Opinion
02-23-00252-CV
03-28-2024
2016 Parkview Condominiums Development, LLC, Appellant/Cross-Appellee v. Ossie Button, Appellee/Cross-Appellant
On Appeal from the 141st District Court Tarrant County, Texas Trial Court No. 141-341504-23
Before Sudderth, C.J.; Kerr and Wallach, JJ.
MEMORANDUM OPINION
MIKE WALLACH, JUSTICE
Ossie Button (Button) signed a contract with 2016 Parkview Condominiums Development, LLC (Parkview) for Parkview to construct and sell a condominium to Button. When Parkview sought to close on the sale, Button refused. The parties each claimed the other had breached the contract and sought entitlement to the earnest money provided in the contract, plus recovery of attorney's fees and expenses. Pursuant to an arbitration clause in the contract, the dispute was submitted to arbitration. In her Interim Award and Final Award, collectively, the arbitrator awarded the earnest money ($123,750) to Button and assessed attorney's fees and costs plus administrative fees and expenses against Parkview.
Parkview then filed suit in the district court to vacate the arbitration award. Button countered with a motion to confirm the arbitration award and to recover additional attorney's fees and costs for having to file the motion to confirm the award and to defend against the motion to vacate the award. The district court denied Parkview's motion to vacate, granted "in its entirety" Button's motion to confirm, and awarded her prejudgment and postjudgment interest. The Order was silent as to Button's request for additional attorney's fees and costs although it recited that the "Confirmation and Judgment is final and disposes of all parties and all claims and is appealable." Parkview now appeals the trial court's denial of the motion to vacate the award. Button cross-appeals the trial court's purported denial of her claim for additional attorney's fees and costs. We will affirm the judgment of the trial court.
Chicago Title of Texas, LLC, the holder of the earnest money, had intervened but was nonsuited on July 11, 2023. Further, although the order did not address Button's claim for additional attorney's fees and costs, the trial court denied Button's claim for additional attorney's fees and costs on the hearing record and both parties accept that the order implicitly denied Button's claim for additional attorney's fees and costs.
I. Factual Background
Button was a purchaser under a contract to purchase a condominium unit in Southlake, Texas that was fully executed as of October 19, 2016, (the contract) and Parkview was the seller. In the contract, Parkview agreed to construct and sell to Button the condo unit in question. The base purchase price was $825,000, subject to changes requested during construction. Button placed a deposit of $15,000 toward a total earnest money deposit of $123,750, which was 15% of the purchase price. The contract provided for closing as follows: "The Closing Date shall mean a business day, designated by Seller on not less than ten days advance notice to Purchaser, but in no event prior to the date that Housing Unit is Available to Purchaser for Occupancy nor later than November 1st 2019."
Section 2.6 of the contract addressed "Termination and Default." Subsection (a) provided that if the purchaser breached or defaulted under the contract, the seller's sole remedy was to terminate the contract. Subsection (b) provided that if the seller defaulted under the contract, the purchaser's remedies were either to terminate the contract or have specific performance. Subsection (c) provided that in the event of termination of the contract, the terminating party's sole and exclusive remedy was recovery of the earnest money deposit as liquidated damages. Subsection (d) provided that if the party that was not entitled to recovery of the earnest money deposit wrongfully interfered with the title company's proper disbursement of the deposit, the party entitled to the deposit would be entitled to recovery of its costs and reasonable attorney's fees upon final order of the court in connection with its recovery thereof.
Likewise, Section 7.14 of the contract provided for recovery of reasonable attorney's fees and costs by the nondefaulting party if it became necessary for either party to employ an attorney to enforce its rights under the contract. Finally, Section 7.27 provided for arbitration of "any controversy, claim[,] or dispute arising out of or relating to (a) the Contract, (b) any breach thereof, (c) the sales transaction reflected in the Contract, (d) the construction of the Subject Property, and/or (e) any representations or warranties, express or implied, relating to the Subject Property" in accordance with the rules of the American Arbitration Association. Section 7.27 further provided that "[a]ll decisions by the arbitrators shall be final, and any judgment upon the award rendered by the arbitrators may be confirmed, entered[,] and enforced in any court having proper jurisdiction."
The contract gave Button an option, if timely exercised by her, to terminate and receive a refund of her earnest money if construction was not completed and the unit she was purchasing was not available for occupancy by November 1, 2019. Button did not exercise the termination option by November 1, 2019, and after evincing an intent to close when construction was complete, she refused to close when the closing was scheduled by Parkview to occur the week of February 8, 2021.
