Court Opinion

ID: 3128952
Source: CourtListenerOpinion
Date Created: 2015-10-16 16:12:58.730545+00
Date Added: 2024-06-11T09:33:12.756248
License: Public Domain

Opinion issued March 3, 2011.

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-09-01065-CV
———————————
Thomas Petroleum, Inc. and Thomas Fuels, 
Lubricants & Chemicals, Appellants
V.
Gregory
Morris, Appellee
and

Gregory Morris, Cross-Appellant
 
V.
 
THOMAS PETROLEUM, INC. AND THOMAS FUELS, 
LUBRICANTS & CHEMICALS, Cross-Appellees
 

 
On Appeal from the 269th Judicial District
Harris County, Texas

Trial Court Case No. 2007-48269
 

O P I N I O N
Thomas
Petroleum, Inc. and Thomas Fuels, Lubricants and Chemicals (collectively,
Thomas) appeal the trial court’s confirmation of an arbitration award in favor
of Gregory Morris, Thomas Fuels’s former employee.  Morris worked as a truck driver delivering fuel
to customers.  A fellow truck driver stabbed
and seriously injured Morris in a knife attack over a dispute about a truck
assignment.  Thomas terminated Morris’s
employment.  Morris sued Thomas for wrongful
discharge, negligence, and defamation. 
Thomas moved to compel binding arbitration under its employment
agreement with Morris and sought a stay of proceedings, which the trial court
granted.  A three-member arbitration
panel decided the case in Morris’s favor and awarded him substantial damages,
attorney’s fees, and costs.  
          Morris
returned to the trial court and moved to confirm the award, which Thomas
opposed.  After hearing the motion, the
trial court rendered judgment.  It confirmed
the arbitration award but denied Morris’s request for pre- and post-judgment
interest. 
On appeal, Thomas challenges the trial
court’s confirmation of the award, claiming that, despite the parties’ express
stipulation to the contrary, the Federal Arbitration Act (FAA) does not apply,
and that application of the contractual standard of review in the employment agreement
requires vacatur of the award.  In a
cross-appeal, Morris complains of the trial court’s denial of his request for
pre- and post‑judgment interest on the arbitration award.  We hold that Thomas waived its challenge to
the FAA’s application and failed to identify any ground for vacatur under the
FAA.  We further hold that the trial
court correctly denied Morris’s request for pre- and post-judgment interest.  We therefore affirm.  
Background
Circumstances leading to termination
of Morris’s employment
This dispute arose out of the incident
that led to Morris’s discharge in early 2007.[1]  Early one morning in December 2006, after
Morris left the worksite to make a delivery, the dispatcher called Morris back
to the facility because she had assigned Morris the wrong truck.  When Morris returned, the angry driver who had
been waiting for the truck attacked Morris, stabbing him in the throat.  
Morris was seriously injured.  Several days after the attack, Morris’s wife informed
Thomas that her husband was recuperating from surgery, and she inquired about his
medical leave and disability benefits.  Thomas
terminated Morris’s employment.

