Darling Homes of Texas, LLC and Taylor Morrison of Texas, Inc. v. Kurt Carpenter and Jennifer Carpenter, 01-23-00957-CV

In 2018 the Carpenters contracted with Darling Homes (and parent Taylor Morrison) to build a home; closing was April 2019 for $1,217,696.
The Purchase Agreement contains a broad arbitration clause (FAA) authorizing the arbitrator to award “all recognized remedies available in law or in equity” and references the Texas Residential Construction Liability Act (RCLA) and limits of recoverable damages.
The Carpenters alleged post‑closing foundation problems, retained an engineer who concluded progressive foundation failure, and submitted RCLA/DTPA demand letters; Darling Homes’ engineers disagreed.
The Carpenters arbitrated breach‑of‑contract, DTPA, fraud, negligence, and related claims; a five‑day AAA hearing followed.
The arbitrator found major construction defects in failure to follow the geotechnical report, concluded the foundation was unstable and not repairable by conventional underpinning, and awarded $669,500 for diminution in value; attorney’s fees were denied.
The trial court confirmed the award; appellants appealed arguing the arbitrator exceeded her authority because RCLA allegedly limits diminution recovery to post‑repair market‑value reduction for structural failures.

Issue	Carpenter's Argument	Darling's Argument	Held
Whether the arbitrator exceeded her authority by awarding diminution in value contrary to the RCLA and the Purchase Agreement	Arbitrator had broad authority under §11.2.5 to award recognized legal/equitable remedies; award was based on evidence and applicable law and is rationally inferable from the agreement	RCLA allows only post‑repair reduction in market value for structural failures; here defect was not repaired and allegedly not a structural failure, so the award was unauthorized and exceeded arbitrator’s powers	Affirmed. The award was rationally inferable from the arbitration agreement; even a legal error does not show excess of authority, so vacatur was improper

Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614 (1985) (federal policy strongly favors arbitration)
In re Am. Homestar of Lancaster, Inc., 50 S.W.3d 480 (Tex. 2001) (Texas courts favor arbitration)
Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) (FAA requires confirmation unless vacatur grounds under §10 exist)
Forest Oil Corp. v. El Rucio Land & Cattle Co., 518 S.W.3d 422 (Tex. 2017) (award must be rationally inferable from the contract; arbitrator exceeds authority only by disregarding the contract)
CVN Grp., Inc. v. Delgado, 95 S.W.3d 234 (Tex. 2002) (presumption in favor of arbitration awards; indulge reasonable presumptions in favor of the award)
Oxford Health Plans, LLC v. Sutter, 569 U.S. 564 (2013) (court’s review asks only whether arbitrator at least arguably construed the agreement)
E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267 (Tex. 2010) (judicial review of arbitration awards is extraordinarily narrow)
Baker Hughes Oilfield Operations, Inc. v. Hennig Prod. Co., 164 S.W.3d 438 (Tex. App.—Houston [14th Dist.] 2005) (broad arbitration clauses are construed to subsume related controversies)
Vargas v. Rigid Global Buildings, LLC, 654 S.W.3d 1 (Tex. App.—Houston [14th Dist.] 2022) (award need only be at least rationally inferable from the arbitration agreement)
D.R. Horton‑Tex., Ltd. v. Bernhard, 423 S.W.3d 532 (Tex. App.—Houston [14th Dist.] 2014) (arbitrator exceeds authority by dispensing own idea of justice)