Opinion
No. 05-10-00595-CV
Opinion Filed June 23, 2011.
On Appeal from the 116th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 10-03957-F.
Before Justices O'NEILL, FRANCIS, and MYERS.
MEMORANDUM OPINION
Hanley-Wood, LLC, appeals the trial court's judgment confirming the arbitrator's award in favor of Galen Poss and Michael Green. In three issues, Hanley-Wood claims the trial court erred in confirming the arbitrator's award because the arbitrator exceeded his authority, required Hanley-Wood to pay all the arbitrator's fees when the agreements stated otherwise, and failed to specify the date on which prejudgment interest would accrue. We affirm.
Poss and Green were executives who worked for Hanley-Wood from 2000 until 2009. In 2005, each signed an employment agreement which provided, among other things, the terms of employment and salary, bonus, and termination packages. If Poss or Green terminated his employment for good reason, he was entitled to a severance package that included twelve months base salary, accrued benefits, and an amount equal his previous year's incentive bonus. Good reason included if the company failed to provide increases required by the agreement or to pay when due any amount payable under the agreement. The agreements also provided the parties would arbitrate any controversies, disputes, or claims.
On June 15, 2009, Poss and Green terminated their respective employment agreements when the company failed to pay amounts due under the employment agreements. The men sued Hanley-Wood for breach of contract. Hanley-Wood, in turn, asserted various defenses, including the increases and bonuses contemplated by the agreements were discretionary, not mandatory; Poss and Green were not entitled to termination benefits because they breached their agreements by retaining certain documents; and Hanley-Wood had substantially complied with the agreement or, alternatively, was excused from performing because performance was impossible or impracticable.
The case proceeded to arbitration. The arbitrator awarded Poss and Green their respective bonuses for 2008, salary adjustments for 2009, termination benefits, and attorney's fees. The arbitrator also awarded 5% prejudgment interest and ordered postjudgment interest to begin accruing April 2, 2010-the date of the arbitration award. Finally, the award assessed the arbitration fees and costs against Hanley-Wood. After the trial court confirmed the award on May 14, 2010, Hanley-Wood appealed.
In its first issue, Hanley-Wood claims the trial court erred in confirming the arbitrator's award because the arbitrator exceeded his powers by basing the award on issues not before him and altering the terms of the contracts. Specifically, Hanley-Wood argues the arbitrator incorrectly decided Poss's and Green's "noncompliance with Section 6(a) was not material" and "Hanley-Wood was not damaged" by the noncompliance. Hanley-Wood claims the arbitrator engrafted a materiality and harm provision not contemplated by the parties. We disagree. A trial court's decision to confirm an arbitration award is reviewed de novo, and we review the entire record in making such a review. Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677, 683 (Tex. App.-Dallas 2010, pet. denied); see Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 567 (Tex. App.-Dallas 2008, no pet.). An arbitrator's award on matters submitted to arbitration is given "the same effect as the judgment of a court of last resort. All reasonable presumptions are indulged in favor of the award, and none against it." CVN Group, Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002). Therefore, a court reviewing the award may not substitute its judgment for that of the arbitrator merely because the court would have reached a different decision. Bailey Williams v. Westfall, 727 S.W.2d 86, 90 (Tex. App.-Dallas 1987, writ ref'd n.r.e.). Review of an arbitration award is so limited that even a mistake of fact or law by the arbitrator in the application of substantive law is not a proper ground for vacating an award. Ancor Holdings, LLC v. Peterson, Goldman Villani, Inc., 294 S.W.3d 818, 826 (Tex. App.-Dallas 2009, no pet.); Crossmark, Inc. v. Hazar, 124 S.W.3d 422, 429 (Tex. App-Dallas 2004, pet. denied).
Section 171.088 of the civil practice and remedies code provides a court shall vacate an award if the arbitrator exceeded his power. Tex. Civ. Prac. Rem. Code Ann. § 171.088(a)(3) (West 2005). An arbitrator exceeds his power when he decides matters not properly before him. See City of Baytown v. C.L. Winter, Inc., 886 S.W.2d 515, 518-19 (Tex. App.-Houston [1st Dist.] 1994, writ denied). The authority of the arbitrator is derived from the arbitration agreement and is limited to a decision of the matters submitted either expressly or by necessary implication. Gulf Oil Corp. v. Guidry, 327 S.W.2d 406, 408 (Tex. 1959).
When a non-prevailing party seeks to vacate an arbitration award, it bears the burden in the trial court to bring forward a complete record establishing its basis for vacating the award. Centex/Vestal, 314 S.W.3d at 684. As a general rule, when no arbitration transcript is presented, we must presume the arbitration evidence adequately supported an award. Id. Here, we have no transcript from the arbitration, nor do we have any pleadings filed before arbitration; we do have the employment agreements, motion to confirm, motion to amend or vacate, and argument of counsel at the hearing on the motions. Our inquiry, therefore, is whether the arbitrator had the authority, based on the arbitration clause and the parties' complaints as we understand them, to consider the materiality of Poss's and Green's breaches. See Ancor Holdings, 294 S.W.3d at 829.
Although portions of the employment agreements at issue in this case differed, the arbitration clauses in both contracts were identical. They provided:
any controversy, dispute or claim arising out of or relating to the Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration. . . . The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.
The language in the arbitration section is broad, encompassing a wide range of disputes. When an arbitration clause employs broad language such as this, it is construed as evidencing the parties' intent to be inclusive rather than exclusive. Centex/Vestal, 314 S.W.3d at 685; see also Prodigy Commc'ns Corp. v. Agric. Excess Surplus Ins. Co., 288 S.W.3d 374, 378 (Tex. 2009) (considering whether party committed a material breach is a fundamental part of contract law); Allied Capital Partners, LP v. Proceed Technical Res., Inc., 313 S.W.3d 460, 464-65 (Tex. App.-Dallas 2010, no pet.) (same).
Section 5(e) of each agreement details the termination package each executive "shall be entitled to receive" if the employment period is terminated by the executive for good reason. That section specifically states "provided, however, that if the Executive has materially breached the provisions of this Agreement, the provisions of Section 11 shall apply in lieu of this Section 5(e)." In light of the arbitration clause's broad intent and the agreement's specific language about material breach, we cannot conclude the arbitrator exceeded his authority by deciding Poss's and Green's breaches were "not material" and "Hanley-Wood was not damaged" by the noncompliance. We overrule the first issue.
In its second and third issues, Hanley-Wood claims the trial court erred in confirming the award because (1) the award required the company to pay all the arbitrator's fees, contrary to the terms of the parties' contracts, and (2) the award reflected prejudgment interest had already begun accruing when, in fact, Poss and Green had not yet suffered a loss or injury.
A claim that the arbitrator erred by awarding fees or miscalculating interest does not mean he exceeded his authority but rather raises a factual or legal mistake. See Centex/Vestal, 314 S.W.3d at 686. "The fact that the relief granted by the arbitrators could not or would not be granted by a court of law or equity is not a ground for vacating or refusing to confirm the award." Tex. Civ. Prac. Rem. Code Ann. § 171.090 (West 2005); see Jamison Harris v. Nat'l Loan Investors, 939 S.W.2d 735, 737 (Tex. App.-Houston [14th Dist.] 1997, writ denied) (arbitration award may not be vacated for mistake of law or fact). Because the trial court could not vacate the award on these grounds, we cannot conclude the trial court erred in confirming the award. We overrule Hanley-Wood's second and third issues.
We affirm the trial court's judgment.