ACI Design Build Contractors, Inc., D/B/A E3D Architecture and Engineering E3D LLC E3D, a Veritas Financial Series LLC Patrick Towne D/B/A E3D LLC Sustainable Building Solutions And E3D Architecture and Engineering v. 3405 Rainforest Drive, LLC and Michael Gill, Jr. ( 2024 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-22-00695-CV
ACI Design Build Contractors, Inc., d/b/a E3D Architecture and Engineering; E3D LLC;
E3D, a Veritas Financial Series LLC; Patrick Towne d/b/a E3D LLC Sustainable Building
Solutions; and E3D Architecture and Engineering, Appellants
v.
3405 Rainforest Drive, LLC and Michael Gill, Jr., Appellees
FROM THE 419TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-21-003047, THE HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING
MEMORANDUM OPINION
ACI Design Build Contractors, Inc., d/b/a E3D Architecture and Engineering;
E3D LLC; E3D, a Veritas Financial Series LLC; Patrick Towne d/b/a E3D LLC Sustainable
Building Solutions; and E3D Architecture and Engineering (collectively, ACI Design) appeal
from the final judgment confirming an arbitration award in favor of 3405 Rain Forest Drive,
LLC and Michael Gill, Jr. (collectively, 3405 Rain Forest). We will affirm.
BACKGROUND
In January 2019, Gill and E3D LLC Sustainable Building Solutions entered into a
fixed-price contract for the construction of a home at 3405 Rain Forest Drive in Westlake.
Construction began in March 2019. During construction, changes were made to the scope of the
project and 3405 Rain Forest paid additional requested sums related to the project. Although
the parties offer differing accounts of the preceding events, in June 2021, ACI Design Build
Contractors, Inc. d/b/a E3d Architecture and Engineering sued 3405 Rain Forest Drive LLC
alleging causes of action for breach of contract and quantum meruit based on its assertion that
3405 Rain Forest had failed to pay invoices submitted for construction services performed by
ACI Design (Case 3047). In July 2021, 3405 Rain Forest sued ACI Design alleging that it had
filed fraudulent liens on the project and seeking a declaration that the liens were invalid and
unenforceable (Case 3106). ACI Design and 3405 Rain Forest agreed to consolidate the two
cases into Case 3047 and also agreed to “draft an agreed motion to allow the Court to choose a
neutral per the parties’ Rule 11 Agreement filed on September 20, 2021.”1 The parties then filed
an agreed motion to consolidate, which the trial court granted.
The parties filed another agreed motion in the consolidated case stating that “the
parties have reached a settlement agreement disposing of the dispute” by agreeing to have a
jointly selected “Appraisal expert” provide a decision regarding “the ultimate appraised cost of
construction and allocation of costs to the Parties to determine any sums due from or to the other
Party.”2 The parties asked the trial court to choose a “neutral” from a list of attorneys Board
Certified in Construction Law by the Texas Board of Legal Specialization “to determine the
value of the parties’ contract and change orders” and to stay all proceedings “including any
pending discovery, unless so requested by the neutral selected by the Court.” In November
1
The Rule 11 Agreement did not define the term “neutral” in the context of the parties’
agreement.
2
The parties stated that the terms of the “settlement agreement” were contained in a
Confidential Mediator Proposal prepared by Lakeside Mediation Center that they maintain
constituted a Rule 11 Agreement because it had been “filed with the court” as an attachment to
ACI Design’s First Amended Answer, Affirmative Defenses, and Counterclaim filed to 3405
Rain Forest’s petition in Case 3106.
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2021, the court signed an agreed order that appointed Joe Basham “to act as the neutral to
determine the value of the parties’ contract and change orders” and to “determine what amounts,
if any, are owed to the builder or owner.” The order further provided that “the owner shall
receive credit for all corrective work completed to obtain a certificate of occupancy from the
City of Austin” and that the parties “may seek relief from the court to effectuate the
determination of the neutral.” When Joe Basham declined the appointment due to a conflict of
interest, the court signed a second agreed order on December 16, 2021 that was identical to the
first except for naming Anthony Ciccone as the neutral in Joe Basham’s place.
