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listing arbitration provisions where parties had asserted unsuccessfully that arbitrators lacked power to make a decision containing a reversible error under state or federal law
Summary of this case from Acra v. BonaudoOpinion
No. 05-17-00369-CV
06-04-2018
JOHN PRELL AND FIRST BANCOR FINANCIAL CORP D/B/A CREEKVIEW REALTY, Appellants/Cross-Appellees v. MIKE BOWMAN, Appellee/Cross-Appellant
On Appeal from the 366th Judicial District Court Collin County, Texas
Trial Court Cause No. 366-01936-2016
MEMORANDUM OPINION
Before Justices Bridges, Evans, and Whitehill
Opinion by Justice Whitehill
Appellee Mike Bowman prevailed in a real estate commission procuring cause dispute arbitration proceeding against appellants. The trial court confirmed the arbitration award over appellants' opposition. Appellants appeal the confirmation, and Bowman cross-appeals the trial court's failure to award him attorney's fees.
A principal question is whether the parties made a clear agreement to expand judicial review of the arbitration award sufficient to satisfy Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 95-97 (Tex. 2011). We conclude that an agreement that (i) arbitrators cannot make certain awards (like punitive damages) and (ii) arbitration procedures will conform to state law does not satisfy Nafta Traders concerning the substantive legal issues in this case. Thus, the trial court did not err by applying the usual rules governing judicial review of an arbitration award—or by concluding that appellants were not entitled to relief under those rules. The court did err, however, by failing to award Bowman any attorney's fees, which he was entitled to under the arbitration agreement
We affirm the award confirmation, reverse the order to the extent it denies Bowman any recovery of attorney's fees, and remand for further proceedings on Bowman's fee request.
I. BACKGROUND
This suit began when appellants filed their original petition to vacate a $10,500 arbitration award in Bowman's favor. Appellants alleged the following facts:
In June 2015, an agent from "CENTURY 21, MIKE BOWMAN" showed a house to prospective buyer Mian Shahid. Shahid refused to sign a representation agreement with Bowman's company and later entered such an agreement with appellant First Bancor Financial Corp d/b/a Creekview Realty. The petition implies that Shahid then bought the house with Creekview as his agent.
Bowman then commenced an arbitration against appellants through the Texas Association of Realtors claiming that Bowman was the "procuring cause" of the Shahid purchase. Bowman prevailed in the arbitration, obtaining an award for the full $10,500 he requested. The award lists four arbitrators—three "Members" and one "Alternate." The award was signed only by Member Bob Baker and Alternate E. Lee Warren.
Appellants' petition sought to vacate or alternatively to modify the arbitration award.
Bowman answered and moved to confirm the arbitration award. He also requested his attorney's fees.
Appellants responded to Bowman's motion to confirm. They also filed an amended petition to vacate in which they added defenses to Bowman's fee request.
The trial court held a hearing on appellants' amended petition to vacate and Bowman's motion to confirm. The court heard only the argument of counsel, even though appellants objected to the court's refusal to allow them to call Prell to testify and also said that they wanted to call Bowman's lawyer as a witness.
The trial judge later signed an order (i) denying appellants' amended petition to vacate, (ii) granting Bowman's motion to confirm, and (iii) rendering judgment for Bowman for $10,500. The order required each side to bear its own attorney's fees.
Appellants timely appealed, and Bowman cross-appealed. See generally TEX. CIV. PRAC. & REM. CODE § 171.098 (governing appeals relating to arbitration).
The National Association of Realtors and the Texas Association of Realtors have filed an amicus brief supporting Bowman's position.
II. ISSUES PRESENTED
Appellants raise three issues: First, the trial court erred by not reviewing the arbitration award for reversible error under traditional Texas appellate standards. Second, the trial court erred by confirming the arbitration award because the arbitrators exceeded their powers and because the award contained an evident miscalculation. Third, the trial court erred by confirming the arbitration award because one arbitrator failed to disclose potential bias.
Bowman's sole cross-appeal issue argues that the trial court erred by not awarding Bowman his attorney's fees.
III. ANALYSIS OF APPELLANTS' ISSUES
A. Issue One: Did the trial court err by refusing to review the arbitration award for reversible error?
Construing the Texas Arbitration Act (TAA), the Texas Supreme Court has held that the TAA presents no impediment to an agreement that limits an arbitrator's authority in deciding a matter and that allows for judicial review of an arbitration award for reversible error. Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 95-97 (Tex. 2011). In their first issue, appellants argue that (i) their arbitration agreement contained such a provision and (ii) the trial court erred by failing to review the arbitration award for reversible error. We overrule appellants' first issue for two independent reasons: (i) the parties did not clearly agree to deny the arbitrators the power to commit reversible error or to permit expanded judicial review and (ii) regardless, we do not have an arbitration record.
