John P. Sebastian and Gwen Sebastian v. Weston Lee Wilkerson and Bliss Builders, Inc. ( 2019 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-18-00223-CV
____________________
JOHN P. SEBASTIAN AND GWEN SEBASTIAN, Appellants
V.
WESTON LEE WILKERSON AND BLISS BUILDERS, INC., Appellees
__________________________________________________________________
On Appeal from the 284th District Court
Montgomery County, Texas
Trial Cause No. 15-01-00525-CV
__________________________________________________________________
MEMORANDUM OPINION
The appellants, John P. Sebastian and Gwen Sebastian (“the Sebastians”),
appeal the trial court’s order vacating the arbitration award. In issue one, the
Sebastians argue that the trial court erred by vacating the arbitrator’s award against
the appellees, Weston Lee Wilkerson and Bliss Builders, Inc. (“Bliss”), because
Wilkerson failed to present evidence of evident partiality or any evidence to support
any of the other grounds for vacatur. In issue two, the Sebastians argue that the trial
court erred by vacating the arbitrator’s award as to Bliss, because Bliss did not file
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a motion to vacate or to join in Wilkerson’s motion. We reverse the trial court’s
order.
Background
In June 2014, the Sebastians signed a residential construction contract with
Bliss, and Wilkerson, the President of Bliss, who signed on behalf of Bliss. In May
2015, after learning that the improvements Bliss had constructed on their property
suffered from numerous construction defects, the Sebastians filed suit against
Wilkerson and Bliss seeking, among other relief, a declaratory judgment that
Wilkerson and Bliss failed to comply with sections 53.255 and 53.256 of the Texas
Property Code, and damages for fraud and for violating the Texas Business and
Commerce Code and the Texas Deceptive Trade Practices Act. Wilkerson and Bliss
moved to compel arbitration of the Sebastians’ claims, and the trial court granted the
motion and ordered the case to be arbitrated. Bliss also filed a counterclaim alleging
that the Sebastians breached the construction contract by failing to pay draw requests
pursuant to the contract and seeking damages and a judgment declaring that Bliss
has valid and subsisting liens against the property. The parties entered into a Rule
11 agreement, in which they agreed to substitute the Honorable Suzanne Stovall as
the arbitrator for the matter. See Tex. R. Civ. P. 11.
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The case was arbitrated, and in March 2018, Stovall entered an arbitration
award in favor of the Sebastians. Stovall found that (1) Bliss materially breached the
building contract; (2) Wilkerson participated in fraud while acting as a corporate
agent for Bliss; (3) the liquidation damage clause of the contract is unconscionable;
(4) Wilkerson is personally and individually liable for the damages; (5) Bliss and
Wilkerson are jointly and severally liable for damages, including $135,765 in
economic damages, $5250 in expert witness expenses, $50,032 in attorney’s fees
and expenses, and the maximum amount of prejudgment and postjudgment interest
allowed by law; and (6) Bliss must immediately remove a lien in the amount of
$245,672.60. The Sebastians moved to confirm the arbitration award and to enter a
final judgment on the arbitrator’s award.
Wilkerson, acting pro se, moved to vacate the arbitrator’s award due to
Stovall’s alleged evident partiality resulting from nondisclosure. Wilkerson argued
that Stovall, who is currently seated as a Senior Judge, failed to disclose that in 2016,
she gave a campaign contribution to Kristin Bays of Bays and Bays Law Firm, the
firm representing the Sebastians. According to Wilkerson, Stovall’s award should
be vacated because she failed to disclose her relationship with Randy and Kristin
Bays, the Sebastians, and First Bank of Conroe. The Sebastians filed a motion in
response to Wilkerson’s motion to vacate, arguing that the trial court should confirm
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the arbitration award because Wilkerson failed to prove a statutory ground to vacate
the arbitration award as required by section 171.088 of the Texas Civil Practice and
Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 171.088 (West 2011).
The trial court conducted a hearing, during which it heard arguments
concerning the Sebastians’ motion to confirm the arbitration award and Wilkerson’s
motion to vacate the award. During the hearing, counsel for the Sebastians argued
that the trial court should confirm the award in accordance with section 171.087 of
the Texas Civil Practice and Remedies Code. See id. § 171.087 (West 2011).
