Moody Nat'l Grapevine MT, LP v. Tic Grapevine 2, LP

651 S.W.3d 450

MOODY NATIONAL GRAPEVINE MT, LP, Appellant

v.TIC GRAPEVINE 2, LP, TIC Grapevine 3, LP, TIC Grapevine 5, LP, TIC Grapevine 8, LP, TIC Grapevine 9, LP, TIC Grapevine 10, LP, TIC Grapevine 12, LP, TIC Grapevine 18, LP, TIC Grapevine 20, LP, and TIC Grapevine 22, LP, Appellees

NO. 14-21-00083-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed March 15, 2022

Christopher Hogan, Jean C. Frizzell, Harris Wells, for Appellant.

Lynne Jurek, Houston, for Appellee.

Panel consists of Justices Jewell, Zimmerer, and Hassan.

Meagan Hassan, Justice Appellees TIC Grapevine 2, LP, TIC Grapevine 3, LP, TIC Grapevine 5, LP, TIC Grapevine 8, LP, TIC Grapevine 9, LP, TIC Grapevine 10, LP, TIC Grapevine 12, LP, TIC Grapevine 18, LP, TIC Grapevine 20, LP, and TIC Grapevine 22, LP (collectively, "Appellees" or the "TIC Grapevine __, LP " entities) moved to confirm an arbitration award rendered in their favor following a dispute with appellant Moody National Grapevine MT, LP ("Moody"). The trial court granted Appellees’ motion and Moody appealed.

On appeal, Moody contends that (1) Appellees’ motion to confirm was filed outside the applicable statute of limitations, and (2) the trial court's order confirming the arbitration award impermissibly modifies the award. For the reasons below, we modify the trial court's order confirming the arbitration award and affirm as modified.

BACKGROUND

Appellees and Moody entered into a Master Lease Agreement (the "MLA") in 2005. Pursuant to this agreement, Moody operated a hotel in Grapevine, Texas and paid rent to Appellees.

In 2015, a demand for arbitration was filed by the "TIC Grapevine GP __, LLC " entities,¹ alleging that Moody failed to remit payments owed under the MLA. During arbitration, the parties filed a "Stipulation to Correct Entity Names," changing the arbitration claimants from the "TIC Grapevine GP __, LLC " entities to Appellees, the "TIC Grapevine __, LP " entities.

On June 23, 2016, the arbitrator issued an award in favor of a third group of entities: the "TIC Grapevine GP __, LP " entities.² The award orders Moody to pay the "TIC Grapevine GP __, LP " entities $1,708,800 for "back rent and interest" and $179,020.17 as "attorneys’ fees and costs." The award does not order the payment of pre- or post-judgment interest.

The "TIC Grapevine GP __, LP " entities filed a motion to confirm the arbitration award on June 23, 2017. Moody's registered agent was served with process on July 18, 2017.

Approximately one month later, Moody filed its "Original Answer, Affirmative Defense, and Response to Plaintiffs’ Motion to Confirm Arbitration Award" in the trial court. Moody asserted the statute of limitations as an affirmative defense, arguing that the motion to confirm was served on Moody outside the Federal Arbitration Act's (the "FAA") one-year deadline for confirmation of an arbitration award. See 9 U.S.C.A. § 9. Moody also filed a verified denial, asserting that the "TIC Grapevine GP __, LP " entities "do not appear to be registered entities" and "are not entitled to receive in the capacity in which they sue."

In October 2017, Appellees (the "TIC Grapevine __, LP " entities) filed an amended motion to confirm the arbitration award. Appellees stated that the "TIC Grapevine GP __, LP " entities were "erroneously named" as the plaintiffs in the original motion to confirm.

Moody filed an amended answer and response, again raising its statute of limitations defense. Moody also argued that Appellees could not seek confirmation of an arbitration award that was rendered in favor of different entities.

Appellees filed a second amended motion to confirm, which removed the "TIC Grapevine 5" entity from the list of plaintiffs. Appellees also responded to Moody's statute of limitations defense and requested for the first time that the trial court award them additional attorney's fees and pre- and post-judgment interest. Moody filed a response to Appellees’ second amended motion, again raising its statute of limitations defense.

On November 16, 2020, the trial court signed an order confirming the arbitration award. The style of the order lists the "TIC Grapevine GP __, LP " entities as the plaintiffs; however, the body of the order lists Appellees (the "TIC Grapevine __, LP " entities) as the plaintiffs. Both listings remove the "TIC Grapevine 5" entity from the enumerated plaintiffs. The order states, in relevant part:

It is therefore: ORDERED ADJUDGED and DECREED that Plaintiffs’ Motion is Granted and the Final Arbitration Award, with the corrected parties as stipulated, is confirmed.

