Opinion issued May 9, 2013.




                                      In The

                               Court of Appeals
                                      For The

                          First District of Texas
                           ————————————
                               NO. 01-12-00092-CV
                            ———————————
                       GONZALO SALDANA, Appellant
                                         V.
                         ESTELA SALDANA, Appellee


                    On Appeal from the 13th District Court
                           Navarro County, Texas1
                      Trial Court Case No. 10-19768-CV


                          MEMORANDUM OPINION

      Gonzalo Saldana appeals the trial court’s final decree of divorce ordering

him to sign instruments creating a security interest in favor of his wife on property

1
      The Texas Supreme Court transferred this appeal from the Court of Appeals for
      the Tenth District of Texas. Misc. Docket No. 12-9008 (Tex. Jan. 10, 2012); see
      TEX. GOV’T CODE ANN. § 73.001 (West 2005) (authorizing transfer of cases).
awarded to him in the divorce. During the underlying divorce suit, Gonzalo and

his ex-wife, Estela Saldana, reached a Mediated Settlement Agreement (MSA),

which included an agreement to arbitrate disputes concerning the interpretation of

the agreement. See TEX. FAM. CODE ANN. §6.602 (West 2006). After a dispute

arose, the parties submitted it to the arbitrator. The arbitrator rendered an award in

Estela’s favor, and the trial court rendered a final decree of divorce that conformed

to the arbitrator’s award. Gonzalo contends that the arbitration was procedurally

flawed and that the arbitrator and the trial court erroneously added to the mediated

settlement agreement new terms to which he never agreed. We affirm.

                                    Background

      In December 2010, Gonzalo filed for divorce from Estela. Estela answered

and filed a counter-petition for divorce. On April 15, 2011, Gonzalo and Estela

reached an MSA. In the MSA, Gonzalo and Estela agreed on the division of their

community estate. Gonzalo agreed to pay Estela $2.6 million in two installments:

$100,000 by April 25, 2011, and the $2.5 million balance by June 25. The parties

agreed that Gonzalo was to resume exclusive possession and operation of his

business upon payment of the $100,000 and that Estela would vacate the

community’s homestead upon receipt of the $2.5 million balance. The provision

of the MSA that gave rise to the dispute states:

      Payment of all sums payable hereunder shall be secured by all
      property awarded Husband and such property may not be sold or
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       transferred prior to full payment of the [$2.6 million] unless all sales
       proceeds are transferred directly from the Title Company closing the
       transaction into the escrow account of [Estela’s attorney].

Additionally, paragraph 19 of the MSA provides that if “any dispute arises with

regard to the interpretation of this agreement, or as to the drafting of documents

necessary to effect this agreement,” it would be referred to the mediator for

arbitration.

       A few days after Gonzalo agreed to the MSA, he paid Estela $100,000.

However, Gonzalo did not pay $2.5 million by June 25, 2011. Accordingly, on

June 30, Estela filed a motion for judgment under the MSA. Estela asked that

Gonzalo “be ordered to sign a security instrument as to all personal property

awarded to him, real estate lien note, and Deed of Trust,” and she attached a

proposed decree of divorce creating a lien against property awarded to Gonzalo to

secure the payment due to her.       Gonzalo responded to the motion, disputing

Estela’s interpretation of the agreement and asserting that she sought greater relief

than the MSA provided. Gonzalo asked the trial court to refer the dispute to the

arbitrator.

       The parties submitted position papers to the arbitrator in early August.

After Estela renewed her motion for judgment on the MSA, the arbitrator

conducted a telephone conference with the parties’ counsel on September 23, 2011.

The arbitrator announced his decision but did not issue a written award at that time.

                                          3
On September 30, Gonzalo’s counsel sent an email to Estela’s counsel

acknowledging receipt of a proposed decree of divorce. In it, Gonzalo’s counsel

acknowledged the arbitrator’s ruling at the “arbitration telephone conference,”

continuing: “Obviously, we both agree that the prior Decree version now has to be

changed to incorporate [the arbitrator’s] decisions.” He referenced the drafting and

execution of “additional documents, i.e. Deed of Trust.” Gonzalo’s counsel also

suggested possible dates for entry of the decree.

