Court Opinion

ID: 4421408
Source: CourtListenerOpinion
Date Created: 2019-07-31 06:37:56.127229+00
Date Added: 2024-06-11T14:51:22.692893
License: Public Domain

Opinion issued July 30, 2019

                                     In The

                               Court of Appeals
                                    For The

                         First District of Texas
                            ————————————
                               NO. 01-18-00024-CV
                           ———————————
                      MAHASIN A. HAWDI, Appellant
                                       V.
   ATHEEL MUTAMMARA, AGENT AND ATTORNEY-IN-FACT FOR
             WILLIAM B. MUTAMMARA, Appellee

                   On Appeal from the 240th District Court
                          Fort Bend County, Texas
                    Trial Court Case No. 16-DCV-236345

                         MEMORANDUM OPINION

      This is an appeal from a final judgment confirming an arbitration award.

Appellant Mahasin A. Hawdi is the wife of William B. Mutammara, who currently

resides in a senior assisted living and memory care facility. Mahasin is 78 years

old, and William is 88 years old. Atheel Mutamarra is William’s adult son,
Mahasin’s stepson, and the holder of financial and medical powers of attorney for

William.

      Before their marriage in 2007, Mahasin and William signed a premarital

agreement that set forth provisions regarding the characterization of and rights to

manage their assets during and after their marriage. This agreement included an

arbitration provision. In 2016, a dispute arose between Atheel and Mahasin

regarding ownership and use of property that Atheel contended was his father’s

separate property. Atheel sought arbitration under the premarital agreement to

obtain “a declaration of the rights, duties, and obligations” of each spouse under

the agreement, the imposition of a constructive trust over William’s separate

property that was allegedly possessed by Mahasin, and injunctive relief to preserve

William’s assets. Mahasin opposed arbitration, but the trial court granted Atheel’s

motion to compel arbitration. Atheel later sought confirmation of the arbitration

award, and the trial court entered a final judgment.

      On appeal, Mahasin raises seven issues. Four issues challenge the trial

court’s order compelling arbitration, and three issues challenge the arbitration

award as included in the final judgment. We affirm.

                                    Background

      Before Mahasin and William married, they signed a premarital agreement.

They stipulated that their intent was “to clarify their respective property rights to

                                          2
eliminate any uncertainty about those rights.” The agreement identified what

would comprise each party’s separate property upon marriage, and it provided that

“[e]ach party will have the full, free, and unrestricted right to manage the separate

property over which he or she has control.”1 It also provided that “[n]either party

will have the authority to encumber or dispose of the other party’s separate

property without the other party’s express written consent.”

      The agreement also provided for “binding arbitration” “in accordance with

Texas arbitration law.”:

             The parties agree to submit to binding arbitration any dispute
      or controversy regarding the validity, interpretation, or
      enforceability of this agreement, as well as all issues involving its
      enforcement in connection with a dissolution proceeding between the
      parties. Each party expressly waives any right to trial by a court or
      trial by a jury. If a dissolution proceeding or declaratory judgment
      proceeding is filed in Texas, the arbitrator appointed under this
      agreement will simultaneously be designated as special master under
      the Texas Rules of Civil Procedure, and the parties agree to jointly
      apply to the court for any orders that are necessary to vest the
      arbitrator with all powers and authority of a special master under the
      rules.

1
      The agreement included provisions regarding: representations and disclosures of
      financial positions, children, the parties’ property, management of property, events
      that would not comprise evidence of community property, liabilities, future
      business transactions, pending and future litigation, future credit transactions,
      household and personal expenses, joint acquisition of assets, dissolution of the
      marriage by court order or death, retirement benefits, gifts, independent
      conveyances or bequests, reimbursement, economic contribution, arbitration,
      general provisions, and representations and warranties.

                                           3
             The parties agree to appoint one arbitrator, whose decisions will
      be binding in all respects. Any arbitrator appointed by the parties must
      be an attorney who (i) has undergone arbitration training conducted by
      the American Bar Association or the American Academy of
      Matrimonial Lawyers and (ii) is in good standing with the State Bar of
      Texas. The first party requesting arbitration must designate the name
      of an arbitrator in the request. The other party must then designate the
      name of an arbitrator. If the parties cannot agree on an arbitrator
      within fourteen days after either party’s written request for arbitration,
      the two designees must select a qualified arbitrator, who will be
      designated the sole arbitrator of the dispute. If the parties cannot agree
      on the ground rules and procedures to be followed during the
      arbitration proceedings, the arbitrator shall have the sole authority to
      establish the ground rules and procedures to be followed during the
      arbitration proceeding. The parties agree to attend the arbitration on
      the date and at the time and place set by the arbitrator. The cost of
      arbitration must be borne as the arbitrator directs. The award of the
      arbitrator will be binding and conclusive on the parties, and a
      judgment setting forth the arbitration award may be entered in any
      court of competent jurisdiction.