On October 19, 2020 Parkview notified Button that the building was ready for occupancy and that Parkview anticipated closing to take place, tentatively, on October 28, 2020. Button responded to the notification, stating that she was out of town and not scheduled to return until "Nov.-early Dec" to perform a pre-closing walk-through and to close. On November 30, 2020, Parkview reached out to set up a closing date, at which time Button again said that she would circle back when she got to town, but she did not do so, leading to another follow up with her on January 15, 2021.
As of January 26, 2021, Button had never indicated any desire to terminate the contract, and, on that date, Parkview sent notice to Button advising her that unit 410 was available for occupancy and that the closing had been scheduled for the week of February 8, 2021. On February 5, 2021, Button's lawyer sent written notification of her putative termination of the contract, citing a failure of Parkview to complete construction by November 1, 2019, relying upon Sections 2.1 and 3.7 of the contract, and further claiming a right of recovery of the earnest money deposit.
Parkview contended that Button's lawyer's letter was her repudiation of her closing obligations, and because Button refused to close, on February 9, 2021, Parkview's lawyer sent a letter to Button advising of her default under Section 2.6(a) of the contract and of Parkview's termination of the contract in response to such default by Button and further notified her of Parkview's claim to the earnest money deposit.
Parkview filed a breach of contract claim on May 10, 2022, commencing an arbitration proceeding styled 2016 Parkview Condominiums Development, LLC v. Ossie Button, AAA, Case No. 01-22-0001-9348, in which Parkview claimed that Button's putative termination was not a permitted termination under the contract that allowed for a return of the earnest money deposit to her and that, because of Button's default, Parkview was entitled to recover the earnest money deposit.
The matter was arbitrated and the arbitrator issued an Interim Award and a Final Award. In the Interim Award, the arbitrator found, among other things, that Button was not in default, that she was entitled to recovery of the earnest money deposit, that Parkview wrongfully interfered with the proper disbursement of the earnest money deposit, and that, therefore, Button was entitled to recovery of her costs and reasonable attorney's fees. The arbitrator requested Button to submit proof of her attorney's fees.
In the Final Award, after Button submitted proof of attorney's fees and expenses, the arbitrator awarded the $123,750 earnest money deposit to Button plus reasonable attorney's fees of $32,000 and expenses of $979.20 and assessed the arbitration expenses and fees of $10,335 against Parkview. The Final Award also had a "Mother Hubbard" type clause providing, "This Final Award is in full settlement of all claims submitted to this Arbitration. All claims not expressly granted herein are denied." There was no separate provision in either the Interim or Final Award for conditional attorney's fees to be awarded in the event of the successful filing of a motion to confirm or vacate the awards in court.
Parkview exercised its rights under Section 171.088(b) of the Texas Civil Practice and Remedies Code, Texas's General Arbitration Act (the Act), by invoking the jurisdiction of the trial court below to adjudicate its timely filed motion to vacate under Section 171.088(a) of the Act. See Tex. Civ. Prac. &Rem. Code Ann. § 171.088. Button denied that Parkview was entitled to vacate the arbitration awards and filed a motion to confirm, including a claim for additional attorney's fees and costs. The trial court ruled as described above and this appeal was commenced by Parkview. Button cross-appealed, complaining of the trial court's refusal to award her additional attorney's fees and costs.
II. Standards of Review and Governing Law
To protect the strong deference accorded to arbitration awards, we review a trial court's ruling to vacate or confirm an arbitration award de novo based on the entire record. Spears Constr. Mgmt. LLC v. Physical Therapy Dynamics, PLLC, No. 02-22-00337-CV, 2023 WL 1859452, at *3 (Tex. App.-Fort Worth Feb. 9, 2023, pet. denied) (mem. op.). "[B]ecause Texas law favors arbitration, judicial review of an arbitration award is extraordinarily narrow." Hoskins v. Hoskins, 497 S.W.3d 490, 494 (Tex. 2016) (quoting E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267, 271 (Tex. 2010)); see also City of Arlington v. Kovacs, 508 S.W.3d 472, 476 (Tex. App.- Fort Worth 2015, pet. denied). An arbitration award is given the same effect as a judgment of a court of last resort, and a trial court's ruling on a motion to confirm or vacate an arbitration award "serves an appellate function" by "reviewing the award for reversible error." Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 101 n.79 (Tex. 2011); CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002). All reasonable presumptions are indulged in favor of the arbitration award and none against it. Nafta Traders Inc., 339 S.W.3d at 95 n.53 (quoting CVN Grp., 95 S.W.3d at 238); City of Arlington, 508 S.W.3d at 476.
