Opinion
NO. 09-10-00385-CV
01-05-2012
RICHARD LANCE MORRIS, Appellant v. JULIE ANN MORRIS, Appellee
On Appeal from the 9th District Court
Montgomery County, Texas
Trial Cause No. 09-10-09548 CV
MEMORANDUM OPINION
This is an appeal from a suit for dissolution of marriage between Julie Ann Morris and Richard Lance Morris. The parties participated in mediation and during the mediation reached a mediated settlement agreement regarding the terms of their divorce ("Agreement"). The Agreement provided that if any dispute arose with regard to the interpretation or performance of the Agreement or any of its provisions, then the dispute would be subject to binding arbitration. The Agreement further specifically provided, "If any Party does not produce the required documentation of the community interest in any financial account, then the Parties agree to submit any questions of fact and application of law to binding arbitration with Robert Rosenquist." Under the section entitled, "Retirement and 401K's and 529s," the parties agreed that "the division and allocation of the retirement accounts shall be contingent upon both parties exchanging supporting documentation to determine the community interest in those accounts. The Agreement required Richard to produce to Julie prior to entry of the decree, "all supporting documentation to determine community interest in his Vanguard Retirement Account, specifically, the account balance at time of marriage."
On April 1, 2010, Julie filed a motion to compel arbitration under the Agreement alleging that Richard did not provide documentation of the Vanguard account balance at the time of his marriage to Julie. After hearing the parties' arguments by submission, on April 12, 2010, the court granted the motion to compel and ordered the parties to arbitration.
The arbitrator conducted a two-hour hearing. The arbitrator found that prior to arbitration, Julie made multiple requests for documentation to support the claim of separate property of the account labeled "Rollover" as contained in the Vanguard Savings Plan, as well as inquiring into the existence of a TD Ameritrade account. The arbitrator further found that Richard supplied Julie with no documentation to evidence the character of either the Rollover account or the TD Ameritrade account. Noting that "all accounts are presumed community property unless supporting documentation is provided to clearly and convincingly show an account as separate property," the arbitrator found that this includes Richard's Rollover account, and if it exists, the TD Ameritrade account. At the conclusion of the hearing, the arbitrator awarded Richard and Julie each a one-half interest in the Rollover account, and if it exists, each a one-half interest in the TD Ameritrade account. Julie filed a motion to confirm the arbitration decision and award. Julie also filed a motion to sign and enter the decree of divorce. The court granted the motion to confirm the arbitration decision and award and entered the decree of divorce. It is from the final divorce decree that Richard filed his notice of appeal.
Texas law favors arbitration. Brazoria Cnty. v. Knutson, 176 S.W.2d 740, 743 (Tex. 1943). We review a trial court's order confirming an arbitration award under a de novo standard. GJR Mgmt. Holdings, L.P. v. Jack Raus, Ltd., 126 S.W.3d 257, 262-63 (Tex. App.—San Antonio 2003, pet. denied). A trial court's review of an arbitration award is "'extraordinarily narrow.'" Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 568 (Tex. App.—Dallas 2008, no pet.). "[A]n award of arbitrators upon matters submitted to them is given the same effect as the judgment of a court of last resort. All reasonable presumptions are indulged in favor of the award, and none against it." City of San Antonio v. McKenzie Constr. Co., 150 S.W.2d 989, 996 (Tex. 1941). "[A] trial court may set aside an arbitration award only in limited circumstances." CVN Grp. v. Delgado, 95 S.W.3d 234, 245 (Tex. 2002). "Absent specific common-law or statutory grounds for vacating, modifying, or correcting an award, the reviewing court must confirm it." Id.; see Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (West 2011).