1. Standard of Review and Burden of Proof
We review an order confirming an arbitration award de novo based on the entire record. White v. Siemens, 369 S.W.3d 911, 914 (Tex. App.—Dallas 2012, no pet.). However, we indulge all reasonable presumptions to uphold the award and none against it. Id.
A party seeking to vacate or modify an arbitration award bears the burden of proving the necessary grounds. Roehrs v. FSI Holdings, Inc., 246 S.W.3d 796, 804 (Tex. App.—Dallas 2008, pet. denied).
2. Applicable Law
An arbitration agreement may be governed by both the Texas Arbitration Act and the Federal Arbitration Act, absent the parties' choice of one or the other. Nafta Traders, 339 S.W.3d at 98 n.64. The parties do not dispute that the TAA applies to their arbitration agreement.
The TAA lists several grounds for vacating an arbitration award. See CIV. PRAC. § 171.088(a). That list is exclusive. Hoskins v. Hoskins, 497 S.W.3d 490, 495 (Tex. 2016).
One statutory ground for vacatur is that the arbitrators exceeded their powers. CIV. PRAC. § 171.088(a)(3)(A). In Nafta Traders, the supreme court held that the TAA allows parties to agree to limit the arbitrators' power to that of a judge, permitting courts to review an arbitration award for reversible error under ordinary appellate review standards. 339 S.W.3d at 97, 102. The court cautioned, however, that a "clear agreement" is required to limit the arbitrators' powers this way:
The TAA, as we have construed it, permits parties to agree to expanded review, or to a corresponding limit on the arbitrator's authority, as in this case, but it does not impose such review on every arbitration agreement. . . . The matter is left to the
agreement of the parties. But absent clear agreement, the default under the TAA, and the only course permitted by the FAA, is restricted judicial review.Id. at 101 (emphasis added). The agreement at issue in Nafta Traders met this standard. It provided that "[t]he arbitrator does not have authority (i) to render a decision which contains a reversible error of state or federal law, or (ii) to apply a cause of action or remedy not expressly provided for under existing state or federal law." Id. at 87-88 n.7. The court further said that judicial review of an arbitration award for reversible error also required "a sufficient record of the arbitral proceedings" and error preservation, "all as if the award were a court judgment on appeal." Id. at 101 (footnote omitted).
Since Nafta Traders was decided, courts have repeatedly rejected claims that parties had made a "clear agreement" to curb the arbitrators' authority and allow expanded judicial review:
• An agreement authorizing arbitrators "to award punitive damages where allowed by Texas substantive law" was not a clear agreement to limit the arbitrators' authority or expand the scope of judicial review. Forest Oil Corp. v. El Rucio Land & Cattle Co., Inc., 518 S.W.3d 422, 432 (Tex. 2017).
• There was no clear agreement to expanded judicial review despite the following agreements: (i) "[a]n arbitrator may award any relief authorized by contract or applicable law that appears to be fair under the circumstances," (ii) "[a]n award must be in writing and signed by the arbitrator, in compliance with applicable state and federal law," (iii) the Texas Rules of Civil Procedure "will provide guidance" for discovery matters, and (iv) Texas law would "govern[] the subject matter of this arbitration." Jones v. Carlos & Parnell, M.D., P.A., No. 05-17-00329-CV, 2017 WL 4930896, at *2-3 (Tex. App.—Dallas Oct. 31, 2017, pet. denied) (mem. op.).
• There was no clear agreement to expanded judicial review despite the following agreements: (i) "All applicable Federal and State law (including Chapter 27 of the Texas Property Code) shall apply" and (ii) "All applicable claims, causes of action, remedies and defenses that would be available in court shall apply." Holmes Builders at Castle Hills, Ltd. v. Gordon, No. 05-16-00887-CV, 2018 WL 1081635, at *3-4 (Tex. App.—Dallas Feb. 28, 2018, no pet. h.) (mem. op.).
• There was no clear agreement to expanded judicial review where the parties agreed, "An appeal from an order or judgment of the Panel shall be taken in the manner and to the same extent as from orders or judgment[s] in civil
cases under Texas law." Denbury Onshore, LLC v. TexCal Energy S. Tex., L.P., 513 S.W.3d 511, 518-19 (Tex. App.—Houston [14th Dist.] 2016, no pet.).