(Emphasis added.)

      Six years after the premarital agreement was signed and while Mahasin was

out of town, William signed a statutory durable power of attorney in favor of

Atheel. Six weeks later, William was diagnosed with Alzheimer’s Disease. Two

years later, in July 2015, while Mahasin was recovering from a serious accident,

Atheel placed William in a senior assisted-living memory-care facility, where he

remains. Disputes arose between Mahasin and Atheel regarding access to William

and financial matters, including occupation of the marital residence.

      About a year later, Atheel requested arbitration in writing, designated Bruce

Wayne Wettman as arbitrator, and informed Mahasin that she had 14 days to
                                          4
“agree to an arbitrator.” Mahasin neither replied nor objected to Atheel’s

designation of Wettman as arbitrator. Atheel filed with the district court an

application to compel arbitration designating Wettman as arbitrator. He later

amended the application, attaching a copy of the premarital agreement. Mahasin

opposed arbitration asserting that Atheel lacked standing to enforce the arbitration

clause.

      The parties unsuccessfully mediated before Wettman. The trial court granted

the amended application to compel arbitration, specifically finding that: (1) the

existence of an agreement to arbitrate is undisputed; (2) Mahasin “nevertheless

refuses to arbitrate”; (3) “the arbitration agreement contains a delegation clause

whereby the parties to the arbitration agreement intend for the arbitrator to decide

gateway matters regarding the validity, interpretation or enforceability of the

arbitration agreement, and all other legal and factual matters”; and (4) Mahasin

failed to raise any valid defenses to the arbitration agreement. The court ordered

arbitration “with the designated arbitrator” and retained jurisdiction “to appoint an

arbitrator” “should the agreed method of appointment fail.”

      After arbitration was conducted, Wettman entered an award. Wettman found

that when they signed the premarital agreement, Mahasin and William

acknowledged that they “had or reasonably could have had full and complete

knowledge of property owned by the other party.” The arbitrator also found that

                                          5
Mahasin had entered into the premarital agreement knowingly and voluntarily and

that she declined to retain independent counsel despite having had the opportunity

to do so. The arbitrator found that the marital home was William’s separate

property because it was “purchased entirely with cash” that was William’s separate

property. The arbitrator also found that Mahasin had withdrawn nearly $300,000

from an investment account that was solely William’s separate property and put

the money in other accounts for her personal living expenses. The arbitrator

awarded Atheel $172,000 plus 6% postjudgment interest. He also ordered that

Mahasin had the right to continue living in the marital home and that Atheel could

conduct one inspection per month “at a mutually agreeable date and time.” The

parties were ordered to pay their own costs and attorneys’ fees.

      Atheel filed an application with the court to confirm the award. Mahasin

objected and sought to vacate the arbitration award. She argued that the arbitrator

improperly exceeded his powers under the Texas Arbitration Act by finding that

the marital home was William’s separate property. She argued that when a spouse

uses separate property to acquire real property during a marriage and takes title in

both spouses’ names, Texas law presumes that the nonpurchasing spouse has

received a gift of a one-half interest in the property. She attached a copy of the

deed to her objection and application to vacate. Mahasin made no argument about

the money transferred from the investment account, and she made no argument

                                         6
about the proper characterization of the property under the parties’ premarital

agreement.

      The trial court entered a final judgment confirming the arbitration award,

and Mahasin appealed.

                                      Analysis

      Mahasin raised seven issues on appeal. Some relate to the order compelling

arbitration, and others relate to the final judgment confirming the arbitration award.

I.    Issues relating to the order compelling arbitration

      An order compelling arbitration may be reviewed in an appeal from the final

judgment. See Perry Homes v. Cull, 258 S.W.3d 580, 586 n.9 (Tex. 2008). We

review a trial court’s ruling on a motion to compel arbitration for an abuse of

discretion, deferring to the trial court’s factual determinations that are supported by

evidence and examining questions of law de novo. Parker v. Schlumberger Tech.

Corp., 475 S.W.3d 914, 922 (Tex. App.—Houston [1st Dist.] 2015, no pet.).

      Arbitration agreements are enforceable as contracts. See Steer Wealth

Mgmt., LLC v. Denson, 537 S.W.3d 558, 566 (Tex. App.—Houston [1st Dist.]

