Court Opinion

ID: 3124071
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:47:20.707041+00
Date Added: 2024-06-11T12:47:06.909867
License: Public Domain

COURT OF APPEALS

             THIRTEENTH DISTRICT OF TEXAS

               CORPUS CHRISTI - EDINBURG

                       No. 13-10-00115-CV

                IN RE RIO GRANDE XARIN II, LTD.

                On Petition for Writ of Mandamus.

                       No. 13-10-00116-CV

RIO GRANDE XARIN, II, LTD.,                            Appellant,

                               v.

WOLVERINE ROBSTOWN, L.P.,                              Appellee.

              On Appeal from the 94th District Court
                   of Nueces County, Texas

                  MEMORANDUM OPINION
     Before Chief Justice Valdez and Justices Benavides and Vela
                Memorandum Opinion by Justice Vela

      Through a consolidated appeal in cause number 13-10-00116-CV and original

proceeding in cause number 13-10-00115-CV, Rio Grande Xarin II, Ltd. (“Rio Grande”),

seeks to set aside an order vacating an arbitration award. We reverse and remand.

                                       I. BACKGROUND

      Rio Grande owned Robstown Shopping Center, located in Robstown, Texas, and

leased parts of the premises to commercial tenants, including CVS Corporation. Rio

Grande and Wolverine Robstown, L.P. (“Wolverine”) entered into a “Commercial Earnest

Money Contract” under which Wolverine agreed to purchase Robstown Shopping Center

from Rio Grande. Paragraph 23 of the earnest money contract included an arbitration

agreement, stating in relevant part:

      ARBITRATION OF DISPUTES: If a controversy arises out of this Agreement
      (including but not limited to the parties’ rights to any Deposit or the payment
      of any Commission(s) as provided herein) or the transaction contemplated
      herein, Buyer, Seller[,] and Agent agree that such controversy shall be
      settled by final, binding arbitration in accordance with the Commercial
      Arbitration Rules of the American Arbitration Association, and judgment upon
      the award rendered by the arbitrator(s) may be entered in any Court having
      jurisdiction thereof. In determining any question, matter or dispute, the
      arbitrator(s) shall apply the provisions of this Agreement without varying
      therefrom, and shall not have the power to add to, modify, or change any of
      the provisions hereof. Notwithstanding anything to the contrary herein, Agent
      may initiate a judicial action to the extent necessary to perfect its lien rights.

Subsequently, Wolverine purchased the shopping center from Rio Grande and assumed

Rio Grande’s role as landlord to the commercial tenants. After consummation of the sale,

Wolverine and Rio Grande disputed ownership of a portion of the monthly rentals due to

the owner of the shopping center from CVS under its commercial lease.

                                              2
       On February 27, 2009, Rio Grande notified Wolverine that there was a dispute as

to accrued rent and stated that, under the contract, “disputes relating to the sale and

purchase shall be resolved by Arbitration in accordance with the Commercial Arbitration

Rules of the American Arbitration Association.” Rio Grande requested arbitration of this

issue and any others related thereto, and by copy of the letter, notified the “AAA office for

Case Management in Dallas, Texas,” who “will initiate the [a]rbitrator selection process, the

exchange of information, and time[-]table[-]related issues.” On March 9, 2009, Rio Grande

sent a letter to the American Arbitration Association (“AAA”) requesting arbitration and

enclosing the arbitration fee. Rio Grande sent a copy of this correspondence to Wolverine.

       On March 10, 2009, Wolverine responded to Rio Grande, stating that it was “not

convinced” that the matter should be subject to arbitration and it “may be more appropriate

that we resolve our dispute in District Court,” although Wolverine would “prefer we discuss

this issue further.” By letter dated March 18, 2009 and copied to Wolverine, Rio Grande

again requested that the AAA arbitrate the dispute. On March 23, 2009, the AAA notified

the parties that:

       The Association has carefully reviewed the positions and contentions of the
       parties as set forth in their correspondence. The claimant has met the filing
       requirements of the rules by filing a demand for arbitration providing for
       administration by the American Arbitration Association under its rules.

