Opinion
NO. 01-17-00332-CV
06-26-2018
BEN DOMINGUEZ, II, Appellant v. KENNETH D. EICHNER, P.C., Appellee
On Appeal from County Civil Court at Law No. 4 Harris County, Texas
Trial Court Case No. 1073076
MEMORANDUM OPINION
Kenneth D. Eichner, P.C. filed suit against Ben Dominguez, II for money owed for accounting services. The trial court ordered the parties to arbitrate their dispute. The trial court subsequently signed a judgment confirming the arbitration award. In three issue, Dominguez argues (1) the arbitration agreement was substantively unconscionable, (2) the trial court erred by not vacating the award, and (3) Eichner, P.C. was not authorized to recover attorneys' fees.
We affirm.
Background
In 2005, Eichner, P.C. signed a contract with Dominguez to prepare tax returns for Dominguez and to provide other tax-related services. The agreement did not have a termination date. In 2013, the parties signed a new agreement. This agreement also did not have a termination date.
Both agreements contained mandatory arbitration provisions. The 2005 agreement required Dominguez to provide notice of any disputes for charges within two years of the charges. The parties agreed that this notice provision was a condition precedent for seeking arbitration.
On February 1, 2016, Eichner, P.C. filed suit against Dominguez, alleging Dominguez owed Eichner, P.C. money under the contracts. Dominguez answered and filed a motion to compel arbitration based on the arbitration provisions in both contracts. The following month, Eichner, P.C. also filed a motion to compel arbitration. The trial court granted Eichner, P.C.'s motion, but struck out language in the proposed order requiring the parties to use the Better Business Bureau for its arbitration.
A couple of months after the trial court ordered the parties to mediation, Dominguez sought discovery from Eichner, P.C. through the trial proceedings. Eleven days later, Dominguez filed a motion to set aside the order to arbitrate with the trial court. There is no indication in the record that Dominguez set the motion for consideration before the trial court, and the trial court never ruled on the motion.
After the arbitrator issued an award to Eichner, P.C., Dominguez filed a motion to vacate the award. Instead, the trial court signed a final judgment confirming the arbitration award. The judgment included an award of attorneys' fees incurred by Eichner, P.C. Dominguez filed a motion for new trial, which was overruled by operation of law.
Standard of Review
"Texas law renders unconscionable contracts unenforceable." In re Olshan Found. Repair Co., LLC, 328 S.W.3d 883, 892 (Tex. 2010). "The ultimate issue of whether an arbitration agreement is against public policy or unconscionable is a question of law for the court." Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494, 499 (Tex. 2015).
Likewise, appellate courts "review de novo a trial court's decision to confirm or vacate an arbitration award." Denbury Onshore, LLC v. Texcal Energy S. Texas, L.P., 513 S.W.3d 511, 515 (Tex. App.—Houston [14th Dist.] 2016, no pet.). "A party seeking to vacate an arbitration award bears the burden of presenting a complete record that establishes grounds for vacating the award." In re Drobny, No. 01-15-00435-CV, 2016 WL 4537076, at *7 (Tex. App.—Houston [1st Dist.] Aug. 30, 2016, no pet.) (mem. op.) (citing Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 568 (Tex. App.-Dallas 2008, no pet.)). "All reasonable preferences are indulged in favor of the award." Denbury, 513 S.W.3d at 515.
Substantive Unconscionability
In his first issue, Dominguez argues the arbitration provision is substantively unconscionable. "Substantive unconscionability refers to the fairness of the arbitration provision itself." In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 677 (Tex. 2006). The "test for unconscionability is whether, given the parties' general commercial background and the commercial needs of the particular trade or case, the clause involved is so one-sided that it is unconscionable under the circumstances existing when the parties made the contract." In re FirstMerit Bank, N.A., 52 S.W.3d 749, 757 (Tex. 2001). "The principle is one of the prevention of oppression and unfair surprise and not of disturbance of allocation of risks because of superior bargaining power." TEX. BUS. & COM. CODE ANN. § 2.302 cmt. 1 (West 2009); accord In re Olshan Found. Repair Co., LLC, 328 S.W.3d 883, 892 (Tex. 2010).
Dominguez argues five portions of the contract establish substantive unconscionability: (1) the contract reduced the limitations period for breach of contract to two years; (2) the contract limited any claims against Eichner, P.C. to two years; (3) the contract waived any Deceptive Trade Practices Act claims and any other consumer rights claims; (4) the contract prevented him from recovering "statutory attorneys' fees"; and (5) the contract required Dominguez to follow a notice of complaint procedure before seeking arbitration.
