Court Opinion

ID: 4394675
Source: CourtListenerOpinion
Date Created: 2019-05-07 22:47:10.788447+00
Date Added: 2024-06-11T14:52:04.348689
License: Public Domain

Affirmed in Part, Reversed and Remanded in Part, and Majority and
Concurring Opinions filed May 7, 2019.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-17-00869-CV

IN THE MATTER OF THE MARRIAGE OF WILLIAM EDWARD PISKE,
               JR. AND JAMIE KRIVAN LANGE

                    On Appeal from the 246th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2014-59709

                         MAJORITY OPINION
      Jamie Krivan Lange appeals the trial court’s judgment confirming an
arbitration award entered in favor of William Edward Piske, Jr. On appeal, Lange
asserts the arbitrator exhibited evident partiality in Piske’s favor by failing to
disclose his personal and professional connections with one of Piske’s attorneys.
For the reasons below, we reverse the trial court’s judgment, vacate the arbitration
award, and remand for further proceedings consistent with this opinion.
                                        BACKGROUND

I.      Underlying Facts and Arbitration

        Lange and Piske married in 2008 and Piske filed a petition for divorce in
 2014. Lange filed a counter-petition asserting breach of contract and tort claims
 against Piske arising from the parties’ joint business dealings. Lange and Piske
 filed a joint motion to refer the case to arbitration in accordance with their
 premarital agreement.1

        In their “Amended Agreed Order Appointing Arbitrator and Special
 Master,” Lange and Piske appointed Houston family-law attorney Warren Cole to
 arbitrate their dispute. After his appointment, Cole emailed both parties’ attorneys
 a document entitled, “Family Law Arbitration Rules.”                     Under the subtitle
 “Qualifications of Arbitrator,” the rules state, in relevant part:

        The Arbitrator shall disclose to the parties any circumstance likely to
        affect impartiality, including any bias or financial or personal interest
        in the result of the arbitration, or any past or present relationship with
        the parties or their counsel.
 At the parties’ initial status conference with Cole, Cole represented that he did not
 have a material relationship with any of the parties or their counsel other than
 normal professional relationships.

        In January 2017, Houston family-law attorney Joan Jenkins filed a notice of

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           The premarital agreement’s arbitration clause does not state whether it is governed by
 the Federal Arbitration Act (the “FAA”) or the Texas Arbitration Act (the “TAA”). The clause
 simply states, “[t]he provisions for binding arbitration must be in accordance with Texas
 arbitration law, including but not limited to section 153.0071 of the Texas Family Code.”
 Therefore, both apply. See In re Devon Energy Corp., 332 S.W.3d 543, 547 (Tex. App.—
 Houston [1st Dist.] 2009, orig. proceeding) (“If an arbitration agreement does not specify
 whether the FAA or the TAA applies, but states that it is governed by the laws of Texas, both the
 FAA and the TAA apply unless the agreement specifically excludes federal law.”); see also
 Natgasoline LLC v. Refractory Constr. Servs., Co., 566 S.W.3d 871, 878 (Tex. App.—Houston
 [14th Dist.] 2018, pet. filed).

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  appearance in the case as Piske’s co-counsel. According to Cole, he did not
  supplement his initial disclosures after Jenkins’ appearance.

        The arbitration hearings were conducted between February 27 and March 7,
  2017. The trial court’s order appointing Cole required the arbitration award be
  issued within 21 days after the case was closed, but Cole did not issue an award
  within this period. On July 12, 2017, Jenkins emailed Cole requesting a ruling:

        Warren — You know how much I think of you as a friend and a
        lawyer however I must address the issue with this case and your lack
        of a ruling. It has now been 18 weeks since this case was tried, almost
        5 months. These parties need closure. Each time you reply to us
        when we inquire about a ruling you tell us you are “working on it”
        and should have it out within a few days. Still nothing. Can you
        please rule? With all due respect, this is becoming beyond anything
        litigants should be required to endure, especially when they are paying
        for your services. I would appreciate a reply today. Thank you. Jo.
  Cole issued his arbitration award several days later, ruling in favor of Piske and
  against most of Lange’s claims. The trial court scheduled a hearing to enter a final
  divorce decree.

