Saturday, July 26, 2008

How to obtain judicial confirmation of arbitration award

As stated by the Dallas Court of Appeals: Procedural matters relating to the confirmation of arbitration awards in Texas courts are governed by Texas law even if the FAA supplies the substantive rules of decision. Hamm v. Millennium Income Fund, L.L.C., 178 S.W.3d 256, 260 n.3 (Tex. App.-Houston [1st Dist.] 2005, pet. denied). Under the TAA, the trial court shall confirm an arbitration award on application of a party unless grounds are offered for vacating, modifying, or correcting the award. Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (Vernon 2005). In similar language, the statute provides that the trial court shall vacate or modify an arbitration award on application if proper grounds are present. Id. §§ 171.088(a), 171.091(a). If the court does not vacate or modify the award, it shall confirm the award. Id. §§ 171.088(c), 171.091(c). A party seeking to modify or vacate an arbitration award bears the ultimate burden of proving the grounds for modification or vacatur. E.g., Eurocapital Group, Ltd. v. Goldman Sachs & Co., 17 S.W.3d 426, 429 (Tex. App.-Houston [1st Dist.] 2000, no pet.); see also Mariner Fin. Group, Inc. v. Bossley, 79 S.W.3d 30, 35 (Tex. 2002) (indicating that losing party bears ultimate burden of proving arbitrator's partiality as a ground of vacatur); Hamm, 178 S.W.3d at 268 (likening grounds for vacatur to affirmative defenses under Texas Rule of Civil Procedure 94). The TAA provides that each application made under its authority-apparently including not only applications for confirmation but also applications for vacatur and modification-shall be heard by the court “in the manner and with the notice required by law or court rule for making and hearing a motion filed in a pending civil action in a district court.” Tex. Civ. Prac. & Rem. Code Ann. § 171.093. The purpose of this provision is to expedite judicial treatment of matters pertaining to arbitration. Crossmark, Inc. v. Hazar, 124 S.W.3d 422, 430 (Tex. App.-Dallas 2004, pet. denied). There is, however, no single “manner” for making and hearing a motion in a civil case in Texas. The burdens of proof vary considerably, as does the permissibility of live and affidavit testimony in support and opposition. Compare, e.g., Tex. R. Civ. P. 120a (special appearance) with Tex. R. Civ. P. 166a (summary judgment). It is clear, however, that if a party seeking confirmation of an arbitration award seeks to dispose of its opponent's grounds for vacatur by means of a summary- judgment motion, the usual summary-judgment burdens apply. See, e.g., Crossmark, Inc., 124 S.W.3d at 430 (“[I]f a party chooses to follow summary judgment procedure rather than the simple motion procedure authorized by the [TAA], it assumes the traditional burdens and requirements of summary judgment practice.”). In Mariner Financial Group, for example, the supreme court reversed the confirmation of an award because the prevailing parties had sought confirmation via a traditional motion for summary judgment and failed to conclusively disprove the “evident partiality” of the arbitrator. 79 S.W.3d at 35. FSI's motions do not clearly identify any issues as to which it sought “confirmation of the award” as opposed to “summary judgment.” After review, we believe that the only fair reading of FSI's motions is that FSI sought summary judgment as to all grounds for vacatur and modification of the arbitration award asserted by Roehrs, McGrath, and the prevailing defendants. All of appellants' issues concern the trial court's rejection of their grounds for vacatur and modification. Accordingly, we will apply the summary-judgment standard of review to appellants' issues. The final procedural wrinkle is that FSI's motions clearly invoke the no-evidence provisions of Texas Rule of Civil Procedure 166a(i) without identifying the specific elements of appellants' counterclaims as to which there is no evidence. This defect may be raised for the first time on appeal, Crocker v. Paulyne's Nursing Home, Inc., 95 S.W.3d 416, 419 (Tex. App.-Dallas 2002, no pet.), but because appellants do not raise this defect as an issue on appeal, we may not consider it, Selz v. Friendly Chevrolet, Ltd., 152 S.W.3d 833, 838 (Tex. App.-Dallas 2005, no pet.). Accordingly, we will construe FSI's motions as presenting no-evidence challenges to all of appellants' counterclaims that are specifically mentioned in those motions. [Note: Click on case style below to read the full opinion, which also addresses other interesting legal issues pertaining to arbitration] Roehrs v. FSI Holdings, Inc., No. 05-06-01432-CV, 246 SW3d 796 (Tex.App.- Dallas, Feb. 26, 2008, pet. denied June 20, 2008)

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