By default, "[u]nless grounds are offered for vacating, modifying, or correcting an [arbitration] award," the trial court "shall confirm the award." Tex. Civ. Prac. & Rem. Code Ann. § 171.087. The statutory grounds for vacating, modifying, or correcting an arbitration award are set out in the Texas Arbitration Act (TAA). See id. §§ 171.088, .091; see Hilton v. Korrect Gen. Contracting, LLC, No. 02-20-00337-CV, 2021 WL 4621761, at *2 (Tex. App.-Fort Worth Oct. 7, 2021, pet. denied) (mem. op.) (noting that the statute "'leaves no room for courts to expand on' the grounds listed" for vacating or modifying an arbitration award (quoting Hoskins, 497 S.W.3d at 494)).
Under the TAA, as relevant here, a trial court must vacate an arbitration award on application of a party if the arbitrator is shown to have "exceeded [her] powers." Tex. Civ. Prac. &Rem. Code Ann. § 171.088(a)(3). "In determining whether an arbitrator has exceeded [her] authority, the proper inquiry is not whether the arbitrator decided an issue correctly, but rather, whether [s]he had the authority to decide the issue at all." Forest Oil Corp. v. El Rucio Land & Cattle Co., Inc., 518 S.W.3d 422, 431 (Tex. 2017). This is an exceedingly narrow standard of review. Jones v. Carlos &Parnell, M.D.P.A., No. 05-17-00329-CV, 2017 WL 4930896, at *4 (Tex. App.-Dallas Oct. 31, 2017, pet. denied) (mem. op.). Unless an arbitration agreement provides that mistakes of fact or law by the arbitrator constitute exceeding authority, a mistake or misunderstanding of the law or facts by the arbitrator does not constitute exceeding authority or a basis to vacate an award. Id. at *4; Lorant v. 2016 Parkview Condo. Dev. LLC, No. 02-22-00032-CV, 2022 WL 16845110, at *4 (Tex. App.-Fort Worth Nov. 10, 2022, no pet.) (mem. op.); Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677, 684 (Tex. App.-Dallas 2010, pet. denied). "Rather, arbitrators exceed their power under the TAA when they decide matters not properly before them or where the resulting award is not rationally inferable from the parties' agreement." Jones, 2017 WL 4930896, at *4. Arbitrators derive their power from the parties' agreement to submit the matter to arbitration. Nafta Traders Inc., 339 S.W.3d at 89-91. Therefore, "courts and arbitrators must give effect to the contractual rights and expectations of the parties." Id. at 90 (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 130 S.Ct. 1758, 1773-74 (2010)). "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." Prell v. Bowman, No. 05-17-00369-CV, 2018 WL 2473850, at *10 (Tex. App.-Dallas June 4, 2018, no pet.) (mem. op.). Accordingly, an arbitrator exceeds her authority when she disregards the contract and "dispens[es her] own idea of justice." D.R. Horton-Tex., Ltd. v. Bernhard, 423 S.W.3d 532, 534 (Tex. App.-Houston [14th Dist.] 2014, pet. denied).
Finally, when a non-prevailing party seeks to vacate an arbitration award, it bears the burden in the trial court of bringing forth a complete record that establishes its basis for vacating the award. Centex/Vestal, 314 S.W.3d at 685; Anzilotti v. Gene D. Liggin, Inc., 899 S.W.2d 264, 267 (Tex. App.-Houston [14th Dist.] 1995, no writ). Without an arbitration transcript, we must presume the arbitration evidence adequately supported an award. Centex/Vestal, 314 S.W.3d at 685; Jamison &Harris v. Nat'l Loan Invs., 939 S.W.2d 735, 737 (Tex. App.-Houston [14th Dist.] 1997, writ denied).