In February 2022, counsel for ACI Design filed a motion to withdraw, stating that
he was “unable to communicate with [ACI Design] in a manner consistent with good attorney-
client relations” and had “resigned as a W-2 employee and [ACI Design] has not paid wages
dating back to Dec. 2021.” On March 15, 2022, 3405 Rain Forest filed a response to the motion
to withdraw pointing out that the motion did not provide last known addresses for the plaintiffs
and asserting that counsel for ACI Design “had a propensity to file withdrawal motions” in cases
in which he represented ACI Design, causing litigation delays. 3405 Rain Forest stated that it
did not oppose “the delay time it would take” ACI Design to find other counsel but requested
that the court “impose a time limit for [ACI Design] to find counsel, preferably within 20 days of
the signing of the withdrawal order.” The same day, 3405 Rain Forest also filed a “Motion for
Contempt, to Show Cause, and Motion to Enforce” stating that the court had ordered “that
Anthony Ciccone be the arbitrator for the matter,” and that while 3405 Rain Forest had “paid the
arbitration fee,” ACI Design had neither “signed the arbitrator’s fee agreement nor paid the
arbitrator’s fees thus delaying the resolution of this matter.” 3405 Rain Forest again catalogued
the instances in which counsel for ACI Design had filed motions to withdraw in other cases.
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3405 Rain Forest requested that the court issue an order requiring ACI Design to show cause as
to why they had violated the court’s order by not signing “the arbitration agreement supplied by
the Court appointed neutral, and have not paid their half of the arbitration fee.” The motion also
stated: “[T]he parties agreed in the Order to a court appointed neutral and to submit to
arbitration. Thus, this Court has the ability to enforce the Order, and require [ACI Design] to
sign the arbitration agreement and pay the required arbitration fee.” 3405 Rain Forest asked the
court to find ACI Design in contempt of court and order that, if ACI Design failed to pay “the
arbitrator’s fees and sign[] the arbitration agreement within 10 business days,” the court would
strike ACI Design’s pleadings and render a default judgment in 3405 Rain Forest’s favor. ACI
Design did not file a response to the Motion for Contempt, to Show Cause, and Motion to
Enforce. Instead, one week later, on March 22, 2022, ACI Design’s counsel filed a second
motion to withdraw and asked that the court sign an order “discharging [him] as attorney of
record” for ACI Design.
On March 25, 2022, the court signed an order stating its finding that ACI Design
was in violation of “this Court’s Order dated December 16, 2021, which compelled the parties to
arbitration.” The court ordered ACI Design to “sign the arbitrator’s fee agreement and pay all of
the arbitrator’s fees [] within 10 business days of this order and appear before the arbitrator as
he so schedules.” The order further stated that, if ACI Design failed to do so, 3405 Rain Forest
“may have this Court hold a hearing to determine if” ACI Design’s pleadings and defenses
should be stricken and default judgment entered in 3405 Rain Forest’s favor. ACI Design did
not move for reconsideration, file a petition for writ of mandamus challenging the order, or
otherwise lodge any objection to the trial court’s order.
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On March 31, 2022, the trial court granted ACI Design’s counsel’s motion to
withdraw. The order stated that the appearance of new counsel for ACI “will not be a basis for
delay” and noted that the “current settings and deadlines” include “[p]ayment in the amount of
$5,000.00 to Anthony Ciccone, appointed arbitrator, and the signing of corresponding arbitration
fee agreement, on or before Ten (10) days from the date of the order regarding the same.”
The record contains a document dated March 25, 2022, titled Arbitration Agreement and
Appointment of Arbitrator prepared by Anthony Ciccone and signed by Michael Gill on behalf
of 3405 Rain Forest on April 6, 2022, and by Patrick Towne on behalf of ACI Design on April 4,
2022. The Arbitration Agreement provides:
We, the undersigned, hereby agree to submit the above-referenced matter to
Anthony F. Ciccone, as neutral and arbitrator, to arbitrate and issue an award
granting a resolution to the dispute between the undersigned parties concerning
the construction of the improvements to the property located at 3405 Rain Forest
Drive, Austin, Texas 78613 (“Residence”), pursuant to that certain Agreed Order
signed by Judge Mauzy on December 16, 2021.
