Court Opinion

ID: 9412752
Source: CourtListenerOpinion
Date Created: 2023-08-01 15:09:56.106549+00
Date Added: 2024-06-11T16:41:13.481784
License: Public Domain

Fourth Court of Appeals
                                      San Antonio, Texas
                                 MEMORANDUM OPINION

                                          No. 04-22-00460-CV

                              MILLSWORTH ENTERPRISES, LLC,
                                       Appellant

                                                   v.

                                  TEXAS FIRST RENTALS, LLC,
                                           Appellee

                      From the 73rd Judicial District Court, Bexar County, Texas
                                    Trial Court No. 2021CI04865
                               Honorable Tina Torres, Judge Presiding

Opinion by:       Beth Watkins, Justice

Sitting:          Rebeca C. Martinez, Chief Justice
                  Luz Elena D. Chapa, Justice
                  Beth Watkins, Justice

Delivered and Filed: July 26, 2023

AFFIRMED

           Appellant Millsworth Enterprises, LLC challenges the trial court’s order confirming an

arbitration award in favor of appellee Texas First Rentals, LLC. We affirm the trial court’s order.

                                            BACKGROUND

           In 2019, Millsworth rented several pieces of equipment from Texas First on credit. Each

of the rental invoices included an arbitration clause:

           Parties agree to submit to binding arbitration for any dispute arising out of or
           relating to this transaction. Either party may initiate arbitration which shall be
           conducted in accordance with commercial arbitration rules of the American
           Arbitration Association, in San Antonio, Bexar County, Texas. Each party shall
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        bear its own costs and attorney’s fees unless the arbitrators award such fees to a
        party, each party shall share equally the cost of the arbitration.

On March 16, 2021, Texas First sued Millsworth in Bexar County District Court on claims of

sworn account and breach of contract, alleging that Millsworth had failed to pay $68,670.37.

Millsworth moved to compel arbitration, and the trial court granted Millsworth’s motion.

        During the arbitration, Millsworth did not dispute that it had failed to pay the amount Texas

First claimed. However, it filed a counterclaim alleging that Texas First breached the parties’

contract by initiating litigation. As relief for this counterclaim, Millsworth sought the attorney’s

fees it incurred in moving to compel arbitration. The arbitrator found in favor of Texas First, denied

Millsworth’s counterclaim, and ordered Millsworth to pay damages, pre- and post-judgment

interest, and attorney’s fees.

        Texas First filed a motion in the trial court to confirm the arbitration award under the Texas

Arbitration Act. Millsworth filed a response asking the trial court to vacate or modify the award

because the arbitrator “committed gross error or a manifest disregard of the law.” On June 24,

2022, the trial court signed an order confirming the award. Millsworth then filed this appeal.

                                             ANALYSIS

        In a single issue, Millsworth argues the trial court erred by confirming the arbitration award

because the arbitrator committed gross error or a manifest disregard for the law by failing to award

Millsworth the attorney’s fees it incurred to compel arbitration.

                                        Standard of Review

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

Holdings, L.P. v. Jack Raus, Ltd., 126 S.W.3d 257, 262 (Tex. App.—San Antonio 2003, pet.

denied). Our “review of arbitration awards is extraordinarily narrow,” and “we must indulge every

reasonable presumption in favor of upholding the arbitration award.” Id. “An arbitration award has

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the same effect as a judgment of a court of last resort, and it is presumed valid and entitled to great

deference.” Acra v. Bonaudo, No. 05-17-00451-CV, 2018 WL 3238133, at *2 (Tex. App.—Dallas

July 3, 2018, no pet.) (mem. op.).

                                            Applicable Law

         The arbitration agreement in this case did not specify whether the Federal Arbitration Act

or the Texas Arbitration Act applied to the parties’ agreement. See Black v. Shor, 443 S.W.3d 154,

162 (Tex. App.—Corpus Christi–Edinburg 2013, pet. denied). “The FAA applies to maritime

transactions and transactions involving [interstate] commerce[.]” Nafta Traders, Inc. v. Quinn, 339

S.W.3d 84, 97 n.64 (Tex. 2011) (citing 9 U.S.C. § 2). With exceptions that do not apply here,

“[t]he TAA applies to written arbitration agreements[.]” Id. (citing TEX. CIV. PRAC. & REM. CODE

ANN. §§ 171.001, 171.002). “The TAA and the FAA may both be applicable to an agreement,

absent the parties’ choice of one or the other.” Id.

         Under the FAA, a trial court may vacate an arbitration award if the challenging party

establishes:

         (1) the award resulted from “corruption, fraud, or undue means”;

         (2) the arbitrators were partial or corrupt;

         (3) the arbitrators committed certain specified types of misconduct; or

         (4) “the arbitrators exceeded their powers[.]”

