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Howerton v. Wood

Court of Appeals of Texas, Second District, Fort Worth

February 23, 2017

TY HOWERTON APPELLANT
v.
DR. MICHAEL N. WOOD AND CINDY WOOD APPELLEES

         FROM THE 48TH DISTRICT COURT OF TARRANT COUNTY TRIAL COURT NO. 048-259642-12

          PANEL: LIVINGSTON, C.J.; GABRIEL and PITTMAN, JJ.

          MEMORANDUM OPINION [1]

          LEE GABRIEL JUSTICE.

         Appellant Ty Howerton appeals from the trial court's final judgment that confirmed an arbitration award entered in favor of appellees Dr. Michael N. Wood and Cindy Wood (the Woods). We affirm the trial court's judgment.

         I. BACKGROUND

         This appeal arises from a home renovation that went horribly wrong. In 2010, the Woods bought a home in Mansfield, Texas, for $1.35 million and hired Federal Resources, Inc. (FRI), Howerton's company, to be the general contractor for their extensive renovation plans. Howerton originally agreed to perform the renovations for approximately $625, 000, "subject to adjustments for changes." The general-contractor agreement between FRI and the Woods included an arbitration clause, mandating arbitration before a "single arbitrator" for "any and all claims or disputes between the Contractor and the Client arising out or relating to the Contract Documents." The agreement included a clause placing proper venue for "an arbitration or subsequent legal action" in "Tarrant County, Texas." The parties did not attempt to contractually expand or limit the judicial review of any resulting arbitration award. See generally Hoskins v. Hoskins, 497 S.W.3d 490, 495-96 (Tex. 2016) (holding parties may not expand judicial review of arbitration award under Texas arbitration law); Denbury Onshore, LLC v. Texcal Energy S. Tex., L.P., No. 14-15-00439-CV, 2016 WL 7108246, at *4-5 (Tex. App.-Houston [14th Dist.] Dec. 6, 2016, no pet.) (discussing effect of parties' contractual expansion of judicial review of arbitration award under federal and Texas arbitration law). The Woods and Howerton, as "President" of FRI, signed the agreement.

         To help the Woods obtain financing for their construction loan, Howerton enlisted Brian Ramon, Howerton's "associate" and the owner of a foundation- repair business, to co-sign the construction loan with Frost Bank. Ramon signed the construction-loan agreement as the "Owner" of FRI, identified as the "Contractor" in the agreement with Frost Bank.

         During the renovations, the Wood family, which included the Woods' four children, lived in the home's detached, one-bedroom pool house. The Woods believed they would be in the pool house for four months, but their stay ultimately lasted three and a half years. The project had major problems from the beginning, which Howerton characterizes as "substantial overruns, " leading Howerton to tell the Woods that it would cost an additional $850, 000 to finish the project. But by November 2011, all work on the project had stopped, the Woods had paid Howerton approximately $900, 000, and the Woods discovered that Howerton had not been paying the subcontractors and suppliers out of those funds. In February 2012, the Woods discovered that Howerton had pleaded guilty on August 31, 2010, to conspiracy to commit wire fraud by receiving money from others based on his assertion to them that he would invest the money in property while actually using the money for his own purposes.[2] See 18 U.S.C.A. §§ 1343, 1349 (West 2015). On July 10, 2012, Howerton was sentenced to sixty months in federal prison and ordered to pay $7, 905, 767 in restitution.

         Shortly before Howerton was sentenced, the Woods filed suit against Howerton, FRI, Ramon, and Ramon's foundation-repair business raising claims for breach of contract, breach of warranty, fraud, violations of the Deceptive Trade Practices Act (DTPA), violations of the Construction Trust Fund Act, breach of fiduciary duty, knowing participation in a breach of fiduciary duty, negligence, and violations of the Theft Liability Act. The defendants, all represented by counsel, moved to compel arbitration based on the clause in the general-contractor agreement. The Woods agreed to proceed to arbitration. Accordingly, the trial court entered an agreed order compelling arbitration, appointing an arbitrator, and staying the judicial proceedings pending the outcome of the arbitration.

         The arbitrator held a five-day hearing in September and October 2014, and entered an award in favor of the Woods on November 12, 2014. Howerton was represented by counsel at the arbitration hearing and testified by telephone on the last day of the hearing. The arbitrator found in the Woods' favor on each of their claims and determined that the awarded damages attributable to FRI could be recovered from Howerton and Ramon jointly and severally.

         The Woods then filed an application for the trial court to confirm the arbitration award. See Tex. Civ. Prac. & Rem. Code Ann. § 171.087 (West 2011) Howerton, who was still represented by counsel, filed a pro se motion to vacate or modify the arbitration award.[3] One month after Howerton filed his motion, his counsel moved to withdraw on the grounds that he had not been paid, which the trial court granted. Ramon then moved to vacate the arbitration award as well.

         The trial court held a hearing on the post-arbitration motions in August 2015 and took judicial notice of the arbitration record. On September 11, 2015, the trial court denied Howerton's and Ramon's motions and granted the Woods' motion to confirm the award. The Woods elected to recover under their DTPA claim; therefore, the trial court entered judgment, awarding the Woods damages against Ramon, Howerton, and FRI, jointly and severally, in the amount of $2, 572, 980 plus attorneys' fees, the arbitrator's fee, and costs. See id. § 171.092 (West 2011). Howerton appeals from the trial court's judgment and argues that the trial court erred by denying his motion to vacate or modify and by confirming the arbitration award.[4]

         II. SCOPE AND STANDARD OF THIS COURT'S REVIEW

         A. ...


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