Denver City Energy Associates, L.P. v. Golden Spread Electric Cooperative, Inc. and GS Electric Generating Cooperative, Inc.

NO. 07-09-00195-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL D

APRIL 28, 2011

DENVER CITY ENERGY ASSOCIATES, L.P., APPELLANT

v.

GOLDEN SPREAD ELECTRIC
COOPERATIVE, INC. AND GS ELECTRIC GENERATING
COOPERATIVE, INC., APPELLEES

FROM THE 108TH DISTRICT COURT OF POTTER COUNTY;

NO. 95,028-E; HONORABLE DOUGLAS WOODBURN, JUDGE

Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.

OPINION

Through four issues, appellant Denver City Energy Associates, L.P. (Denver

City) appeals the trial court’s judgment confirming an arbitrator’s award in favor of

appellees Golden Spread Electric Cooperative, Inc., (Golden Spread) and Golden

Spread Electric Generating Cooperative, Inc. (GS Generating) and the trial court’s order

denying Denver City’s motion to vacate. We will affirm.
 Background

Denver City and GS Generating jointly own Mustang Station, an electric

generating facility. Golden Spread purchases all the energy generated by the plant.

Its purchase of electric energy from Denver City is governed by a January 1997 Power

Purchase Agreement (PPA). All three companies are parties to a Joint Operating

Agreement (JOA) which, among other things, prescribes the allocation of fuel costs

between Denver City and GS Generating. From these complex documents,

disagreements arose between Denver City and the other two parties. We previously

addressed some disputed matters between Golden Spread and Denver City.1 Other

issues among the parties emerged concerning Denver City’s allocation of certain fuel

costs to GS Generating under the JOA and Denver City’s billing procedure under the

PPA. Golden Spread and GS Generating added these complaints against Denver City

to then-pending litigation. Relying on terms of the PPA and JOA, Denver City initiated

arbitration of the issues. The trial court recognized their arbitrability by order.

The complaints of Golden Spread and GS Generating against Denver City were

docketed separately for arbitration but consolidated for hearing. The arbitration was

conducted according to the commercial arbitration rules of the American Arbitration

Association (AAA).2 On the alleged liability of Denver City, Golden Spread and GS

1
See Golden Spread Elec. Coop. v. Denver City Energy Assoc., L.P., 269
S.W.3d 183 (Tex.App.--Amarillo 2008, pet. denied).
2
The PPA provides it is governed “where applicable,” by the United States
Arbitration Act, as the Federal Arbitration Act (FAA) previously was known. See Stolt-
Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. __, __, 130 S.Ct. 1758, 1773, 176
2
Generating sought an award of injunctive relief and damages. The JOA and the PPA

provided for hearing the arbitrated issues within thirty days of selection of the arbitrator.

The arbitrator was then required to “notify the Parties in writing of the decision within

sixty (60) days of the conclusion of the hearing.” A single arbitrator heard the issues

during the weeks of May 15 and May 22, 2006. By order of August 15, 2006, the

arbitrator concluded the award was due within sixty days thereafter.

On October 5, 2006, the arbitrator issued an award wherein he noted “[t]he

subject matter and the controversies arising out of the relationships between the parties

are complex and difficult to understand.” The arbitrator found Denver City breached the

JOA and PPA to the injury of Golden Spread and GS Generating respectively. The

award did not contain an amount of damages. Rather, it specified a method for Golden

Spread and GS Generating to calculate past and future damages with the proviso that

these entities provide Denver City their calculations and “all associated work papers” by

November 14, 2006. Denver City was directed to cease and desist from its former

billing procedure, which produced damages to Golden Spread and GS Generating, and

L.Ed.2d 605 (2010) (indicating proper title of current act); 9 U.S.C.A. §§ 1-16 (West
2009).

The JOA provides only that it is governed by the law of Texas. According to
Denver City this means the Texas Arbitration Act (TAA), Tex. Civ. Prac. & Rem. Code
Ann. §§ 171.001-.098 (West 2011), and the FAA apply simultaneously since the JOA
affects interstate commerce. Perry v. Thomas, 482 U.S. 483, 489, 107 S.Ct. 2520,
2525, 96 L.Ed.2d 426 (1987). Appellees do not argue otherwise. Under a general
choice-of-law provision, such as that of the JOA, we will apply the FAA although the
TAA also applies to the extent it is consistent with the FAA. Roehrs v. FSI Holdings,
Inc., 246 S.W.3d 796, 803 (Tex.App.—Dallas 2008, pet. denied) (citing In re D. Wilson
Constr. Co., 196 S.W.3d 774, 779-80 (Tex. 2006)).