       Accordingly, in the absence of an agreement by the parties or a court order
       staying this matter, the Association will proceed with administration pursuant
       to the Rules. The parties may wish to raise the issue of the scope of the
       arbitration clause, upon appointment of the arbitrator.

By return correspondence dated April 1, 2009, Wolverine notified the AAA that it “remains

our position that arbitration is no longer a remedy,” and that if the AAA “persist[s] in

scheduling arbitration in this matter, we will file a lawsuit in the courthouse prior to the

                                             3
arbitration.”

       On April 3, 2009, the AAA acknowledged receipt of Wolverine’s position as stated

in its April 1 correspondence and provided the parties with a list of arbitrators from which

to choose. On April 7, 2009, Wolverine responded to the AAA that it still believed

arbitration was not appropriate, but it nevertheless deemed two of the arbitrators “remotely

acceptable.” According to Wolverine’s letter, “[w]e still believe that arbitration is not proper

in this matter and we intend to challenge it in the proper court.” That same day, Wolverine

notified Rio Grande that it “intend[s] to go to the courthouse prior to arbitration,” but stated

that, “if your client will agree that either party can appeal ‘trial de novo’ to the District Court,

[Wolverine] will agree to arbitration.”

       The AAA thereafter appointed John K. Boyce, III, as arbitrator in this matter. Boyce

was one of the two arbitrators on AAA’s list that Wolverine deemed “remotely acceptable.”

On June 8, Rio Grande submitted to Boyce “factual information and authorities” regarding

its position regarding the arbitrability of the dispute. On June 12, Wolverine submitted a

response to Boyce, continuing to object to the arbitrability of the dispute, specifically

discussing the “non-applicability of the arbitration provision to post-closing disputes,” and

further stating that the filing of the response “should not be construed in any way to

indicate our acceptance of arbitration in this matter.” On June 15 and June 16, the parties

provided additional information to Boyce regarding their positions as to the arbitrability of

the dispute.

       On June 16, Boyce entered an order denying Wolverine’s motion to dismiss the

arbitration proceeding. According to Boyce’s order, the “referenced dispute is arbitrable,

and the case should proceed to hearing.” On June 17, Wolverine requested that Boyce

                                                 4
provide his reasoning for denying its motion to dismiss. Counsel for Wolverine stated that,

“[i]f I can be shown how I am wrong and that we did agree to mediation post-closing, I will,

of course, participate and not seek relief in the courthouse.” On June 23, the AAA notified

the parties that Boyce declined Wolverine’s request for a “reasoned” opinion regarding the

decision on arbitrability.

       On July 1, the AAA “reminded” the parties that arbitration was scheduled to

commence on July 8. On July 7, Wolverine notified Boyce that it had filed suit against Rio

Grande in the 94th District Court of Nueces County and was continuing to withhold its

“consent” to arbitration, but that corporate counsel would nevertheless be available to

“pursue informal mediation” on July 8. Wolverine did not file a motion to stay the arbitration

in the lawsuit filed in district court or otherwise seek relief from the scheduled arbitration.

       Arbitration commenced on July 8. Wolverine’s counsel and witness, “though initially

appearing, refused to participate and walked out.” On July 21, Boyce entered an award

in favor of Rio Grande of $46,587.93 for breach of the earnest money contract. The award

further included attorney’s fees, post-award interest, and costs.

       After arbitration, Rio Grande filed an answer to Wolverine’s petition and a motion

to confirm the arbitration award in the lawsuit pending in the 94th District Court. Wolverine,

in contrast, filed a motion to vacate the arbitration award. On February 10, 2010, the trial

court denied Rio Grande’s motion and granted Wolverine’s, vacating the arbitration award

in favor of Rio Grande. This appeal and original proceeding ensued. This Court previously

granted Rio Grande’s motion to consolidate the matters for the purposes of judicial

economy. We grant Rio Grande’s motion to file its reply brief.

