Court Opinion

ID: 4398082
Source: CourtListenerOpinion
Date Created: 2019-05-17 14:50:31.52986+00
Date Added: 2024-06-11T14:52:14.194864
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                     NO. 03-18-00228-CV

                  Jeremie Gordon and Amber Arnold-Gordon, Appellants

                                                v.

                 James B. Nickerson and Julia A. Nickerson, Trustees of the
                       Nickerson Revocable Living Trust, Appellees

              FROM THE 261ST DISTRICT COURT OF TRAVIS COUNTY
    NO. D-1-GN-17-002819, THE HONORABLE SCOTT H. JENKINS, JUDGE PRESIDING

                           MEMORANDUM OPINION

               Jeremie Gordon and Amber Arnold-Gordon appeal the district court’s order

confirming an arbitration award in favor of James B. Nickerson and Julia A. Nickerson, Trustees

of the Nickerson Revocable Living Trust.1 We will modify the district court’s order and affirm

as modified.

               This is the second appeal arising out of the parties’ dispute. To give context to

the Gordons’ issues, we repeat the background facts set out in our previous opinion:

       The Nickersons, who own and live on the property adjacent to the Gordons,
       obtain their water from the Gordon-owned water well under a “Well Use
       Easement Agreement” entered into in 1995 by the previous owners of the Gordon
       and Nickerson properties. In January 2015, shortly after purchasing the property

       1
         The Gordons represent themselves on appeal. We read the briefs liberally, see Tex. R.
App. P. 38.9, but we hold pro se litigants to the same standards as we do litigants represented by
counsel to avoid giving pro se litigants an unfair advantage. Veigel v. Texas Boll Weevil
Eradication Found., Inc., 549 S.W.3d 193, 195 n.1 (Tex. App.—Austin 2018, no pet.) (citing
Mansfield State Bank v. Cohn, 573 S.W.2d 181, 184–85 (Tex. 1978)).
       with the water well, the Gordons told the Nickersons that the easement agreement
       did not allow the Nickerson property access to the water and that, unless the
       Nickersons started paying an annual fee, the Gordons would disconnect the well
       piping to cut off the Nickersons’ water supply. In response to the Gordons’
       notice, the Nickersons filed suit for breach of the well-use agreement and trespass
       and sought injunctive relief.

Gordon v. Nickerson, No. 03-16-00071-CV, 2017 WL 1549150, at *1 (Tex. App.—Austin

Apr. 27, 2017, no pet.) (mem. op.) [Gordon I]. The parties mediated and reached a settlement

agreement (the MSA) calling for the Gordons to sell a portion of their property with the water

well to the Nickersons in exchange for $32,500. Id. They further agreed to resolve all disputes

arising out of the MSA through binding arbitration. Id.

               A dispute soon arose over whether the property had to be replatted before it was

conveyed to the Nickersons. Id. The arbitrator issued an award ordering the sale to go forward

without replatting. Id. The Gordons refused to comply, and the Nickersons sued to confirm the

award. A Travis County district court rendered judgment confirming the award and specifically

directing the Gordons to convey the property. Id. While the Gordons’ appeal was pending in

this Court, the Travis County clerk created an abstract of judgment incorrectly reflecting that the

Nickersons obtained a money judgment against the Gordons. The Nickersons’ counsel filed the

abstract in the real property records of Travis County.2 In April of 2017, this Court modified the

district court’s judgment to remove attorney’s fees not awarded by the arbitrator and affirmed as

modified. Id. at *5.

               Two months later, the Gordons agreed to sell an unrelated Travis County property

to Richeon and Steven Eledge. The Eledges subsequently canceled the contract, allegedly due to

       2
         We take our description of the abstract and the other events not mentioned in Gordon I
from the parties’ briefs and the factual recitations in the arbitrator’s second award.
                                                2
the abstract of judgment. The Gordons then sued the Nickersons under a different cause number

alleging causes of action for filing a fraudulent lien, slander of title, abuse of process, and

tortious interference with a contract. They sought relief in the form of a declaration nullifying

the abstract and an award of at least $15,000 in attorney’s fees.