We further agree that a judgment of any court having jurisdiction may be entered
upon the award. The final hearing shall take place in Austin, Texas. The parties
agree that the American Arbitration Association Construction Industry Arbitration
Rules and Mediation Procedures shall apply to this matter.
In August 2022, 3405 Rain Forest filed a “Motion to Confirm Award of Arbitrator and for
Entry of Final Judgment.” The motion stated that “the Court ordered the parties to participate in
binding arbitration before Anthony Ciccone in an Order dated December 16, 2021” and that on
August 5, 2022, “the Court-appointed Neutral/Arbitrator, Anthony Ciccone, signed an award in
favor of” 3405 Rain Forest. The motion to confirm the arbitration award attached a “Final
Findings of Neutral and Award” signed by Ciccone. Ciccone stated that he had conducted a
preliminary meeting with the parties in which they agreed that they would submit “any position
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papers, documents, or evidence” to him on or before May 21, 2022. Ciccone stated that the
parties agreed that he could have “an ex parte communication with Patrick Towne so he could
explain his side of the dispute.” Ciccone further stated:
On or around June 23, 2022, I engaged in a phone conference with Patrick Towne
during which he explained to me the background and history of the above-
referenced matter from his perspective. During this conversation, I told
Mr. Towne that we had not received a submission or any document in support of
his claims. I further explained to Mr. Towne that we do not go out and gather
evidence and perform an independent investigation. I further explained to
Mr. Towne that if there are documents or a submission he would like considered
then he would need to directly submit the documentation to this office for review.
In the interest of fairness, I agreed to extend the submission deadline to July 1,
2022, and I sent an email to the Parties disclosing the telephone conference.
On or around July 1, 2022, I received an email from Mr. Towne which had
several attachments. After the close of the evidence date, both parties submitted
additional items of evidence and/or information. All late filed evidence,
documents, and/or information was reviewed and considered in making this
award.
Ciccone then stated his findings that (1) 3405 Rain Forest overpaid ACI Design in the amount of
$373,691.98 for construction of the residence and that amount represented a reasonable, fair, and
equitable compensatory damages award; (2) 3405 Rain Forest should recover reasonable and
necessary attorneys’ fees, expenses, and costs of $79,719.61; (3) 3405 Rain Forest should
recover an additional $5,000.00 for arbitration fees; and (4) 3405 Rain Forest should be awarded
$10,000 pursuant to Texas Civil Practice and Remedies Code chapter 12 based on ACI Design’s
filing three separate liens on the residence with the intent to defraud.
In its motion, 3405 Rain Forest requested that the court confirm the award
pursuant to Texas Civil Practice and Remedies Code section 171.087. See Tex. Civ. Prac. &
Rem. Code § 171.087 (providing that “unless grounds are offered for vacating, modifying, or
correcting an award under Section 171.088 or 171.091, the court, on application of a party, shall
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confirm the award”); see also id. §§ 171.088 (providing cirumstances under which, “on
application of a party,” court shall vacate award), .091 (providing circumstances under which,
“on application,” court shall modify or correct award). ACI Design did not file a response to the
motion, nor did it file any application requesting that the court vacate or modify the award.
The court held a hearing on the motion to confirm the award on September 28,
2022. 3405 Rain Forest appeared through counsel and Patrick Towne appeared pro se. 3405
Rain Forest requested that the court confirm the award pursuant to Texas Civil Practice and
Remedies Code section 171.087, pointing out that there had been no application to vacate,
modify, or correct the award. When asked whether he objected to the court’s confirming the
award, Towne stated that it was his understanding that the neutral, Ciccone, would conduct an
appraisal of the residence and then each party would “have their own appraisal or experts to
review the appraisal” and “either agree with it or disagree with it.” The court explained to
Towne that in arbitration the arbitrator makes a decision about contested facts and issues an
opinion, which is then filed with the court for issuance of a judgment based on that opinion. The
court stated that the arbitrator’s award can only be attacked on certain grounds such as intrinsic
fraud or undue influence. The court then stated that it was going to render final judgment
confirming the arbitration award and concluded the hearing. The trial court signed a Final
Judgment that awarded 3405 Rain Forest the amounts of damages, attorneys’ fees, arbitration
fees, and penalties under Texas Civil Practice and Remedies Code chapter 12 set forth in the
arbitrator’s Final Findings and Award. This appeal followed.
