Affirmed and Opinion filed July 10, 2012.
In The
Fourteenth Court of Appeals
NO. 14-10-00939-CV
MARY E. EWING, Appellant
V.
ACT CATASTROPHE-TEXAS L.C., Appellee
On Appeal from the 189th District Court
Harris County, Texas
Trial Court Cause No. 2008-66362
OPINION
This appeal arises from a trial court’s order confirming an arbitration award
against a homeowner following a dispute between the homeowner and a contractor who
performed restoration work on her home. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff/appellee ACT Catastrophe-Texas L.C. filed suit on November 5, 2008,
against defendant/appellant Mary Ewing and defendants Dean Marshall1 and Financial
Casualty & Surety, Inc., seeking recovery of $29,502.58 for the restoration work it
performed on Ewing’s home. According to the live pleadings, after a fire in Ewing’s
home, Ewing filed a claim with her insurer, Financial Casualty & Surety, Inc., and ACT
Catastrophe-Texas conducted emergency restoration work on the home. ACT
Catastrophe-Texas alleged that Ewing refused to endorse checks from Financial Casualty
& Surety, Inc. that were payable to both Ewing and ACT Catastrophe-Texas for the
restoration work.
Ewing answered, asserting various defenses. Ewing also filed a counterclaim,
alleging that the work was not fully performed as promised. The record reflects the
following:
ACT Catastrophe-Texas informed all defendants in July 2009 of its intent
to initiate arbitration pursuant to an arbitration clause in a contract and
work authorization signed by Ewing before commencement of the
restoration work. ACT Catastrophe-Texas initiated an arbitration
proceeding against Ewing in August 2009. Ewing did not raise any
objections.
In September 2009, the American Arbitration Association contacted the
parties via multiple letters, informing the parties of the arbitrator selection
process, confirming the subsequent appointment of an arbitrator, and
setting a date for a preliminary hearing. Ewing was included or copied on
these communications and did not raise any objections.
Ewing did not participate in the preliminary hearing on October 6, 2009.
At one point during the conference call, the American Arbitration
Association called the office of Ewing’s counsel and was told that counsel
was in the office. The American Arbitration Association sent another letter
to the parties requesting them to submit any objections to the arbitrator by a
certain date and instructing the parties to exchange copies of all exhibits by
another date. ACT Catastrophe-Texas hand-delivered exhibits to Ewing’s
1
Apparently, Marshall is Ewing’s son who lived with her. Neither Marshall nor Financial Casualty &
Surety, Inc. are parties on appeal.
2
counsel. Ewing did not assert any objections or tender copies of any
exhibits.
ACT Catastrophe-Texas participated in the arbitration hearing on October
23, 2009, on its claims against Ewing. Neither Ewing nor her counsel
appeared or participated in the arbitration. The arbitrator issued an award
against Ewing and in favor of ACT Catastrophe-Texas.
ACT Catastrophe-Texas moved to confirm the arbitration award. Ewing opposed
this motion. The trial court held a hearing on the motion. At the hearing, Financial
Casualty & Surety, Inc. asserted that it had the funds available to tender to the court
registry but that Ewing would not sign a policy release necessary to release the funds. At
the hearing, Ewing objected to the motion to confirm the arbitration award, claiming that
she did not participate in arbitration because there was no court order compelling her
participation.
The trial court signed an order on January 26, 2010, confirming the arbitration
award and rendering judgment against Ewing based upon the arbitration award.
Although the trial court’s order of January 26, 2010, was entitled “Final Judgment,” the
trial court had not yet disposed of all claims. Following a subsequent bench trial on the
claims of Dean Marshall and Financial Casualty & Surety, Inc., the trial court rendered a
final judgment in which the court rendered judgment against Ewing based upon the
arbitration award. Ewing’s motion for new trial was denied by operation of law. Ewing
now appeals the trial court’s final judgment.
II. ISSUES AND ANALYSIS
A. Did the trial court err by rendering judgment upon the arbitration award
despite the homeowner’s alleged lack of agreement to arbitrate, the absence
of an order compelling arbitration, and the failure of the contractor to
arbitrate its claims against the other two defendants?
In her first issue, Ewing asserts that she is not bound by the arbitration award
because (1) she did not agree to arbitrate; (2) the trial court never ordered the parties to
arbitrate; and (3) ACT Catastrophe-Texas did not arbitrate its claims against the other
3
two defendants in the case. In her second issue, Ewing asserts that the trial court erred in
rendering judgment based upon the arbitration award for the same three reasons.
In the arbitration clause the parties did not specify whether the Federal Arbitration
Act (“Federal Act”) or the Texas Arbitration Act (“Texas Act”) applies, and, on appeal,
the parties have not taken a position on this issue. See 9 U.S.C. §1, et seq.; Tex. Civ.