               The Nickersons moved to compel arbitration of the Gordons’ claims under the

MSA. The district court granted the motion and referred the case to the same arbitrator who

conducted the arbitration in Gordon I. The Nickersons submitted a written counterclaim for

breach of contract and requested attorney’s fees and costs as sanctions. The arbitrator issued a

second award concluding both sides failed to prove their claims but stating he expected the

conveyance “on or before January 15, 2018.” If that did not occur, the arbitrator “specifically

reserve[d] the right to award to a non-breaching party additional attorney’s fees incurred as a

result of an unreasonable failure of a party to close on or before January 15, 2018.” The

arbitrator also conditionally awarded the Nickersons $4,500 in attorney’s fees “if the Gordons

again seek review in the trial court.”

               The Gordons conveyed 0.172 acres of land containing the disputed well to the

Nickersons shortly before the arbitrator’s deadline. The Nickersons then filed a motion to

confirm the arbitrator’s award, and the Gordons filed a cross-motion to vacate. The district court

signed an order confirming the award and ordering the Gordons to pay $4,500 in attorney’s fees

plus post-judgment interest. This appeal followed.

                                           ANALYSIS

               The Gordons argue on appeal that the district court erred by confirming the award

because the MSA is void for illegality, the arbitrator committed a “gross error of fact,” and the

                                                 3
arbitrator exceeded his powers. If we conclude the award is valid, the Gordons contend the

district court improperly added post-judgment interest to the award of attorney’s fees.

Standard of Review

               We review a trial court’s decision to confirm or vacate an arbitration award de

novo. Southwinds Express Constr., LLC v. D.H. Griffin of Tex., Inc., 513 S.W.3d 66, 70 (Tex.

App.—Houston [14th Dist.] 2016, no pet.). However, “[b]ecause Texas law favors arbitration,

judicial review of an arbitration award is extraordinarily narrow.” East Tex. Salt Water Disposal

Co., v. Werline, 307 S.W.3d 267, 271 (Tex. 2010). We give arbitration awards “the same effect

as the judgment of a court of last resort” and presume their validity. Id. at 271 n.11 (quoting

CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002)). The party seeking to vacate the

award “bears the burden of presenting a complete record that establishes grounds for vacatur.”

Kreit v. Brewer & Pritchard, P.C., 530 S.W.3d 231, 243 (Tex. App.—Houston [14th Dist.] 2017,

pet. denied) (quoting Amoco D.T. Co. v. Occidental Petrol. Corp., 343 S.W.3d 837, 841 (Tex.

App.—Houston [14th Dist.] 2011, pet. denied)).

               The Texas Arbitration Act (TAA) requires trial courts to confirm an arbitration

award “[u]nless grounds are offered for vacating, modifying, or correcting [the] award under

Section 171.088 or 171.091.” Tex. Civ. Prac. & Rem. Code § 171.087; see generally id.

§§ 171.001–.098. The TAA “leaves no room for courts to expand on those grounds” in vacating

an arbitration award. Hoskins v. Hoskins, 497 S.W.3d 490, 494 (Tex. 2016). Thus, a party may

                                                4
avoid confirmation of an arbitration award under the TAA “only by demonstrating a ground

expressly listed in section 171.088.” Id. at 495.3

Illegality

                The Gordons argue in their first two issues that the MSA is void because it

requires the Gordons to violate state law and municipal ordinances.          And this voids the

arbitrator’s award, they reason, because it is based on an illegal contract. The Nickersons

respond that the issue is moot or, in the alternative, that res judicata bars the Gordons from

raising this issue.

                We address the Nickersons’ mootness argument first because it implicates our

jurisdiction. See State ex rel. Best v. Harper, 562 S.W.3d 1, 6 (Tex. 2018) (stating courts lose

subject matter jurisdiction when case becomes moot). A case becomes moot when there ceases

to be a live controversy between the parties or when the parties no longer have “a legally

cognizable interest in the outcome.” Id. (quoting Williams v. Lara, 52 S.W.3d 171, 184 (Tex.