Richard's first five issues essentially contend that the trial court erred in not vacating the arbitration award because the arbitrator failed to follow the procedural guidelines established in the Texas General Arbitration Act ("TAA"). Specifically, Richard claims that the arbitrator heard no evidence at the hearing, afforded Richard no right to be heard, and afforded him no right to cross-examine any witness. Richard further contends that this failure substantially prejudiced his rights. Richard also contends that the arbitration award should be vacated because the arbitrator failed to administer an oath to the witnesses. Finally, Richard contends in issue six that the arbitration award should be vacated as it is contrary to public policy. Specifically, Richard argues the arbitration award divests Richard of substantial separate property, acknowledged by both parties in writing. However, Julie argues that "Richard wholly failed to address to the trial court any issues or opposition with the confirmation of the arbitration decision and for the first time on appeal he alleges that the arbitrator failed in his role as arbitrator[.]"
Under the TAA, a party wishing to challenge an arbitration award has 90 days from the date of delivery of an award to apply to the trial court to vacate, to modify, or to correct the award. Tex. Civ. Prac. & Rem. Code Ann. §§ 171.088(b), 171.091(b) (West 2011). Once the trial court confirms an arbitration award without challenge and final judgment has been rendered, "'the award can be vacated only if the judgment can be [vacated], and to vacate the judgment an adequate excuse must be shown for not having presented objections to the award when the motion to confirm was heard." Hamm v. Millennium Income Fund, L.L.C., 178 S.W.3d 256, 265 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (quoting The Hartbridge, 57 F.2d 672, 673 (2nd Cir. 1932)); see also FIA Card Servs. N.A. v. Standley, No. 09-09-00240-CV, 2010 WL 2695672, at *1-2 (Tex. App.—Beaumont July 8, 2010, no pet.) (holding that party's failure to seek to vacate, modify, or correct the arbitrator's award within the statutory timeframe of delivery of the award forfeited the party's right to seek judicial review of the arbitrator's award).
There are no specific form requirements for an application to vacate an arbitrator award. See Tex. Civ. Prac. & Rem. Code Ann. § 171.088. "There appear to be no policy or efficiency reasons to require a separate, formal application, so long as the party apprizes the court and the opposing party of the desire to have the award vacated." Sydow v. Verner, Liipfert, Bernhard, McPherson & Hand, Chartered, 218 S.W.3d 162, 172 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (inclusion of request to vacate award in amended answer adequately apprised court and plaintiff of request when the substance of the party's complaint about the award was clearly before the court).
In Hamm, the First Court of Appeals analogized asserting statutory grounds for vacating an arbitration award to the requirements for pleading affirmative defenses. Hamm, 178 S.W.3d at 268.
The statutory grounds for vacating, modifying, or correcting an arbitration award under either statute are in the nature of affirmative defenses because the party asserting these grounds implicitly confesses the existence of an arbitration award, but nonetheless seeks to avoid its effect by asserting an independent reason that the award should not be enforced. Like Rule of Civil Procedure 94, which expressly requires pre-judgment pleading of affirmative defenses and "matter[s] constituting an avoidance" in other contexts, the FAA and TAA also contemplate . . . a due order of pleading with respect to motions to confirm, to vacate, to modify, or to correct, requiring a party challenging an award to raise its challenge before final judgment. This requirement makes sense given that the statutory grounds for vacatur, modification, and correction are matters--like those governed, by analogy, by rule 94--of confession and avoidance.Id. (footnotes and emphasis omitted).
In Hamm, the party seeking to vacate the arbitration award failed to file anything prior to confirmation of the award except a motion for continuance. Id. at 259, 269. The motion requested a continuance because the party "intend[ed] to prepare and present motions to vacate and/or modify the arbitration award[.]" Id. at 259. The motion did not offer any of the grounds on which the motion to vacate would be based. See Id. "The trial court had no discretion but to confirm the arbitration award if the Hamm parties did not file a motion to vacate or to modify (or otherwise challenge in any way) the award before the ruling on Millennium's motion to confirm." Id. at 272. The court held that like an affirmative defense, a party waives any challenge to an arbitration award if the party moves to vacate and produces evidence in support of its motion only after the trial court has confirmed the award and rendered final judgment. Id. at 268. The court explained that "[i]f a judgment confirming an arbitration award is final like any other, then, as it is required to do with any other judgment, a party must raise (and prove, if evidence is necessary) its confession-and-avoidance defenses before judgment." Id.
