Court Opinion

ID: 3117343
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:51:35.474073+00
Date Added: 2024-06-11T11:45:10.881898
License: Public Domain

Opinion issued June 4, 2013

                                    In The

                              Court of Appeals
                                   For The

                        First District of Texas
                        ————————————
                              NO. 01-12-00795-CV
                         ———————————
 BOB BENNETT & ASSOCIATES, P.C. AND BOB BENNETT, Appellants
                                      V.
                         GARY O. LAND, Appellee

                  On Appeal from the 125th District Court
                           Harris County, Texas
                     Trial Court Case No. 2012-20006

                       MEMORANDUM OPINION

     Bob Bennett & Associates, P.C. and Bob Bennett appeal the trial court’s

judgment confirming an arbitration award in favor of Gary O. Land. Appellants
identify one issue on appeal, with a number of sub-issues, challenging the

confirmation of the award.

      We affirm.

                              Background Summary

      Gary O. Land retained the legal services of Bob Bennett & Associates, P.C.

and Bob Bennett (collectively, “Appellants”) to represent Land in a matter

involving a possible civil rights violation and a federal investigation of Land.

Land also retained Appellants to assist in a commercial dispute in Potter County,

Texas.

      On February 10, 2011, Land signed an attorney retainer and fee agreement

(“the Fee Agreement”) with Appellants. Among other matters, the Agreement

addressed the scope of Appellants’ representation of Land and set out how fees and

expenses would be calculated and billed.        The Agreement also contained an

arbitration provision, which provided, in part, as follows:

      In order to facilitate a quick and inexpensive resolution of any
      disputes concerning this Agreement, the parties agree that any
      disputes arising out of the Agreement, whether contractual or tortious
      in nature will be resolved by submission to binding arbitration
      pursuant to the rules of the Houston Bar Association Fee Dispute
      Committee. . . . To further clarify our Agreement on arbitration,
      arbitration would apply to any controversy, claim or dispute in the
      course and scope of the business relationship or arising out of or
      relating to this Agreement or the breach, termination, enforcement,
      interpretation or validity thereof, including the determination of the
      scope or applicability of this Agreement to arbitrate.

                                          2
             Our dispute shall be determined by arbitration in Houston,
      Texas before a panel selected by, and per the rules of the Houston Bar
      Association Fee Dispute Committee, in accordance with the laws of
      the State of Texas for Agreements made in and to be performed in
      Texas. “Disputes” shall include, without limitation, those involving
      fees, costs, billing, and breach of ethical or fiduciary duties. The
      arbitration shall be administered by the Houston Bar Association Fee
      Dispute Committee, pursuant to its Rules and Regulations. . . .

      As required by the Fee Agreement, Land paid a $50,000 retainer to the firm.

Appellants commenced providing services to Land for which Land was invoiced.

After some time, the $50,000 retainer was exhausted.            However, Appellants

continued to provide services to Land.

      On August 3, 2011, Land sent a letter to Appellants stating that he was

terminating Appellants’ representation of him. Land indicated in the letter that he

disagreed with the fees that Appellants had charged him. Land retained another

attorney to represent him in the fee dispute with Appellants. New counsel sent a

letter to Appellants requesting a fee reduction of $35,000. The letter also requested

Appellants to refund a portion of the retainer Land had paid.

      As permitted by the Fee Agreement, Land initiated the arbitration process by

filing a fee dispute complaint with the Houston Bar Association’s Fee Dispute

Committee. In the complaint, Land stated that the amount of fees in dispute was

$70,998.31. Land sought the return of $35,000 of the $50,000 in fees that he had

paid the firm. Appellants consented to the arbitration and filed an arbitral counter-

claim, alleging that Land owed the firm $25,787.50 in unpaid fees.
                                         3
      The matter was assigned to an Arbitration Panel comprised of two attorneys

and one non-attorney. The arbitration hearing occurred over the course of three

days. Land appeared and testified at the hearing by telephonic conference call.