Wilkerson, acting pro se, argued that he did not receive any disclosures concerning
the relationships between “all of the opposing parties and the arbitrator[,] and
Wilkerson claimed that he would not have approved Stovall as the arbitrator if he
had known the facts regarding the relationships Stovall had with the Sebastians and
their counsel. Wilkerson stated that he did not understand why his former counsel
had entered into a Rule 11 agreement to have Stovall arbitrate his case.
Wilkerson argued that Stovall’s campaign contribution to Kristin indicated
that they had a good relationship and showed some sort of “partiality.” Kristin
informed the trial court that while there were no written disclosures, Stovall orally
disclosed to Wilkerson’s former counsel that Stovall had conducted prior mediations
with Kristin. Kristin also informed the trial court that in 2016, she received a $1000
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campaign contribution from Stovall for her judicial campaign against Jennifer
Robin, who is now the sitting judge for the 410th District Court. According to
Kristin, Stovall also contributed $1000 to Robin’s campaign, and Stovall did not
disclose either contribution. The trial court noted that it could take judicial notice of
Kristin’s campaign finance report, which discloses Stovall’s 2016 contribution,
because it is a public report.
Wilkerson also claimed that Kristin’s and Stovall’s friendship status on
Facebook showed that they were close acquaintances. Kristin argued that social
media is an important tool to use when running for office and is not evidence of a
close personal friendship. According to Wilkerson, the fact that Kristin and Stovall
were both members of the Montgomery County Republican Women and the
Montgomery County Bar Association showed that “there is some sort of relationship
there.”
Wilkerson also complained that Stovall had purchased items from the
Sebastians’ business, but Kristin maintained that it had been fifteen years since
Stovall last made a purchase. According to Kristin, the Sebastians had never met
Stovall until the arbitration. Wilkerson also informed the trial court that during the
arbitration, Stovall disclosed her relationship with First Bank of Conroe and that she
had prior business dealings with Dan Dominy, and Wilkerson’s counsel did not
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object. Kristin argued that Wilkerson failed to show that any of his allegations
concerning Stovall’s failure to disclose relationships demonstrated partiality or had
a direct impact on the integrity of the arbitration process.
After taking the matter under advisement, the trial court granted Wilkerson’s
motion to vacate the arbitrator’s award and ordered the parties to conduct a new
arbitration with a different arbitrator. In its order vacating the arbitration award, the
trial court noted that evident partiality is established from the nondisclosure itself
and does not require evidence of actual bias. The trial court concluded that Stovall’s
nondisclosed campaign contribution to Kristin “was not trivial and might create an
impression of possible bias, and therefore meets the evident partiality standard of
Section 171.088 . . . .” The Sebastians appealed.
Analysis
In issue one, the Sebastians argue that the trial court erred by vacating the
arbitration award because Wilkerson failed to present evidence of evident partiality
or any evidence to support any of the other grounds for vacatur. We review a trial
court’s decision to vacate an arbitration award de novo based on the entire record,
indulging all reasonable presumptions to uphold the arbitration award. Cambridge
Legacy Grp., Inc. v. Jain, 407 S.W.3d 443, 447 (Tex. App.—Dallas 2013, pet.
denied). Because an arbitration award has the same effect as a judgment of a court
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of last resort, it is presumed valid and entitled to great deference. Id. The party
seeking to vacate an arbitration award bears the burden of bringing forth a complete
record that establishes the necessary grounds for vacating the award. Centex/Vestal
v. Friendship West Baptist Church, 314 S.W.3d 677, 684 (Tex. App.—Dallas 2010,
pet. denied); Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 568 (Tex.
App.—Dallas 2008, no pet.).
The Texas Arbitration Act (TAA) states that on application of a party, the
court shall confirm the arbitration award unless grounds are offered for vacating,
modifying, or correcting an award under sections 171.088 or 171.091. Tex. Civ.
