Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

The Holmes Builders at Castle Hills, Ltd. v. Gordon

Court of Appeals of Texas, Fifth District, Dallas

February 28, 2018


         On Appeal from the 95th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-16-00364

          Before Justices Lang-Miers, Myers, and Boatright



         The Holmes Builders at Castle Hills, Ltd. and THBGP, Inc. appeal the trial court's entry of judgment on the arbitration award in favor of Albert H. Gordon and Lawanda P. Gordon. Appellants bring five issues contending the trial court erred by (1) failing to dismiss the Gordons' claims as barred by res judicata; (2) failing to dismiss the Gordons' claims as barred by limitations; (3) failing to vacate the arbitration award because appellants' warranty excluded each element of recovery awarded by the arbitrator; (4) failing to vacate the arbitration award because it violated the Texas Property and Casualty Insurance Guaranty Act; and (5) awarding the Gordons their attorney's fees and failing to award appellants their attorney's fees. We affirm the trial court's judgment.


         In 2008, the Gordons hired The Holmes Builders to build their home. The parties signed a construction contract, which included a limited warranty attached to the contract. Both the construction contract and the warranty contained arbitration provisions for any dispute arising from the contract or the warranty. The provision stated the dispute would be "submitted to binding arbitration as provided by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) or, if applicable, by similar state statute, and not by or in a court of law."

         Soon after the Gordon's moved in, defects in the foundation became apparent. A survey showed the house was one-and-a-half inches out of levelness. Appellants worked with the foundation and engineering contractors for several years to repair the damage to the foundation, the home, and the landscaping.

         On June 15, 2012, the Gordons filed suit against appellees and the foundation subcontractors. The next week, the Gordons nonsuited appellants and instituted an arbitration action against them. Appellants intervened in the lawsuit, seeking contribution from the subcontractors in the event appellants were found liable in the arbitration proceeding. The litigation with the subcontractors was settled by a written agreement dated August 23, 2013. In the settlement agreement, the subcontractors agreed to pay the Gordons and appellants in exchange for their agreement not to pursue claims or contribution against the subcontractors. Also in the settlement agreement, appellants promised to repair the foundation and to undertake "reasonable and necessary cosmetic and other repairs caused by foundation distress to [bring] the home and landscaping to 'as new' condition by June 1, 2014." The Gordons agreed to dismiss the arbitration proceeding upon satisfactory completion of the repairs.

         On August 1, 2014, while the repairs under the settlement agreement were under way, appellants' insurer was designated an "impaired insurer" and was placed in liquidation. This stayed any further action under the settlement agreement for 180 days. At that time, some foundation work as well as some cosmetic and landscape repairs remained. When the stay from the receivership expired, the Gordons demanded appellants complete the work under the settlement agreement. Appellants completed the foundation work, but they did not complete the cosmetic and landscape repairs.

         At the conclusion of the arbitration proceeding, the arbitrator found the Gordons "prevailed on two causes of action: breach of contract for violation of a mediated settlement agreement dated August 23, 2013, and breach of Respondent The Holmes Builders at Castle Hills Ltd.'s express warranty to repair." The arbitrator awarded the Gordons $448, 450.33 for damages, costs, expert fees, and attorney's fees.

         The Gordons filed in district court a petition to confirm the arbitration award. Appellants opposed the petition, asserting the arbitration award was erroneous because the Gordons' claims were barred by res judicata and limitations, the damages awarded were not based on the underlying contract, and the award violated the Texas Property and Casualty Insurance Agreement. The trial court confirmed the arbitration award, entering judgment for the Gordons.


         Arbitration of disputes is strongly favored under both federal and Texas law. Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898 (Tex. 1995) (per curiam); Cambridge Legacy Grp., Inc. v. Jain, 407 S.W.3d 443, 447 (Tex. App.-Dallas 2013, pet. denied). We review a trial court's decision to vacate or confirm an arbitration award de novo based on the entire record. Cambridge, 407 S.W.3d at 447. However, all reasonable presumptions are indulged to uphold the arbitrator's decision, and none are indulged against it. Id. An arbitration award has the same effect as a judgment of a court of last resort, and it is presumed valid and entitled to great deference. Id. Review of an arbitration award is so limited that even a mistake of fact or law by the arbitrator in the application of substantive law is not a proper ground for vacating an award. Id.