• There was no clear agreement to expanded judicial review even though the arbitration agreement contained statements such as (i) "the arbitrator will apply the same laws and will be able to grant the same relief as would a judge or jury," (ii) "[t]he arbitrator has the same power, authority, and limitations to award any remedy to which either party would have been entitled had the dispute been taken to a government agency or to a court," (iii) "[t]he arbitrator must apply the same statutory law and follow the same case precedent that would have to be applied and followed by the state or federal court judge who would otherwise have jurisdiction of the dispute," and (iv) "[t]he arbitrator will not award relief greater than what the employee would otherwise be entitled to in a court of law." Methodist Healthcare Sys., Ltd., LLP v. Friesenhahn, No. 04-16-00824-CV, 2017 WL 4518284, at *3 (Tex. App.—San Antonio Oct. 11, 2017, pet. pending) (mem. op.).
• The following was not a clear agreement to expanded judicial review: "The parties agree that in the event of an arbitration proceeding pursuant hereto, the parties shall file a joint motion to request that the arbitrator strictly observe all applicable state and federal laws, including, but not limited to, applicable statutes of limitation." Pasadera Builders, LP v. Hughes, No. 04-17-00021-CV, 2017 WL 6345218, at *2 n.2 (Tex. App.—San Antonio Dc. 13, 2017, pet. filed) (mem. op.).
3. Applying the Law to the Facts
Appellants argue that (i) they agreed to arbitrate under the National Association of Realtors' Code of Ethics and Arbitration Manual and (ii) certain provisions in the Manual are clear agreements to limit the arbitrators' authority and expand judicial review to encompass reversible errors. Bowman disagrees because (i) appellants did not present the trial court with an arbitration record and (ii) there is no agreement satisfying Nafta Traders. We agree with Bowman's arguments.
First, we reject appellants' contract interpretation. The provisions they rely on do not amount to a clear agreement to deny the arbitrators the authority to commit reversible error, so they do not satisfy Nafta Traders. Appellants rely on two passages in the National Association of Realtors 2017 Code of Ethics and Arbitration Manual, excerpts from which were attached to appellants' response to Bowman's motion to confirm:
Amici argue that the Manual is not part of the parties' arbitration agreement. For purposes of analysis, we assume that it is.
Any award rendered may not be greater than the amount in dispute, may not include punitive damages, may not include attorney's fees unless expressly provided for in the agreement giving rise to the dispute, and may not include interest unless called for in the arbitration agreement and permitted by state law. Notwithstanding the foregoing, a party to an arbitration proceeding may appeal to the Board of Directors only with respect to such alleged irregularities occurring in the conduct of the proceeding as may have deprived the party of fundamental "due process."Appellants' brief also quotes one other purported provision from the Manual, but they support that quotation with a citation to their response to the motion to confirm, not to evidence. It does not change our analysis, so we repeat appellants' quotation: "(2) Must be consistent with state law. All arbitration hearings must be conducted in a manner consistent with state law."
. . . .
Factor #5. Conformity with state law
The procedures by which arbitration requests are received, hearings are conducted, and awards are made must be in strict conformity with the law. In such matters, the advice of Board legal counsel should be followed.
None of the three provisions quoted above purports to deny the arbitrators the power to make reversible errors. The first such passage states that arbitrators will not make certain specific awards, but that is not the same as denying arbitrators the authority to make any reversible errors like the Nafta Traders clause did. Cf. 339 S.W.3d at 87-88 n.7 ("The arbitrator does not have authority (i) to render a decision which contains a reversible error of state or federal law . . . ."). Thus, the first passage quoted above does not show a clear agreement to allow expanded judicial review of arbitration awards.
The second and third passages give appellants' argument no support either. They both concern the procedures to be used in an arbitration proceeding, not the substance of the arbitrators' decision. Moreover, simply agreeing that state law will govern arbitration proceedings or a particular issue does not amount to a clear agreement limiting arbitrators' authority and expanding judicial review. See, e.g., Forest Oil Corp., 518 S.W.3d at 432; Jones, 2017 WL 4930896, at *3.
Second, appellants' issue also fails because we do not have a record of the arbitration proceedings, which means we cannot determine if any error is harmful. Appellants argue that they should be excused from producing the arbitration record because the trial judge said at the hearing that he would not take evidence or allow testimony. Having reviewed the reporter's record, we are not convinced that appellants preserved error by actually offering the arbitration transcript into evidence. But even if appellants adequately offered the arbitration record into evidence and the trial court excluded it, appellants did not make an offer of proof. Accordingly, we cannot tell whether any error was harmful. See Sink v. Sink, 364 S.W.3d 340, 347 (Tex. App.—Dallas 2012, no pet.) ("[W]ithout an offer of proof, we can never determine whether exclusion of the evidence was harmful."). Without a showing of harm, we cannot reverse. See TEX. R. APP. P. 44.1.