Bob Bennett also testified at the hearing. In addition, Appellants offered the

affidavits of several attorneys indicating that the fees charged by Appellants were

reasonable.   The Arbitration Panel also considered documentary evidence,

including invoices sent by Appellant to Land.

      The Arbitration Panel issued its written Arbitration Award on January 3,

2012. The panel awarded Land $27,500 and expressly awarded Appellants nothing

on the counter-claim.

      Rule 7.03 of the Rules and Regulations of the Houston Bar Association’s

Fee Dispute Committee provides that a party may apply to the Fee Dispute

Committee Chair for a modification or correction of an arbitration decision. On

February 3, 2012, Appellants filed a motion for modification and correction

(“modification motion”) of the Arbitration Award. The Arbitration Panel issued an

order denying the modification motion on March 2, 2012. The Arbitration Award

remained unchanged. The order also included a 17 page explanation, detailing the

grounds for the panel’s January 3, 2012 Arbitration Award.

      On April 4, 2012, Land filed a motion to confirm the Arbitration Award in

the trial court. Appellants answered and filed an application for vacatur of the

                                        4
award on April 27, 2012. The parties then filed a series of responses and replies

regarding whether the Arbitration Award should be confirmed. After a hearing,

the trial court signed an order granting Land’s motion to confirm and “enter[ing]

judgment in accordance with the [A]rbitration [A]ward.”

      Appellants now appeal the judgment. They identify one issue with a number

of sub-issues in which they assert that the trial court erred by confirming the

Arbitration Award. Specifically, Appellants contend that the trial court erred by

confirming the award because the arbitrators exceeded the scope of their authority,

demonstrated partiality to Land, did not permit Appellants to finish cross-

examining Land, and committed gross mistake.

                     Judicial Review of Arbitration Award

A.    Scope and Standard of Review

      Texas law favors the arbitration of disputes. Jones v. Brelsford, 390 S.W.3d
486, 491–92 (Tex. App.—Houston [1st Dist.] 2012, no pet.) (citing E. Tex. Salt

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

Cnty. v. Knutson, 176 S.W.2d 740, 743 (Tex. 1943)). As a result, judicial review

of an arbitration award is extraordinarily narrow and focuses on the integrity of the

process, not the propriety of the result.      Id. at 492 (citing Women’s Reg’l

Healthcare, P.A. v. FemPartners of N. Tex., Inc., 175 S.W.3d 365, 367–68 (Tex.

App.—Houston [1st Dist.] 2005, no pet.)). We review a trial court’s decision to

                                         5
confirm or to vacate an arbitration award de novo. Ouzenne v. Haynes, No. 01–

10–00112–CV, 2012 WL 1249420, at *1 (Tex. App.—Houston [1st Dist.] Apr. 12,

2012, pet. denied) (mem. op.) (citing In re Chestnut Energy Partners, Inc., 300
S.W.3d 386, 397 (Tex. App.—Dallas 2009, pet. denied)). We examine the entire

record in making such review. Id.

      Every reasonable presumption must be indulged to uphold the arbitrator’s

decision, and none is indulged against it. CVN Group, Inc. v. Delgado, 95 S.W.3d
234, 245 (Tex. 2002); New Med. Horizons II, Ltd. v. Jacobson, 317 S.W.3d 421,

428 (Tex. App.—Houston [1st Dist.] 2010, no pet.). Review of an arbitration

award is so limited that even a mistake of fact or law by the arbitrator is not a

proper ground for vacating an award. Universal Computer Sys., Inc. v. Dealer

Solutions, L.L.C., 183 S.W.3d 741, 752 (Tex. App.—Houston [1st Dist.] 2005, pet.

denied).

