ORAL ARGUMENT CONDITIONALLY REQUESTED 

No. 03-17-00492-CV 

In the Court of Appeals 

for the Third Judicial District 

Austin, Texas

DIXIE EQUIPMENT, LLC AND DIXIE TURBINE SERVICES, LLC, 

Appellants, 

v. 

ENERGIA DE RAMOS, S.A.P.I. DE C.V. F/K/A

DEACERO POWER S.A.P.I. DE C.V., 

Appellee. 

On Appeal from the 200th Judicial District Court 

Travis County, Texas 

BRIEF OF APPELLEE ENERGIA DE RAMOS, S.A.P.I. DE C.V. F/K/A 

DEACERO POWER S.A.P.I. DE C.V. 

 Breck Harrison 

 State Bar No. 24007325 

Michael Roberts 

 State Bar No. 24082153 

Danica L. Milios 

 State Bar No. 00791261 

JACKSON WALKER L.L.P. 

100 Congress Ave., Suite 1100 

Austin, Texas 78701 

[Tel.] (512) 236-2000 

[Fax] (512) 236-2002 

bharrison@jw.com 

COUNSEL FOR APPELLEE

ACCEPTED

03-17-00492-CV

21273618

THIRD COURT OF APPEALS

AUSTIN, TEXAS

12/13/2017 3:34 PM

JEFFREY D. KYLE

CLERK

 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 12/13/2017 3:34:07 PM JEFFREY D. KYLE Clerk
ii

IDENTITY OF PARTIES AND COUNSEL 

Appellants 

Dixie Equipment, LLC and

Dixie Turbine Services, LLC

Lead Appellate Counsel

Kevin J. Terrazas

State Bar No. 24060708

Timothy A. Cleveland

State Bar No. 24055318

CLEVELAND | TERRAZAS PLLC

4611 Bee Cave Rd., # 306B

Austin, Texas 78746

[Tel.] (512) 680-3257

kterrazas@clevelandterrazas.com

Appellee

Energia de Ramos, S.A.P.I. de C.V. f/k/a

Deacero Power S.A.P.I. de C.V.

Lead Appellate Counsel 

Breck Harrison

State Bar No. 24007325

JACKSON WALKER L.L.P.

100 Congress Ave., Suite 1100

Austin, Texas 78701

[Tel.] (512) 236-2000

[Fax] (512) 236-2002

bharrison@jw.com

Additional Appellate Counsel 

Michael Roberts

State Bar No. 24082153

Danica L. Milios

State Bar No. 00791261

JACKSON WALKER L.L.P.

100 Congress Ave., Suite 1100

Austin, Texas 78701

[Tel.] (512) 236-2000

[Fax] (512) 236-2002

mroberts@jw.com

dmilios@jw.com
iii

TABLE OF CONTENTS 

Identity of Parties and Counsel ................................................................ii

Table of Authorities...................................................................................v

Statement of the Case ............................................................................viii

Statement Regarding Oral Argument ......................................................x

Issues Presented........................................................................................x

Statement of Facts ....................................................................................3

I. The Ramos Arizpe Project.......................................................3

II. The Arbitration Proceeding ....................................................4

III. The District Court Confirms the Arbitration Award .............8

Summary of Argument..............................................................................9

Argument.................................................................................................11

I. The Arbitration Panel’s Decision To Hold the Final 

Arbitration Hearing in Dixie’s Voluntary Absence and 

in Accordance with the Panel’s Rules Did Not Violate 

Dixie’s Purported Due Process or Constitute Misconduct 

under the FAA.......................................................................14

A. The Arbitration Panel’s Decision To Hold the Final 

Arbitration Hearing in Dixie’s Absence Comported 

with Due Process Because Dixie Had Full Notice 

of the Hearing and Voluntarily Elected To 

Abandon the Proceedings.............................................16

B. The Arbitration Panel’s Decision To Conduct the 

Hearing in Dixie’s Absence Was Authorized by the 

Rules of the ICDR ........................................................20
iv

C. It Was Dixie’s Burden To Procure a Transcript of 

the Final Arbitration Hearing; Its Failure To Do so 

Does Not Support Vacatur of the Arbitration 

Award ...........................................................................22

II. The Arbitration Panel’s Decision To Hold the Final 

Arbitration Hearing Despite Dixie’s Claimed Inability 

To Pay Is Not Grounds for Vacatur ......................................28

A. Dixie Failed To Prove Its Inability To Pay in the 

Arbitration Proceeding.................................................28

B. The ICDR Procedures Specifically Authorized the 

Arbitration Panel To Reject Dixie’s Counterclaims 

for Failure To Pay Its Share of the Arbitration 

Fees...............................................................................31

Prayer ......................................................................................................32

Certificate of Service ...............................................................................33
v

TABLE OF AUTHORITIES 

Page(s) 

Cases 

21st Fin. Servs., L.L.C. v. Manchester Fin. Bank, 

747 F.3d 331 (5th Cir. 2014) ..........................................................17

Baravati v. Josephthal, Lyon & Ross, Inc., 

28 F.3d 704 (7th Cir. 1994) ............................................................21

BDO Seidman LLP v. J.A. Green Dev. Corp., 

327 S.W.3d 852 (Tex. App.—Dallas 2010, no pet.)........................31

Berstein Seawell & Kove v. Bosarge, 

813 F.2d 726 (5th Cir. 1987) .................................................... 17, 18

Bonded Builders Home Warranty Assoc., Inc. v. Smith, 

488 S.W.3d 468 (Tex. App.—Dallas 2016, no pet).........................30

Craft v. Davis, 

No. 2-07-332-CV, 2008 WL 4180357 (Tex. App.—Fort 

Worth Sept. 11, 2008, no pet.) (mem. op.) .....................................23

CVN Grp., Inc. v. Delgado, 

95 S.W.3d 234 (Tex. 2002)..............................................................22

Ewing v. Act Catastrophe-Tex. L.C., 

375 S.W.3d 545 (Tex. App.—Houston [14th Dist.] 

2012, pet. denied) ...........................................................................18

Gilbert v. Rain & Hail Ins., 

No. 02-16-00277-CV, 2017 WL 710702 (Tex. App.—Fort 

Worth Feb. 23, 2017, pet. denied) (mem. op.)................................19

GJR Mgmt. Holdings, L.P. v. Jack Raus, Ltd., 

126 S.W.3d 257 (Tex. App.—San Antonio 2003, pet. denied)..........23
vi

Grp. 32 Dev. & Eng’g, Inc. v. GC Barnes Grp., 

No. 3:14-CV-2436-B, 2015 WL 144082 

(N.D. Tex. Jan. 9, 2015) ........................................................... 18, 22

House Grain Co. v. Obst, 

659 S.W.2d 903 (Tex. App.—Corpus Christi 1983, 

writ ref’d n.r.e.)...............................................................................23

