Dotcom LTD CO D/B/A Dotcom LTD (Also Known as Dotcom Internet Services) and Peter Fernandez v. DP Solutions, Inc.
12-16-00340-CV
| Tex. App. | Jul 31, 2017Background
- Dotcom Ltd. Co. (Dotcom) and Peter Fernandez contracted with DP Solutions (DP) in 2006: a confidentiality agreement, a Professional Services Agreement (PSA), and Fernandez’s personal guaranty. The PSA included an arbitration clause requiring the arbitrator to issue an award within 60 days of the last mediation.
- The dispute centered on Section 16 of the PSA: whether DP promised to transfer "approximately 1,042" active dial-up users to Dotcom, and Dotcom’s subsequent reduced payments and alleged shortfall in users delivered.
- DP sued in 2010 for unpaid contract payments; Dotcom counterclaimed for breach, fraud, negligent misrepresentation, and promissory estoppel. The parties mediated and then proceeded to arbitration in 2016 before Arbitrator Robert Black (selected by Dotcom’s counsel).
- Black issued a written award in favor of DP on July 27, 2016, finding (among other things) the contract unambiguous, no breach by DP, and Dotcom’s proofs unreliable; Dotcom learned new objections only after the award.
- Dotcom moved to vacate the award arguing (1) arbitrator exceeded authority by issuing an award beyond the 60-day deadline, (2) nondisclosure of a relationship between Black and DP’s counsel denied neutrality, (3) evident partiality/bias in rulings and findings, (4) reliance on facts not presented at arbitration, and (5) denial of adequate time to analyze late-produced data. The trial court confirmed the award; this appeal followed.
Issues
| Issue | Plaintiff's Argument (Dotcom) | Defendant's Argument (DP) | Held |
|---|---|---|---|
| Arbitrator’s timeliness/authority | Award invalid because arbitrator exceeded 60‑day contractual deadline | Time limit is not jurisdictional, Dotcom waived objection by not timely raising it | Court: Time limit directional; Dotcom waived objection; claim overruled |
| Failure to disclose relationship (neutrality) | Black failed to disclose knowing DP counsel’s family, denying neutral arbitrator | Conversation was trivial; Dotcom knew facts during arbitration and did not object | Court: Complaint waived; alleged ties too trivial to show evident partiality |
| Evident partiality/bias in rulings | Black favored DP in discovery rulings, contract interpretation, and evidentiary treatment | Arbitrator has broad discretion on law, fact, and discovery; adverse rulings ≠ bias | Court: No evident partiality; adverse rulings alone insufficient to vacate award |
| Reliance on facts not presented / late data issue | Award relied on facts not in record (footnote re: market decline); denied time to analyze large database produced late | DP asserts evidence of market decline was presented; no arbitration transcript provided | Court: No record of error; presumes award correct; Dotcom waived continuance procedure; issues overruled |
Key Cases Cited
- CVN Grp., Inc. v. Delgado, 95 S.W.3d 234 (Tex. 2002) (review of arbitration confirmations is limited and deferential)
- Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504 (U.S. 2001) (courts ordinarily cannot resolve merits or factual determinations underlying awards)
- G.T. Leach Builders, LLC v. Sapphire V.P., L.P., 458 S.W.3d 502 (Tex. 2015) (distinguishing substantive vs. procedural arbitrability)
- Int’l Ass’n of Machinists v. Mooney Aircraft, 410 F.2d 681 (5th Cir. 1969) (time limits in arbitration agreements are typically directory, not jurisdictional)
- Int’l Bank of Commerce-Brownsville v. Int’l Energy Dev. Corp., 981 S.W.2d 38 (Tex. App.—Corpus Christi 1998) (untimely challenge to arbitrator’s jurisdiction is waived if not raised before adverse award)
- Burlington N.R.R. Co. v. Tuco, Inc., 960 S.W.2d 629 (Tex. 1997) (nondisclosure can establish evident partiality if it would create a reasonable impression of bias)
- Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) (awards are presumed correct when record does not demonstrate error)
- Kergosien v. Ocean Energy, Inc., 390 F.3d 346 (5th Cir. 2004) (arbitrator’s mistaken factfinding or law application is not a basis to vacate absent fraud or dishonesty)
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (arbitrators have broad discretion over discovery)