Darling Homes of Texas, LLC and Taylor Morrison of Texas, Inc. v. Kurt Carpenter and Jennifer Carpenter

• Court: Court of Appeals of Texas
• Decided: August 26, 2025
• Docket: 01-23-00957-CV
• Status: Published

Opinion

Opinion issued August 26, 2025

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-23-00957-CV ——————————— DARLING HOMES OF TEXAS, LLC AND TAYLOR MORRISON OF TEXAS INC., Appellants V. KURT CARPENTER AND JENNIFER CARPENTER, Appellees

On Appeal from the 113th District Court Harris County, Texas Trial Court Case No. 2023-37433

MEMORANDUM OPINION

Appellants Darling Homes of Texas, LLC (“Darling Homes”) and Taylor

Morrison of Texas Inc. (collectively, “appellants”), appeal the trial court’s order

granting appellees Kurt Carpenter and Jennifer Carpenter’s application to confirm arbitration award by entry of judgment. In one issue, appellants contend that the

trial court erred in confirming the arbitrator’s final reasoned award.

We affirm.

Background

On March 25, 2018, the Carpenters and Darling Homes executed a Purchase

Agreement for the construction of the Carpenters’ residence in Tomball, Texas (the

“home”). The Carpenters paid $1,217,696.00 for the home at closing.

A. Arbitration Agreement

Section 11.2 of the Purchase Agreement contains an agreement to arbitrate.

The arbitration agreement provides that “[a]ny and all claims, controversies,

breaches or disputes by or between the buyer and seller, arising out of or related to

this Purchase Agreement . . . shall be arbitrated pursuant to the Federal Arbitration

Act.”1 (Emphasis omitted.) Section 11.2.5 states that “[t]he arbitrator shall be

authorized to provide all recognized remedies available in law or in equity for any

cause of action that is [the] basis of arbitration.” (Emphasis omitted.) Section 11.3,

“Texas Residential Construction Liability Act,” states that the Purchase Agreement

“is subject to Chapter 27 of the Texas Property Code. The provisions of that chapter

may affect your right to recover damages arising from a construction defect.”

1 Section 11.2 of the arbitration agreement appears capitalized and in bold in the actual document.

2 (Emphasis omitted.) And, Section 11.4 states that “[t]he parties agree and

understand that, to the extent allowed by law, any damages which Buyer may recover

from Seller are strictly limited to the damages allowed under the Texas Residential

Construction Liability Act [(‘RCLA’)].”2 (Emphasis omitted.) The arbitration

agreement further states that “the decision of the arbitrator shall be final and

binding.” (Emphasis omitted.)

The construction of the Carpenters’ home was completed in April 2019. The

purchase of the home closed on April 11, 2019.

In January 2020, the Carpenters sent a demand letter to Darling Homes under

the Texas Deceptive Trade Practices Act (“DTPA”) and Texas Business and

Commerce Code section 17.41 regarding a claim against Darling Homes, and a

notice of construction defects pursuant to the RCLA. The letter stated that in the

months following the closing, the Carpenters became concerned about persistent

excessive moisture in the soil next to the foundation of the home as well as the

growth of algae on the exposed foundation beams. The Carpenters hired an expert,

Randy Riddell, P.E., to inspect the property. The letter stated that based on his

several site inspections and review of the construction documents, Riddell had

concluded that the foundation system of the Carpenters’ home “is not stable and is

2 See TEX. PROP. CODE ANN. §§ 27.001–.009.

3 not performing its intended design function, due to a loss of structural integrity, and

is in a condition of progressive foundation failure.”3

Darling Homes responded in writing that Brian Eubanks with Paragon

Structural Engineering (“Paragon”) had inspected the Carpenters’ home and

investigated the Carpenters’ structural foundation concerns. The findings of the

Paragon report were that “the foundation of the subject residence does not exceed

the performance standards for overall (global) deflection and/or tilt pursuant to the

builder’s express limited warranty.” The letter continued that the Paragon report

found that “the foundation of the subject residence is performing its intended

function” and “structural remedial foundation measures are not warranted.” The

letter further stated that MLA Engineers, which had designed the foundation system

of the Carpenters’ home, had previously performed a Level B investigation in

response to the Carpenters’ concerns, and, like Paragon, it found no structural

failure.

3 According to Riddell’s report, there was no evidence that Darling Homes either provided the appropriate type and volume of fill that would be required for the home or that any of the various layers of fill below the surface (beyond the top six inches) were properly compacted as required by the soil data and site preparation requirements of the Geotech Engineering and Testing Geotechnical Study upon which construction of the Carpenters’ home was based.

