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Guerra v. L&F Distributors, LLC

Court of Appeals of Texas, Fourth District, San Antonio

May 24, 2017

Julian GUERRA, Appellant

         From the County Court at Law No. 2, Webb County, Texas Trial Court No. 2013-CVZ-002396 C3 Honorable Roel Canales, Associate Judge Presiding

          Sitting: Sandee Bryan Marion, Chief Justice, Rebeca C. Martinez, Justice Luz Elena D. Chapa, Justice



         After arbitration of Julian Guerra's retaliatory discharge claims against L&F Distributors, both parties requested the trial court confirm the arbitration award. The trial court rendered judgment against L&F for the amounts awarded by the arbitrator, "less any and all federally required withholdings." The trial court also entered a sanctions award against Guerra. On appeal, Guerra argues the trial court impermissibly modified the arbitration award and erred by sanctioning him. L&F contends the appeal is moot and that we lack jurisdiction because Guerra accepted payment of the sum awarded in the judgment. We hold the appeal is not moot. We further hold L&F failed to identify any ground for modification of the award under the Federal Arbitration Act and the trial court erred in rendering judgment for less than the full amount awarded in arbitration. Finally, we hold the record does not support the award of sanctions.


         Julian Guerra was injured in a vehicular accident while in the course and scope of his employment as a driver and salesman for L&F Distributors. L&F fired Guerra, and he filed suit, alleging retaliatory discharge. Guerra had signed an Employee Dispute Resolution Agreement, and the parties agreed to stay the case so the parties could arbitrate Guerra's claims.

         After a two-day arbitration hearing, the arbitrator rendered a written award, ruling Guerra "is entitled to recover economic damages in the form of lost wages in the amount of $10, 126.00." The arbitrator also awarded Guerra $30, 000 for past mental anguish, but found Guerra had not met his burden to support awards of future mental anguish damages, exemplary damages, or attorney's fees. The arbitrator also ordered L&F to reimburse Guerra $200 for arbitration costs. The arbitration award concluded that it "is in full settlement of all claims and counterclaims submitted to this Arbitration. All claims not expressly granted herein are hereby, denied." The award was silent as to taxes and withholding.

         L&F and Guerra each filed pleadings in the district court asking the court to confirm the arbitration award. Both asked the trial court to render judgment on the amounts awarded by the arbitrator. However, L&F's motion included a request that the trial court explicitly authorize L&F to withhold taxes from the award for back pay. In addition, each party sought attorney's fees as sanctions, alleging the other had acted in bad faith and unjustifiably failed to abide by the arbitrator's determination.

         At the hearing on the cross motions to confirm the arbitration award, L&F's attorney stated it had paid Guerra $30, 200 for the mental anguish award and cost reimbursement. He stated the back pay award had not been paid because Guerra refused to provide a fully executed Form W4, which L&F asserted it needed in order to withhold taxes. Guerra's attorney argued that L&F was not entitled to withhold any money from the amount awarded by the arbitrator. Guerra contended L&F should have presented its argument for withholding to the arbitrator and that the trial court had no discretion to change the amount of the arbitration award. No evidence was presented on the parties' motions for sanctions and no argument was made about them. The court took the cross motions for confirmation under submission.

         On January 22, 2016, the trial court signed an order granting L&F's motion to confirm and for sanctions, but did not render a judgment. The court ordered Guerra to forward executed Forms W-4 and W-9 to L&F's attorneys and ordered Guerra to pay L&F $600 "in attorney's fees and sanctions in accordance with the Texas Rules of Civil Procedure."

         On February 3, 2016, after the order granting L&F's motion to confirm was issued, but before the judgment was signed, L&F sent a check and a letter to Guerra's attorney. The letter stated that "pursuant to the settlement of the above matter, " L&F had enclosed a check "in the gross amount of $10, 126.00 representing Mr. Guerra's claim for lost wages." However, the enclosed check was not made payable in the exact dollar amount of $10, 126; it was made in the amount of $7, 060.13. An accompanying document indicated that L&F had withheld $3, 065.87 (30.27%) for federal income taxes, FICA and Medicare. Guerra cashed the check on February 12.