We overrule appellants' first issue.
B. Issue Two: Did the trial court err by confirming the arbitration award because the arbitrators exceeded their powers or made an evident miscalculation?
Appellants' second issue presents three arguments: (i) the arbitrators exceeded their powers by awarding Bowman punitive damages, (ii) the arbitrators made an evident miscalculation that the trial court should have corrected, and (iii) the arbitrators' award exceeded their powers in various other respects. As with issue one, our standard of review is de novo, and we indulge all reasonable presumptions to uphold the award. White, 369 S.W.3d at 914.
1. Does the record establish that the arbitrators exceeded their powers by awarding punitive damages?
As noted above, the Arbitration Manual stated that an award "may not include punitive damages." Appellants argue that (i) the arbitrators therefore lacked authority to award punitive damages and (ii) the $10,500 award necessarily included punitive damages because it was three times the $3,350 that appellants received in the transaction. See CIV. PRAC. § 171.088(a)(3)(A) (court may vacate arbitration award if arbitrators exceeded their powers).
However, we conclude that the record does not establish that this award contained a punitive damages component. Punitive damages are damages assessed to punish a defendant for outrageous, malicious, or otherwise morally culpable conduct. Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 16 (Tex. 1994). They are not compensatory damages, i.e., damages intended to make the plaintiff whole. See id.
Here, the arbitration award does not explain the amount awarded. It merely says that "there is due and owing $10,500 to be paid by John Prell to Mike Bowman." We do not have the arbitration record, so we cannot rule out the possibility that Bowman presented a compensatory damages theory justifying a $10,500 award. Indeed, appellants' brief suggests such a theory by asserting that Bowman was "trying to sue for 'lost profits.'" Lost profits are compensatory damages. Premier Pools Mgmt. Corp. v. Premier Pools, Inc., No. 05-14-01388-CV, 2016 WL 4258830, at * (Tex. App.—Dallas Aug. 12, 2016, pet. denied) (mem. op.).
Because we indulge all reasonable presumptions in favor of an arbitration award, White, 369 S.W.3d at 914, we presume here that the arbitrators did not award punitive damages contrary to their governing rules. See Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677, 687 (Tex. App.—Dallas 2010, pet. denied) (without arbitration record, court could not conclude arbitrator exceeded authority by awarding certain fees and expenses).
Because the record does not establish that the arbitration award includes any punitive damages, we reject appellants' argument that the arbitrators exceeded their powers by awarding them.
2. Does the record establish an evident miscalculation?
Next appellants argue that the trial court should have modified the award because it contained an evident miscalculation of numbers. Texas law recognizes this as a permissible basis to modify an award. CIV. PRAC. § 171.091(a)(1)(A). "A court may not overturn an award based upon 'evident miscalculation of numbers' unless the mistake is clear, concise, and conclusive from the record." Crossmark, Inc. v. Hazar, 124 S.W.3d 422, 436 (Tex. App.—Dallas 2004, pet. denied). "'Miscalculation' implies inadvertence or an error caused by oversight." Id.
Appellants' principal miscalculation argument is that the arbitration evidence showed that appellants were paid only $3,350 in the underlying real estate transaction and not $10,500. This argument fails because we do not have the arbitration record. See Rassouli v. Nat'l Signs Holding, LLC, No. 14-15-00353-CV, 2017 WL 6374720, at *5 (Tex. App.—Houston [14th Dist.] Dec. 14, 2017, no pet.) (mem. op.) (rejecting evident miscalculation argument because party did not produce complete arbitration record).
Moreover, the argument would fail even if we had the record because it is a substantive argument that the arbitrators used the wrong damages measure, not an argument that the arbitrators performed a mathematical calculation and got it wrong.
Appellants also assert that the $10,500 figure resulted from an evident miscalculation because that figure is 3.1% of the house's $335,000 purchase price instead of 3% (which would be $10,050). But again, without the arbitration record we cannot tell whether the $10,500 figure resulted from a mathematical mistake or was actually rooted in the arbitration evidence.
The record does not establish an evident miscalculation of numbers, so we reject appellants' arguments to the contrary.
3. Does the record establish that the arbitrators exceeded their powers by ruling in Bowman's favor?
Finally, appellants raise several other arguments that the arbitrators exceeded their powers. They are as follows:
• Bowman lacked standing to sue appellants.
• Bowman had no cognizable claims against appellants because (i) there was no privity of contract between Bowman and appellants, (ii) Bowman had no contract with the buyer, Shahid, (iii) appellants did not commit a tort because they were unaware of Bowman's existence until after the transaction closed, (iv) Bowman was not entitled to lost profits or fee disgorgement because appellants did not owe him a fiduciary duty, (v) Bowman did not prove that appellants received $10,500 in the transaction, and (vi) appellants caused no harm to Bowman.