DISCUSSION
ACI Design designates four issues on appeal, which reduce to complaints that:
(1) the trial court erred by ordering the parties to arbitrate their dispute in the absence of an
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arbitration agreement; and (2) the trial court erred in confirming the arbitration award. We
address the related arguments in turn.
ACI Design asserts that the trial court erred when, on March 25, 2022, it
determined that ACI Design had violated a December 16, 2021 order compelling the parties to
arbitrate their dispute and ordered ACI Design to “sign the arbitrator’s fee agreement” and
“appear before the arbitrator as he so schedules.” On appeal, ACI Design disputes that the
December 16, 2021 order was one compelling the parties to arbitrate—in essence asserting that
the trial court misinterpreted its own order—and further argues that the trial court erred by
ordering it to sign an arbitration agreement when it had not agreed to arbitrate its disputes with
3405 Rain Forest. However, ACI Design waived these complaints when it failed to raise any
objection to the court’s order and, instead, signed an arbitration agreement agreeing to submit its
dispute with 3405 Rain Forest to arbitration, with Ciccone acting as the neutral arbitrator. See
Tex. R. App. P. 33.1(a) (stating that generally, to preserve complaint for appellate review, party
must complain to trial court by timely request, objection, or motion, and trial court must rule or
refuse to rule on request, objection, or motion). ACI Design neither filed a response to 3405
Rain Forest’s motion to compel ACI Design to pay the arbitration fee and sign the arbitration
agreement Ciccone had prepared, nor did it object to the trial court’s order compelling arbitration
by filing a motion for reconsideration informing the court of its position that the parties had
not agreed to arbitration of their disputes. Regarding preservation of error, the Texas Supreme
Court has stated:
There are important prudential considerations behind our rules on preserving
error. First, requiring that parties initially raise complaints in the trial court
conserves judicial resources by providing trial courts the opportunity to correct
errors before appeal. Second, judicial-decision making is more accurate when
trial courts have the first opportunity to consider and rule on error. Third, a party
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should not be permitted to waive, consent, or neglect to complain about an error
at trial and then surprise his opponent on appeal by stating his complaint for the
first time.
Mansions in the Forest, L.P. v. Montgomery County, 365 S.W.3d 314, 317 (Tex. 2012) (cleaned
up). Rather than notify the court of its position that the parties had not agreed to arbitration, ACI
Design signed the arbitration agreement and participated in the arbitration proceeding conducted
by Ciccone. See Tex. Civ. Prac. & Rem. Code § 171.001(a) (providing that written agreement to
arbitrate is valid and enforceable if agreement is to arbitrate controversy that exists at time of
agreement); (b) (providing that party may revoke agreement only on ground that exists at law or
in equity for revocation of contract). The first time that any of the ACI Design parties asserted
that they had not agreed to arbitrate the dispute was at the hearing on 3405 Rain Forest’s motion
to confirm the arbitration award. Additionally, the statements to the court at the hearing on the
motion to confirm were not specifically that ACI Design had not agreed to arbitrate but, rather,
that Towne had a different understanding of how the dispute would be handled by the “neutral.”
Finally, Towne’s objections could be made only on his own behalf, not on behalf of the other
entities that were parties to the litigation. See Lori Bernice Sharp Tr. v. Phung, 622 S.W.3d 929,
929-30 (Tex. App.—Austin 2021, no pet.) (“According to Texas law, only a licensed attorney is
allowed to represent other parties.”); see also 1 Fox 2 Prods., LLC v. Mercedes-Benz USA, LLC,
No. 03-20-00101-CV, 2021 WL 81865, at *4 (Tex. App.—Austin Jan. 7, 2021, no pet.) (mem.
op.) (dismissing corporate appellant’s issues raised in brief because LLC’s owner could not
represent entity pro se).
