contracts with

Graham and Dicus use slightly different language, requiring arbitration of all

claims or disputes “between or among [Graham or Dicus] and JVIC” and all

disputes “between or among [Graham or Dicus] and JVIC’s . . . clients . . .

facility owners where [Graham or Dicus] perform[] services for JVIC . . . .”

Thus, these agreements put claims into two categories: (1) claims between Graham

or Dicus and JVIC, and (2) claims between Graham or Dicus and various

categories of third parties. This is distinguishable from the language in Bayer , which was broad enough to include

claims between employees and third parties and not the employer but did not

separately provide for arbitration of such claims. The second category of

claims indentified in Graham’s and Dicus’s arbitration agreements expressly

mandates arbitration of disputes in which JVIC is not a party; that obligation

to arbitrate such claims has no affect if it cannot be enforced by a third-party.

This language is therefore some indication that JVIC intended for clients like

ConocoPhillips to have the right to enforce the arbitration agreements. See City of Houston , 353 S.W.3d at 146

(requiring courts to give effect to all of arbitration’s provisions in

determining whether parties intended to benefitthird-party).

2. Presumption

against third-party beneficiaries

As the Bayer court

observed, “a party is presumed to contract only for its own benefit[.]”265

S.W.3d at 456; see MCI Telecomm. Corp. v. Tex. Util. Elec. Co. , 995 S.W.2d 647, 652 (Tex. 1999).

For this reason, contract law presumes that parties to a contract did not

intend to confer a benefit on third parties. See MCI Telecomm. , 995 S.W.2d at 652 . But this

presumption has less force when, as here, the contractual rights relate to

dispute resolution of specific claims, as to which a contracting party owes a

duty of indemnification and defense to the third-party claiming the benefit.

JVIC entered into the master service agreement in January 2008. Graham and

Dicus signed JVIC’s “Arbitration Agreement/Policy” in 2009 and 2010,

respectively. In light of its indemnity and defense obligations to

ConocoPhillips, JVIC, by conferring a right to enforce these arbitration

agreements on ConocoPhillips, benefitted itself.

The Citgo court

identified a similar indemnity obligation as the basis for determining that the

contractor in that case intended to endow Citgo with a right to enforce the

contractor’s arbitration agreement with its employee. See 248 S.W.3d at 777 . In Bayer ,

the record established no indemnity relationship between Bayer and its

scaffolding contractor. See 265

S.W.3d at 454 . In this aspect, the case before us is more akin to Citgo than Bayer . [2]

Also, unlike Bayer ,

the master service agreement imposed certain duties on JVIC to protect the

safety of its employees while providing services at ConocoPhillips’s facility.

Thus, JVIC, on the one hand, assumed certain duties to ConocoPhillips regarding

its employees’ work safety and, on the other hand, benefitted itself by

providing for arbitration if one of its employees was injured on the job and

asserted claims against ConocoPhillips that fell within its indemnity

obligation.

3. Intended

v. incidental benefit

In light of the contracts’ express contemplation of an

arbitration obligation in disputes to which JVIC is not a party, and in light

of JVIC’s interest in having such claims arbitrated as an indemnitor, the

benefit conferred on ConocoPhillips—the right to enforce JVIC’s arbitration

agreements when sued by JVIC’s employees—is not merely incidental. Cf. MCI

Telecomm. , 995

S.W.2d at 651 (third-party whose transmission lines were incidentally affected

by performance of fiber optic cable installation contract was not third-party

beneficiary of contract).ConocoPhillips’s right to enforce the arbitration

agreements is necessary to effectuate one of JVIC’s apparent intended purposes

in entering into the agreement: arbitration of not only the employee’s claims

against JVIC but also the employee’s claims against JVIC’s clients, whom JVIC

has, at least in some cases, agreed to indemnify and defend in such matters. See Citgo , 248 S.W.3d at 777 .

For

all of these reasons, we conclude that ConocoPhillips is a third-party

beneficiary under JVIC’s arbitration agreements with Graham and Dicus. [3]

Scope

Having determined that ConocoPhillips is a third-party

beneficiary to JVIC’s arbitration agreements with Graham and Dicus,

ConocoPhillips is now entitled to the strong presumption that Graham and

Dicus’s claims are subject to arbitration. Ellis ,

337 S.W.3d at 862 (observing that “strong presumption favoring arbitration” arises

once party seeking to arbitrate proves existence of valid arbitration

agreement). We resolve any doubts as to whether Graham’s and Dicus’s claims

fall within the scope of the agreement in favor of arbitration. Id. (stating that courts should “resolve

any doubts as to the agreement’s scope”).

The arbitration agreements expressly include any claim for

“personal” or “physical” injury between a JVIC employee and JVIC client. In

their petition, Graham and Dicus assert that they suffered “injuries to their

body and hearing” and “also suffered from stress associated with reliving the

incident.” These are “personal” and “physical” injuries. ConocoPhillips is a

JVIC client. Not only were the arbitration agreements broadly worded, they

explicitly state that the “only disputes which are not included within” their

scope are certain claims relating to workers’ compensation or unemployment

compensation and certain claims for injunctive relief. See Pepe Intern. Dev. Co. v.

Pub Brewing Co. , 915 S.W.2d 925, 930 (Tex. App.—Houston [1st Dist.]

1996, no writ) (stating rule that broadly worded arbitration provisions

evidence parties’ intent to be inclusive, rather than exclusive, of claims

covered under provision). Graham’s and Dicus’s claims are neither for

injunctive relief nor workers’ or unemployment compensation. Thus, Graham’s and

Dicus’s claims fall within the scope of claims covered by the plain language of

the arbitration agreements.