2001)). “Put simply, a case is moot when the court’s action on the merits cannot affect the

parties’ rights or interests.” Heckman v. Williamson County, 369 S.W.3d 137, 162 (Tex. 2012).

The Nickersons argue the illegality issue has become moot because the Gordons would not

regain the property they conveyed even if we conclude the MSA is void and unenforceable. But

if the Gordons succeed in proving the MSA is void, the conveyance could be reversed. See Lee

v. Lee, 528 S.W.3d 201, 210 (Tex. App.—Houston [14th Dist.] 2017, pet. denied) (holding

several transfers of real property pursuant to settlement agreement did not moot party’s appeal of

        3
          The MSA does not fall within any exclusion from the scope of the TAA. See Tex. Civ.
Prac. & Rem. Code § 171.002. Moreover, neither party has suggested that the Federal
Arbitration Act applies.
                                                 5
agreement because “if [appellant] should prevail, these transactions can be reversed”). The

illegality issue is thus not moot.

                However, we agree with the Nickersons that res judicata bars the issue.4 “[R]es

judicata is the generic term for a group of related concepts concerning the conclusive effects

given final judgments.”      Barr v. Resolution Tr. Corp., 837 S.W.2d 627, 628 (Tex. 1992).

Relevant here is claim preclusion—also called res judicata—which “bars the relitigation of

claims that have been finally adjudicated or that could have been litigated in the prior action.”

Engelman Irrigation Dist. v. Shields Bros., Inc., 514 S.W.3d 746, 750 (Tex. 2017) (quoting Igal

v. Brightstar Info. Tech. Grp., 250 S.W.3d 78, 86 (Tex. 2008)).

                The Gordons initially argue that the Nickersons waived res judicata by failing to

plead the issue. See Whallon v. City of Houston, 462 S.W.3d 146, 155 (Tex. App.—Houston [1st

Dist.] 2015, pet. denied) (“[R]es judicata is an affirmative defense that must be pleaded.”). We

agree the Nickersons did not raise the issue in their pleadings, but “[t]rial by consent can cure

lack of pleading.” Bos v. Smith, 556 S.W.3d 293, 306 (Tex. 2018). To determine whether an

issue was tried by consent, “[w]e must examine the record not for evidence of the issue, but

rather for evidence of trial of the issue.” Id. at 307 (quoting Sage St. Assocs. v. Northdale

Constr. Co., 863 S.W.2d 438, 446 (Tex. 1993)). Jeremie Gordon argued during the hearing on

the parties’ cross-motions that “[the Nickersons’ counsel] has also raised res judicata of the

illegality issue” and then explained why the court should reject it. The record does not contain

the arguments of the Nickersons’ counsel or his response because the record before us consists

        4
         We construe the Gordons’ brief as asserting that the award should be vacated under the
TAA because “there was no agreement to arbitrate” because the MSA was illegal. See id.
§ 171.088(a)(4).
                                                6
only of Jeremie Gordon’s arguments, the Gordons’ exhibits, and the presiding judge’s ruling.

Nevertheless, the record before us is sufficient to demonstrate the issue was tried by consent. 5

               To establish res judicata as a bar to the Gordons’ illegality claim, the Nickersons

had the burden to establish that there is a prior final judgment on the merits by a court of

competent jurisdiction, the parties in this case are the same or in privity with those in Gordon I,

and the illegality claim was or or could have been raised in Gordon I. See Travelers Ins. Co.

v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). All three elements are met here. This Court has

issued its mandate in Gordon I, making the judgment final and enforceable, and there is no

dispute the parties in the two cases are the same. The Gordons primarily contest the third

element. “Texas courts apply the transactional approach to res judicata, which requires that

claims arising out of the same subject matter be litigated in a single lawsuit.” Better Bus. Bureau

of Metro. Hous., Inc. v. John Moore Servs., Inc., 500 S.W.3d 26, 40 (Tex. App.—Houston [1st

Dist.] 2016, pet. denied) (citing Hallco Tex., Inc. v. McMullen County., 221 S.W.3d 50, 58 (Tex.

2006)). Cases arise from the same transaction if they share the same set of operative facts. Id.