4 B. Arbitration Proceedings

The Carpenters filed a demand for arbitration against Darling Homes and its

parent company, Taylor Morrison of Texas Inc., with the American Arbitration

Association (“AAA”). They asserted causes of action against appellants for

violations of the DTPA, fraud in a real estate transaction, common law fraud, breach

of contract, negligence, and gross negligence, and they sought recovery of attorney’s

fees under various statutes and as the prevailing party as provided by the parties’

agreement.

Darling Homes answered, asserting general and specific denials and

numerous defenses, including that the RCLA controls the Carpenters’ claims and

their causes of action and that the damages sought by the Carpenters conflict with

the RCLA.

The arbitration hearing, which included witness testimony and the admission

of evidence, lasted five days. On June 5, 2023, the arbitrator issued a final reasoned

award (corrected), which provided, in pertinent part:

After considering the sworn testimony of the witnesses, the exhibits, the pleadings on file, a site visit, applicable law, the pre- and post-hearing briefs and attorneys’ fees affidavits, the Arbitrator finds as follows:

Breach of Contract

1. [The Carpenters] and [appellants] entered into a Purchase Agreement for the construction and purchase of the Home.

5 2. The Purchase Agreement, the Specifications[,] and applicable building codes and standards required [appellants] to design and construct the Home in compliance with the applicable Geotech Engineering and Testing (“GET”) study for the home.

....

5. [Darling Homes] failed to follow the GET study by failing to:

a. remov[e] vegetation, tree roots, and organics;

b. keep[] a record of any on-site fill soils;

c. proof-roll[] subgrade areas;

d. remov[e] . . . surficial cohesionless sandy soils since they will be unstable underneath slabs;

e. place[] and compact[] select structural fill underneath slabs, or perform fly ash stabilization of on-site cohesionless soils used as fill; and

f. monitor[] . . . the site preparation and construction by a qualified engineer or technician for quality control.

6. [Appellants’] failure to comply with the GET study is a major construction defect and has caused damage to the Home. The bearing capacity of the uncompacted sand underneath the concrete slab does not meet the requirements of the GET study. The foundation system is not stable and is not performing its intended design function. Conventional underpinning-type foundation-repair techniques would not structurally repair the foundation system.

7. [The Carpenters] fully performed their contractual obligations and [appellants] materially breached the Purchase Agreement by:

a) Failing to construct the Home in substantial conformance with the plans and features list for the Home; 6 b) Failing to construct the Home on fill soil in accordance with the recommendations and inspection of licensed civil and soils engineers; [and]

c) Failing to construct the Home in accordance with the recommendations of geotechnical and structural engineers to meet the requirements of the soils and structural conditions of those local agencies.

8. [The Carpenters] are entitled to damages for breach of contract from [appellants] for the diminution in value of the Home in the amount of $669,500.00.

The arbitrator denied the Carpenters’ remaining claims. As to the Carpenters’ claim

for attorney’s fees, the arbitrator found:

The Purchase Agreement between [the Carpenters] and [appellants] has conflicting provisions relating to Attorney’s Fees and Costs of Arbitration. Article 11.2.4 of the Purchase Agreement provides that attorney’s fees and costs shall be borne separately between the parties. Article 11.4 provides that costs and attorney’s fees are recoverable by the prevailing party. In this case, paragraph 11.2.4 is bold, highlighted and titled “Costs and Attorney’s Fees” while Article 11.4 is not highlighted and appears later in the agreement under a paragraph titled “Limitation of Claims and Damages - Two Year Period of Limitations.” The clear intention under the terms of the Purchase Agreement appear to be highlighted in Article 11.2.4. [The Carpenters’] request for Attorney’s Fees and costs against [appellants] is denied.

C. Confirmation of Award

Following the issuance of the arbitrator’s final reasoned award (corrected),

appellants sought to vacate the arbitrator’s final award as unenforceable on the ground

that the arbitrator exceeded her powers. Specifically, they argued that the award of

$669,500.00 for diminution in the value of the Carpenters’ home was not a recognized

7 remedy available in law or in equity for the Carpenters’ cause of action that was the

basis of the arbitration, and the award was unauthorized by the parties’ arbitration

agreement. They asserted that construction defect claims are governed by the RCLA

and the plain language of the statute limits recovery of “the reduction in current

market value . . . after the construction defect is repaired if the construction defect is

a structural failure.”4 They argued that the defect in this case was neither repaired

nor a structural failure.