In re Chestnut Energy Partners, Inc., 

300 S.W.3d 388 (Tex. App.—Dallas 2009, pet. denied)........... 12, 26

In re Kempwood Assocs., L.P., 

9 S.W.3d 125 (Tex. 1999) (orig. proceeding) (per curiam)................12

In re Olshan Found. Repair Co., 

328 S.W.3d 883 (Tex. 2010) (orig. proceeding) ............ 12, 21, 29, 31

Jacaman Polaris Sports Ctr. Ltd. v. Falcon Int’l Bank, 

No. 04-16-00481-CV, 2017 WL 2852632 (Tex. App.—

San Antonio July 5, 2017, no pet.) (mem. op.)................... 12, 25, 26

Kline v. O’Quinn, 

874 S.W.2d 776 (Tex. App.—Houston [14th Dist.] 1994, 

writ denied) ....................................................................................23

KNJ Enters., Inc. v. Wilbanks & Wilbanks, P.C., 

No. 14-14-00271-CV, 2015 WL 1736400 (Tex. App.—

Houston [14th Dist.] Apr. 14, 2015, no pet.) (mem. op.).... 18, 19, 26

Laws v. Morgan Stanley Dean Witter, 

452 F.3d 398 (5th Cir. 2006) ..........................................................13

Nafta Traders, Inc. v. Quinn, 

339 S.W.3d 84 (Tex. 2011).................................................. 23, 24, 27

Peacock v. Wave Tec Pools, Inc., 

107 S.W.3d 631 (Tex. App.—Waco 2003, no pet.)..........................20
vii

Saks v. Rogers, 

No. 04-16-00286-CV, 2017 WL 3159712 (Tex. App.—

San Antonio July 26, 2017, no pet.) (mem. op.).............................19

Statewide Remodeling, Inc. v. Williams, 

244 S.W.3d 564 (Tex. App.—Dallas 2008, no pet.).................. 23, 26

Totem Marine Tug & Barge, Inc. v. N. Am. Towing, Inc., 

607 F.2d 649 (5th Cir. 1979) .................................................... 16, 17

Venture Cotton Coop. v. Freeman, 

435 S.W.3d 222 (Tex. 2014)............................................................29

Venture Cotton Coop. v. Neudorf, 

No. 14-13-00808-CV, 2014 WL 4557765 (Tex. App.—

Houston [14th Dist.] Sept. 16, 2014, no pet.) (mem. op.) ........ 12, 19

Volt Info. Sci., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 

489 U.S. 468 (1989) ........................................................................20

Vorwerk v. Williamson Cnty. Grain, Inc., 

No. 03-10-00549-CV, 2012 WL 593481 (Tex. App.—

Austin Feb. 23, 2012, pet. denied) (mem. op.) ............. 11, 20, 23–25

Codes and Rule 

9 U.S.C. § 10(a)(3) ...................................................................................13

9 U.S.C. § 10(c) ........................................................................................12

TEX. R. APP. P. 38.1(i) ..............................................................................31

Other Authorities 

International Dispute Resolution Procedures, Available at

https://www.icdr.org/icdr/ShowProperty?nodeId=/UCM/A

DRSTAGE2020868&revision=latestreleased 

(last accessed December 12, 2017) .....................................................22
viii

STATEMENT OF THE CASE 

Nature of the Case: Appellee Energia de Ramos, S.A.P.I. 

de C.V. f/k/a Deacero Power, S.A.P.I. 

de C.V. (“EdR”) initiated arbitration 

proceedings against Appellants, Dixie 

Equipment, LLC (“Dixie Equipment”) 

and Dixie Turbine Services, LLC 

(“Dixie Turbine”) (collectively, 

“Dixie”) pursuant to the parties’ 

contracts. CR.12.1 Dixie appeared 

and asserted counterclaims. CR.12; 

CR.202–20. 

Course of Proceedings: Seven months after EdR instituted 

the arbitration proceedings, Dixie 

informed the duly-appointed 

arbitration panel (“Arbitration 

Panel”) that it was unable to pay its 

portion of the arbitration fees. 

CR.12–13. In response to the 

Arbitration Panel’s order, Dixie filed a 

written statement in which it 

confirmed that it would not pay its 

portion of the arbitration fees, that its 

counsel’s role would be “limited to 

that of an observer,” and that it 

“[would] no longer be an active 

participant in the proceedings.” 

CR.237. The Arbitration Panel held 

the final arbitration hearing. CR.14. 

EdR presented documentary 

evidence, as well as fact and expert 

witness testimony, in support of its 

claims against Dixie. Id. Dixie, 

through its counsel, attended the 

 

1. Citations of CR.__ reference the clerk’s record, with the blank identifying the page.
ix

morning session of the first day of the 

two-day hearing, but did not return 

for the remainder of the proceedings. 

Id. The Arbitration Panel awarded 

EdR $16,664,184.60 including 

economic damages, attorneys’ fees, 

expert fees, arbitration fees and 

expenses, and prejudgment interest. 

CR.11–34. EdR filed a Petition to 

Confirm Arbitration Award in the 

district court, which was granted. 

CR.246–73. This appeal followed. 

CR.365–66.

Trial Court: 200th District Court, Travis County; 

the Honorable Karin Crump, 

presiding.

Trial Court Disposition: The district court confirmed the 

arbitration award. CR.246–73.
x

STATEMENT REGARDING ORAL ARGUMENT 

Because this case is controlled by the application of well-established 

legal principles, Appellee does not believe that oral argument is needed 

to aid in the Court’s decisional process. However, if the Court concludes 

that it will hear oral argument in this matter, counsel for Appellee would 

like to be heard.

ISSUES PRESENTED 

1. Whether an arbitration panel’s receipt of evidence following a 

party’s voluntary absence from a final arbitration hearing, with actual 

knowledge of the hearing, due to alleged inability to pay constitutes 

arbitrator misbehavior under the Federal Arbitration Act sufficient to 

vacate the arbitration award. 

2. Whether a party may complain on appeal regarding the lack 

of a transcript of a final arbitration hearing when the party neither 

requested one nor objected to the failure to record the proceedings before, 

during, or after the hearing.

3. Whether a party’s voluntary waiver of its counterclaims due 

to an alleged inability to pay, a result mandated by the party’s chosen 

arbitration rules, is a violation of the party’s due-process rights.
No. 03-17-00492-CV

In the Court of Appeals 

for the Third Judicial District 

Austin, Texas 

DIXIE EQUIPMENT, LLC AND DIXIE TURBINE SERVICES, LLC,

Appellant,

v.

ENERGIA DE RAMOS, S.A.P.I. DE C.V. F/K/A

DEACERO POWER S.A.P.I. DE C.V.,

Appellee.

On Appeal from the 200th Judicial District Court

Travis County, Texas

BRIEF OF APPELLEE ENERGIA DE RAMOS, S.A.P.I. DE C.V. F/K/A 

DEACERO POWER S.A.P.I. DE C.V. 

TO THE HONORABLE THIRD COURT OF APPEALS:

The district court correctly confirmed the Arbitration Panel’s award 

of damages in favor of EdR for Dixie’s breach of contract. Dixie invites 

the Court to vacate that award because Dixie voluntarily abandoned the 

arbitration proceeding and did not participate in the final arbitration 

hearing, asserting an unsubstantiated inability to pay. According to 

Dixie, the Arbitration Panel violated its due-process rights by conducting 
2

the final arbitration hearing in Dixie’s absence without a transcript. 

