Tuesday, August 16, 2011

Mandamus granted to enforce arbitration under contracted-for rules, not before the AAA as the trial court had ordered


Dallas Court of Appeals dismisses interlocutory appeal as unauthorized by statute, but grants mandamus relief to enforce arbitration under to the rules and procedure specified in the arbitration agreement, holding that an appeal from a final award/judgment would not provide an adequate remedy under the circumstances. Trial court found to have abused discretion in ordering arbitration under AAA rules contrary to the provisions of the underlying arbitration agreement.


Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc.
No. 05-10-01542-CV (Tex.App. - Dallas, Aug. 15, 2011)(interlocutory appeal of order compelling arbitration dismissed for lack of jurisdiction)
In re Austin Commercial Contractors, L.P .,
No. 05-10-01542-CV (Tex.App. - Dallas, Aug. 15, 2011)(mandamus granted)
 
POINT OF LAW

Parties may specify by contract the rules under which their arbitration will be conducted, and enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA. Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). And there is no adequate remedy by appeal when a party is erroneously denied its contracted-for arbitration rights under the FAA. In re D. Wilson Const. Co., 196 S.W.3d 774, 780-81 (Tex. 2006).

THE DECISION

We dismiss ACCLP's interlocutory appeal for lack of jurisdiction. We conditionally grant the petition for mandamus insofar as it complains of the portion of the October 29, 2010 order that orders the arbitration to proceed before the AAA. We direct the trial court (1) to vacate that portion of its order, and (2) to amend the order to require the arbitration to proceed as directed by the Prime Contract, under the rules of the CBCA. We are confident the district court will comply without delay. The writ will issue only if it does not.

FULL TEXT OF OPINION BY JUSTICE FITZGERALD

In this consolidated interlocutory appeal and mandamus proceeding, Austin Commercial Contractors, L.P. (“ACCLP”) challenges the trial court's October 29, 2010 Order Regarding Plaintiff's Motion to Compel Arbitration, which both compels arbitration and orders the arbitration to proceed before the American Arbitration Association (the “AAA”). We dismiss the interlocutory appeal for lack of jurisdiction, but we conditionally grant the petition for mandamus.

Background

The Regents of the University of California entered into an agreement with ACCLP (the “Prime Contract”) for the latter to act as general contractor on a project involving construction of a new building at the Los Alamos National Laboratories in New Mexico.   See Footnote 1  As general contractor, ACCLP entered into a Consultant Agreement with Carter & Burgess to provide all architectural and engineering services required by the project. ACCLP sued Carter & Burgess alleging breach of contract. Carter & Burgess answered subject to a motion to dismiss. It also served discovery and asserted a counterclaim for breach of contract.

Approximately two and one half months after filing suit, ACCLP filed a motion to compel arbitration pursuant to the Consultant Agreement. It relied on a clause in that agreement which states:
19.1 Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be subject to the dispute resolution procedures, if any, set out in the Prime Contract between [ACCLP] and [LANS]. Should the Prime Contract contain no specific requirement for the resolution of disputes, any such controversy or claim shall be resolved by arbitration pursuant to the Construction Industry Rules of the American Arbitration Association then prevailing, and judgment upon the award by the Arbitrator(s) shall be entered in any Court having jurisdiction thereof.

The Prime Contract does contain specific requirements for dispute resolution: submission of the dispute to mediation and then-if not resolved-to binding arbitration before the Civilian Board of Contract Appeals (the “CBCA”).   See Footnote 2  ACCLP's motion sought two specific rulings: the parties should be compelled to arbitration, and the arbitration should proceed before the CBCA.
Carter & Burgess opposed the motion. It contended that the CBCA lacked jurisdiction over a dispute between ACCLP and Carter & Burgess, that there was no agreement requiring it to arbitrate before the CBCA, and that the CBCA could not assume jurisdiction merely through agreement of the parties. Carter & Burgess also contended that ACCLP had waived its right to elect arbitration by filing suit. And, alternatively, Carter & Burgess argued that if the agreements do require arbitration before the CBCA, then ACCLP had failed to satisfy conditions precedent to arbitration.

The trial court's October 29, 2010 order granted the motion in part and denied it in part.   See Footnote 3  It ordered the matter to proceed to arbitration as ACCLP had requested; neither party challenges that ruling in this Court. But the order also ordered the arbitration to proceed before the AAA. ACCLP appealed and sought mandamus relief as to this ruling. We consolidated the two proceedings for resolution in this Court.

Interlocutory Appeal

In 2009, the Texas Legislature added a provision to the civil practice and remedies code addressing interlocutory appeals arising under the Federal Arbitration Act:
In a matter subject to the Federal Arbitration Act (9 U.S.C. Section 1 et seq.), a person may take an appeal or writ of error to the court of appeals from the judgment or interlocutory order of a district court, county court at law, or county court under the same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16.
Tex. Civ. Prac. & Rem. Code Ann. § 51.016 (West Supp. 2011). The parties agree any arbitration ordered will be governed by the Federal Arbitration Act. Thus, an interlocutory appeal in this case will be permitted only if it would be permitted under the same circumstances under section 16. See CMH Homes v. Perez, 340 S.W.3d 444, 449 (Tex. 2011). Section 16, in turn, allows appeals from:

(1) an order--

        (A) refusing a stay of any action under section 3 of this title,
        (B) denying a petition under section 4 of this title to order arbitration to proceed,
        (C) denying an application under section 206 of this title to compel arbitration,
        (D) confirming or denying confirmation of an award or partial award, or
        (E) modifying, correcting, or vacating an award;

(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or

(3) a final decision with respect to an arbitration that is subject to this title.
9 U.S.C. § 16(a) (West 2009). Section 16 goes on to identify interlocutory orders that will not support an immediate appeal:

        (1) granting a stay of any action under section 3 of this title;
        (2) directing arbitration to proceed under section 4 of this title;
        (3) compelling arbitration under section 206 of this title; or
        (4) refusing to enjoin an arbitration that is subject to this title.

Id. § 16(b).

        It is clear the portion of the trial court's order compelling arbitration would not be appealable under federal law, so it is not appealable in this case. See id § 16(b)(3). The portion of the court's order directing arbitration to proceed before the AAA actually speaks to the rules under which the arbitration shall take place. (The Prime Contract directs the Board to arbitrate all claims “in accordance with the Rules of the Board; the Consultant Agreement directs resolution, when appropriate, “by arbitration pursuant to the Construction Industry Rules of the [AAA].”) We find no provision in section 16 permitting appeal of such an order. Accordingly, we conclude this portion of the trial court's order is not appealable either. See CMH Homes, 340 S.W.3d at 451. Our conclusion comports with the rule that section 16 “generally permits immediate appeal of orders hostile to arbitration, whether the orders are final or interlocutory, but bars appeal of interlocutory orders favorable to arbitration.” See Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 86 (2000); In re Gulf Exploration, LLC, 289 S.W.3d 836, 839 (Tex. 2009).         The trial court's order is not appealable under section 16. Accordingly we dismiss ACCLP's interlocutory appeal for lack of jurisdiction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.016.   See Footnote 4

Petition for Mandamus

To show itself entitled to mandamus, a relator must show that (1) the trial court clearly abused its discretion, and (2) the relator has no adequate remedy by appeal. Gulf Exploration, 289 S.W.3d at 842. Mandamus is generally unavailable if the order at issue compels arbitration: even if the relator can meet the first prong of this test by showing an abuse of discretion, it can rarely meet the second prong. Id. Indeed, “[i]f a trial court compels arbitration when the parties have not agreed to it, that error can unquestionably be reviewed by [final] appeal.” Id. Although parties may expend time and money if they are ordered to arbitration improperly, delay and expense-standing alone-will not render the final appeal inadequate. Id. That rule is especially true when the substance of the arbitration is a contract claim, because the party that prevails can recover its fees and expenses. Id.

The case before us involves only contract claims, and it does not implicate any conflicting legislative mandates. See id. (identifying rare exception when mandamus may allow appellate court to give direction to law that would otherwise prove elusive in appeal from final judgment). Thus, the parties have an adequate remedy by appeal with which to make their challenges, if any, to the portion of the trial court's order compelling arbitration.

ACCLP contends, however, that it has no adequate remedy by appeal for the second portion of the trial court's order, which requires the arbitration to proceed under AAA rules rather than the rules of CBCA. We must agree. Parties may specify by contract the rules under which their arbitration will be conducted, and enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA. Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). And there is no adequate remedy by appeal when a party is erroneously denied its contracted-for arbitration rights under the FAA. In re D. Wilson Const. Co., 196 S.W.3d 774, 780-81 (Tex. 2006).

Recently, in CMH Homes v. Perez, 340 S.W.3d 444 (Tex. 2011), our supreme court addressed a case in which the parties had contracted to name their arbitrator but were unable to reach agreement on the issue. The trial court intervened and appointed an arbitrator. CMH Homes filed an interlocutory appeal challenging the appointment and requesting, in the alternative, that its appeal be treated as a petition for mandamus. Id. at 446. The court of appeals concluded it lacked jurisdiction to hear the interlocutory appeal, and the supreme court affirmed that ruling. Id. at 452. However, the supreme court concluded the court of appeals erroneously declined to treat the appeal as a mandamus proceeding. Id. at 454. In reaching that conclusion, the supreme court cited In re Louisiana Pacific Corp., 972 S.W.2d 63 (Tex. 1998), in which the court had concluded a trial court's order appointing an arbitrator could be reviewed by mandamus. 340 S.W.3d at 452. The court stated that its holding in Louisiana Pacific was not altered by the Legislature's adoption of section 51.016 because “[t]here is still no remedy by appeal because the FAA does not provide for the review of this type of order in state court.” Id. The court stressed there is no adequate remedy by appeal when a party is denied its contractual arbitration rights. Id. (citing D. Wilson, 196 S.W.3d at 780). We conclude we are bound by this principle in the case before us: if the trial court denied AACLP its contractual arbitration rights by ordering arbitration before the AAA, then ACCLP will lack an adequate remedy by appeal.
We further conclude the trial court clearly abused its discretion in compelling arbitration to proceed under the rules of the AAA. The Consultant Agreement unambiguously provides that any claim arising out of or relating to the breach of that agreement “shall be subject to the dispute resolution procedures, if any, set out in the Prime Contract.” And, as we discussed above, the Prime Contract does set out specific dispute resolution procedures, which are centered on binding arbitration under the rules of the CBCA. Thus, the back-up procedure of arbitration before the AAA should not have been implicated unless Carter & Burgess identified a reason the Prime Contract's dispute resolution procedure was, in essence, non-existent. But Carter & Burgess's objections to the jurisdiction of the CBCA and its contention that ACCLP has failed to satisfy conditions precedent to arbitration are matters of procedure that are for the arbitrator and not for the court. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002) (questions of procedural arbitrability are matters for arbitrator to decide); see also Am. Realty Trust, Inc. v. JDN Real Estate- McKinney, L.P., 74 S.W.3d 527, 531 (Tex. App.-Dallas 2002, pet. denied) (question whether any contractually-based prerequisites to arbitration have been satisfied is for arbitrator). Nor are we persuaded by Carter & Burgess's argument that by initiating arbitration before the AAA-as it was ordered to do-ACCLP has waived its right to complain of arbitration in that forum.