                                              5
                              II. FEDERAL ARBITRATION ACT

       Rio Grande asserts that this matter involves a transaction in interstate commerce

and Wolverine does not dispute this. Accordingly, we apply the provisions of the Federal

Arbitration Act to the instant case. See generally 9 U.S.C. §§ 1-16 (2009) (“FAA”).

Nevertheless, “federal procedure does not apply in Texas courts, even when Texas courts

apply the [FAA].” Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992); see also

Chestnut Energy Partners v. Tapia (In re Chestnut Energy Partners, Inc.), 300 S.W.3d 386,

394-95 (Tex. App.–Dallas 2009, no pet.) (combined appeal and original proceeding);

Roehrs v. FSI Holdings, Inc., 246 S.W.3d 796, 804 (Tex. App.–Dallas 2008, pet. denied)

(“Procedural matters relating to the confirmation of arbitration awards in Texas courts are

governed by Texas law even if the FAA supplies the substantive rules of decision.”); Holcim

(Tex.) Ltd. P’ship v. Humboldt Wedag, Inc., 211 S.W.3d 796, 800-01 (Tex. App.–Waco

2006, no pet.) (“When Texas courts confront procedural issues involving a case subject

to the FAA, however, Texas procedural rules apply instead of federal rules.”); J.D. Edwards

World Solutions Co. v. Estes, Inc., 91 S.W.3d 836, 839 (Tex. App.–Fort Worth 2002, pet.

denied) (same).

                                III. MANDAMUS OR APPEAL

       Until recently, mandamus was the appropriate method to enforce arbitration

provisions governed by the FAA. See Jack B. Anglin Co., 842 S.W.2d at 272. Texas Civil

Practice & Remedies Code section 51.016, enacted in 2009, provides for an interlocutory

appeal in a matter subject to the FAA “under the same circumstances that an appeal from

a federal district court’s order or decision would be permitted by” the FAA. See TEX . CIV.

                                            6
PRAC . & REM . CODE ANN . § 51.016 (Vernon Supp. 2009). Section 51.016 applies to this

case. See Act of May 27, 2009, 81st Leg., R.S., ch. 820, § 1, 2009 Tex. Gen. Laws 2061,

2061 (codified at TEX . CIV. PRAC . & REM . CODE ANN . § 51.016).

         Section 16 of the FAA sets out when an interlocutory appeal of an arbitration order

is permitted:

         (a)      An appeal may be taken from—

                  (1) an order—

                           (A)      refusing a stay of any action under section 3 of this title,

                           (B)      denying a petition under section 4 of this title to order
                                    arbitration to proceed,

                           (C)      denying an application under section 206 of this title to
                                    compel arbitration,

                           (D)      confirming or denying confirmation of an award or
                                    partial award, or

                           (E)      modifying, correcting, or vacating an award.

9 U.S.C. § 16(a)(1). This is an appeal from an order vacating an arbitration award and

denying a motion to compel arbitration. Thus, the appeal is properly before us, and we

have jurisdiction over the matters at issue.1 Accordingly, we deny the petition for writ of

mandamus and address the substance of the appeal. In re Prudential Ins. Co. of Am., 148

         1
            Rio Grande filed a “conditional” m otion for extension of tim e to file its notice of appeal. In the instant
case, the order vacating the arbitration award was entered February 10, 2010. As an accelerated appeal of
an interlocutory order, the notice of appeal was due within twenty days. See T EX . R. A PP . P. 26.1(b). Thus,
the notice of appeal was due on March 2, 2010, but was not filed until March 11, 2010. Rio Grande filed a
m otion for extension of tim e to file the notice of appeal on March 17, 2010, within the tim e allowed by Texas
Rule of Appellate Procedure 26.3. See id. at R. 26.3. The m otion for extension of tim e provides a “plausible”
statem ent of circum stances indicating that failure to file within the specified period of was not deliberate or
intentional, but was the result of inadvertence, m istake, or m ischance. See Houser v. McElveen, 243 S.W .3d
646, 647 (Tex. 2008); Hone v. Hanafin, 104 S.W .3d 884, 886 (Tex. 2003) (per curiam ); Meshwert v.
Meshwert, 549 S.W .2d 383, 384 (Tex. 1977). Accordingly, we grant the conditional m otion for extension of
tim e to file the notice of appeal.