         Under both the Federal Arbitration Act (FAA) and the Texas Arbitration Act (TAA), there are no common-law grounds for vacating an arbitration award. Instead, under both acts, vacatur is limited to the grounds expressly provided by statute. See 9 U.S.C. § 10(a); Tex. Civ. Prac. & Rem. Code Ann. § 171.088 (West 2011); Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584 (2008) ("We now hold that §§ 10 and 11 respectively provide the FAA's exclusive grounds for expedited vacatur and modification."); Hoskins v. Hoskins, 497 S.W.3d 490, 491, 494 (Tex. 2016) (statutory grounds for vacatur of arbitration award are exclusive; common-law ground of manifest disregard of law is not a ground for vacatur under the TAA). Both acts provide for vacating an arbitration award if the arbitrators "exceeded their powers." 9 U.S.C. § 10(a)(4) ("In any of the following cases the United States court . . . may make an order vacating the award . . . where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter was not made"); Civ. Prac. § 171.088(a)(3)(A) ("On application of a party, the court shall vacate an award if . . . the arbitrators . . . exceeded their powers . . . ."). The party seeking to vacate the arbitration award has the burden of proving the grounds for vacatur. Cambridge, 407 S.W.3d at 449.

         Unless the arbitration award is vacated, modified, or corrected on a ground provided in the arbitration acts, the trial court, on application of a party, must enter an order confirming the award. See 9 U.S.C. § 9; Civ. Prac. § 171.087.


         Arbitrators derive their authority from the arbitration agreement, which limits their authority to deciding the matters submitted therein either expressly or by necessary implication. Cestex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677, 684 (Tex. App.-Dallas 2010, pet. denied). Arbitrators exceed their powers when they decide matters not properly before them or where the resulting award is not rationally inferable from the parties' agreement. Ancor Holdings, LLC v. Peterson, Goldman & Villani, Inc., 294 S.W.3d 818, 829 (Tex. App.-Dallas 2009, no pet.).

         Although arbitrators ordinarily have the power to interpret the facts and law and to apply them with little judicial review, the parties, in an agreement under the TAA, may expressly agree to limit that power and to provide for expanded judicial review of the arbitrator's decision. In Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011), the parties' arbitration provision stated, "The arbitrator does not have authority (i) to render a decision which contains a reversible error of state or federal law, or (ii) to apply a cause of action or remedy not expressly provided for under existing state or federal law." Id. at 88. The supreme court concluded this provision provided an express limitation on the power of the arbitrator "to that of a judge, whose decisions are reviewable on appeal." Hoskins, 497 S.W.3d at 494 (quoting Nafta Traders, 339 S.W.3d at 93).

         Appellants argue the arbitration provision in this case contains a provision similar to that in Nafta Traders that limits the power of the arbitrator and provides for expanded judicial review. The arbitration provision was part of the construction contract and stated:

17. MEDIATION AND BINDING ARBITRATION. It is the policy of the State of Texas to encourage the peaceable resolution of disputes through alternative dispute resolution procedures. The parties to this Contract specifically agree that this transaction involves interstate commerce and that any dispute (whether contract, warranty, tort, statutory or otherwise), including, but not limited to, (a) any and all controversies, disputes or claims arising under, or relating to, this Contract, and any amendments thereto, the Property, or any dealings between the Owner and Contractor, (b) any controversy, dispute or claim arising by virtue of any representations, omissions, promises or warranties alleged to have been made by Contractor or Contractor's representative; and (c) any personal injury or property damage alleged to have been sustained by Owner on the Property or in the subdivision shall first be submitted to mediation and, if not settled during mediation, shall thereafter be submitted to binding arbitration as provided by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) or, if applicable, by similar state statute, and not by or in a court of law. All decisions respecting the arbitrability of any dispute shall be decided by the arbitrator. . . . The mediation and, if necessary, the arbitration shall be conducted pursuant to any procedures set forth in the applicable warranty documents. If there is any conflict between this Contract and such procedures, the provisions of this Contract shall control. . . .
In any arbitration proceeding between the parties:
(a) All applicable Federal and State law (including Chapter 27 of the Texas Property Code) shall apply;
(b) All applicable claims, causes of action, remedies and defenses that would be available ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.