3
required to pay damages as to months before it modified its procedure. The award

further provided “[t]he Arbitrator shall keep the record open on this matter for a period of

forty-five (45) days from the date of this Award for the limited purpose of addressing any

disputes that arise that are directly related to the computation or payment of damages”

and “if Golden Spread disagrees with [Denver City], the matter will be referred to the

arbitrator for resolution.”

Apparently acting on a motion by Golden Spread and GS Generating and

response by Denver City, the arbitrator corrected typographical errors in the award and

issued a “Corrected Arbitrator’s Award” on November 15, 2006. The corrected award

restated the entire award with the corrections. Because no party takes exception to the

arbitrator’s correction of the October 5 award in the manner stated, we hereinafter refer

to the October 5 award as corrected on November 15 as the November 15 award.

Golden Spread and GS Generating transmitted their damage calculations to

Denver City. After Denver City disputed the calculations, Golden Spread and GS

Generating filed a motion seeking resolution by the arbitrator. Denver City responded

that the arbitration was closed and the arbitrator lacked authority to consider damage

calculations.

In an order of December 28, 2006, the arbitrator collectively awarded Golden

Spread and GS Generating over $5 million in damages. According to the order, the

arbitrator, in the November 15 award, “awarded damages and ordered the parties to

apply numbers to a formula, failing in which, he would do so. The Arbitrator is not

4
modifying or changing an Award. The Arbitrator concludes that the continuing oversight

of damages computation by him is and was appropriate.”

Golden Spread and GS Generating moved the trial court to confirm the award.

Denver City sought vacation of the award as modified by the December 28 order on

grounds that the award lacked finality and the arbitrator exceeded his authority. After a

hearing, the trial court denied Denver City’s vacatur and confirmed the award to Golden

Spread and GS Generating. Denver City appeals.

First Issue

By its first issue, Denver City argues the arbitrator lacked authority to enter the

December 28 order, and the trial court therefore erred by not vacating that order.

Through multiple sub-issues it contends the JOA and PPA, the AAA rules,3 the FAA4

and TAA,5 and common law6 validate the argument.

3
Denver City supports its argument with the following AAA rules.

R-35. Closing of Hearing. The arbitrator shall specifically inquire of all parties whether
they have any further proofs to offer or witnesses to be heard. Upon receiving negative
replies or if satisfied that the record is complete, the arbitrator shall declare the hearing
closed. If briefs are to be filed, the hearing shall be declared closed as of the final date
set by the arbitrator for the receipt of briefs. If documents are to be filed as provided in
Section R-32 and the date set for their receipt is later than that set for the receipt of
briefs, the later date shall be the closing date of the hearing. The time limit within which
the arbitrator is required to make the award shall commence, in the absence of other
agreements by the parties, upon the closing of the hearing.

R-36. Reopening of Hearing. The hearing may be reopened on the arbitrator's
initiative, or upon application of a party, at any time before the award is made. If
reopening the hearing would prevent the making of the award within the specific time
agreed on by the parties in the contract(s) out of which the controversy has arisen, the
matter may not be reopened unless the parties agree on an extension of time. When no
specific date is fixed in the contract, the arbitrator may reopen the hearing and shall
have 30 days from the closing of the reopened hearing within which to make an award.
5
 Denver City’s argument is rooted in a sentence appearing in the arbitration

paragraphs of both the JOA and PPA, “The arbitrator shall notify the Parties in writing of

the decision within sixty (60) days of the conclusion of the hearing.” This language,

Denver City contends, is the parties’ agreed-upon “contractual 60-day deadline,”

precluding adjudication beyond that date by the arbitrator.

R-38. Extensions of Time. The parties may modify any period of time by mutual
agreement. The AAA or the arbitrator may for good cause extend any period of time
established by these rules, except the time for making the award. The AAA shall notify
the parties of any extension.