Dixie also seeks to fault EdR for not securing a transcript of the final 

arbitration hearing. 

At every turn, however, Texas law mandates confirmation of the 

Arbitration Panel’s award. Dixie had actual knowledge of the 

proceedings and voluntarily chose to avoid them. The Arbitration Panel 

was authorized by the rules of the arbitral forum to proceed in Dixie’s 

absence. And it was Dixie’s sole responsibility to procure a record of the 

proceedings if it wanted to contest the result, not EdR’s. Dixie received 

all the process to which it was entitled. 

Moreover, Dixie cannot now be heard to complain about the cost of 

arbitration. Dixie has never claimed that the arbitration agreements 

were unconscionable due to excessive costs, and it failed to offer any 

evidence to that effect before the Arbitration Panel. Dixie’s voluntary 

decision to abandon the arbitration proceeding, citing an unproven 

inability to pay, does not create a due-process violation. The Court should 

affirm the district court’s judgment confirming the arbitration award.
3

STATEMENT OF FACTS 

EdR is an affiliate of Deacero, S.A.P.I. de C.V., a steel manufacturer 

located in Mexico. See CR.14. This case arises out of two contracts 

executed in December 2012 and April 2013: (1) the Equipment Purchase 

Agreement (“EPA”) between Dixie Equipment and EdR; and (2) the 

Engineering Project Management and Centerline Installation Contract 

(“Installation Contract”) between Dixie Turbine Services and EdR. See

CR.42–82 (EPA); CR.83–170 (Installation Contract). Both the EPA and 

the Installation Contract contained arbitration provisions. CR. 51–52 

(EPA arbitration provision); CR.115 (Installation Contract arbitration 

provision). 

I. THE RAMOS ARIZPE PROJECT 

Pursuant to the EPA and the Installation Contract, Dixie agreed to 

disassemble, refurbish, transport, and install a turbine generator and 

related components for a power generation facility in Ramos Arizpe, 

Nuevo León, Mexico to serve EdR’s manufacturing plants and other 

facilities’ electric power needs (“Project”). CR.14–15.2 EdR planned on 

 

2. Record cites to CR.11–34 come from the Arbitration Award (defined herein) issued 

by the Arbitration Panel. The Arbitration Award was issued following the 

Arbitration Panel’s receipt of pre- and post-hearing briefing, documentary evidence, 
4

selling any excess power it did not need to Mexico’s state-run electric 

power provider and other third parties. CR.14. 

Following Dixie’s delays and deficient performance throughout the 

Project, and after EdR paid it $24,266,213.90, over a million dollars more 

than the price agreed-upon in the EPA and Installation Contract, Dixie 

abandoned the Project on September 10, 2014. CR.15–16. Dixie’s 

premature abandonment of the incomplete Project required EdR to hire 

a number of contractors to correct and complete Dixie’s scope of work 

under both the EPA and Installation Contracts. CR.16. 

II. THE ARBITRATION PROCEEDING 

Seeking to recoup the amounts paid to other contractors to correct 

and complete Dixie’s scope of work, as well as lost profits associated with 

lost sales of power occasioned by the Project’s delayed completion, EdR 

filed its Notice of Arbitration in September 2015. CR 12. In October 

2015, Dixie filed its Original Answer and Counterclaim. Id. Following 

the parties’ selection of the Arbitration Panel, the parties agreed that the 

arbitration would be conducted in accordance with the procedures of the 

 

expert and fact witness testimony, Dixie’s Original Answer, and EdR’s counsel’s 

responses to the Arbitration Panel’s inquires during the final arbitration hearing. 
5

International Center for Dispute Resolution’s (“ICDR”) International 

Dispute Resolution Procedures (“ICDR Procedures”) and agreed on a 

scheduling order to govern Case Number 01–15–0004–9165 (“Arbitration 

Proceeding”). CR.12; CR.35–39 (February 17, 2016 Report of Preparatory 

Conference and Scheduling Order (“Initial Scheduling Order”)). Dixie 

was initially an active participant in the Arbitration Proceeding. For 

example, pursuant to the Initial Scheduling Order, Dixie agreed to a 

procedural schedule which provided for the exchange of discovery, expert 

designation deadlines, a discovery deadline, and the exchange of pretrial 

materials. CR.35–39. Further, Dixie agreed to a final arbitration 

hearing beginning September 12, 2016, in Austin, Texas. CR.37. 

On April 8, 2016, Dixie’s then-counsel informed the Arbitration 

Panel and EdR that it would not pay its portion of the arbitration fees for 

unexplained financial reasons. CR.13. Following this representation, 

EdR still complied with its obligations under the Initial Scheduling 

Order, serving Dixie with its document production and a Statement of

Persons with Knowledge of Relevant Facts. The Arbitration Panel held 

a status conference on June 3, 2016, concerning the status of the 

Arbitration Proceeding in light of Dixie’s representation that it would not 
6

pay its share of the arbitration fees. Id. During this conference, the 

Arbitration Panel required Dixie to provide a written status report to the 

Panel and EdR. Id. 

On June 13, 2016, in response to the Arbitration Panel’s order for a 

written status report, Dixie stated that it was “financially unable to 

continue to defend” against the claims in the Arbitration Proceeding. 

CR.237. Further, Dixie stated that its attorney would “remain as counsel 

for Dixie, but [his] role [would] be limited to that of an observer [and] 

Dixie [would] no longer be an active participant in the proceedings.” Id. 

Dixie requested that the Arbitration Panel “take judicial notice of its 

pleadings and give due consideration to the contractual limitations on 

damages agreed to under the contracts.” Id. 

Following Dixie’s representation, and EdR’s June 13, 2016 request 

to continue to the final arbitration hearing, the Arbitration Panel 

confirmed that the final arbitration hearing would take place in Austin, 

Texas beginning on September 12, 2016, as provided in the previously 

agreed-upon Initial Scheduling Order. See CR.13; CR.37. The Panel

noted that Dixie’s counsel would not put on evidence, but would appear 

at the hearing in an observer role. CR.13. Subsequently, Dixie informed 
7

the Arbitration Panel that Dixie would not be pursuing its counterclaims 

because it could not pay the “tribunal fees required to advance these 

claims.” Id. 

On August 8, 2016, the Arbitration Panel held its final status 

conference confirming preparations and deadlines for the final 

arbitration hearing. Id. Counsel for EdR and Dixie participated in this 

status conference. Id. Prior to the final arbitration hearing, EdR served 

its Hearing Exhibit List, Pre-Hearing Brief, and Timeline and Witness 

List on the Arbitration Panel and Dixie. CR.13–14. 

On September 12 and 13, 2016, the Arbitration Panel held the final 

arbitration hearing in Austin, Texas. EdR presented documentary and 

testimonial evidence in support of its claims, calling four live witnesses, 

including two expert witnesses, who were questioned by the Arbitration 

Panel. CR.14. The Arbitration Panel additionally questioned EdR’s 

counsel. Id. Dixie’s counsel attended the hearing the morning of 

September 12, but did not return for the remainder of the hearing. Id. 