9 U.S.C. § 10(a). A trial court may modify or correct an arbitrator’s award if the challenging party

shows:

         (1) “there was an evident material miscalculation of figures or an evident material
             mistake in the description of any person, thing, or property referred to in the
             award”;

         (2) the arbitrators based their award on “a matter not submitted to them” that
             affected the merits of the decision; or

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       (3) “the award is imperfect in matter of form not affecting the merits of the
           controversy.”

9 U.S.C. § 11. The United States Supreme Court has held that these statutory grounds are the

exclusive means for challenging an award under the FAA. Hall St. Assocs., L.L.C. v. Mattel, Inc.,

552 U.S. 576, 578, 586–90 (2008). “Hall Street forecloses any common-law grounds for vacatur

of an arbitration award such as manifest disregard of the law and gross mistake.” Royce Homes,

L.P. v. Bates, 315 S.W.3d 77, 90 (Tex. App.—Houston [1st Dist.] 2010, no pet.).

       Like the FAA, the TAA “provides the exclusive grounds for vacatur of an arbitration

award.” Hoskins v. Hoskins, 497 S.W.3d 490, 497 (Tex. 2016). Under the TAA, a trial court must

confirm an arbitration award unless the challenging party establishes statutory grounds for

vacating, modifying, or correcting the award. TEX. CIV. PRAC. & REM. CODE ANN. § 171.087. The

TAA permits vacatur of an arbitration award if:

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

       (2) a party’s rights were prejudiced by the arbitrator’s evident partiality, corruption,
           misconduct, or willful misbehavior;

       (3) the arbitrator exceeded her powers, refused to postpone the hearing after a
           showing of sufficient cause, refused to hear material evidence, or conducted the
           hearing “in a manner that substantially prejudiced the rights of a party”; or

       (4) the parties did not agree to arbitrate and the complaining party did not
           participate in the arbitration without objection.

TEX. CIV. PRAC. & REM. CODE ANN. § 171.088(a). A trial court may modify or correct an award

if:

       (1) the award contains an evident numerical miscalculation or “an evident mistake
           in the description of a person, thing, or property referred to in the award”;

       (2) the arbitrator made an award on an issue not submitted to her and the error can
           be corrected without affecting the merits of the submitted issues; or

       (3) there is an error in the form of the award that can be corrected without affecting
           the merits of the decision.

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                                                                                     04-22-00460-CV

TEX. CIV. PRAC. & REM. CODE ANN. § 171.091(a). “The statutory text [of the TAA] could not be

plainer” that confirmation of the award is required unless the challenging party establishes

statutory grounds to the contrary. Hoskins, 497 S.W.3d at 494.

                                           Application

       Millsworth has not disputed that either the FAA or the TAA governs this dispute, and it

cited both in the trial court. Additionally, Texas First sought to confirm the award under the TAA,

and Millsworth did not challenge its reliance on that statutory scheme. Finally, “this case does not

fall within any of the statutory exceptions to the TAA’s applicability[.]” Lorant v. 2016 Parkview

Condos. Dev. LLC, No. 02-22-00032-CV, 2022 WL 16845110, at *4 n.10 (Tex. App.—Fort Worth

Nov. 10, 2022, no pet.) (mem. op). Under these circumstances, we will apply both the FAA and

the TAA here. See Nafta Traders, 339 S.W.3d at 97 n.64.

       Millsworth does not challenge the arbitrator’s award under any statutory grounds listed in

the FAA or the TAA. Instead, it challenges the award under common-law grounds of gross error

and manifest disregard for the law. See Royce Homes, 315 S.W.3d at 90. However, it is well-

established that neither the FAA nor the TAA permits vacatur or modification of an arbitration

award on common-law grounds. See, e.g., Hoskins, 497 S.W.3d at 495; Lorant, 2022 WL

16845110, at *2; Saiz v. Susser Holdings Corp., No. 04-14-00487-CV, 2015 WL 1089605, at *3

(Tex. App.—San Antonio Mar. 11, 2015, no pet.) (mem. op.); Casa Del Mar Ass’n, Inc. v.

Williams & Thomas, L.P., 476 S.W.3d 96, 99–100 (Tex. App.—Houston [14th Dist.] 2015, no

pet.); Royce Homes, 315 S.W.3d at 90. The trial court did not err by concluding that the plain

language of the FAA and the TAA required it to confirm the arbitrator’s award. 9 U.S.C. §§ 10,

11; TEX. CIV. PRAC. & REM. CODE §§ 171.088(a), 171.091(a); Hall St., 552 U.S. at 578; Hoskins,

497 S.W.3d at 497.

       For this reason, we overrule Millsworth’s sole issue on appeal.

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                                                                  04-22-00460-CV

                                     CONCLUSION

We affirm the trial court’s order.

                                          Beth Watkins, Justice

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