Mansions in the Forest, L.P. v. Montgomery County

IN THE SUPREME COURT OF TEXAS
444444444444
NO . 06-1084
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BISON BUILDING MATERIALS, LTD., PETITIONER,
v.

LLOYD K. ALDRIDGE, RESPONDENT

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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS
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Argued January 16, 2008

JUSTICE WAINWRIGHT delivered the opinion of the Court, in which CHIEF JUSTICE
JEFFERSON , JUSTICE GREEN , JUSTICE JOHNSON , JUSTICE GUZMAN , and JUSTICE LEHRMANN joined.

JUSTICE HECHT filed a dissenting opinion, in which JUSTICE MEDINA and JUSTICE WILLETT
joined.

We deny the motion for rehearing of Bison Building Materials, Ltd. We withdraw our

opinion of April 20, 2012 and substitute the following in its place.

The issue in this case is whether an appellate court has jurisdiction over an appeal from a trial

court order confirming an arbitration award in part and vacating the award in part based on the

existence of unresolved questions of law or fact necessary to a ruling, yet the trial court did not

expressly direct a rehearing.1 We agree with the court of appeals that it does not have jurisdiction

over the appeal, but for different reasons.

1
Bison Building filed for bankruptcy in 2009 under Chapter 11 of the United States Bankruptcy Code. The
bankruptcy court lifted the automatic stay to allow Aldridge’s claim to proceed and we lifted our stay on September 2,
2011. See T EX . R. A PP . P. 8.2, 8.3.
 I. Factual and Procedural Background

Lloyd K. Aldridge was employed as a truck driver by Bison Building Materials, Ltd. As a

condition of his employment, Aldridge signed a Mutual Agreement to Arbitrate Claims (arbitration

agreement) in which he agreed to resolve any claims for “work-related illness or injuries” by

arbitration. The arbitration agreement provided that “the Federal Arbitration Act shall govern

interpretation, enforcement, and all proceedings pursuant to this Agreement. To the extent that the

Federal Arbitration Act (FAA) is inapplicable, state law pertaining to agreements to arbitrate shall

apply.” The parties agree that the FAA, rather than the Texas Arbitration Act (TAA), governs the

substance of the agreement.

After he was injured on the job, Aldridge signed a two-page “Post Injury Waiver and

Release” (release) as consideration for receiving benefits under Bison’s “Workplace Injury Plan”

(plan). The release stated in pertinent part, “I am aware that . . . I could file a legal action against

[Bison but] . . . . I understand and agree to give up the right to file a legal action against [Bison] . . .

for any and all damages sustained by me because of my injury.” Bison accordingly paid Aldridge

approximately $80,000 in medical and wage replacement benefits under the plan.

Aldridge subsequently filed a demand for arbitration seeking to recover damages for lost

wages, medical expenses, pain and suffering, mental anguish, and loss of earning capacity. During

the arbitration proceedings, Bison moved to dismiss Aldridge’s claim, raising waiver and release.

Aldridge provided an affidavit averring that he did not remember signing the release or, in the

alternative, that he did not understand the consequences of signing the release. The arbitrator found

that Aldridge signed the release and waived his right to arbitrate his personal injury claim against

Bison. Accordingly, the arbitrator dismissed Aldridge’s claim with prejudice. Based on the

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enforcement clause in the arbitration agreement, Aldridge petitioned the trial court to set aside the

award and remand the matter to the arbitrator, and Bison moved to confirm the award.

After the hearing on the arbitrator’s award and in light of a new opinion from this Court

(cited in the order below), the trial court confirmed the award in part and vacated it in part,

concluding that residual “fact questions” precluded confirmation of the arbitrator’s take-nothing

award. The order provides:

[T]he Court determines that the motions should be GRANTED in part and
DENIED in part as follows.

The Court finds that, as a matter of first impression, that both the Texas
Supreme Court decision Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190 (Tex.
2004) (holding that Texas’ strong public policy for Workers’ Compensation favors
even a radical extension of the doctrine to less-than-total-exculpation waivers where
workers are involved) and the fair notice requirements described therein are properly
applied to a post-injury waiver. The Court further finds that the post-injury waiver
is ambiguous as to whether the right to arbitration is forfeited. Thus, the Final Award
of dismissal is VACATED in PART, solely as to the arbitrator’s finding that the
post-injury waiver precludes arbitration because there are fact questions on:

(1) Is the post-injury waiver enforceable. That is, (a) does the waiver
satisfy the fair notice requirements and, if not, (b) did both parties
have actual knowledge of the terms of the waiver agreement. If the
answer to these questions is “no,” the waiver is unenforceable. Even
if the waiver is enforceable, there is a fact question on:

(2) Do the ambiguous terms of the waiver preclude this action
seeking arbitration.