Following the hearing, the Arbitration Panel requested EdR brief 

discrete issues, which it did, serving Dixie with a copy of its post-hearing 

briefing. Id. Despite attending part of the hearing and being copied on 
8

all pre- and post-hearing correspondence and pleadings, Dixie did not 

request a transcript of the final arbitration hearing or object to the 

absence of a transcript. 

On November 22, 2016, the Arbitration Panel issued its Final 

Award in the form of an 18-page reasoned award (“Arbitration Award”). 

CR.11–34; CR.195–97. In issuing its rulings, the Arbitration Panel 

referenced and analyzed five specific issues and specifically relied on 

“EdR’s pleadings, Dixie’s Original Answer, the evidence presented at the 

Final Arbitration Hearing, and post-hearing briefing.” CR.17. The 

Arbitration Panel ultimately awarded EdR $13,627,162.30 against Dixie 

Equipment and $3,037,022.34 against Dixie Turbine. CR.27.

III. THE DISTRICT COURT CONFIRMS THE ARBITRATION AWARD 

EdR promptly filed its Petition to Confirm Arbitration Award in 

Travis County state court on November 30, 2016. CR.3–171. Exactly 

three months following the Arbitration Panel’s issuance of the award, 

Dixie’s non-attorney owner, Claude Hendrickson, filed an “Answer to 

Petition to Confirm Arbitration Award” on behalf of Dixie. CR.174–81. 

On April 13, 2017, Dixie filed a pleading entitled “Additional Briefing 

Related to Motion to Vacate[,]” asserting substantially the same 
9

arguments raised before this Court, and EdR filed a response the 

following day. CR.230–44. 

The district court denied Dixie’s purported Motion to Vacate on 

April 18, 2017. On April 19, 2017, the district court granted EdR’s 

Petition to Confirm Arbitration Award and confirmed the Arbitration 

Award in its entirety, with post-award interest. CR.246–73. Dixie filed 

a Motion for New Trial and Motion to Modify the Judgment, again raising 

substantially the same arguments it raises before this Court. CR.333–

42. Both motions were overruled by operation of law, and this appeal 

followed. CR.365–66.

SUMMARY OF ARGUMENT 

The district court confirmed the Arbitration Award, issued after the 

Arbitration Panel received and considered pre- and post-hearing briefing, 

testimonial and documentary evidence, and Dixie’s Original Answer. 

Dixie argues the Arbitration Award should have been vacated because: 

(1) it was “unable to participate” in the final arbitration hearing; (2) EdR 

did not request a record of the final arbitration hearing on Dixie’s behalf, 

and; (3) Dixie could not “present its counterclaims[.]” Dixie claims that 

these purported failures of the Arbitration Panel and EdR violated its 
10

due-process rights and support vacatur of the Arbitration Award. 

Because Dixie’s contentions are foreclosed by Texas law, the Court should 

reject them. 

To reverse the district court’s judgment, Dixie would have this 

Court ignore the presumption in favor of arbitration awards and sanction 

the strategy of partially participating in a previously agreed-upon 

arbitration proceeding, voluntarily withdrawing from the proceeding, 

and re-appearing only after the fact to contest the results of the 

proceeding from which it withdrew. Sanctioning Dixie’s strategy would 

not serve due process, fairness, or common sense. 

Texas law has long held that arbitration awards may be set aside 

in only the most egregious of circumstances, none of which are presented 

here. Dixie had full notice—indeed it had actual knowledge—of the final 

arbitration hearing, and it voluntarily opted not to participate. Dixie had 

every opportunity to request a record be made of the final arbitration 

hearing, but it failed to do so. Finally, Dixie made no attempt to prove 

the purportedly excessive cost of the Arbitration Proceeding, to which it 

voluntarily agreed. Dixie cannot establish error in the Arbitration 
11

Panel’s actions and decision at all, much less such error that would 

support vacatur under Texas law.

The Court should affirm the district court’s judgment confirming 

the Arbitration Award. 

ARGUMENT 

As this Court and the Texas Supreme Court have repeatedly 

recognized, “Texas law has long favored arbitration of disputes.” 

Vorwerk v. Williamson Cnty. Grain, Inc., No. 03-10-00549-CV, 2012 WL 

593481, at *4 (Tex. App.—Austin Feb. 23, 2012, pet. denied) (mem. op.) 

(citing Prudential Secs. Inc. v. Marshall, 909 S.W.2d 896, 898 (Tex. 1995) 

(orig. proceeding) (per curiam)). Arbitration awards are conclusive as to 

all matters submitted to the arbitrators because the award has the effect 

of a judgment of a court of last resort. Id. 

Accordingly, judicial review of arbitration awards “is 

extraordinarily narrow,” and courts “indulge every reasonable 

presumption in favor of upholding the arbitration award.” Id. (citing E. 

Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267, 271 (Tex. 2010); 

CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002)). An 

arbitration award must be confirmed unless it is vacated, modified, or 
12

corrected pursuant to one of the limited—and exclusive—grounds set 

forth in the Federal Arbitration Act (FAA).3 Venture Cotton Coop. v. 

Neudorf, No. 14-13-00808-CV, 2014 WL 4557765, at *3 (Tex. App.—

Houston [14th Dist.] Sept. 16, 2014, no pet.) (mem. op.) (citing Hall St. 

Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584 (2008) (holding that the 

bases for vacatur under the FAA are exclusive)). 

Dixie urges the Court to vacate the arbitration award for 

“misconduct” under section 10 of the FAA.4 That provision authorizes 

vacatur in limited circumstances, including 

 

3. The parties agreed the Arbitration Proceeding “would be governed in all aspects 

by Texas law.” CR.12. Accordingly, both the FAA and TAA may apply. In re Olshan 

Found. Repair Co., 328 S.W.3d 883, 890 (Tex. 2010) (orig. proceeding); In re 

Kempwood Assocs., L.P., 9 S.W.3d 125, 127–28 (Tex. 1999) (orig. proceeding) (per 

curiam). Because Dixie raises vacatur grounds only pursuant to the FAA, EdR 

focuses its brief on the FAA. 

4. Dixie actually cites 9 U.S.C. § 10(c) as the asserted statutory basis for vacatur of 

the arbitral panel’s award for alleged misconduct. Appellants’ Br. at 7–8. Section 

10(c), however, does not concern misconduct, but states that “The United States 

district court for the district wherein an award was made that was issued pursuant 

to section 580 of title 5 may make an order vacating the award upon the application 

of a person, other than a party to the arbitration, who is adversely affected or 

aggrieved by the award, if the use of arbitration or the award is clearly inconsistent 

with the factors set forth in section 572 of title 5.” 9 U.S.C. § 10(c). The only portion 

of 9 U.S.C. section 10 that concerns “misconduct” is 9 U.S.C. section 10(a)(3). Because

the substance of Dixie’s argument on appeal concerns “misconduct,” EdR assumes 

Dixie seeks vacatur under that provision. See Appellants’ Br. at 7–8; see also In re 

Chestnut Energy Partners, Inc., 300 S.W.3d 386, 397-98 (Tex. App.—Dallas 2009, 

pet. denied) (noting that section 10(a) sets forth the limited situations in which a 

court may vacate an arbitration award); Jacaman Polaris Sports Ctr. Ltd. v. Falcon 
13

where the arbitrators were guilty of misconduct in 

refusing to postpone the hearing, upon sufficient 

cause shown, or in refusing to hear evidence 

pertinent and material to the controversy; or of 

any other misbehavior by which the rights of any 

party have been prejudiced.

