Amarillo Appeals Court Finds Arbitral Award Issued After Deadline May Not be Confirmed

Texas’ Seventh Court of Appeals in Amarillo has ruled that trial courts may not confirm an arbitral award that was issued after a deadline imposed by a court or the parties’ agreement.  In Sims v. Building Tomorrow’s Talent, LLC, No. 07-12-00170-CV (Tex. App. – Amarillo 2014), Sims and a representative for Building Tomorrow’s Talent, Gay, entered into a mediated settlement over a business dispute.  As part of the settlement, the parties agreed to submit any future disagreements to mediation or arbitration.  After a dispute over a number of copyrighted materials arose, both Sims and Gay agreed to invoke the arbitration provision included in the mediated settlement agreement.

The parties in the case jointly selected an impartial arbitrator and agreed on several arbitration guidelines.  Sims and Gay also scheduled an arbitral hearing and selected a deadline by which the arbitrator was required to issue his written ruling.  After the arbitrator failed to issue a written decision by the target date, Sims contacted him several times to no avail.  One year after the arbitral hearing took place, Sims sued the arbitrator for breach of contract and Gay intervened in the case.  About six months later, a trial court ordered the arbitrator to issue a decision in the dispute within 60 days.  The arbitrator finally issued an award in favor of Gay more than 19 months after the parties’ initial deadline.  The trial court confirmed the arbitral award over Sims’ objections and she appealed the case to Texas’ Seventh Court of Appeals.

In a brief opinion, the Amarillo appellate court overturned the lower court’s confirmation of the award.  The appeals court stated,

…Sims asserts the trial court erred in confirming the arbitrator’s award after the deadline set by the parties had passed. We agree. Complaints concerning the tardiness of an arbitration award are waived “unless the party notifies the arbitrators of the objection before the delivery of the award to that party.” See § 171.053(e). The parties have not cited this Court to any Texas cases involving tardiness of an award, and we have found none.

…

The Legislature clearly and unambiguously provided that an arbitrator shall make an award within the time established by the agreement to arbitrate, or if a deadline is not established by agreement, within the time ordered by the court. See § 171.053(c)(1), (2). Even assuming the parties abandoned the original deadline as argued by Gay, Whitten’s award was still outside the later deadline set by the trial court. Whitten’s conduct defeated the intent of arbitration—a contractual arrangement by parties “to obtain a speedy and inexpensive final disposition.” See Tipps, 842 S.W.2d at 268. We conclude Whitten had no authority to enter an arbitration award, whether it be outside the deadline set in the Proposed Arbitration Guidelines or in the trial court’s June 18, 2010 order.

Because the arbitrator’s decision was issued after the deadline that was initially established by the parties, the Seventh Court of Appeals reversed the trial court’s decision confirming the arbitral award and remanded the case for further proceedings.