B.    Timeliness of the Challenge

      Land moved for confirmation of the Arbitration Award pursuant to section

171.087 of the Texas General Arbitration Act (“TGAA”).1              Section 171.087

provides, “Unless grounds are offered for vacating, modifying, or correcting an

1
      The Fee Agreement states that a dispute under the agreement should be
      determined by arbitration in accordance with the law of Texas. The parties each
      rely on the Texas General Arbitration Act and appear to agree that it governs this
      case. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.001–.098 (Vernon 2011).
      Appellants also challenge the Arbitration Award on the common-law ground of
      gross mistake, which is discussed infra.
                                          6
award under Section 171.088 or 171.091, the court, on application of a party, shall

confirm the award.” TEX. CIV. PRAC. & REM. CODE ANN. § 171.087 (Vernon

2011).

      Appellants asserted in the trial court that the Arbitration Award should be

vacated pursuant to section 171.088. That section provides,

      (a) On application of a party, the court shall vacate an award if:

          (1) the award was obtained by corruption, fraud, or other
          undue means;

          (2) the rights of a party were prejudiced by:

            (A) evident partiality by an arbitrator appointed as a
            neutral arbitrator;

            (B) corruption in an arbitrator; or

            (C) misconduct or wilful misbehavior of an arbitrator;

          (3) the arbitrators:

            (A) exceeded their powers;

            (B) refused to postpone the hearing after a showing of
            sufficient cause for the postponement;

            (C) refused to hear evidence material to the controversy;
            or

            (D) conducted the hearing, contrary to Section 171.043,
            171.044, 171.045, 171.046, or 171.047, in a manner that
            substantially prejudiced the rights of a party; or

          (4) there was no agreement to arbitrate, the issue was not
          adversely determined in a proceeding under Subchapter B, and
                                          7
          the party did not participate in the arbitration hearing without
          raising the objection.

      (b) A party must make an application under this section not later than
      the 90th day after the date of delivery of a copy of the award to the
      applicant. A party must make an application under Subsection (a)(1)
      not later than the 90th day after the date the grounds for the
      application are known or should have been known.

      (c) If the application to vacate is denied and a motion to modify or
      correct the award is not pending, the court shall confirm the award.

Id. at § 171.088 (footnote omitted).

      Appellants identify three statutory grounds as reasons to vacate—and not to

confirm—the Arbitration Award:

    The Arbitration Panel exceeded its authority (see id. § 171.088(a)(3)(A));

    The Arbitration Panel was not impartial (see id. § 171.088(a)(2)(A));

    The panel conducted the arbitration contrary to TGAA section 171.047
     because Appellants were denied the right to finish cross-examining Land
     (see id. § 171.088(a)(3)(D)).

      As he did in the trial court, Land points out that Appellants did not timely

file the application to vacate within 90 days of receiving a copy of the Arbitration

Award, as required by section 171.088(b). We have held that the 90-day period is

a limitations period after which a party no longer has a right to petition a court to

vacate an arbitration award; that is, the applicant no longer has the right to judicial

                                          8
review of the decision. 2 See New Med. Horizons II, Ltd. v. Jacobson, 317 S.W.3d
421, 428 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (citing La. Natural Gas

Pipeline, Inc. v. Bludworth Bond Shipyard, Inc., 875 S.W.2d 458, 462 (Tex.

App.—Houston [1st Dist.] 1994, writ denied)).              A party seeking to bar

confirmation of an arbitration award for one of the reasons listed in 171.088 must

do so within 90 days or forfeit his right to make such challenge. See id. If the

challenge is not timely asserted, the only alternative for the trial court is to confirm

the arbitration award. See id.; TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.087,

171.088(a)(3)(A), (b).