R-46. Modification of Award. Within 20 days after the transmittal of an award, any
party, upon notice to the other parties, may request the arbitrator, through the AAA, to
correct any clerical, typographical, or computational errors in the award. The arbitrator is
not empowered to redetermine the merits of any claim already decided. The other
parties shall be given 10 days to respond to the request. The arbitrator shall dispose of
the request within 20 days after transmittal by the AAA to the arbitrator of the request
and any response thereto.
4
Denver City cites Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior
Univ. for the proposition that the FAA “permits a party to seek an order compelling
arbitration only ‘in the manner provided for in [the parties’] agreement.’” 489 U.S. 468,
474-75, 109 S.Ct. 1248, 1253, 103 L.Ed.2d 488 (1989) (emphasis in original).
5
Denver City cites § 171.053(c)(1),(d) of the Texas Civil Practice & Remedies
Code, providing in part, “The arbitrators shall make the award: (1) within the time
established by the agreement to arbitrate . . . (d) The parties may extend the time for
making the award either before or after the time expires. The extension must be in
writing.” Tex. Civ. Prac. & Rem. Code Ann. § 171.053(c)(1),(d) (West 2011)
6
Under the common law, “[a]rbitrators complete their function and lose their
authority to act after making a final determination on a matter. This principle, known as
the doctrine of functus officio, prevents an arbitrator from reexamining the merits of a
final award.” AO Techsnabexport v. Globe Nuclear Servs. & Supply GNSS, No. 09-
2064, 2010 U.S. App. Lexis 25640, at *15 (4th Cir. Dec. 15, 2010) (citations omitted).

6
 We review a trial court’s vacation, modification or confirmation of an arbitration

award de novo. Werline v. East Texas Salt Water Disposal Company, 209 S.W.3d 888,

897 (Tex.App.--Texarkana 2006), affirmed by East Texas Salt Water Disposal Company

v. Werline, 307 S.W.3d 267 (Tex. 2010) (citing cases for de novo review of vacation,

modification, or confirmation of awards in arbitration); Hisaw & Associates General

Contractors, Inc. v. Cornerstone Concrete Sys., Inc., 115 S.W.3d 16, 18 (Tex.App.--Fort

Worth 2003, pet. denied); Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105

S.W.3d 244, 250 (Tex.App.--Houston [14th Dist.] 2003, pet. denied). See also Aero Air,

L.L.C. v. Sino Swearingen Aircraft Corp., No. 07-07-0271-CV, 2009 Tex.App. Lexis

5187, at *2 (Tex.App.--Amarillo July 7, 2009, no pet.) (mem. op.) (citing Kergosien v.

Ocean Energy, Inc., 390 F.3d 346, 352 (5th Cir. 2004)) (vacatur reviewed de novo).

“Because Texas law favors arbitration, judicial review of an arbitration award is

extraordinarily narrow.” E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267,

271 (Tex. 2010); Pheng Invs., Inc. v. Rodriquez, 196 S.W.3d 322, 328 (Tex. App.--Fort

Worth 2006, no pet.) (op. on reh’g); Hisaw & Assocs., 115 S.W.3d at 18. See

Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984) (“The confirmation of an

arbitration award is a summary proceeding that merely makes what is already a final

arbitration award a judgment of the court”). “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). Thus an award may not be vacated even though

it is based on a mistake of law or fact. Universal Computer Sys., Inc. v. Dealer
7
Solutions, L.L.C., 183 S.W.3d 741, 752 (Tex.App.--Houston [1st Dist.] 2005, pet.

denied). The arbitrator’s award on matters submitted for resolution carries the same

effect as the judgment of a court of last resort. San Antonio v. McKenzie Const. Co.,

136 Tex. 315, 326, 150 S.W.2d 989, 996 (Tex. 1941). Every reasonable presumption in

favor of upholding an award is indulged. CVN Group, Inc. v. Delgado, 95 S.W.3d 234,

245 (Tex. 2002); Kosty v. S. Shore Harbour Cmty. Ass’n, 226 S.W.3d 459, 463

(Tex.App.--Houston [1st Dist.] 2006, pet. denied); IPCO-G&C Joint Venture, 65 S.W.3d

at 255-56. While every reasonable presumption is indulged to uphold the arbitrator’s

decision, none is indulged against it. Kosty, 226 S.W.3d at 463; IPCO-G&C Joint

Venture, 65 S.W.3d at 255-56. Cf. Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d Cir.