II.     Post-Arbitration Legal Proceedings

        Four days before the scheduled hearing, Lange filed a motion for
  continuance. Asserting she had “bona fide evidence of an undisclosed social
  relationship” between Cole and Jenkins, Lange requested an opportunity to
  conduct additional discovery.      Concurrently, Lange also filed an emergency
  motion to vacate the arbitration award. Lange asserted her rights were “prejudiced
  by Cole’s evident partiality arising from Cole’s failure to disclose a close
  friendship with Piske’s counsel, Joan Jenkins.”

        Piske filed a response to Lange’s motion to vacate and attached an affidavit
  signed by Jenkins which states, in relevant part:

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            Jenkins has known Cole for 30-plus years, and both she and Cole are
             very involved with State Bar activities and CLE programs. Jenkins
             and Cole often are featured on the same CLE programs.
            Jenkins and Cole both “regularly practice in the area of high
             wealth/high profile divorces.” Attorneys practicing in this area
             regularly see each other in practice.
            Along with other family lawyers, Jenkins “attended three or four
             outdoor cookouts at Warren Cole’s home on Galveston Island.”
             These events were associated with the State Bar.
            Cole, Jenkins, and their respective significant others were part of a
             group of Houston attorneys that spent the weekend as guests at a
             mutual friend’s ranch.
At the hearing, the trial court declined to rule on Lange’s motion for a continuance
and stated the motion was “not timely filed.” The trial court signed a “Final
Decree of Divorce Pursuant to Arbitrator’s Award” and set Lange’s motion to
vacate for an evidentiary hearing.

      Lange filed a motion for new trial or, alternatively, a motion to vacate,
modify, correct, or reform the trial court’s divorce decree and attached transcripts
of Cole’s and Jenkins’ depositions. At her deposition, Jenkins stated that Cole had
(1) mediated disputes for her on five-or-six occasions and (2) arbitrated a division
of artwork on a case five-to-seven years ago. Jenkins recalled that she was an
arbitrator on a case Cole “had some involvement in.” Jenkins did not recall any
details about the case and stated that it “was a long, long time ago.” Reviewing her
affidavit, Jenkins reiterated that the “three or four outdoor cookouts” she attended
at Cole’s Galveston home were State Bar events. Jenkins also discussed the
weekend she, Cole, and their respective significant others spent as guests at a
mutual friend’s ranch and stated she “had nothing to do with planning the get-
together” but was there as her significant other’s guest.

      Cole stated at his deposition that he had known Jenkins for approximately 30

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 years. Cole testified he served as mediator in a case for Jenkins “maybe five”
 times and served as a “clean up arbitrator” for Jenkins in a telephone arbitration.
 When questioned regarding the statements made in Jenkins’ affidavit, Cole stated
 he recalled only one outdoor cookout at his Galveston home. Cole testified that the
 weekend at a mutual friend’s ranch was attended by six-to-eight couples.

       After the evidentiary hearing, the trial court signed two orders denying
 Lange’s motion to vacate and motion for new trial. Lange timely appealed.

                                       ANALYSIS

       Citing section 171.088 of the Texas Arbitration Act (the “TAA”), Lange
 asserts Cole’s failure to disclose his personal and professional connections with
 Jenkins establishes evident partiality that warrants vacatur of Cole’s arbitration
 award. See Tex. Civ. Prac. & Rem. Code Ann. § 171.088(a)(2)(A) (Vernon 2019).
 Lange also challenges the trial court’s denial of her motion for new trial and
 motion for a continuance.

       Piske argues (1) Lange waived her evident-partiality claim by failing to raise
 it during arbitration and (2) the trial court correctly denied Lange’s post-arbitration
 motions because Cole’s and Jenkins’ limited relationship did not trigger Cole’s
 duty to disclose.

       We address these arguments below.