Conclusion

We dismiss ACCLP's interlocutory appeal for lack of jurisdiction. We conditionally grant the petition for mandamus insofar as it complains of the portion of the October 29, 2010 order that orders the arbitration to proceed before the AAA. We direct the trial court (1) to vacate that portion of its order, and (2) to amend the order to require the arbitration to proceed as directed by the Prime Contract, under the rules of the CBCA. We are confident the district court will comply without delay. The writ will issue only if it does not.                                           
                                                        KERRY P. FITZGERALD
                                                        JUSTICE
--------------------------------------------------------------------------------
For footnotes: Click link below:
 

Monday, August 15, 2011

MSA given effect by court even though signatory tried to change its terms

ENFORCING SETTLEMENT AGREEMENTS

Abdulwahab v. Sam's Real Estate Business Trust
(Tex.App.- Fort Worth, Jul. 21, 2011)

Fort Worth Court of Appeals explains that agreed judgment cannot be entered when party withdraws consent to settlement agreement (or refuses to sign final court document effecting the terms of the settlement). Remedy in such cases is a claim for breach of settlement agreement by the non-breaching party. Motion to dismiss held sufficient in this case in lieu of breach-of-contract pleadings to give opposing party notice and provide a basis for dismissal in accordance with the terms of the settlement, which included release language. Breaching party -- who objected to the scope of the release -- did not respond to motion to dismiss and therefore couldn't complain later about denial of the right to assert defenses to breach-of-settlement agreement claim.


POINTS OF LAW ON WITHDRAWAL -- OR REVOCATION -- OF CONSENT TO SETTLEMENT AGREEMENT PRIOR TO ENTRY OF JUDGMENT

Written settlement agreements and rule 11 agreements may be enforced as contracts even if one party withdraws consent before judgment is entered on the agreement. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009); Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995); see Tex. Civ. Prac. & Rem. Code Ann. § 154.071(a) (West 2011) ("If the parties reach a settlement and execute a written agreement disposing of the dispute, the agreement is enforceable in the same manner as any other written contract."); Tex. R. Civ. P. 11; City of Roanoke v. Town of Westlake, 111 S.W.3d 617, 626 (Tex. App.-Fort Worth 2003, pet. denied). When consent is withdrawn, an agreed judgment based on the settlement agreement is inappropriate; instead, the party seeking enforcement of the settlement agreement must pursue a claim for breach of contract. Ford Motor Co., 279 S.W.3d at 663; Padilla, 907 S.W.2d at 461 ("Although a court cannot render a valid agreed judgment absent consent at the time it is rendered, this does not preclude the court, after proper notice and hearing, from enforcing a settlement agreement . . . even though one side no longer consents to the settlement."); Alcantar v. Okla. Nat'l Bank, 47 S.W.3d 815, 819 (Tex. App.-Fort Worth 2001, no pet.).

A settlement agreement can be enforced as a contract by the trial court only after proper pleading, notice, hearing, and proof. Ford, 279 S.W.3d at 663; Padilla, 907 S.W.2d at 462; Neasbitt v. Warren, 105 S.W.3d 113, 117 (Tex. App.-Fort Worth 2003, no pet.); see also Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (orig. proceeding) ("Where the settlement dispute arises while the trial court has jurisdiction over the underlying action, a claim to enforce the settlement agreement should, if possible, be asserted in that court under the original cause number.").

Although an amended pleading is one method of raising a claim that a settlement agreement should be enforced as a contract, we have held that a motion seeking enforcement of the settlement agreement is a sufficient pleading to allow a trial court to render judgment enforcing the settlement because such a motion gives the alleged breaching party an opportunity to defend itself. Neasbitt, 105 S.W.3d at 117; see Twist v. McAllen Nat'l Bank, 248 S.W.3d 351, 361 (Tex. App.-Corpus Christi 2007, orig. proceeding [mand. denied]) (holding that an oral motion to enforce a settlement agreement was sufficient because "[a]s long as the motion recites the terms of the agreement, states that the other party has revoked its previously stated consent to the agreement, and requests the trial court to grant relief, the motion is sufficient"); Bayway Servs., Inc. v. Ameri-Build Constr., L.C., 106 S.W.3d 156, 160 (Tex. App.-Houston [1st Dist.] 2003, no pet.). If the motion satisfies the general purposes of pleadings, which is to give the other party fair notice of the claim and the relief sought, it is sufficient to allow the trial court to render judgment enforcing the settlement. Twist, 248 S.W.3d at 361; Neasbitt, 105 S.W.3d at 117.[7]

FULL CASE STYLE: HUSSAIN ABDULWAHAB, INDIVIDUALLY AND D/B/A FURNITURE GALAXY AND BAZAAR v. SAM'S REAL ESTATE BUSINESS TRUST, A DELAWARE STATUTORY TRUST, (Tex.App.- Dallas, July 21, 2011)

FULL TEXT OF OPINION BY TERRIE LIVINGSTON 

MEMORANDUM OPINION [1]

This appeal arises from a judgment that the trial court rendered after the parties entered into a Mediation Settlement Agreement (MSA). The trial court granted appellee Sam's Real Estate Business Trust, a Delaware Statutory Trust's motion to dismiss, which sought enforcement of the MSA. We affirm the trial court's judgment.

Background Facts

In February 2007, appellee sued appellant for breach of a commercial sublease that was related to a building in Grand Prairie.[2] Appellee claimed that appellant had breached the agreement by not paying rent and other costs. Appellant admitted to entering into the sublease but asserted that although appellee had represented that it would repair various aspects of the building, it had not done so. Thus, appellant counterclaimed for breach of warranty of suitability, breach of covenant of quiet enjoyment, and deceptive trade practices.[3] Appellee answered the counterclaims, and appellee filed a motion to strike them based on appellant's alleged failure to properly answer discovery, a hybrid motion for summary judgment on the counterclaims, and a no-evidence motion for summary judgment on appellant's affirmative defenses. The trial court granted appellee's hybrid motion for summary judgment, ruling that appellee was entitled to judgment as a matter of law on appellant's counterclaims.

The parties then mediated appellee's breach of contract claim. On October 23, 2009, the parties reached an agreement to settle the case. The terms of the MSA, in its entirety, are as follows:

On this the 23th [sic] day of October 2009, the parties identified below resolved the referenced matter on the dependent terms outlined below:

1. Without stipulation as to liability, all parties agree to completely release and discharge any and all claims of any kind, asserted or unasserted, known or unknown, that were or that could have been joined in the referenced litigation between these parties.

. . . .[4]

3. Counsel for Plaintiff will prepare formal settlement and dismissal documents.

By signing below we acknowledge our understanding of and agreement to the terms outlined above.

The agreement displays appellant's signature as well as the signatures of counsel for both parties.

The MSA was filed three days later. In May 2010, seven months after the MSA had been executed, appellee filed a motion to dismiss all claims, alleging that appellant had refused to sign a formal settlement document because he was considering filing a lawsuit against the real estate broker who helped market the property that appellant subleased from appellee.[5] The motion to dismiss stated that appellant had failed to appear for two dismissal hearings scheduled by the trial court and that the court had "directed" that the motion be filed. The motion recited that the formal settlement document that appellant had refused to sign contained "customary release language" that precluded claims against agents of either party.[6] Finally, the motion informed the trial court that appellant disagreed that claims against the parties' agents should be dismissed.

On May 28, 2010, appellee gave appellant written notice that the motion to dismiss would be submitted for the trial court's consideration on June 7, 2010, without an oral hearing. Appellant did not file a response by June 7, and on that date the trial court signed an order granting the motion and stating that

any and all claims of any kind, asserted or unasserted, known or unknown, that were or that could have been joined in this lawsuit, which includes claims against potential agents of either [appellee] or [appellant] (including real estate brokers), are released by both [appellee] and [appellant] and discharged with prejudice.

Two weeks later, appellant requested findings of fact and conclusions of law. Appellee objected, arguing that the trial court's findings and conclusions would not be proper under the rules of civil procedure because the court did not hear conflicting evidence on the dismissal motion. The trial court agreed with appellee and denied appellant's request.

Appellant filed a motion to modify, reform, or correct the judgment, stating that the MSA settled claims among only the named parties. In the motion, appellant represented that he had not withdrawn his consent to the settlement agreement, but he stated that he never gave consent to "any settlement extending beyond the named parties." The trial court denied appellant's motion to reform the judgment, and appellant brought this appeal.

The Propriety of the Trial Court's Judgment

In three issues, appellant contends that the trial court erred by granting appellee's motion to dismiss with prejudice, denying appellant's request for findings of fact and conclusions of law, and denying appellant's motion to modify, reform, or correct the judgment.