      On October 7, 2011, Estela again moved for entry of a final decree of

divorce and submitted a proposed decree incorporating the arbitrator’s award. The

decree created an equitable lien on property awarded to Gonzalo and ordered him

to sign a note, a deed of trust, and a security agreement covering the property to

secure the $2.5 million payment owed to Estela.

      The hearing to enter the decree was set for October 12. On October 11, at

about 4:30 p.m., the arbitrator issued a written award. The arbitrator found that the

$2.5 million owed to Estela was secured by a lien on all property awarded to

Gonzalo and that Gonzalo was required to execute a note, a deed of trust, and a

security agreement to carry out the parties’ agreement.

      At the next day’s hearing, Gonzalo objected to entry of the divorce decree

on the grounds that no “trial arbitration” under Chapter 171 of the Texas Civil

Practice and Remedies Code was held:

                                          4
      . . . [U]nder Chapter 171, Section 171.047 where the parties are
      entitled to be heard, present evidence, and cross-examine witnesses. I
      will submit to the Court, and I believe [Estela’s counsel] would agree,
      that all that was done was there was a telephone hearing with [the
      arbitrator]. There has been no, there has been no trial arbitration
      under Rule 171. And we believe that the Court is compelled to stay
      these proceedings and then order that the arbitration comply with
      Chapter 171 of the Texas Civil Practice and Remedies Code.

Gonzalo also objected that receiving the award after 4:30 p.m. the day before the

trial court rendered judgment left him with insufficient time to move to vacate or

modify the award under the Texas General Arbitration Act. See TEX. CIV. PRAC. &

REM. CODE §§ 171.001–.098 (West 2011). Finally, Gonzalo objected because “the

arbitrator’s award and the proposed judgment do not comply with the mediated

settlement agreement. The terms that are in [Estela’s] proposed decree, as well as

the arbitrator’s award, are not included in the mediated settlement agreement.”

      On October 13, the trial court rendered judgment conforming to the

arbitrator’s award. Gonzalo requested findings of fact and conclusions of law and,

later, filed a motion for new trial. In his motion for new trial, Gonzalo argued the

arbitration award should be vacated because the arbitrator exceeded his powers by

deciding issues that the parties did not agree to arbitrate. The motion for new trial

was overruled by operation of law. Gonzalo appeals.

                               Standard of Review

      Texas law favors arbitration. Kosty v. S. Shore Harbour Cmty. Ass’n, Inc.,

226 S.W.3d 459, 463 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) (citing
                                         5
IPCO—G. & C. Joint Venture v. A.B. Chance Co., 65 S.W.3d 252, 255 (Tex.

App.—Houston [1st Dist.] 2001, pet. denied)). Arbitration is favored as a means

of dispute resolution; courts must therefore indulge every reasonable presumption

in favor of upholding an arbitration award and make no presumptions against it.

Id. (citing IPCO—G. & C. Joint Venture, 65 S.W.3d at 256). “An arbitration

award has the same effect as a judgment of a court of last resort, and a court

reviewing the award may not substitute its judgment for the arbitrator’s merely

because the court would have reached a different decision.” Id.

      Under the TAA, on application by a party, the trial court “shall” confirm an

arbitration award “[u]nless grounds are offered for vacating, modifying, or

correcting an award under Section 171.088 or 171.091.” TEX. CIV. PRAC. & REM.

CODE ANN. § 171.087; see Baker Hughes Oilfield Operations, Inc. v. Hennig Prod.

Co., 164 S.W.3d 438, 442 (Tex. App.—Houston [14th Dist.] 2005, no pet.). As

pertinent to this appeal, a trial court shall vacate an arbitration award upon a

showing that “the arbitrators . . . (A) exceeded their powers . . . [or] (D) conducted

the hearing, contrary to Section 171.043, 171.044, 171.045, 171.046, or 171.047,

in a manner that substantially prejudiced the rights of a party . . . .” TEX. CIV.

PRAC. & REM. CODE ANN. § 171.088(a)(3)(A), (D).