The Gordons analogize this case to Lawlor v. National Screen Service Corp., where the United

States Supreme Court held res judicata did not bar a second lawsuit based on the same course of

conduct as a previous suit if the new claims “could not possibly have been sued upon in the

previous case.” 349 U.S. 322, 327–28 (1955). Applying that holding here, the Gordons contend

       5
           The Gordons failed to file “a statement of the points or issues to be presented on
appeal” as required by the rules governing appeals on partial records. See Tex. R. App. P.
34.6(c)(1). If an appellant entirely fails to comply with this requirement the reviewing court
“must presume that the omitted portions of the record are relevant to the disposition of the appeal
and that they support the trial court’s judgment.” Nelson v. Gulf Coast Cancer & Diagnostic
Ctr., 529 S.W.3d 545, 548 (Tex. App.—Houston [14th Dist.] 2017, no pet.) (citing Bennett
v. Cochran, 96 S.W.3d 227, 229 (Tex. 2002) (per curiam)). Accordingly, we presume the
omitted portions of the record support that the parties tried the issue of res judicata by consent
and that res judicata bars the Gordons’ illegality claim.
                                                 7
their challenge to the arbitrator’s award of attorney’s fees (and his reservation of the right to

award additional fees to compel the transfer) were new acts that could not have been sued upon

in Gordon I. But the Gordons challenge the arbitrator’s acts based on the alleged illegality of the

MSA. This is the same claim the Gordons asserted in Gordon I, 2017 WL 1549150 at *2, and

res judicata bars the Gordons from raising it again here. See John Moore Servs., 500 S.W.3d at

40. We overrule the Gordons’ first two issues.

Gross Mistake of Fact

               The Gordons’ third ground for vacating the award is that the arbitrator allegedly

committed a gross mistake of fact. Gross mistake “is a common law ground for setting aside an

arbitration award” but not a ground for vacatur set out in the TAA. Callahan & Assocs.

v. Orangefield Indep. Sch. Dist., 92 S.W.3d 841, 844 (Tex. 2002); see Tex. Civ. Prac. & Rem.

Code § 171.088 (listing grounds for vacatur). Thus, the Gordons may not rely on gross mistake

of fact to overturn the award. See Hoskins, 497 S.W.3d at 494–95; see also Patel v. Moin,

No. 14-15-00851-CV, 2016 WL 4254016, at *6 (Tex. App.—Houston [14th Dist.] Aug. 11, 2016,

pet. denied) (mem. op.) (holding gross mistake is not permissible basis under TAA to vacate

arbitrator’s award). We overrule the Gordons’ third issue.

Arbitrator’s Powers

               The Gordons’ fourth argument is that the arbitrator exceeded his powers by

conditionally awarding attorney’s fees. See Tex. Civ. Prac. & Rem. Code § 171.088(a)(3)(A).

Arbitrators derive their authority “over disputes from parties’ consent and the law of contract.”

RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 122 (Tex. 2018). As a result, an arbitrator

“exceeds his authority only ‘when he disregards the contract and dispenses his own idea of

                                                 8
justice.’” Denbury Onshore, LLC v. Texcal Energy S. Tex., L.P., 513 S.W.3d 511, 520 (Tex.

App.—Houston [14th Dist.] 2016, no pet.) (quoting D.R. Horton-Tex., Ltd. v. Bernhard,

423 S.W.3d 532, 534 (Tex. App.—Houston [14th Dist.] 2014, pet. denied)). Thus, the relevant

question when determining whether an arbitrator exceeded his authority “is not whether the

arbitrator decided an issue correctly, but rather, whether he had the authority to decide the issue

at all.” Forest Oil Corp. v. El Rucio Land & Cattle Co., 518 S.W.3d 422, 431 (Tex. 2017).