1987) (“The showing required to avoid summary confirmation is high”).

The “authority of arbitrators is derived from the arbitration agreement and is

limited to a decision of the matters submitted therein either expressly or by necessary

implication.” Gulf Oil Corp. v. Guidry, 160 Tex. 139, 143, 327 S.W.2d 406, 408 (1959);

see City of Pasadena v. Smith, 292 S.W.3d 14, 20 n.41 (Tex. 2009) (same). Arbitrators

therefore exceed their powers by deciding a matter not properly before them. Ancor

Holdings, LLC v. Peterson, Goldman, & Villani, Inc., 294 S.W.3d 818, 829 (Tex.App.--

Dallas 2009, no pet.); Pheng Invs., 196 S.W.3d at 329. The FAA and TAA authorize a

trial court to vacate an arbitration award if the arbitrator exceeded his powers. 9

U.S.C.A. § 10(a)(4) (West 2009); Tex. Civ. Prac. & Rem. Code Ann. § 171.088(a)(3)(A)

(West 2011).

8
 Generally, an award in arbitration is not final when “a substantive task remain[s]

for the arbitrator to perform.” McKinney Restoration Co. v. Ill. Dist. Council No. 1, 392

F.3d 867, 871 (7th Cir. 2004); see also Millmen's Local 550, United Bhd. of Carpenters

& Joiners of Am. v. Well’s Exterior Trim, 828 F.2d 1373, 1376-77 (9th Cir. 1987); Pub.

Serv. Elec. & Gas Co. v. System Council U-2, 703 F.2d 68, 70 (3d Cir. 1983).7 This is

true even if not all of the parties to the arbitration believe further action is warranted.

Orion Pictures Corp. v. Writers Guild of America, West, Inc., 946 F.2d 722, 725 (9th Cir.

1991). “In order to be ‘final,’ an arbitration award must be intended by the arbitrators to

be their complete determination of all claims submitted to them,” and “[g]enerally, for a

claim to be completely determined, the arbitrators must have decided not only the issue

of liability of a party on the claim, but also the issue of damages.” Michaels v.

Mariforum Shipping, S.A., 624 F.2d 411, 413-14 (2d Cir. 1980) (discussing FAA); A/S

Siljestad v. Hideca Trading, Inc., 678 F.2d 391, 392 (2d Cir. 1982) (per curiam) (same);

see also Rocket Jewelry Box, Inc. v. Noble Gift Packaging, Inc., 157 F.3d 174, 176 (2d

Cir. 1998) (per curiam) (“[A]n arbitration award, to be final, must resolve all issues

submitted to arbitration, and . . . it must resolve them definitely enough so that the rights

and obligations of the two parties, with respect to the issues submitted, do not stand in

need of further adjudication”) (emphasis in original)); Lummus Global Amazonas S.A. v.

Aguaytia Energy del Peru S.R. Ltda., 256 F. Supp. 2d 594, 639 (S.D. Tex. 2002) (“As a

general rule, a final and definite arbitration award must both resolve all the issues

7
In this commercial arbitration case, we find the cited labor arbitration cases
appropriate to the analysis. See Painewebber Inc. v. Elahi, 87 F.3d 589, 594 n.6 (1st
Cir. 1996) (“Earlier, one might have doubted whether appellate decisions concerning
labor arbitration would apply to commercial arbitration. Today, there is little question”).

9
submitted to arbitration, and determine each issue fully so that no further litigation is

necessary to finalize the obligations of the parties under the award”) (internal quotations

omitted).

An award that leaves only the ministerial determination of the amount of

damages, however, may nonetheless be final. See Flender Corp. v. Techna-Quip Co.,

953 F.2d 273, 280 (7th Cir. 1992) (court found award was final and definite because

calculation of commissions due on sales was a “ministerial computation,” “easily

ascertainable” from documents the arbitrator required produced); Dreis & Krump Mfg.

Co. v. International Ass’n of Machinists and Aerospace Workers, 802 F.2d 247, 251 (7th

Cir. 1986) (precise amount of backpay could be determined “automatically” without

judgment or discretion by resort to company’s records and this “ministerial” detail did not

preclude finality). “Whether the award indicates [it is] final and whether the arbitrator

intended the award to be final are factors in determining if an arbitration award is final.”