Graham and Dicus assert that their claims in this lawsuit

are outside of the scope of those agreements because: their claims arise out of

ConocoPhillips’s general tort duty and not any rights founded on their

employment relationship with JVIC; when they sustained their injuries, they

were “fleeing from an explosion” rather than performing work; and their claims

are “not the product of any commercial transaction, as is required for

applicability of the FAA.” In support of their position, Graham and Dicus rely

on 9 U.S.C. § 2 and In re NEXT Financial ,

271 S.W.3d at 266–67. Section two of the FAA provides: “A written provision in

any maritime transaction or a contract evidencing a transaction involving

commerce to settle by arbitration a controversy thereafter arising out of such

contract or transaction, or the refusal to perform the whole or any part

thereof . . . shall be valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for revocation of any contract.” 9 U.S.C.

§ 2 . The language Graham and Dicus rely on from NEXT Financial is: “Under the FAA’s plain language, an arbitrable

dispute can arise out of either the

contract containing the arbitration clause or

a transaction evidence by the contract.” 271 S.W.3d at 266 (emphasis added

by appellees).

JVIC’s arbitration agreements with Graham and Dicus are

“contract[s] evidencing a transaction involving commerce.” See 9 U.S.C. § 2 . They state that they are entered into as a

condition of JVIC’s employment of Graham and Dicus. And Graham’s and Dicus’s

claims arise out of their employment with JVIC. Graham and Dicus specifically

pled that they were “working at” ConocoPhillips’s refinery when the steam

header ruptured and that they were there as “invitees.” Their premises

liability claims against ConocoPhillips are, in fact, dependent on their invitee

status. Graham and Dicus have identified no right to be on ConocoPhillips’s

premises except as employees of JVIC performing work there.

In the very paragraph of the NEXT Financial opinion from which Graham and Dicus quote, the Supreme

Court goes on to recognize that it “has held that tort claims and other

extra-contractual claims can arise from a commercial transaction and may be

subject to arbitration agreements made under the FAA.” In re NEXT Fin. , 271 S.W.3d at 267 . Texas courts routinely enforce

employee-employer arbitration agreements under the FAA with respect to claims

based on personal injuries allegedly suffered by an employee while on the job. E.g. , J.B. Hunt Transp., Inc. v.

Hartman , 307 S.W.3d 804 (Tex. App.—San Antonio 2010, no pet.); Nexion

Health at Omaha, Inc. v. Martin , 2010 WL 2690562 , at *8(Tex. App.—Texarkana

July 7, 2010, no pet.) (mem. op.); In re Permian Tank & Mfg., Inc. ,

306 S.W.3d 338, 341 (Tex. App.—Eastland 2010, orig. proceeding). We see no

reason to treat Graham’s and Dicus’s claims differently merely because they

were evacuating the work site at the time the injury occurred, and they have

provided us no authority suggesting that we do so.

We hold that Graham’s and Dicus’s claims against

ConocoPhillips are within the scope of their arbitration agreements.

Conclusion

We

hold that the trial court erred in refusing to compel arbitration of Graham’s

and Dicus’s claims against ConocoPhillips. Accordingly, we reverse the trial

court’s order and remand with an instruction to the trial court to grant

ConocoPhillips’s motion to compel arbitration of these claims and to take such

other actions as it deems appropriate and consistent with this opinion.

Harvey

Brown

Justice

Panel

consists of Justices Jennings, Sharp, and Brown.

Justice

Sharp, dissenting. Dissent to follow.

[1] The

arbitration agreement provides that the FAA governs first but state law will

apply in the event that the FAA is not applicable, “so as to give this

agreement the broadest application possible.” Neither party has argued that

this provision should be read as requiring the application of the Texas

Arbitration Act here. Graham and Dicus state in their brief that, because they

were “fleeing from an explosion” rather than “working” at the time of their

injuries, their claims are “not the product of any commercial transaction, as

is required for the applicability of the FAA.” But this is part of an their

argument as to whether their claims are within the scope of the arbitration

agreement. They do not assert that the FAA does not govern the dispute if the

claims are within the scope of the arbitration agreement.

[2] Graham

and Dicus point out that the indemnification agreement between Citgo and the

contractor, Pat Tank, in Citgo

expressly referenced “arbitrator’s fees” among Citgo’s indemnifiable costs,

while the indemnification agreement between ConocoPhillips and JVIC expressly

reference “court costs” among ConocoPhillips’sindemnifiable costs. While the

reference to arbitration costs in the indemnity agreement in Citgo was probative of Pat Tank’s intent

in that case, 248 S.W.3d at 777 , we do not find the absence of such reference

determinative here. JVIC’s indemnity obligations to ConocoPhillips under the

master service agreement extended beyond claims by JVIC employees to include

claims by persons with whom JVIC may not have had an arbitration agreement,

such as its invitees, subcontractors, employees or invitees of subcontractors,

and the agents, representatives, or assigns of their invitees and

subcontractors. Additionally, the record does not establish whether JVIC had

arbitration agreements with all of its employees at the time it executed the

master service agreement. While Graham had a previous arbitration agreement

with JVIC, the only arbitration agreement between Dicus and JVIC was executed

in 2010.

[3] At oral argument, Graham and Dicus

stated that they are not requesting that we affirm the trial court’s ruling on

the basis that their claims do not fall within the scope of the arbitration

agreement. Nevertheless, because they raised and argued this issue in their

briefing, we address it below.