Prac. & Rem. Code Ann. § 171.001, et seq. In the case under review, there is no order
compelling arbitration or denying a stay of arbitration for this court to review. See Perry
Homes v. Cull, 258 S.W.3d 580, 585–87 (Tex. 2008) (holding that appellate courts may
review trial court orders compelling arbitration on appeal from final judgment rendered
upon confirmation of arbitration award). In this context, to the extent that the Federal
Act applies, the arguments raised by Ewing in her first two issues would not be valid
grounds for reversing the trial court’s judgment because they are not listed in the Federal
Act. See 9 U.S.C. §§ 10, 11; Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U. S. 576,
578, 128 S. Ct. 1396, 1400, 170 L.E.2d 254 (2008) (holding that grounds stated in the
Federal Act for vacating or modifying an arbitration award are exclusive); LeFoumba v.
Legend Classic Homes, Ltd., No. 14-08-00243-CV, 2009 WL 3109875, at *2 (Tex.
App.—Houston [14th Dist.] Sept. 17, 2009, no pet.) (rejecting appellant’s argument for
vacating arbitration award under the Federal Act because the argument was not one of the
grounds listed in the Federal Act) (mem. op.).
In the Texas Act, the Legislature has provided that “[u]nless grounds are offered
for vacating, modifying, or correcting an award under Section 171.088 or 171.091, the
court, on application of a party, shall confirm the award.” Tex. Civ. Prac. & Rem. Code
Ann § 171.087 (West 2012). Under section 171.088(a)(4),2 on application of a party, the
trial court shall vacate an arbitration award if “there was no agreement to arbitrate, the
issue was not adversely determined in a proceeding under Subchapter B [of Chapter 171],
and the party did not participate in the arbitration hearing without raising the objection.”
See id. § 171.088(a)(4) (West 2012). In the case under review, there were no proceedings
2
Unless otherwise specified, all statutory references in this opinion are to the Texas Civil Practice and
Remedies Code.
4
under Subchapter B of Chapter 171, and Ewing did not participate in the arbitration
hearing. Therefore, if the Texas Act applies, the absence of an agreement by Ewing to
arbitrate is a ground for vacating the arbitration award that Ewing properly could raise in
the trial court in response to the motion to confirm. But, Ewing did not present this
complaint to the trial court. Therefore, Ewing failed to preserve error. See Tex. R. App.
P. 33.1; Kline v. O’Quinn, 874 S.W.2d 776, 790–91 (Tex. App.—Houston [14th Dist.]
1994, writ denied) (holding that party seeking to vacate or modify arbitration award in
trial court failed to preserve error regarding grounds for avoiding confirmation of award
that were not asserted in the trial court) (op. on reh’g). In any event, Ewing admits that
she signed a “Work Authorization” agreement with ACT Catastrophe-Texas for the
restoration work on her home. This agreement contains the following arbitration clause:
4. Arbitration. The parties agree that any controversy or claim arising
out of or relating to this Authorization, the services of ACT, or any breach
therof shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment
upon the award rendered may be entered in any court having jurisdiction
over such controversy or claim. Any such claim shall be submitted prior to
two years from completion of the work by ACT or be barred.
Ewing next argues that she is not bound by the arbitration award because (1) the
trial court never ordered the parties to arbitrate and (2) ACT Catastrophe-Texas did not
arbitrate its claims against the other two defendants. Ewing preserved error on these
arguments in the trial court. The record reflects that no party applied for an order
compelling arbitration, nor did any party apply for an order staying arbitration; therefore,
there is no order under Subchapter B of Chapter 171 for this court to review. See Tex.
Civ. Prac. & Rem. Code Ann § 171.021, 171.023 (West 2012); Perry Homes, 258
S.W.3d at 585–87.
These two grounds are not statutory grounds under the Texas Act for vacating,
modifying, or correcting an arbitration award. See Tex. Civ. Prac. & Rem. Code Ann §
171.087. In these grounds, Ewing does not assert constitutional violations, nor does she
claim that the award clearly violates carefully articulated, fundamental public policy.
5
See CVN Group, Inc. v. Delgado, 95 S.W.3d 234, 239 (Tex. 2002) (stating that arbitration
award may be set aside on public policy grounds in the extraordinary situation in which
the award clearly violates carefully articulated, fundamental policy); Action Box Co. v.