Prac. & Rem. Code Ann. § 171.087 (West 2011). Section 171.088 states that the
court shall vacate an award if the rights of a party were prejudiced by the evident
partiality by an arbitrator appointed as a neutral arbitrator. Id. § 171.088(a)(2)(A)
(West 2011). “Evident partiality is established by the nondisclosure of ‘facts which
might, to an objective observer, create a reasonable impression of the arbitrator’s
partiality’, regardless of whether the nondisclosed information necessarily shows
partiality or bias.” Forest Oil Corp. v. El Rucio Land and Cattle Co., Inc., 518
S.W.3d 422, 431 (Tex. 2017) (quoting Tenaska Energy, Inc. v. Ponderosa Pine
Energy, LLC, 437 S.W.3d 518, 524 (Tex. 2014)). “However, if an objective observer
could not believe the undisclosed information might create a reasonable impression
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of partiality, the information is trivial and the arbitrator did not exhibit partiality by
failing to disclose it.” Amoco D.T. Co. v. Occidental Petroleum Corp., 343 S.W.3d
837, 844 (Tex. App.—Houston [14th Dist.] 2011, pet. denied).
An arbitrator is only required to disclose facts that are material. Forest Oil
Corp., 518 S.W.3d at 431. The consequences of the nondisclosure should be directly
tied to the materiality of the unrevealed information. Mariner Fin. Grp., Inc. v.
Bossley, 79 S.W.3d 30, 32-33 (Tex. 2002). A party should have access to all
information that might reasonably affect the arbitrator’s partiality, which would
obviously include a familial or close social relationship. Amoco D.T. Co., 343
S.W.3d at 843. However, an arbitrator is not required to disclose “‘trivial’” matters.
Forest Oil Corp., 518 S.W.3d at 431 (quoting Burlington N. R.R. Co. v. TUCO Inc.,
960 S.W.2d 629, 637 (Tex. 1997)). “Some undisclosed relationships are too
insubstantial to warrant vacating an award.” Id. Because the party asserting evident
partiality has the heavy burden to establish specific facts that indicate an improper
motive on the part of the arbitrator, the alleged partiality must be direct, definite, and
capable of demonstration rather than remote, uncertain, and speculative. Int’l Bank
of Commerce-Brownsville v. Int’l Energy Dev. Corp., 981 S.W.2d 38, 44 (Tex.
App.—Corpus Christi 1998, pet. denied).
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In his motion to vacate, Wilkerson argued that the arbitration award should be
vacated because Stovall failed to disclose her relationships with Randy and Kristin
Bays, the Sebastians, and First Bank of Conroe. During the hearing on Wilkerson’s
motion to vacate, Wilkerson argued that Stovall’s campaign contribution to Kristin
indicated that they had a good relationship and showed Stovall’s partiality. Kristin
maintained that both she and her opponent received a $1000 campaign contribution
from Stovall for their judicial campaigns for the 410th District Court, and her
opponent won the election. Kristin agreed that Stovall did not disclose the
contributions but asserted that campaign finance reports are available for the public
to view, and the trial court noted that it could take judicial notice of Kristin’s
campaign finance report, which disclosed Stovall’s 2016 contribution, because it is
a public report. The trial court concluded that Stovall’s nondisclosed campaign
contribution to Kristin was not trivial and might create an impression of possible
bias.
Wilkerson also complained that Stovall failed to disclose her personal
relationship with Kristin, arguing that their friendship status on Facebook and
membership in the same associations showed that they were close acquaintances
who had a relationship. Kristin argued that social media is not evidence of a close
personal friendship and that she did not know that Stovall was a member of the
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Montgomery County Republican Women. Kristin maintained that Stovall orally
disclosed to Wilkerson’s former counsel that Stovall had conducted prior mediations
with Kristin. According to Kristin, Wilkerson failed to show that any of his
allegations concerning Stovall’s failure to disclose relationships demonstrated
partiality or had a direct impact on the integrity of the arbitration process.
