Werline v. East Texas Salt Water Disp. Co.

• Decision Date: 18 December 2006
• Docket Number: No. 06-06-00039-CV.,06-06-00039-CV.
• Citation: 209 S.W.3d 888
• Parties: Richard Leon WERLINE, Appellant, v. EAST TEXAS SALT WATER DISPOSAL COMPANY, INC., Appellee.
• Court: Texas Court of Appeals

209 S.W.3d 888

Richard Leon WERLINE, Appellant, v. EAST TEXAS SALT WATER DISPOSAL COMPANY, INC., Appellee.

No. 06-06-00039-CV.

Court of Appeals of Texas, Texarkana.

Submitted November 30, 2006.

Decided December 18, 2006.

Rehearing Overruled January 11, 2007.

COPYRIGHT MATERIAL OMITTED

Gregory J. Wright, Jason A. Holt, Bunt & Wright, PLLC, Longview, for appellant.

Gregory D. Smith, Ramey & Flock, PC, Tyler, Jerry S. Harris, Harbour, Smith, Harris & Merritt, PC, Longview, for appellee.

Before MORRISS, C.J., ROSS and CARTER, JJ.

OPINION

Opinion by Justice ROSS.

Richard Leon Werline appeals the denial of his application to confirm an arbitration award rendered in his favor under the Texas Arbitration Act (TAA).¹ Werline had instituted an arbitration proceeding against East Texas Salt Water Disposal Company, Inc. (East Texas) for breaching its contractual duty to employ Werline as its operations manager. The arbitrator found East Texas had materially breached the contract and awarded Werline twenty-four months' pay as damages, consistent with the terms of Werline's employment contract. When Werline filed an application to confirm the award, East Texas filed a motion to vacate the award, alleging that there was no evidence to support the arbitrator's decision and that the arbitrator committed a gross mistake. The trial court denied Werline's motion to confirm, granted East Texas' motion to vacate, and directed a rehearing before another arbitrator. Werline brings this interlocutory appeal.

The first issue before this Court is whether we have jurisdiction over this appeal. East Texas contends we lack jurisdiction because, in addition to denying the application to confirm the arbitrator's award, the trial court vacated the award and directed a rehearing. We conclude, based on the plain language of the statute, that we do have jurisdiction over this appeal. The second issue is whether the trial court erred in denying Werline's application to confirm the arbitration award. Because the arbitrator did not commit such a gross mistake that would imply bad faith or failure to exercise honest judgment, the trial court erred in denying Werline's application to confirm the award. We, therefore, reverse the trial court's judgment and render judgment confirming the arbitrator's award.

FACTUAL BACKGROUND

This case centers around an employment agreement entered into by and between Werline and East Texas November 30, 2000. Werline, an employee of East Texas since 1996, alleges East Texas committed a material breach of his employment contract when it transferred him to a new position. The key terms of the employment agreement are as follows:

1. Initial Term. Subject to the terms and conditions specified in this Agreement, Employer agrees to continue to employ Employee as Operations Manager for the Initial Term as herein defined. In such position, Employee shall be responsible for those duties normally associated with that position, subject to such policies and guidelines as may be reasonably established from time to time by the Board of Directors of Employer. Employee hereby agrees to continue in such employment for a five (5) year period commencing on the date hereof ...

. . . .

6. Employer Breach. In the event of the breach of any material provision of this Agreement by Employer, which shall include, but not be limited to, severance and termination of Employee's Employment other than for cause, the Employee shall have the express contractual right and option to terminate his employment with Employer or respond to such a breach upon twenty (20) days written notice to Employer. In the event of termination or response by Employee under the conditions last provided, the Employer shall, as severance pay, be obligated and have a duty to continue pay to and provide Employee monthly payments for twenty-four (24) successive months, with each such payment to be equal to Employee's monthly base pay for the month immediately preceding such termination ... or Employer may elect to pay Employee, as severance payment, a lump sum equal to 100% of that amount which would have been paid had such payments been made monthly as last provided.

Although the contract did not provide a job description for the position of operations manager, Werline testified the following is a fair summary of the duties of the operations manager at all relevant times: (1) management of day-to-day field operations through supervision of field personnel, including foremen, hourly employees, and superintendent; (2) approving financial transactions related to operations; (3) management representation with the union; (4) representing the company with the railroad commission; (5) supervision and management of the company engineer, including the company's survey crew; (6) supervision and management of the purchasing department; and (7) evaluation of special projects. Nick Adams, former President and CEO of East Texas,² testified the above summary is accurate.

