Chief Justice Tracy Christopher
The Houston [14th] Court of Appeals has ruled that a trial court has no inherent authority to award post-arbitration attorney’s fees to a claimant seeking to confirm an arbitration award.
CPM of America, LLC v. Roberto Gonzalez (No. 14-23-00720-CV; October 31, 2024) arose from a construction defect dispute. When Roberto Gonzalez bought a home from CPM, the newly constructed home, covered by a written warranty, turned out to have leaky pipes. After attempting to go through the warranty to get the issues fixed with no avail, Gonzalez turned to arbitration, pursuant to a clause under the warranty. He was then awarded over $120,000 in damages and attorney’s fees, which the arbitrator ordered CPM to pay within 30 days. After the 30 days had expired with no payment, Gonzalez returned to the trial court, alleging that CPM had not complied with the award and seeking to confirm the award. Gonzalez also requested additional compensation for attorney’s fees incurred as a result of CPM’s non-compliance. Gonzalez moved for a partial summary judgment and was granted the original award and an additional $3,179. However, when the parties agreed to a final judgment, they further agreed that the additional attorney’s fees amounted to $50,000, producing a judgment of $53,179. CPM appealed.
In an opinion by Chief Justice Christopher, the court of appeals affirmed in part and reversed in part. CPM raised three issues on appeal: (1) Gonzalez did not establish his entitlement to summary judgment, (2) the arbitrator exceeded his authority by making a monetary award, and (3) Gonzalez was not entitled to the award of post arbitration attorney’s fees. The court concluded as follows:
- Entitlement to Summary Judgment. Because Gonzalez chose to pursue confirmation through summary judgment, he was required to show that he was entitled to judgment as a matter of law. CPM argued that an “as is” clause in the purchase contract defeated each of the claims Gonzalez presented to the arbitrator. The court rejected this argument because an arbitration award governed by the FAA cannot be set aside on the basis that an arbitrator made a mistake of law. CPM further argued that Gonzalez failed to negate all grounds for vacating an arbitration award. The court likewise rejected this argument because CPM did not plead any grounds to vacate the award, Gonzalez has no burden to negate.
- Monetary Award. The written warranty contained an arbitration clause, which stated that if the arbitrator found in favor of the homeowner, CPM had to do a complete repair or pay the cost of the repair. The clause further stated that no arbitrator may award a monetary sum unless the parties agreed. Unfortunately for CPM, however, this argument was not made at the trial court, so CPM could not raise it on appeal. The court also concluded that CPM did not satisfy its burden of showing that the arbitrator acted outside of his authority because the arbitration clause allowed an agreed-upon monetary award. Since they could not show otherwise, the award stands.
- Post Arbitration Attorney’s Fees. Gonzalez sought additional attorney’s fees after having to enforce and confirm the arbitrator’s award when CPM did not pay him in accordance with the arbitration award. However, due to the “American Rule” that states one cannot collect attorneys fees unless so authorized by a statute or contract, the trial court had no inherent authority to make a post-arbitration award. The court thus concluded that the trial court abused its discretion in awarding extra attorney’s and reversed the $53,179 judgment.