Panel Prints, Inc., 130 S.W.3d 249, 252–53 (Tex. App.—Houston [14th Dist.] 2004, no
pet.) (rejecting public policy argument for vacating arbitration award because the
argument did not meet the standard set by the high court in the CVN Group case); Kline,
874 S.W.2d at 783–84, 790–91 (addressing argument that arbitration award violated
United States and Texas constitutions). Presuming, without deciding, that common-law
grounds for vacating an arbitration award still may be used to vacate an award under the
Texas Act, these common-law grounds would be that the award is “tainted with fraud,
misconduct, or gross mistake as would imply bad faith and failure to exercise honest
judgment.” See Callahan & Assocs. v. Orangefield Indep. Sch. Dist., 92 S.W.3d 841, 844
(Tex. 2002) (presuming for sake of argument that common-law grounds could be used to
vacate award under Texas Act but holding that legal standard for common-law ground in
question was not satisfied); Riha v. Smulcer, 843 S.W.2d 289, 292 (Tex. App.—Houston
[14th Dist.] 1992, writ denied) (listing the common-law grounds for vacating an
arbitration award). Ewing’s two arguments are not valid statutory grounds under the
Texas Act for vacating, modifying, or correcting the award, nor are they constitutional,
public policy, or common-law grounds for avoiding confirmation of the award. See Tex.
Civ. Prac. & Rem. Code Ann § 171.087; CVN Group, Inc., 95 S.W.3d at 239; Kline, 874
S.W.2d at 783–84, 790–91; Riha, 843 S.W.2d at 292. Therefore, if the Texas Act
applies, these arguments do not provide a basis for reversing the trial court’s confirmation
of the award or judgment on the award.
Regardless, under the plain meaning of the Texas Act, an arbitration may be
conducted and an arbitration award may be rendered and enforced without any order
under section 171.021 compelling the parties to arbitrate. See Tex. Civ. Prac. & Rem.
Code Ann § 171.001, et seq.; Perry Homes, 258 S.W.3d at 592 (stating “parties may
begin arbitration without a court order . . . [b]ut Texas procedure also contemplates that
6
parties may file suit in order to compel arbitration”). Courts have reached a similar
conclusion under the arbitration statutes of other states. See Tutti Mangia Italian Grill,
Inc. v. American Textile Maintenance Co., 128 Cal. Rptr.3d 551, 555–57 (Cal. Ct. App.
2011) (rejecting argument of party who did not appear at arbitration that order
compelling arbitration was necessary before arbitration award may be confirmed); North
Central Utilities, Inc. v. East Columbia Water Dist., 449 So.2d 1186, 1188 (La. Ct. App.
1984) (same as Tutti Mangia Italian Grill).
Likewise, nothing in the parties’ arbitration agreement requires an order to compel
arbitration before the parties may proceed with the arbitration process. If Ewing thought
that there was no agreement to arbitrate, she could have sought a court order staying the
arbitration. See Tex. Civ. Prac. & Rem. Code Ann § 171.023. Despite receiving notice,
Ewing chose not to appear at the arbitration hearing. Nothing in the Texas Act or the
parties’ agreement required ACT Catastrophe-Texas to obtain an order compelling
arbitration or prevented the arbitrator from proceeding with the arbitration hearing
despite Ewing’s failure to appear. See Perry Homes, 258 S.W.3d at 592.
In addition, nothing in the Texas Act or the parties’ agreement required defendant
Dean Marshall or defendant Financial Casualty & Surety, Inc. to participate in the
arbitration for there to be a valid arbitration award against Ewing.
Accordingly, we overrule Ewing’s first and second issues.
B. Did the trial court violate the homeowner’s constitutional due process rights
by rendering judgment on an arbitration award issued after a hearing at
which the homeowner did not appear?
In her third issue, Ewing asserts that the trial court violated her due process rights
and the open courts provision of the Texas Constitution by rendering judgment on the
arbitration award even though she did not have an opportunity to be heard due to her
absence at the arbitration hearing. See U.S. CONST. amend. XIV, §1; TEX. CONST. art. I,
§§ 13, 19.
7
Ewing waived her argument regarding the open courts provision of the Texas
Constitution by not presenting it in the trial court. See TEX. R. APP. P. 33.1(a); In re
L.M.I., 119 S.W.3d 707, 711 (Tex. 2003) (holding that, to preserve argument for
appellate review, including constitutional arguments, party must present it to trial court
by timely request, motion, or objection, state specific grounds therefore, and obtain
ruling); Langston v. City of Houston, No. 14-08-000063-CV, 2009 WL 3003259, at *3
(Tex. App.—Houston [14th Dist.] Aug. 6, 2009, no pet.) (mem. op.) (same).
We presume that Ewing preserved error regarding her due process complaint by
means of the objections to the entry of judgment that she asserted in the trial court. The
record reflects that Ewing had notice of the arbitration proceeding. Parties in an
arbitration proceeding have due process rights to notice and a meaningful opportunity to
be heard. See Bernstein Seawell & Kove v. Bosarge, 813 F.2d 726, 729 (5th Cir. 1987).