2017, no pet.). Ordinarily, a party seeking to compel arbitration must show that

(1) a valid, enforceable arbitration agreement exists and (2) the claims asserted fall

within the scope of that agreement. Id. These two factors are referred to as

“substantive arbitrability” and are gateway questions to be decided by the court.

                                          7
See W. Dow Hamm III Corp. v. Millennium Income Fund, L.L.C., 237 S.W.3d 745,

753 (Tex. App.—Houston [1st Dist.] 2007, no pet.) (citing Howsam v. Dean Witter

Reynolds, Inc., 537 U.S. 79, 84–85 (2002)). However, “parties have a right to

contract as they see fit,” and therefore “they may agree to arbitral delegation

clauses that send gateway issues such as arbitrability to the arbitrator.” RSL

Funding, LLC v. Newsome, 569 S.W.3d 116, 120–21 (Tex. 2018). “When faced

with such an agreement, courts have no discretion but to compel arbitration unless

the arbitration clause’s validity is challenged on legal or public policy grounds.”

Id. Thus, we first consider whether there is a binding arbitration agreement that

delegates gateway questions of substantive arbitrability to the arbitrator. Id.

      A.     Whether Atheel could invoke the arbitration clause based on
             agency principles was a question for the arbitrator.

      In her first issue, Mahasin challenges whether Atheel, who is a nonsignatory

to the premarital agreement, can compel arbitration under it. Mahasin concedes

that there is an arbitration provision in the premarital agreement, but she argues

that Atheel did not sign the premarital agreement and therefore cannot rely on the

arbitration provision. She specifically references section 17.12 of the premarital

agreement, which provides that the agreement is “personal to the parties” and that

“neither party may assign or delegate any of his or her rights or obligations under

it.” She further references section 17.6 of the premarital agreement, entitled

“Successors,” which provides that the agreement “binds and inures to the benefit of

                                           8
the parties and their . . . legal and personal representatives.” Mahasin contends that

section 17.6 refers exclusively to individuals who may have a future interest upon

the death of a spouse.

      “As a general rule, ‘an arbitration clause cannot be invoked by a non-party

to the arbitration contract.’” G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458
S.W.3d 502, 524 (Tex. 2015) (quoting Grigson v. Creative Artists Agency, L.L.C.,

210 F.3d 524, 532 (5th Cir. 2000)). In some circumstances, including agency, a

nonsignatory may be permitted to enforce an agreement to arbitrate. Id. A statutory

durable power of attorney creates an agency relationship between the principal and

the designated holder of the power of attorney. See TEX. ESTATES CODE

§ 751.002(3); id. §§ 751.001–753.002 passim (durable powers of attorney).

      After William signed the premarital agreement, he signed a statutory durable

power of attorney appointing Atheel as his agent. This agency relationship

afforded him the authority to invoke the arbitration provision. See G.T. Leach

Builders, 458 S.W.3d at 524. To the extent that Mahasin argues that specific

provisions in the premarital agreement would bar any nonsignatory from invoking

the arbitration provision, we conclude that those disputes relate to an interpretation

of the premarital agreement and would go to arbitration because of the delegation

clause.

                                          9
      Mahasin’s first issue, arguing that the trial court erred by granting arbitration

based on nonsignatory Atheel’s motion, is overruled.

      B.     The delegation provision removed the gateway question of
             substantive arbitrability from the trial court’s purview.

      In her second issue, Mahasin asserts that the trial court erred by failing to

consider the two substantive arbitrability gateway questions of the existence of a

valid arbitration agreement and a dispute within its scope.

      Mahasin argues that the premarital agreement was hearsay, and therefore

Atheel failed to tender an admissible arbitration agreement. Atheel attached the

premarital agreement to his application to compel arbitration and his amended

application to compel arbitration, effectively incorporating the pertinent arbitration

provision into his pleadings. See TEX. R. CIV. P. 59. Accordingly, it was properly

before the court.

      Mahasin also argues that the premarital agreement was unconscionable when

it was made, rendering the arbitration provision unenforceable. She asserts that she

could not read English, did not understand what she was signing, and was not

provided an interpreter. She also asserts that William failed to disclose all his

assets, including valuable offshore accounts.

      “[A]rbitrators generally must decide defenses that apply to the whole

contract, while courts decide defenses relating solely to the arbitration clause.”

Perry Homes v. Cull, 258 S.W.3d 580, 589 (Tex. 2008). “Classic contract defenses

                                          10
such as unconscionability, illegality and fraudulent inducement” are decided by the

arbitrator “if they are alleged only against the contract as a whole.” RSL Funding,
569 S.W.3d at 124; see Perry Homes, 258 S.W.3d at 589 (“[A]rbitrators must

decide if an entire contract was fraudulently induced, while courts must decide if

an arbitration clause was.”).