Local 36, Sheet Metal Workers Int’l Ass’n, AFL-CIO v. Pevely Sheet Metal Co., Inc., 951

F.2d 947, 949 (8th Cir. 1992). In Pevely Sheet Metal the Eighth Circuit held that an

arbitration award is not final if resolving the undetermined damage issue does “not

merely involve a simple calculation, but require[s] resolution of significant issues.” Id. at

949. See also Millmen Local 550, 828 F.2d at 1377. Finality of arbitration requires a

“‘complete arbitration.’” Pevely Sheet Metal, 951 F.2d at 949-50. Requiring a complete

arbitration is a rule of prudence. GES v. Bates, No 97 C3716, 1998 U.S. Dist. Lexis

3606, at *11 (N.D. Ill. Mar. 20, 1998).

10
 As noted, the JOA and PPA required the arbitrator to conduct a hearing within

thirty days of his selection, and then notify the parties of his decision within sixty days of

the conclusion of the hearing. The agreements do not define the term “hearing.”

Significantly, however, after a preliminary hearing, in February 2006 the parties

and arbitrator agreed on a scheduling order, in which they agreed that an “evidentiary

hearing on the merits,” which they labeled the “merits hearing,” would take place in

Dallas and conclude no later than May 26, 2006, unless extended by the arbitrator for

reasons beyond the control of the arbitrator or parties. The scheduling order further

provided that the arbitrator would “determine when the Arbitration is closed for purposes

of beginning the sixty (60) days deadline for rendering a decision.” The arbitrator did

not observe the “sixty days from close of hearing” requirement of the JOA and PPA but,

pursuant to authority granted him in the scheduling order, ordered “the record closed”

on August 15, 2006.

The November 15 award only determined questions of liability while providing a

formula for subsequent calculation of damages. It specified, “The Arbitrator shall keep

the record open on this matter for a period of forty-five (45) days from the date of this

Award for the limited purposes of addressing any disputes that arise that are directly

related to the computation or payment of damages.” The arbitrator could not calculate

damage amounts for inclusion in the November 15 award because he did not have

before him evidence of damages incurred after February 2006. Golden Spread and GS

Generating were therefore to follow a stated methodology and calculate the specified

damages. The methodology the arbitrator ordered, both for the calculation of damages

11
and for the correction of future billings, incorporated that devised by Golden Spread’s

expert David Surls, which has been referred to in the confirmation litigation as the “Surls

macro.”8 Evidence before the trial court showed the macro did not work as written.

Golden Spread and GS Generating then submitted a lengthier, modified formula which

Denver City viewed as a deviation from the November 15 award. Golden Spread and

GS Generating took “strong exception” to changes made in Denver City’s billings and its

claimed failure to recognize or pay damages awarded. Golden Spread and GS

Generating then moved the arbitrator to resolve the dispute and with their pleading

transmitted a “Workbook including the backup support” which they asserted “detail[ed]

the amounts” they were due from Denver City. From these calculations, Golden Spread

and GS Generating requested the arbitrator determine the proper method for calculating

pre-judgment interest and confirm an amount of money due each in excess of $2.5

million.9

The arbitrator found and ordered that he possessed authority to determine

damages pursuant to the criteria set forth in the Award and to grant the relief provided

by the December 28 order. He confirmed the damage calculations submitted by Golden

Spread and GS Generating, and awarded Golden Spread $2,586,905 and GS

Generating $2,513,919.

8
According to testimony by Denver City at the confirmation-vacatur hearing, a
macro “is a program that runs the Excel worksheet that it’s linked to.”
9
Rule R-36 authorizes an arbitrator to reopen the hearing on his own initiative
any time before the award is made provided reopening does not prevent making the
award within the specific time agreed by the parties.
12
 In this court, Golden Spread and GS Generating contend the damage calculation

anticipated by the November 15 award was “ministerial.” Denver City contends the

December 28 order impermissibly modified the November 15 award, or was itself a new

award. We agree with neither party. In substance, determining the amount of damages

flowing to Golden Spread and GS Generating from the found liability of Denver City was

not a ministerial task but one requiring deliberation including resolution of disputed party

positions. Nor can we agree that the December 28 order modified or amended a final

award, or constituted a new award. The November 15 award expressed the arbitrator’s

decision on issues of liability and the intended means for calculation of damages. The

record was reopened for calculation and enforcement of the damage amounts, leading

to completion of the arbitration. Under the facts here presented, this procedure was not

inconsistent with AAA Rule R-36. Within the time allowed by Rule R-36, the arbitrator

delivered the December 28 order, which made the arbitration complete.

