In re David J. Kroupa, D.C.--Appeal from 269th District Court of Harris County

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Laws-info.com » Cases » Texas » 1st District Court of Appeals » 2005 » In re David J. Kroupa, D.C.--Appeal from 269th District Court of Harris County

State: Texas

Court: Texas Northern District Court

Docket No: 01-05-00376-CV

Case Date: 12/08/2005

Plaintiff: Joseph Arceneaux

Defendant: The State of Texas--Appeal from 232nd District Court of Harris County

Preview:In re David J. Kroupa, D.C.--Appeal from 269th
District Court of Harris County
Opinion issued December 8, 2005
In The
Court of Appeals
For The
First District of Texas
NO. 01-05-00224-CV
DAVID J. KROUPA, D.C., Appellant
V.
ERNEST CASEY, Appellee
On Appeal from the 269th District Court
Harris County, Texas
Trial Court Cause No. 2003-46191
NO. 01-05-00376-CV
IN RE DAVID J. KROUPA, D.C., RELATOR
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Original Proceeding on Petition for Writ of Mandamus
MEMORANDUM OPINION
In dual proceedings, appellant-relator, David J. Kroupa, D.C. ( Kroupa ), challenges the trial court s order that denied
his motion to compel arbitration against appellee-real party in interest, Ernest Casey ( Casey ). // In one issue, Kroupa
contends that the trial court erroneously denied his motion to compel arbitration. We dismiss the interlocutory appeal
for want of jurisdiction and conditionally grant the petition for writ of mandamus.
Background
In early 2003, Casey received chiropractic treatment from Kroupa at Kroupa s office in Houston. On August 20, 2003,
Casey sued Kroupa, alleging that Kroupa had been negligent and grossly negligent by (1) failing to properly evaluate
Casey; (2) failing to take X-rays before treatment; and (3) giving improper chiropractic manipulation. Kroupa
responded by filing an original answer and a motion to compel arbitration. On September 1, 2004, Kroupa filed his
first amended motion to compel arbitration, seeking arbitration pursuant to both the Federal Arbitration Act ( FAA )
and the Texas Arbitration Act ( TAA ). On January 6, 2005, the trial court denied Kroupa s first amended motion to
compel arbitration. After Kroupa filed a motion for reconsideration of the trial court s order, the trial court held a
second hearing, during which the court expressed concern with sending a medical malpractice case to arbitration. On
February 17, 2005, the trial court signed a second order that denied Kroupa s Motion for Reconsideration of Amended
Motion to Compel Arbitration. We stayed all trial proceedings on April 26, 2005. Kroupa now challenges the trial court
s order via an interlocutory appeal and a petition for writ of mandamus.
Appeal
The TAA and the FAA provide alternative procedural vehicles for relief. In re Educ. Mgmt. Corp., 14 S.W.3d 418, 425
(Tex. App. Houston [14th Dist.] 2000, orig. proceeding). If the trial court s denial of arbitration is based on the TAA,
the order is subject to interlocutory appeal. Tex. Civ. Prac. & Rem. Code Ann. 171.098(a)(1) (Vernon 2005). Relief
from a denial of arbitration under the FAA must be pursued by mandamus. EZ Pawn Corp. v. Mancias, 934 S.W.2d
87, 91 (Tex. 1996) (orig. proceeding).
The trial court did not expressly determine whether the FAA or the TAA applies. See 9 U.S.C. 1-16 (2000); Tex. Civ.
Prac. & Rem. Code Ann. 171.001-.098 (Vernon 2005). However, the parties contract provides that any dispute as to
medical malpractice . . . will be determined by submission to arbitration as provided by state and federal law, and the
Supreme Court of Texas and this Court have both approved application of the FAA when a contract relates to
interstate commerce and the parties agree that federal law applies. See In re Firstmerit Bank, N.A., 52 S.W.3d 749, 754
(Tex. 2001) (orig. proceeding); see also In re Tenet Healthcare, LTD, 84 S.W.3d 760, 765 (Tex. App. Houston [1st
Dist.] 2002, orig. proceeding). As a threshold matter, we first determine which act applies.
The FAA governs a written arbitration clause in any contract evidencing a transaction involving commerce. See 9
U.S.C. 2. This provision extends to all transactions affecting commerce and is coextensive with the reach of the
