Brad Herriage and Logistics Solutions Intl., LLC v. BNSF Logistics LLC
05-16-01232-CV
| Tex. App. | Nov 17, 2017Background
- Herriage (owner of Logistics Solutions Intl., LLC) and BNSF entered a written agency/broker agreement providing disputes be resolved under the AAA Commercial Rules; the agreement contained a typographical date error but parties continued to work together through 2015.
- BNSF claimed appellants breached the agreement and sent a demand letter (refused/returned by appellants); BNSF later filed a demand for arbitration in December 2015 under the AAA rules.
- AAA appointed an arbitrator, set a Dallas hearing for May 4, 2016, and sent notices by e-mail (brad@lsiworld.com) and by certified and first-class mail to the address in the agreement; AAA sent notice twice (about two months before and six days before the hearing).
- Herriage admitted the e-mail address was valid but that he had not checked it for about a year; he also admitted receiving notice the evening before the hearing but chose not to appear or request a continuance.
- Arbitrator conducted the hearing in Herriage’s absence and entered an award for BNSF (damages, attorneys’ fees, costs, and a one-year injunctive covenant). Arbitrator later modified the award to correct/arbitrate costs.
- BNSF moved to confirm the award in district court; appellants moved to vacate on grounds of lack of statutory notice/return receipt, improper ex parte proceeding, and lack of notice of the modification. Trial court confirmed the award; appellants appealed.
Issues
| Issue | Plaintiff's Argument (BNSF) | Defendant's Argument (Herriage/LSI) | Held |
|---|---|---|---|
| 1. Was notice of the May 4, 2016 hearing adequate under §171.044 and due process? | AAA sent notice per the parties’ agreement and AAA rules (e-mail + certified mail); Herriage received notice but did not attend. | Statutory notice (personal or registered mail w/ return receipt at least 5 days before) was not shown; AAA notices were ineffective and hearing was ex parte. | Court: Notice was adequate — parties agreed to AAA rules, AAA compliance satisfied due process; Herriage’s failure to check e-mail/choose not to attend forecloses relief. Affirmed. |
| 2. Is absence of a certified-mail return receipt (green card) fatal to notice? | The award recited certified-mail delivery receipt and arbitrator found notice given; reasonable presumptions favor arbitration awards. | No green card appears in record, so statutory service requirement unmet. | Court: The arbitrator’s finding and compliance with AAA rules suffice; presumption favors the award; absence of green card in record does not require vacatur. |
| 3. Was the June 8, 2016 modification of the award improper or inadequately noticed? | BNSF copied appellants on the modification request by e-mail; arbitrator made a computational reduction of costs (permitted correction). | Appellants claim lack of notice and that modification exceeded authority (not a mere calculation error). | Court: Appellants were notified and failed to respond; the arbitrator’s reduction corrected a computational/clerical matter and was permissible. |
| 4. Did the alleged ex parte procedure and asserted contract expiration substantially prejudice appellants? | BNSF: No prejudice — appellants had notice and chose not to participate; no record showing prejudice. | Appellants: Ex parte arbitration prejudiced them because contract had allegedly expired months earlier and they were denied meaningful hearing. | Court: Appellants failed to show substantial prejudice and did not produce a complete arbitration record; presumptions in favor of arbitration prevail. |
Key Cases Cited
- Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677 (Tex. App.—Dallas 2010) (de novo review but extremely narrow due to policy favoring arbitration)
- Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564 (Tex. App.—Dallas 2008) (presumption in favor of arbitration awards and need for complete record to attack award)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (due process requires notice reasonably calculated to apprise parties)
- Brozo v. Shearson Lehman Hutton, Inc., 865 S.W.2d 509 (Tex. App.—Corpus Christi 1993) (attempted notice under arbitration rules can satisfy due process even if imperfect)
- CVN Group, Inc. v. Delgado, 95 S.W.3d 234 (Tex. 2002) (arbitration award has same effect as judgment of court of last resort)
- Hazar v. Crossmark, Inc., 124 S.W.3d 422 (Tex. App.—Dallas 2004) (very limited grounds for vacating an arbitration award)
- Sydow v. Verner, Liipfert, Bernhard, McPherson & Hand, Chartered, 218 S.W.3d 162 (Tex. App.—Houston [14th Dist.] 2007) (permissible correction of award to reflect arbitrator’s intended calculations)
- Baker Hughes Oilfield Ops., Inc. v. Hennig Prod’n Co., 164 S.W.3d 438 (Tex. App.—Houston [14th Dist.] 2005) (trial court may correct awards to reflect clear intended calculations)