Nor did the procedure contravene the parties’ agreements or statute. It appears

indisputable that the arbitration “hearing” required by the JOA and PPA was the hearing

completed in May 2006. By the terms of the JOA and PPA, the arbitration award was

due within sixty days thereafter. But the parties and the arbitrator agreed on a different

deadline which the November 15 award met. We find the conclusion inescapable that

the contractual deadline, measured as sixty days from the hearing, was vitiated by the

language of the February 2006 scheduling order and the arbitrator’s actions pursuant to

the authority given him in that scheduling order.

13
 Denver City also illustrates its contention that the arbitrator exceeded his

contractual authority with Smith v. Transport Workers Union of Am., AFL-CIO Air

Transport Local 556, 374 F.3d 372 (5th Cir. 2004) (per curiam). In Smith, the court

affirmed the district court’s vacatur of an arbitration award “[b]ecause the arbitration

agreement clearly restricts the authority of the arbitrators to amend or correct their

award.” Id. at 374. According to the arbitration agreement, “‘The arbitrators sua sponte

may amend or correct their award within three business days after the award, but the

parties shall not have a right to seek correction of the award.’” Id. Nevertheless, the

arbitration panel modified the award more than a month after the initial award. Id. The

Fifth Circuit observed that arbitration is a matter of contract and “the plain wording of the

arbitration agreement contemplates that the arbitrators will not consider correcting the

arbitral award at all at the behest of the parties, and forbids a correction or amendment

on the arbitrators['] own motion more than three business days after the award.” Id. at

374-75. Relying on the restrictive language of the arbitration agreement, the court

concluded that the arbitrators exceeded their powers by modifying the initial award. Id.

at 375.

Analogizing Smith to the case at bar is hindered somewhat by the per curiam

opinion’s limited discussion of the facts. That said, we assume the “initial award”

rendered in favor of Smith was the result of a complete arbitration. A complete

arbitration did not occur here until the arbitrator rendered a decision on damages.10 And

10
We acknowledge the November 15 award contains a paragraph reading, “This
AWARD is in full settlement of all claims submitted to this arbitration. Any issue not
specifically decided is hereby DENIED.” Given the award’s express provisions for
14
here the arbitrator’s actions were consistent with, not contrary to, the scheduling order

and AAA rules. We accordingly find Smith distinguishable. Denver City’s first issue is

overruled.

Second Issue

Denver City argues in its second issue that, if we vacate the December 28 order

the damage award incorporated into the trial court’s judgment “is too vague to stand.”

Because we have overruled Denver City’s first issue and do not vacate the December

28 order, discussion of Denver City’s second issue is unnecessary to the disposition of

the appeal. Tex. R. App. P. 47.1.

Third Issue

In its third issue, Denver City argues the trial court erred by failing to vacate the

award because it was not mutual, final, and definite.

The grounds for vacatur under the FAA are limited to those specified by § 10 of

the Act. Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 583-84, 128 S.Ct.

1396, 1403, 170 L.Ed.2d 254 (2008); Citigroup Global Mkts. Inc. v. Bacon, 562 F.3d

349, 350 (5th Cir. 2009). Section 10 provides the ground Denver City here argues. The

district court may vacate an award if the arbitrator “so imperfectly executed [his powers]

that a mutual, final, and definite award upon the subject matter submitted was not

made.” 9 U.S.C.A. § 10(a)(4) (West 2009).

calculation of damages and resolution of disputes over damages, and considering the
award document as a whole, we cannot read that paragraph as controlling.
15
 As used by § 10(a)(4) of the FAA, “mutual” and “final” mean “that the arbitrators

must have resolved the entire dispute (to the extent arbitrable) that had been submitted

to them” and “definite” means “that the award is sufficiently clear and specific to be

enforced should it be confirmed by the district court and thus made judicially

enforceable.” IDS Life Ins. Co. v. Royal Alliance Associates, Inc., 266 F.3d 645, 650

(7th Cir. 2001) (citations omitted).