The arbitration award is CONFIRMED as to the finding that Aldridge signed the
post-injury waiver.

(Emphasis supplied.) Although the trial court confirmed the arbitrator’s finding that Aldridge signed

the release, the trial court vacated the arbitrator’s finding that the post-injury waiver precluded

arbitration because of unresolved fact questions.

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 The trial court confirmed the arbitrator’s determination that Aldridge signed the post-injury

waiver and vacated the arbitrator’s holding that the waiver barred Aldridge’s arbitration claims. The

order did not explicitly direct a rehearing before the arbitrator, but the trial court held that the post-

injury waiver was ambiguous and indicated that the arbitrator needed to consider fact questions (or

mixed questions of law and fact) concerning the post-injury waiver provision.2 Both parties appealed

the trial court’s order.

After the parties filed their initial briefs, the court of appeals requested supplemental briefing

on the issue of appellate jurisdiction. 263 S.W.3d 69, 72. A divided court of appeals held that the

trial court’s order was not appealable as either a final judgment or an interlocutory order. Id. at 76.

The court determined that the judgment is not final because it does “not contain finality language or

otherwise state that it is a final judgment” and “necessarily contemplates resolution of [the

remaining] issues by way of a rehearing,” making the appeal interlocutory. Id. at 73, 74. After

examining the relevant portions of the FAA and TAA, the court of appeals concluded that no statute

permitted an appeal in this case. Id. at 76. The court therefore dismissed the appeal for want of

jurisdiction without reaching the merits of the case.

On appeal to this Court, Bison argues that the trial court’s order was appealable because it

confirmed part of the award and vacated part of the award, but did not explicitly or implicitly direct

a rehearing. Aldridge contends that we should dismiss the appeal for want of jurisdiction because

the trial court’s order does not dispose of all issues and contemplates further resolution of fact issues.

2
The dissent writes that the trial court “dismissed, with prejudice” Aldridge’s claims. ___ S.W .3d ___ (Hecht,
J., dissenting). That is a difficult conclusion to draw from the language of the order. The trial court found an ambiguity
in the release and unresolved fact questions in the dispute. Under the arbitration agreement, only the arbitrator could
decide these unresolved, substantive issues.

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Neither party suggested that the interlocutory appeal sections of the TAA were inapplicable due to

the nature of the arbitration agreement at issue here.

II. Law and Analysis

We must address whether the trial court’s judgment is appealable, either as a final judgment

or as an interlocutory order. Unless specifically authorized by statute, Texas appellate courts only

have jurisdiction to review final judgments. TEX . CIV . PRAC. & REM . CODE § 51.014; see also Stary

v. DeBord, 967 S.W.2d 352, 352–53 (Tex. 1998). A judgment is final for purposes of appeal “if and

only if either it actually disposes of all claims and parties then before the court, regardless of its

language, or it states with unmistakable clarity that it is a final judgment as to all claims and all

parties.” Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192–93 (Tex. 2001). Bison contends that the

order is final and appealable because the parties’ competing motions were completely resolved by

the trial court, with nothing left for the trial court to do. We disagree.

The order is not final because it does not contain finality language, state that it is a final

order, or dispose of all claims and parties. 263 S.W.3d at 73. Instead, the order states that questions

of fact remain which must be resolved before the award may be confirmed, if at all. Specifically,

the order confirmed the arbitrator’s finding that Aldridge signed the post-injury waiver. That was

a disputed question of fact in the arbitration. However, the order vacated the arbitrator’s finding that

the post-injury waiver precludes arbitration because “fact questions” remained on whether the waiver

satisfies the common law fair notice requirements for work-related liability waivers and, if not,

whether both parties had actual knowledge of the waiver agreement. The order also bases its partial

vacatur on the need for findings of fact on the issue of whether “the ambiguous terms of the waiver

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preclude this action.” Because the order leaves significant factual and legal issues open for further

determination, it is interlocutory and not appealable unless authorized by statute.

