Pasadera Builders, LP v. Todd Hughes
04-17-00021-CV
| Tex. App. | Dec 13, 2017Background
- Pasadera Builders (builder) and Todd Hughes (homeowner) contracted for construction of a custom home; post-completion water intrusion and mold issues arose in 2014–2015.
- Disputes over warranty obligations led to offers under the Texas Residential Construction Liability Act (RCLA), then litigation; the trial court compelled arbitration per the contract.
- The contract provided: "The prevailing party in any action to enforce the terms of this Agreement shall be entitled to receive from the non-prevailing party all reasonable attorney's fees and all expenses and court or arbitration costs."
- After a nine-day arbitration, the panel found Pasadera breached the express limited warranty (water intrusion/mold) but denied liability on several other claims and found Pasadera’s RCLA offer reasonable; because Hughes rejected a reasonable offer, his recoverable award was limited.
- The panel concluded neither party was a "prevailing party" under the contract; Hughes was awarded $103,340.26 (damages, fees, costs for pre-offer work). Pasadera moved to vacate that portion; the trial court confirmed the award and denied vacatur.
- Pasadera appealed, arguing the arbitrators exceeded their powers by not declaring Pasadera the prevailing party and by failing to award roughly $601,525.25 in fees and $184,060.26 in expenses/costs.
Issues
| Issue | Plaintiff's Argument (Pasadera) | Defendant's Argument (Hughes) | Held |
|---|---|---|---|
| Did arbitrators exceed authority by finding neither party prevailed under the contract? | Arbitrators ignored contractual fee provision and should have designated Pasadera prevailing and awarded contractual fees/costs. | Contract did not prohibit finding no prevailing party; panel interpreted contract and statutes when deciding. | Panel did not exceed powers; court affirmed confirmation—arbitrators arguably interpreted the agreement. |
| Was Townes controlling to require designation of a non-prevailing party? | Townes requires designation when agreement limits panel from splitting costs; here similar logic should apply. | Townes is distinguishable because the contract here lacked language forbidding a split or requiring designation. | Townes distinguishable; contract here did not specifically foreclose finding neither party prevailed. |
| Should court apply expanded judicial review based on contract language? | (Implied) Contract language requesting strict observance of law could expand review. | Default TAA restricted review applies absent a clear, explicit agreement to expand review. | No expanded review applied; default narrow review governs. |
| Can award be vacated for alleged legal or factual error by arbitrators? | Errors justify vacatur because result conflicts with contract fee clause. | Mistakes of law/fact are not grounds for vacatur; only exceeding powers suffices. | Mistake of law/fact insufficient; vacatur denied because arbitrators did not act beyond contractual scope. |
Key Cases Cited
- Fitzgerald v. Schroder Ventures II, LLC, 345 S.W.3d 624 (Tex. App.—San Antonio 2011) (defendant can be prevailing party where judgment is take-nothing)
- Intercontinental Group P’ship v. KB Homes Lone Star, L.P., 295 S.W.3d 650 (Tex. 2009) (prevailing-party analysis requiring affirmative recovery in certain contexts)
- East Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267 (Tex. 2010) (judicial review of arbitration awards is narrow)
- D.R. Horton-Tex., Ltd. v. Bernhard, 423 S.W.3d 532 (Tex. App.—Houston [14th Dist.] 2014) (arbitral construction of contract stands unless arbitrator exceeds authority)
- Townes Telecomm., Inc. v. Travis, Wolff & Co., L.L.P., 291 S.W.3d 490 (Tex. App.—Dallas 2009) (arbitrator exceeded power where agreement specifically barred allocation of costs between parties)
- Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) (expanded judicial review requires clear contractual intent)