Denver City contends the award is indefinite because it failed to “resolve the key

issue submitted to arbitration--how is [Denver City] supposed to bill the Golden Spread

entities for start-up energy?” Denver City notes it was ordered by the arbitrator “to

cease and desist from certain billing practices and to change its future billing

procedures by incorporating a specific Excel spreadsheet “‘macro’” introduced into

evidence at the arbitration hearing by Mr. Surls.” Denver City further argues the Surls

macro was intended to modify Denver City’s billing spreadsheet in the future “by

removing fuel used to generate electricity from the ‘Start_Fuel_1’ and ‘Start_Fuel_2’

columns of the [monthly generation report] . . . . The Surls macro was supposed to

accomplish that, but it did not.” It seems to us the contention made is not that the

arbitrator failed to complete his assignment as to future billing procedures, for it is clear

the award provided detailed direction for modification of the billing practices; rather, the

nut of Denver City’s reasoning is the formula the arbitrator incorporated into his award

was wrong. The macro devised by expert Surls does not work.

“The requirements of finality and definiteness are ones more of form than of

substance. They must not be confused with whether the arbitrator[’s] award was correct

16
or even reasonable, since neither error nor clear error nor even gross error is a ground

for vacating an award.” IDS Life Ins. Co., 266 F.3d at 650 (citing Major League

Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509, 121 S.Ct. 1724, 1728 149

L.Ed.2d 740 (2001); United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38,

108 S. Ct. 364, 98 L.Ed.2d 286 (1987); George Watts & Sons, Inc. v. Tiffany & Co., 248

F.3d 577, 579; (7th Cir. 2001); and Flexible Mfg. Systems Pty. Ltd. v. Super Products

Corp., 86 F.3d 96, 100 (7th Cir. 1996)).

The law affords us an “extraordinarily narrow” review of a trial court’s denial of

vacatur and confirmation of award. Myer v. American Life, Inc., 232 S.W.3d 401, 408

(Tex.App.--Dallas 2007, no pet.). Our concern thus “is not whether the arbitrator[’s]

reasoning is incomplete in the sense that a syllogism would be incomplete if it lacked its

major or its minor premise but whether the award itself, in the sense of judgment, order,

bottom line, is incomplete in the sense of having left unresolved a portion of the parties’

dispute.” IDS Life Ins. Co., 266 F.3d at 651. Confronting technical and complex

contract terms and requirements, the parties chose arbitration for resolution of their

disputes over the retroactive and prospective allocation of fuel costs. The arbitrator

produced an award fixing specific recoverable damage amounts and providing a

specified means of calculating future costs. That Denver City now believes the

arbitrator rendered an unworkable solution to its future billing dilemma is not, under the

constraints that bind us, a ground for vacatur. See id. 266 F.3d at 649 (“the grounds for

challenging an arbitration award are narrowly limited, reflecting the voluntary contractual

nature of commercial arbitration. Within exceedingly broad limits, the parties to an

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arbitration agreement choose their method of dispute resolution and are bound by it

however bad their choice appears to be either ex ante or ex post”).

Denver City presents further arguments in support of its third issue, but as we

perceive them they either are predicated on our vacating the arbitrator’s December

2006 order, or reiterate contentions addressed in our discussion of its first issue.

Denver City’s third issue is overruled.

Fourth Issue

By its fourth issue, Denver City complains that the entire award should be

vacated because the arbitrator exceeded his powers by ruling on an issue not submitted

to arbitration and his ruling conflicts with this court’s decision in Golden Spread, 269

S.W.3d 183.

The nub of this complaint is the arbitrator gratuitously determined how to price

fuel used to generate electricity. The complained-of language appears in a section of

the November 15 award entitled “conclusions of law as to Golden Spread and [Denver

City],” wherein the arbitrator stated, “Under the express terms of the PPA, recovery by

[Denver City] for costs for all fuel used to generate energy is subject to the PPA Heat

Rates.”11

“The FAA creates a presumption in favor of arbitrability; so, parties must clearly

express their intent to exclude categories of claims from their arbitration agreement.”