                                                           7
S.W.3d 124, 135-36 (Tex. 2004)         (orig. proceeding) (stating that in order to obtain

mandamus relief, the relator must show a clear abuse of discretion and that the relator has

no adequate remedy by appeal). Rio Grande raises three issues on appeal, through which

it contends that: (1) it was entitled to enforce the arbitration agreement; (2) the arbitrator

had the authority to decide the arbitrability of the dispute; and (3) the trial court erred in

vacating the arbitration award.

                                  IV. VALIDITY AND SCOPE

       By its first issue, Rio Grande asserts that it was entitled to enforce the arbitration

agreement. A party seeking to compel arbitration under the FAA must: (1) establish the

existence of a valid agreement to arbitrate under the FAA; and (2) show that the claims in

dispute are within the scope of the agreement. In re Kellogg Brown & Root, Inc., 166
S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). “Whether a valid arbitration agreement

exists is a legal question subject to de novo review.” In re D. Wilson Constr. Co., 196
S.W.3d 774, 781 (Tex. 2006) (orig. proceeding). In determining the validity of agreements

to arbitrate which are subject to the FAA, we generally apply state-law principles governing

the formation of contracts. In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 676 (Tex.

2006) (orig. proceeding) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944

(1995)). If the trial court finds there is a valid agreement to arbitrate, the burden shifts to

the party opposing arbitration to prove his defenses. J.M. Davidson, Inc. v. Webster, 128
S.W.3d 223, 227 (Tex. 2003).

       Once a valid agreement to arbitrate has been established, the court must then

determine whether the arbitration agreement covers the nonmovants’ claims. In re

                                              8
FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001) (orig. proceeding). To determine

whether an existing arbitration agreement covers a party’s claims, a court must “focus on

the complaint’s factual allegations rather than the legal causes of action asserted.” Id. at

754. Federal policy embodied in the FAA favors agreements to arbitrate, and courts must

resolve any doubts about an arbitration agreement’s scope in favor of arbitration. Id. at

753. If the arbitration agreement encompasses the claims and the party opposing

arbitration has failed to prove its defenses, the trial court has no discretion but to compel

arbitration and stay its own proceedings. Id. at 753-54; D.R. Horton, Inc. v. Brooks, 207
S.W.3d 862, 866-67 (Tex. App.–Houston [14th Dist.] 2006, no pet.); Feldman/Matz

Interests, L.L.P. v. Settlement Capital Corp., 140 S.W.3d 879, 883 (Tex. App.–Houston

[14th Dist.] 2004, no pet.).

       In the instant case, the earnest money contract includes an arbitration agreement

that requires the arbitration of controversies “arising out of this Agreement” or “the

transaction contemplated herein.”      The contract further provides for “final, binding

arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration

Association.”

       We conclude that Rio Grande has established the existence of an arbitration

agreement, and, given the breadth of the arbitration agreement, that the claims in this

lawsuit fall within the scope of this agreement. See, e.g., In re FirstMerit Bank, N.A., 52
S.W.3d at 754. The contract requires arbitration of controversies arising out of the

agreement and the transaction contemplated therein, and this broad arbitration provision

includes within its scope the dispute between Rio Grande and Wolverine as to ownership

                                             9
of the lease payments. See, e.g., In re Swift Transp. Co., 279 S.W.3d 403, 408 (Tex.

App.–Dallas 2009, orig. proceeding).