Although the FAA governs the dispute, “federal procedure does not apply in Texas courts,

even when Texas courts apply the [FAA].” Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 272

(Tex. 1992) (orig. proceeding). Because appellate jurisdiction is procedural, we look to Texas

procedural law to determine whether the court of appeals has jurisdiction over the interlocutory

appeal in this case. The only applicable Texas statute that could make the trial court’s interlocutory

order appealable is section 171.098 of the TAA. TEX . CIV . PRAC. & REM . CODE § 171.098(a)(3)

(permitting interlocutory appeal over a trial court order “confirming or denying confirmation of an

award” under the TAA); Id. § 171.098(a)(5) (permitting interlocutory appeal over a trial court order

“vacating an award without directing a rehearing”). However, the TAA does not apply to this

dispute. Section 171.002(a) of the TAA states that Chapter 171 “does not apply to . . . a claim for

personal injury,” unless the agreement is signed by both parties’ attorneys. TEX . CIV . PRAC. & REM

CODE § 171.002(a)(3), (b)(2). The arbitration agreement here was not signed by the parties’

attorneys. Thus, Chapter 171 does not apply, as a matter of Texas procedure, and subsections

171.098(a)(3) and (a)(5), on which both parties rely in determining appellate jurisdiction, cannot

apply either. Jack B. Anglin Co., 842 S.W.2d at 272.

Because the TAA previously did not provide an avenue for interlocutory appeals of FAA

arbitrations, this Court held that it would entertain appeals otherwise permitted under the FAA

through a petition for writ of mandamus. Jack B. Anglin Co., 842 S.W.2d at 272. In the past, when

a party to a dispute sought to appeal an interlocutory order adverse to arbitration under the TAA and

FAA, the party was required to file both a petition for writ of mandamus and interlocutory appeal.

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See id. The Legislature amended the Civil Practice and Remedies Code to permit interlocutory

appeals “to the court of appeals from the judgment or interlocutory order of a district court . . . under

the same circumstances that an appeal from a federal district court’s order or decision would be

permitted by 9 U.S.C. Section 16.” TEX . CIV . PRAC. & REM CODE § 51.016; CMH Homes v. Perez,

340 S.W.3d 444, 448 (Tex. 2011). However, this act is applicable only to appeals of an interlocutory

order in an action filed on or after September 1, 2009. Act of June 19, 2009, 81st Leg., R.S., ch. 820,

§ 2, 2009 Tex. Gen. Laws 2061. Therefore, section 51.016 is inapplicable to this case.

The TAA does not provide jurisdiction over this interlocutory appeal. However, even if the

TAA did apply to this matter, our conclusion regarding lack of appellate jurisdiction is consistent

with our reasoning in this area. In East Texas Salt Water Disposal Co., Inc. v. Werline, this Court

held that a trial court’s order denying confirmation and re-submitting the case to arbitration was

subject to appellate jurisdiction. 307 S.W.3d 267, 270 (Tex. 2010). We held that the order fit

squarely within the section of the TAA allowing for appeal of the confirmation or denial of an award.

Id.; TEX . CIV . PRAC. & REM . CODE § 171.098(a)(3). In denying the request for confirmation at issue

in Werline, the district court “made clear that it rejected the award and all bases on which it rested.”

Werline, 307 S.W.3d at 270. We also reasoned that a limited rehearing to correct a problem —such

as an instance in which “an arbitration award is unclear or incomplete or contains an obvious

error”—is not a final decision on the issue “but merely a deferral of final ruling until the arbitration

was complete.” Id. at 270–71 (emphasis added). Werline relied largely on the reasoning in Forsythe

Int’l S.A. v. Gibbs Oil Co. of Tex., 915 F.2d 1017, 1020 (5th Cir. 1990), which explained there is no

jurisdiction over arbitration awards that are incomplete.