 
Arbitration agreement
As a condition of employment with
Thomas, Morris had signed a “Dispute Resolution Program & Binding
Arbitration Agreement Between All Employees & Thomas Fuels, Lubricants and
Chemicals, Inc., Employer.”  The arbitration
agreement recites that it is binding on every Thomas employee.  Continued employment with Thomas is
contingent on each employee’s agreement that he is bound by its terms.  The parties agreed to submit any employment
disputes that they could not resolve through mediation to the American
Arbitration Association (AAA) for resolution. 
In addition, the agreement provides:
The award rendered by the arbitrator(s) shall
be final, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.  All parties stipulate and agree that [Thomas]
is engaged in interstate commerce and that the enforcement of this arbitration
agreement shall be governed by the U.S. Arbitration Act, 9 U.S.C. § 1, et
seq.
The agreement provides for a limited contractual “right
of appeal” if the arbitration award exceeds $50,000 or provides for injunctive
relief.  It declares:
The scope and standard of review to be
applied by the District Judge in this limited right of appeal will be the same
scope and standard of review as the Texas Supreme Court applies when reviewing
a civil judgment following a bench trial without a jury.  Accordingly, this appeal may only contest
issues and points of law and will not involve a review of the factual
sufficiency of the evidence.  If the
District Judge determines that the original arbitrator(s) erred on a point of
law, the District Judge shall have the right to render a final award to be
consistent with a correct application of the applicable law in the same manner
as the Texas Supreme Court would render judgment to correct an error of law by
a lower court.
Proceedings in the trial court
Morris sued in Harris County district
court, claiming that Thomas had violated his rights under the federal Family
Medical Leave Act and Americans with Disabilities Act, as well as bringing
common-law claims for negligence.  Morris
also asserted a defamation claim based on Thomas’s statements to potential
employers and others concerning Morris’s job performance, work history, and the
circumstances preceding his discharge.  
Thomas responded with a verified
plea in abatement. It asserted that Morris’s claims were subject to the agreement,
invoked the FAA as the law governing the agreement, and requested that the
trial court stay the proceedings pursuant to the FAA.  Morris did not oppose Thomas’s request.  Thomas also brought a property damage
counterclaim against Morris in the arbitration proceeding.  The parties jointly selected three
arbitrators and proceeded on Morris’s claims.  The parties tried their claims to the
arbitration panel.  The panel found in
favor of Morris on his claims, and it rejected Thomas’s counterclaim.  
Discussion
I.       Applicability
of the Federal Arbitration Act
Thomas contends that, in confirming
the award, the trial court erred by rejecting the more stringent standard of
review set forth in the agreement and instead reviewing the award under the
deferential standard prescribed by the FAA. 
The parties expressly stipulated in the agreement that the FAA governs
their dispute.  The United States Supreme
Court has held that parties may not contractually agree to a more stringent
standard of review in arbitration agreements governed by the FAA; the statutory
grounds for judicial review of arbitration awards are exclusive.[2]  Hall
Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 585–86, 128 S. Ct.
1396, 1404–05 (2008); accord Petroleum
Analyzer Co. LP v. Olstowski, No. 01-09-00076-CV, 2010 WL 2789016, *12
(Tex. App.—Houston [1st Dist.] Jul. 15, 2010, no pet.) (mem. op.).  Recognizing this obstacle to its position,
Thomas contends that, as a truck driver, Morris is among a class of
transportation workers exempt from the FAA’s purview, negating the parties’
express stipulation that the FAA applies to their dispute.  See Circuit
City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S. Ct. 1302, 1311 (2001)
(holding that FAA, by its terms, does not apply to employment contracts of
transportation workers engaged in interstate or foreign commerce).  When there is an express agreement to
arbitrate under the FAA, we previously have upheld such choice-of-law
provisions even when the transaction at issue does not involve interstate
commerce.  In re Kellogg Brown & Root, 80 S.W.3d 611, 617 (Tex.
App.—Houston [1st Dist.] 2002, orig. proceeding).  We need not reach the merits of the questions
that Thomas poses in this case—specifically
whether Morris’s former position is one that falls within the category of
transportation workers or whether a party whose status otherwise renders him
exempt from the FAA’s purview can expressly contract for its application.  We agree with Morris that Thomas has waived any objection to the FAA’s application
to this dispute by invoking it in the trial court.
Waiver is “an intentional
relinquishment of a known right or intentional conduct inconsistent with
claiming that right.”  Sun Exploration & Prod. Co. v. Benton,
728 S.W.2d 35, 37 (Tex. 1987), quoted in
Jernigan v. Langley, 111 S.W.3d 153, 156–57 (Tex. 2003).  A party waives an arbitration clause by
substantially invoking the judicial process to the other party’s detriment.  See In
re Citigroup Global Mkts., Inc., 258 S.W.3d 623, 625 (Tex. 2008) (orig.
proceeding) (quoting Perry Homes v. Cull,
258 S.W.3d 580, 589–90 (Tex. 2008), cert.
denied, 129 S. Ct. 952 (2009)).  The reason
for finding waiver under such circumstances lies in “the inherent unfairness
caused by ‘a party’s attempt to have it both ways by switching between
litigation and arbitration.’”  Id. at 625 (quoting Perry Homes, 258 S.W.3d at 597); cf. Keith v. Keith, 221 S.W.3d 156, 163 (Tex. App.—Houston [1st
Dist.] 2006, no pet.) (explaining that under invited error doctrine, appellant
may not complain on appeal that trial court granted appellant’s own request).  This reason equally applies when a party
substantially invokes the arbitral process to the other party’s detriment.  
In determining whether a party
waived its right to arbitrate a dispute, courts have considered, among other
factors: (1) which party moved for arbitration; (2) how long the movant delayed
before seeking arbitration; (3) the amount of pretrial activity related to the
merits rather than arbitrability or jurisdiction; (4) the amount of discovery
conducted; and (5) whether the movant sought judgment on the merits.  See
Perry Homes, 258 S.W.3d at 591–92.  Application
of these factors here shows that Thomas waived any complaint about the
enforcement of the agreement under the FAA as the agreement expressly provides.  Thomas sought to compel arbitration under the
agreement at the same time it filed its original answer and filed a verified
plea in abatement, expressly invoking the FAA. 
Once in arbitration, Thomas also prosecuted a counterclaim against
Morris.  Thomas’s insistence on having
the dispute arbitrated to its conclusion before a three-member panel resulted
in a considerable investment of time, energy, and expense, to Morris’s
detriment.  We therefore conclude that Thomas
waived its objection to the agreement’s application by substantially invoking
the FAA and the arbitral process.
The AAA Rules to which the agreement
undisputedly binds Thomas and Morris also support the determination that Thomas
waived its objection to the agreement’s application to the dispute.  They provide: 
A party must object to the
jurisdiction of the arbitrator or to the arbitrability of a claim or
counterclaim no later than the filing of the answering statement to the claim
or counterclaim that gives rise to the objection. The arbitrator may rule on
such objections as a preliminary matter or as part of the final award.
 