• The Arbitration Manual provides that tortious interference claims are not arbitrable.
• The arbitrators failed to apply the National Association of Realtors' own definition of procuring cause.
"In determining whether an arbitrator has exceeded his authority, the proper inquiry is not whether the arbitrator decided an issue correctly, but rather, whether he had the authority to decide the issue at all." Forest Oil Corp., 518 S.W.3d at 431. Thus, "a complaint that the arbitrator decided the issue incorrectly or made a mistake of law is not a complaint that the arbitrator exceeded his powers." Centex/Vestal, 314 S.W.3d at 686. In other words, "a mistake of fact or law by the arbitrator in the application of substantive law is not a proper ground for vacating an award." Id. at 683. We give great deference to arbitration awards to discourage disappointed litigants from judicially challenging every unfavorable arbitration award. Crossmark, Inc., 124 S.W.3d at 429.
Appellants' complaints, with one possible exception, are at most mere mistakes of fact or law. Thus, they present no basis for vacatur. See id. ("A reviewing court . . . will not set aside an arbitration award for a mere mistake of fact or law.").
The one possible exception is appellants' argument that the Arbitration Manual states that "tortious interference with business relationships" and "tortious interference with a contractual relationship" are "non-arbitrable issues." This arguably suggests that the arbitrators lacked the authority to arbitrate such claims. However, Standard of Practice 17-4 in the Manual also identifies several "[s]pecific non-contractual disputes that are subject to arbitration," and one such arbitrable dispute arises "[w]here a listing broker has compensated a cooperating broker and another cooperating broker subsequently claims to be the procuring cause of the sale or lease." The parties' dispute seems to be arbitrable under Standard of Practice 17-4. We do not have an arbitration record that might demonstrate that Bowman's claim was not arbitrable. We conclude that appellants have not shown that the arbitrators exceeded their powers on the basis that this was a non-arbitrable tortious interference claim.
4. Conclusion
We overrule appellants' second issue.
C. Issue Three: Did the trial court err by confirming the arbitration award because an arbitrator was evidently partial?
Appellants' third issue presents three arguments that the trial court erred by not vacating the arbitration award because one arbitrator, Bob Baker, was evidently partial. See CIV. PRAC. § 171.088(a)(2)(A) (evident partiality by a neutral arbitrator is ground for vacatur).
1. Applicable Law
A neutral arbitrator exhibits evident partiality if he does not disclose facts that might, to an objective observer, create a reasonable impression that the arbitrator is partial. Karlseng v. Cooke, 346 S.W.3d 85, 94 (Tex. App.—Dallas 2011, no pet.). The nondisclosure establishes evident partiality, regardless of whether the undisclosed information necessarily establishes partiality or bias. Id. at 95. Although a neutral arbitrator need not disclose trivial relationships or connections, a conscientious arbitrator should err in favor of disclosure. Id. at 96.
We review the entire record, and we view it from an objective observer's perspective to determine whether the undisclosed fact should have been disclosed. Id.
A recent Texas Supreme Court case demonstrates two important points about appellate review of an evident-partiality determination. See Forest Oil Corp., 518 S.W.3d at 431. First, we defer to the trial court's factual determinations if they are supported by the evidence. Id. Second, the arbitrator's subjective awareness or ignorance of facts can be relevant to the evident-partiality determination. Id. That is, if there is evidence that the arbitrator actually did not know about the undisclosed facts that allegedly made him evidently partial, the trial court can credit this evidence and conclude that evident partiality has not been shown. See id.
2. Applying the Law to the Facts
a. Baker's Alleged Bias Against "Flat Fee Brokers"
Appellants first argue that arbitrator Baker was biased against them because they are "flat fee brokers" who offer their services for reduced fees. Appellants rely on excerpts from Baker's deposition, arguing that Baker contradicted himself by testifying first that (i) it is "[f]airly typical" for a listing agent to get a six percent commission and agree to split it with a buyer's agent and then that (ii) there is "no normal percentage" charged by realtors, there is no "average commission," and "[c]ommissions are always negotiated in the industry."
We reject appellants' argument because that testimony does not impugn flat-fee commissions; it merely states his belief about what is fairly typical or normal without stating anything negative about flat-fee brokers. The question is whether Baker's answers showed that he was biased against flat-fee brokers, and we cannot conclude that his answers showed such a bias.
b. Baker's Relationship with Bowman
Next appellants argue that Baker was evidently partial because he did not disclose a personal friendship with Bowman. They rely on two pieces of testimony from Baker's deposition. First, Baker said that he saw Prell's and Bowman's names on the arbitration and "in my opinion I know both of them at the same level as brokers for companies in the area." Second, Baker said that at some point he had added Bowman as a "friend" on Facebook.