Significantly, Ewing does not claim that she had no notice of the arbitration hearing;
rather, she complains that because the arbitrator conducted the arbitration hearing despite
her absence, she was deprived of her “right to be heard.” The Due Process Clause does
not mandate the parties be heard at the arbitration hearing; rather, the Due Process Clause
requires that the parties be given a meaningful opportunity to be heard at the arbitration
hearing. See id.; Univ. of Tex. Med. School v. Than, 901 S.W.2d 926, 930 (Tex. 1995). If
a party’s absence at the arbitration hearing is the result of her decision not to attend, there
is no due process violation. See Bernstein Seawell & Kove, 813 F.2d at 729. Ewing has
not shown that she was deprived of a meaningful opportunity to be heard in the
arbitration proceeding, and she has not shown any violation of her due process rights.
Accordingly, we overrule Ewing’s third issue.
C. Did the trial court err by impliedly concluding that the contractor did not
waive its rights under the arbitration clause by substantially invoking the
judicial process to the homeowner’s detriment or prejudice?
In her fourth issue, Ewing asserts that ACT Catastrophe-Texas waived its right to
arbitrate by substantially invoking the judicial process to her prejudice. Ewing raised this
issue for the first time in response to ACT Catastrophe-Texas’s motion to confirm the
8
arbitration award in the trial court. No party applied for an order compelling arbitration,
nor did any party apply for an order staying arbitration; therefore, there is no order under
Subchapter B of Chapter 171 for this court to review. See Tex. Civ. Prac. & Rem. Code
Ann § 171.021, 171.023; Perry Homes, 258 S.W.3d at 585–87 (reviewing waiver-of-
arbitration argument preserved by trial court’s order compelling arbitration). In this
context, to the extent that the Federal Act applies, the waiver-of-arbitration argument
raised by Ewing in her fourth issue would not be a valid ground for reversing the trial
court’s judgment because this ground is not listed in the Federal Act. See 9 U.S.C. §§ 10,
11; Hall Street Assocs., 552 U. S. at 578, 128 S. Ct. at 1400 (holding that grounds stated
in the Federal Arbitration Act for vacating or modifying an arbitration award are
exclusive); LeFoumba, 2009 WL 3109875, at *2 (rejecting appellant’s argument for
vacating arbitration award under the Federal Act because the argument was not one of the
grounds listed in the Federal Act).
Under the Texas Act, an alleged waiver of the right to arbitrate is not a statutory
ground for vacating, modifying, or correcting an arbitration award. See Tex. Civ. Prac. &
Rem. Code Ann § 171.087. This alleged waiver does not constitute a constitutional
violation or a clear violation of carefully articulated, fundamental public policy. See
CVN Group, Inc., 95 S.W.3d at 239 (stating that arbitration award may be set aside on
public policy grounds in the extraordinary situation in which the award clearly violates
carefully articulated, fundamental policy); Action Box Co., 130 S.W.3d at 252–53
(rejecting public policy argument for vacating arbitration award because the argument did
not meet the standard set by the high court in the CVN Group case); Kline, 874 S.W.2d at
783–84, 790–91 (addressing argument that arbitration award violated United States and
Texas constitutions). Presuming, without deciding, that common-law grounds for
vacating an arbitration award still may be used to vacate an award under the Texas Act,
these common-law grounds would be that the award is “tainted with fraud, misconduct,
or gross mistake as would imply bad faith and failure to exercise honest judgment.” See
Callahan & Assocs., 92 S.W.3d at 844 (presuming for sake of argument that common-
9
law grounds could be used to vacate award under Texas Act but holding that legal
standard for common-law ground in question was not satisfied); Riha, 843 S.W.2d at 292
(listing the common-law grounds for vacating an arbitration award). Waiver is not a
common-law ground for vacating an arbitration award. See Riha, 843 S.W.2d at 292.
Ewing’s waiver argument is not a valid statutory ground under the Texas Act for
vacating, modifying, or correcting the award, nor is it a constitutional, public policy, or
common-law ground for avoiding confirmation of the award. See Tex. Civ. Prac. &
Rem. Code Ann § 171.087; CVN Group, Inc., 95 S.W.3d at 239; Kline, 874 S.W.2d at
783–84, 790–91; Riha, 843 S.W.2d at 292. For this reason, if the Texas Act applies, this
waiver argument does not provide a basis for reversing the trial court’s confirmation of
the award or judgment on the award.3 Accordingly, we overrule Ewing’s fourth issue.
The trial court’s judgment is affirmed.
/s/ Kem Thompson Frost
Justice
Panel consists of Justices Frost, Brown, and Christopher.
3
Even if waiver were a valid ground, we would conclude that Ewing did not meet her burden of showing
that ACT Catastrophe-Texas waived its rights under the arbitration clause by substantially invoking the
judicial process to her detriment or prejudice.
10