In this case, the clerk's record contains no written objection to confirmation of the arbitration award, or any motion to vacate or modify the award. On May 10, 2010, Richard filed a motion to set aside the trial court's order on the motion to compel arbitration. Arbitration took place May 11, 2010, and the arbitrator ruled in favor of Julie. On June 7, 2010, Richard filed an "Opposed Motion to Enter Order," wherein Richard sought to have the court enter an order that would set aside the court's original order compelling arbitration and set aside the arbitration award. Neither this motion, nor the attached order referenced any of the specific grounds upon which Richard was requesting the court to set aside the arbitration award. The clerk's record does not contain a signed copy of the order Richard requested the court to enter. However, the clerk's record does contain Julie's "Motion to Reconsider Sua Sponte Order Setting Aside Arbitration Award and Motion to Reconsider Judgment Nunc Pro Tunc." In Julie's motion to reconsider, she alleges that on May 21, 2010, the trial court heard Richard's motion to set aside the motion to compel arbitration, and at that time, the court made an oral ruling that the entire arbitration order be set aside. According to a court order contained in the record, the court considered the parties' motions and ordered that the order on the motion to compel arbitration be reinstated and confirmed, and that the oral ruling made by the court on May 21, 2010, is set aside and vacated. The reporter's record is not part of the appellate record, thus we have no transcript of the hearing referenced in Julie's motion or the trial court's order.
While there is some evidence in the record that Richard opposed the arbitration award, there is nothing in the record before us to indicate what, if any, grounds Richard asserted before the trial court as a basis for his opposition. We have no record of any matter discussed with regard to the court's confirmation of the arbitration award. Given this record, we conclude that Richard failed to file a timely application to vacate the arbitration award and thus forfeited his right to seek judicial review of the arbitrator's award. See Hamm, 178 S.W.3d at 270-72; compare Sydow, 218 S.W.3d at 171 n.8, 172.
Further, even if we were to reach the merits of Richard's claims, the arbitration record is not part of the appellate record. As such, there is nothing to show that the trial court considered the arbitration record when it made its rulings. The party seeking to modify or vacate the arbitrator's award has the burden in the trial court to bring forth a complete record and to establish any basis that would warrant vacating or modifying the arbitrator's award. Kline v. O'Quinn, 874 S.W.2d 776, 790-91 (Tex. App.—Houston [14th Dist.] 1994, writ denied); see generally Grissom v. Greener & Sumner Constr., Inc., 676 S.W.2d 709, 710-11 (Tex. App.—El Paso 1984, writ ref'd n.r.e.) (recognizing that the party challenging the arbitration award had the burden in the trial court of establishing facts that would warrant vacating the arbitration award). Without a written transcript of the arbitration hearing, a court is unable to determine what evidence the arbitrator refused to hear or what evidence the parties offered before the arbitrator and, consequently, the appellate court presumes the evidence was adequate to support the award. Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 568 (Tex. App.—Dallas 2008, no pet.). Further, "[t]he general rule is that without an arbitration transcript, we must presume the arbitration evidence adequately supported an award." Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677, 684 (Tex. App.—Dallas 2010, pet. denied).
Richard, as the non-prevailing party seeking to vacate the award, bore the burden in the trial court to bring forth a complete record to establish his basis for seeking to vacate the arbitration award. The record does not indicate that Richard provided the trial court with a complete record, i.e., a transcript of the arbitration proceedings. See Williams, 244 S.W.3d at 569. The grounds Richard asserts for vacatur on appeal all depend on the evidence offered and considered by the arbitrator and the manner in which the arbitrator conducted the proceedings. Without the arbitration transcript, the trial court could not determine whether the arbitrator heard evidence at the hearing, afforded Richard a right to be heard, administered oaths to the witnesses, or afforded him a right to cross-examine any witness.
For all these reasons, we overrule Richard's issues and affirm the trial court's order confirming the arbitration award and judgment.
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CHARLES KREGER
Justice
Before McKeithen, C.J., Kreger and Horton, JJ.