Baker's other testimony provides important additional information:
Q: Earlier you testified you've never had a conversation with Mike Bowman?
A: Other than any interaction in the arbitration hearing, I don't recall any conversation with Mike Bowman.
. . . .
Q: Why do you believe that you are Facebook friends with Mike Bowman?
A: When we [other agents, brokers, and colleagues] first got involved in Facebook, there seemed to be a friendly competition for adding a lot of friends. And at some point in time, because he's in the business and I recognized his name, I probably added him.
. . . .
Q: Do you know any of the Bowmans' family members?
A: No.
Q: Have you ever been to an event that you know of with Dave Bowman [Mike Bowman's son] or Mike Bowman?
A: No.
We conclude that the evidence does not suffice to show evident partiality. As we observed in a judicial impartiality case, a Facebook friendship "provides no insight into the nature of the relationship." Youkers v. State, 400 S.W.3d 200, 206 (Tex. App.—Dallas 2013, pet. ref'd). Some Facebook "friends" have meaningful social relationships, some are bare acquaintances, and some have never even met. See id.
Here, Baker's deposition, taken as a whole, demonstrates that Baker and Bowman had no significant social relationship. See Karlseng, 346 S.W.3d at 96 (we review the whole record in evaluating evident partiality arguments); see also Int'l Bank of Commerce-Brownsville v. Int'l Energy Dev. Corp., 981 S.W.2d 38, 45-46 (Tex. App.—Corpus Christi 1998, pet. denied) (under FAA, casual friendship did not establish evident partiality).
An objective observer, knowing all the facts about Baker and Bowman's relationship, would not think that Baker's nondisclosure of that relationship created a reasonable impression that Baker was partial to Bowman. Accordingly, we reject appellants' argument.
c. Baker's Membership in Facebook Group "Controversial!!"
Finally, appellants argue that Baker showed evident partiality by failing to disclose that he was a member of a Facebook group called "Controversial!!" Appellants filed printouts of three posts on that group's page, and those posts contain offensive anti-Muslim statements. Appellants argue that Baker's membership in this group and his failure to disclose it show that he was evidently partial against appellants because the buyer in the transaction (and appellants' "most important witness") was named Mian Shahid, which appellants contend is "a culturally ethnic name who could be construed to be of Middle Eastern descent and possibly Muslim."
In his deposition, Baker testified as follows when asked what "Controversial!!" is:
I was not aware of it until this came about. And I have—I was very offended by that being on my site. I have—I don't know what the correct word is. I have unjoined it. I'm off—I've kicked it out of my thing. I had no idea that was there. That was incredibly offensive. I would not allow anything like that to be anything I was associated with.He acknowledged that he had "unjoined" the group the day before his deposition. When asked why he had not removed himself from the group earlier, when he read the petition in this case, he answered, "I did not realize that I had that group on my Facebook. I didn't realize that's what that was."
We are not persuaded by appellants' argument. Baker testified that he was unaware that the Facebook group had offensive posts about Muslims on its webpage, and the trial court was entitled to credit that testimony. See Forest Oil Corp., 518 S.W.3d at 431. Moreover, appellants' evidence showed only that there were three offensive posts on the webpage, all apparently posted by the same person in late 2015. The evidence is not clear about when Baker joined the group, but there is some indication he may have joined in mid-2015, before the three offensive posts were made. Nor does the evidence show how many posts the group had on its webpage or whether the three offensive posts were typical of the group as a whole. Thus, the trial court could have concluded that, although he was a member of the group, Baker was ignorant of the three offensive posts in question and of any need for disclosure. Accordingly, the trial court could reasonably have concluded that an objective observer would not have formed a reasonable impression that Baker's nondisclosure of his membership in the group showed partiality.
Additionally, the trial court's decision to reject appellants' evident partiality argument is supported by the fact that Baker's putative bias does not relate directly to any party herein. That is, appellants contend that Baker is or appears to have an anti-Muslim bias, but appellants do not assert that they are Muslims themselves. Rather, they argue that Baker could have been biased against a main witness in the arbitration, Mian Shahid. We are unpersuaded. Even appellants go no further than to claim that Shahid has "a culturally ethnic name [that] could be construed to be of Middle Eastern descent and possibly Muslim." This is mere speculation. And we do not have the arbitration record, so we cannot confirm appellants' claim that Shahid was "their most important witness" or even confirm that he gave testimony favorable to appellants' position.