Employment Arbitration
Rules and Mediation Procedures, Rule 6(c) (formerly known as National Rules for Resolution of Employment
Disputes).  The same result
obtains under Texas common law.  L.H. Lacy Co. v. City of Lubbock, 559
S.W.2d 348, 352–53 (Tex. 1977) (holding that, when both parties participate in
arbitration proceedings, neither unequivocally withdraws its consent to
arbitrate, and arbitration proceedings result in award, award is valid and
enforceable).  Accordingly, we hold that
Thomas has waived any complaint that the FAA does not apply to review of this arbitration
award.  Thomas’s real quarrel is not with
the arbitrability of these claims, but instead it is with the deference
accorded the arbitrator’s decision under the FAA.  The United States Supreme Court has expressly
rejected, however, the contractual efforts to expand or define the powers of
courts presented with agreements the FAA governs.  See
Hall Street, 552 U.S. 576, 128 S. Ct. at 1404–05.  
Thomas’s remaining contentions on appeal rely
either on application of a contractual standard of review, which we have
rejected, or the position that the arbitration award violates public policy,
which is not a valid ground for vacatur.  See Petroleum
Analyzer Co., 2010 WL 2789016 at *12. 
“In the absence of a statutory or common law ground to vacate or modify
an arbitration award, a reviewing court lacks jurisdiction to review other
complaints, including the sufficiency of the evidence to support the award.”  IPCO-G.
& C. Joint Venture v. A.B. Chance Co., 65 S.W.3d 252, 256 (Tex. App.—Houston
[1st Dist.] 2001, pet. denied).  We
further observe that the lack of a record cripples the review of the
arbitration panel’s order on Thomas’s complaints.  We therefore hold that the trial court did
not err in confirming the arbitration award.  
II.      Morris’s
cross-appeal
In his cross-appeal, Morris
contends that the trial court erred in refusing to award pre- and post-judgment
interest in its judgment confirming the arbitration award.  We reject this contention.  The agreement is silent on the issue of
interest on an award, and the arbitration panel did not include any
interest.  The trial court lacked the
authority to modify the award by adding pre- or post-judgment interest.  See
Fogal v. Stature Constr., Inc., 294
S.W.3d 708, 722 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).
The FAA does not address pre- and
post-judgment interest on an arbitrator’s award, so Morris is not automatically
entitled to pre-judgment interest under the FAA. See id. (citing 9 U.S.C.
§§ 1–307).  Nor is Morris entitled to
pre- or post-judgment interest under the Texas Finance Code absent an award
from the panel.  The Texas Finance Code
provides that monetary judgments for personal injury earn pre-judgment
interest, but that provision applies to judgments rendered by courts, not to
awards rendered by arbitrators.  See Tex.
Fin. Code Ann. § 304.102 (Vernon 2006). 
Post-judgment interest is likewise unavailable.  See Tex. Fin. Code Ann. § 304.001 (Vernon 2006)
(post-judgment interest provision applies to “money judgment of a court in this
state”).  We hold that the trial court
properly refused to award pre- or post-judgment interest in its judgment
confirming the arbitration award.
Conclusion
By expressly invoking the FAA and
the arbitral process, we hold that Thomas waived its objection to the
trial  court’s application of  it  in confirming  the 
 
arbitral award. 
We further hold that the trial court properly rejected Morris’s claim
for pre- and post-judgment interest.  We
therefore affirm the order of the trial court. 
All pending motions are dismissed as moot.
 
 
                                                                   Jane
Bland
                                                                   Justice

 
Panel
consists of Chief Justice Radack and Justices Alcala and Bland.
 

[1]
          Thomas did not introduce the
record from the arbitration proceeding. 
Our recitation of the facts comes from the arbitration panel’s
orders.  

[2]
          The FAA provides four grounds
for vacating an arbitration award:
(1)       Where the award was procured by corruption, fraud, or undue
means.
(2)       Where there was evident partiality or corruption in the
arbitrators, or either of them.
(3)       Where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing to hear
evidence pertinent and material to the controversy; or any other misbehavior by
which the rights of any party have been prejudiced.
(4)       Where the arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award upon the subject matter
submitted was not made.
9 U.S.C. § 10
(1999).