      In this case, the Arbitration Award was rendered on January 3, 2012. An

email in the record from Land’s counsel to Bob Bennett indicates that Appellants

were aware of the award by January 4, 2012. Appellants filed the motion to

modify the award with the fee dispute committee on February 3, 2012. The motion

was denied by written order on March 2, 2012. That order also explains the

grounds for the award. Land filed his motion to confirm the Arbitration Award in

2
      The only exception to the requirement that the application for vacatur must be
      filed within 90 days of receiving a copy of the award is when the vacatur
      application asserts that the award “was obtained by corruption, fraud, or other
      undue means.” See TEX. CIV. PRAC. & REM. CODE ANN. § 171.088(b). Under
      those circumstances, the applicant must move for vacatur within 90 days “after the
      date the grounds for the application are known or should have been known.” Id.
      Bennett has not alleged such grounds in this case.
                                           9
the trial court on April 4, 2012. Appellants filed their answer and application to

vacate the award in the trial court on April 27, 2012.

      Appellants do not dispute that the application to vacate—filed on April 27,

2012—was not filed within 90 days after delivery of the Arbitration Award.

Instead, Appellants argue that the application was timely because it was filed less

than 90 days after the issuance of the March 2, 2012 order denying the

modification motion and detailing the grounds for the award. Appellants assert

that, because they are challenging the grounds supporting the award set out in that

order, the 90-day limitations period should run from March 2, 2012. Appellants,

however, offer no authority to support this position.

      In Teleometrics International, Inc. v. Hall, we were presented with an

analogous argument. 922 S.W.2d 189, 192 (Tex. App.—Houston [1st Dist.] 1995,

writ denied). There, the appellee had filed a motion to confirm an arbitration

award in the trial court. See id. at 190. The appellants then filed a motion to

clarify the arbitration award with the arbitrator. See id. The arbitrator denied the

motion to clarify and, as here, left the original arbitration award unchanged. See

id. The appellants then answered and moved to vacate the award in the trial court.

See id. Although it was filed within 90 days of issuance of the order denying the

motion to clarify, the motion to vacate was filed more than 90 days after the

                                         10
original arbitration award. See id. Ultimately, the trial court rendered judgment

confirming the arbitration award. Id. at 191.

      Similarly to this case, the appellants in Teleometrics International argued

that their application to vacate was timely because it was filed less than 90 days

after the arbitrator denied the motion to clarify. See id. The appellants asserted

that the filing of the motion to clarify served to extend the time to file the motion to

vacate. Id. Construing the predecessor to section 171.088, we stated that “there is

no authority that the mere filing of a motion to clarify an award extends the

limitations period to file a motion to vacate the award.” Id. at 192. We explained,

      Both the Texas General Arbitration Act and interpretive case law are
      clear that the 90–day limitation period begins to run from the date of
      the conclusive award itself. It is true that in Louisiana Natural Gas
      Pipeline, the appellate court measured the 90–day limit from the date
      the amended arbitration findings were signed. 875 S.W.2d at 462. In
      this case, however, because [appellants’] motion [to clarify] was
      denied, there was no modified or corrected award to extend the 90–
      day limitations period.

Id.   We held “any motion to vacate was due 90 days after the initial, and

conclusive, award was delivered.” Id. Because the motion to vacate was untimely,

we affirmed the trial court’s judgment confirming the arbitration award. See id.

      As in Teleometrics International, we find no authority to hold that the 90-

day limitations period was extended by the March 2 order denying Bennett’s

motion to modify the award, because the arbitrators did not modify the initial

award or grant any relief. The March 2 order denying relief made no change to the
                                          11
original and definitive award. We conclude that the 90-day limitations period for

filing the vacatur application began to run on delivery of the January 3, 2012

Arbitration Award.      See id.; see also TEX. CIV. PRAC. & REM. CODE ANN.

§ 171.088(b); Zars v. Davis, No. 04-05-00800-CV, 2006 WL 2955326, at *2 (Tex.

App.—San Antonio Oct. 18, 2006, no pet.) (mem. op.) (explaining that TGAA 90-

day limitations period set forth in sections 171.088 is strictly enforced).