The Carpenters filed a response to appellants’ petition to vacate and an

application to confirm arbitration by entry of judgment. In their response, the

Carpenters pointed out that the arbitration agreement granted the arbitrator the

authority to award damages for all recognized remedies available in law or in equity

for any cause of action that was the basis of arbitration. They asserted that the

arbitrator considered the parties’ agreement and applicable law in reaching her

conclusions and, thus, the award drew its essence from the agreement and was

rationally inferable from the agreement. They further asserted that the damages

awarded to them by the arbitrator were an available remedy under the RCLA. The

4 See TEX. PROP. CODE ANN. § 27.004(g)(4) (providing claimant seeking damages under RCLA “may recover only the following economic damages proximately caused by a construction defect: . . . (5) the reduction in current market value, if any, after the construction defect is repaired if the construction defect is a structural failure”).

8 Carpenters requested that the trial court confirm the arbitrator’s final reasoned award

(corrected).

On September 25, 2023, the trial court entered its final judgment confirming

the arbitration award of $669,500.00 and awarding post-judgment interest. This

appeal followed.

Arbitration Award

In one issue, appellants contend that the trial court erred in confirming the

arbitration award because the arbitrator exceeded her powers by acting outside the

authority granted to her in the parties’ arbitration agreement.

A. Standard of Review and Governing Law

Arbitration of disputes is strongly favored under both federal and Texas law.

Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614, 631 (1985);

In re Am. Homestar of Lancaster, Inc., 50 S.W.3d 480, 484 (Tex. 2001). We review

de novo a trial court’s decision to confirm or vacate an arbitration award. Port

Arthur Steam Energy LP v. Oxbow Calcining LLC, 416 S.W.3d 708, 713 (Tex.

App.—Houston [1st Dist.] 2013, pet. denied). “Because Texas law favors

arbitration, judicial review of an arbitration award is extraordinarily narrow.”

E. Tex. Salt Water Disposal Co., Inc. v. Werline, 307 S.W.3d 267, 271 (Tex. 2010).

Therefore, an arbitrator’s award “upon matters submitted to [her] is given the same

effect as the judgment of a court of last resort. All reasonable presumptions are

9 indulged in favor of the award, and none against it.” CVN Grp., Inc. v. Delgado, 95

S.W.3d 234, 238 (Tex. 2002).

The Federal Arbitration Act (“FAA”) requires a court to confirm an arbitration

award unless the award is “vacated, modified, or corrected as prescribed in sections

10 and 11” of the FAA. Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 91 n.30 (Tex.

2011). Under the FAA, a court may only vacate an arbitration award under four

circumstances: (1) where the award was procured by corruption, fraud, or undue

means; (2) where there was evident partiality or corruption in the arbitrators, or

either of them; (3) where the arbitrators were guilty of misconduct in refusing to

postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence

pertinent and material to the controversy; or of any other misbehavior by which the

rights of any party have been prejudiced; or (4) where the arbitrators exceeded their

powers, or so imperfectly executed them that a mutual, final, and definite award

upon the subject matter submitted was not made. See 9 U.S.C. § 10(a). Relevant

here is the applicability of subsection (4), “which requires vacatur when arbitrators

exceed their authority.” Nafta Traders, 339 S.W.3d at 93.

An arbitrator exceeds her authority when she disregards the contract and

dispenses her own idea of justice. See D.R Horton-Tex., Ltd. v. Bernhard, 423

S.W.3d 532, 534 (Tex. App.—Houston [14th Dist.] 2014, pet. denied); Forged

Components, Inc. v. Guzman, 409 S.W.3d 91, 104 (Tex. App.—Houston [1st Dist.]

10 2013, no pet.); see also Ancor Holdings, LLC v. Peterson, Goldman & Villani, Inc.,

294 S.W.3d 818, 830 (Tex. App.—Dallas 2009, no pet.) (“[I]mprovident, even silly

interpretations by arbitrators usually survive judicial challenges.” (internal

quotations omitted)). That is, “an arbitrator does not exceed her authority by

committing a mistake of law, but instead by deciding a matter not properly before

her.” LeFoumba v. Legend Classic Homes, Ltd., No. 14-08-00243-CV, 2009 WL

3109875, at *3 (Tex. App.—Houston [14th Dist.] Sept. 17, 2009, no pet.) (mem.

op.); see also Vargas v. Rigid Global Buildings, LLC, 654 S.W.3d 1, 6 (Tex. App.—

Houston [14th Dist.] 2022, pet. denied) (“To show that the arbitrator exceeded his

powers, it is not enough to show that the arbitrator committed an error, or even a

grave error.”). “Thus, the appropriate inquiry is not whether the arbitrator decided

an issue correctly, but instead whether [the arbitrator] had the authority to decide the

issue at all.” Forest Oil Corp. v. El Rucio Land & Cattle Co., 518 S.W.3d 422, 431

(Tex. 2017).