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 The trial court order at issue in this case is readily distinguishable from the order in Werline,

but fits squarely within Werline’s rationale for rehearing. First, in Werline, the trial court’s judgment

denied confirmation and vacated the award because the arbitrator’s material factual findings in the

award were “‘so against the evidence . . . that they manifest gross mistakes in fact and law.’” Id. at

269. Second we also noted that the trial court “went so far as to hold that the material facts the

parties had vigorously disputed in the first arbitration should all be established against Werline in

the second arbitration” in effect rendering a final judgment, even if not by such nomenclature. Id.

at 270. The order in the matter before us is distinguishable and fits within neither section

171.098(a)(3) nor 171.098(a)(5) of the TAA. TEX . CIV . PRAC. & REM . CODE § 171.098(a)(3),

(a)(5). Here, the trial court vacated in part and confirmed in part. While the order confirms that

Aldridge signed the post-injury waiver, it does not dispose of the substance of the claims, but instead

explicitly identifies unresolved issues and, in essence, remands the case to the same arbitrator to

complete its fact finding and legal determinations. See In re Serv. Corp. Int’l, 355 S.W.3d 655, 659

(Tex. 2011) (per curiam) (holding that, ordinarily, the trial court did not have the authority to

override the parties’ selection of an arbitrator). Forsythe’s reasoning squarely supports holding a

lack of appellate jurisdiction here:

Had the district court remanded to the same arbitration panel for clarification of its
award, the policies disfavoring partial resolution by arbitration would preclude
appellate intrusion until the arbitration was complete.

915 F.2d at 1020 n.1. The trial court did not remand the dispute to a different arbitrator and the trial

court’s order identified unresolved questions of fact that the arbitrator needed to answer. In the

words of Werline and Forsythe, the Bison arbitration was not “complete.” Id.

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 Policies disfavoring partial resolution by arbitration preclude appellate intrusion until the

arbitration is complete. Id. Due to the arbitrator’s failure to resolve multiple issues of fact or law,

the order cannot be considered a confirmation or a denial of an arbitration award under section

171.098(a)(3) or a vacatur of an award without directing a rehearing under section 171.098(a)(5).

We observed in Werline that, because Texas law favors arbitration, the scope of judicial

review of an arbitration award is narrow. Id. at 271 (citing CVN Group, Inc. v. Delgado, 95 S.W.3d

234, 238 (Tex. 2002) (stating the presumption favoring an arbitral award)). CVN Group discouraged

subjecting arbitration awards to judicial review because it “adds expense and delay, thereby

diminishing the benefits of arbitration as an efficient, economical system for resolving disputes.”

95 S.W.3d at 238. We decline to expand the narrow scope of judicial review of arbitration awards,

especially where they are incomplete.

The limited rights of appeal provided in section 171.098(a) of the Civil Practice and

Remedies Code act as a limitation on the authority of trial courts to order the re-arbitration of matters

that should, under the statute, be subject to interlocutory appeal. Those limitations circumscribe the

ability of the trial court to prolong arbitration and thereby delay resolution of the matter. Under

circumstances in which the TAA does not provide appellate jurisdiction, a trial court unreasonably

delaying the proceedings by ordering re-arbitration for arbitrary or unsupported reasons may be the

proper subject of a writ of mandamus. There is no indication in the present case, however, that the

order serves any purpose other than to resolve legitimate factual and legal issues. Importantly, the

parties have not sought review of the issue by mandamus. Cf. In re Chevron U.S.A., Inc., No. 08-

08-00083-CV, 2010 WL 299149, at *3, 7 (Tex. App.—El Paso, Jan. 27, 2010, no pet.) (not

designated for publication) (holding that the interlocutory appeal provisions of the TAA do not apply

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to a review of the trial court’s order confirming or denying an award, but granting relief through

mandamus). While the Legislature has corrected the arbitration appeal two-step, the correction is

not applicable here. Therefore, the court of appeals, and this Court, have no jurisdiction over this

interlocutory appeal. Although neither party raised this issue before the court of appeals or before

this Court, we consider our jurisdiction sua sponte. See Univ. of Tex. Sw. Med. Ctr. v. Loutzenhiser,

140 S.W.3d 351, 358 (Tex. 2004).

Finally, we should retain some measure of symmetry.3 Granting appellate review of an

incomplete FAA arbitration by mandamus would likely grant the FAA matter a greater scope of

review in Texas courts than it would receive in a federal appellate court. As we explained in In re

Palacios,

There is little friction between the FAA and Texas procedures when state courts
review by mandamus an order that the federal courts would review by interlocutory
appeal . . . . But it is quite another matter for state courts to review by mandamus an
order that the federal courts could not review at all. Such review would create
tension with the legislative intent of the FAA . . . .