Given the entire record, an objective observer would not think that Baker's nondisclosure of his membership in the Facebook group Confidential!! created a reasonable impression that Baker was partial. Accordingly, we reject appellants' argument.
D. Conclusion
We overrule appellants' three issues.
IV. BOWMAN'S CROSS-APPEAL
Bowman sought to recover the attorney's fees he incurred litigating appellants' petition to vacate and his motion to confirm. The trial court denied Bowman any fees. Bowman cross-appeals that denial and asks us to render a fee award in his favor.
A. Relevant Facts
The parties agree that their arbitration agreement contains the following fee-shifting provision:
In the event I do not comply with the arbitration award and it is necessary for any party to this arbitration to obtain judicial confirmation and enforcement of the arbitration award against me, I agree to pay the party obtaining such confirmation the costs and reasonable attorney's fees incurred in obtaining such confirmation and enforcement.
Bowman's motion to confirm requested about $17,000 in attorney's fees for litigating appellants' petition to vacate and his motion to confirm, plus additional fees for any postjudgment proceedings. He also filed an affidavit by his lawyer. Shortly before the hearing, Bowman's lawyer filed a second affidavit to prove up additional incurred fees, raising the total fee request to $20,660.00.
Appellants opposed Bowman's fee request and filed Prell's affidavit in which he said that appellants had paid $10,500 into escrow with the Texas Association of Realtors.
B. Standard of Review and Applicable Law
We review a trial court's ruling on attorney's fees for abuse of discretion. Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990) (per curiam).
A party may recover its attorney's fees from its opponent only if provided for by statute or contract. Roberts v. Roper, 373 S.W.3d 227, 233 (Tex. App.—Dallas 2012, no pet.). Appellants do not dispute that the parties have a fee-shifting agreement; they argue that the agreement's terms do not support a fee award on this case's facts.
We construe a contract to effectuate the parties' intent as expressed in the agreement. Mikob Props., Inc. v. Joachim, 468 S.W.3d 587, 594 (Tex. App.—Dallas 2015, pet. denied). We give contract terms their plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a different or technical sense. Id. at 594-95. Contracting parties are presumed to know the law. Philadelphia Indem. Ins. Co. v. White, 490 S.W.3d 468, 483 (Tex. 2016).
C. Applying the Law to the Facts
The agreement specifies two elements that must be proved to support a fee award: (i) the party that lost the arbitration "d[id] not comply with the arbitration award" and (ii) it was necessary for the other party to obtain judicial confirmation and enforcement of the award. Bowman argues that he proved these elements.
Appellants contest mainly the second element: they argue that it was unnecessary for Bowman to obtain confirmation because appellants paid the full arbitration award into escrow with the Texas Association of Realtors. They assert that (i) Bowman merely needed to defeat appellants' petition to vacate to collect his money and (ii) the agreement does not shift fees for defeating a petition to vacate.
Bowman responds that it was necessary for him to obtain confirmation because arbitration awards are not self-enforcing. He also argues that defending a petition to vacate is effectively the same thing as seeking confirmation, citing Lujan v. Texas Bell Jeb Apartments LLC, No. 03-13-00558-CV, 2015 WL 4072121, at *1 n.1 (Tex. App.—Austin June 30, 2015, pet. denied) (mem. op.).
Regarding the first element, we conclude that the evidence established that appellants did not comply with the arbitration award. The award said that Prell was to pay Bowman $10,500 within twenty days after the award was mailed, absent a request for procedural review. Prell made such a request, and a review panel affirmed the award in April 2016. Prell's affidavit said that the $10,500 was paid into escrow with the Texas Association of Realtors. And Bowman's lawyer's October 2016 affidavit said that appellants had still failed to honor the arbitration award. The trial court could not reasonably fail to find that appellants did not comply with the arbitration award.
Under the second element, we ask whether it was necessary for Bowman to confirm the award. If so, he can recover the "reasonable attorney's fees incurred in obtaining such confirmation," and we then consider whether Bowman's fees incurred opposing appellants' petition to vacate are recoverable as "fees incurred in obtaining such confirmation." We conclude that the answer to both questions is yes.
Under the TAA, appellants' petition to vacate put Bowman's favorable arbitration award at risk. See CIV. PRAC. § 171.088(a) ("the court shall vacate an award if" certain grounds are proved). Thus, it was necessary for Bowman to oppose appellants' petition. Moreover, the TAA specifically provides that "[i]f [an] application to vacate is denied and a motion to modify or correct the award is not pending, the court shall confirm the award." CIV. PRAC. § 171.088(c). And the TAA further provides that:
(c) . . . If [an] application [to modify or correct an award] is not granted, the court shall confirm the award.Id. § 171.091(c), (d).