9 U.S.C. § 10(a)(3); see Appellants’ Br. at 7–8. “Misconduct” authorizing 

vacatur of an award is not an error in the arbitrator’s determination or 

an error of law, but is conduct that “so affects the rights of a party that it 

may be said that he was deprived of a fair hearing.” Laws v. Morgan 

Stanley Dean Witter, 452 F.3d 398, 399 (5th Cir. 2006).

Dixie cannot demonstrate any misconduct by the Arbitration 

Panel—let alone such conduct that deprived Dixie of an opportunity for 

a fair hearing. Dixie had full notice and the opportunity to be heard in 

the Arbitration Proceeding. It voluntarily abandoned the Arbitration 

Proceeding claiming an alleged and unproven inability to pay its portion 

of the arbitration fee. The district court properly granted EdR’s Petition

to Confirm Arbitration Award. This Court should affirm.

 

Int’l Bank, No. 04-16-00481-CV, 2017 WL 2852632, at *3 (Tex. App.—San Antonio 

July 5, 2017, no pet.) (mem. op.) (same).
14

I. THE ARBITRATION PANEL’S DECISION TO HOLD THE FINAL 

ARBITRATION HEARING IN DIXIE’S VOLUNTARY ABSENCE AND IN 

ACCORDANCE WITH THE PANEL’S RULES DID NOT VIOLATE DIXIE’S 

PURPORTED DUE PROCESS OR CONSTITUTE MISCONDUCT UNDER THE 

FAA. 

Dixie admits that it was fully aware of the Arbitration Proceeding

pending in the ICDR that was set to resolve the competing breach-ofcontract claims asserted by Dixie and EdR. Appellants’ Br. at 3. It 

further admits that it voluntarily abandoned the proceedings due to 

alleged financial issues. Id. Dixie nonetheless contends that the 

Arbitration Panel engaged in misconduct and violated its due-process 

rights by conducting the final arbitration hearing in Dixie’s absence 

without making a record. Id. at 5–14. Dixie attempts to analogize to the 

post-answer-default rule that, in the absence of a reporter’s record, a 

defaulting party is entitled to remand for a new trial. Id. at 8–13 (citing 

Smith v. Smith, 544 S.W.2d 121, 122 (Tex. 1976)). Claiming that there 

are no “reported case[s] addressing this issue in the arbitration context,” 

id. at 8, Dixie invites the Court to craft a new rule that would give a party 

an automatic rehearing before an arbitration panel when the party, after 

notice of the proceedings, and even partial participation, voluntarily 

abandons the proceedings and a record is not made. Id. at 8–13.
15

For multiple reasons, the Court should reject Dixie’s invitation. 

First, Dixie had full notice, indeed it had actual knowledge, of the 

Arbitration Proceeding, including the final arbitration hearing, and it 

voluntarily abandoned it. CR.13–14; CR.237. Several cases—reported 

and unreported—have rejected the notion that an arbitral decision may 

be upended on due-process or “misconduct” grounds by a party’s failure 

to appear after notice—with or without a transcript of the proceedings. 

Second, courts repeatedly hold that parties to arbitration will be held to 

the rules to which they contractually obligated themselves. When, as 

here, arbitration rules specifically authorize the arbitral panel to proceed 

in the absence of a party who had notice, the absent party has no grounds 

to complain about the conduct of the hearing. Third, the burden to 

procure a transcript of the final arbitration hearing lay squarely with 

Dixie, both under the rules of the ICDR and under well-established Texas 

jurisprudence. Dixie’s voluntary abdication of its responsibility to make

its own record does not establish misconduct or a violation of due process 

by the panel.
16

None of the grounds asserted by Dixie constitutes misconduct to 

support vacatur of the Arbitration Panel’s decision under the FAA. The 

district court’s decision to confirm the Arbitration Award was correct.

A. The Arbitration Panel’s Decision To Hold the Final 

Arbitration Hearing in Dixie’s Absence Comported with Due 

Process Because Dixie Had Full Notice of the Hearing and 

Voluntarily Elected To Abandon the Proceedings. 

Dixie erroneously contends that the Arbitration Panel’s “ex parte 

receipt of evidence constitutes misbehavior by the arbitrators prejudicial 

to Dixie’s rights in violation of 9 U.S.C. § 10(c)[sic].” Appellants’ Br. at 8. 

In other words, Dixie contends that a final arbitration hearing in which 

one party presents evidence while another does not, in general, violates 

the FAA. Id. As support for this erroneous statement of the law, Dixie 

cites Totem Marine Tug and Barge, Inc. v. North American Towing, Inc.,

607 F.2d 649, 653 (5th Cir. 1979), for the principle that “arbitrators 

cannot conduct ex parte hearings or receive evidence except in the 

presence of each other and of the parties, unless otherwise stipulated.” 

Appellants’ Br. at 8. Dixie’s assertion misstates both the law of the Fifth 

Circuit, as expressed by Totem Marine and later cases, as well as Texas 

jurisprudence, which universally authorizes ex parte hearings, provided 

the absent party received notice.
17

To begin, there is no blanket rule prohibiting ex parte arbitration 

hearings.5 To the contrary, “[w]hile all parties in an arbitration 

proceeding are entitled to notice and an opportunity to be heard, due 

process is not violated if the hearing proceeds in the absence of one of the 

parties when that party’s absence is the result of his decision not to 

attend.” Berstein Seawell & Kove v. Bosarge, 813 F.2d 726, 729 (5th Cir. 

1987) (quoting Totem Marine, 607 F.2d at 651) (other citations omitted). 

To support vacatur of an award based on an ex parte hearing, a party 

must show “the absence of actual or constructive notice.” 21st Fin. Servs., 

L.L.C. v. Manchester Fin. Bank, 747 F.3d 331, 337 (5th Cir. 2014) (citing 

Bernstein, 813 F.3d at 729). “Where there is sufficient evidence showing 

 

5. Dixie elides the holding of Totem Marine to suggest that it generally prohibits ex 

parte arbitration hearings. The case makes no such general proclamation. The very 

quote offered by Dixie for its purported general rule against ex parte hearings 

qualifies the rule with the limitation, “unless otherwise stipulated.” 607 F.2d at 653. 

