Conn Appliances, Inc. v. Puente
| Decision Date | 13 August 2020 |
| Docket Number | NO. 09-18-00326-CV,09-18-00326-CV |
| Parties | CONN APPLIANCES, INC., Appellant v. RICHARD PUENTE, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 58th District Court Jefferson County, Texas
Conn Appliances, Inc. (Conn's) appeals the trial court's Order granting Richard Puente's Motion to Vacate an Arbitration Award, denying Conn's Motion to Confirm the Award, vacating the Arbitration Award, and declaring Conn's Dispute Resolution Plan (the "Arbitration Agreement") void. Because we conclude the trial court erred, we reverse the trial court's order and remand the case to the trial court for proceedings consistent with this opinion.
Puente was employed by Conn's as an appliance repairman. While repairing a customer's appliance, Puente injured his thumb and hand. Puente sued Conn's, his employer, for his personal injuries. Conn's is a non-subscriber under the Texas Workers' Compensation Act. See Tex. Labor Code Ann. § 406.003. Puente alleged that Conn's was negligent in failing to provide him the necessary tools to perform the repair work he was assigned to do, resulting in an injury to his right thumb and hand.
Conn's had an Arbitration Agreement with Puente. The Arbitration Agreement included the following provisions:
In response to the lawsuit, Conn's filed an Answer and alleged that the parties had entered into a binding Arbitration Agreement and sought to have the claim submitted to arbitration. Puente and Conn's then asked the trial court to enter an agreed order to abate the suit and to submit Puente's claim to binding arbitration. The parties agreed upon an arbitrator and the arbitrator held a final hearing and thereafter issued an Award. The arbitrator concluded that Conn's was negligent and awarded Puente $60,000. The arbitrator made findings of fact and conclusions of law, which included findings, in pertinent part, that: specific tools should have been provided to Puente by Conn's which would have prevented his injuries; Puente did not seek other medical treatment for almost five months after initially receiving treatment after the incident, did not follow-up with treatment, and saw his primary care health professional three times following the incident but never mentioned his hand injury; Puente stated in his recorded statement immediately following the injury that he did not feel Conn's contributed to his injury in any way and that Conn's is a safe place to work, which "greatly weighed in the final award"; Puente signed a Safety Pledge when he was hired in which he agreed he would report an unsafe act or condition, but Puente failed to report his need for the proper tools despite being trained to use them; Puente was released to return to work in September 2016 but instead of returning to Conn's, he went to work in the same position for another business, which limited future damages from September 1, 2016; Puente failed toproduce certain pay and income records; Conn's is entitled to a credit for its earlier payment to Puente for $16,025.70; Puente's reported rotator cuff injury was not caused by the injury; the Award took into account Puente's obligation to use ordinary care and to act in a reasonable manner, which the arbitrator did not find Puente did to the full extent he should have; and that Conn's "in its response, whether as to fact or law, has cited a contrary position on almost every material issue which has been carefully considered in rendering this Final Award."
Puente filed a Motion to Vacate the Arbitration Award on the grounds that the arbitrator manifestly disregarded the law by improperly considering contributory negligence principles in reducing the amount of the damages award. According to the motion, the improper ruling on damages provided a contractual ground for vacatur under the Arbitration Agreement because it allowed for vacatur when the arbitrator displays a manifest disregard for the law, and the improper ruling on damages also provided a statutory ground for vacatur because the arbitrator violated the Texas Arbitration Act (TAA) and Federal Arbitration Act (FAA) by "exceeding his powers" in issuing an award that reflects a manifest disregard of the law. Conn's filed a Motion to Confirm the award.
The trial court heard the motions and entered an Order that denied Conn's motion to confirm the arbitration award, granted Puente's motion to vacate the arbitration award, declared the arbitration agreement void, and stated that Puentecould pursue his claim in the trial court. The trial court's Order included the following findings:
Conn's appealed.
In Conn's first issue, it argues the trial court erred in granting Puente's motion to vacate the arbitrator's final award and denying Conn's motion to confirm where the only ground for vacatur presented was a claim of manifest disregard, which is no longer a valid basis for vacatur in arbitrations conducted pursuant to the FAA. In issue two, Conn's argues that, even if the FAA permits vacatur based on manifest disregard of the law, the trial court erred in finding manifest disregard of the lawbecause the arbitration award never mentioned contributory negligence. In issue three, Conn's argues the trial court erred because its order declared the entire Arbitration Agreement void based on a claim of fraud, where no evidence of fraud was presented and the arbitration includes a savings clause and disclaimer of representations. In issue four, Conn's argues the trial court erred in allowing the case to be tried in court following vacatur and Section 10 of the FAA only permits the trial court to order a rehearing by the arbitrator.
We review de novo a trial court's order confirming, modifying, or vacating an arbitration award under the FAA. Banc of Am. Inv. Servs., Inc. v. Lancaster, No. 2-06-314-CV, 2007 Tex. App. LEXIS 7100, at *8 (Tex. App.—Fort Worth Aug. 31, 2007, no pet.) (mem. op.) (citing McIlroy v. PaineWebber, Inc., 989 F.2d 817, 819-20 (5th Cir. 1993)); see also In re Chestnut Energy Partners, Inc., 300 S.W.3d 386, 397 (Tex. App.—Dallas 2009, pet. denied); Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 567 (Tex. App.—Dallas 2008, no pet.). This de novo standard is intended to give this Court full power to give strong deference to the award. See Banc of Am. Inv. Servs., 2007 Tex. App. LEXIS 7100, at *8; see also McIlroy, 989 F.2d at 819-20. Texas law strongly favors arbitration, and judicial review of an award is narrow and exceedingly deferential. See Hoskins v. Hoskins, 497 S.W.3d 490, 494 (Tex. 2016); Myer v. Americo Life, Inc., 232 S.W.3d 401, 407-08 (Tex.App.—Dallas 2007, no pet.). An arbitration award has the same effect as a judgment of a court of last resort; accordingly, all reasonable presumptions are indulged in favor of the award and none against it. See CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002); Cambridge Legacy Grp., Inc. v. Jain, 407 S.W.3d 443, 447 (Tex. App.—Dallas 2013, pet. denied). "A party seeking to vacate an arbitration award bears the burden of presenting a complete record that establishes grounds for vacatur." Amoco D.T. Co. v. Occidental Petroleum Corp., 343 S.W.3d 837, 841 (Tex. App.—Houston [14th Dist.] 2011, pet. denied). The entire record is considered in our review. Statewide Remodeling, Inc., 244 S.W.3d at 567.
Under the FAA, an arbitration award is presumed to be valid. Myer, 232 S.W.3d at 407. An arbitration award governed by the FAA must be confirmed unless it is vacated, modified, or corrected under limited grounds. Amoco D.T. Co., 343 S.W.3d at 841. Under section 10(a), a court may vacate an arbitration decision upon the application of any party to the arbitration:
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