I.     Evident Partiality

       A.     Governing Law and Standards of Review

       Under the TAA, a trial court shall vacate an award if the rights of a party
 were prejudiced by the “evident partiality of an arbitrator appointed as a neutral
 arbitrator.” Id.; see also Forest Oil Corp. v. El Rucio Land & Cattle Co., 518
S.W.3d 422, 431 (Tex. 2017). The standard for evident partiality requires vacating
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an award if an arbitrator “fails to disclose facts which might, to an objective
observer, create a reasonable impression of the arbitrator’s partiality.” Tenaska
Energy, Inc. v. Ponderosa Pine Energy, LLC, 437 S.W.3d 518, 525 (Tex. 2014)
(citing Commonwealth Coatings Corp. v. Cont’l Cas. Co., 393 U.S. 145, 147
(1968), and Burlington N. R.R. Co. v. TUCO Inc., 960 S.W.2d 629, 630 (Tex.
1997)).2 An arbitrator need not disclose trivial relationships or connections. Id.;
see also Builders First Source-S. Tex., LP v. Ortiz, 515 S.W.3d 451, 458 (Tex.
App.—Houston [14th Dist.] 2017, pet. denied) [“Builders First”].

      Tenaska’s evident-partiality standard applies to conflicts arising both before
and during the course of arbitration proceedings. See TUCO Inc., 960 S.W.2d at
637. The party seeking to vacate an arbitration award on evident-partiality grounds
bears the burden of proof. Builders First, 515 S.W.3d at 458.

      Evident partiality is established from the nondisclosure itself, regardless of
whether the nondisclosed information shows actual partiality or bias. TUCO Inc.,
960 S.W.2d at 636; Builders First, 515 S.W.3d at 458. This approach reflects the
Texas Supreme Court’s determination that courts should not undertake evaluations
of partiality that are best left to the parties. See TUCO Inc., 960 S.W.2d at 635-36;
see also Tenaska Energy, Inc., 437 S.W.3d at 524-25.              The most attractive
arbitrators often are those “with extensive experience in the field related to the
dispute” — but this extensive experience will foreseeably produce arbitrators who
have had prior business dealings with a party. Tenaska Energy, Inc., 437 S.W.3d
at 524. While extensive experience should not disqualify an arbitrator per se,
“disclosing the information can help the parties attain the impartiality they seek by
evaluating potential bias at the outset of the arbitration.” Id. at 524.
      2
          The standard discussed in Tenaska Energy, Inc. applies to evident-partiality
determinations under both the TAA and the FAA. Amoco D.T. Co. v. Occidental Petroleum
Corp., 343 S.W.3d 837, 843 (Tex. App.—Houston [14th Dist.] 2011, pet. denied).

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       We review de novo a trial court’s order confirming or vacating an arbitration
award. Builders First, 515 S.W.3d at 455. Our review of a trial court’s evident-
partiality determination also involves a factual inquiry. Id.; see also Las Palmas
Med. Ctr. v. Moore, 349 S.W.3d 57, 65 (Tex. App.—El Paso 2010, pet. denied).
To the extent disputes about material facts exist in the context of an evident-
partiality claim, we review the trial court’s resolution of those disputes for legal
and factual sufficiency. Builders First, 515 S.W.3d at 455; see also Amoco D.T.
Co. v. Occidental Petroleum Corp., 343 S.W.3d 837, 844 (Tex. App.—Houston
[14th Dist.] 2011, pet. denied). Where, as here, no findings of fact or conclusions
of law have been issued by the trial court, we infer all facts supported by the
evidence and necessary to support the judgment. Builders First, 515 S.W.3d at
456.

       B.    Analysis

       In her motion to vacate, Lange cited Cole’s failure to disclose (1) Jenkins
had been a guest at Cole’s Galveston home for three-or-four outdoor cookouts;
(2) Cole and Jenkins with their respective significant others spent the weekend at a
mutual friend’s ranch; (3) Cole previously had served as an arbitrator for one of
Jenkins’ cases; and (4) Cole previously had mediated disputes for Jenkins on five-
or-six occasions. Lange argued Cole’s failure to disclose these prior connections
with Jenkins satisfied the evident-partiality standard. We agree.