Commerce Clause of the United States Constitution. Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265, 277, 115 S.
Ct. 834, 838 43 (1995); see In re L & L Kempwood Assocs., 9 S.W.3d 125, 127 (Tex. 1999) (orig. proceeding). A
contract evidenc[es] a transaction involving commerce if it in fact turns out to involve interstate commerce. Allied-
Bruce, 513 U.S. at 277 81, 115 S. Ct. at 841 43.
The FAA displaces state law only to the extent that the state law conflicts with the FAA s purpose of enforcing the
parties contractual obligation to arbitrate. Volt Info. Sciences, Inc. v. Bd. of Trustees, 489 U.S. 468, 477 78, 109 S. Ct.
1248, 1255 (1989); In re H.E. Butt Grocery Co., 17 S.W.3d 360, 378 (Tex. App. Houston [14th Dist.] 2000, orig.
proceeding). Thus, if the arbitration clause is enforceable under the FAA, an analysis of enforceability under the TAA
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is unnecessary. See In re Anaheim Angels Baseball Club, Inc., 993 S.W.2d 875, 877 n.1 (Tex. App. El Paso 1999,
orig. proceeding [mand. denied]). In deciding whether to compel arbitration, the trial court is entitled to rely on
affidavits, pleadings, discovery, and stipulations. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992) (orig.
proceeding).
Attached to his motion to compel arbitration, Kroupa included an affidavit discussing how his transaction with Casey
affected interstate commerce. Kroupa states that every aspect of his practice depends on transactions that he has had
with companies outside of Texas. He states that he uses various types of communications with companies outside
Texas, including telephone calls, interstate fax transmission, United States Mail, and the Internet. He states that 90% of
his patients pay for their treatments through insurance and that most of the insurance companies are located outside of
Texas. All of his insurance bills are submitted via the Internet through a company located in Nebraska. To operate his
company, Kroupa had to obtain malpractice insurance from a company located in California. In the course of treating
Casey, Kroupa used an adjusting table, a hand massager, an interferential current machine, and a hydroculator
purchased outside of Texas. In addition, when Casey first came to Kroupa s office, Casey represented that he would be
paying through Medicare. Kroupa states that based on Casey s representation, he accepted Casey as a patient. Dr.
Kroupa submitted Casey s bill for payment through Medicare.
Casey, on the other hand, argues that interstate commerce is not affected. In an affidavit attached to his response to
Kroupa s motion to compel arbitration, Casey stated the following:
All chiropractic services provided by Dr. Kroupa to the [sic] me were provided at the [sic] Dr. Kroupa s office in Katy,
Texas. I did not cross any state lines in order to obtain the chiropractic services. I first became aware of the [sic] Dr.
Kroupa s chiropractic services by noticing the sign in the shopping center where his office was located. Billing for the
services provided were made and prepared at the [sic] Dr. Kroupa s office. I would be handed a bill when the
treatment was finished and before I left. No interstate mail or phone calls were made between Dr. Kroupa and me.
In considering the evidence that Kroupa presented to the trial court on the transaction s affect on interstate commerce,
we acknowledge that the term commerce is broadly construed. See In re Nexion Health at Humble, Inc., 173 S.W.3d
67, 69 (Tex. 2005) (orig. proceeding) (per curiam); In re L & L Kempwood Assocs., 9 S.W.3d at 127; In re Tenet
Healthcare, 84 S.W.3d at 765.
The underlying proceedings in this case involve negligence in providing medical services to a client. Kroupa produced
evidence that he uses equipment, material, and services acquired from out of state, including equipment purchased
from out of state in his delivery of healthcare services to Casey; makes out-of-state transactions through interstate
forms of communication; receives most of his insurance payments from out of state; receives Medicare payments from