Totem Marine specifically notes that the arbitration rules governing the parties 

before the court required that “all evidence shall be taken in the presence of all the 

parties, except where any of the parties is absent in default or has waived his right 

to be present.” 607 F.2d at 652 (emphasis added). Like the forum rules in Totem 

Marine, the governing rules in this matter expressly authorized the Arbitration Panel 

to conduct a hearing in the absence of a party, if the party failed to appear after being 

duly notified. ICDR art. 26; see infra § I.B. Thus Totem Marine supports the panel’s 

choice to conduct its hearing in Dixie’s absence: Dixie had actual knowledge of the 

final arbitration hearing and elected not to participate, with the exception of its 

counsel attending part of the first day of the hearing. The rules of the forum 

“otherwise stipulated” that the Arbitration Panel was authorized to conduct its 

hearing without Dixie.
18

that a party has received actual or constructive notice of the arbitration 

hearing, the award will be enforced.” Grp. 32 Dev. & Eng’g, Inc. v. GC 

Barnes Grp., No. 3:14-CV-2436-B, 2015 WL 144082, at *4 (N.D. Tex. Jan. 

9, 2015) (citing 21st Fin. Servs., L.L.C., 747 F.3d at 337).

Texas state courts have come to the same conclusion. In Ewing v. 

Act Catastrophe-Texas L.C., 375 S.W.3d 545, 551–52 (Tex. App.—

Houston [14th Dist.] 2012, pet. denied), the Fourteenth Court of Appeals 

considered Ewing’s due-process challenge (nearly identical to that 

asserted by Dixie) to an arbitration award issued after a hearing about 

which she had notice, but elected not to attend. Citing the Fifth Circuit’s 

decision in Berstein, the court held that due process does not mandate 

that parties be heard at an arbitration proceeding. Due process requires 

only that parties be given a meaningful opportunity to be heard. Id.

(citing Berstein, 813 F.2d at 729). The court rejected Ewing’s due-process 

challenge, pointedly concluding “[i]f a party’s absence at the arbitration 

hearing is the result of her decision not to attend, there is no due process 

violation.” Id.

The Fourteenth Court reached a similar result in KNJ Enterprises, 

Inc. v. Wilbanks & Wilbanks, P.C., No. 14-14-00271-CV, 2015 WL 
19

1736400 (Tex. App.—Houston [14th Dist.] Apr. 14, 2015, no pet.) (mem. 

op.). There, the court considered KNJ’s assertion that, even though it 

received notice of the arbitration proceedings, its absence prevented the 

arbitrator from resolving its claims. Id. at *5. The court rejected KNJ’s 

argument, noting that KNJ “could not prevent consideration of claims 

sent to arbitration by opting not to participate in an arbitration 

proceeding of which it had notice.” See also Neudorf 2014 WL 4557765, 

at *5–6 (rejecting due-process challenge to arbitral panel’s decision to 

conduct an ex parte hearing when the objecting party intentionally 

avoided service of the arbitration complaint and notice of hearing). 

Other Texas courts have likewise rejected attempts to vacate 

arbitration awards and decisions based on one party’s intentional 

absence from the proceedings. See Saks v. Rogers, No. 04-16-00286-CV, 

2017 WL 3159712, at *9 (Tex. App.—San Antonio July 26, 2017, no pet.) 

(mem. op.) (noting that “[d]ue process is satisfied when notice procedures 

are followed in compliance with the rules under which the parties agreed 

to be bound”); Gilbert v. Rain & Hail Ins., No. 02-16-00277-CV, 2017 WL 

710702, at *4 (Tex. App.—Fort Worth Feb. 23, 2017, pet. denied) (mem. 

op.) (refusing to vacate arbitration decision for alleged misconduct when 
20

arbitrator conducted hearing in the absence of a party who had notice 

and was given the “opportunity to participate in the proceedings but 

explicitly chose not to.”); cf. Vorwerk, 2012 WL 593481, at *5 (“Courts 

have held that neither an arbitrator’s receipt of ex parte affidavits or ex 

parte documents nor an arbitrator’s ex parte telephone call to a party’s 

counsel constitute arbitrator misconduct.”); Peacock v. Wave Tec Pools, 

Inc., 107 S.W.3d 631, 640 (Tex. App.—Waco 2003, no pet.) (same).

Simply put, no due-process violation arises from an arbitration 

panel’s decision to conduct an arbitration hearing in a party’s voluntary 

absence after notice is provided. The Arbitration Panel’s decision to 

proceed was not misconduct at all, much less misconduct rising to the 

level necessary to void the award under the FAA.

B. The Arbitration Panel’s Decision To Conduct the Hearing in 

Dixie’s Absence Was Authorized by the Rules of the ICDR. 

It is axiomatic that arbitration is “a matter of consent, not coercion, 

and parties are generally free to structure their arbitration agreements 

as they see fit.” Volt Info. Sci., Inc. v. Bd. of Trs. of Leland Stanford 

Junior Univ., 489 U.S. 468, 479 (1989). To that end, the United States 

Supreme Court has recognized that parties may “specify by contract the 

rules under which [their] arbitration will be conducted.” Id. As Judge 
21

Posner has stated in more colorful terms: “[S]hort of authorizing trial by 

battle or ordeal or, more doubtfully, by a panel of three monkeys, . . . 

parties are as free to specify idiosyncratic terms of arbitration as they are 

to specify any other terms in their contract.” Baravati v. Josephthal, 

Lyon & Ross, Inc., 28 F.3d 704, 709 (7th Cir. 1994). These agreements 

are strictly enforced in Texas. “Courts treat arbitration agreements as 

other contracts in applying the legal rules to interpret them. The goal is 

to discern the true intentions of the parties, as the FAA’s primary 

purpose is to ensure private agreements to arbitrate are enforced 

according to their terms, no more, no less.” In re Olshan Found. Repair 

Co., LLC, 328 S.W.3d 883, 889 (Tex. 2010) (orig. proceeding). 

Here, the parties voluntarily agreed to be governed by the ICDR 

Procedures that would both bind them and authorize action by the 

Arbitration Panel in the event of a party’s absence from the proceedings. 

See CR.12 (the Arbitration Award noting that “[t]he parties further 

agreed that . . . [the Arbitration Proceeding] would be governed by the 

ICDR Procedures.”). In particular, Article 26 of the ICDR Procedures 

governs default. In relevant part, Article 26 states:

. . . 
22

2. If a party, duly notified under these Rules, fails to 

appear at a hearing without showing sufficient cause of such 

failure, the tribunal may proceed with the hearing.

3. If a party, duly invited to produce evidence or take any 

other steps in the proceedings, fails to do so within the time 

established by the tribunal without showing sufficient cause 

for such failure, the tribunal may make the award on the 

evidence before it.

ICDR art. 26.2, .3.6 Under the plain text of the ICDR Procedures, the 

Arbitration Panel was specifically authorized to proceed with the final 

hearing and take evidence in Dixie’s voluntary absence. See Grp. 32 Dev. 

& Eng., Inc., 2015 WL 144082, at *6 (rejecting attempt to vacate award 

issued after an ex parte hearing because the governing rules permitted 

the hearing: “Furthermore, the Court finds no reason why the award 

should be vacated based on the arbitrator’s decision to proceed ex 

parte . . . as [the governing rule] permits such a practice.”). 

C. It Was Dixie’s Burden To Procure a Transcript of the Final 

Arbitration Hearing; Its Failure To Do so Does Not Support 

Vacatur of the Arbitration Award. 