       Although an arbitrator need not disclose trivial relationships or connections,
the interactions at issue here are not trivial under the facts of this case. Cole and
Jenkins had a social relationship that extended beyond the purely professional
realm. Although in the context of a State Bar event, Jenkins previously had been a
guest at Cole’s Galveston home. Cole, Jenkins, and their respective significant
others also spent a weekend at a mutual friend’s ranch.

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         Likewise, Cole’s and Jenkins’ professional relationship was not just that of
two attorneys practicing in a subset of the Houston family-law bar — Cole
previously had served as a mediator and arbitrator for Jenkins for a number of
cases. These facts might, to an objective observer, create a reasonable impression
of Cole’s partiality. See Tenaska Energy, Inc., 437 S.W.3d at 525.

         We turn now to Piske’s arguments challenging Lange’s evident-partiality
claim.

         Focusing on the applicable standard of review, Piske argues that “any fact
questions regarding evident partiality were resolved by the trial court after hearing
the evidence, against Lange and her unsupported arguments of evident partiality.”
Asserting these factual determinations are supported by legally and factually
sufficient evidence, Piske contends that the trial court’s judgment confirming
Cole’s arbitration award should be affirmed.        Piske’s argument relies upon a
mistaken standard of review.

         The ultimate question at issue here — whether the undisclosed facts might
give an objective observer a reasonable impression of Cole’s partiality — is a
matter of law we review de novo as a matter of well-established law. See Builders
First, 515 S.W.3d at 455; see also Amoco D.T. Co., 343 S.W.3d at 844. Because
an evident-partiality determination involves a factual inquiry, a trial court’s ruling
is capable of resolving material conflicts in the evidence. Builders First, 515
S.W.3d at 460; see also Amoco D.T. Co., 343 S.W.3d at 844. But if an evident-
partiality determination did not require the resolution of material conflicts, there
are no factual findings to which we must defer. See Las Palmas Med. Ctr., 349
S.W.3d at 64-67.

         Here, Cole’s and Piske’s recollections regarding their relationship differed
with respect to details, but the material facts are undisputed: Jenkins previously
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had been a guest at Cole’s Galveston home, Jenkins and Cole were weekend guests
at a mutual friend’s ranch along with six-to-eight other couples, Cole previously
had arbitrated a dispute for Jenkins, and Cole had mediated at least five disputes
for Jenkins. We conclude Cole failed to disclose facts which might, to an objective
observer, create a reasonable impression of his partiality. See Tenaska Energy,
Inc., 437 S.W.3d at 525; see also Builders First, 515 S.W.3d at 458.

      Pointing to the limited nature of their interactions, Piske asserts Cole and
Jenkins “never shared a deep friendship or anything other than a trivial social
relationship.” We reject this argument because the evident-partiality standard does
not allow us to evaluate interactions in light of the entire relationship — rather, we
must consider the facts from an objective observer’s point of view. See Tenaska
Energy, Inc., 437 S.W.3d at 525; see also Builders First, 515 S.W.3d at 458. Here,
Cole’s and Jenkins’ personal and professional connections might give an objective
observer a reasonable impression of Cole’s partiality. See Tenaska Energy, Inc.,
437 S.W.3d at 525; Builders First, 515 S.W.3d at 458.

      Piske relies on International Bank of Commerce-Brownsville v. International
Energy Development Corp., 981 S.W.2d 38 (Tex. App.—Corpus Christi 1998, pet.
denied), to support his contention that Cole’s and Jenkins’ interactions do not rise
to the level of evident partiality. The facts of International Bank are readily
distinguishable from the circumstances presented herein. There, the appellant
argued the arbitrator exhibited evident partiality by failing to disclose his
association with one of the appellee’s attorneys. Id. at 43-44. Rejecting the
appellant’s evident-partiality claim, the court noted the arbitrator and attorney only
had “met infrequently over the past thirty-plus years” and “encountered one
another perhaps two or three times a year outside the courtroom at professional
conferences, luncheons, and similar functions.”         Id. at 45-46.     Unlike the

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relationship at issue here, the arbitrator and attorney in International Bank “did not
otherwise socialize or visit one another’s homes.” Id. at 45. Piske’s reliance on
International Bank therefore is misplaced.

