The opinion
Opinion issued October 10, 2019
In The
Court of Appeals
For The
First District of Texas
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NO. 01-18-00977-CV
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STADIUM MOTORCARS, LLC D/B/A CENTRAL HOUSTON NISSAN
AND CENTRAL HOUSTON MOTORCARS, LLC D/B/A CENTRAL
HOUSTON CADILLAC, Appellants
V.
CHRIS SINGLETON, Appellee
On Appeal from the 269th District
Harris County, Texas
Trial Court Case No. 2018-35688
MEMORANDUM OPINION
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
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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
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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
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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 an arbitration award
is centered on “the integrity of the process, not the propriety of the result.” Forest
Oil Corp., 446 S.W.3d at 75.
When reviewing an arbitration award under the Texas Arbitration Act
(“TAA”), a court “shall confirm” the arbitration award “[u]nless grounds are offered
for vacating, modifying, or correcting an award under Section 171.088 or 171.091.”
TEX. CIV. PRAC. & REM. CODE § 171.087. A party seeking to avoid confirmation of
an arbitration award under the TAA may do so “only by demonstrating a ground
expressly listed in section 171.088.” Hoskins v. Hoskins, 497 S.W.3d 490, 495 (Tex.
2016).
B. Analysis
In its first issue, Central Nissan contends that arbitration awards that conflict
with public policy can be vacated on common-law grounds.
In Hoskins, the Texas Supreme Court addressed a split among the courts of
appeals as to “whether the TAA permits vacatur of an arbitration award on common-
law grounds not enumerated in the statute.” 497 S.W.3d at 493. Hoskins involved
a dispute over a family trust that culminated in the appointment of an arbitrator to
obtain “resolution through arbitration pursuant to the provisions of the Texas
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General Arbitration Act.” Id. at 492. In an effort to overturn the trial court’s
confirmation of the arbitration award, the plaintiff argued that the award should be
vacated on the common law ground that the arbitrator “demonstrated a manifest
disregard of the law . . . .” Id. at 492–93.
Interpreting the TAA, the Court concluded that “[t]he statutory text could not
be plainer: the trial court ‘shall confirm’ an award unless vacatur is required under
one of the enumerated grounds in section 171.088.” Id. at 494. Because an
arbitrator’s “manifest disregard of the law” is not a ground for vacatur enumerated
in section 171.088, and “the TAA leaves no room for courts to expand on those
grounds,” the Court affirmed the judgment of the lower court. Id. at 491, 494.
In support of the proposition that arbitration awards that conflict with public
policy may be vacated on common law grounds, Central Nissan relies on Jefferson
County v. Jefferson County Constables Association, 546 S.W.3d 661 (Tex. 2018).
In that case, the court affirmed the lower court’s confirmation of an arbitration award
stemming from the County’s violation of its collective bargaining agreement with
the deputy constables’ association. Id. at 663. In its analysis, the Court observed
that the TAA does not govern collective bargaining agreements. Id. at 665. Because
the TAA was inapplicable, the Court reviewed the arbitrator’s award under the
common law. Id. In doing so, the court acknowledged that “the common law allows
vacatur of an arbitration award if the arbitrator exceeds the scope of his authority or
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the award ‘clearly violates carefully articulated, fundamental [public] policy.’” Id.
(quoting CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 239 (Tex. 2002)).
Central Nissan points to the fact that Jefferson County was decided after the
Court decided Hoskins. It argues that because Jefferson County permitted vacatur
of an arbitration award on common law grounds after the Court’s holding in Hoskins,
Hoskins was overruled by Jefferson County. However, Jefferson County and
Hoskins differ in an important respect. Jefferson County involved an arbitration
award stemming from the violation of a collective bargaining agreement which is
not subject to the TAA. Id. Therefore, the Court’s review of the award was
conducted under the common law. Id. In Hoskins, however, the parties executed an
agreement that called for arbitration subject to the TAA. Hoskins, 497 S.W.3d at
492. Consequently, the TAA was the governing law and the grounds for vacatur of
the award were limited to those specifically enumerated in section 171.088.
Here, as in Hoskins, both parties agreed that arbitration would be governed by
the TAA. Furthermore, both parties specifically agreed that the arbitration 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.” Because the arbitration
award in this case stems from an arbitration proceeding governed by the TAA, the
statute, not common law, is controlling. The only grounds for vacatur of this
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arbitration award are those enumerated in section 171.088. See Hoskins, 497 S.W.3d
at 494. We overrule Central Nissan’s first issue.
In its second issue, Central Nissan argues that the trial court erred in
confirming the arbitration award because the award is contrary to Texas public
policy as an employment-at-will state.
Texas has long adhered to the employment at-will doctrine.1 See E. Line &
R.R.R. Co. v. Scott, 10 S.W. 99, 102 (Tex. 1888). However, in Sabine Pilot Service,
Inc. v. Hauck, the Court recognized a narrow exception to the doctrine for an
employee discharged “for the sole reason that the employee refused to perform an
illegal act.” 687 S.W.2d 733, 735 (Tex. 1985). Under this exception, the plaintiff
bears the burden “to prove by a preponderance of the evidence that his discharge
was for no reason other than his refusal to perform an illegal act.” Id. The Sabine
Pilot doctrine applies only when an employee is “unacceptably forced to choose
between risking criminal liability or being discharged from his livelihood.” Winters
v. Houston Chronicle Pub. Co., 795 S.W.2d 723, 724 (Tex. 1990).