Just as courts strictly enforce agreements to arbitrate, they strictly 

enforce arbitration awards, and hold objecting parties to a high burden 

 

6. See International Dispute Resolution Procedures, Available at 

https://www.icdr.org/icdr/ShowProperty?nodeId=/UCM/ADRSTAGE2020868&revisi

on=latestreleased (last accessed December 12, 2017). 
23

of proof. Texas courts, including this Court, unanimously hold that 

“[w]hen a party seeks to modify or vacate an arbitration award, it has the 

burden of bringing forth a complete record and establishing any basis 

that would warrant vacating the award.” Vorwerk, 2012 WL 593481, at 

*5; Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 101–02 (Tex. 2011) 

(noting that, if error cannot be demonstrated in the record, an arbitration 

award must be presumed correct); Statewide Remodeling, Inc. v. 

Williams, 244 S.W.3d 564, 569-70 (Tex. App.—Dallas 2008, no pet.); Craft 

v. Davis, No. 2-07-332-CV, 2008 WL 4180357, at *2 & n.11 (Tex. App.—

Fort Worth Sept. 11, 2008, no pet.) (mem. op.); GJR Mgmt. Holdings, L.P. 

v. Jack Raus, Ltd., 126 S.W.3d 257, 263 (Tex. App.—San Antonio 2003, 

pet. denied); Kline v. O’Quinn, 874 S.W.2d 776, 783 (Tex. App.—Houston 

[14th Dist.] 1994, writ denied); House Grain Co. v. Obst, 659 S.W.2d 903, 

906 (Tex. App.—Corpus Christi 1983, writ ref’d n.r.e.). 

Bringing forth a complete record from an arbitration proceeding is 

just as critical as bringing forth a complete record from a judicial 

proceeding, even though arbitration proceedings are traditionally 

designed to have fewer procedural rules. Nafta Traders, 339 S.W.3d at 

101-02 (noting that arbitration proceedings “are often informal; 
24

procedural rules are relaxed, rules of evidence are not followed, and no 

record is made.”). Regardless, when parties seek judicial review of 

arbitration proceedings, “the only review to which they can agree is the 

kind of review courts conduct. If error cannot be demonstrated, an award 

must be presumed correct.” Id. 

Dixie’s attempt to carve out an exception to this rule for parties who 

intentionally and voluntarily avoid arbitration hearings has no support 

in Texas law. As the Court implicitly acknowledged in Vorwerk, an 

objecting party is required to procure a full record of the proceedings in 

order to vacate an award, even when the party is voluntarily absent from 

the proceedings. 2012 WL 593481, at *5–6. In Vorwerk, the Court 

rejected an attempt to vacate an arbitration award based on ex parte 

communications because the objecting party failed to procure a record. 

Id. at *6. Like Dixie, Vorwerk, had answered and voluntarily 

participated in arbitration proceedings before he failed to appear at a 

hearing. Id. at *1. Subsequent to the hearing, the president of the 

arbitration organization engaged in additional ex parte fax 

communications with Vorwerk’s opposing party. Id. at *1–2. When the 

arbitration panel later issued an award against Vorwerk, he sought to 
25

vacate the award, claiming misconduct based on the ex parte 

communications. Id. at *5.

Even though Vorwerk, like Dixie, was absent from the hearing, the 

Court enforced the strict rule that Dixie seeks to avoid here: As the 

objecting party, Vorwerk was obligated to procure a record of the 

arbitration proceedings—notwithstanding his absence. Id. at *6. 

Without a record, the Court could not “conclusively determine the basis 

for the arbitrator’s award, whether new information was conveyed to the 

panel in the fax, and if it was, whether it deprived Vorwerk of a fair 

hearing.” Accordingly, the Court rejected Vorwerk’s attempt to vacate 

the arbitration award because he failed to procure a record. Id.

Similarly, in Jacaman Polaris Sports Center Ltd. v. Falcon 

International Bank, No. 04-16-00481-CV, 2017 WL 2852632, at *3 (Tex. 

App.—San Antonio July 5, 2017, no pet.) (mem. op.), the San Antonio 

Court rejected a party’s argument that an arbitration award should be 

vacated on misconduct grounds because the arbitration panel failed to 

make a record of its hearing in the absence of the objecting party. In 

Jacaman, the arbitration panel provided the parties notice of a scheduled 
26

hearing, which Jacaman did not attend. Id. at *1.7 Subsequently, the 

panel issued its award, adverse to Jacaman. Id. Jacaman challenged the 

award claiming FAA misconduct for the panel’s failure to record the 

hearing at issue. Id. at 2–3. Citing both the rule of the arbitral forum, 

which provided all parties the right to request a record, as well as the 

standard Texas rule that the objecting party had the burden to procure a 

record of the arbitration proceedings, the court rejected Jacaman’s 

challenge. Id. at *3 (citing Commercial Arbitration Rules of the Am. 

Arbitration Assoc. R-28; In re Chestnut Energy Partners, Inc., 300 

S.W.3d 388, 400 (Tex. App.—Dallas 2009, pet. denied); Statewide 

Remodeling, 244 S.W.3d at 568; see also KNJ Enter., 2015 WL 1736400, 

at *4–5 (rejecting party’s attempt to vacate an arbitration award because 

the party failed to procure a complete record of the proceedings, even 

though party was absent from the proceedings). 

Dixie, like Vorwerk and Jacaman, had full notice and actual 

knowledge of the Arbitration Proceeding, including the final arbitration 

 

7. The court’s decision does not make clear that Jacaman did not attend the hearing, 

or that a hearing even occurred. However, the Brief of Appellee, Falcon Bank, at 6-

7, discusses these facts, providing record cites. See http://www.search.txcourts.gov/ 

SearchMedia.aspx?MediaVersionID=6caac296-93f2-4ca2-a1f5-dc7528f8a302&coa=c 

oa04&DT=Brief&MediaID=bfe0e3e7-cd51-42d1-9365-edb1789ddc83 (last accessed 

December 12, 2017).
27

hearing. CR.13–14; CR.35–39 (Initial Scheduling Order noting final 

arbitration hearing would begin September 12, 2016). The Initial 

Scheduling Order, to which Dixie agreed in February 2016, scheduled the 

final arbitration hearing to begin September 12, 2016. CR. 37. Dixie, 

through its counsel, even attended part of the final arbitration hearing. 

CR.14. Dixie was well aware that the Arbitration Panel would receive 

evidence at the final arbitration hearing. CR.13. Nothing prevented 

Dixie from requesting that a transcript be made of the final arbitration 

hearing, and the record reflects no objection in the Arbitration 

Proceeding to the Arbitration Panel and EdR’s intention to not procure a 

transcript. Having failed in its obligation to make its record for appeal, 

Dixie cannot shift the burden to EdR to manufacture its due-process 

claim. Nafta Traders, 339 S.W.3d at 101–02.

Dixie’s proposed new rule, obligating arbitration panels and 

opposing parties to secure a transcript when one party voluntarily 

abandons an arbitration hearing after notice and prior participation in 

the arbitration proceeding, has been effectively rejected by every court to 

have considered it, including this Court. The district court properly 
28

rejected Dixie’s challenge to the Arbitration Award. The Court should 

affirm.