A campaign contribution, in and of itself, without an indication of
communication about, or coordination of, the handling of a case, does not create bias
or the appearance of impropriety. AVPM Corp. v. Childers, __S.W.3d __, 2018 WL
4870931, at *2 (Tex. App.—Dallas 2018, pet. filed); Aguilar v. Anderson, 855
S.W.2d 799, 802 (Tex. App.—El Paso 1993, writ denied). A reasonable member of
the public understands that trial judges commonly rely on members of the bar for
campaign assistance and would not conclude that the relationship between Stovall
and Kristin would translate into bias in favor of Kristin or other attorneys at her law
firm. See Hansen v. JP Morgan Chase Bank, N.A., 346 S.W.3d 769, 779-80 (Tex.
App.—Dallas 2011, no pet.). Additionally, a Facebook friendship does not show the
degree or intensity of a judge’s relationship with a person, and thus, standing alone,
provides no insight into the nature of a relationship. Youkers v. State, 400 S.W.3d
200, 206 (Tex. App.—Dallas 2013, pet. ref’d).
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Based on our examination of the entire record, Wilkerson has failed to show
that Stovall and Kristin have a significant social relationship or any other fact that
might cause a person to reasonably doubt Stovall’s ability to be impartial, nor does
the record show a pecuniary interest, direct or indirect, flowing from Kristin to
Stovall. See Karsleng v. Cooke, 346 S.W.3d 85, 96 (Tex. App.—Dallas 2011, no
pet.); Int’l Bank of Commerce-Brownsville, 981 S.W.2d at 46. The record also fails
to show that there is any personal, social, business, or political interest that will be
affected by the outcome of the arbitration. See Int’l Bank of Commerce-Brownsville,
981 S.W.2d at 46. We conclude that the facts demonstrating the relationship between
Kristin and Stovall would not, to an objective observer, create a reasonable
impression of Stovall’s partiality if not disclosed by Stovall. See TUCO, 960 S.W.2d
at 636. We further conclude that the record does not show that the relationship
between Stovall and Kristin was substantial enough to require disclosure. See Forest
Oil Corp., 518 S.W.3d at 431; TUCO, 960 S.W.2d at 637.
Wilkerson also complains that Stovall’s failure to disclose her relationship
with the Sebastians is evidence of Stovall’s evident partiality. The record shows that
Stovall first met the Sebastians during arbitration, and Stovall’s only connection to
the Sebastians concerned a purchase from their business fifteen years before the
arbitration occurred. We conclude that Stovall was not required to disclose her prior
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relationship with the Sebastians because it was a trivial and insubstantial matter. See
Forest Oil Corp., 518 S.W.3d at 431; TUCO, 960 S.W.2d at 637. Additionally, the
nondisclosure would not, to an objective observer, create a reasonable impression of
Stovall’s partiality, because it is based on a remote relationship that has no effect on
Stovall’s interest in the outcome of the arbitration. See TUCO, 960 S.W.2d at 635-
36.
Wilkerson further argues that Stovall failed to disclose her relationship with
First Bank of Conroe and her prior business dealings with Dan Dominy; however,
the record shows that Wilkerson informed the trial court that Stovall disclosed these
relationships during arbitration, and Wilkerson’s counsel did not object. Because
Stovall disclosed these relationships during the arbitration and Wilkerson failed to
complain, Wilkerson has waived his complaint for appeal. See Kendall Builders, Inc.
v. Chesson, 149 S.W.3d 796, 804-06 (Tex. App.—Austin 2004, pet. denied); Quinn
v. Nafta Traders, Inc., 360 S.W.3d 713, 719 (Tex. App.—Dallas 2012, pet. denied).
Under the circumstances of this case, we conclude that Wilkerson failed to
satisfy his burden of showing that Stovall’s nondisclosures would create a
reasonable impression of partiality to an objective observer. Accordingly, we
conclude that the trial court erred by vacating the arbitration award. We sustain issue
one. Having concluded that the trial court erred by vacating the award, we need not
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address the Sebastians’ second issue as it would not result in greater relief. See Tex.
R. App. P. 47.1. We reverse the trial court’s order vacating the arbitration award and
remand this case to the trial court to enter an order confirming the arbitration award.
REVERSED AND REMANDED.
______________________________
STEVE McKEITHEN
Chief Justice
Submitted on November 20, 2018
Opinion Delivered February 7, 2019
Before McKeithen, C.J., Horton and Johnson, JJ.
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