Texas courts employ the “essence test” to determine whether an arbitrator has

exceeded her authority. See Taylor Morrison of Tex., Inc. v. Fulcher, No.

13-20-00332-CV, 2022 WL 3092553, at *4 (Tex. App.—Corpus Christi–Edinburg

Aug. 4, 2022, pet. denied) (mem. op.). Under the “essence test,” we inquire as to

whether the basis for the award is “rationally inferable” from the parties’ arbitration

agreement. See id.; see also Vargas v. Rigid Global Buildings, LLC, 654 S.W.3d 1,

11 7 (Tex. App.—Houston [14th Dist.] 2022, pet. denied) (“Arbitrators do not exceed

their powers if the arbitration award has a basis that is at least rationally inferable, if

not obviously drawn, from the letter or purpose of the arbitration agreement”). In

making this inquiry, the reviewing court is not limited to the arbitrator’s explanation

for the award. See Vargas, 654 S.W.3d at 7. Rather, the reviewing court looks to

the result reached and determines whether the award, however arrived at, is

rationally inferable from the arbitration agreement. Id.

B. Analysis

Appellants contend that the arbitrator had no authority to award damages for

“diminution in value” to the Carpenters under the Purchase Agreement and

applicable law. They argue that, in doing so, she exceeded the authority granted to

her under the arbitration agreement, and the trial court should have vacated the

award.

The Purchase Agreement permitted the arbitrator to determine the availability

and amount of damages. Under section 11.2.5 of the arbitration agreement, “[t]he

arbitrator shall be authorized to provide all recognized remedies available in law or

in equity for any cause of action that is basis of arbitration.” (Emphasis omitted.)

Thus, any dispute arising out of the Purchase Agreement—including any dispute

regarding what damages, if any, the Carpenters were entitled to recover—was within

the arbitrator’s broad authority. See, e.g., Baker Hughes Oilfield Operations, Inc. v.

12 Hennig Prod. Co., 164 S.W.3d 438, 443 (Tex. App.—Houston [14th Dist.] 2005, no

pet.) (noting provision that “parties would arbitrate ‘any controversy or claim arising

out of or relating to the Agreement or to [Baker Hughes’] services, equipment, or

products provided to Customer’ was, by its plain language, a broad arbitration

provision and subsume[d] any controversy or claim arising out of or relating to

Baker Hughes’ services”).

With respect to the Carpenters’ breach-of-contract claim, the arbitrator found

that the Purchase Agreement, the specifications, and applicable building codes and

standards required appellants to design and construct the home in compliance with

the GET study for the home. She found that appellants had failed to follow the GET

study in numerous ways, and their failure to comply with the study was a “major

construction defect” that caused damage to the home. She concluded that “the

foundation system is not stable and is not performing its intended design function.

Conventional underpinning-type foundation-repair techniques would not

structurally repair the foundation system.”

Appellants assert that the arbitration agreement limited the arbitrator’s

authority to award only “recognized remedies available in law or in equity” and

identified the specific statute—the RCLA—under which those remedies were to be

determined. Appellants assert that the only “diminution in value” remedy that the

RCLA allows is the “reduction in current market value, if any, after the construction

13 defect is repaired if the construction defect is a structural failure.” According to

appellants, neither requirement was met because the defect was not repaired, and it

did not amount to a structural failure.5 Thus, they assert, the arbitrator disregarded

the terms of the parties’ agreement and the RCLA to which it referred by awarding

damages for “diminution in value” and, in doing so, exceeded her authority.

The record does not support appellants’ assertion that the arbitrator

disregarded the parties’ agreement and the law. In the award, the arbitrator noted

that she had been designated to arbitrate the dispute between the parties related to

the Purchase Agreement. It is undisputed that the Carpenters’ claims arose out of

the Purchase Agreement. The award stated that the parties had exchanged pre-suit

RCLA/DTPA demands and offers of settlement and that appellants had denied any

violations of the RCLA or DTPA. The arbitrator set forth her findings “after

considering the sworn testimony of the witnesses, the exhibits, the pleadings on file,

a site visit, applicable law, the pre- and post-hearing briefs[,] and attorneys’ fees

affidavits.” The exhibits included the Purchase Agreement which contains the

arbitration agreement.