We next consider whether the trial court erred by confirming the arbitration
award. As previously noted, the parties signed the arbitration agreement prepared by Ciccone,
which stated that Ciccone would use the American Arbitration Association rules to resolve their
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dispute. Rule 55(c) provides that the parties are “deemed to have consented that judgment upon
the arbitration award may be entered in any federal or state court having jurisdiction thereof.”
See https://www.adr.org/sites/default/files/ConstructionRules_web.pdf (last visited July 16,
2024). We review a trial court’s decision to confirm or vacate an arbitration award de novo.
Southwinds Express Constr., LLC v. D.H. Griffin of Tex., Inc., 513 S.W.3d 66, 70 (Tex. App.—
Houston [14th Dist.] 2016, no pet.). “Review of an arbitration award is ‘extraordinarily
narrow.’” Amoco D.T. Co. v. Occidental Petroleum Corp., 343 S.W.3d 837, 841 (Tex. App.—
Houston [14th Dist.] 2014, pet. denied) (quoting Statewide Remodeling, Inc. v. Williams, 244
SW.3 565, 568 (Tex. App.—Dallas 2008, no pet.)). We give an arbitration award great
deference and indulge every reasonable presumption in favor of the award and none against it.
CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002); Amoco D.T. Co., 343 S.W.3d
at 841. The party seeking to vacate the award “bears the burden of presenting a complete record
that establishes grounds for vacatur.” Kreit v. Brewer & Pritchard, P.C., 530 S.W.3d 231, 243
(Tex. App.—Houston [14th Dist.] 2017, pet. denied) (quoting Amoco D.T. Co., 343 S.W.3d
at 841).
The Texas Arbitration Act (TAA) requires trial courts to confirm an arbitration
award “[u]nless grounds are offered for vacating, modifying, or correcting [the] award under
Section 171.088 or 171.091.” Tex. Civ. Prac. & Rem. Code § 171.087. Here, 3405 Rain Forest
petitioned the district court to confirm the award. ACI Design did not respond and made no
effort to establish any of the grounds for vacating, modifying or correcting an arbitration award
under the TAA or otherwise. As previously noted, Towne appeared at the hearing to confirm the
award, without counsel, and stated that he had understood that Ciccone would conduct an
appraisal of the residence and then each party would review the appraisal and “either agree with
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it or disagree with it.” To the extent Towne’s comments constituted an assertion that there was
no agreement to arbitrate, as the party seeking to vacate the arbitration award, he was obligated
to present a record establishing that (1) there was no agreement to arbitrate; (2) this issue was not
adversely determined in a motion to compel or stay arbitration; and (3) he did not participate in
the arbitration without raising this objection. See id. § 171.088(a)(4); Patel v. Moin, No. 14-15-
00851-CV; 2016 WL 4254016, at *3 (Tex. App.—Houston [14th Dist.] Aug. 11, 2016, pet.
denied) (mem. op.); Aspri I nvests., LLC v. Afeef, No. 04-10-00573-CV, 2011 WL 3849487, at
*4-5 (Tex. App.—San Antonio Aug. 31, 2011, pet. dism’d) (mem. op.). Towne failed to do so.
Instead, the record reflects that on 3405 Rain Forest’s motion to compel, the trial court ordered
the parties to arbitrate and further reflects that Towne never raised this objection when
communicating with Ciccone and otherwise participating in the arbitration. On appeal, ACI
Design argues that the trial court erred by confirming the award because the arbitrator
adjudicated matters other than the amount that 3405 Rain Forest had overpaid for the
construction project. Having never raised in the trial court an objection that the arbitrator’s
award was beyond the scope of the arbitration agreement, ACI Design has failed to preserve this
issue for appellate review. See Tex. R. App. P. 33.1.
CONCLUSION
For the foregoing reasons, we overrule ACI Design’s issues challenging the trial
court’s order confirming the arbitration award and we affirm the trial court’s judgment.
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__________________________________________
Thomas J. Baker, Justice
Before Justices Baker, Kelly, and Smith
Affirmed
Filed: July 18, 2024
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