(d) An application to modify or correct an award may be joined in the alternative with an application to vacate the award.
In short, successfully defeating an application to vacate or modify an award automatically leads to confirmation. Indeed, our sister court in Austin has held that an order denying a motion to vacate is, in legal effect, an order confirming the arbitration award. Lujan, 2015 WL 4072121, at *1 n.1. Thus, when Bowman incurred attorney's fees to oppose appellants' petition to vacate or modify the arbitration award, he necessarily and simultaneously incurred them to confirm the award.
Accordingly, because (i) it was necessary for Bowman to oppose appellants' petition to vacate and (ii) opposing a petition to vacate under the TAA automatically also seeks to confirm the same award, we conclude that the trial court abused its discretion to the extent it concluded that Bowman failed to prove the second element of his fee claim.
Appellants also argue that the law required Bowman to segregate his fees incurred to obtain award confirmation from his supposedly unrecoverable fees incurred to defend against appellants' petition to vacate. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-14 (Tex. 2006) (rules regarding fee segregation). The foregoing analysis refutes this argument as well. Bowman's fees incurred defending against the motion to vacate were also fees incurred to obtain confirmation. See id. at 314 (if fees incurred to prosecute a particular claim are recoverable, so are fees incurred to defeat affirmative defenses to that claim).
As previously noted, Bowman's lawyer filed two affidavits supporting Bowman's request for attorney's fees. We conclude that the trial court erred by denying Bowman any fee recovery.
D. Render or Remand?
The last question is whether we should render an attorney's fee judgment for Bowman in the amount he requested or remand for further proceedings so that the trial court may make a fee determination.
The general rule is that interested witness testimony does no more than raise a fact issue, even if it is uncontradicted. Ragsdale, 801 S.W.2d at 882. Under the exception to that rule, interested witness testimony will be taken as true as a matter of law if (i) it is not contradicted by another witness or by attendant circumstances and (ii) it is clear, direct, positive, free from contradiction, inaccuracies, and circumstances tending to cast suspicion on it. Id. The exception applies especially if the opposing party had the means and opportunity to disprove the testimony and failed to do so. Id. The Ragsdale court emphasized that uncontradicted attorney's fees evidence is not always conclusive. "[E]ven though the evidence might be uncontradicted, if it is unreasonable, incredible, or its belief is questionable, then such evidence would only raise a fact issue to be determined by the trier of fact." Id.
For two separate reasons, we conclude that this is a case in which the general rule applies and we should not render judgment.
First, we note that at the hearing below appellants asked to call Bowman's lawyer as a witness regarding his attorney's fees. The court ordered each side to pay its own fees without giving appellants a chance to examine Bowman's lawyer about his fees. Thus, appellants did not have a fair opportunity to rebut Bowman's fee evidence.
Second, we have reviewed Bowman's lawyer's affidavits, and we conclude that they were not so clear and direct as to establish Bowman's fees as a matter of law. The affidavits describe in general terms the legal tasks performed (e.g., "reviewed and researched Chapter 171 of the Texas Civil Practice and Remedies Code"), but they do not state the amount of time spent on each. Rather, the affidavits simply list the tasks and then give the total time spent on the case. The affiant also stated that in determining reasonableness he considered certain factors that appear in the caselaw, see, e.g., Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997), but he did not explain how those factors supported his conclusions. On this record, we cannot say that the trial court was bound to accept Bowman's evidence as proving his reasonable fees as a matter of law.
In light of the foregoing, we decline to render judgment. Instead we remand for further proceedings as to Bowman's recoverable attorney's fees.
V. CONCLUSION
We reverse the trial court's order confirming arbitration award only to the extent that the order awards Bowman nothing on his claim for attorney's fees. We affirm the order in all other respects, and we remand the case for further proceedings as to Bowman's fee claim.
/Bill Whitehill/
BILL WHITEHILL
JUSTICE 170369F.P05
JUDGMENT
On Appeal from the 366th Judicial District Court, Collin County, Texas
Trial Court Cause No. 366-01936-2016.
Opinion delivered by Justice Whitehill. Justices Bridges and Evans participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED in part and REVERSED in part. We REVERSE the judgment to the extent it denies Appellee/Cross-Appellant Mike Bowman's claim for attorney's fees, and we REMAND the case for further proceedings as to that claim. In all other respects, we AFFIRM the trial court's judgment.
We ORDER each party to bear its own costs of this appeal. Judgment entered June 4, 2018.