        Wolverine contends that this arbitration provision did not survive the closing of the

real estate transaction.          Specifically, Wolverine contends that the dispute at issue

regarding the ownership of post-closing rental payments is not subject to the arbitration

provision in the pre-closing earnest money contract. In making this argument, Wolverine

points out that three other paragraphs in the earnest money contract expressly provide that

they survive closing or termination of the contract:                    paragraph 8.2 (the paragraph

concerning “inspections, studies, or assessments” states that it “survives termination of this

contract”); paragraph 12 (the paragraph concerning the “‘as is’ condition of property” states

that it “will survive the closing”); and paragraph 17 (the paragraph concerning “rollback

taxes” states that it “survives the [c]losing”). Wolverine thus contends that the omission of

similar language in the arbitration paragraph compels the conclusion that the arbitration

provision in the earnest money contract expired upon closing.2

        Wolverine’s argument is premised on the general rules applicable to the

construction of contracts. General principles of contract interpretation apply to arbitration

contracts. J.M. Davidson, Inc., 128 S.W.3d at 227 (“Arbitration agreements are interpreted

under traditional contract principles.”). Accordingly, when construing a contract containing

an arbitration provision, the court should “consider the entire writing, giving effect to all its

provisions so that none are rendered meaningless.” See Chrysler Ins. Co. v. Greenspoint

        2
         The earnest m oney contract includes a paragraph entitled “integration and survival,” which, ironically,
does not expressly address the survival of any contractual provisions in the contract, except that, in the case
that a portion of the agreem ent is rendered invalid or otherwise unenforceable, “the rem ainder of the
Agreem ent shall rem ain valid and binding as between the parties.”

                                                      10
Dodge of Houston, Inc., 297 S.W.3d 248, 253 (Tex. 2009). Wolverine further premises its

argument on the doctrine of “merger.” Under the merger doctrine, it is a general rule that

a deed made in full execution of a contract of sale of land merges the provisions of the

contract. Harris v. Rowe, 593 S.W.2d 303, 306-07 (Tex. 1979); Munawar v. Cadle Co., 2
S.W.3d 12, 16-17 (Tex. App.–Corpus Christi 1999, pet. denied). However, there are

exceptions to this rule. For instance, a deed which constitutes only partial performance of

the preceding contract does not merge other distinct and unperformed provisions of the

contract. Harris, 593 S.W.2d at 307.

       Based on the express language of the arbitration provision, we disagree with

Wolverine’s contention. The commercial earnest money contract explicitly provides for

arbitration of controversies arising “out of this Agreement . . . or the transaction

contemplated herein.” Thus, the earnest money contract requires arbitration not only of

controversies arising from the earnest money contract, but also those disputes arising from

the ultimate “transaction” contemplated by the parties.

       Further, we conclude that the doctrine of merger is not applicable in this case

because the earnest money contract in this case contained agreements that created rights

collateral to and independent of the conveyance. See Stanford Dev. Corp. v. Stanford

Condo. Owners Ass’n, 285 S.W.3d 45, 52 (Tex. App.–Houston [1st Dist.] 2009, no pet.)

(holding that an arbitration agreement contained in an earnest money contract did not

merge into the deed). In this regard, the earnest money contract expressly includes and

addresses ownership of “[a]ny and all leases . . . occupancy agreements . . . [and] rents.”

The contract addresses the duty of the seller to convey at closing “an assignment of all

leases to or on the Property” and a “rent roll.” The agreement further allocates “[c]ollected

                                             11
rents” and “advance rentals” between the buyer and the seller of the shopping center.

Accordingly, we conclude that the arbitration provision was not extinguished by the closing

of the sale.

       Wolverine further argues that Rio Grande had no right to enforce the arbitration

agreement and the arbitrator lacked authority to conduct arbitration because Rio Grande

did not first file a lawsuit in state court and obtain an order from the trial court to proceed

with arbitration. Wolverine argues that the trial court properly vacated the arbitration award

because “private arbitration must be preceded by a judicial order compelling the arbitration

if arbitrability is disputed in advance.”

       We disagree with Wolverine’s proposition. The purpose of an arbitration provision

or agreement is to prevent subjecting the parties to litigation in the event of a dispute.

Murray v. Epic Energy Res., Inc. (In re Murray), 300 S.W.3d 461, 473 (Tex.

App.–Beaumont 2009, no pet.) (combined appeal and original proceeding); Cayan v.