The judgment complied with the MSA

In his first issue, appellant contends that the trial court erred by signing its June 7, 2010 "Order Granting Motion to Dismiss All Claims, Asserted and Unasserted, Including Potential Agents, with Prejudice" because the order does not strictly and literally comply with the MSA and because the trial court was on notice that he did not consent to a release of claims against potential agents, including real estate brokers, at the time of the judgment. Appellant argues that the trial court altered the express release language in the MSA and therefore rendered an improper consent judgment, an improper ruling that appellant had breached the settlement agreement when no pleading for breach of contract had been filed, or an improper judgment enforcing a settlement agreement when no motion for enforcement had been filed.

Texas has a public policy of encouraging the peaceful resolution of disputes and the early settlement of pending litigation through voluntary settlement procedures. Tex. Civ. Prac. & Rem. Code Ann. § 154.002 (West 2011); Brooks v. Brooks, 257 S.W.3d 418, 421 (Tex. App.-Fort Worth 2008, pet. denied). Trial and appellate courts are charged with the responsibility of carrying out this public policy. Tex. Civ. Prac. & Rem. Code Ann. § 154.003 (West 2011); Brooks, 257 S.W.3d at 421.

Appellee argues that the trial court's dismissal order was not an agreed order and that it is therefore irrelevant whether appellant withdrew his consent to the MSA before the entry of the order. Written settlement agreements and rule 11 agreements may be enforced as contracts even if one party withdraws consent before judgment is entered on the agreement. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009); Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995); see Tex. Civ. Prac. & Rem. Code Ann. § 154.071(a) (West 2011) ("If the parties reach a settlement and execute a written agreement disposing of the dispute, the agreement is enforceable in the same manner as any other written contract."); Tex. R. Civ. P. 11; City of Roanoke v. Town of Westlake, 111 S.W.3d 617, 626 (Tex. App.-Fort Worth 2003, pet. denied). When consent is withdrawn, an agreed judgment based on the settlement agreement is inappropriate; instead, the party seeking enforcement of the settlement agreement must pursue a claim for breach of contract. Ford Motor Co., 279 S.W.3d at 663; Padilla, 907 S.W.2d at 461 ("Although a court cannot render a valid agreed judgment absent consent at the time it is rendered, this does not preclude the court, after proper notice and hearing, from enforcing a settlement agreement . . . even though one side no longer consents to the settlement."); Alcantar v. Okla. Nat'l Bank, 47 S.W.3d 815, 819 (Tex. App.-Fort Worth 2001, no pet.). A settlement agreement can be enforced as a contract by the trial court only after proper pleading, notice, hearing, and proof. Ford, 279 S.W.3d at 663; Padilla, 907 S.W.2d at 462; Neasbitt v. Warren, 105 S.W.3d 113, 117 (Tex. App.-Fort Worth 2003, no pet.); see also Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (orig. proceeding) ("Where the settlement dispute arises while the trial court has jurisdiction over the underlying action, a claim to enforce the settlement agreement should, if possible, be asserted in that court under the original cause number.").

Although an amended pleading is one method of raising a claim that a settlement agreement should be enforced as a contract, we have held that a motion seeking enforcement of the settlement agreement is a sufficient pleading to allow a trial court to render judgment enforcing the settlement because such a motion gives the alleged breaching party an opportunity to defend itself. Neasbitt, 105 S.W.3d at 117; see Twist v. McAllen Nat'l Bank, 248 S.W.3d 351, 361 (Tex. App.-Corpus Christi 2007, orig. proceeding [mand. denied]) (holding that an oral motion to enforce a settlement agreement was sufficient because "[a]s long as the motion recites the terms of the agreement, states that the other party has revoked its previously stated consent to the agreement, and requests the trial court to grant relief, the motion is sufficient"); Bayway Servs., Inc. v. Ameri-Build Constr., L.C., 106 S.W.3d 156, 160 (Tex. App.-Houston [1st Dist.] 2003, no pet.). If the motion satisfies the general purposes of pleadings, which is to give the other party fair notice of the claim and the relief sought, it is sufficient to allow the trial court to render judgment enforcing the settlement. Twist, 248 S.W.3d at 361; Neasbitt, 105 S.W.3d at 117.[7]

Appellant argues that the trial court erred by rendering judgment releasing claims against potential agents when the only pleading pending was a motion to dismiss.[8] Although appellee's motion was labeled as a motion to dismiss, it was essentially a motion to enforce the MSA because appellee alleged that appellant "refuse[d] to sign a formal settlement document `releas[ing] . . . any and all claims of any kind . . . that could have been joined in [this] litigation' as he agreed to do in [the MSA]." The motion specifically recited and attached the terms of the MSA and stated that appellee's counsel had prepared the formal settlement and dismissal documents required by the agreement. The motion further alleged that the formal settlement documents were forwarded to and approved by appellant's counsel but that appellant refused to sign them. Appellee requested that the motion to dismiss be set for a hearing with notice to appellant and asked the trial court to enforce the settlement agreement.[9] Thus, the motion contained all of the necessary elements to request enforcement of the MSA. See Twist, 248 S.W.3d at 361-62; Neasbitt, 105 S.W.3d at 117.

Furthermore, the trial court correctly enforced the settlement agreement to preclude claims against third parties that could have been brought in the litigation between appellee and appellant. The MSA is a contract and is therefore governed by the same rules of construction applicable to all contracts. See Doe v. Tex. Ass'n of Sch. Bds., Inc., 283 S.W.3d 451, 458 (Tex. App.-Fort Worth 2009, pet. denied). Thus, in construing the MSA, our primary concern is ascertaining the true intent of the parties as expressed in the agreement. Id. (citing NP Anderson Cotton Exch., L.P. v. Potter, 230 S.W.3d 457, 463 (Tex. App.-Fort Worth 2007, no pet.)); see Republic Nat'l Bank of Dallas v. Nat'l Bankers Life Ins. Co., 427 S.W.2d 76, 79-80 (Tex. Civ. App.-Dallas 1968, writ ref'd n.r.e.) (noting that courts should not consider the "intention which the parties may have had, but failed to express in the instrument"). "Words in a contract must carry their ordinary, generally accepted meanings unless the contract itself shows that the terms have been used in a technical or different sense. In construing a contract, we may not rewrite it nor add to its language." Doe, 283 S.W.3d at 458 (citation omitted). The interpretation of an unambiguous contract is a matter of law to be determined by the trial court. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000).

The trial court literally and strictly complied with the MSA by ordering that it precluded all claims "that were or that could have been joined in this lawsuit, which includes claims against potential agents."[10] This is precisely what the MSA required when the parties agreed to "completely release and discharge any and all claims of any kind, asserted or unasserted, known or unknown, that were or that could have been joined in the referenced litigation between these parties." Appellant's interpretation of the MSA, that it releases only claims that could have been brought between appellant and appellee, is unreasonable because it would have required the trial court to rewrite the agreement to state, in effect, that the parties agreed to "completely release and discharge any and all claims of any kind between these parties, asserted or unasserted, known or unknown, that were or that could have been joined in the referenced litigation."

Because we hold that the trial court did not err by granting appellee's motion to dismiss (of which appellant had notice and an opportunity to respond) and by strictly enforcing the terms of the MSA, we overrule appellant's first issue. See Neasbitt, 105 S.W.3d at 117-19.

The request for findings of fact and conclusions of law was inappropriate

In his second issue, appellant argues that the trial court erred by refusing to file findings of fact and conclusions of law. "In any case tried in the district or county court without a jury, any party may request the court to state in writing its findings of fact and conclusions of law." Tex. R. Civ. P. 296. "Findings and conclusions are appropriate if there is an evidentiary hearing and the trial court is called upon to determine questions of fact based on conflicting evidence." Int'l Union, United Auto., Aerospace & Agric. Implement Workers of Am.-UAW v. Gen. Motors Corp., 104 S.W.3d 126, 129 (Tex. App.-Fort Worth 2003, no pet.) (citing Port Arthur ISD v. Port Arthur Teachers Ass'n, 990 S.W.2d 955, 958 (Tex. App.-Beaumont 1999, pet. denied)). When the trial court rules without determining questions of fact, a request for findings of fact and conclusions of law is inappropriate. Id.; see O'Donnell v. McDaniel, 914 S.W.2d 209, 210 (Tex. App.-Fort Worth 1995, writ denied) (stating that a dismissal of a case without an evidentiary hearing does not constitute a case that has been "tried" within the meaning of rule 296); see also Puri v. Mansukhani, 973 S.W.2d 701, 708 (Tex. App.-Houston [14th Dist.] 1998, no pet.) ("The purpose of Rule 296 is to give a party a right to findings of fact and conclusions of law finally adjudicated after a conventional trial. . . . In other cases, findings and conclusions may be proper, but a party is not entitled to them.").

The trial court did not hold an evidentiary hearing, and its decision to grant appellee's motion to dismiss and enforce the MSA was not based on the determination of any fact issue about which there was conflicting evidence. Instead, at most, it was based on the parties' competing interpretations of the principal evidence presented, the MSA, and on appellant's undisputed refusal to sign a document that complied with the MSA's language.

Appellant contends that the trial court decided a disputed fact issue of the parties' intent in signing the MSA. But intent in entering a contract is only a fact issue where the contract is ambiguous, and based on our reasoning above, we hold that the MSA was not ambiguous. See Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996); Doe, 283 S.W.3d at 459.

For these reasons, we hold that the trial court did not err by declining to file findings of fact and conclusions of law. See Tex. R. Civ. P. 296. We overrule appellant's second issue.

The trial court correctly denied appellant's motion to modify, reform, or correct the judgment

In his third issue, appellant argues that the trial court erred by denying his motion to modify, reform, or correct the judgment. That motion and the argument contained in the body of appellant's third issue recast the contentions that appellant made in his first issue. Therefore, for the same reasons that we overruled appellant's first issue, we overrule his third issue. See Neasbitt, 105 S.W.3d at 118-19.