       Mahasin’s challenges attack the premarital agreement as a whole; therefore

the court properly permitted the arbitrator to resolve these questions. See RSL

Funding, 569 S.W.3d at 124; Perry Homes, 258 S.W.3d at 589. Mahasin also

argues that the dispute is not within the scope of the arbitration agreement. In part,

she asserts that the language of the arbitration provision applies only to a

dissolution proceeding. This is a matter of interpretation, which has been delegated

to arbitration.

       Accordingly, we conclude that the court did not err by not considering

whether the dispute is within the scope of the arbitration agreement, and we

overrule Mahasin’s second issue.

       C.     The trial court did not err by granting the motion to compel
              arbitration before Wettman.

       In her third issue, Mahasin argues that the trial court erred by selecting an

arbitrator because the method specified for selecting arbitrators in the premarital

agreement was not followed. She argues that because of this, the arbitrator lacked

                                         11
jurisdiction. The record on appeal does not show that the court selected an

arbitrator.

       The premarital agreement provides for binding arbitration in accordance

with Texas arbitration law. The Texas Arbitration Act provides that the “method of

appointment of arbitrators is as specified in the agreement to arbitrate.” TEX. CIV.

PRAC. & REM. CODE § 171.041(a). The premarital agreement states that “the parties

agree to appoint one arbitrator.” It provides the following method of appointment:

       The first party requesting arbitration must designate the name of an
       arbitrator in the request. The other party must then designate the name
       of an arbitrator. If the parties cannot agree on an arbitrator within
       fourteen days after either party’s written request for arbitration, the
       two designees must select a qualified arbitrator, who will be
       designated the sole arbitrator of the dispute.

       In September 2016, Atheel requested arbitration in writing in a letter to

Mahasin’s attorney. In the letter, Atheel designated Bruce Wayne Wettman as

arbitrator and stated, “You must agree to an arbitrator within 14 days.” Mahasin

did not respond the request for arbitration, designate an arbitrator, or object to

Wettman serving as arbitrator. Rather, Mahasin refused to arbitrate. In January

2017, Atheel filed a motion to compel arbitration before Wettman as arbitrator.

Mahasin continued to oppose arbitration, but she did not designate an arbitrator.

       The trial court heard Atheel’s motion to compel arbitration over two days in

July 2017. At these hearings, Mahasin suggested that she would prefer former

Judge Robert Kern due to his experience with family law and because Wettman
                                         12
and Atheel’s attorney both were adjunct professors at the same school. On July 13,

2017, the trial court granted the motion to compel, which had identified Wettman

as the arbitrator, but the order compelling arbitration did not specifically name

Wettman. Instead, the order required Atheel and Mahasin to “promptly and without

delay commence arbitration with the designated arbitrator.”2

      Despite Mahasin’s assertion on appeal, the trial court did not specifically

order the parties to arbitrate before Wettman; the court ordered the parties to

arbitrate before “the designated arbitrator.” Atheel requested arbitration in writing,

designating Wettman, in September 2016. Mahasin did not designate an arbitrator

within the time period provided by the premarital agreement. The only arbitrator

ever designated was Wettman. The record does not support Mahasin’s assertion

that the trial court, rather than the parties, selected Wettman as arbitrator. We

overrule the third issue.

      In her fourth issue, Mahasin asserts that it was improper for Wettman to

serve as both mediator and arbitrator. To preserve a complaint for appellate review,

a party must first demonstrate that the complaint was made to the trial court by a

timely request, objection, or motion. TEX. R. APP. P. 33.1. Mahasin did not raise

2
      The trial court stayed the case but retained jurisdiction to appoint an arbitrator
      pursuant to section 171.041 of the Civil Practice and Remedies Code “should the
      agreed method of appointment fail.” Thereafter the parties arbitrated their claims
      with Wettman as arbitrator.

                                          13
this argument in trial court, where she argued only that she “felt there was a bias”

because Atheel’s counsel and Wettman “both teach at the same college.” Because

Mahasin makes this argument for the first time on appeal, we hold that it is not

preserved. See TEX. R. APP. P. 33.1. We overrule Mahasin’s fourth issue.

II.   Issues relating to the order confirming the arbitration award.

      Mahasin argues that the trial court erred by confirming the arbitration award.