Regarding assessment of court costs, we review a trial court ruling for an abuse of discretion. Durant v. Anderson, No. 02-14-00283-CV, 2020 WL 1295058, at *36 (Tex. App.-Fort Worth Mar. 19, 2020, pet. denied) (mem. op.). Where neither party was wholly successful on its respective claims and counterclaims, a court does not abuse its discretion in allowing the parties to bear their own costs. Casaubon Firm v. Tex. Mut. Ins. Co., 657 S.W.3d 1, 15 (Tex. App.-El Paso 2021, pet. denied); Henry v. Masson, 453 S.W.3d 43, 50-51 (Tex. App.-Houston [1st Dist.] 2014, no pet.).
III. Analysis
a. Parkview Appeal
In a single issue, Parkview argues that the trial court erred by confirming the arbitration award, in whole or in part, because the arbitrator exceeded her authority, requiring vacatur of the award in whole or in part. See Tex. Civ. Prac. &Rem. Code Ann. § 171.088(a)(3). Parkview contends that the arbitrator exceeded her authority in the following respects: (1) by failing to abide by contractually agreed upon limitations of her authority and fashioning an unauthorized remedy, (2) by failing to construe and apply all the pertinent provisions of the contract, ignoring some, and exceeding her powers by doing so, (3) in finding that Button could terminate the contract under Section 3.7 when she putatively did so, and further by awarding her both the earnest money and attorney's fees and costs. Under the last contention, Parkview argues that Button's termination occurred in early 2021 after she had expressed intent in the fall of 2020 to close the sale, that any purchase option in the contract expired on November 1, 2019, that Button's 2021 termination was not a permitted termination (thus she was not entitled to the earnest money), and that Parkview did not wrongfully interfere with the proper disbursement of the earnest money (precluding an award of attorney's fees and costs). We are not persuaded.
As noted, the arbitrator's authority arises from the contract that authorizes the arbitration. Therefore, we look to the contract to determine the scope of the issues properly before the arbitrator. Saqer v. Ghanem, No. 09-07-519 CV, 2008 WL 5263359, at *6 (Tex. App-Beaumont Dec. 18, 2008, no pet.) (mem. op.). Section 7.27 provided for arbitration of "any controversy, claim[,] or dispute arising out of or relating to (a) the Contract [or] (b) any breach thereof ...." This broad language bestowed on the arbitrator the authority to resolve any controversy between the parties relating to the meaning of the contract and its breach. Id. Here, the parties' dispute related to the alleged breach of the contract by both parties and their defenses to the alleged breaches. It also concerned the right to recover attorney's fees and costs for breach of the contract. Therefore, the arbitrator had contractual authority to rule on those matters. See Skidmore Energy, Inc. v. Maxus (U.S.) Expl. Co., 345 S.W.3d 672, 688 (Tex. App.-Dallas 2011, pet. denied); Saqer, 2008 WL 5263359, at *6.
Parkview's contentions, which are cast as complaints of exceeding authority, are nothing more than arguments that the arbitrator did not find the facts as Parkview thought they should have been found, did not construe the contract the way Parkview thought it should have been construed, or did not apply the law the way Parkview argued. As noted above, any such misunderstandings or mistakes are not a basis to vacate an arbitration award.
Next, as noted by the court in Anchor Holdings, LLC v. Peterson, Goldman & Villani, Inc.,
[W]e [must determine if] the arbitrator's award "was so unfounded in reason and fact, so unconnected with the wording and purpose of the [contract] as to 'manifest an infidelity to the obligation of the arbitrator'" such that the arbitrator failed to interpret [the contract] at all. B[rother]h[oo]d of R.R. Trainmen [v. Cent. of Ga. Ry. Co.], 415 F.2d [403,]
415 [5th Cir. 1969] (quoting [United Steelworkers of Am. v.] Enter. Wheel [& Car Corp.], 363 U.S. [593,] 597, 80 S.Ct. 1358[, 1960]); see also [United Paperworkers Int'l Union, AFL-CIO v.] Misco, Inc., 484 U.S. [29,] 38, 108 S.Ct. 364 [1987] ("[A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision."); Wise v. Wachovia Secs., LLC, 450 F.3d 265, 269 (7th Cir. 2006); Perry Homes [v. Cull], 258 S.W.3d [580,] 607 [Tex. 2008]. Even if we disagree with the arbitrator's decision here, we must uphold confirmation of the award if the arbitrator's decision is rationally inferable from the [contract]. Misco, Inc., 484 U.S. at 38, 108 S.Ct. 364; Anderman/Smith [Operating Co. v. Tenn. Gas Pipeline Co.], 918 F.2d [1215,] 1219 n.3 [5th Cir. 1990].294 S.W.3d 818, 830-31 (Tex. App.-Dallas 2009, no pet.). Following the methodology laid out in Anchor Holdings, it is apparent that the arbitrator's award here does not fail that test. The allegations of the parties setting forth their respective positions for entitlement to the earnest money under the contract were before the arbitrator as well as Button's claims for attorney's fees and expenses, and each party's proof was in front of the arbitrator, including the contract. The arbitrator's awards recited that she had reviewed the parties' proof and allegations.