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                                     Discussion

A.    Method of Conducting Arbitration

      Gonzalo argues that the arbitration award should be vacated because the

arbitrator did not conduct the arbitration hearing as required by sections 171.044

and 171.047 of the Texas Civil Practice and Remedies Code. Section 171.044

provides, generally, that the arbitrator must notify the parties of the time and place

of the arbitration hearing. Id. § 171.044(a). Section 171.047 states, “Unless

otherwise provided by the agreement to arbitrate, a party at the hearing is entitled

to: (1) be heard; (2) present evidence material to the controversy; and (3) cross-

examine any witness.”      Id. § 171.047; cf. id. § 171.088(a)(3)(C) (ground for

vacating award is that arbitrators “refused to hear evidence material to the

controversy”).

      The party seeking to modify or vacate an arbitration award has the burden in

the trial court of bringing forth the complete record and establishing the basis for

vacating or modifying the award. GJR Mgmt. Holdings, L.P. v. Jack Raus, Ltd.,

126 S.W.3d 257, 263 (Tex. App.—San Antonio 2003, pet. denied) (citing Kline v.

O’Quinn, 874 S.W.2d 776, 790 (Tex. App.—Houston [14th Dist.] 1994, writ

denied)); see also Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677,

684 (Tex. App.—Dallas 2010, pet. denied) (stating party seeking to vacate award

has burden of bringing forth complete record establishing grounds for vacatur);

                                          7
Statewide Remodeling, Inc. v. Williams, 244 S.W.3d 564, 569 (Tex. App.—Dallas

2008, no pet.) (holding movant did not carry burden of showing arbitrator

misconduct or prejudice where there was no record of arbitration proceedings);

Eurocapital Grp. Ltd. v. Goldman Sachs & Co., 17 S.W.3d 426, 429 (Tex. App.—

Houston [1st Dist.] 2000, no pet.) (stating party seeking to modify or vacate award

bears ultimate burden of proving grounds for modification or vacatur); cf. Mariner

Fin. Grp., Inc. v. Bossley, 79 S.W.3d 30, 35 (Tex. 2002) (indicating that losing

party bears ultimate burden of proving arbitrator’s partiality as ground of vacatur).

      Here, there is no record of any arbitration proceeding. We therefore cannot

determine whether the arbitrator refused to properly conduct the proceedings or

consider material evidence or—if he did so—whether it substantially prejudiced

Gonzalo’s rights. See GJR Mgmt. Holdings, L.P., 126 S.W.3d at 263 (“Because

we have no record, we have no way of judging whether the misconduct in fact

occurred and, if it occurred, whether it deprived GJR of a fair hearing.”). Neither

before the trial court nor in his brief to this court has Gonzalo identified what

evidence he was prevented from presenting due to the arbitrator’s purported error

in failing to conduct a “trial arbitration.”

      Additionally, we note that the record that does exist supports the conclusion

that Gonzalo not only agreed to the arbitration proceeding, but also initiated it and

participated in it. In June 2011, when Estela first moved for a decree of divorce

                                               8
requiring Gonzalo to execute documents perfecting a security interest in the

property awarded to him, Gonzalo himself insisted on arbitration as agreed in the

MSA.     Although Gonzalo contends he was not given adequate notice of the

arbitration hearing, both he and Estela submitted position papers to the arbitrator in

early August. Additionally, counsel for both parties participated in a telephonic

arbitration with the arbitrator on September 23. A week after the arbitration,

Gonzalo’s counsel acknowledged receipt of proposed documents from Estela’s

counsel. In that email, Gonzalo’s counsel stated,

        . . . I believe R.B. Pool [the arbitrator] contemplated that we were
       using the Decree, Note & Deed of Trust that was already in my
       possession last week when we had the arbitration telephone
       conference. Obviously, we both agree that the prior Decree version
       now has to be changed to incorporate his decisions.

(Emphasis added.)      In that email, counsel also discussed “getting a Monday

afternoon prove-up.”

       Section 171.044 requires notice of the arbitration hearing, but further

provides, “Appearance at the hearing waives the notice.” TEX. CIV. PRAC. & REM.