Conclusion

Having overruled each of appellant's issues, we affirm the trial court's judgment.

For footnotes click on link below:

Thursday, August 11, 2011

Agreed Judgment cannot be rendered after consent is withdrawn

Agreed Judgment cannot be rendered when a party changes his or her mind and revokes consent to the agreement.

Dallas Court of Appeals reverses on finding that trial court erred by rendering judgment on the parties' Rule 11 settlement agreement in SAPCR modification proceeding after appellant had withdrawn his consent.

Mims v. Mims
Wesley James Mims v. Mary Ann Mims (Tex.App.- Dallas, Aug. 2, 2011)

  
MEMORANDUM OPINION

Before Justices Moseley, Richter, and Lang-Miers
Opinion By Justice Lang-Miers

Appellant Wesley James Mims appeals the trial court's judgment in this suit to modify an order affecting the parent-child relationship. For the following reasons, we reverse the trial court's judgment and remand for further proceedings.

Background

Appellee filed this suit to modify an order affecting the parent-child relationship. The matter was set for a bench trial in July 2009. Sometime after the trial began, the parties reached a rule 11 settlement agreement on all issues. The attorneys read the agreement into the record and also worked out some of the details of the agreement as it was being read. The court made extensive notes about the agreement's details on the docket sheet. At the conclusion of the proceeding, both parties stated that they agreed to the settlement agreement and asked the trial court to approve it. Appellee prepared an agreed order and, about a month later, filed it along with a motion to sign the order. Appellant had not signed the agreed order. Two days after appellee filed the motion to sign the agreed order, appellant filed objections to the motion stating that he withdrew his consent to the settlement agreement. The record reflects that a hearing on the matter was scheduled for August 19, 2009. However, on August 18, 2009, the court made a docket entry stating, “Resp. to get cases to Court by 4:00 P.M. Review cases and transcript. Both sides announced they had no objections.” The record does not contain any other notation regarding a hearing, and on August 27, 2009, the trial court signed the agreed order. In one issue, appellant argues that the trial court erred by rendering judgment after he withdrew his consent to the agreement.

Applicable Law

A party may revoke his consent to settle a case any time before judgment is rendered on the agreement. S&A Rest. Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995). An agreed judgment rendered after one of the parties revokes his consent is void. Padilla v. LaFrance, 907 S.W.2d 454, 461-62 (Tex. 1995) (“court cannot render a valid agreed judgment absent consent at the time it is rendered”); Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983) (when trial court has knowledge party does not consent to judgment, trial court should refuse to sanction agreement by making it judgment of the court).

Although the parties agree with this statement of the law, they disagree about when the judgment in this case was rendered. A judgment is rendered when “the court settles and declares the decision of the law upon the matters at issue.” Formby's KOA v. BHP Water Supply Corp., 730 S.W.2d 428, 429 (Tex. App.-Dallas 1987, no writ) (quoting Coleman v. Zapp, 151 S.W.1040, 1041 (Tex. 1912)). Rendition of judgment is a present act; an expression of future intent is not a rendition. See S&A Rest., 892 S.W.2d at 858; Formby's KOA, 730 S.W.2d at 430. The words used by the trial court must clearly indicate the court's intent to render judgment at the time the words are expressed. S&A Rest., 892 S.W.2d at 858.

Discussion

At the conclusion of the trial proceeding, both parties asked the court to approve the agreement, and the court stated:

THE COURT: All right. Then I understand that [appellee's lawyer] is going to prepare the order. And I know this is going to be kind of a convoluted and very complicated order, but I still would want to have it before - can we get it before - could we get it by July the 30th or 31st?

[APPELLEE'S LAWYER]: Yes.

THE COURT: That way we'll have something in our hands.
Appellant argues that the court “utter[ly] failed to clearly and affirmatively state it was rendering judgment” during the July proceeding during which the settlement agreement was read into the record. He also argues that the agreement did not resolve all pending matters. He contends that the trial court did not render judgment until it signed the agreed order on August 27, 2009. Appellee, on the other hand, contends that no magic words are required and that the court's on-the-record statements at the July proceeding, combined with the court's notations on the docket sheet, “clearly constitute a rendition . . . .” We agree with appellant.

Although the trial court did not expressly state it approved the settlement agreement, the record shows that the court appeared to have approved it. But mere approval of a settlement agreement does not constitute rendition of judgment. S&A Rest., 892 S.W.2d at 858. And although the court appeared to have approved the agreement, the court did not order the parties to sign and follow the agreement. See Samples Exterminators v. Samples, 640 S.W.2d 873, 875 (Tex. 1982) (trial court rendered judgment by ordering parties to sign and follow the agreement); Formby's KOA, 730 S.W.2d at 430. Appellant also argues that the record shows that some matters were left unresolved when the agreement was read into the record. For example, he cites the record where appellee's attorney advised the court that the attorneys and parties would have to work out the logistics of visitation if appellee moved out of the state with the child: “And the logistics of that we'll work out in final orders pursuant to the Texas Family Law Practice Manual, but there's going to have to be some notice provisions and buying tickets.”

Additionally, the record shows that motions were pending and would not be resolved except by the court's signed order. Appellee's counsel asked appellee whether she was “asking the Court to make these terms and conditions into an order that will dispose of two pending motions?” She said yes. The record does not indicate that the trial court ruled on those pending motions at the July proceeding. Appellee responds that the trial court ruled on those matters by the notation on the docket sheet that “all other pending requests denied and non-suited.” But we do not construe that notation as a rendition of judgment. See Formby's KOA, 730 S.W.2d at 430-31 (stating that as a general rule, “a mere docket entry is not sufficient to constitute a judgment or decree of the court” without more evidence of the court's intent). Instead, it appears to be a contemporaneous note relating to appellant's counsel's statement of the parties' agreement that “all other pending requests in this cause of action, the parties have agreed will be waived by the parties and denied by the Court.”

Based on this record, we conclude that judgment was not rendered in this case at the time the parties announced their agreement on the record. We conclude that judgment was rendered on the date the trial court signed the agreed order, which was well after appellant had withdrawn his consent to the agreement. Consequently, the trial court erred by rendering judgment on the parties' agreement after appellant had withdrawn his consent. See Footnote 1

We sustain appellant's sole issue on appeal, reverse the trial court's judgment, and remand the cause for further proceedings.

ELIZABETH LANG-MIERS
JUSTICE

Richter, J., concurring without opinion.

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Footnote 1


We express no opinion regarding the enforceability of the settlement agreement. See Padilla, 907 S.W.2d at 461 (distinguishing between requirements of an agreed judgment and an enforceable settlement agreement); Browning v. Holloway, 620 S.W.2d 611, 614-15 (Tex. Civ. App.-Dallas 1981, writ ref'd n.r.e.) (same).

13th Court of Appeals affirms trial court's denial of motion to compel arbitration


Denial of motion to compel arbitration affirmed in interlocutory appeal. Appellant did not challenge all possible grounds for the trial court's order, which did not specify any such ground. Briefing rules do  not permit new grounds for appeal to be raised in a reply brief.

U.S. Lawns, Inc. v. Castillo,
U.S. Lawns, Inc. vs Rudolfo Luis Castillo, Jr. and Yadira Ivette Arroyo,
No. 13-10-00669-CV (Tex.App. - Corpus Christi, Jul. 28, 2011)

O P I N I O N

Before Chief Justice Valdez and Justices Rodriguez and Benavides

Opinion by Chief Justice Valdez

Appellant, U.S. Lawns, Inc. (“U.S. Lawns”), filed an interlocutory appeal from an order denying its motion to compel arbitration with appellees, Rodolfo Castillo Jr. and Yadira Ivette Arroyo. By one issue, U.S. Lawns contends that the trial court erred in denying its motion because Castillo was bound to an arbitration agreement between U.S. Lawns and Castillo’s employer. We affirm.

I. Background

On July 31, 2008, Castillo was injured while employed with Blue Green Services, L.P. Castillo was using a “zero radius turn” lawnmower on a steep embankment when he lost control of it. The lawnmower slid down the embankment into a cement ditch and landed on top of him. Castillo suffered severe neurological injuries and is now a paraplegic.

On February 11, 2009, appellees filed suit for personal injuries and loss of consortium against Exmark Manufacturing Company, Inc., the Toro Company, and the Young Men’s Christian Association (YMCA) of the Greater Houston Area.[1] On March 30, 2010, appellees filed an amended petition naming U.S. Lawns as an additional party. U.S. Lawns responded to appellees’ amended petition with a motion to transfer venue, original answer, and jury demand with jury fees enclosed. The jury trial was set for December 6, 2010.

On October 5, 2010, U.S. Lawns filed a motion to compel binding arbitration and to dismiss appellees’ petition, claiming an arbitration agreement existed with Castillo. Appellees filed a response to the motion to compel arbitration, contending that there was not a valid arbitration agreement and that U.S. Lawns had waived arbitration. After conducting a hearing on November 18, 2010, the trial court denied U.S. Lawns’s motion to compel arbitration. This interlocutory appeal followed.[2]

II. Standard of Review

We review the denial of a motion to compel arbitration under the Federal Arbitration Act for an abuse of discretion. Sidley Austin Brown & Wood, LLP v. J.A. Green Dev. Corp., 327 S.W.3d 859, 862–63 (Tex. App.—Dallas 2010, no pet.); In re D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006) (orig. proceeding). A trial court abuses its discretion when it acts arbitrarily or unreasonably and without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985).

III. Waiver on Appeal

Appellees claim that the trial court could have denied U.S. Lawns’s motion to compel arbitration on a ground that U.S. Lawns has not challenged on appeal. Therefore, appellees argue that we may affirm the trial court’s judgment on that unchallenged ground. Specifically, appellees assert that the trial court could have denied U.S. Lawns’s motion to compel arbitration because U.S. Lawns waived its right to arbitration by substantially invoking the judicial process, which resulted in prejudice to appellees. See Perry Homes v. Cull, 258 S.W.3d 580, 589–90 (Tex. 2008) (“[A] party waives an arbitration clause by substantially invoking the judicial process to the other party’s detriment or prejudice.”).