II. THE ARBITRATION PANEL’S DECISION TO HOLD THE FINAL 

ARBITRATION HEARING DESPITE DIXIE’S CLAIMED INABILITY TO PAY 

IS NOT GROUNDS FOR VACATUR. 

The Court should reject Dixie’s contention that its due-process 

rights were violated because it was “prevented from bringing its claims 

due to lack of funds.” Appellants’ Br. at 14. Dixie waived its complaint 

in the first instance by not offering any proof in the arbitral forum of the 

likelihood of incurring excessive costs. Even if the Court considers Dixie’s 

inability-to-pay claim, however, it should still affirm the district court’s 

judgment because Dixie agreed to forfeit its counterclaims in arbitration 

for failure to pay its required deposit. Because Dixie failed to offer any 

proof of its financial circumstances, but agreed in any event to the 

consequences of its decision to not pay, the district court correctly 

confirmed the Arbitration Award. 

A. Dixie Failed To Prove Its Inability To Pay in the Arbitration 

Proceeding. 

Dixie contends that its due-process rights were violated because it 

was “barred from bringing its claims in arbitration” due to its alleged 

inability to pay. Id. at 15. While Texas law recognizes the possibility 
29

that an arbitration agreement may be held substantively unconscionable 

due to excessively high costs, a party seeking to avoid arbitration on such 

grounds bears the burden of proving that arbitration would be 

prohibitively expensive. Olshan, 328 S.W.3d at 893. “[P]arties must at 

least provide evidence of the likely cost of their particular arbitration, 

through invoices, expert testimony, reliable cost estimates, or other 

comparable evidence.” Id. at 895. “Evidence that merely speculates 

about the risk of possible cost is insufficient.” Id.; see also Venture Cotton 

Coop. v. Freeman, 435 S.W.3d 222, 227 (Tex. 2014) (a party opposing 

arbitration bears the burden to raise an affirmative defense to the 

agreement’s enforcement). Failing that proof, a party may be compelled 

to participate in arbitration. Olshan, 328 S.W.3d at 894–97 (overturning 

the denial of a motion to compel arbitration because the party seeking to 

avoid arbitration “provided no comparison of [the costs of arbitration] to 

the expected cost of litigation, the amount of their claim, or their ability 

to pay these costs”).

Dixie made no attempt to comply with Olshan’s requirements. 

Dixie never claimed that the parties’ arbitration agreements were 

unconscionable, nor did it otherwise challenge their enforceability. 
30

Rather, Dixie initially agreed to and participated in the Arbitration 

Proceeding. CR.13–14; CR.35–39 (February 17, 2016 Report of 

Preparatory Conference and Scheduling Order signed by EdR and Dixie’s 

counsels). In fact, Dixie filed a breach-of-contract counterclaim in the 

Arbitration Proceeding based on the contracts containing the initial 

arbitration agreements. CR.215–20. Dixie offered no evidence to support 

its claim that the cost of arbitration would be excessive, but merely 

announced through counsel that it would no longer participate due to its 

alleged inability to pay, and abandoned the proceedings, limiting its role 

to “that of an observer.” CR.13; CR.237. 

Having failed entirely to document with evidence its claim that the 

cost of the agreed-to arbitration was excessive, Dixie cannot now avoid 

the effect of its agreement to arbitrate by offering unsubstantiated claims 

of excessive costs. Bonded Builders Home Warranty Assoc., Inc. v. Smith, 

488 S.W.3d 468, 482 (Tex. App.—Dallas 2016, no pet).8 Dixie’s due-

 

8. Moreover, Dixie’s appellate briefing of its Issue 3 concerning its alleged inability to 

pay fails to comply with Texas Rule of Appellate Procedure 38.1(i). Dixie cites to one 

page from the appellate record: its letter to the Arbitration Panel stating that it would 

no longer participate in the proceedings due to cost. Appellants’ Br. at 14. And it 

cites one decision from this Court for the principle that Dixie could not represent itself 

in the arbitration under Texas law. Id. at 14–15. Dixie makes no attempt to brief its 

purported entitlement to vacatur of the Arbitration Panel’s award for its alleged 

inability to pay in the absence of the evidence required by Olshan. The Court should, 
31

process claim based on its alleged and unproven inability to pay fails as 

a matter of law.

B. The ICDR Procedures Specifically Authorized the Arbitration 

Panel To Reject Dixie’s Counterclaims for Failure To Pay Its 

Share of the Arbitration Fees. 

In any event, Dixie cannot be heard to complain about its inability 

to present its counterclaims in arbitration due to its alleged financial 

problems. Dixie agreed to the rules of the arbitral forum, which 

unequivocally state that “[f]ailure of a party asserting a claim or 

counterclaim to pay the required deposits shall be deemed a withdrawal 

of the claim or counterclaim.” ICDR art. 36.4.

In the absence of any supporting evidence to substantiate its claim 

that participation in the arbitration would violate its due process, Dixie 

must held to its bargain with EdR. Dixie agreed to the rules of the forum 

that required payment of arbitration fees to present counterclaims and 

other claims for relief. See CR.12 (noting the parties agreed the 

Arbitration Proceeding would “be governed by the ICDR Procedures.”). 

 

therefore, refuse to consider Dixie’s Issue 3. Tex. R. App. P. 38.1(i); BDO Seidman 

LLP v. J.A. Green Dev. Corp., 327 S.W.3d 852, 859 n.4 (Tex. App.—Dallas 2010, no 

pet.) (rejecting argument that an arbitration provision violated due process for failure 

to provide authority as required by Rule 38.1(i)).
32

The Court should affirm the district court’s judgment confirming the 

Arbitration Award.

PRAYER 

For these reasons, the Court should affirm the judgment of the 

district court. 

Respectfully submitted,

/s/ Breck Harrison

Breck Harrison

 State Bar No. 24007325

Michael Roberts

 State Bar No. 24082153

Danica L. Milios

 State Bar No. 00791261

JACKSON WALKER L.L.P.

100 Congress Ave., Suite 1100

Austin, Texas 78701

[Tel.] (512) 236-2000

[Fax] (512) 236-2002

bharrison@jw.com

COUNSEL FOR APPELLEE
33

CERTIFICATE OF SERVICE 

I certify that on December 13, 2017, a true and correct copy of the 

foregoing document was served via FileTime e-filing system, certified 

U.S. mail, return receipt requested, and/or third-party commercial 

carrier on the following:

Kevin J. Terrazas

Timothy A. Cleveland

CLEVELAND | TERRAZAS PLLC

4611 Bee Cave Rd., # 306B

Austin, Texas 78746

COUNSEL FOR APPELLANT

/s/ Breck Harrison

Breck Harrison
34

CERTIFICATE OF COMPLIANCE 

This document complies with the typeface requirements of TEX. R.

APP. P. 9.4(e) because it has been prepared in a conventional typeface no 

smaller than 14-point for text and 12-point for footnotes. This document 

also complies with the word-count limitations of TEX. R. APP. P. 9.4(i) 

because it contains 6,464 words, excluding any parts exempted by TEX.

R. APP. P. 9.4(i)(1).

/s/ Breck Harrison

Breck Harrison