Paladino v. Avnet Computer Techs., 134 F.3d 1054, 1057 (11th Cir. 1998) (citing First

11
We do not decide whether this language, couched by the arbitrator as a
“conclusion of law,” rather than an award, is decretal.
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Options v. Kaplan, 514 U.S. 938, 945, 115 S.Ct. 1920, 1924-25, 131 L.Ed.2d 985

(1995) (stating that issues will be deemed arbitrable unless it is clear that the arbitration

clause has not included them)); see Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943,

944 (Tex. 1996) (orig. proceeding, per curiam) (holding that “[f]ederal and state law

strongly favor arbitration,” and “a presumption exists in favor of agreements to arbitrate

under the FAA”). Under the FAA, any doubts as to whether a claim falls within the

scope of an agreement to arbitrate are resolved in favor of arbitration. Prudential

Securities v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995) (orig. proceeding, per curiam).

Without a transcript of the arbitration proceedings, we will presume sufficient evidence

and adequate reasoning support the award. Grand Homes 96, L.P. v. Loudermilk, 208

S.W.3d 696, 705 (Tex.App.--Fort Worth 2006, pet denied) (citing Jamison & Harris v.

Nat’l Loan Investors, 939 S.W.2d 735, 737 (Tex.App.--Houston [14th Dist.] 1997, writ

denied)).

Through the JOA and PPA, the parties agreed arbitration could reach “any

dispute, controversy or claim arising out of, under or relating to this Agreement . . .

unless otherwise provided in this Agreement or mutually agreed by the Parties.” With

similar breadth, the parties identified issues for the consolidated arbitration. According

to the agreed scheduling order, the arbitral issues were found in twelve identified

documents, inserts, and pleadings. First on the list was an October 11, 2005, letter

from Golden Spread to Denver City “instituting Dispute Resolution pursuant to the PPA.”

The letter indicates one of the disputed issues was “[Denver City] has failed to properly

calculate the Fuel Cost Rate as required by the terms of the [JOA].” According to the

JOA, which identifies Denver City as “the Partnership,” the fuel cost rate equals the sum
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of, among other factors, “the quotient obtained by dividing the Partnership’s start-up fuel

cost allocation . . . by the product of the Partnership Energy for the Month of

determination times the average PPA Heat Rate . . . .” The PPA assigns “PPA Heat

Rate” the meaning contained in Appendix 2 of the PPA entitled, “PPA Capacity and

PPA Heat Rate.” This highly technical pamphlet includes attached heat rate schedules.

It formulaically expounds on matters such as PPA heat rates during different plant

operations. We quoted from the section pertaining to the combined cycle stage of

operations in our heat rate discussion in Golden Spread. 269 S.W.3d at 189.

Given the breadth of the issues identified in the scheduling order, and the nature

of the evidence introduced before the arbitrator, it is difficult to conclude the arbitrator

exceeded the scope of the issues submitted. And, whether the conclusion was

necessary to the arbitrator’s analysis of other issues, or more fundamentally, whether it

was even correct are matters beyond the scope of this review. Absent a transcript of

the arbitration hearing and given the presumption favoring inclusion of the matter giving

rise to the complained-of conclusion within the arbitral issues, we must conclude the

arbitrator did not exceed the scope of his powers by issuing the complained-of

conclusion.

Moreover, whether the complained-of conclusion stands in legitimate conflict with

a declaration of the trial court in a portion of the case not referred to arbitration actually

begs the inquiry whether the arbitrator committed a mistake in law. Down that avenue,

we do not venture. See, e.g., Loudermilk, 208 S.W.3d at 705 (court will not vacate an

award because of a “mistake of fact or mistake of law”); Whiteside v. Carr, Hunt & Joy,

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L.L.P., No. 07-06-0207-CV, 2007 Tex. App. Lexis 409, at *6-*7 (Tex.App.--Amarillo Jan.

23, 2007, pet. denied) (mem. op.) (citing TUCO Inc. v. Burlington Northern RR. Co., 912

S.W.2d 311, 315 (Tex.App.--Amarillo 1995), modified, 960 S.W.2d 629 (Tex. 1997)

(“Judicial scrutiny focuses on integrity of process rather than propriety of result”).

Denver City’s fourth issue is overruled.

Conclusion

Having overruled each of Denver City’s issues necessary for disposition of this

appeal, we affirm the judgment of the trial court.

James T. Campbell
Justice

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