East Texas modified Werline's duties in a memorandum from Adams, dated April 21, 2003, providing as follows: "Concerning personnel, Richard Werline will be temporarily assigned essentially full-time to investigate the alternative businesses of a [Skimmed Oil Recovery] plant and the disposal of non-Woodbine water. Most of his other duties as Operations Manager will be handled by myself or other people." Werline testified he thought the assignment was merely temporary until the June 5, 2003, board meeting.

Following the June 5, 2003, board meeting, Werline was informed that he would continue investigating alternative lines of business and that Ricky Clements, the new president of East Texas, would assume most of the duties performed by the operations manager. The chief engineer was informed he should now report directly to Clements. Clements testified that Werline's assignment to investigate alternate business lines was "permanent until [the Board of Directors] found out there was going to be a change." Werline delivered a letter to Clements, dated July 28, 2003, notifying East Texas that the company had breached his employment agreement by removing him (Werline) from the duties normally associated with the position of operations manager.

As contractually agreed by the parties, Werline's claim was submitted to binding arbitration. Following a three-day hearing, the arbitrator, in a twelve-page judgment, found, among other things, that East Texas' primary business of disposal of salt water from East Texas oil-field production was declining. The arbitrator further concluded East Texas had materially breached the contract by not continuing to employ Werline as operations manager and awarded Werline twenty-four months' compensation under the severance provisions of the agreement, as well as stipulated attorney's fees and expenses. Werline filed a motion in the trial court to confirm the arbitrator's award. East Texas filed a motion to vacate the arbitrator's award. The trial court found that there was no evidence to support several of the arbitrator's findings and that

the material factual findings in the Award are so against the evidence and the stipulated and judicially admitted facts before the Arbitrator that they manifest gross mistakes in fact and law, a failure to exercise honest judgment, the lack of impartiality and constitute willful misconduct resulting in an award that was arbitrary and capricious.

The trial court denied Werline's motion to confirm, vacated the arbitration award, and ordered a rehearing.

JURISDICTION

East Texas contends this Court lacks jurisdiction because the trial court vacated the award and directed a rehearing. In support of its position, East Texas directs our attention to a decision of the Fourteenth District Court of Appeals holding that it lacked jurisdiction over interlocutory appeals of a denial of confirmation when the trial court also vacated the award and directed a rehearing. See Prudential Secs., Inc. v. Vondergoltz, 14 S.W.3d 329 (Tex.App.-Houston [14th Dist.] 2000, no pet.). In addition, East Texas contends other states, with the exception of Missouri, have uniformly held they lack jurisdiction under similar circumstances.

The Plain Language of the Statute

Generally, only final decisions of trial courts are appealable. Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001); Hinde v. Hinde, 701 S.W.2d 637, 639 (Tex.1985); see TEX. CIV. PRAC. & REM. CODE ANN. § 51.012 (Vernon 1997). The Legislature has, however, authorized the appeal of a number of interlocutory orders. The TAA provides:

(a) A party may appeal a judgment or decree entered under this chapter or an order:

(1) denying an application to compel arbitration made under Section 171.021;

(2) granting an application to stay arbitration made under Section 171.023;

(3) confirming or denying confirmation of an award;

(4) modifying or correcting an award; or

(5) vacating an award without directing a rehearing.

TEX. CIV. PRAC. & REM.CODE ANN. § 171.098 (Vernon 2005). Section 171.098 is substantially similar to Section 19 of the Uniform Arbitration Act. Compare TEX. CIV. PRAC. & REM.CODE ANN. § 171.098 with UNIF. ARBITRATION ACT § 19, 7 Part I U.L.A. 714 (2005).

The dispute in this case is whether denial of a motion to confirm an arbitration award can be appealed when the trial court also vacates the award and directs a rehearing. When interpreting a statutory provision, we seek to find and apply the intent of the Legislature; and if the text is unambiguous, we will be guided by "the statute's plain language unless that interpretation would lead to absurd results." Tex. Dep't of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 176-77 (Tex.2004); see City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex.2003). Under the plain language of the statute, a party can appeal the denial of an application to confirm an arbitration award, but cannot appeal an order which...