CODE ANN. § 171.044(b).         Here, Gonzalo submitted position papers and

participated in the telephone arbitration hearing through counsel, thereby waiving

notice. However, even if Gonzalo had not waived notice, he has not shown that

the lack of notice “substantially prejudiced” his rights. See TEX. CIV. PRAC. &

REM. CODE ANN. § 171.088(a)(3)(D).

                                          9
      Gonzalo also complains he was deprived of an adequate opportunity to seek

vacatur or modification of the award because the arbitrator did not issue a written

award until after 4:30 p.m. the day before the hearing on the motion to enter a final

decree of divorce. The record does not support this argument. On the day of the

hearing to enter a final decree of divorce, Gonzalo filed a written response,

objecting to entry of the decree based on the lack of a “trial arbitration” and his

argument that the arbitrator exceeded his powers. Gonzalo argued both of these

grounds to the trial court. And Gonzalo filed a motion for new trial again making

the argument that the arbitrator exceeded his powers. We conclude that Gonzalo

was not deprived of an opportunity to seek vacatur of the arbitration award.

B.    Interpretation of the MSA

      Gonzalo also argues the arbitrator erred by adding to or modifying the terms

of the MSA, which was “binding on the parties.” See TEX. FAM. CODE. ANN.

§ 6.602(b). Specifically, Gonzalo contends the arbitrator exceeded his powers by

entering an award that required him to execute documents to perfect Estela’s

security interest in the property he was awarded, securing the $2.6 million he

agreed to pay Estela. He further contends the trial court erred in incorporating the

award in the final decree.

      An arbitrator exceeds his power by deciding a matter not properly before

him. Pheng Invs., Inc. v. Rodriquez, 196 S.W.3d 322, 329 (Tex. App.—Fort

                                         10
Worth 2006, no pet.); Barsness v. Scott, 126 S.W.3d 232, 241 (Tex. App.—San

Antonio 2003, pet. denied). “The authority of arbitrators is derived from the

arbitration agreement and is limited to a decision of the matters submitted therein

either expressly or by necessary implication.” Centex/Vestal, 314 S.W.3d at 684

(citing Gulf Oil Corp. v. Guidry, 327 S.W.2d 406, 408 (Tex. 1959)).

      Although Gonzalo contends the arbitrator exceeded his power, he actually is

complaining that the arbitrator misconstrued the terms of the parties’ agreement in

requiring Gonzalo to execute documents to perfect a lien in Estela’s favor on all

the real property awarded to Gonzalo. Because the decision the arbitrator made—

determining what the parties meant when they agreed to “secure” the payment to

Estela with the property awarded to Gonzalo—was squarely within the scope of

the arbitrator’s powers as set forth in the MSA, we conclude that the arbitrator did

not exceed his powers. See id. (holding complaint that arbitrator erred by making

legally incorrect determination was not complaint that arbitrator exceeded powers);

Pheng Invs., Inc., 196 S.W.3d at 329–30 (holding that arbitrators did not exceed

their powers under TAA where agreement contained broad arbitration clause;

appellant’s complaint was actually that arbitrators had made mistake of law or fact

in making award).

      Having determined that Gonzalo has not shown that the arbitrator either

(1) conducted the arbitration in violation of Texas Civil Practice and Remedies

                                        11
Code section 171.044 or 171.047 or (2) exceeded his powers, we accordingly hold

that the trial court did not err by incorporating the terms of the arbitrator’s award

into the final decree of divorce. See Eurocapital Grp., Ltd., 17 S.W.3d at 429

(stating party seeking to modify or vacate award bears ultimate burden of proving

grounds for modification or vacatur); GJR Mgmt. Holdings, L.P., 126 S.W.3d at

263 (stating Texas law provides that party seeking to vacate arbitration award has

burden in trial court of bringing forth complete record and establishing any basis

warranting vacation of award); see also TEX. CIV. PRAC. & REM. CODE ANN.

§ 171.087 (providing trial court “shall” confirm arbitration award “[u]nless

grounds are offered for vacating, modifying, or correcting an award under Section

171.088 or 171.091”).

      We overrule Gonzalo’s issue.

                                    Conclusion

      We affirm the trial court’s judgment.




                                              Rebeca Huddle
                                              Justice

Panel consists of Justices Keyes, Sharp, and Huddle.




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