In her fifth issue, Mahasin argues that the court lacked jurisdiction to determine a

marital property division while the parties are married. In her sixth issue, Mahasin

asserts that Atheel cannot use the power of attorney to avoid William’s duty of

spousal support. In her seventh issue, she asserts that the arbitrator exceeded his

power by ignoring the law and the terms of the premarital agreement by finding

that the marital home was the separate property of William. Mahasin maintains that

she had a one-half separate property interest in the property because title was taken

in both her name and William’s name.

      We review a trial court’s order confirming an arbitration award de novo

based on a review of the entire record. Infinity Capital II, LLC v. Strasburger &

Price, LLP, No. 01-15-00691-CV, 2016 WL 4254137, at *3 (Tex. App.—Houston

[1st Dist.] Aug. 11, 2016, pet. denied) (mem. op.); Stage Stores, Inc. v. Gunnerson,

477 S.W.3d 848, 855 (Tex. App.—Houston [1st Dist.] 2015, no pet.). Unless an

arbitration agreement provides for expanded judicial review of an arbitration

                                         14
award, judicial review of an arbitration award under the TAA is “extraordinarily

narrow,” E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267, 271 (Tex.

2010), and it is limited to the statutory grounds for modification, correction, or

vacatur. See TEX. CIV. PRAC. & REM. CODE § 171.088(a) (grounds for vacatur)3; id.

3
      (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 the party did
                    not participate in the arbitration hearing without raising the
                    objection.

      TEX. CIV. PRAC. & REM. CODE § 171.088(a).
                                            15
§ 171.091(a) (grounds for modification or correction of an award)4; Nafta Traders,

Inc. v. Quinn, 339 S.W.3d 84, 89–90 (Tex. 2011). Unless such grounds are offered,

“the court, on application of a party, shall confirm the arbitration award.” TEX. CIV.

PRAC. & REM. CODE § 171.087.

      Judicial scrutiny of an arbitration award awards “focuses on the integrity of

the arbitration process, not on the propriety of the result.” 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.); see Purse v. DeJesus, No. 01-17-00855-

CV, 2019 WL 237751, at *2 (Tex. App.—Houston [1st Dist.] Jan. 17, 2019, no

pet.) (mem. op.). “Review is so limited that a court may not vacate an arbitration

award even if it is based upon a mistake of fact or law.” Universal Comput. Sys.,

4
      (a)    On application, the court shall modify or correct an award if:

             (1)    the award contains:

                    (A)    an evident miscalculation of numbers; or

                    (B)    an evident mistake in the description of a person, thing, or
                           property referred to in the award;

             (2)    the arbitrators have made an award with respect to a matter not
                    submitted to them and the award may be corrected without affecting
                    the merits of the decision made with respect to the issues that were
                    submitted; or

             (3)    the form of the award is imperfect in a manner not affecting the
                    merits of the controversy.

      TEX. CIV. PRAC. & REM. CODE § 171.091(a).
                                           16
Inc. v. Dealer Sols., L.L.C., 183 S.W.3d 741, 752 (Tex. App.—Houston [1st Dist.]

2005, pet. denied); see Jamison & Harris v. Nat’l Loan Inv’rs, 939 S.W.2d 735,

737 (Tex. App.—Houston [14th Dist.] 1997, writ denied) (alleged errors in

application of substantive law by arbitrators during arbitration proceedings was not

reviewable on motion to vacate award).

      In her fifth, sixth, and seventh issues, Mahasin alleges that the arbitrator

made mistakes of law—by determining the character of marital property in the

absence of a divorce proceeding, by failing to consider the statutory duty of

spousal support, and by mischaracterizing the marital home as William’s separate

property. All of these are mistakes of law that are not reviewable by a motion to

modify, correct, or vacate an arbitration award. See Universal Comput. Sys., 183
S.W.3d at 754; Jamison, 939 S.W.2d at 737. In addition, to the extent that any of

these issues requires review of arbitration proceedings, Mahasin’s failure to

provide a record of the arbitration proceedings prevents us from determining

whether the arbitrator exceeded his authority. See Saldana v. Saldana, No. 01-12-

00092-CV, 2013 WL 1928800, at *3 (Tex. App.—Houston [1st Dist.] May 9,

2013, pet. denied) (mem. op.) (“The party seeking to modify or vacate an

arbitration award has the burden in the trial court of bringing forth the complete

record and establishing the basis for vacating or modifying the award.”).

      We overrule the fifth, sixth, and seventh issues.

                                         17
                                   Conclusion

      We affirm the judgment of the trial court.

                                             Peter Kelly
                                             Justice

Panel consists of Justices Lloyd, Kelly, and Hightower.

                                        18