A. Applicable Law

An appellant’s brief “must state concisely all issues or points presented” for appellate review. Tex. R. App. P. 38.1(d). A point or statement of an issue is treated as “covering every subsidiary question” that is reasonably included. Id. However, “the courts of appeals may not reverse the judgment of a trial court for a reason not raised in a point of error.” Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (citing Vawter v. Garvey, 786 S.W.2d 263, 264 (Tex. 1990); San Jacinto River Auth. v. Duke, 783 S.W.2d 209, 210 (Tex. 1990)). Moreover, “[g]rounds of error not asserted by points of error are considered waived on appeal.” Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 395 (Tex. 1991) (stating that the appellant could not challenge a trial court’s general judgment notwithstanding the verdict on grounds that the appellant did not advance in his brief to the court of appeals); Garcia v. Barreiro, 115 S.W.3d 271, 273 n.2 (Tex. App.—Corpus Christi 2003, no pet.) (concluding that the appellants waived their requests for the reversal of the trial court’s orders granting the appellees’ motions for summary judgment and the trial court’s order denying appellants’ motion for new trial because they failed to raise points of error or assert arguments concerning those issues).

An appellant must challenge each independent ground that may support an adverse ruling. Fox v. Maguire, 224 S.W.3d 304, 307 (Tex. App.—El Paso 2005, pet. denied) (applying this rule in a case involving a plea to the jurisdiction); Inscore v. Karnes County Sav. & Loan Ass’n, 787 S.W.2d 183, 184 (Tex. App.—Corpus Christi 1990, no writ) (“Where a judgment may rest upon more than one ground, the party aggrieved by the judgment must assign error to each ground or the trial court’s judgment will be affirmed on the ground to which no error was assigned. In such situations, it is said that appellants have waived their right to complain of the ruling to which no error was assigned.”). If the appellant fails to challenge all possible grounds, we must affirm the judgment on the unchallenged ground. Fox, 224 S.W.3d at 307; Inscore, 787 S.W.2d at 184.

B. Discussion

U.S. Lawns argues that this Court may not affirm the trial court’s “order on the independent ground proffered by [appellees]” because: (1) the order from the trial court was not a “general” order; (2) summary judgment rules do not apply to motions to compel arbitration; and (3) even if the order was a general order, the waiver of arbitration issue needs to succeed on the merits.

1. “General” Order

First, U.S. Lawns argues that even though the trial court did not specify the basis for its denial of its motion, the order was not a “general” order. Additionally, U.S. Lawns states that because appellees did not “present, advance, reference or, even mention [their] waiver [of arbitration] argument during the entire hearing,” appellees’ “suggestion that the trial court could have based its decision on the waiver argument is not correct and [is] unsupported.” Thus, without citation to any authority, U.S. Lawns invites us to rely only on the reporter’s record of the hearing on its motion to compel arbitration to determine the ground or grounds that the trial court considered in denying its motion to compel arbitration. We decline to do so.

Here, the trial court recited in its order that it denied U.S. Lawns’s motion to compel arbitration “[a]fter considering [U.S. Lawns’s] [m]otion . . ., the response, and arguments of counsel, and after a hearing on the application . . . .” We may not ignore this recitals in the trial court’s order, and we may not simply refer to the trial court’s oral pronouncements in the reporter’s record. See Capital Fin. & Commerce AG v. Sinopec Overseas Oil & Gas, Ltd., 260 S.W.3d 67, 84 n.21 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (“Recitals in a judgment or signed order of the court thus control over conflicting recitals in the record.”); Harrington v. Harrington, 742 S.W.2d 722, 724 (Tex. App.—Houston [1st Dist.] 1987, no writ); see also Pisharodi v. Six, No. 13-07-019-CV, 2008 Tex. App. LEXIS 5987, at **9–10 (Tex. App.—Corpus Christi Aug. 7, 2008, no pet.) (mem. op.) (refusing “to surmise about the reasoning behind the trial court’s general order granting summary judgment” and determining that we must only “look to the order granting summary judgment to determine the trial court’s reasons for ruling” and that “the trial court indicated in its order that it considered the motion and the supplements” when it stated that the trial court considered the “Defendants’ Motion for Summary Judgment and Exhibits, all responses, replies, and supplements thereto”). Moreover, we may not remove U.S. Lawns’s burden of attacking each of the possible grounds for the trial court’s denial of its motion to compel arbitration by simply referencing the trial court’s oral pronouncements at the motion to compel arbitration hearing, and we may not assume that the trial court did not consider all of the grounds asserted in appellees’ response to U.S. Lawns’s motion. See Strather v. Dolgencorp of Tex., Inc., 96 S.W.3d 420, 422–23 (Tex. App.—Texarkana 2002, no pet.) (explaining that the appellate court may not speculate on the trial court’s reasons for granting summary judgment and that to do so, the appellate court would be improperly placing itself in the trial court’s role). Therefore, we conclude that because the trial court did not specify in its order its reason for denying U.S. Lawns’s motion, the trial court’s order is a general order.[3] See Lang v. City of Nacogdoches, 942 S.W.2d 752, 767–68 (Tex. App.—Tyler 1997, writ denied) (“[W]hen the trial court does not specify the specific grounds upon which it granted summary judgment, it is presumed that judgment was granted on all grounds raised by the moving party and it is then the burden of the non-moving party to show that each independent argument alleged in the motion was insufficient to support the trial court's order.”) (citing Ins. Co. of N. Am. v. Sec. Ins. Co., 790 S.W.2d 407, 410 (Tex. App.—Houston [1st Dist.] 1990, no writ)). Accordingly, U.S. Lawns was required on appeal to attack each possible ground for the trial court’s denial of its motion. See id.

2. Addressing Unchallenged Grounds

Second, U.S. Lawns argues that it should not have to address each ground asserted by appellees for denying its motion because the rule requiring a party to challenge alternative grounds on appeal only applies to summary judgments. Again, without citation to authority, U.S. Lawns states that “[a]pplying the rule does not make sense in the context of a movant’s appeal of an order denying arbitration because doing so causes substantial discord with this State’s strong presumption and policy favoring arbitration.” Further, although U.S. Lawns recognizes that this Court has discussed the application of summary judgment rules regarding alternative grounds in the context of a motion to compel arbitration, U.S. Lawns claims that neither it nor appellees have found “any case applying this principle in the present context [and] [t]his Court should not be the first to do so.”

As we stated in In re Int’l Bank of Commerce—a case involving a trial court’s ruling on a motion to compel arbitration—when the trial court has not stated the grounds for its ruling, “the appellant is required to attack all possible grounds for the order or judgment or risk waiver of its complaints.” No. 13-07-693-CV, 2008 Tex. App. LEXIS 519, **41–42 (Tex. App.—Corpus Christi Jan. 18, 2008, pet. struck, original proceeding). In In re Brock Specialty Servs., Ltd., we explained that in arbitration cases where the trial court specifies its reason for its ruling, we apply summary judgment rules, and we stated, “we see no reason why [that reasoning] should not apply in the context of our interlocutory review of arbitration orders.” 286 S.W.3d 649, 656–57 (Tex. App.—Corpus Christi 2009, no pet.).

In this case, the trial court did not state its grounds for its order, and appellees asserted two possible grounds supporting the denial of U.S. Lawns’s motion to compel arbitration. Therefore, we will follow the logic in In re Int’l Bank of Commerce and In re Brock Specialty Servs., Ltd, and we cannot agree with U.S. Lawns’s assertion that on appeal, it is not required to challenge all grounds supporting the trial court’s denial of its motion to compel arbitration. See Fort. Bend County Drainage Dist., 818 S.W.2d at 395; Garcia, 115 S.W.3d at 273 n.2; Fox, 224 S.W.3d at 307; Inscore, 787 S.W.2d at 184. Accordingly, U.S. Lawns was required to attack all possible grounds supporting the trial court’s order or risk waiver of its complaints. See 2008 Tex. App. LEXIS 519, **41–42.

3. Merits of Unchallenged Grounds

Finally, U.S. Lawns argues in its reply to appellees’ brief that “independent alternate grounds, must be legally meritorious and supported in the record.” Therefore, it appears that U.S. Lawns urges this Court to determine the merits of a ground not challenged in its original brief. We decline to do so.

“It is well-settled that [r]ule 38.3 of the Texas Rules of Appellate Procedure does not allow an appellant to include in a reply brief a new issue in response to a matter pointed out in appellee’s brief but not raised by the appellant’s original brief.” In re TCW Global Project Fund II, Ltd., 274 S.W.3d 166, 171 (Tex. App.—Houston [14th Dist.] 2008, orig. proceeding) (citing Dallas County v. Gonzales, 183 S.W.3d 94, 104 (Tex. App—Dallas 2006, pet. denied); Howell v. Tex. Workers’ Comp. Comm’n, 143 S.W.3d 416, 439 (Tex. App.—Austin 2004, pet. denied); In re M.D.H., 139 S.W.3d 315, 318 (Tex. App.—Fort Worth 2004, pet. denied); Barrios v. State, 27 S.W.3d 313, 322 (Tex. App.—Houston [1st Dist.] 2000, pet. ref’d)); see Tex. R. App. P. 38.3. Here, in its original brief, U.S. Lawns did not challenge all possible grounds on which the trial court could have based its denial of the motion to compel arbitration. By attacking the merits of the unchallenged ground in its reply brief, U.S. Lawns is attempting to circumvent the briefing rules.

Because U.S. Lawns has failed to challenge in its original brief, a ground that may have been the basis for the trial court’s denial of U.S. Lawns’s motion to compel arbitration—whether U.S. Lawns waived its right to arbitration—that issue has been waived on appeal. See In re TCW Global Project Fund II, Ltd., 274 S.W.3d at 171. Moreover, because the trial court’s judgment in this case can rest on more than one ground and U.S. Lawns has not challenged each of those grounds, we may affirm the trial court’s judgment on the ground to which no error was assigned. Fox, 224 S.W.3d at 307; Inscore, 787 S.W.2d at 184. We therefore conclude that the trial court did not err in denying U.S. Lawns’s motion to compel arbitration. We overrule U.S. Lawns’s sole issue.