A particular remedy lies beyond the arbitrator’s authority “only if there is no

rational way to explain the remedy . . . as a logical means of furthering the aims of

5 The RCLA defines “structural failure” as “actual physical damage to the load-bearing portion of a residence caused by a failure of the load-bearing portion.” Id. § 27.001(7).

14 the contract.” Forest Oil, 446 S.W.3d at 82. Courts look only at the result. Id.

“The single question is whether the award, however arrived at, is rationally inferable

from the contract.” Id. (internal quotations omitted). The record demonstrates that

the arbitration award is rationally inferable from the language and purpose of the

Purchase Agreement. See Vargas, 654 S.W.3d at 7 (“Arbitrators do not exceed their

powers if the arbitration award has a basis that is at least rationally inferable, if not

obviously drawn, from the letter or purpose of the arbitration agreement”).

Appellants’ argument is essentially that the arbitrator made a mistake in

applying the law. We do not decide whether the arbitrator correctly decided the

damages the Carpenters were entitled to recover. Judicial review of the arbitration

process is limited, and even a mistake of law or fact by the arbitrator in applying

substantive law is not a proper ground for vacating an award. See Forest Oil, 446

S.W.3d at 83 (“Even if the arbitrator made a mistake in applying the law of remedies

or awarded a remedy a court of law could not, that does not support vacatur of the

arbitration award on the ground that the arbitrator exceeded her authority.”); see,

e.g., Aston Solar, LLC v. Sunnova Energy Corp., No. 14-21-00074-CV, 2022 WL

1256427, at *2 (Tex. App.—Houston [14th Dist.] Apr. 28, 2022, no pet.) (mem. op.)

(concluding record did not support appellants’ contention that arbitrator disregarded

agreement’s prohibition against consequential damage; at worst, arbitrator made

error of law); Patel v. Moin, No. 14-15-00851-CV, 2016 WL 4254016, at *5 (Tex.

15 App.—Houston [14th Dist.] Aug. 11, 2016, pet. denied) (mem. op.) (concluding

appellants’ contentions that arbitrator’s award of breach-of-contract damages were

not encompassed by parties’ arbitration agreement provided no basis for reversing

trial court order confirming award “because, at most, they assail the arbitrator’s

reasoning as being legally erroneous or internally inconsistent” and “[c]ontentions

that the arbitrator misinterpreted the contract or misapplied the law provide no basis

for disturbing an arbitration award”); see also Oxford Health Plans, LLC v. Sutter,

569 U.S. 564, 569 (2013) (“The question for the court is not whether the arbitrator

construed the agreement correctly but whether she construed it at all, and if the

arbitrator even arguably construed or applied the agreement, the award should not

be vacated.”).

Appellants’ arguments that the arbitrator did not include the phrase “structural

failure” in her award and that evidence that a foundation might fail in the future is

not evidence of a structural failure are also unavailing. Appellants do not direct us

to any authority that an arbitrator must articulate her findings in an award using the

precise statutory language. Moreover, Riddell testified that the foundation system

of the Carpenters’ home “is not stable and is not performing its intended design

function, due to a loss of structural integrity, and is in a condition of progressive

foundation failure.” This evidence arguably suggests that the failure had already

begun and would continue. In her award, the arbitrator found that “a major

16 construction defect has caused damage to the Home”; “[t]he bearing capacity of the

uncompacted sand underneath the concrete slab does not meet the requirements of

the GET study”; [t]he foundation system is not stable and is not performing its

intended design function”; and “[c]onventional underpinning-type foundation-repair

techniques would not structurally repair the foundation system.” Appellants also

point to the arbitrator’s finding that “there was insufficient evidence that the

foundation itself had experienced differential movement (deflected or tilted) in

excess of the standard set forth in the warranty.” However, even if these findings

were inconsistent, this would not provide a basis for vacating the award. See Patel,

2016 WL 4254016, at *5 (noting appellants’ argument suggesting arbitrator’s

reasoning was legally erroneous or internally inconsistent did not provide basis for

vacatur of award).

We hold that the trial court did not err in confirming the arbitration award.

We overrule appellants’ sole issue.

Conclusion

We affirm the trial court’s judgment.

Kristin Guiney Justice

Panel consists of Justices Rivas-Molloy, Guiney, and Morgan.