out of state, and accepted Casey as a Medicare patient; and acquired his malpractice insurance from out of state. Casey
does not dispute these allegations.
Kroupa contends that a number of Texas cases support his claim that the activities he described establish the substantial
effect of his practice on interstate commerce necessary to bring this suit within the scope of the FAA. We agree. See
In re Nexion Health, 173 S.W.3d at 69 (holding that Medicare payments paid to relator were sufficient to establish
interstate commerce and the FAA s application);In re Firstmerit Bank, N.A., 52 S.W.3d at 754 (holding that
installment contract for sale of mobile home related to interstate commerce and was subject to FAA; secured lender
and its servicing agent were corporations in another sate and received payments there and arbitration addendum stated
loan involved Interstate Commerce Clause and was governed by FAA); In re Tenet Healthcare, 84 S.W.3d at 765
(concluding that FAA applied when relator hospital treated patients who lived out-of-state, received goods and
services from out-of-state, received payments from out-of-state insurance carriers, received Medicaid and Medicare
payments, and agreement specifically referred to FAA); BWI Cos. v. Beck, 910 S.W.2d 620, 622 23 (Tex. App. Austin
1995, orig. proceeding) (holding that arbitration agreement between employer and employee involved interstate
commerce, even though employee worked and made deliveries only in Texas, because employer had facilities in Texas
and other states); Palm Harbor Homes, Inc. v. McCoy, 944 S.W.2d 716, 720 (Tex. App. Fort Worth 1997, orig.
proceeding) (holding that FAA applied because, inter alia, manufactured homes contained components that were
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bought and shipped from fourteen other states and countries and housing bond was issued by out-of-state insurance
company); Lost Creek Mun. Util. Dist. v. Travis Indus. Painters, Inc., 827 S.W.2d 103, 105 (Tex. App. Austin 1992,
writ denied) (holding that arbitration agreement between Texas residents, concerning work performed in Texas,
involved interstate commerce because paint and epoxy were manufactured outside Texas, and contractor s performance
bond was issued by nonresident surety company). Thus, we conclude that the transaction between Kroupa and Casey
affected interstate commerce and that the FAA applies.
Because the FAA applies, mandamus, and not interlocutory appeal, is the procedural vehicle for the relief that Kroupa
requests. We dismiss Kroupa s interlocutory appeal and consider the merits of his petition for writ of mandamus.
Mandamus
Standard of Review
Mandamus is an extraordinary remedy that will issue only to correct a clear abuse of discretion or the violation of a
legal duty when there is no adequate remedy at law. In re Masonite Corp., 997 S.W.2d 194, 197 (Tex. 1999) (orig.
proceeding). When a trial court erroneously grants a party s motion to compel arbitration, the movant has no adequate
remedy at law and is entitled to a writ of mandamus. See In re Am. Homestar, Inc., 50 S.W.3d 480, 483 (Tex. 2001)
(orig. proceeding). We review the trial court s order for abuse of discretion. Jack B. Anglin, 842 S.W.2d at 271; Trico
Marine Servs., Inc. v. Stewart & Stevenson Technical Servs. Inc., 73 S.W.3d 545, 548 (Tex. App. Houston [1st Dist.]
2002, no pet.) (combined appeal & orig. proceeding). A trial court abuses its discretion when it errs in determining
what the law is or in applying the law to the facts. In re Bruce Terminix Co., 988 S.W.2d 702, 703 (Tex. 1998); Trico
Marine Servs., 73 S.W.3d at 548. The trial court s order does not state its grounds for denying Kroupa s motion to
compel arbitration. Thus, we review the grounds stated in Kroupa s motion and reverse the trial court s order if any of
the grounds are meritorious. See In re H.E. Butt Grocery, 17 S.W.3d at 367.
Agreement to Arbitrate
In his mandamus petition, Kroupa argues that the trial court erred in denying his motion to compel arbitration because
he submitted an agreement to arbitrate and because Casey s claims were within the scope of their agreement.
Whether an enforceable agreement to arbitrate exists is a legal question subject to de novo review. In re Kellogg