      C.     Waiver

      Lange filed her motion to vacate in September 2017, arguing that Cole’s
undisclosed friendship with Jenkins exhibited evident partiality. Lange’s motion
states that Jenkins’ July 12, 2017 email — in which she referred to Cole as a
“friend” (about whom she thought a great deal) — was “the first disclosure that
Lange or her counsel ever received of any friendship or other social relationship
between Cole and Jenkins.” Piske asserts Lange waived her complaint as to Cole’s
partiality by failing to raise the objection until approximately two months after
Jenkins’ email.   Guided by the Texas Supreme Court’s reasoning in Tenaska
Energy, Inc., 437 S.W.3d at 528-29, and TUCO Inc., 960 S.W.2d at 637-38, we
reject Piske’s argument.

      In Tenaska, the arbitrator disclosed that (1) the appellee’s law firm, Nixon
Peabody, had recommended him as an arbitrator in three other arbitrations, and
(2) he was the director of a litigation services company and, in that capacity, had
attended a meeting at Nixon Peabody. 437 S.W.3d at 520. However, the arbitrator
also said there was no indication his company and Nixon Peabody would ever do
business. Id. There, the arbitrator’s contacts with Nixon Peabody were more
considerable than his disclosures demonstrated — “extensive discovery” revealed
that (1) the arbitrator’s contacts with Nixon Peabody were specifically with the
appellee’s attorneys, (2) the arbitrator previously had met with those same
attorneys to solicit business for his company, and (3) one of the attorneys edited
the arbitrator’s disclosures to minimize their contacts. Id. at 525-26. Rejecting the
appellee’s waiver argument, the Texas Supreme Court stated:

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      [The appellant] did not waive its evident partiality challenge by
      proceeding to arbitration based upon information it was unaware of at
      that time. To hold otherwise would put a premium on concealment in
      a context where the Supreme Court has long required full disclosure.

Id. at 528 (internal citations omitted).

      Similarly, in TUCO Inc. the arbitrator disclosed that he previously had
served as an expert witness in two matters for the appellee’s arbitrator’s law firm.
960 S.W.2d at 638. The arbitrator failed to disclose that the firm also assisted him
in obtaining a substantial referral during the course of the arbitration. Id. at 637-
38. The Texas Supreme Court rejected the appellee’s waiver argument, concluding
that “it is for the parties to determine, after full disclosure, whether a particular
relationship is likely to undermine an arbitrator’s impartiality.” Id.

      Like the appellants in Tenaska and TUCO Inc., Lange did not waive her
evident-partiality claim by proceeding with the arbitration after Jenkins’ July 12,
2017 email. Jenkins’ email referred to Cole as a “friend” but did not disclose the
later-discovered extent of their personal and business connections. Moreover, the
email’s overall tone indicated Jenkins’ frustration with the delay in Cole’s issuance
of his ruling. The email encouraged Cole to rule on the arbitration “as quickly as
possible,” informing him that his delay in issuing the award “was beyond anything
the parties should have to endure.” This email and Jenkins’ reference to Cole as a
“friend” did not constitute a full disclosure of Cole’s and Jenkins’ relationship.

      We sustain Lange’s first issue and conclude Cole exhibited evident partiality
by failing to disclose the extent of his personal and professional connections with
Jenkins. Because we sustain Lange’s first issue, we do not reach her challenges
addressing the trial court’s denial of her motion for new trial and motion for
continuance.

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                                   CONCLUSION

      We affirm the trial court’s October 2, 2017 divorce decree in so far as it
grants Lange’s and Piske’s divorce, but we reverse the remainder of the divorce
decree and remand for further proceedings consistent with this opinion.

                                       /s/    Meagan Hassan
                                              Justice

Panel consists of Justices Christopher, Jewell, and Hassan (Jewell, J., concurring).

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