         On February 17, Guerra filed a motion for reconsideration of the January 22 order. Guerra argued the trial court lacked authority to modify the arbitration award, both because no modification had been requested and because a modification was not authorized by law. Alternatively, he sought clarification on the tax rate and calculations used by L&F to support withholding at the rate of 30.27%. Guerra also argued the sanctions award was erroneous because there was no good cause for imposing the sanctions and the order failed to identify any sanctionable conduct. The trial court denied Guerra's motion.

         Four months later, the trial court signed the final judgment, which decrees that Guerra have and recover against L&F the damage amounts in the categories awarded by the arbitrator, "less any and all federally required withholdings." Additionally, the judgment expressly authorizes L&F to "process the check for lost wages in the amount of $10, 126.00, less any and all federally required withholdings." Guerra appeals the judgment.

         Acceptance of Benefits - L&F's Motion for Partial Dismissal of the Appeal

         L&F has filed a motion to partially dismiss this appeal as moot. It argues that by cashing the check, Guerra "voluntarily accepted the gross payment of $10, 126.00, " including "L&F's payment of $3, 065.87 to the federal government on his behalf." Guerra responds that he only accepted the check for $7, 060.13, an amount indisputably owed to him.

         Under the acceptance-of-benefits doctrine, a "litigant cannot treat a judgment as both right and wrong, and if he has voluntarily accepted the benefits of a judgment, he cannot afterward prosecute an appeal therefrom." Tex. State Bank v. Amaro, 87 S.W.3d 538, 544 (Tex. 2002) (quoting Carle v. Carle, 234 S.W.2d 1002, 1004 (Tex. 1950)). The doctrine is based on the principle of estoppel, which "prevents litigants from taking contradictory positions as a means of gaining an unfair advantage from the inconsistency." Kramer v. Kastleman, 508 S.W.3d 211, 217 (Tex. 2017). However, "as long as an appellant 'accepts only that which appellee concedes, or is bound to concede, to be due him under the judgment he is not estopped to prosecute an appeal which involves only his right to a further recovery.'" Amaro, 87 S.W.3d at 544 (quoting Carle, 234 S.W.2d at 1004). We will not dismiss an appeal under the acceptance of the benefits doctrine and deny a merits-based disposition "absent acquiescence in the judgment to the opposing party's irremediable disadvantage." Kramer, 508 S.W.3d at 213-14.

         L&F contends that by cashing the check, Guerra conceded the propriety of the withholding. However, it is undisputed that L&F owed Guerra the $7, 060.13 that Guerra received. There are no arguments made in this appeal that are inconsistent with his accepting those funds or that could result in Guerra receiving less than $7, 060.13 in back wages. Because Guerra's entitlement to $7, 060.13 is undisputed and unaffected by our resolution of the issue on appeal, we do not infer any acquiescence in the validity of the final judgment from his acceptance of that sum. See id. at 218.

         L&F also contends that by cashing the check, Guerra accepted the "benefit" of L&F paying taxes that Guerra owed the government. We disagree. The record does not establish Guerra owed a tax debt or that Guerra acquiesced in the payment of the alleged debt. Neither the arbitrator nor the trial court adjudicated the amount of taxes, if any, that Guerra owed on the award. Moreover, the record contains no evidence supporting the calculation of the amount withheld. The record also does not establish that Guerra "accepted" L&F's payment of the funds to the government. Nothing on the front or back of the check Guerra cashed referred to a "settlement" or indicated in any manner that endorsement of the check would constitute full satisfaction of the arbitration award. Instead, L&F withheld 30.27% of the amount awarded by the arbitrator and notified Guerra the withheld sums were being sent to the government. The withholding and payment to the government was presented to Guerra as a fait accompli, not something Guerra could reject by not negotiating the check. Under these circumstances, L&F's unilateral payment to a third party does not constitute "acceptance" of a benefit that bars an appeal. We likewise reject the contention that Guerra's conduct will result in prejudice to L&F because it may be required to pay the disputed amounts twice. Any such prejudice would be the result of L&F's unilateral act of sending the disputed funds to a third party, and not the result of Guerra negotiating a check for the undisputed amount.

         L&F has not shown that Guerra impliedly or expressly acquiesced in the judgment or that Guerra's conduct resulted in irremediable prejudice to L&F. We therefore hold this appeal is not moot and we deny the motion to dismiss. See id. at 217-18, 227-29.

         Modification of Arbitration Award

         The principal issue before us is whether the trial court impermissibly modified the arbitration award by rendering judgment in the amount of the arbitration award "less ...

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