IV. Conclusion

Accordingly, we affirm the trial court’s order denying U.S. Lawns’s motion to compel arbitration.

Rogelio Valdez
Chief Justice

Delivered and filed the 28th day of July, 2011.

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[1] Exmark Manufacturing Company, Inc., the Toro Company, and the Young Men’s Christian Association of the Greater Houston Area, and Blue Green Services are not parties to this appeal.

[2] Section 51.016 of the civil practice and remedies code permits courts to review orders denying a motion to compel arbitration subject to the Federal Arbitration Act (FAA) by interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.016 (West Supp. 2010). Both parties agree that this case is governed by the FAA.

[3] We note that at the hearing on U.S. Lawns’s motion to compel arbitration, U.S. Lawns argued to the trial court, “They’re [appellees] also going to argue that I waived this motion because of significant work has been done in discovery. There is no case law supporting that. There was a summary judgment filed but it was filed the day after this motion and it was filed subject to this motion. So any argument that they put forth that I waived it, I do not agree with them and it is just simply not supported by the case law.” Therefore, at the hearing, U.S. Lawns acknowledged that appellees had in fact raised a waiver of arbitration argument to the trial court.


Court of Appeals orders case sent back to Arbitrator for clarification


Thirteenth Court of Appeals reverses trial court's denial of arb award confirmation and remands with instruction to send the case back to the arbitrator for clarification.

Ramos v. Perez,
Roberto Ramos v. Javier Perez, et al. No. 13-10-00350-CV (Tex.App. - Corpus Christi, Aug. 10, 2011)


MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Rodriguez and Garza

Memorandum Opinion by Justice Rodriguez

This is an arbitration case. Appellant, Roberto Ramos, filed suit against appellees, Javier Perez, individually, Hook and Lateral Investments, L.L.C., Livex and Agro, L.L.C., Monte Bonito, L.L.C., Northgate Real Estate Group, L.L.C., P&L Partners, L.L.C., Paradise Rio Carwash, G.P., L.L.C., Sharyland Investors, Ltd., and the Shary Group, L.L.C. (collectively Perez). The parties agreed to arbitrate, and the arbitrator entered a final award in favor of Ramos. On Perez's motion, the trial court vacated that award. By his sole issue, Ramos generally contends that the trial court erred in vacating the arbitrator's award because Perez failed to prove that the arbitrator executed his powers so imperfectly that no mutual, final, or definite award was rendered.[1] We reverse with instructions to submit to the arbitrator for clarification and, once resolved, to confirm.

I. Background

The parties filed various claims and counterclaims against each other disputing, among other things, ownership interests, contributions made, and actions taken in relation to Monte Bonito, L.L.C. (the Company), a limited liability corporation formed by the parties to develop, subdivide, and sell property. Rather than proceed to trial, the parties agreed to submit their claims to arbitration under the Federal Arbitration Act (FAA).
The arbitrator conducted a four-day final evidentiary hearing. Upon its conclusion, due to the complexity of the accounting issues, the arbitrator asked the parties to submit briefs limited to liability issues. Following submission of the briefs, the arbitrator issued Amended Interim Order #1 which included the following relevant and unchallenged liability findings:

7. Respondent Perez breached his fiduciary duty to Claimant [Ramos] and [the Company] in transferring 15 "repossessed" lots to Hook and Lateral Investments, LLC in violation of Texas Business Organizations Code ' 101.225 . . . ; [and]

8. Claimant [Ramos] breached his fiduciary duty to Respondent Perez and [the Company] in failing to disclose the lien created in favor of Eva Ramos on the 12 acre tract transferred to the project.[[2]]

After additional briefing, the arbitrator issued Interim Order #2. That order determined what accounting priority models would be utilized to reflect the schedule of assets and liabilities and the schedule of partner capital accounts.[3]

Finally, the parties submitted closing briefs on the issue of damages and remedies. In his closing brief,[4] Perez recommended, in relevant part, the following method of zeroing out the capital accounts and winding up the company—a method which addresses the issue of the $50,000 lien created by Ramos in favor of his sister-in-law, Eva Ramos, on the 12 acre tract transferred to the project (the Eva Ramos lien):

Considering [the goal to get Perez and Ramos "split up" thus, winding down the company by zeroing out the capital accounts of each member and distributing the assets based upon the respective ownership interest], utilizing Interim Order #2, Perez believes that the following distribution is the fairest and most expedient and expeditious way to zero out the remainder of the capital accounts and divide the company assets between its members immediately. This distribution would eliminate any need to continue on [sic] the company with both owners to have to collect note payments to generate revenue as well as resolve the issues raised by the respective breaches of fiduciary duties found by the arbitrator.
. . . . .

In order to zero-out Ramos's capital account, Ramos should be paid the total cash assets in the company, which total $91,201, thereby leaving a balance owed in the amount of $105,629.

Balance of Ramos Capital: $196,830

Less Cash (Bank/Court): <$91,201>

Balance owing to Ramos: $105,629

However, before Ramos is paid any money, the issue of the $50,000 lien created in favor of Eva Ramos, which the Arbitrator previously found was a breach of Ramos's breach of his [sic] fiduciary duty to the company must be addressed. Thus, the payment of these cash assets should be conditioned upon a release of lien executed by Eva Ramos or the payment should be made jointly payable to both Ramos and Eva Ramos, to assure that no further damages are incurred due to the lien on the property and that matter is resolved.

After discussing his proposed method of zeroing out the capital accounts and winding up the company in detail, Perez summarily stated "[i]n short, the 'zeroing out' and distribution of assets to the members of [the Company] will result in . . . [c]ash paid to Ramos" in the amount of "$91,201 (subject to Eva Ramos release)." Perez concluded this portion of his brief on damages and remedies as follows:

This proposal would allow for the fairest and most expedient and expeditious manner for the zeroing out of capital accounts and the dividing of the company. A spreadsheet of this distribution is attached as Exhibit "I". Additionally, this distribution addresses the respective breaches of fiduciary duties by Perez and Ramos by (1) conditioning the payment of the case [sic] to Ramos on obtaining a release from Eva Ramos[[5]] and (2) returns the lots transferred to Hook & Lateral and uses those to pay off capital and distributes the notes to the company members. As such, Perez urges the Arbitrator to adopt this method for zeroing out the capital accounts and distributing the assets and thus winding down the company.

On February 23, 2010, the arbitrator entered his final award in favor of Ramos, basing it, in part, on a statement of zeroing out capital accounts and winding up of the company, attached as Exhibit "I" to the award. Exhibit "I" and a companion Exhibit "IA," modified only for attorney's fees, were otherwise identical to the spreadsheet of the distribution proposed by Perez and attached to his closing brief as Exhibit "I." The arbitrator's award closed with the following language: "This Award is in full settlement of all claims submitted to this Arbitration. All claims not expressly granted herein are hereby denied."

Nonetheless, on March 29, 2010, Perez moved in the trial court to vacate the arbitration award, in relevant part, on the basis that the arbitrator executed his powers so imperfectly that there was no mutual, final, and definite award. See 9 U.S.C. ' 10(a)(4). At the hearing on the motion to vacate, Perez argued that while the arbitrator found Ramos breached his fiduciary duty to the Company by entering into an agreement with his sister-in-law to pay her $50,000 thereby creating a lien on property that was eventually sold to third parties, the arbitrator made no damage finding in his breach of fiduciary duty claim. Perez also asserted that the arbitrator did not resolve that issue by either satisfying the lien or making a requirement that it be satisfied and removed so that title to the property was clear and the Company did not have a claim filed against it. According to Perez, because this issue remained unresolved, the arbitrator executed his powers so imperfectly that there was no mutual, final, and definite award.

On June 21, 2010, the trial court granted Perez's motion thereby vacating the arbitrator's award. It is from the trial court's order that Ramos appeals.

II. Standard of Review and Applicable Law

Because it is undisputed that the FAA controlled the arbitration proceedings, we review de novo the questions regarding whether to vacate the arbitrator's award. See Kergosien v. Ocean Energy, Inc., 390 F.3d 346, 352 (5th Cir. 2004); Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d 244, 250 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (op. on reh'g). All reasonable presumptions are indulged in favor of the award, and none against it. Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 568 (Tex. App.—Dallas 2008, no pet.).

It is well-settled that such an award can be vacated only for the reasons specified in section 10(a) of the FAA. 9 U.S.C. § 10(a). That is, section 10(a) permits a court to vacate an arbitration award only when: (1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption in the arbitrator; (3) the arbitrator was guilty of refusing to postpone the hearing, failing to hear material evidence, or misbehaving in a way that prejudiced the rights of any party; or (4) the arbitrator exceeded his powers or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. Id.; see Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 578 (2008) (providing that bases for vacatur in section 10 of the FAA are exclusive).

"The party moving to vacate an arbitration award has the burden of proof." Lummus Global Amazonas S.A. v. Aguaytia Energy del Peru S.R. Ltda., 256 F.Supp.2d 594, 604 (S.D. Tex. 2002). When seeking to modify or vacate an arbitration award, the non-prevailing party bears the burden to bring forth a complete record to the trial court to establish its basis for vacating or modifying the award. See Statewide Remodeling, 244 S.W.3d at 568-69; see also GJR Mgmt. Holdings, L.P. v. Jack Raus, Ltd., 126 S.W.3d 257, 263 (Tex. App.—San Antonio 2003, pet. denied) (stating that without a record, the court has "no way of judging" whether allegations of arbitrator's gross mistake were supported). "When there is no transcript of the arbitration hearing, the appellate court will presume the evidence was adequate to support the award." Statewide Remodeling, 244 S.W.3d at 568.