Cayan, 38 S.W.3d 161, 166 (Tex. App.–Houston [14th Dist.] 2000, pet. denied). Requiring

a party who is initiating arbitration pursuant to contract to institute litigation prior to

arbitration is nonsensical. Such a procedure deprives the parties of the benefits of the

contracted-for arbitration clause and defeats “the purpose of providing a rapid, inexpensive

alternative to traditional litigation.” See Jack B. Anglin. Co., Inc., 842 S.W.2d at 272-73

(“Absent mandamus relief, Anglin would be deprived of the benefits of the arbitration

clause it contracted for, and the purpose of providing a rapid, inexpensive alternative to

traditional litigation would be defeated.”).

       Wolverine bases its contention that Rio Grande had the burden to institute litigation

to compel arbitration on section 4 of the FAA and section 171.021(a) of the Texas

                                               12
Arbitration Act. See 9 U.S.C. § 4 (2009) (“A party aggrieved by the alleged failure, neglect,

or refusal of another to arbitrate under a written agreement for arbitration may petition any

United States district court which, save for such agreement, would have jurisdiction . . . for

an order directing that such arbitration proceed in a manner provided for in such

agreement.”); TEX . CIV. PRAC . & REM . CODE ANN . § 171.021(a) (Vernon 2005) (“A court

shall order the parties to arbitrate on application of a party showing: (1) an agreement to

arbitrate; and (2) the opposing party’s refusal to arbitrate.”).

       While both the Texas and federal arbitration statutes allow a party seeking to

compel arbitration to institute court proceedings in order to do so, they do not require it.

In this regard, we consider it salient that both statutes contemplate that parties seeking to

avoid arbitration may also seek a remedy in court. See 9 U.S.C. § 16(a)(1)(A) (allowing

review of an order refusing a stay of any action); TEX . CIV. PRAC . & REM . CODE ANN . §

171.098(a)(2) (allowing “a party” to appeal an order granting an application to stay

arbitration); see also Perry Homes v. Cull, 258 S.W.3d 580, 592 (Tex. 2008)

(acknowledging that parties may begin arbitration without a court order).

       Our decision on this issue is further compelled by the factual circumstances

underlying this matter. Rio Grande first indicated its intention to institute arbitration

proceedings on February 27, 2009. On March 23, the AAA notified the parties that it would

proceed with administration of arbitration “in the absence of an agreement by the parties

or a court order staying this matter.” On April 1, Wolverine acknowledged its ability to file

suit to avoid arbitration, yet failed to file suit until July 7, the eve of arbitration and more

than three months after the AAA instituted proceedings, and, in fact, never sought to stay

the arbitration. Although Wolverine consistently denied the applicability of arbitration, it

                                              13
participated in those matters leading up to the arbitration itself, including selecting an

arbitrator and submitting the issue of arbitrability to the arbitrator. Wolverine’s position

throughout this matter appears to have been premised on the erroneous concepts that

mediation and arbitration are somehow interchangeable, or that arbitration and litigation

are mutually consistent and parallel remedies.

       After considering the foregoing, we conclude that Rio Grande met its burden to

establish a valid arbitration agreement and that the claims at issue herein fell within the

scope of that agreement. We further conclude that Rio Grande was not required to

institute litigation prior to instituting arbitration proceedings. Thus, we sustain Rio Grande’s

first issue regarding whether it was entitled to enforce the arbitration agreement.

                                      V. ARBITRABILITY

       By its second issue, Rio Grande asserts that the arbitrator had the authority to

determine the arbitrability of the dispute. In contrast, Wolverine contends that the arbitrator

exceeded his authority by deciding the arbitrability of the dispute.

       Under the FAA, absent unmistakable evidence that the parties intended the

contrary, it is the court rather than the arbitrator that must decide “gateway matters,” such

as whether a valid arbitration agreement exists. In re Weekley Homes, L.P., 180 S.W.3d
127, 130 (Tex. 2005); see In re Houston Pipe Line Co., No. 08-0800, 2009 Tex. LEXIS

468, at *4, 52 Tex. Sup. J. 1098 (Tex. July 3, 2009) (“When a party disputes the scope of

an arbitration provision or raises a defense to the provision, the trial court, not the

arbitrator, must decide the issues.”); Perry Homes, 258 S.W.3d at 589 (“[A]rbitrators

generally must decide defenses that apply to the whole contract, while courts decide

defenses relating solely to the arbitration clause.”).