In the Interim Arbitrator's Award, the arbitrator tracked the language of the contractual provisions, applied the facts as she found them, and concluded that Button was entitled to recovery of the earnest money deposit and attorney's fees and costs. In the Final Arbitrator's Award, the arbitrator considered the proof of attorney's fees and expenses that had been submitted and awarded the reasonable and necessary attorney's fees, expenses, and administrative fees. She also held that the award was in full settlement of all claims submitted to this arbitration and that all claims not expressly granted were denied. Under the analytical format set out in Anchor Holdings, whether we agree or disagree with the award, we must uphold it since her decision is rationally inferable from the contract and the facts. See Anchor Holdings, 294 S.W.3d at 830-31. We overrule Parkview's sole issue.
b. Button Cross-Appeal
Button contends that the contract authorized the trial court to award her additional attorney's fees and costs under Sections 2.6(d), 3.7, and 7.14 and that her attorney offered appropriate proof of those fees. Therefore, she claims the trial court erred in failing to award them. See Jones, 2017 WL 4930896, at *7. For purposes of this appeal, we will assume that Button's assertions about the contract and her evidence are true. Under the procedural circumstances of the case, however, Button still cannot prevail.
At the arbitration, the issue of attorney's fees was raised, evidence was received, and the arbitrator made an award. When the issue of attorney's fees is properly before the arbitrator and the parties submit the issue of attorney's fees to the arbitrator, the trial court cannot add additional attorney's fees for confirmation of the award or for defense of an action to vacate the award. D.R. Horton-Texas, Ltd., 423 S.W.3d at 536- 537; Saqer, 2008 WL 5263359, at *6; Int'l Bank of Commerce-Brownsville v. Int'l Energy Dev. Corp., 981 S.W.2d 38, 54 (Tex. App.-Corpus Christi 1998, pet. denied); Babcock &Wilcox Co. v. PMAC, Ltd., 863 S.W.2d 225, 236 (Tex. App.-Houston [14th Dist.] 1993, writ denied).
Button also contends that the trial court was obligated to award her additional attorney's fees and costs because Parkview's challenge to the award was meritless. In support of this position, Button cites three Fifth Circuit cases: Amalgamated Meat Cutters of North America, Local Union 540 v. Great Western Food Co., 712 F.2d 122, 125 (5th Cir. 1983); Bell Production Engineers Ass'n v. Bell Helicopter Textron, Division of Textron, Inc., 688 F.2d 997, 998 (5th Cir. 1982); and International Ass'n of Machinists & Aerospace Workers, District. 776 v. Texas Steel Co., 639 F.2d 279, 283 (5th Cir. 1981). Button cites no Texas state law in support of this proposition.
Our research reveals two Texas court of appeals cases which have addressed this theory. The proposition was addressed in Stage Stores, Inc. v. Gunnerson, 477 S.W.3d 848, 863-64 (Tex. App.-Houston [1st Dist.] 2015, no pet.), where the court cited the proposition but found that the challenge to the arbitration award could not be characterized as "without merit." The second case is Acra v. Bonaudo, No. 05-17-00451-CV, 2018 WL 3238133, at *7 (Tex. App.-Dallas July 3, 2018, no pet.) (mem. op.), where our sister court declined to follow the federal precedent. Since we review the trial court's ruling here for an abuse of discretion, we cannot conclude that the trial court abused its discretion under these circumstances. See Acra, 2018 WL 3238133, at *7.
Regarding court costs, although Button successfully prosecuted her motion to confirm the award and successfully defeated the motion to vacate the award, she did not prevail on her claim for additional attorney's fees. Since both parties were partially successful and partially not, the trial court did not abuse its discretion in not awarding Button her court costs under the authority cited above.
We overrule Button's sole issue.
IV. Conclusion
Having overruled each party's sole issue on appeal, we affirm the judgment of the trial court.