For the first three portions, these are general provisions of the contract that do not apply to the arbitration provision specifically. "[C]hallenges relating to an entire contract will not invalidate an arbitration provision in the contract; rather, challenges to an arbitration provision in a contract must be directed specifically to that provision." Royston, 467 S.W.3d at 501.
For the "statutory attorneys' fees" complaint, Dominguez does not identify which attorneys' fees he was prevented from recovering. To the degree Dominguez is referring to fees for statutory claims waived under the contract, these do not relate to the arbitration provision specifically and cannot be a basis for finding the provision unconscionable. See id.
For the notice provision, Dominguez agreed under the 2005 contract to provide Eichner, P.C. with two-years' notice of any complaints about charges as a condition precedent to seeking arbitration. Dominguez does not explain how a two-years' notice provision is so oppressive or unfairly surprising to rise to the level of unconscionable. See BUS. & COM. § 2.302 cmt. 1 ("The principle is one of the prevention of oppression and unfair surprise."); In re Standard Meat Co., L.P., No. 05-06-01470-CV, 2007 WL 730660, at *4 (Tex. App.—Dallas Mar. 9, 2007, no pet.) (mem. op.) (upholding one-year's notice requirement).
We overrule Dominguez's first issue.
Vacature
Dominguez frames his second issue as a challenge to the procedural unconscionability of the arbitration provision. "[P]rocedural unconscionability refers to the circumstances surrounding adoption of the arbitration provision." In re Palm Harbor, 195 S.W.3d at 677. All of Dominguez's arguments for this issue, however, focus on events during the arbitration process. These cannot establish procedural unconscionability. See id. We construe Dominguez's second issue, then, as a challenge to the trial court's denial of his motion to vacate the arbitration award and his motion for new trial. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.088 (West 2011) (establishing grounds for vacating arbitration award).
First, Dominguez argues the award should be vacated because, when Eichner, P.C. filed its motion to compel arbitration, the motion was signed by Eichner, P.C., rather than by a licensed attorney. Dominguez argues that this led to the trial court's order being confusing about who was allowed to pick the arbitrators. As a result, Dominguez argues, Eichner, P.C.'s claim that it had the exclusive right to pick the arbitrator "led to an arbitration that was unfair and unconscionable."
As Eichner, P.C. points out, however, Dominguez also filed a motion to compel arbitration. "[A] party cannot complain on appeal that the trial court took a specific action that the complaining party requested, a doctrine commonly referred to as 'the invited error' doctrine." Tittizer v. Union Gas Corp., 171 S.W.3d 857, 862 (Tex. 2005).
Second, Dominguez argues Eichner, P.C. did not follow the court's order when selecting an arbitrator. The basis for this argument is that the trial court used Eichner, P.C.'s proposed order as the basis for its order directing the parties to arbitration. The proposed order included language requiring the parties to use the Better Business Bureau for their arbitration. The trial court struck out this language in the signed order. Dominguez asserts the trial court told them they had to agree on whom to use for arbitration. There is no evidence of this in the record, however. See In re Drobny, 2016 WL 4537076, at *7 ("A party seeking to vacate an arbitration award bears the burden of presenting a complete record that establishes grounds for vacating the award.").
Third, Dominguez argues the award should be vacated because he was forced to participate in arbitration without Eichner, P.C. answering his discovery requests. As Eichner, P.C. points out, Dominguez sought discovery from Eichner, P.C. through the trial proceedings, not the arbitration. When the trial court ordered the parties to arbitration, all trial proceedings were stayed. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.025(a) (West 2011). Dominguez does not complain about any limitations placed on discovery within the arbitration process. See In re Fleetwood Homes of Texas, L.P., 257 S.W.3d 692, 695 (Tex. 2008) (holding limited discovery is one of arbitration's most distinctive features).
Finally, Dominguez complains that the arbitrator refused to postpone arbitration when he filed a motion to set aside the arbitration order with the trial court. Dominguez did not prevail on this motion and does not otherwise explain why the arbitrator would be required to postpone arbitration based on his having filed a motion with the trial court. See TEX. R. APP. P. 38.1(i) ("The brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record.").
We overrule Dominguez's second issue.
Attorneys' Fees
In his third issue, Dominguez argues that the arbitration agreements preclude Eichner, P.C. from obtaining attorneys' fees. As Eichner, P.C. points out, this matter was not raised before the trial court. See TEX. R. APP. P. 33.1(a) (requiring, as prerequisite to raising issue on appeal, complaint was made to trial court and party obtained ruling from trial court).
We overrule Dominguez's third issue.
Conclusion
We affirm the judgment of the trial court.
Laura Carter Higley
Justice Panel consists of Justices Higley, Brown, and Caughey.