Central Nissan contends that Singleton’s discharge does not fit within the
Sabine Pilot exception. Specifically, it argues that for a discharged employee to be
protected by Sabine Pilot, an employer must expressly request the employee to
1
Employment for an indefinite term may be terminated at will and without cause.
See Winters v. Chronicle Publ’g. Co., 795 S.W.2d 723, 723 (Tex. 1990).
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perform an illegal act. Central Nissan reasons that because it did not explicitly
request that Singleton perform an illegal act, Singleton’s actions essentially amount
to internal private whistleblowing, which is not protected under Sabine Pilot. See
Garza v. Doctors on Wilcrest, P.A., 976 S.W.2d 899, 901 (Tex. App.—Houston
[14th Dist.] 1998, pet. denied).
However, courts have held that an employee may assert a Sabine Pilot claim
despite the fact that an employer fails to “directly confront an employee and make
an affirmative statement that the employee will be terminated if he refuses to perform
an illegal act.” Higginbotham v. Allwaste, Inc., 889 S.W.2d 411, 413 (Tex. App.—
Houston [14th Dist.] 1994, writ denied). In Higginbotham, an employee for an
asbestos abatement services company refused to hide material overstatements of his
employer’s quarterly profits. See id. at 412. The employee was subsequently fired
and filed a wrongful termination claim. Id. at 412. In determining whether the
employee’s refusal to perform illegal acts provided a basis to prevail on a Sabine
Pilot claim, the court observed that “[g]enerally, one who seeks the performance of
an illegal act does so with subtlety and stealth.” Id. at 416.
Similarly, in Rescar, Inc. v. Ward, a plant manager alerted his supervisors to
environmental violations, including the illegal dumping of toxic chemicals. 60
S.W.3d 169, 174 (Tex. App.—Houston [1st Dist.] 2001, judgm’t vacated w.r.m.).
The manager refused to participate in these activities and was later fired by his
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employer. Id. at 174, 177. The court concluded that “there was more than a scintilla
of evidence in the record . . . that [the employee] was discharged for the sole reason
he refused to perform one of these illegal acts.” Id. at 178.
In Garza, an x-ray technician sued her former employer for wrongful
termination after being discharged for alerting the Texas Board of Medical
Examiners that one of her colleagues was performing x-rays on patients without
proper certification and without the use of proper protective shielding. Garza, 976
S.W.2d at 900. After the jury found for the technician and awarded damages, the
trial court granted the defense’s motion for judgment notwithstanding the verdict.
Id. On appeal, the court affirmed the lower court, finding that the Sabine Pilot
exception did not apply because the technician “was not unacceptably forced to
choose between risking criminal liability or being discharged from her livelihood.”
Id. at 901. Moreover, the technician failed to meet her burden “to prove by a
preponderance of the evidence that her discharge was for no reason other than her
refusal to perform an illegal act.” Id.
The court’s refusal to extend Sabine Pilot in Garza was not because the
employer failed to explicitly request the technician to perform an illegal act. Rather,
it was because the technician was not forced “to choose between risking criminal
liability or being discharged from her livelihood.” Id. Here, in contrast, Singleton’s
refusal to participate in an ongoing criminal insurance fraud perpetrated by
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employees of Central Nissan directly resulted in his firing. Thus, even if the
common law applied and permitted vacatur of Singleton’s arbitration award for
public policy reasons, Singleton presents a Sabine Pilot claim consistent with
Texas’s employment-at-will policy. Accordingly, we overrule Central Nissan’s
second issue.
C. Frivolous Appeal
In his brief, Singleton requests that this Court impose sanctions on Central
Nissan for filing a frivolous appeal. See TEX. R. APP. P. 45.
We may award just damages to a prevailing party if we objectively determine,
after considering “the record, briefs, or other papers filed in the court of appeals,”
that an appeal is frivolous. Id.; Woods v. Kenner, 501 S.W.3d 185, 198–99 (Tex.
App.—Houston [1st Dist.] 2016, no pet.). An appeal is frivolous when the record,
viewed from the perspective of the advocate, does not provide reasonable grounds
for the advocate to believe that the case could be reversed. Smith v. Brown, 51
S.W.3d 376, 381 (Tex. App.—Houston [1st Dist.] 2001, pet. denied). The decision
to grant appellate sanctions is a matter of discretion that an appellate court exercises
with prudence and caution and only after careful deliberation. Id. And Rule 45 does
not require the Court to award just damages in every case in which an appeal is
frivolous. Glassman v. Goodfriend, 347 S.W.3d 772, 782 (Tex. App.—Houston
[14th Dist.] 2011, pet. denied).
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After a review of the record, briefing, and other papers filed in this Court, we
deny Singleton’s request for sanctions. See TEX. R. APP. P. 45.
Conclusion
We affirm the trial court’s judgment.
Russell Lloyd
Justice
Panel consists of Justices Lloyd, Goodman, and Landau.
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