III. Discussion

By his sole issue, Ramos contends that the trial court erred in vacating the arbitrator's award pursuant to section 10(a)(4), because all issues, specifically Perez's breach-of-fiduciary-duty claim, were resolved by the arbitrator. See 9 U.S.C. § 10(a)(4). Ramos also urges that if we agree that this breach-of-fiduciary-duty claim was resolved but determine that the award was not final because the arbitrator did not inform the parties of how to handle the Eva Ramos lien, then the award is only ambiguous. And if it is ambiguous, Ramos asserts the trial court erred in vacating the award because the proper remedy would have been to remand the award to the arbitrator for clarification of its intent regarding the lien.

A. Damages

Ramos contends that the trial court erred in vacating the award on the basis that no damages were awarded on Perez's breach of fiduciary duty claim.

We agree.

Addressing liability issues in its Amended Interim Order #1, the arbitrator found that Ramos "breached his fiduciary duty to . . . Perez and [the Company] in failing to disclose the lien created in favor of Eva Ramos on the 12 acre tract transferred to the project." The arbitrator "decline[d] to award actual damages" because "there were none at the time of the filing of the lawsuit." Rather, the arbitrator provided for equitable relief. He ordered the settlement of the Company, requiring the winding up of a partnership, an accounting, the distribution of notes, and a reduction of the parties' capital accounts to zero. See, e.g., ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 872-75 (Tex. 2010) (setting out that "courts may fashion equitable remedies such as profit disgorgement and fee forfeiture to remedy a breach of fiduciary duty") (citing Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 200 (Tex. 2002) (stating the rule that courts may disgorge any profit where "an agent diverted an opportunity from the principal or engaged in competition with the principal, [and] the agent or an entity controlled by the agent profited or benefitted in some way"); Burrow v. Arce, 997 S.W.2d 229, 237 (Tex. 1999) ("[A] person who renders service to another in a relationship of trust may be denied compensation for his service if he breaches that trust.")); Chien v. Chen, 759 S.W.2d 484, 494 n.6 (Tex. App.—Austin 1988, no writ) (recognizing equitable remedies, including a constructive trust, as a remedy for breach of fiduciary duty); Hughes v. Houston Nw. Med. Ctr., Inc., 680 S.W.2d 838, 843 (Tex. App.—Houston [1st Dist.] 1984, writ ref'd n.r.e.) (acknowledging a constructive trust as a remedy for breach of fiduciary duty that results in profit or unjust enrichment to the breaching party) (citing Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401, 410 (1960)); see also Tex. Bus. Orgs. Code Ann. §§ 11.051(5), 11.314(1)(B) (West Supp. 2010) (providing that a district court has jurisdiction to order the winding up and termination of the partnership on a partner's application when the court determines, among other things, that "another partner has engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on the business in partnership with that partner"). Thus, the requested equitable remedies were available and were ordered by the arbitrator.[6] Moreover, because equitable relief was requested and available, the arbitrator did not need to award actual damages. See Burrow, 997 S.W.2d at 238-39 (recognizing that a showing of actual damages is not required to prevail on a claim of breach of fiduciary duty) (relying on Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 514 (1942), to reject lack of damage to plaintiff as negating recovery for breach of fiduciary duty); see also Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478 (1962) ("The necessary prerequisite to the right to maintain a suit for an equitable accounting, like all other equitable remedies, is . . . the absence of an adequate remedy at law.") (citing Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 510 (1959)); Stockton v. Altman, 432 F.2d 946, 950 (5th Cir. 1970).

In addition, the arbitrator's final award stated that it was "in full settlement of all claims submitted to" arbitration and denied all claims not expressly granted in the award. This broad language suggests that the arbitrator considered and resolved all claims submitted, including the damage element of the breach-of-fiduciary-duty claims.

Based on our de novo review, see Kergosien, 390 F.3d at 352; Tanox, 105 S.W.3d at 250, and indulging all reasonable presumptions in favor of the award and none against it, see Statewide Remodeling, 244 S.W.3d at 568, we conclude that the arbitrator's award resolved all issues submitted to arbitration, including the damage element of Perez's breach-of-fiduciary-duty claim. Thus, the trial court erred in vacating the arbitration award on the basis that no breach-of-fiduciary-duty damage finding had been made. We sustain Ramos's issue in that regard.

B. Ambiguity

Perez also urged, in his motion to vacate, that the award did not clearly set out what the parties were to do with regard to the Eva Ramos lien. While Ramos argues on appeal that there is no such ambiguity, he asserts, in the alternative, that if this Court so concludes, then the proper remedy is not to vacate the award but to remand the award to the arbitrator for clarification of that matter. We agree.

When a reviewing court finds part of an award ambiguous, the remedy is to remand the award to the arbitrator for a full explanation. San Antonio Newspaper Guild Local No. 25 v. San Antonio Light Div., 481 F.2d 821, 825 (5th Cir. 1973); see Weinberg v. Silber, 140 F.Supp.2d 712, 722-23 (N.D. Tex. 2001); see also In re Nestle USA—Beverage Div., Inc., 82 S.W.3d 767, 778 (Tex. App.—Corpus Christi 2002, orig. proceeding).

In this case, the award discussed an amount of cash, $91,201, to be paid to Ramos. The arbitrator incorporated Exhibit "I" into his final award. This exhibit, adopted from Perez's closing brief, set out that the cash in the bank and in escrow in the court to be paid to Ramos—the $91,201—was subject to "release by Eva Ramos." The arbitrator also stated in the opening paragraph of his final award that he considered all arguments presented by the parties. Based on this language, the arbitrator considered the following argument urged by Perez in his closing brief:

[T]he payment of these cash assets should be conditioned upon a release of lien executed by Eva Ramos or the payment should be made jointly payable to both Ramos and Eva Ramos, to assure that no further damages are incurred due to the lien on the property and that matter is resolved," . . . [and] this distribution[, summarized in Exhibit "I"] addresses the respective breaches of fiduciary duties by . . . Ramos by . . . conditioning the payment of the case [sic] to Ramos on obtaining a release from Eva Ramos.

Perez's proposal would have allowed for the release of the lien so that the money could have been paid to Ramos.

While stating that the payment of the money to Ramos was subject to a release from Eva Ramos and considering this proposal, the arbitrator did not, however, expressly inform the parties as to what should be done regarding the lien. Therefore, we cannot conclude that the award's language is dispositive as to how the parties should handle that part of the award, the referenced lien. The language provides no guidance. Instead, it is ambiguous.

Because the award did not clearly set out what the parties were to do with regard to the Eva Ramos lien, the trial court properly concluded the award was ambiguous and that the arbitrator executed his powers so imperfectly that no mutual, final, or definite award was rendered. See 9 U.S.C. ' 10(a)(4). Thus, we overrule Ramos's issue to the extent he challenges the ambiguity of the award as the basis for the trial court's vacatur.

However, because the proper remedy for an ambiguous award is to remand it to the arbitrator for a full explanation and clarification, see San Antonio Newspaper Guild, 481 F.2d at 825, we agree with Ramos that the trial court erred in vacating the award. Rather, the trial court should have remanded the matter of the Eva Ramos lien to the arbitrator for clarification. See id. Therefore, we sustain this issue on the basis of Ramos's alternative remedy argument.

IV. Conclusion

Accordingly, we reverse the order of the trial court and remand this cause to the trial court with instructions to submit the matter to the arbitrator for clarification of the process by which the parties should address the Eva Ramos lien and, once resolved, to enter an order confirming the arbitration award.

NELDA V. RODRIGUEZ
Justice

Delivered and filed the 11th day of August, 2011.

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[1] Ramos also contends that the trial court erred in vacating the arbitrator's award because Perez failed to prove that the arbitrator was (1) partial or biased and (2) refused to hear pertinent and material evidence related to accounting principles that were allegedly misapplied which prejudiced Perez's rights. See 9 U.S.C. § 10(a)(2)–(3) (West 2006). Perez, however, has informed the Court that he does not rely on these arguments to support his position. Neither does Perez contend that he proved the arbitrator exceeded his powers. See id. § 10(a)(4). Therefore, to the extent Ramos argues these issues on appeal, we need not address them. See Tex. R. App. P. 47.1. In other words, both parties agree that the only matter before this Court is whether the arbitrator executed his powers so imperfectly that no mutual, final, or definite award was rendered. See id.


[2] The "project" is described as the development of a tract of land in Mission, Texas, as a residential subdivision.


[3] Although Perez challenged the accounting process in the trial court, he does not assert on appeal that this was a basis for vacating the arbitration award.


[4] It is undisputed that the arbitration proceeding was not recorded. Other than the arbitrator's final award, Perez's remedies and damages brief is the only portion of the arbitration proceeding that is part of the appellate record. Although Perez offered the closing brief and its exhibits at the hearing on his motion to vacate for the limited purpose of establishing that one of its exhibits—a certain affidavit—had been submitted to the arbitrator, the trial court admitted the brief and all of its exhibits without limitation and without objection. On appeal, this brief and its exhibits appear in the reporter's record.


[5] Exhibit "I" addressed Perez's recommended disposition of Ramos's breach-of-fiduciary-duty claim through the following entry under the category of Liabilities: "Pay Cash in Bank and escrow in Court to Ramos: <$91,201> (Subject to release by Eva Ramos)."


[6] Although Perez's counterclaims do not appear in the record, it is undisputed that he filed them. Moreover, because the arbitrator granted equitable relief in this matter, we must presume that Perez requested not only actual damages but also equitable relief, as did Ramos. See Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 568 (Tex. App.—Dallas 2008, no pet.) (providing that all reasonable presumptions are indulged in favor of the award and none against it).

Walk out on mediator at your peril: Appeal dismissed for failure to complete mediation session



Waco Court of Appeals dismisses appeal because Appellant terminated the mediation early by walking out. Preference for having the court decide the issues in dispute did not pass muster as a valid excuse.  