                                              14
       The arbitration clause in the earnest money contract stated that arbitration would

be conducted “in accordance with the Commercial Arbitration Rules of the American

Arbitration Association.” Rule 7(a) of the Commercial Arbitration Rules provides that an

arbitrator has the power to rule on his own jurisdiction, “including any objections with

respect to the existence, scope, or validity of the arbitration agreement.” “When . . . the

parties agree to a broad arbitration clause and explicitly incorporate rules that empower an

arbitrator to decide issues of arbitrability, the incorporation serves as clear and

unmistakable evidence of the parties’ intent to delegate such issues to an arbitrator.” Saxa

Inc. v. DFD Architecture Inc., No. 05-09-01245-CV, 2010 Tex. App. LEXIS 3137, at *12-14

(Tex. App.–Dallas Apr. 29, 2010, no pet.) (op.); Haddock v. Quinn, 287 S.W.3d 158, 172

(Tex. App.–Fort Worth 2009, pet. denied) (“The majority of courts have concluded that

express incorporation of rules empowering the arbitrator to decide arbitrability (including

ruling upon his or her own jurisdiction) clearly and unmistakably evidences the parties’

intent to delegate issues of arbitrability to the arbitrator.”); Burlington Res. Oil & Gas Co.

LP v. San Juan Basin Royalty Trust, 249 S.W.3d 34, 41 (Tex. App.–Houston [1st Dist.]

2007, pet. denied) (“We are also mindful that, in certain circumstances, the incorporation

of AAA rules may constitute clear and unmistakable evidence of an intent to allow an

arbitrator to decide issues of arbitrability.”); see also Qualcomm Inc. v. Nokia Corp., 466
F.3d 1366, 1368, 1373 (Fed. Cir. 2006) (concluding that an arbitration agreement

containing a broad arbitration clause and incorporating the American Arbitration Rules,

which allow an arbitrator to rule on his own jurisdiction, “clearly and unmistakably shows

the parties’ intent to delegate the issue of determining arbitrability to an arbitrator”). In this

                                               15
regard, we note that Wolverine itself submitted the issue of arbitrability to the arbitrator in

this dispute.

       Based on the foregoing, we conclude that the arbitrator had the authority to decide

the arbitrability of the dispute. We sustain Rio Grande’s second issue.

                                 VI. VACATING THE AW ARD

       By its third issue, Rio Grande contends that the trial court erred in vacating the

arbitration award. The FAA governs the vacatur and confirmation of the arbitration award

in this case. Chestnut Energy Partners, 300 S.W.3d at 399; Roehrs v. FSI Holdings, Inc.,

246 S.W.3d 796, 805-11 (Tex. App.–Dallas 2008, pet. denied). We review de novo a trial

court’s decision to confirm or vacate an arbitration award under the FAA. Chestnut Energy

Partners, 300 S.W.3d at 397; Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564,

567 (Tex. App.–Dallas 2008, no pet.); Myer v. Americo Life, Inc., 232 S.W.3d 401, 407

(Tex. App.–Dallas 2007, no pet.); see also In re Labatt Food Serv., L.P., 279 S.W.3d 640,

643 (Tex. 2009) (applying de novo standard to review the trial court’s resolution of whether

an arbitration provision under the FAA was enforceable). In applying this standard of

review, we review the entire record. Chestnut Energy Partners, 300 S.W.3d at 397;

Statewide Remodeling, Inc., 244 S.W.3d at 567. In a de novo review, the trial court’s

decision is given absolutely no deference. Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex.

