SE Texas Record

Thursday, October 17, 2019

13th Court of Appeals remands arbitration ruling in fraud case against funeral home

By Elizabeth Alt | Feb 12, 2018

CORPUS CHRISTI – The Texas 13th Court of Appeals in Corpus Christi has ordered a lower court to revisit a ruling denying arbitration in a lawsuit filed by a woman who alleges her brother’s body was embalmed without her consent, infested with insects during the viewing at their parlor, and buried without his organs.

Justice Nelda Rodriguez noted Jan. 25 the plaintiff’s “fraud defense does not justify the denial of arbitration.” Defendants in the case are Service Corp. International and SCI Texas Funeral Services Inc.

The appellate court reversed the trial court decision and remanded it back to trial, stating that the trial court erred in denying the motion to compel arbitration.

Rodriguez wrote the court opinion, noting in the decision that “We find that the Interment Agreement and its arbitration clause are supported by valid consideration.” 

According to the opinion, Mary Ruiz hired Funeraria Del Angel Buena Vista in Brownsville to take care of the remains of her brother Ernesto Eguia after he passed away unexpectedly. Ruiz alleges that the body was embalmed after autopsy without her consent and that bugs covered her deceased brother’s face and chest on the day of the funeral. 

Ruiz also claimed that the funeral home employees did not fix their air conditioning after assuring her they would do so, making the bug issue worse during her brother’s funeral service.  

Funeraria Del Angel is owned by Service Corp. International and SCI Texas Funeral Services Inc.

Several days after the funeral, the opinion states Ruiz was called to meet with a manager from SCI who told her that her brother’s organs had not been returned to his body after the autopsy and were not buried with him. Ruiz alleges she was given the option of reopening the casket to bury the organs with her brother’s body or to have them cremated and placed next to his grave.

Ruiz filed her lawsuit against SCI, claiming fraud, specifically that SCI knew and had a duty to inform her “that Ernesto’s remains were received in a condition that would cause insect infestation, that the remains had suffered a mishap or would be mishandled by SCI in a manner that would cause insect infestation, and that the remains were to be buried without internal organs,” according to the opinion. SCI filed a motion to compel arbitration, which the trial court denied.

In the appeal for arbitration, SCI argued that the contract Ruiz signed bound her to first try to settle out of court with an arbitrator in accordance with the Federal Arbitration Association. Ruiz argued that the arbitration agreements in the contract she signed with SCI would not apply to the rules of the FAA because her claim is for fraud, stating her claim “could and should not be contemplated within an agreement to arbitrate.”  

In the appellate opinion, Rodriguez stated “Under the terms of the arbitration clause in the Funeral Agreement, Ruiz expressly agreed to arbitrate disputes against Funeraria Del Angel Buena Vista as well as any of its 'parent, subsidiary, or affiliate corporations.'”

Rodriguez referred to the Federal Trade Commission’s “Funeral Rule” in reversing the trial court’s decision to explain the appellate court’s jurisdiction. Noting that neither court should be addressing the issue of fraud, Rodriguez noted, “if Ruiz’s affirmative defense of fraud is to be addressed, it is the arbitrator, and not the trial court, that must address it. The trial court could not have relied on Ruiz’s affirmative defense of fraud to deny arbitration.”

The appellate court's ruling leaves open the possibility that the motion could yet be denied by the lower court, with the panel abstaining from the motion itself and instead asking the trial court to revisit the issue of unconscionability--the claim that claim the contracts terms compelling arbitration are unjustly in favor of SCI--that it did not address from Ruiz's original fraud claim, 

“When the record is not fully developed with respect to the alternative grounds, appellate courts should refrain from addressing issues beyond the trial court’s express basis for its ruling," the appeals court wrote in its opinion.

Texas 13th Court of Appeals in Corpus Christi case number 13-16-00699-CV    

Editor's note: this article was updated to clarify that the appeals court did not rule as to whether arbitration was required, but instead asked to trial court to revisit its decision denying arbitration.                                         

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Texas 13th Court of Appeals - Corpus Christi