In the Estate of James H. Rice,
No. 10-10-00021-CV (Tex.App.- Waco, Aug. 10, 2011)


MEMORANDUM OPINION


In an order dated April 20, 2011, the Court found that this appeal was appropriate for mediation and ordered the parties to mediate this case. The Court’s Order provided in part:

Named parties must be present during the entire mediation process, … .

Failure or refusal to attend the mediation as scheduled may result in the imposition of sanctions, as permitted by law. If Appellant James Rice, Jr. fails to attend the mediation, this appeal will be dismissed. See Tex. R. App. P. 42.3(b), (c). [Emphasis in original.]

The mediation was held at the McLennan County Dispute Resolution Center on June 15, 2011. The Court received a June 22, 2011 letter from the Executive Director of the McLennan County Dispute Resolution Center. That letter states that

the mediation session ended abruptly when Appellant, James H. Rice, Jr. unexpectedly left the premises and did not return, prior to the mediation being terminated, adjourned, or recessed by the DRC’s volunteer mediator. As a result, the parties were unable to reach any agreement and the mediator, in the absence of the Appellant, pronounced the mediation terminated with the parties at impasse.
The Court requested, and has received, statements from the parties’ counsel about “the circumstances of Appellant’s departure from the mediation and why this appeal should not be dismissed for failure to comply with the Court’s April 20 Order.” James has not justified his departure from the mediation. The only explanation, which the Court finds insufficient, for James’s departure is that he “felt it best to put this matter in the hands of the Court.” Noah’s counsel’s statement verifies the Executive Director’s description of the events. James’s departure violated both the letter and spirit of the Court’s order, which explicitly required him “to attend the mediation” and to “be present during the entire mediation process.” Accordingly, this appeal is dismissed. Tex. R. App. P. 42.3(c).

REX D. DAVIS

Justice

Before Chief Justice Gray, Justice Davis, and Justice Scoggins

Appeal dismissed

Opinion delivered and filed August 10, 2011


TAGS: dismissal for failure to comply with appellate mediation order, failure or refusal to mediate

Monday, July 18, 2011

Claim that arbitrators exceeded their powers rejected

Dallas Court of Appeals rejects contention that the arbitrators went beyond the scope of their authority:  

Skidmore Energy, Inc. v. Maxus (U.S.) Exploration Company,  
No. 05-09-00402-CV (Tex.App.- Dallas July 12, 2011)

Claim That Arbitrators Exceeded Their Powers


Appellants additionally contend the trial court erred by entering a judgment confirming the arbitration award because the panel majority exceeded its authority. Appellants claim the panel majority exceeded its authority by ruling that Skidmore breached the 1998 Agreement because that specific argument was not advanced by Maxus at the outset of the arbitration. [fact and background section moved to the bottom of this post]

Analysis
Texas law allows for vacatur of an arbitration award if the arbitrators "exceeded their powers." Tex. Civ. Prac. & Rem. Code Ann. § 171.088 (a)(3)(A). An arbitrator's authority is limited to disposition of matters expressly covered by an arbitration agreement or implied by necessity. Gulf Oil Corp. v. Guidry, 327 S.W.2d 406, 408 (Tex. 1959); see also Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 90 (Tex. 2011) (in arbitration conducted by agreement of the parties, rule is well established that an arbitrator derives his power from parties' agreement to submit to arbitration) (citing City of Pasadena v. Smith, 292 S.W.3d 14, 20 (Tex. 2009)); Townes Telecomms. Inc. v. Travis, Wolff & Co., 291 S.W.3d 490, 493 (Tex. App.-Dallas 2009, pet. denied) (arbitrator's authority to decide matters is derived from the arbitration agreement). Arbitrators therefore exceed their authority when they decide matters not properly before them. Travis, Wolff & Co., 291 S.W.3d at 493. When determining whether an arbitration panel has exceeded its powers, any doubts concerning the scope of what is arbitrable should be resolved in favor of arbitration. Id.

When we determine whether claims are within the scope of an arbitration agreement, we examine the terms of the arbitration agreement and the factual allegations pertinent to the claim. Graham-Rutledge & Co. v. Nadia Corp., 281 S.W.3d 683, 690 (Tex. App.-Dallas 2009, no pet.). Because of policy favoring enforcement of arbitration agreements, the ability to arbitrate claims should not be denied "unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue." Marshall, 909 S.W.2d at 899 (quoting Commerce Park at DFW Freeport v. Mardian Constr. Co., 729 F.2d 334, 338 (5th Cir. 1984)).

Here the arbitration agreement reflects the parties' desire to submit "all claims asserted in the Lawsuit" to binding arbitration. See Footnote 12 This phrase is broad and may encompass a wide range of issues. See Centex/Vestal, 314 S.W.3d at 685 (noting that "[a]ny claim arising out of or related to the Contract" was subject to arbitration was broad and encompassed a wide range of disputes). When an arbitration clause employs broad language such as the language in the arbitration agreement here, "it is construed as evidencing the parties' intent to be inclusive rather than exclusive." Id. Broad arbitration agreements like that at issue have been held to support awards rendered on a variety of grounds, including those not specifically argued to the arbitrators. See City of Baytown v. C.L. Winter, Inc., 886 S.W.2d 515, 518 (Tex. App.-Houston [1st Dist.] 1994, writ denied) (arbitrators did not exceed powers by awarding damages for changed conditions under contract even though issue of changed conditions was not specifically addressed in parties' briefing); J.J. Gregory Gourmet Servs., Inc. v. Antone's Import Co., 927 S.W.2d 31, 34-5 (Tex. App.-Houston [1st Dist.] 1995, no writ) (arbitrators did not exceed their powers in determining issue the resolution of which was not expressly demanded, because issue was actually discussed during arbitration proceedings).

In their motion to vacate the arbitration award, appellants stated that "at the arbitration and pursuant to the terms of the Arbitration Agreement, the arbitrators were to undertake a 'clarification of the issues.'" The arbitration agreement further provides that in exercising their discretion, the arbitrators "may direct the parties to focus their presentations on issues the decision of which could dispose of all or part of the case." Here, the parties were requested to advise the arbitrator whether either party took the position that the 1998 Agreement had been breached at the time of the closing of the lease assignments.

Appellants contend Maxus stipulated that no party to the arbitration argued a breach of contract occurred when the lease agreements were executed. Appellants argue that the stipulation is dispositive on the question of whether the panel majority exceeded its powers. We disagree. The arbitrator was attempting to clarify a dispositive legal issue and the statement of Maxus regarding its position on that legal issue was not binding on Maxus or the arbitrators. See Footnote 13 The question of when a cause of action accrues is a question of law, not fact. Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001). Stipulations as to legal conclusions, as opposed to facts, are not binding on courts or parties. Caprock Inv. Corp. v. Fed. Deposit Ins. Corp., 17 S.W.3d 707, 713 (Tex. App.-Eastland 2000, pet. denied); see also Fid. & Cas. Co. of N.Y. v. Horton & Horton Custom Works, Inc.. 462 S.W.2d 613, 618 (Tex. Civ. App.-Fort Worth 1971, writ ref'd n.r.e.) (since question of law would be involved, stipulation could not have operated to control the court and prevent finding on facts which might, when applicable law and legal principles were applied, compel conclusion); Humble Oil & Refining Co. v. Sun Oil Co., 191 F.2d 705, 714 (5th Cir. 1951) (citing Reynolds v. McMan Oil & Gas Co., 11 S.W.2d 778, 785 (Tex. Comm'n App. 1928)) (adoption of the principle by Supreme Court of Texas "that expressions of opinions as to the law of the case by counsel are not binding upon either his client or the court"). See Footnote 14

Skidmore's claim is that Maxus breached the parties' 1998 Agreement by surrendering five oil and gas leases without first giving Skidmore notice and an opportunity to request reassignment of the leases. See Footnote 15 In its answer, Maxus denied the claim and contended Skidmore's claims were barred by waiver, estoppel, and limitations. The parties' arbitration agreement encompassed the question of whether Skidmore breached the parties' agreement and was thereby estopped from pursuing its claim against Maxus. The matter was raised as an affirmative defense in Maxus' pleadings and discussed during the actual arbitration proceedings. In its statement of the case submitted in advance of the arbitration hearing, Maxus stated that whether Skidmore's claims are barred, in whole or in part, by the affirmative defenses of waiver, estoppel and the statute of limitations were issues in the case.

The arbitrators stated the arbitration proceeding would not be closed until the parties provided their closing memoranda. Arbitrator Ratliff, again, raised the legal issue of whether a breach occurred at the time of the closing of the lease assignments when non-conforming assignments were delivered, a matter the parties could address in their closing memoranda. In its closing memorandum to the arbitrators, Maxus addressed the issue of whether a breach of the 1998 Agreement occurred at closing:

Maxus contends that there was no breach at the August 21, 1998, closing because . . . each party had the option at closing of either (i) insisting that the other party present an assignment of the lease(s) using the Exhibit B form, failing which that party could refuse to close, or (ii) waiving the condition and accepting the tendered Assignments. Because the parties closed without insisting on delivery of the Exhibit B form of Assignment, Maxus contends that the use of that form was waived and that the failure to deliver Assignments on that form was therefore not a breach of the Agreement.

If, as Skidmore and Intervenors contend, however, the parties did not waive the use of the Exhibit B form of assignment, then the alternative is that they were still insisting on the use of that form, and since neither party delivered assignments on the Exhibit B form, the Agreement was breached at that point.

* * *

[...]

Appellants asserted in the lawsuit against Maxus that Maxus breached the 1998 Agreement and that Skidmore performed its obligations under the agreement. The affirmative defenses asserted by Maxus-waiver, estoppel, and limitations-were before the arbitration panel. The questions of whether and when there was a breach of the 1998 Agreement were before the arbitration panel. See Centex/Vestal, 314 S.W.3d at 686 (party cannot submit issue to arbitration panel and then, when unfavorable result occurs, claim arbitrators exceeded their authority in deciding the issue).

We conclude the arbitrators decided matters that were properly before them and did not exceed their powers. We overrule appellants' argument to the contrary.

[...]