221 S.W.3d 564, 565 (Tex. 2006) (per curiam) (emphasis added). The case before us is “quite

another matter.” Id. There does not appear to be a strong consensus among federal courts on this

question, but federal cases indicate that the FAA would not allow an interlocutory appeal in federal

court of a district court’s order determining that an arbitration is not final but is incomplete. See

discussion of federal case law infra.

This line of reasoning applies in the context of court review of arbitration awards, where

there is a “strong presumption in favor of enforcing arbitration awards” and the role the federal

3
As pointed out, section 51.016 does not govern this appeal as it was not yet effective at the time of this suit.

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courts generally take in reviewing arbitration awards is “extremely limited.” Wall St. Assoc., L.P.

v. Becker Paribas, Inc., 27 F.3d 845, 849 (2nd Cir. 1994) (citation omitted). For example, in Rich

v. Spartis, the Eighth Circuit recently concluded that an arbitration award that was indefinite,

incomplete, and ambiguous would not be vacated on the grounds that the arbitrators had exceeded

their authority. 516 F.3d 75, 82 (2nd Cir. 2008). Because an essential assessment by the arbitrators

allowing the court to determine the award’s validity was missing, the order was not complete and

was instead a source of “confusion.” Id. This “lack of clarity” in the award precluded a ruling by

the Court as to whether the arbitrators exceeded their authority; instead a remand to the arbitration

panel was necessary for clarification. Id. at 83–84. In Landy Michaels Realty Corp. v. Local 32B-

32J, Service Employees International Union, AFL-CIO, the Second Circuit held that appellate

jurisdiction was lacking. 954 F.2d 794, 797 (2d Cir. 1992). In that case, the arbitrator ruled in favor

of a trade union and awarded substantial damages. Id. at 795. The district court vacated the award

as to damages and remanded for reconsideration. Id. Because the district court ordered the same

arbitrator to make a further determination with respect to the content of the award, the court of

appeals held that remand is outside its appellate jurisdiction. Id. at 797. The order at issue before

us seeks completion of an arbitration and sends the dispute to the same arbitrator. It would most

likely be viewed by a federal appellate court today as outside its jurisdiction due to the lack of

finality of its terms.

The dissent concludes that the trial court’s order was final and that it fully and finally

resolved Aldridge’s claims. ___ S.W.3d___ (Hecht, J., dissenting). Understandably, the dissent’s

case law supports the established rule that a district court order calling for re-evaluation of the entire

controversy is appealable. Id. (citing, e.g., HCC Aviation Ins. Group, Inc. v. Emp’rs Reinsurance

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Corp., 243 F. App’x 838, 842 n.5 (5th Cir. 2007) (concluding that an order vacating an entire

arbitration award is appealable, despite being remanded to the same panel); Bull HN Info. Sys., Inc.

v. Hutson, 229 F.3d 321, 327 (1st Cir. 2000) (construing as appealable part of a district court order

remanding the “entire matter” to a new arbitrator); Jay Foods, L.L.C. v. Chem. & Allied Prod.

Workers Union, Local 20, AFL–CIO, 208 F.3d 610, 613 (7th Cir. 2000) (noting that appeal is

available from an order of remand, unless the purpose of the remand was “was merely to enable the

arbitrator to clarify his decision in order to set the stage for informed appellate review”); Virgin

Islands Hous. Auth. v. Coastal Gen. Constr. Servs. Corp., 27 F.3d 911, 914 (3rd Cir. 1994)

(concluding an order remanding the case to a new arbitration hearing was subject to appeal, but

under facts in which “the District Court did not simply request clarification, but instead directed a

re-evaluation of the entire controversy . . . .”)). Orders that direct a re-evaluation of a completed

arbitration are appealable. However, orders that defer a final ruling until the arbitration is complete

are not appealable. Werline, 307 S.W.3d at 270–71. We conclude that the order in this case is not

the type of appealable order described in the dissent’s authorities.

III. Conclusion

For the aforementioned reasons, we affirm the court of appeals’ judgment and, for different

reasons, dismiss the appeal for want of jurisdiction. TEX . R. APP . P. 60.2(a).

__________________________________________
Dale Wainwright
Justice

OPINION DELIVERED: August 17, 2012

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