1998). All reasonable presumptions are indulged in favor of the award, and none against

it. Chestnut Energy Partners, 300 S.W.3d at 397; Statewide Remodeling, Inc., 244 S.W.3d

at 568. An arbitration award is presumed valid and entitled to great deference. Myer, 232
S.W.3d at 407-08. Because judicial review of an arbitration award adds expense and

                                              16
delay that diminishes the benefit of arbitration as an efficient, economical system for

resolving disputes, our review of the arbitration award is “extraordinarily narrow.” Id. at

408.

        When a non-prevailing party seeks to vacate an arbitration award, it bears the

burden in the trial court of bringing forth a complete record that establishes its basis for

vacating the award.             Chestnut Energy Partners, 300 S.W.3d at 399; Statewide

Remodeling, Inc., 244 S.W.3d at 568. “When there is no transcript of the arbitration

hearing, the appellate court will presume the evidence was adequate to support the

award.” Chestnut Energy Partners, 300 S.W.3d at 400; Statewide Remodeling, Inc., 244
S.W.3d at 568.

        Under the FAA, the grounds for vacating, modifying, or correcting an arbitration

award are limited to those specified in sections 10 and 11. See 9 U.S.C. §§ 9-11; Hall St.

Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582 (2008); see also Petroleum Analyzer Co.,

LP v. Olstowski, No. 01-09-00076-CV, 2010 Tex. App. LEXIS 1558, at *28 (Tex.

App.–Houston [1st Dist.] Mar. 4, 2010, no pet.) (mem. op.).3 Section 10(a) permits a court

to vacate 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

        3
          Section 11 of the FAA allows an arbitration award to be m odified in the event that: (1) the award has
an evident m aterial m iscalculation or m aterial m istake; or (2) the form of the award is im perfect in a way that
does not affect the m erits. See 9 U.S.C. § 11. These grounds speak to errors that are “clerical in nature rather
than legal.” See Fogal v. Stature Constr., Inc., 294 S.W .3d 708, 721 (Tex. App.–Houston [1st Dist.] 2009, pet.
denied) (quoting Quinn v. NAFTA Traders, Inc., 257 S.W .3d 795, 798 (Tex. App.–Dallas 2008, pet. granted)).

                                                        17
              the hearing, upon sufficient cause shown, or in refusing to hear
              evidence pertinent and material to the controversy; or of any other
              misbehavior by which the rights of any party have been prejudiced; or

       (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.

See 9 U.S.C.A. § 10; see also GE Commer. Distrib. Fin. Corp. v. Momentum Transp.

Servs., L.L.C., No. 09-09-00162-CV, 2010 Tex. App. LEXIS 2486, at **10-11 (Tex.

App.–Beaumont Apr. 8, 2010, no pet.) (mem. op.).

       By its amended motion to vacate, Wolverine argued that the arbitration award

should be vacated, or alternatively, modified, because: (1) the parties did not agree

contractually to arbitrate their differences; and (2) Rio Grande failed to obtain a court order

compelling Wolverine to arbitrate after Wolverine had provided Rio Grande with advance,

written notice of its objection to going forward with the arbitration initiated by Rio Grande.

Wolverine does not expressly advance any of the four statutory grounds listed in section

10 of the FAA as grounds for vacatur of the arbitration award, although Wolverine does

argue that “by ignoring the Plaintiff’s continuing objection to arbitration, the arbitrator

exceeded his powers.” We have already addressed Wolverine’s arguments in other

contexts in this opinion, and need not address them further. See TEX . R. APP. P. 47.1,

47.4. Applying a de novo review, we conclude that the trial court erred in vacating the

arbitration award. Accordingly, we sustain Rio Grande’s final issue.

                                      VII. CONCLUSION

       Because Rio Grande and Wolverine were parties to a valid arbitration agreement

and the claims that were resolved by the arbitrator were within the scope of the parties’

arbitration agreement, the claims were properly arbitrated. We hold that the trial court

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erred in granting Wolverine’s motion to vacate the arbitration award. We reverse the order

vacating the arbitration award, remand the cause to the trial court, and instruct the trial

court to enter judgment confirming the final arbitration award.

                                                   ROSE VELA
                                                   Justice

Delivered and filed the 6th
day of July, 2010.

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