Brown & Root, 80 S.W.3d 611, 615 (Tex. App. Houston [1st Dist.] 2002, orig. proceeding). Although an arbitration
agreement need not assume any particular form, the language of the agreement must clearly indicate the intent to
arbitrate. See Massey v. Galvan, 822 S.W.2d 309, 316 (Tex. App. Houston [14th Dist.] 1992, writ denied). Without an
agreement to arbitrate, arbitration cannot be compelled. Freis v. Canales, 877 S.W.2d 283, 284 (Tex. 1994) (orig.
proceeding).
Under both the TAA and the FAA, a party seeking to compel arbitration has the initial burden to establish the
arbitration agreement s existence and to show that the claims asserted fall within the agreement s scope. See Tex. Civ.
Prac. & Rem. Code Ann. 171.021(a) (Vernon 2005); In re Kellogg Brown & Root, 80 S.W.3d at 615. If the party
seeking arbitration carries its initial burden, the burden then shifts to the party resisting arbitration to present evidence
on its defenses to the arbitration agreement. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003)
(orig. proceeding); Mohamed v. Auto Nation USA Corp., 89 S.W.3d 830, 835 (Tex. App. Houston [1st Dist.] 2002,
orig. proceeding).
In its motion to compel arbitration, Kroupa relied on the following clause to show the parties intent to arbitrate:
Agreement to Arbitrate: It is understood that any dispute as to medical malpractice that is as to whether any medical
services rendered under this contract were unnecessary or unauthorized or were improperly, negligently, or
incompetently rendered, will be determined by submission to arbitration as provided by state and federal law, and not
by a lawsuit or resort to court process except as state and federal law provides for judicial review of arbitration
proceedings. Both parties to this contract by entering into it, are giving up their constitutional right to have any such
dispute decided in a court of law before a jury and instead are accepting the use of arbitration.
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Further, the agreement encompasses a broad range of disputes:
All claims must be Arbitrated. It is also understood that any dispute that does not relate to medical malpractice
including disputes as to whether or not a dispute is subject to arbitration, will also be determined by submission to
binding arbitration.
At the bottom of the agreement is the statement:
NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE OF MEDICAL
MALPRACTICE DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP YOUR RIGHT TO A
JURY OR COURT TRIAL.
Casey s name appears at the top of the document, and his signature is on the bottom of the document.
In his response to Kroupa s petition for writ of mandamus, Casey neither disputes that this clause mandates arbitration
nor disputes that his claims are within the scope of this clause. After reviewing the arbitration agreement, we conclude
that Kroupa has presented a valid enforceable arbitration agreement and that Casey s claims are within the scope of the
agreement. Once a party seeking to compel arbitration establishes that an agreement exists under the FAA and that the
claims raised are within the agreement s scope, the trial court has no discretion but to compel arbitration and stay its
proceedings pending arbitration. Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996) (orig. proceeding).
Accordingly, the trial court erred by denying Kroupa s motion to compel arbitration pursuant to the FAA.
Conclusion
We conclude that the trial court improperly denied Kroupa s motion to compel arbitration. A party who is erroneously
denied the right to arbitrate under the FAA has no adequate remedy at law, and mandamus relief is appropriate. Id. at
945. Thus, we conditionally grant the writ of mandamus in cause no. 01 05 00376 CV and direct the trial court to order
that Casey s claims proceed to arbitration under the FAA. We dismiss the appeal in cause no. 01 05 00224 CV for
want of jurisdiction. We withdraw our April 26, 2005 order that stayed all proceedings in the trial court.
Evelyn V. Keyes
Justice
Panel consists of Justices Taft, Keyes, and Hanks.
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