               The MSA’s arbitration clause does not address attorney’s fees, but paragraph 2 of

the MSA states:     “[e]ach party shall otherwise bear his her its [sic] attorney[’]s fees and

mediation fees.” Even if we assume that paragraph 2 applies to fees incurred in arbitration

proceedings rather than the original lawsuit, an arbitrator “may expand the scope of its review

based on the issues the parties submit or the arguments they advance in the proceedings.” Miller

v. Walker, ___ S.W.3d ___, ___, No. 02-17-00035-CV, 2018 WL 895602, at *3 (Tex. App.—

Fort Worth Feb. 15, 2018, no pet.) (quoting Wells Fargo Bank, N.A. v. WMR e-PIN, LLC,

653 F.3d 702, 711 (8th Cir. 2011)); see New Med. Horizons II, Ltd. v. Jacobson, 317 S.W.3d 421,

429 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (“An arbitrator’s jurisdiction is defined by

the contract containing the arbitration clause and by the issues actually submitted to

arbitration.”). The Gordons requested in their amended petition that the district court award

them “at least $15,000” in attorney’s fees, and the Nickersons moved to submit the “entire

controversy” to arbitration, including “attorney’s fees.” The district court referred all “issues

raised by [the Gordons’] petition” to the arbitrator. The Nickersons then requested that the

arbitrator award them “attorney’s fees and costs” as sanctions. The Gordons have not presented

us with a complete record of the arbitration hearing, but the arbitrator’s award does not reflect

the parties questioned the arbitrator’s power to award fees. The issue of attorney’s fees was

                                                9
obviously submitted to the arbitrator, and paragraph 2 of the MSA does not expressly prohibit

the arbitrator from awarding fees. See D.R. Horton, 423 S.W.3d at 535 (reasoning provision

with similar wording did not prohibit arbitrator from awarding fees when requested by parties).

Under these circumstances, we cannot say the district court exceeded its authority by awarding

attorney’s fees to the Nickersons. See Miller, 2018 WL 895602 at *5–6 (upholding arbitration

panel’s award of attorney’s fees when both sides requested fees and arbitrator considered fee

award without objection); Thomas v. Prudential Sec., Inc., 921 S.W.2d 847, 851 (Tex. App.—

Austin 1996, no writ) (“We conclude that both parties’ claims for attorney fees reflect their

unified intention to authorize the panel’s award of attorney fees.”). We overrule the Gordons’

fourth issue.

Modification

                The Gordons argue in their final issue that the district court improperly added

post-judgment interest to the award of attorney’s fees. The TAA authorizes trial courts to

modify an arbitration award on application of a party if:        the award contains an evident

miscalculation of numbers or an evident mistake in the description of a relevant person, thing, or

property; the award addresses a matter not submitted to the arbitrators; or “the form of the award

is imperfect in a manner not affecting the merits of the controversy.” Tex. Civ. Prac. & Rem.

Code § 171.091. These are the exclusive grounds for modifying an award under the TAA. See

Callahan & Assocs., 92 S.W.3d at 844; White v. Siemens, 369 S.W.3d 911, 916 (Tex. App.—

Dallas 2012, no pet.). Because modifying an award so that it accrues interest is not permitted by

the TAA, the district court erred by adding 5% interest to the arbitrator’s award of attorney’s

fees. See Barnes v. Old Am. Mut. Fire Ins. Co., No. 03-07-00404-CV, 2010 WL 668913, at *8

                                               10
(Tex. App.—Austin Feb. 26, 2010, no pet.) (mem. op.) (concluding trial court erred by adding

post-judgment interest to arbitration award). We sustain the Gordons’ fifth issue.

                                        CONCLUSION

               We modify the district court’s order to delete the award of post-judgment interest

and affirm as modified.6

                                             __________________________________________
                                             Edward Smith, Justice

Before Chief Justice Rose, Justices Kelly and Smith

Modified and, as Modified, Affirmed

Filed: May 17, 2019

       6
          The Nickersons have filed a motion asking this Court to sanction the Gordons for filing
a frivolous appeal. See Tex. R. App. P. 45 (authorizing court of appeals to award prevailing
party “just damages” if appeal is frivolous). We exercise our discretion and decline to do so.
See R. Hassell Builders, Inc. v. Texan Floor Serv., Ltd., 546 S.W.3d 816, 833 (Tex. App.—
Houston [1st Dist.] 2018, pet. denied) (awarding damages under Rule 45 is discretionary).
                                               11