Eaton Commercial, L.P. v. Paradigm Hotel SA Riverwalk, LP
04-15-00705-CV
Tex. App.Oct 5, 2016Background
- Eaton Commercial (contractor) and Paradigm Hotel SA Riverwalk (owner) disputed payment under a guaranteed maximum price (GMP) construction contract; original GMP was $10,268,700 and change order #1 added $804,005.
- Eaton claimed its adjusted GMP and total costs/fee supported additional recovery; arbitration followed under the contract.
- The arbitrator awarded an "adjustment to the GMP of $769,553.33," plus $123,000 in attorney’s fees, $3,550.01 in arbitration costs, 10% prejudgment interest, and post-award interest — but did not state the final GMP or the total amount owed to Eaton after the adjustment.
- Eaton moved to clarify the award, asserting the arbitrator failed to specify the GMP baseline to which the $769,553.33 applied; the arbitrator initially denied the motion, then issued an order saying she lacked authority until a court acted.
- The trial court confirmed the award in the specific amounts listed by the arbitrator; Eaton appealed, arguing the award is ambiguous and must be remanded to the arbitrator for clarification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award is ambiguous such that it cannot be enforced | Eaton: Award fails to state the final GMP or total amount owed after the $769,553.33 adjustment; ambiguity requires remand to arbitrator for clarification | Paradigm: Award language is final and in full satisfaction; arbitration record/clarification requests show no need for remand | Court held the award is ambiguous and trial court erred; remand to trial court with instructions to remand to arbitrator for clarification |
| Whether the trial court may itself interpret the award to resolve any ambiguity | Eaton: Court should remand to arbitrator rather than interpret the award | Paradigm: Trial court confirmation was appropriate; arbitrator’s award is complete | Court: Trial court may not interpret; must remand ambiguous awards to arbitrator for clarification |
| Whether Eaton’s failure to provide arbitration record bars relief | Paradigm: Losing party must provide arbitration record to modify or vacate award | Eaton: Court’s finding of facial ambiguity relies only on the award itself, so record is not required for remand to arbitrator | Court: Facial ambiguity is sufficient to remand to arbitrator; trial court may remand without examining arbitration record |
| Whether remand would improperly allow arbitrator to revisit merits (functus officio) | Eaton: Clarification is permissible and is the recognized exception to functus officio | Paradigm: Arbitrator cannot revisit merits after issuing award | Court: Clarification by arbitrator is an accepted exception to functus officio; remand for clarification is proper |
Key Cases Cited
- Brown v. Witco Corp., 340 F.3d 209 (5th Cir. 2003) (ambiguous arbitration awards cannot be enforced and must be clarified by arbitrator)
- Murchison Capital Partners, L.P. v. Nuance Commc’ns, Inc., 760 F.3d 418 (5th Cir. 2014) (trial courts must remand ambiguous awards to arbitrator for clarification)
- E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267 (Tex. 2010) (limited rehearing by arbitrator to correct ambiguity precedes confirmation)
- Stage Stores, Inc. v. Gunnerson, 477 S.W.3d 848 (Tex. App.—Houston [1st Dist.] 2015) (de novo review of trial court’s decision to confirm arbitration award and discussion of remand for clarification)