Appellants did not file the vacatur application until April 27, 2012; therefore, it

was untimely. 3 We hold that the trial court could not review Appellants’ asserted

statutory grounds for vacatur, because they did not timely assert those grounds

within the 90-day limitations period following delivery of the award, as required

by statute. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.087, 171.088; New

Med. Horizons II, 317 S.W.3d at 431; Teleometrics Int’l, 922 S.W.2d at 192.

C.    Gross Mistake

      In addition to the statutory grounds for vacatur, Appellants also contend that

the trial court erred in refusing to vacate the Arbitration Award because the

arbitrators committed a gross mistake.

3
      The Arbitration Panel denied Appellants’ motion to modify on March 2, 2012. At
      that point, Appellants still had 30 days to file their vacatur application. Thus, even
      if they were waiting to learn whether the panel would modify the award,
      Appellants had ample time to timely seek judicial vacatur of the award in the trial
      court after the modification motion was denied.
                                            12
      Gross mistake is a Texas state common-law standard that has been used to

attack arbitration awards. 4 Callahan & Assocs. v. Orangefield Indep. Sch. Dist.,

92 S.W.3d 841, 844 (Tex. 2002). A “gross mistake” is a mistake by the arbitrator

that implies bad faith or failure to exercise honest judgment. Ouzenne, 2012 WL
1249420, at *2 (citing Anzilotti v. Gene D. Liggin, Inc., 899 S.W.2d 264, 266 (Tex.

App.—Houston [14th Dist.] 1995, no writ)). Gross mistake results in a decision

that is arbitrary or capricious. Universal Computer Sys., 183 S.W.3d at 752. An

honest judgment made after due consideration given to conflicting claims, however

erroneous, is not arbitrary or capricious. Id.

      The March 2, 2012 order indicates that, in addition to examining specific

attorney’s fees charged by Appellants to Land, the Arbitration Panel also viewed

the fees on a “global basis” to determine their reasonableness. In this respect, the

panel explained that it was reviewing the fees in the context of the overall

representation of Land by Appellants. The order also indicates that the panel

4
      The United States Supreme Court has held that the statutory grounds provided in
      Federal Arbitration Act sections 10 and 11 for vacating, modifying, or correcting
      an arbitration award are the exclusive grounds for vacating an arbitration award.
      Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584, 128 S. Ct. 1396, 1403,
      (2008). In contrast, the Supreme Court of Texas has reserved opinion regarding
      the continued viability of common law grounds for attacking an arbitration award
      under the TGAA. See E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d
267, 270 n.7 (Tex. 2010) (“We express no opinion on this issue [of whether an
      arbitration under the TGAA can be set aside on common law grounds.]”).
                                          13
considered the non-exclusive factors listed in the Houston Bar Association’s

arbitration rules for determining the reasonableness of the fees.

      Appellants argue that the Arbitration Panel committed a gross mistake by

considering the reasonableness of the fees on a global basis. They assert that

determining the reasonableness of the fees on a global basis is not sanctioned by

the bar association’s arbitration rules or the Fee Agreement.            However, as

explained, the panel indicated in the order that it also considered the non-exclusive

factors listed in the arbitration rules for determining the reasonableness of the fees.

We do not agree that the arbitrators’ consideration of the fees in the context of the

Appellants’ overall representation of Land, in addition to considering the

particularized non-exclusive factors listed in the arbitration rules for determining

fee disputes, indicates bad faith or a failure to exercise honest judgment.

      In addition, it is not within our province to interpret the Fee Agreement to

ascertain whether the panel determined the reasonableness of the fees in

accordance with its provisions. See Universal Computer Sys., 183 S.W.3d at 753.

Instead, our review is limited to whether the arbitrators’ conduct constitutes bad

faith or a failure to exercise honest judgment. See id. The party seeking to vacate

an arbitration award has the burden of demonstrating how the arbitrators made a

gross mistake. Id. at 752. Appellants do not explain how considering the fees on a

                                          14
global basis violates the Fee Agreement in a manner that rises to a level of bad

faith or to a failure to exercise honest judgment.