Furthermore, it is ORDERED ADJUDGED and DECREED that the Plaintiffs be awarded their costs for this application and any subsequent proceedings.

Furthermore, it is ORDERED ADJUDGED and DECREED that the Plaintiffs be awarded their attorney's fees and expenses for this application and any appeals regarding these proceeds [sic], as well as pre and post interest from the date of the Final Award.

Moody filed a "Motion to Modify the Court's Judgment," asserting the trial court improperly modified the arbitration award by (1) granting a judgment in favor of the "corrected parties", i.e. , Appellees, (2) awarding Appellees additional attorney's fees, and (3) awarding Appellees pre- and post-judgment interest. The trial court did not rule on Moody's motion to modify, and Moody filed a notice of appeal.

ANALYSIS

Moody asserts two arguments on appeal: (1) the FAA's one-year statute of limitations bars Appellees’ motion to confirm, and (2) the trial court's order confirming the arbitration award impermissibly modifies the award. We address these issues below.

I. Standard of Review

We review a trial court's order confirming an arbitration award under a de novo standard. Southwinds Express Constr., LLC v. D.H. Griffin of Tex., Inc. , 513 S.W.3d 66, 70 (Tex. App.—Houston [14th Dist.] 2016, no pet.). The scope of our review is extraordinarily narrow, and we indulge every reasonable presumption in favor of upholding the arbitration award. Denbury Onshore, LLC v. Texcal Energy S. Tex., L.P. , 513 S.W.3d 511, 515 (Tex. App.—Houston [14th Dist.] 2016, no pet.).

II. Statute of Limitations

Section 9 of the FAA states, in relevant part, as follows:

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.

9 U.S.C.A. § 9 (emphasis added). Citing this provision, Moody points out that the arbitration award was signed on June 23, 2016, and the original motion to confirm the award was filed on June 23, 2017. Based on these dates, Moody raises two arguments to support its contention that the FAA's limitations period bars Appellees’ amended motion to confirm:

1. Appellees (the "TIC Grapevine __, LP " entities) originally appeared in the first amended motion to confirm, which was filed on October 20, 2017. The addition of these parties "does not relate back" to the filing of the original motion to confirm, which listed the "TIC Grapevine GP __, LP " entities as the plaintiffs.

2. Moody was not served with process until July 18, 2017, "nearly one month beyond the one-year statute of limitations." Because Appellees did not present any evidence to show they used due diligence in effecting service, their motion to confirm is barred by the statute of limitations.

Because we conclude that the FAA's one-year statute of limitations provision does not preempt the Texas Arbitration Act's (the "TAA") lack of a deadline for motions to confirm, we need not resolve these arguments here.

We begin with a threshold issue: whether the parties’ arbitration agreement is governed by the FAA, the TAA, or both.

An arbitration agreement may specify whether it is governed by the FAA or the TAA. See, e.g., In re Rubiola , 334 S.W.3d 220, 223 (Tex. 2011) (orig. proceeding) ("[t]he arbitration agreement here expressly provides for arbitration under the FAA"); Sydow v. Verner, Liipfert, Bernhard, McPherson & Hand, Chartered , 218 S.W.3d 162, 167 (Tex. App.—Houston [14th Dist.] 2007, no pet.) ("[t]he agreement ... states that the proceedings were to be governed by the Texas Arbitration Act").

However, " ‘[i]f an arbitration agreement does not specify whether the FAA or the TAA applies, but states that it is governed by the laws of Texas, both the FAA and the TAA apply unless the agreement specifically excludes federal law.’ " Natgasoline LLC v. Refractory Constr. Servs., Co. , 566 S.W.3d 871, 878 (Tex. App.—Houston [14th Dist.] 2018, pet. denied) (quoting In re Devon Energy Corp. , 332 S.W.3d 543, 547 (Tex. App.—Houston [1st Dist.] 2009, orig. proceeding) ); see also Accord Bus. Funding, LLC v. Ellis , 625 S.W.3d 612, 617 (Tex. App.—Houston [14th Dist.] 2021, no pet.) (same).

The MLA's arbitration provision falls into the latter category. In relevant part, this provision states:

Binding Arbitration. Any controversy between the parties hereto arising out of or related to this Agreement or the breach thereof or an investment in the tenant in common interests in the Project shall be settled by arbitration in Harris County, Texas, unless otherwise agreed to by the parties thereto, in accordance with the rules of The American Arbitration Association, and judgment entered upon the award rendered may be enforced by appropriate judicial action.

The MLA also provides as follows with respect to the governing law:

This Agreement shall be construed and enforced in accordance with the laws of the State in which the Project is located without regard to any applicable conflicts of laws principles that would require the application of the law of any other jurisdiction and venue

...