      Appellants also cite the manner in which the Arbitration Panel viewed and

applied the evidence as indicating gross mistake. Appellants point out that, at the

arbitration hearing, they offered affidavits from a number of attorneys attesting to

the reasonableness of the attorney’s fees. They point out that the only testimony

offered by Land was his own testimony. Appellants further cite language in the

March 2 order in which the panel indicated that it would have reached the same

award even if it had discredited Land’s testimony and given credence to the

Appellants’ evidence.

      By their contentions, Appellants are essentially arguing that the Arbitration

Panel was wrong in its view of the evidence and ultimately in its decision. As the

fact-finder, the Arbitration Panel was the judge of the credibility of the witnesses

and could choose whom to believe and whom to disbelieve. See Ouzenne, 2012
WL 1249420, at *2 (citing Xtria L.L.C. v. Intern. Ins. Alliance, Inc., 286 S.W.3d
583, 597 (Tex. App.—Texarkana 2009, pet. denied). Significantly, review of an

arbitration award is so limited that an arbitration award may not be vacated even if

there is a mistake of fact or law. Graham–Rutledge & Co. v. Nadia Corp., 281
S.W.3d 683, 689 (Tex. App.—Dallas 2009, no pet.). Appellants’ contentions

relating to how the panel viewed and applied the evidence may show a mistake of

                                          15
fact or law, but they do not rise to the level of gross mistake. See Ouzenne, 2012
WL 1249420, at *2.

      Lastly, Appellants contend that the Arbitration Panel committed a gross

mistake because the panel’s March 2 order contains a table categorizing and

grouping the various attorney’s fees charged by Appellants. Appellants assert that

the panel inaccurately categorized and miscalculated the fees. Appellants contend

that these inaccuracies are misleading and indicate that the panel acted in bad faith.

We disagree. At most, any inaccuracies in categorization or valuation by the panel

may indicate a mistake of law or fact; that is, a mistake in the panel’s decision-

making process. However, any such mistakes do not tend to show bad faith or a

failure by the panel to exercise honest judgment. See id.; Graham–Rutledge &

Co., 281 S.W.3d at 689.

      We overrule Appellants’ sole issue, and all sub-issues, challenging the trial

court’s confirmation of the Arbitration Award.

                                 Rule 45 Sanctions

      In his brief, Land requests that this Court impose sanctions against

Appellants for filing a frivolous appeal. See TEX. R. APP. P. 45 (authorizing

imposition of sanctions for filing of frivolous appeal). Land asserts that Appellants

have “no reasonable grounds on which the arbitration award can be vacated.” He

contends that, despite the fact that their challenges have no merit, Appellants have

                                         16
“delayed and appealed this case on every opportunity available” to avoid paying

the arbitration award and to cause Land to incur greater attorney’s fees.

      After considering the record, briefs, or other papers filed in this Court, we

may award a prevailing party damages if we objectively determine that an appeal is

frivolous. See TEX. R. APP. P. 45; Smith v. Brown, 51 S.W.3d 376, 381 (Tex.

App.—Houston [1st Dist.] 2001, pet. denied). An appeal is frivolous when the

record, viewed from the perspective of the advocate, does not provide reasonable

grounds for the advocate to believe that the case could be reversed. Smith, 51
S.W.3d at 381.

      The decision to grant appellate sanctions is a matter of discretion that an

appellate court exercises with prudence and caution and only after careful

deliberation. Id. Although imposing sanctions is within our discretion, we will do

so only in circumstances that are truly egregious. See id. While we disagree with

the merits of the appeal, after considering the record and briefs, we do not

conclude that the circumstances in this case warrant sanction. Accordingly, we

overrule Land’s request for Rule 45 sanctions.

                                         17
                                   Conclusion

      We affirm the judgment of the trial court and deny Land’s request for

sanctions.

                                             Laura Carter Higley
                                             Justice

Panel consists of Justices Keyes, Higley, and Bland.

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